Posted on 12/01/2008 2:20:37 PM PST by SunkenCiv
Politicians searching for historical precedents for the current financial turmoil should start looking a bit further back after an Oxford University historian discovered what he believes is the world's first credit crunch in 88BC. The good news is that Philip Kay knows how the Romans got themselves into financial bother. The bad news is no one knows how they got themselves out of it... The monetary historian is giving a lecture today in which he will reveal how Cicero, the Roman orator, gave a speech in 66BC in which he alluded to the credit crunch. Cicero was arguing that Pompey the Great should be given military command against Mithridates VI, king of Pontus on the Black sea coast of what is now Turkey. He reminded his audience of events in 88BC, when the same Mithridates invaded the Roman province of Asia, on the western coast of Turkey. Cicero claimed the invasion caused the loss of so much Roman money that credit was destroyed in Rome itself... Certainly historians know that Sulla became dictator of the Roman republic after the credit crunch, but Kay said the two events were unrelated.
(Excerpt) Read more at guardian.co.uk ...
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I’m not sure I believe this. It’s my understanding that “credit” didn’t really exist in Rome. You could borrow privately from your patron but not from someone you didn’t know personally.
Sulla murdered half the businessmen in Rome, confiscated their property and used it to pay the State’s debts and to reward his friends.
Perhaps Obama should consider this approach?
Credit crunch?
They did not have fiat currencies back then.
Most likely they did nothing, the market cleared away the debris, and soon everything went back to normal.
"A nation can survive its fools, and even the ambitious.
But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly.
But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself.
For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men.
He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist.
A murderer is less to be feared."
-- Marcus Tullius Cicero
Like I said, all we have to do is print several trillion-dollar bills, and a few hundred-billion dollar bills, and we’ll be just fine.
Money lending was a big business in Rome. And there was a sophisticated futures market as well.
My comment was close, but not entirely accurate. In his “Ancient and Modern” column in the October 29 issue of The Spectotor, Peter Jones had this to say:
“Peter Jones on ancient finance
Last time we saw that the Romans did not have anything like a banking system i.e. a machinery for creating credit through various negotiable instruments. What they did have was minted coin — and that was the sole monetary instrument. So at a personal level, if you wanted money, you went to a rich friend and hoped he would help you out with a loan. But if there were no bankers in our sense, there were small-scale businessmen such as money-changers, charging up to 5 per cent to change high-value into low-value coins, who also received deposits and advanced credit. We hear of one Novius receiving a short-term loan of 10,000 sesterces from such a businessman against collateral of grain, chick-peas, lentils and spelt. Penalties for late payment are often attached.
If you wanted serious money, however, this could come only from elite financiers, who were looking primarily for security, or from risk-taking ‘entrepreneurs’, more interested in profit. These are the sort of people who would go into partnership together and bid for big Senate contracts — everything from building aqueducts to supplying the army or raising taxes.
There were still crises. In ad 33, the emperor Tiberius solved a liquidity problem by offering interest-free 3-year loans up to 100 million sesterces against real estate or buildings. In 216 bc Rome ran out of money during the war against Hannibal. It asked for money and wheat from Hieron of Syracuse; deferred payments to those who had won contracts to supply its army in Spain and carry out building works; sold off assets; equipped its fleet through a special tax on the rich; and appealed for contributions.
But there was never any question of Rome borrowing money. As a result, there was no such thing as national debt, that ‘swindling of futurity’ to which Thomas Jefferson referred. Likewise, while providing credit (out of hard coin) was understood, it was for immediate use; there was no concept of ‘furthering economic investment’. Our world is very different, and banks central to it. They have brought phenomenal economic benefits. But they have forgotten a rule even the Romans knew: Horace’s aurea mediocritas, ‘the golden middle-way’. The emphasis is on ‘golden’; for the avoidance of extremes is where the real gold lies. It should be emblazoned over every bank.”
http://www.spectator.co.uk/the-magazine/columnists/2557761/ancient-modern.thtml
:’) They did. The Roman imperial government relied on plunder (from conquest) and taxes to operate. The economic peak was during the reign of Trajan, who got the last really big pile of booty the empire was to see, during his conquest of Dacia. The empire (not coincidentally) also reached its greatest geographical extent at the end of his reign.
Even before Trajan, Rome had lively seagoing trade with India, and had some sort of trade presence further east. At least one Roman writer whose work has survived complained of the piles of gold Rome sent to India to purchase whatever kind of Pier One crap they were making then.
By the third century, as the empire was in turmoil, the currency had become bronze, because, obviously, with a greater population and more economic activity (which is pretty much what turmoil will do for ya) there was more need for coin of the realm. While it wasn’t paper money (that is generally attributed to Chinese practices introduced by Marco Polo), it was basically the same kind of idea we have today with our own currency — whatever was needed, got minted.
I’m not sure that Roman finance was very “sophisticated”. See the article from The Spectator I posted in this thread. It was the medieval Italians and the knightly orders (Templars and Hospitalers) that invented banking in a form we would recognize.
Any further information you would have would be appreciated.
I know:
1) Start war with a barbarian region;
2) win war (be ruthless; don't pussyfoot around);
3) make barbarians offer they can't refuse;
4) rake in the tribute money.
5) Done deal.
Borrowing with interest did exist, but as you said, banks did not. Private lenders (like that loan shark crook character in HBO’s series “Rome”) did exist, and thrived, but had to have muscle — either hired thugs, or the backing of the state.
Consider it? He made sure it’s in the Democratic Party platform.
The major financial problem during the republic, particularly late in the republic, was the amount of land held by a few dozen families — they literally owned nearly all of Italy. People who worked the land (or wanted to) couldn’t get land to work, unless they got into some kind of exploitative rental arrangement with some noble house, or if they migrated out of Italy. With the emperors, the Roman republic got a better form of government, as there was for the first time a strong executive branch and government control (and financing) of the army and navy.
Once order was restored, generally given as the Battle of Actium, Octavian ruled over an united empire. Business boomed in a peaceful environment and economic expansion as the imperial system was imposed in the expanse of conquered territories, with emphasis on Egypt. Succession from Caesar to Caesar wasn’t always orderly, but, apart from the short period of uncertainty after the assassination of Gaius “Caligula”, the period from Actium (31 BC) until the death of (in quick succession) Nero, Galba, Otho, and Vitellius (68-69 AD) was pretty quiet and peaceful throughout the empire.
IIRC, Gibbon remarked that at Rome’s height, long term money could be had for 5%.
I'm so glad you delineated the plunder part. Otherwise it would have sounded (to me) like you you were repeating yourself. As in "The Obama Imperial Government relied on plunder (taxes) and taxes (plunder) to operate". Maybe kind of like some exact parallel or somethin.
;’) Plunder can also come from putting down a rebellion (also not unheard of, but never a major revenue source in the Empire).
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