Roman finance

Pooling capital

Before banks were established in Rome there was little ability to mobilize large amounts of capital, leaving Romans to operate within the constraints of the wealth of their households. When household wealth was exhausted, the elites in Roman society would often extend loans amongst themselves.^[2] The value of these loans to the lender was not always derived from interest payments, but rather from the social obligations that were an implication of being a lender.^[3][4] The formation of a societas allowed for the utilization of pooled capital. Societates were groups who could combine their resources to place a bid for a government contract and then share in the resulting profit or loss.^[2][5] The publicani (public contractors) were an early incarnation of societates who would bid for the right to collect taxes from the Roman provinces. Senators were not allowed to engage in trade, so it fell to the knights (equites) to bid on these contracts issued by the censors every five years.^[6] Banks were established in Rome that modeled their Greek counterparts and introduced formalized financial intermediation. Livy is the first writer to acknowledge the rise of formal Roman banks in 310 BC.^[7]

Ancient Roman banks operated under private law, which did not have clear guidance on how to decide cases concerning financial matters, which forced Roman banks to operate entirely on their word and character. Bankers congregated around the arch of Janus to conduct their business and despite their informal location, were clearly professional in their dealings.^[8][9]

Private loans

Up until the dawn of the Roman Empire, it was common for loans to be negotiated as oral contracts. In the early Empire, lenders and borrowers began to adopt the usage of a chirographum (“handwritten record”) to record these contracts and use them for evidence of the agreed terms.^[10] One copy of the contract was presented on the exterior of the chirographum, while a second copy was kept sealed within two waxed tablets of the document in the presence of a witness.^[10][11] Informal methods of maintaining records of loans made and received existed, as well as formal incarnations adopted by frequent lenders. These serial lenders used a kalendarium to document the loans that they issued to assist in tabulating interest accrued at the beginning of each month (Kalends).^[12] Parties to contracts were supposed to be Roman citizens, but there is evidence of this boundary being broken.^[12] Loans to citizens were also originated from public or governmental positions. For example, the Temple of Apollo is believed to have engaged in secured loans with citizens’ homes being used as collateral.^[13] Loans were more rarely extended to citizens from the government, as in the case of Tiberius who allowed for three-year, interest-free loans to be issued to senators in order to avert a looming credit crisis.^[14]

Deferred payment

There is sufficient evidence of deferred payments and financing arrangements to be negotiated for large purchases. Deferred payments were used in the auction of wine or oil that was "on the tree" (not yet harvested or produced), requiring payment from the winning bidder long after the auction had ended. Roman peasants who needed money to pay their taxes would use an inverted form of this process by selling the right to a portion of their harvest in the future in exchange for cash in the present.^[15] The sulpicii arose as professional bankers in the first century AD, and among other forms of financial intermediation, they offered financing for speculators in grain markets.^[2][5]

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Banking in ancient Rome

Banking in ancient Rome

In ancient Rome there were a variety of officials tasked with banking. These were the argentarii, mensarii, coactores, and nummulari. The argentarii were money changers. The role of the mensarii was to help people through economic hardships, the coactores were hired to collect money and give it to their employer, and the nummulari minted and tested currency. They offered credit systems and loans. Between 260 and the fourth century CE Roman bankers disappear from the historical record, likely because of economic difficulties caused by the debasement of the currency.

Capital (economics)

Capital (economics)

In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. At the macroeconomic level, "the nation's capital stock includes buildings, equipment, software, and inventories during a given year."

Interest

Interest

In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. It is distinct from a fee which the borrower may pay the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs.

Profit (economics)

Profit (economics)

In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs.

Publican

Publican

In antiquity, publicans were public contractors, in whose official capacity they often supplied the Roman legions and military, managed the collection of port duties, and oversaw public building projects. In addition, they served as tax collectors for the Roman Republic, farming the taxes of the Roman provinces, and bidding on contracts for the collection of various types of taxes. Importantly, this role as tax collectors was not emphasized until late into the history of the Republic. The publicans were usually of the class of equites.

