Ancient & Modern | 18 October 2008

In the banking chaos, we should recall the words of the American president Thomas Jefferson: ‘The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a grand scale.’

There was no such swindling in the ancient world because minted coin was the sole monetary instrument, and there was no machinery for creating credit. So there were no banks in our sense, and only two sources of wealth: agricultural and mineral, the former far more important, but the latter having more dramatic instant consequences. For example, in 483 bc, it would never have occurred to the Athenians to borrow the money from somewhere to build a Persian-defeating fleet. But the lead mines at Sounion suddenly revealed a fabulous seam of silver, and bingo! There was the money. The fleet was built, and the Persians defeated at Salamis.

As a result of hard cash from its expanding empire, Roman revenues quadrupled between 200 bc and 70 bc. Pompey’s campaigns in the East in the 60s bc immediately doubled or even trebled that amount. In the course of his sensational triumph in 61 bc, Pompey’s men dragged through the streets coins to the value of over 70 million denariae (280 million sestertiae), far more than Rome’s annual revenues and enough to feed the whole of Rome for two years. There it was, passing before their very eyes. That was power.

At a personal level, credit was provided in the form of transactions between friends, neighbours and relations, marked by the absence of securities, interest or even written agreements (that implied distrust). Aristocrats, for example, felt an obligation to take on the debts of friends. In his On Duties, Cicero distinguishes two categories of givers: those who squander their money on public banquets, food doles, gladiatorial shows and wild beast fights (to gain political credit), and those who take over friends’ debts, help in providing dowries for their daughters or assist them in acquiring property.