Funny, I just was discussing this last month at a luncheon:

Politicians searching for historical precedents for the current financial turmoil should start looking a bit further back after an Oxford University historian discovered what he believes is the world’s first credit crunch in 88BC.

The good news is that Philip Kay knows how the Romans got themselves into financial bother. The bad news is no one knows how they got themselves out of it.

“The essential similarity between what happened 21 centuries ago and what is happening in today’s UK economy is that a massive increase in monetary liquidity culminated with problems in another country causing a credit crisis at home. In both cases distance and over-optimism obscured the risk,” said Kay, a supernumerary fellow at Wolfson College.

The monetary historian is giving a lecture today in which he will reveal how Cicero, the Roman orator, gave a speech in 66BC in which he alluded to the credit crunch. Cicero was arguing that Pompey the Great should be given military command against Mithridates VI, king of Pontus on the Black sea coast of what is now Turkey. He reminded his audience of events in 88BC, when the same Mithridates invaded the Roman province of Asia, on the western coast of Turkey. Cicero claimed the invasion caused the loss of so much Roman money that credit was destroyed in Rome itself.

The orator told his audience: “Defend the republic from this danger and believe me when I tell you – what you see for yourselves – that this system of monies, which operates at Rome in the Forum, is bound up in, and is linked with, those Asian monies; the loss of one inevitably undermines the other and causes its collapse.”

Kay said the words were “remarkable” for their contemporary tone. “Substitute US sub-prime for ‘the Asian monies’ and the UK banking system for ‘the system of monies which operates in the Roman Forum’ and it could have been written about the current credit crisis,” said Kay.

“In second-century and early first-century BC Rome, increased inflows of bullion combined with an expansion in the availability of credit to produce a massive growth in Rome’s money supply. This increase in the supply and availability of money in turn resulted both in a major increase in Roman economic activity and, eventually, in the credit crisis which Cicero describes.”


First credit crunch traced back to Roman republic
Mark Brown
The Guardian, Friday November 28 2008

Category: Bailouts, BP Cafe, Credit

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Cicero and the Roman Credit Crunch, 88 BC”

  1. awilensky says:

    But weren’t they all hard currency? There was no way to expand the empire’s balance sheet via fractional reserves?

  2. David Merkel says:

    Under a gold/barter standard, winning a few battles and gaining enough incremental goods could turn the monetary tide. When gold becomes more common, it often produces a boom, followed by the inevitable bust.

    For a different example, think of the Pilgrims, who would see the prices of goods they could not produce, denominated in quantities of agricultural produce and furs, fluctuate as new colonists came (or went).

  3. daveNYC says:

    Back then the solution could have been getting lucky and finding a gold mine, or having the creditors send in a legion or two as kind of extreme repo men.

  4. Jojo99 says:

    This from my quote file is commonly cited:

    The budget should be balanced, the treasury refilled, public debt reduced, the arrogance of officialdom tempered and controlled, and the assistance to foreign lands curtailed, lest Rome become bankrupt.

    – Cicero, Roman statesman

  5. DavidB says:

    Friends, Romans, countrymen….lend me your money

  6. jason.leigh says:

    This simply isn’t true. There were of course earlier examples of Credit Crises, even immediately preceding Cicero. Look at the Tacitus’ annals of Imperial Rome, around A.D. 33 during the time of Emperor Tiberius. His response was eerily like today’s. A massive credit crunch. A desperate legislature asking the Emperor to inject cash into the economy. Tiberius pumping millions into the Roman economy. This proved to be such a spectacular failure that people cheered upon hearing of his death.

    There’s also a credit crisis in Chapter 47:13-25 of Genesis. The Egyptians spent all their money on corn. They ran out of money. Joseph hoarded the money, and didn’t inject cash back into the economy causing a massive deflationary spiral. In exchange for food, the Egyptians traded their land, their livestock, and 20% of their future harvest in perpetuity.