Ancient Rome commanded a vast area of land, with tremendous natural and human resources. As such, Rome's economy remained focused on farming and trade. Agricultural free trade changed the Italian landscape, and by the 1st century BC, vast grape and olive estates had supplanted the yeoman farmers, who were unable to match the imported grain price. The annexation of Egypt, Sicily and Tunisia in North Africa provided a continuous supply of grains. In turn, olive oil and wine were Italy's main exports. Two-tier crop rotation was practiced, but farm productivity was low, around 1 ton per hectare.
Industrial and manufacturing activities were smaller. The largest such activities were the mining and quarrying of stones, which provided basic construction materials for the buildings of that period. In manufacturing, production was on a relatively small scale, and generally consisted of workshops and small factories that employed at most dozens of workers. However, some brick factories employed hundreds of workers.
The economy of the early Republic was largely based on smallholding and paid labor. However, foreign wars and conquests made slaves increasingly cheap and plentiful, and by the late Republic, the economy was largely dependent on slave labor for both skilled and unskilled work. Slaves are estimated to have constituted around 20% of the Roman Empire's population at this time and 40% in the city of Rome. Only in the Roman Empire, when the conquests stopped and the prices of slaves increased, did hired labor become more economical than slave ownership.
Although barter was used in ancient Rome, and often used in tax collection, Rome had a very developed coinage system, with brass, bronze, and precious metal coins in circulation throughout the Empire and beyond—some have even been discovered in India. Before the 3rd century BC, copper was traded by weight, measured in unmarked lumps, across central Italy. The original copper coins (as) had a face value of one Roman pound of copper, but weighed less. Thus, Roman money's utility as a unit of exchange consistently exceeded its intrinsic value as metal. After Nero began debasing the silver denarius, its legal value was an estimated one-third greater than its intrinsic value.
Horses were too expensive and other pack animals too slow. Mass trade on the Roman roads connected military posts, not markets, and were rarely designed for wheels. As a result, there was little transport of commodities between Roman regions until the rise of Roman maritime trade in the 2nd century BC. During that period, a trading vessel took less than a month to complete a trip from Gades to Alexandria via Ostia, spanning the entire length of the Mediterranean. Transport by sea was around 60 times cheaper than by land, so the volume for such trips was much larger.
Some economists like Peter Temin consider the Roman Empire a market economy, similar in its degree of capitalistic practices to 17th century Netherlands and 18th century England.
Roman trade was the engine that drove the Roman economy of the late Republic and the early Empire. Fashions and trends in historiography and in popular culture have tended to neglect the economic basis of the empire in favor of the lingua franca of Latin and the exploits of the Roman legions. The language and the legions were supported by trade while being at the same time part of its backbone. Romans were businessmen and the longevity of their empire was due to their commercial trade.
Whereas in theory members of the Roman Senate and their families were prohibited from engaging in trade, the members of the Equestrian order were involved in businesses, despite their upper class values that laid the emphasis on military pursuits and leisure activities. Plebeians and freedmen held shop or manned stalls at markets while vast quantities of slaves did most of the hard work. The slaves were themselves also the subject of commercial transactions. Their high proportion in society (compared to that in Classical Greece), and the reality of runaways, the Roman Servile Wars and minor uprisings, they gave a distinct flavor to Roman commerce.
The intricate, complex, and extensive accounting of Roman trade was conducted with counting boards and the Roman abacus. The abacus, using Roman numerals, was ideally suited to the counting of Roman currency and tallying of Roman measures.
The Romans knew two types of businessmen, the negotiatores and the mercatores. The negotiatores were in part bankers because they lent money on interest. They also bought and sold staples in bulk or did commerce in wholesale quantities of goods. In some instances the argentarii are considered as a subset of the negotiatores and in others as a group apart.
The argentarii acted as agents in public or private auctions, kept deposits of money for individuals, cashed cheques (prescriptio) and served as moneychangers. They kept strict books, or tabulae, which were considered as legal proof by the courts. The argentarii sometimes did the same kind of work as the mensarii, who were public bankers appointed by the state. The mercatores were usually plebeians or freedmen. They were present in all the open-air markets or covered shops, manning stalls or hawking goods by the side of the road. They were also present near Roman military camps during campaigns, where they sold food and clothing to the soldiers and paid cash for any booty coming from military activities.
