History repeats itself: the financial crisis of Rome

From pp. 331-332 in Caesar and Christ:

The famous “panic” of A.D. 33 illustrates the development and complex interdependency of banks and commerce in the Empire.  Augustus had coined and spent money lavishly, on the theory that its increased circulation, low interest rates, and rising prices would stimulate business.  They did; but as the process could not go on forever, a reaction set in as early as 10 B.C., when this flush minting ceased.  Tiberius rebounded to the opposite theory–that the most economical economy is the best.  He severely limited the governmental expenditures, sharply restricted new issues of currency, and hoarded 2,700,000,000 sesterces in the Treasury.  The resulting dearth of circulating medium was made worse by the train of money eastward in exchange for luxuries.  Prices fell, interest rates rose, creditors foreclosed on debtors, debtors sued usurers, and moneylending almost ceased. The Senate tried to check the export of capital by requiring a high percentage of every senator’s fortune to be invested in Italian land; senators thereupon called in loans and foreclosed mortgages to raise cash and the crisis rose.  When the senator Publius Spinther notified the bank of Balbus and Ollius that he must withdraw 30,000,000 sesterces to comply… the firm announced its bankruptcy.  At the same time the failure of an Alexandrian firm… and the collapse of the great dyeing concern of Malchus at Tyre, led to rumors that the Roman banking house of Maximus and Vibo would be broken by their extensive loans to these firms.  When its depositors began a “run” on this bank it shut its doors, and later on that day, a larger bank… also suspended payment…. One after another the banks of Rome closed.  Money could be borrowed only at rates far above the legal limit.

Sound familiar?


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