Roman province

Roman province

The Roman provinces were the administrative regions of Ancient Rome outside Roman Italy that were controlled by the Romans under the Roman Republic and later the Roman Empire. Each province was ruled by a Roman appointed as governor.

Equites

Equites

The equites constituted the second of the property-based classes of ancient Rome, ranking below the senatorial class. A member of the equestrian order was known as an eques.

Livy

Livy

Titus Livius, known in English as Livy, was a Roman historian. He wrote a monumental history of Rome and the Roman people, titled Ab Urbe Condita, ''From the Founding of the City'', covering the period from the earliest legends of Rome before the traditional founding in 753 BC through the reign of Augustus in Livy's own lifetime. He was on familiar terms with members of the Julio-Claudian dynasty and a friend of Augustus, whose young grandnephew, the future emperor Claudius, he exhorted to take up the writing of history.

Arch of Janus

Arch of Janus

The Arch of Janus is the only quadrifrons triumphal arch preserved in Rome. It was set up at a crossroads at the northeastern limit of the Forum Boarium, close to the Velabrum, over the Cloaca Maxima drain that went from the Forum to the River Tiber.

Roman Empire

Roman Empire

The Roman Empire was the post-Republican period of ancient Rome. As a polity, it included large territorial holdings around the Mediterranean Sea in Europe, North Africa, and Western Asia, and was ruled by emperors. From the accession of Caesar Augustus as the first Roman emperor to the military anarchy of the 3rd century, it was a Principate with Italia as the metropole of its provinces and the city of Rome as its sole capital. The Empire was later ruled by multiple emperors who shared control over the Western Roman Empire and the Eastern Roman Empire. The city of Rome remained the nominal capital of both parts until AD 476 when the imperial insignia were sent to Constantinople following the capture of the Western capital of Ravenna by the Germanic barbarians. The adoption of Christianity as the state church of the Roman Empire in AD 380 and the fall of the Western Roman Empire to Germanic kings conventionally marks the end of classical antiquity and the beginning of the Middle Ages. Because of these events, along with the gradual Hellenization of the Eastern Roman Empire, historians distinguish the medieval Roman Empire that remained in the Eastern provinces as the Byzantine Empire.

For centuries the monetary affairs of the Roman Republic had rested in the hands of the Senate. These elite liked to present themselves as steady and fiscally conservative, but as the 19th-century historian of Rome Wilhelm Ihne remarked:

Though individually the Romans were exceedingly economical and careful in the management of their private property, the state as such was extravagant and careless with the state revenue. It was found impossible to protect the public property from being plundered by private individuals, and the feeling of powerlessness resulted in reckless indifference. It was felt that revenues which could not be preserved intact and devoted to the common good were of no value to the state and might as well be abandoned.^[16]

The aerarium (state treasury) was supervised by members of the government rising in power and prestige, the quaestors, praetors, and eventually the prefects. With the dawn of the Roman Empire, a major change took place, as the emperors assumed the reins of financial control. Augustus adopted a system that was, on the surface, fair to the Senate. Just as the world was divided in provinces designated as imperial or senatorial, so was the treasury. All tribute brought in from senatorially controlled provinces was given to the aerarium, while that of the imperial territories went to the treasury of the emperor, the fiscus.

Initially, this process of distribution seemed to work, although the legal technicality did not disguise the supremacy of the emperor or his often used right to transfer funds back and forth regularly from the aerarium to the fiscus. The fiscus actually took shape after the reign of Augustus and Tiberius. It began as a private fund (fiscus meaning purse or basket) but grew to include all imperial monies, not only the private estates but also all public lands and finances under the imperial eye.

The property of the rulers grew to such an extent that changes had to be made starting sometime in the 3rd century, most certainly under Septimius Severus. Henceforth, the imperial treasury was divided. The fiscus was retained to handle actual government revenue, while a patrimonium was created to hold the private fortune, which was inherited by the Emperors successor. There is a considerable question as to the exact nature of this evaluation, involving possibly a res privata so common in the Late Empire.