There is some information on the economy of Roman Palestine from Jewish sources of around the 3rd century AD. Itinerant pedlars (rochel) took spices and perfumes to the rural population. This suggests that the economic benefits of the Empire did reach, at least, the upper levels of the peasantry.
The Forum Cuppedinis in ancient Rome was a market which offered general goods. At least four other large markets specialized in specific goods such as cattle, wine, fish and herbs and vegetables, but the Roman forum drew the bulk of the traffic.
All new cities, like Timgad, were laid out according to an orthogonal grid plan which facilitated transportation and commerce. The cities were connected by good roads. Navigable rivers were extensively used and some canals were dug but neither leave such clear archaeology as roads and consequently they tend to be underestimated. A major mechanism for the expansion of trade was peace. All settlements, especially the smaller ones, could be located in economically rational positions. Before and after the Roman Empire, hilltop defensive positions were preferred for small settlements and piracy made coastal settlement particularly hazardous for all but the largest cities.
Even before the republic, the Roman Kingdom was engaged in regular commerce using the river Tiber. Before the Punic Wars completely changed the nature of commerce in the Mediterranean, the Roman republic had important commercial exchanges with Carthage. It entered into several commercial and political agreements with its rival city in addition to engaging in simple retail trading. The Roman Empire traded with the Chinese over the Silk Road.
Maritime archeology and ancient manuscripts from classical antiquity show evidence of vast Roman commercial fleets. The most substantial remains from this commerce are the infrastructure remains of harbors, moles, warehouses and lighthouses at ports such as Civitavecchia, Ostia, Portus, Leptis Magna and Caesarea Maritima. At Rome itself, Monte Testaccio is a tribute to the scale of this commerce. As with most Roman technology, the Roman sea going commercial ships had no significant advances over Greek ships of the previous centuries, though the lead sheeting of hulls for protection seems to have been more common.
The Romans used round hulled sailing ships. Continuous Mediterranean "police" protection over several centuries was one of the main factors of success of Roman commerce, given that Roman roads were designed more for feet or hooves than for wheels, and could not support the economical transport of goods over long distances. The Roman ships used would have been easy prey for pirates had it not been for the fleets of Liburnian galleys and triremes of the Roman navy.
Bulky low-valued commodities, like grain and construction materials were traded only by sea routes, since the cost of sea transportation was 60 times lower than land. Staple goods and commodities like cereals for making bread and papyrus scrolls for book production were imported from Ptolemaic Egypt to Italy in a continuous fashion.
The trade over the Indian Ocean blossomed in the 1st and 2nd century CE. The sailors made use of the monsoon to cross the ocean from the ports of Berenice, Leulos Limen and Myos Hormos on the Red Sea coast of Roman Egypt to the ports of Muziris and Nelkynda in Malabar coast. The main trading partners in southern India were the Tamil dynasties of the Pandyas, Cholas and Cheras. Many Roman artifacts have been found in India; for example, at the archaeological site of Arikamedu near present day Pondicherry. Meticulous descriptions of the ports and items of trade around the Indian Ocean can be found in the Greek work Periplus of the Erythraean Sea.
Trade contacts were made with India. Hoards of Roman coins have been found in southern India during the history of Roman-India trade. Roman objects have been found in India in the seaside port city of Arikamedu, which was a center of trade during this era.
The Hou Hanshu (History of the Later Han Chinese dynasty) recounted the first of several Roman embassies to China sent out by a Roman Emperor, probably Marcus Aurelius judging by the arrival date of 166 (Antoninus Pius is another possibility, but he died in 161. The confusion arises because Marcus Aurelius took the names of his predecessor as additional names, as a mark of respect and so is referred to in Chinese history as "An Tun", i.e. "Antoninus"). The mission came from the South, and therefore probably by sea, entering China by the frontier of Jinan or Tonkin. It brought presents of rhinoceros horns, ivory, and tortoise shell which had probably been acquired in Southern Asia.
The mission reached the Chinese capital of Luoyang in 166 and was met by Emperor Huan of the Han Dynasty. About the same time, and possibly through this embassy, the Chinese acquired a treatise of astronomy from Daqin (Rome).
However, in the absence of any record of this on the Roman side of the silk road, it may be that the "ambassadors" were in reality free traders acting independently of Aurelius.
From the 3rd century a Chinese text, the Weilue, describes the products of the Roman Empire and the routes to it.
