This page pulls together various aspects of the Economy of ancient Rome which is a huge subject given the long period of time which the title suggests and also the enormous region which could be defined as “ancient Rome”:
Time period of ancient Rome:
The birth of Rome was around the 8th century BC and indeed the earliest settlements which Archaeologists have identified suggest huts were on the Palatine hill as far back as the 10th century BC.
The fall of ancient Rome is an equally difficult moment to define especially if we consider that the empire was eventually split into West and East. The Western half, with capital in Rome, is officially regarded to have concluded its days with the fall of Emperor Romulus Augustulus in the year 476AD whilst the Eastern Half with capital in Constantinople (Istanbul) fell as late as 1453AD!
Geographic expansion to be considered: clearly we could define the perimeter to be observed as being the 7 hills of Rome and no more, on the other hand the question would generally tend to imply “Ancient Rome” on the whole, ie including its empire and dominions – which again varied in size through the ages. A half-way house definition of what should be regarded as “Ancient Roman economy” is by considering the territories where freeborn people would call themselves Roman citizens or “Civis”: again this is a moving feast as successive bankrupt emperors extended the definition in order to increase the number of tax payers contributing into imperial coffers.
Understanding the Roman economy requires an understanding of the development of Roman history and civilisation as well as the aspects which underpinned its culture and ancient Roman society: what is economy if not an understanding of the individual in the context of his society and that society’s own ability to leverage the inventiveness and hard work of the individuals within it? And then to this we must superimpose the impact of influences external to ancient Rome:
- the desire of other populations and civilisations for growth and wealth
- the impact of new technologies and products which entered Rome as a consequence of military expansion as well as extended reach of tradesmen; for example the development of agriculture in parallel with the entry of new cultivars.
- and last but not least the impact of the climate, including climate in Rome….. there is speculation that pressure on the Roman borders towards the end of the empire of the East was linked to volcanic activity which caused famine in the East, hence pushing those populations westward, placing pressure on the Roman borders. Another example of the effect of weather is the climate change of a few degrees which occurred across the 1st century BC to 1st Century AD. This enabled a broad variety of horticultural species to be acclimatised and grown in Italy. Agricultural provinces like Campania with cities such as Pompeii greatly benefited from the combination of military expansion (access to new markets and cultivars) with slight increases in average temperature.
For a fast understanding of the mechanisms which saw the rise and fall of the roman empire (and its economy) it is worth looking at our list of reasons_collapse_fall_roman_empire.htm
Introduction to the Roman Economy
First and foremost we should bear in mind that the economy of Ancient Rome was essentially a market based competitive economy – capitalistic in nature. Many of the mechanisms at work were similar to those which we observe today although it didn’t reach the same degree of complexity and largely remained focused on the use of cheap slave labour to feed the masses.
Rich people and corporations (like workers guilds) clubbed cash to make investments of various nature such as infrastructure construction, trade, farming, financing the state’s military campaigns (in return for profit in case of success) and so on. Much as we see today, the “state” which at the time of the Emperors was increasingly focused around the Emperor himself had to devise stratagems to finance military campaigns, state aid of disaster areas (for example emperor Titus’ aid to Pompeii), social aid to the poor by way of rations of food and wine, the public games, public infrastructure and so on. This financing was achieved by way of taxes, military campaigns or other investments.
An extremely popular anecdote is of Emperor Vespasian who, according to the Roman historians Suetonius and Cassius Dione, placed a small tax on the use of public lavatories; his son Titus challenged him about it by throwing some coins on the ground of a public toilet which the Emperor duly picked up, held to his nose and responded with “pecunia non olet” – money doesn’t smell. Emperor Vespasian can be said to have embodied the best of Roman qualities: absolutely pragmatic.
I take the opportunity to look at the word “Pecunia” – money. The word itself is derived from “Pecus” – Sheep. We can therefore see how at the very root of the roman economy we had a very basic farming economy, indeed the earliest forum for the exchange of goods was the Forum Boarium, dedicated to cattle and meat (a little like “boars”!) together with banking and money lending. Yep, money and meat trade went hand in hand. It was, not surprisingly situated on the banks of the river Tiber, hence facilitating the transport of the goods – the mainstay of Ancient Roman trade.
