Roman Banking

1. STATE BANKING

State Bank

  • The Romans had no State Bank, unlike certain Greek cities and Ancient Egypt.
  • Instead, Finance was raised through a system of Banking Houses located in Rome and in the Provinces. These made Loans and took Deposits.

Before Coinage

Greek Coinage (c. sixth century BCE)

  • The Greeks were the first to mint coins of Gold and Silver. They invented coins around the sixth century BCE, and all the Greek cities adopted coinage, revolutionising the Greek economy.

Roman Money (c. 300 BCE-476 CE)

  • The Roman Republic first minted metal coins in c.300 CE, influenced by the coins already produced in the nearby cities of Magna Graecia.
  • The Motifs of early coins were based on Greek Coinage, later coins carried images of the Emperors. The coins were of bronze alloys, silver Orichalcum and gold. The Mint of Rome produced coins until 491 CE.

Roman Inflation (3rd century CE)

  • Inflation in Ancient Rome became a problem during the Third Century CE.
  • It was caused by the gradual Debasement of the Gold Coin, the Aureus and the Silver Coin, the Denarius.
  • The Roman Government insisted all Taxes be paid in Gold or Silver. However, new Gold and Silver coins were continually debased. As a consequence, Prices were increased to cover the shortfall and Inflation became a chronic problem.

Roman Mints

Money Transfers

  • Transfers between the Provinces and Rome were made with Gold and Silver coins. Local mints only produced the base coinage which stayed in the Province.
  • Transfers were also made by exporting a commodity, such as grain, salt or olive oil.

The Temple as the Bank

  • Temples in the Ancient World were the Banks.
  • The Roman Temple was a safe Depository built as a stone fortress with defensive doors. The Temple of Diana was the Aerarium or State Treasury.
  • The Temple was always the target of an invading army, and its riches carried off if they were victorious.

Tax Collection

  • Roman Republic
    • Tax Collection was done by the Corporations known as the Publicani. Property was the sole criteria for taxation.
  • Roman Empire
    • After Augustus (27 BCE-14 CE), the Governor of a Province had no control over Finance or Tax Collection, which was done instead by an Equestrian Fiscal Procurator.
    • Property was no longer the sole criteria for taxation. Instead a wealth tax on each city was imposed of 1% and also a Poll Tax on each individual at a fixed rate. Taxation now moved from being based on Property ownership to being based more on Income.

The State Treasury

The Fiscus

  • This was the Emperor’s personal Treasury, which included the Revenues from the Imperial Provinces.
  • However, sometimes in times of poor cashflow, what belonged to the Roman Senate in the Aerarium, might be borrowed by the Emperor and returned later.

Aerarium Militare

  • This was the Military Treasury which went to provide the Pensions of the Roman Legionaries .
  • It received Revenues from the Sales Tax and the Inheritance Tax.

The Grain Import

  • Grain was produced in the Roman Empire on huge Estates known as Latifundia.
  • The State bought and distributed Grain to the population and the Roman Legions.
  • Josephus wrote that Africa fed Rome for eight months and Egypt for only four.
  • During the Empire there were no Famines because the State organised the Grain Fleets and the distribution of free grain.
  • Grain and other commodities were also used as collateral for loans in private banking.

2. PRIVATE BANKING

The Argentarii

  • The Argentarii were the Bankers of Rome. Although they were free agents and not employees of the State, they did belong to a Guild of Bankers who restricted their numbers.
  • They conducted financial transactions such as Currency Exchange (Permutatio).
  • They were legally required to buy new coinage from the Mint and to circulate it. They could assess the value of new and old coins and tell whether one was a forgery.
  • They used Bills of Exchange where an associated banker in a Province would pay out the sum that had been paid in to him.
  • They took in deposits and made payments on behalf of their clients.
  • They operated a system of payment by cheque known as ‘Presciptio’.
  • All transactions were recorded in books called ‘Codices’ and could be used as evidence in a court of law.
  • They operated at Public Auctions, acting as agents for both the sellers and the buyers and receiving payments and making them