Just as the Senate had its own finance officers, so did the emperors. The head of the fiscus in the first years was the rationalis, originally a freedman due to Augustus' desire to place the office in the hands of a servant free of the class demands of the traditional society. In succeeding years the corruption and reputation of the freedman forced new and more reliable administrators. From the time of Hadrian (r. 117–138), any rationalis hailed from the Equestrian Order (equites) and remained so through the chaos of the 3rd century and into the age of Diocletian.

With Diocletian came a series of massive reforms, and total control over the finances of the Empire fell to the now stronger central government. Tax reforms made possible a real budget in the modern sense for the first time. Previously it had issued the tax demands to the cities and allowed them to allocate the burden. From now on the imperial government driven by fiscal needs dictated the entire process down to the civic level. Under Constantine the Great this aggrandizement continued with the emergence of an appointed minister of finance, the comes sacrarum largitionum ("Count of the Sacred Largesses"). He maintained the general treasury and the intake of all revenue until Constantine divided the treasury into three, giving the prefect, count, and the manager of the res privata their own treasuries. The treasury of the prefect was called the arca. His powers were directed toward control of the new sacrum aerarium, the result of the combination of the aerarium and the fiscus.

The insignia of the comes sacrarum largitionum in the Notitia Dignitatum: money bags and pieces of ore signifying his control over mines and mints, and the codicil of his appointment on a stand

The comes sacrarum largitionum was a figure of tremendous influence. He was responsible for all money taxes, examined banks, ran the mints and mines everywhere, weaving mills and dye works, paid the salaries and expenses of many departments of the state, the upkeep of imperial palaces and other public buildings, supplied the Courts with clothing and other items. To accomplish these many tasks, he was aided by a large central staff, a regional field force and small staffs in larger cities and towns. Just below the comes sacrarum were the rationales, comptrollers, positioned in each diocese. They supervised the collection of all tribute, taxes, or fees. They were everywhere and omnipotent until Constantine demoted them after his reorganization of the palatine level ministries' competencies in the years 325–326 by restricting their activity to supervision of the collection of taxes collected in gold and silver performed by the governors under the general supervision of the vicars. The rationales lost the last of their provincial field force of procurators between 330–337.

Only the praetorian prefects were more powerful. His office, as vice-regent to the emperors, took precedence over all other civilian officials and military officers. They were chief finance officers of the Empire. They composed the global budget and set the tax rates across the board. Before Constantine's reforms they were directly responsible for the supply of the army, the annona militaris, which was a separate tax form the time of Diocletian in place of arbitrary requisitions. The annona civilis, the general in kind taxes were turned over to the prefects alone. To their care was entrusted the supply of food stuffs to the capitals, the imperial armament factories, the maintenance of the state post. The magister officiorum ("Master of Offices"), who was a kind of Minister of the Interior and State Security and the comes rerum privatarum ("Count of the Private Fortune") could counter the political the comes sacrarum largitionum. The magister officiorum made all the major decisions concerning intelligence matters was not a fiscal officer and could not interfere with the operation of the sacrae largitiones and the res privata. The comes sacrarum largitionum gradually lost power to the prefects as more and more in kind taxes of his department were converted to gold. By the 5th century their diocesan level staff were no longer of much importance, although they continued in their duties. However, the heads of the office continued to have power into the 430s in part because appellate jurisdiction in fiscal cases had been returned to them in 385.

The imperial estates and holdings were huge. Their res privata was directly under the management of the RP. The patromonium, or imperial inheritance were lands leased to individuals. Both were under the jurisdiction of the comes rerum privatarum. In the West the rents and tax income was shared with the sacrae largitionum but not in the East. In the East the palace administration took over gradually post-450 and the RP was finally dissolved by Justinian's successors.

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Roman Republic

Roman Republic

The Roman Republic was a form of government of Rome and the era of the classical Roman civilization when it was run through public representation of the Roman people. Beginning with the overthrow of the Roman Kingdom and ending in 27 BC with the establishment of the Roman Empire, Rome's control rapidly expanded during this period—from the city's immediate surroundings to hegemony over the entire Mediterranean world.

Aerarium

Aerarium

Aerarium, from aes + -ārium, was the name given in Ancient Rome to the public treasury, and in a secondary sense to the public finances.

Prefect

Prefect

Prefect is a magisterial title of varying definition, but essentially refers to the leader of an administrative area.