As may be seen in the pages about ancient Rome’s trade the fortunes of ancient Roman economy were made up of a number of factors: access to cheap labour by way of slavery, access to relatively peaceful traderoutes, a relatively liquid supply-demand mechanism, a single currency and a sharply increasing population which acted as a good sink of growing demand. Observation of a single product such as ancient roman wine is sufficient to give us a pretty good feel of the mechanisms at work which in many ways were international mechanisms. Events such as the invasion of Sicily (essentially a granary) or the elimination of Pompeii had economic effects which extended far and wide across the growing empire.
The decline and fall of the Roman empire also tells us much about the mechanisms at work within the ancient Roman economy:
there was relative political instability although this was also true during the 1st century BC when the economy and geographical expansion was at its greatest rate
the size of the empire was huge, it had reached its peak around the 2nd century AD and managing it had become both expensive and complex. Successive ancient roman leaders beginning with Julius Caesar had given consideration to the idea of moving the capital eastwards so that it could be closer to the military front and the major trade routes. This eventually came about with the establishment of Constantinople underEmperor Constantine but nevertheless it was clear that the western part of the empire was spending too much in oriental goods whilst producing little of added value worth exporting.
The amazing network of ancient roman roads and ancient roman transport was extensive and generally highly efficient but still unsuited to managing an empire of such a huge extension, particularly when the population began to decrease in size and increasing numbers of “foreigners” were having to fill the rank and file of the Roman army. The borders were under increasing pressure and citizens at the fringes of the empire would rather abandon their land in favour of a peaceful life in the city.
Most significantly the supply of slaves had begun to dwindle which in turn meant a lack of cheap labour. There were in fact many cases of free plebeans selling themselves into slavery as a means of abating their own personal poverty. Literacy was also decreasing.
Many of the above aspects can also be observed in later civilisations and empires, what is perhaps lacking is the spark of an industrial revolution to enable value added high quality differentiated goods to be produced in spite of the lack of cheap labour. Again, it is interesting to observe the mechanics of the roman trade of wine because whilst the production of mass market wine was taken over by cheaper production locations such as Spain (aided by the relatively cheaper transport by sea rather than land) Italy managed to retain production of the high quality gourmet wines which others found difficult to imitate.
Technological innovation and ancient Roman inventions: It is interesting to note that virtually all the elements of a steam engine had been invented and were already available in various forms but the essential step of intensive mechanisation for the scope of producing exportable goods failed to come about. I personally feel that this was the missing link which might have “saved” the western empire and allowed further progress, including a growing appreciation for the value of human life (slaves were becoming increasingly valuable due to their scarcity and laws were protecting them increasingly).
A further interesting observation might be had from the extra longevity of the Eastern half of the empire which lasted a further 1000 years! Clearly greater proximity to the eastern trade routes had a major part to play.
Some examples of factors affecting the Roman economy
Influence from conquests, particularly to the East:
Particularly significant on the Roman economy was the entry of new technologies and new cultivars (types of plant for agriculture). For example soft wheats (Triticum Aestivum) entered Roman farming practice as Roman dominions spread Eastwards around the time of Julius Caesar and Pompey the Great. The new type of wheat greatly reduced the work required to produce flour as well as enabling a broader variety of breads and cakes to be produced than the traditional “farr” or Spelt (Triticum Spelta – rugged wheat). The greater ease of working implied greater ease of production and hence ability to mass produce flour, thus enabling bread commerce to diversify and grow and consequently trading, not only in breads and cakes but also in drinks to quench the thirst produced! Pliny tells us (and Pompeii demonstrates) that other agricultural products also entered Roman consumption around this time, such as Peaches and Lemons for example.
We can gain some direct insight of the interplay of the above factors by looking at cities such as ancient Pompeii: small yet developed enough, and most importantly full of the details which allow for an understanding of the conditions of the city as a whole as well as the individuals which made up Pompeian society through the history of pompeii. A look at the wine trade of Pompeii gives a useful indication of how such a (provincial) economy might grow and how it could be subject to alternating fortunes: by the time of the volcanic eruption Pompeii was already seeing the beginnings of a period of decline through foreign competition.
Large scale events and natural disasters:
Even the volcanic eruption of Pompeii had a huge impact on the Roman economy for some years to come, affecting the supply of certain goods such as wine, pushing prices up through an imbalance of supply and demand and causing farmers to convert land from grain to wine, which in itself caused imbalances in the supply of food for Rome’s population….
