Saturday, March 2, 2013

When in Rome...

From Historical Echoes at Liberty Street Economics, Historical Echoes: Cash or Credit? Payments and Finance in Ancient Rome by Marco Del Negro and Mary Tao:

Imagine yourself a Roman citizen in the 1st Century B.C. You’ve gone shopping with your partner, who’s trying to convince you to buy a particular item. The thing’s pretty expensive, and you demur because you’re short of cash. You may think that back then such an excuse would get you off scot-free. What else can you possibly do: Write a check? Well, yes, writes the poet Ovid...

In ancient Rome, they had something comparable to our checking accounts.

But was there a market for nomina, just like there’s one today in, say, mortgage-backed securities? According to both Barlow and Harris, the answer is yes.

In ancient Rome, there were advanced financial markets.

What if you had to transfer money to somebody in a different part of the globe? As the Roman dominions expanded into Greece, Spain, North Africa, and Asia, Roman finance actually faced this logistical problem....

This is intense. Remember, we're talking ancient Rome here:

It worked as follows: The publicani were private companies in charge of tax collection in the provinces (as well as many other tasks; see “Publicani,” by U. Malmendier). They had a branch in Rome and one in Thapsus. So, you’d give them the silver in Rome (or transfer them some nomina) and they’d divert some of their tax collection in North Africa to Caius. This is also how the Republic would finance its public spending overseas. Since taxes were collected throughout the provinces, by trading claims on taxes Romans could transfer funds across the globe–or at least to the part of the globe they had conquered.

Sort of like Western Union and the IRS rolled up in one. A thousand years (and one dark age) later, the nearest Europe could come to what Rome had was embodied in the Knights Templar.

So if anyone asks whether ancient Rome had an economy that could have been subject to financial strains comparable to those in the world today, the answer is yes.

If anyone wants to know if I think it was finance that toppled Rome, the answer is yes.

1 comment:

Luke Smith said...

It is possible that the Romans had real estate bubbles.