Location of the Argentarii

Mensarii

  • In 352 BCE, a team of five Public Bankers and a Bank was created to solve the problem of citizen debt, and prevent indebtedness leading to citizens being sold into Slavery.
  • The Mensarii would pay the debt after having first assessed the debtor’s property, which the Mensarii would then hold as collateral until repayment was made. Or the debtor’s property would be accepted by the Mensarii in exchange for taking on the debt.
  • Eventually, the Mensarii undertook the same financial transactions as the Argentarii, currency exchange, coin assessment, taking deposits and lending money.

Nummularii

  • The Nummularii were the Officers of the Mint who operated a bank which placed new coins into circulation and removed the old coins.
  • They also eventually undertook the same financial transactions as the Argentarii, taking deposits, making loans and attending auctions.

The Murecine Archive

  • The Murecine Archive or Tablets, also known as the Tablets of the Sulpici, are a collection of 70 wooden wax writing tablets, that were found in a villa near a dock area in Pompeii known as the Agro Murecine.
  • They are a record of business transactions in Puteoli, written between 20-79 CE, by four Roman Freedmen who appear to have been Bankers.

Roman Banking Houses

  • The Romans had no State Bank, unlike certain Greek Cities and Ancient Egypt.
  • The wealthy raised finance through banking houses.
  • Banking Families often used ex-slaves known as Freedmen (see Murecine Archive).
  • The Banking Houses in Rome and in each Province made Loans and took Deposits.

Roman Interest Rates

  • Roman Interest Rates were capped under Roman Law at a standard interest rate of 12% per annum.

The Publicani

  • Under the Roman Republic, Tax collection was based on Property Ownership and the Tax Collectors or Publicani, often acted as Bankers, lending the amount of Tax to be paid and collecting it later with interest.
  • This ended under the Empire when Tax collection was made by a State Official called the Procurator.
  • However, the Publicani continued to exist as Bankers.

Roman Pensions

  • The Romans had two types of Pensions:
    • The Annua
      • For the civilian population.
      • The Annua was similar to the modern Annuity Pension. Roman citizens made an annual payment to the civic authority and in old age, the civic authority would provide a lifetime pension or annuity.
    • The Praemium
      • For the legionary soldiers.

The Maritime Loan: Ships and Cargoes

  • In 218 BCE a Law was passed forbidding Senators or their sons from owning ships with a capacity of over 300 Amphorae.
  • This meant ownership of vessels became dominated by the emerging Equestrian class or by foreigners.
  • They needed to raise finance to purchase their vessels and cargoes to be carried in them. This was a specialised form of lending known as the Maritime Loan, which the Romans inherited from the Greeks.
  • The Maritime Loan was called the ‘nauticum faenus’ or the ‘mutua pecunia nautica’. The Loan would be made either to one individual shipowner or to a large consortium of shipowners. The loan was to be repaid within one year and the cargo used as collateral in the event of default.
  • Maritime Loans were exempt under Roman Law from applying standard interest rate of 12% per annum. As a result, the interest rate could be double this amount or more. This reflected the greater risk of transport by sea.
  • Under the Lex Rhodia, the Captain was the ‘Possessor’ and the Shipper was the ‘Owner’. This distinction between Ownership and Possession of Goods, established the Liability for Insurance purposes, between the Shipper and the Vessel’s Captain.

Roman Corporations

  • Under the Republic there existed a need for large amounts of finance for state activities.
  • This was done by the creation of Joint Stock Companies known as Societas Publicanorum (Soc.Pub.), which had a corporate personality and organisation under Roman Law. However, it is uncertain whether shares could be traded freely in these companies.
  • Three types of joint stock companies are known, the Tax Collection Companies, the Mining Companies and the Saltworks Companies.

Roman Financial Panic of 33 CE

  • 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. This was the equivalent of modern State intervention using State Funds.

 

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