Other examples of disasters which affected the Roman economy include the burning of Rome (during Emperor Nero’s reign) and the plague (during the reign of Emperor Titus’). It is interesting to note how these three disasters were relatively close to one another. Rome’s burning, Vesuvius’ eruption and the further fire in Rome accompanied by plague which occurred in relative succession: 64 AD, 79 AD in 80AD.
Tacitus Annals [15.45] describes the aftermath of Nero’s burning of Rome>
” Meanwhile Italy was thoroughly exhausted by contributions of money, the provinces were ruined, as also the allied nations and the free states, as they were called. Even the gods fell victims to the plunder; for the temples in Rome were despoiled and the gold carried off, which, for a triumph or a vow, the Roman people in every age had consecrated in their prosperity or their alarm. Throughout Asia and Achaia not only votive gifts, but the images of deities were seized, Acratus and Secundus Carinas having been sent into those provinces.”
Ancient Roman market economy
“Ancient Rome” intended in the wider sense to include its dominions, was a market economy open to free trade: Military conquest often came across Roman merchants who had already opened and established trade routes into the same region. Taking a more reductive approach we might also say that it was a simple economy driven by the need to feed its ever growing population, employing military conquest and slave labour to do so. However, that would be reductive: many if not all other economies of the time, and the succeeding ages were driven by similar motives. In fact it can be added that at the height of the empire, the growing middle classes had created a vast demand for literature and luxury goods which could be sourced from all parts of the world.
It is interesting to note that the Roman economy started as an agricultural economy and gradually moved towards industry and services: Some areas of industry actually managed to reach significant productivity levels which were to be unseen until the Victorian age and the British empire. However the Roman economy never quite saw its “industrial revolution”. Areas such as Rome itself essentially shifted towards services and trading – a sort of mercantile economy.
At its extreme we might say that the trade imbalance and continuous outflow of wealth towards the east that greatly contributed to the impoverishment and final collapse of Rome as well as the development of “New Rome” at Constantinople. A more extensive collection of motives for the fall of the Roman empire has been assembled on a separate article.
Given the scarcity of data, it is difficult to have a macroeconomic picture of the ancient Roman economy, however, to gain a step closer in our understanding as to how the economy might have progressed we have made a guess at a number of variables so as to invent an estimated index of the Roman economy’s ability to generate wealth might have evolved through time.
Technological innovation in ancient Roman economy
It is interesting to ponder whether such an imbalance might have been corrected technological innovation gone a step further, not that ancient Rome was adverse or unable to make use of innovation. It is a “shame” that whilst all the components of the mechanisation which drove the industrial revolution in Victorian Britain were well known in Ancient Rome and indeed used in different applications, they didn’t spark into a means of filling the labour gap caused by the decline in slave supply, increasing productivity not to mention enhancing infrastructure, improving weapon manufacture etc.
Examples in Agriculture:
The harvester (technology) has already been mentioned, which together with the employment of soft grains (imported development) and the extensive development of Roman aqueducts (infrastructure) allowed individuals to mass produce of flour to feed the masses with a broad variety of breads and cakes.
Examples in industry:
The bilge pump was brought to great levels of perfection both on ships (transport and trade) and in mines. Indeed the examples found in some Spanish mines, complete with valve and piston mechanisms are not dissimilar to modern mechanisms. Such advancements coupled with Roman hydraulic expertise enabled intensive mining operations such as those alluded to by Pliny above.
Free trade and competition from cheap production centres
Various items of trade, at various time through ancient Roman history were subjected to controls or duty taxes (for example the production of purple dyes), but by and large it can be said that the ancient Romans enjoyed free trade.
This openness to trade clearly shaped the economy of the empire and the fortunes of the individuals from all extractions within it. An example being competition from imported goods, some of which produced by industrious merchants who had themselves moved “off shore”. An example of this was the production of “Aretine” earthenware. Called Aretine because it was initially from the region of Arezzo in Tuscany but soon learned and exported to other manufacturing centres such as Gaul and northern Africa where it was made more cheaply.
An example of the influence which foreign competition could imply to the fortunes of local Italic economies is to be had from Pompeii which at the time of the eruption was feeling the impact of foreign competition.
