How loans worked in ancient Rome

5 min

Imagine that you are a resident of Ancient Rome in the first century BC. Your wife convinces you to buy a certain item. It is quite expensive, so you hesitate, because you have little cash. One would imagine that such an excuse in those days would have allowed you to go unpunished. After all, what choice do you have: you can’t write a check? Actually, you can, as the poet writes Ovid in the first book “Science of love“. And since your wife knows about it, you have no other choice:

“A woman will find a remedy for passionate men to rob.
Here the peddler came, laid out the goods in front of her,
She will review them and turn to you
“Choose, – he will say, – the taste, I’ll see how picky you are”,
And then he kisses, and cooes: “Buy!”
She will say that this is enough for her for many years, – They sell the necessary thing, how can you not buy it?
If the money, they say, is not with you, he will ask for a receipt,
And you will envy those who are not learned to write. “

(Translated by M.L. Gasparov.)

In Roman times, large sums of money changed owners. People bought real estate, traded and invested in the provinces captured by the Roman legions. How did this happen? In their “Letters Fam., V, 6” and “Letters Att., XIII, 31” Cicero writes: “I bought the same house for 3,500,000 sesterces some time after your congratulations” and “the closest neighbor is Gaius Albanius; he bought a thousand yugers [625 акров] Mark Pilius, as far as I remember, for 11,500,000 sesterces. ” “How?” – asks the historian Harris (in his book “The Nature of Roman Money“), -” How Cicero paid three and a half million sesterces, which he paid for his famous house on Palatine… This would require loading and moving three and a half tons of coins through the streets of Rome. When Guy Albanius bought the estate from Mark Pilius for eleven and a half million sesterces, did he physically send him this amount in silver coins? “ Harris responds this way: “Almost without the slightest doubt, at least most of the amount was transferred through documentary [т.е. бумажные] transactions. The most popular procedure for buying large property during this period is mentioned by Cicero[[About responsibilities. Book II, 3.59]… „nomina facit, negotium conficit“- granting a loan[or”commitments”-[или„обязательства“—nomina]completes the purchase. “

Mark Tullius Cicero

What are these nomina, from which, by the way, did the concept “nominal”, commonly used in economics, originate? In his Ph.D. thesis “Bankers, Moneylenders, and Interest Rates in the Roman Republic“Charles Barlow writes (pp. 156-156):” An entry in the account book was called nomen… Initially, the word meant just that – a name with some numbers. By the time of Cicero …[[n]omen could also mean “debt” relating to the entries in the accounts of the creditor and the debtor. ” And this “debt was actually the blood of the Roman economy at all levels … nomina were a perfectly standard part of the lives of property owners, as well as an everyday fact for a large number of other people ”(Harris, p. 184). Pliny the Younger, for example, he wrote (in Letters): “Perhaps you will ask if I can get these three million without difficulty. Almost all my capital is invested in land, but I have money invested at interest, and I can borrow it to you without difficulty. “

Reconstruction of buildings on Palatine Hill

For the sake of concreteness, imagine that a friend Sempronius owes you one million sesterces. Yourself, or in case you are rich senator or equit, then your financial advisor (procurator – for Cicero it was Titus Pomponius Atticus) will write down the debt in the ledger. What if you need money to buy some property? Will you have to wait for Sempronius to bring you a bag of a million sesterces? Not! Since Sempronius is a reliable creditor (bonum nomen [см. Барлоу, стр. 156]; in the modern terminology of credit classification agencies – AAA-lender), you will do as Cicero described: pass nomina and close the deal. For example, Cicero writes to his financial advisor Atticus (“Letters Att., XII, 31”): “If I had sold Faberius’s bond, I would not have hesitated to prepare even cash for the Silievs, if only I could persuade him to sell.” Harris (p. 192) remarks: “Nomina were circulating and by the second century BC, if not earlier, they were habitually used as a means of payment for other assets … In Latin, the procedure by which the payer transfers nomen what they owe him, the seller, is called delegatio“.

So, we realized that the Romans could make calculations by transferring nomina… But was there a market for nominaHow do mortgage-backed securities exist in the modern world? According to both Barlow and Harris, the answer is yes. They argue that the Romans took one step further towards convertibility and, in effect, transformed “plain ledger entries” into “negotiable bills” (see Barlow, p. 159, and Harris, p. 192). Not everyone agrees with this. Economic historian P. Temin (“Financial Intermediation in the Early Roman Empire“) also reports that there is evidence of the possibility of assignments, opening up opportunities for“ wider negotiability. ”“ But, ”he adds,“ we have no evidence that this has happened ”(p. 721). there is circumstantial evidence.For example, the meaning of negotiable bills seems to have been well understood by Roman lawyers, in particular, Ulpianu (Digest Justinian XXX.I.44): “The party transferring the bill is transferring the debt claim, not just the material on which it is written. The fact of the sale confirms that when the bill is sold, the debt is also sold, by which it is confirmed. “

What if we need to transfer money to someone else in the world? When dominions
As Rome expanded to Greece, Spain, North Africa and Asia, Rome’s finances faced this logistical challenge. If you are in Rome and, for example, want to finance the Guy mines in North African Tapse, how do you transfer the money to him? He needs silver to buy materials, slaves and other goods, but you naturally really don’t want to send money to Africa by sea – their chances of getting there are low (they are threatened pirates, shipwreck, etc.). “Rome’s remarkable contribution to the banking industry of antiquity was permutatio – transfer of funds using paper transactions ”(Barlow, p. 168). It worked like this: published were private companies collecting taxes in the provinces (as well as in many other cases; see article “Publicani“Ulrica Malmendiera). They had a branch in Rome and another in Tapse. So if you gave them silver in Rome (or gave them nomina), then they sent part of the taxes collected in North Africa to Guy. In exactly the same way, the Republic financed its public expenditures in the external territories. Since taxes were collected in all provinces, exchanging promissory notes for taxes, the Romans could transfer funds around the world – or, at least, over the part of it that ancient Rome captured.

Rome in 40 BC

Interestingly, some historians measure the development of the Roman financial system “by the degree of presence of banks” (Temin, p. 719). Of course, if we do not find evidence of the existence of our bank in the first century BC, this does not necessarily imply a lack of development. Before the Great US Recession [финансового спада 2007-2009 годов] most of the financial intermediation did not involve banks – it took place through “shadow banking system“. The financial aristocracy of Rome” acted mainly with the help of brokerage “(K. Verboven”Faeneratores, Negotiatores and Financial Intermediation in the Roman World“, p. 12), and therefore resembled a little the predecessor of the shadow banking system. Like the shadow banking system in the United States, it was fragile… Let’s go back to our first example: it is worth noting that if someone who wants to buy a property begins to doubt the creditworthiness of Sempronius, he will not accept his payment in nomina and will require cash. This will force you to demand the repayment of the debt from Sempronius, who in turn will have to demand the repayment of the debt from Titus, and so on. However, the financial crises of Ancient Rome are a topic for a separate article.

We express our gratitude Cameron Hawkins from the University of Chicago for help in finding literature.


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