Commerce and Religion
Mercury, who was originally only the god of the mercatores and the grain trade eventually became the god of all who were involved in commercial activities. On the Mercuralia on May 14, a Roman merchant would do the proper rituals of devotion to Mercury and beseech the god to remove from him and from his belongings the guilt coming from all the cheating he had done to his customers and suppliers.
The majority of the people of the Roman Empire were living in destitution, with an insignificant part of the population engaged in commerce, being much poorer than the elite. The industrial output was minimal, due to the fact that the majority poor could not pay for the markets for products. Technological advance was severely hampered by this fact. Urbanization in the western part of the empire was also minimal due to the poverty of the region. Slaves accounting for most of the means of industrial output, rather than technology.
For centuries the monetary affairs of the Roman Republic had rested in the hands of the Senate. These elite liked to present themselves as steady and fiscally conservative.
The aerarium (state treasury) was supervised by members of the government rising in power and prestige, the Quaestors, Praetors, and eventually the Prefects. With the dawn of the Roman Empire, a major change took place, as the emperors assumed the reins of financial control. Augustus adopted a system that was, on the surface, fair to the senate. Just as the world was divided in provinces designated as imperial or senatorial, so was the treasury. All tribute brought in from senatorially controlled provinces was given to the aerarium, while that of the imperial territories went to the treasury of the emperor, the fiscus.
Initially, this process of distribution seemed to work, although the legal technicality did not disguise the supremacy of the emperor or his often used right to transfer funds back and forth regularly from the aerarium to the fiscus. The fiscus actually took shape after the reign of Augustus and Tiberius. It began as a private fund (fiscus meaning purse or basket) but grew to include all imperial monies, not only the private estates but also all public lands and finances under the imperial eye.
The property of the rulers grew to such an extent that changes had to be made starting sometime in the 3rd century, most certainly under Septimius Severus. Henceforth the imperial treasury was divided. The fiscus was retained to handle actual government revenue, while a patrimonium was created to hold the private fortune, the inheritance of the royal house. There is a considerable question as to the exact nature of this evaluation, involving possibly a res privata so common in the Late Empire.
Just as the senate had its own finance officers, so did the emperors. The head of the fiscus in the first years was the rationalis, originally a freedman due to Augustus' desire to place the office in the hands of a servant free of the class demands of the traditional society. In succeeding years the corruption and reputation of the freedman forced new and more reliable administrators. From the time of Hadrian (117-138), any rationalis hailed from the Equestrian Order (equites) and remained so through the chaos of the 3rd century and into the age of Diocletian.
With Diocletian came a series of massive reforms, and total control over the finances of the Empire fell to the now stronger central government. Under Constantine this aggrandizement continued with the emergence of an appointed minister of finance, the comes sacrarum largitionum (count of the sacred largesses). He maintained the general treasury and the intake of all revenue. His powers were directed toward control of the new sacrum aerarium, the result of the combination of the aerarium and the fiscus.
The comes sacrarum largitionum was a figure of tremendous influence. He was responsible for all taxes, examined banks, mints and mines everywhere, watched over all forms of industry, and paid out the budgets of the many departments of the state. To accomplish these many tasks, he was aided by a vast bureaucracy. Just below the comes sacrarum were the rationales positioned in each diocese. They acted as territorial chiefs, sending out agents, the rationales summarum, to collect all money in tribute, taxes, or fees. They could go virtually anywhere and were the most visible extension of the government in the 4th and 5th centuries.
Only the praetorian prefects who were responsible for the supply of the army, the imperial armament factories, weaving mills, the maintenance of the state post and the magister officiorum and the comes rerum privatarum could counter the political and financial weight of the comes sacrarum largitionum. The magister officiorum (master of offices) made all the major decisions concerning intelligence matters, receiving a large budget, over which the comes sacrarum largitionum probably only had partial authority. After the end of Constantine's reign the comes sacrarum largitionum gradually lost power to the prefects as the taxes of his department came to be collected more and more in gold rather than in kin. By the 5th century their diocesan level staff were no longer of much importance, although they continued in their duties.
Given the increased size of the imperial estates and holdings, the res privata not only survived but was also officially divided into two different treasuries, the res privatae of actual lands and the patromonium sacrae, or imperial inheritance. Both were under the jurisdiction of the comes rerum privatarum. He also took in any rents or dues from imperial lands and territories.
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