Roman Empire

Roman Empire

The Roman Empire was the post-Republican period of ancient Rome. As a polity, it included large territorial holdings around the Mediterranean Sea in Europe, North Africa, and Western Asia, and was ruled by emperors. From the accession of Caesar Augustus as the first Roman emperor to the military anarchy of the 3rd century, it was a Principate with Italia as the metropole of its provinces and the city of Rome as its sole capital. The Empire was later ruled by multiple emperors who shared control over the Western Roman Empire and the Eastern Roman Empire. The city of Rome remained the nominal capital of both parts until AD 476 when the imperial insignia were sent to Constantinople following the capture of the Western capital of Ravenna by the Germanic barbarians. The adoption of Christianity as the state church of the Roman Empire in AD 380 and the fall of the Western Roman Empire to Germanic kings conventionally marks the end of classical antiquity and the beginning of the Middle Ages. Because of these events, along with the gradual Hellenization of the Eastern Roman Empire, historians distinguish the medieval Roman Empire that remained in the Eastern provinces as the Byzantine Empire.

Augustus

Augustus

Caesar Augustus, also known as Octavian, was the first Roman emperor; he reigned from 27 BC until his death in AD 14. He is known for being the founder of the Roman Principate, which is the first phase of the Roman Empire, and is considered one of the greatest leaders in human history. The reign of Augustus initiated an imperial cult as well as an era associated with imperial peace, the Pax Romana or Pax Augusta. The Roman world was largely free from large-scale conflict for more than two centuries despite continuous wars of imperial expansion on the empire's frontiers and the year-long civil war known as the "Year of the Four Emperors" over the imperial succession.

Imperial province

Imperial province

An imperial province was a Roman province during the Principate where the Roman Emperor had the sole right to appoint the governor. These provinces were often the strategically located border provinces.

Fiscus

Fiscus

Fiscus, from which comes the English term "fiscal", was the name of the personal chest of the emperors of Rome.

Legal technicality

Legal technicality

The term legal technicality is a casual or colloquial phrase referring to a technical aspect of law. The phrase is not a term of art in the law; it has no exact meaning, nor does it have a legal definition. It implies that strict adherence to the letter of the law has prevented the spirit of the law from being enforced -- that is, the law applied as written, in opposition to what was intended by whoever wrote the law. However, as a vague term, the definition of a technicality varies from person to person, and it is often simply used to denote any portion of the law that interferes with the outcome desired by the user of the term.

Imperial estate (Roman)

Imperial estate (Roman)

An Imperial Estate in the Roman Empire was the "personal property of members of the imperial family, as distinct from property belonging to the Roman state." On the Emperor's death these properties passed to his successor, and not to his private heirs.

Property

Property

Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, redefine, rent, mortgage, pawn, sell, exchange, transfer, give away, or destroy it, or to exclude others from doing these things, as well as to perhaps abandon it; whereas regardless of the nature of the property, the owner thereof has the right to properly use it under the granted property rights.

Rationalis

Rationalis

A rationalis was a high-ranking fiscal officer in the Roman Empire. Until replaced by the comes sacrarum largitionum by Emperor Constantine in the early 4th century, the rationalis summarum – comparable to a modern-day finance minister – was one of two state officials who had authority over the imperial treasury, the other one being the rationalis rei privatae. Examples for tasks that were performed by a rationalis are "the collection of all normal taxes and duties, the control of currency and the administration of mines and mints".

Hadrian

Hadrian

Hadrian was Roman emperor from 117 to 138. He was born in Italica, a Roman municipium founded by Italic settlers in Hispania Baetica. He came from a branch of the gens Aelia that originated in the Picenean town of Hadria, the Aeli Hadriani. His father was of senatorial rank and was a first cousin of Emperor Trajan. Hadrian married Trajan's grand-niece Vibia Sabina early in his career before Trajan became emperor and possibly at the behest of Trajan's wife Pompeia Plotina. Plotina and Trajan's close friend and adviser Lucius Licinius Sura were well disposed towards Hadrian. When Trajan died, his widow claimed that he had nominated Hadrian as emperor immediately before his death.