Roman economy and the individuals within Roman society
But economy and ancient Roman trade can also be said to be an expression of the people who make up society and of the relationship between these people. At the end of the day, a market economy is founded on entrepreneurs: individuals who have a particular drive to make something out of nothing coming from a variety of cultural backgrounds (Rome was full of such examples, from both ends of the social pyramid). People who are able to quantify risks, are operating in an environment of relative political stability (aka the “pax romana“) with suitable infrastructure and of course have access to finance.
And to the above we have to overlay the changing effects of history and time:
- The huge variety of different conditions Rome went through during it’s rise and fall. It started as a small community and ended its days as a number of separate states a thousand years later (two thousand years if you consider the Roman empire of the east at Constantinople)
- They went through a variety of forms of rule and the shape of society also changed as they increasingly opened/took and governed the world about them.
- Growing familiarity with foreign lands and cultures, as well as familiarity with “risk management”. For example trade by ship was initially considered highly risky (which it was) but it was soon realised that the benefits could far outreach the risks of a sinking ship.
We can perceive something of the above from a good number of funeral engravings, memorials and tomb stones, but also by looking at other aspects of Roman civilisation, such as art and more specifically, portraiture. If anything can be said by looking at Roman portraits it’s that they were, at least in the image they wished to leave behind, devoted to austere pragmatic realism. Writers leave behind a different image, perhaps of the latter years when the austerity had all but vanished, but nevertheless the pragmatic realism remained hard and fast.
The motto “primum vivere deinde philosophari” is a perfect example of the Roman character: absorbing and making their own the best of other nations (the citation actually belongs to Aristotle).
Money Supply and Banking in Ancient Rome
A quick introduction to Rome’s coins is useful to understanding money supply in ancient Rome. Money changers, bankers, were known as the “argentarius”. Since the 4th Century BC and perhaps sooner, their stalls were to be found near markets and places where commerce was active, such as the Roman Forum, theatres or harbours and ports where merchandise was traded. This coincided with the period in which the Aes Rude (a shapeless ingot of bronze used for bartering across central Italy) transformed into a “proper” coin.
The earliest service provided involved simply looking after money, with no interest payments or such like. Later the money held on deposit began to be used to make loans with interest payments, often at high rates, for example to exchange currencies or provide liquidity at the trading market or slave auctions. Usury was also an issue within Roman society and excessively high rates were not permitted by law and attracted a fine to be inflicted on the argentarius. Nevertheless the argentarius also needed persons to help ensure any loans made be repaid, for which job he would employ a “cofactor” who was paid a % of the money recovered.
The argentarius was also required to keep a ledger in a book (actually a scroll or wooden tablets) known as the “codex rationum” as well as a “codex accepti et expensi” which subdivided receipts and loans by individual client. These records could be used as evidence in Roman law courts.
Accounting within the banking business was generally held by a person working for the argentarius: the nummularius (the money counter) who was specialised in checking the value and if the money was good or false, for example by throwing it on the ground to check its sound and weighing them carefully before then putting them away in a carefully sealed and tagged bag.
Measuring the Economy of Ancient Rome
Measuring the economy of ancient Rome, like that of many other ancient civilisations is no easy matter, principally because there is little in the way of accurate records regarding personal wealth and population sizes to enable any accurate calculation of GDP (Gross Domestic Product).
Equally difficult is gaining an understanding of inflationary tendencies during the various periods of ancient Rome, certainly there were many, as there must have also been periods of boom and bust, and heavy hits on the economy during times of war or interruptions in the supply of various products which Rome so depended on. A sense of this can be had from the way the weight of Roman coinage varied through time, for example the early Aes weighed a full 330grams and reduced to something more than 10% of this (40grams) at the height of the second Punic war in less than a hundred years.
On the positive side, we do have numerous records regarding the cost of various basic goods at various times, as well as estimates of the population in Rome and the empire. These have enabled a number of rough estimates to be calculated regarding the economy of ancient Rome.
A number of GDP calculations may be found published even on the internet. It is apparent that there is great uncertainty around the results, particularly driven by unclear estimates of population sizes. For this reason we have made a first attempt at guessing an index of the ability to generate wealth/economy in ancient Rome.