All roads lead to Rome. Or so it’s said.
And that’s certainly true of personal finance. Much of what we know about money, and much of what we believe about how it should or should not be spent, can be traced to the ancient city on the Tiber.
Before the rise of Rome, much of the world lived hand to mouth. There have always been wealthy kings and successful merchants. But the idea of a wealthy city — a place with a teeming middle class that had more money than was needed just to survive — was largely unimaginable before Rome.
And the ideas that the Romans developed about wealth and the management thereof are with us still today.
To see just how pervasive is Roman thought in modern personal finance, we’ll need to look at two Roman institutions, two distinctly Roman behaviors and two famous Romans.
Saving for the future
“All roads lead to Rome.” That expression is the modern wording of a medieval proverb that refers to the Romans’ remarkable network of paved highways and support roads. Those roads turned Rome into a global trade powerhouse and were the source of the city’s wealth.
Historians believe that the start of the road network — the place to which all roads led — was a marble pillar called Milliarium Aureum, or the Golden Milestone.
Only the base of that pillar has survived. Scholars believe it stood just outside the Temple of Saturn on the Forum, which housed two institutions that still inform the world of personal finance.
Aerarium sanctius — Translated roughly as the sacred treasury, the Aerarium sanctius was the empire’s emergency fund. It was held separate from the rest of the treasury and was to be used only in the most dire circumstances. Just like your emergency fund. At first, the sacred funds came from the spoils of war. Later the Romans created a special tax to set aside money for a rainy day.
Aerarium militare — Also housed in the Temple were separate accounts for what the Romans called a military treasury. But its purpose wasn’t martial. Rather, the aerarium militare was a retirement fund for soldiers. Augustus Caesar founded the system, and endowed it himself. It was later funded by taxes, particularly an inheritance tax.
It was Augustus’ way of ensuring that people too old to work in their chosen profession would still have an income. Just like your retirement plan.
As much as the institutions we discussed above were about public action, it would be misleading to think of the Romans as a nanny state. Many of their financial beliefs would be familiar to anyone in the modern era who sees self-sufficiency as the key to financial health. At the same time, the Romans understood that collective action -- usually done through extended families or clans -- was generally more powerful than any solo act.
To understand what we mean, let’s look at two Roman behaviors.
Peer-to-peer lending — Banks didn’t arrive in Rome until well into the Republic’s rise. (The first evidence of formal banking appears in the work of Livy in the year 310 B.C.) Prior to that, the ruling families of the city extended loans to each other to finance investments. Interestingly, these early peer-to-peer systems didn’t involve the payment of interest. Rather, lenders operated out of a sense of social obligation.
Rome’s wealthy also pooled their resources in societas, or fellowships, to bid on large-scale public contracts. In both instances, the general idea was to build wealth by extending credit and sharing resources. Just like your peer-to-peer loan.
Buying freedom — Slavery in Rome was as brutal and horrific as anywhere else in human history. But slavery in Roman lands was distinctly different from slavery elsewhere in one crucial area: Skilled slaves could earn their own money in outside employment, and use that money to buy their freedom. Remarkably, slaves who purchased their freedom were then considered citizens with the right to vote (some restrictions still applied, notably that freed slaves could not hold some prestigious positions such as state priest.)
Certainly only a small percentage of Rome’s enslaved people were able to buy their freedom. Nonetheless, it is remarkable that a highly class-conscious people like the Romans believed in the possibility of upward mobility for the skilled and ambitious, even among the most oppressed of people.
Hating both waste and luxury
To the modern mind, Rome was land of depravity. We make much of the excesses of the empire, note the orgies and vomitoriums, the bread and circus to entertain the mob, and the strange and outlandish behaviors of the rulers.
What we seem not to note, however, is that some of the great thinkers of Rome were quite concerned by what they viewed as Rome’s penchant for inappropriate behaviors.
And the steps they recommended as a counterweight to Rome’s decadence can be found in today’s beliefs about personal finance.
Let’s look at two of Rome’s brilliant minds to learn more.
Vespasian — By the time Titus Flavius Vespasianus completed his ascension through Rome’s military and became Emperor Vespasian in the year 69 A.D., the empire was in a sorry financial state, choking from debt amassed by Nero.
Vespasian made it his calling to get the Empire’s financial house in order. Imposing new taxes, reclaiming land from squatters, ending special treatment for some provinces, he greatly increased Rome’s revenue. Scholars are unsure of how much cash
Vespasian was able to raise. But this much is clear: at the end of his 10-year reign, Rome was on its fiscal feet again and Vespasian had enough money left over to build one of the city’s greatest structures: the Colosseum. Vespasian knew the way to pursue big dreams was to first cut debt.
Cicero — Much of what we know of ancient Rome is based upon the works left behind by the extraordinary number of gifted writers and orators the city produced. But even among the giants of Roman letters, one stood above all others: Marcus Tullius Cicero.
Living and writing toward the end of the Roman Republic, his influence on language, philosophy, law and politics extended through the era of the Roman Empire, into the middle ages and even to today.
He had much to say about personal finance.
With a background in stoicism, Cicero had little tolerance for the affluence-chasing behaviors he saw among his peers. Perhaps his greatest work, the three-book treatise called “On Duties,” is a guide to moral and wise behavior. Its call for frugality echoes throughout the history of money management from Rome, to the Quakers, to today’s minimalism movement. “If we will only bear in mind the superiority and dignity of our nature,” Cicero wrote, “we shall realize how wrong it is to abandon ourselves to excess and to live in luxury and voluptuousness, and how right it is to live in thrift, self-denial, simplicity and sobriety.”