Roman Financial Panic of 33 CE

The Roman Financial Panic of 33 CE was a banking crisis which occurred under Tiberius (14-37 CE).
It was resolved in just a few weeks by the lowering of interest rates to zero and the provision of 100 million Sesterces in State Funds to increase liquidity.

Tiberius (14-37 CE) was concerned at the lack of silver circulating in the Empire, despite he himself hoarding a fortune in silver Denarii equal to 2.7 billion sestercii by the time he died.
18 months earlier he had passed an Edict obliging the Senators to buy land in Italia with at least 33% of their capital, to force them to release some of their silver.
But the Edict produced the opposite effect. The Senators started buying land but as there was no silver to buy it with, the price of land halved, producing the conditions for a crisis that just needed a trigger. When the Edict’s deadline fell. few of the senators had conformed, and there was a rush of requests for credit from their Bankers.

The trigger was a Banking House collapse in Alexandria, Egypt. The House of Southes lost three cargo vessels in a Red Sea storm, and at the same time the price of certain Commodities such as Ivory collapsed. At Tyre, in Syria, the House of Malchus was bankrupted by a strike of its employees and embezzlement by its manager. The House had subsidiaries in Antioch and Ephesus.

The Crisis then reached Rome. The Banking House of Quintus Maximus and Lucious Vibo in Rome collapsed, leading to a Run on the Banking House of Pittio and other Banking houses located on the Via Sacra, the Financial Centre of Rome.
At the same time unrest in Gaul, where a lot of Roman Banking Houses were heavily invested, had produced a freeze on Payments from the Gallic Provinces. Consequently the Banking Houses on the Via Sacra would not lend, neither to the two distressed Banking Houses, nor between themselves, and closed their doors.
To refinance themselves, the Banking Houses started to call in loans from creditors, who had to sell land and other valuables in order to repay the Banks. As there were few buyers, the price of land collapsed.
A request to the Banking House of Balbus Ollius for 30,000,000 Sesterces from Publius Spencer, led to the House having to refuse and close its doors.

From here there was a domino effect across the Empire as Banking Houses collapsed and closed their doors, from Greece, Corinth and Byzantium to Africa Proconsularis, Carthage and also to Lyon in Gaul.

Tiberius adopted the following measures to restore liquidity:
- He suspended the Edict that had required Senators to spend 33% of their Capital on Land in Italia.
- He lowered the Interest Rate to 0% for three years, by prohibiting interest from being collected on outstanding Loans.
- He provided 100,000,000 sesterces from his own Imperial Treasury, the Fiscus, to the leading Banking Houses, to lend to their most desperate clients. This immediately had the effect of increasing liquidity and restoring land values.
The Panic ended within a few weeks of having started.
This was the equivalent of modern State intervention with State Funds.