An empire that pays a quarter of a million men in cash every year is a fiscal machine before it is anything else, and almost everything later emperors do can be read off the arithmetic of that payroll.
The previous lesson counted the army and ended with a rough basic payroll near 190 million sesterces, plus discharge bounties, equipment and food. This lesson asks where that money came from. Nothing resembling a Roman budget survives, so the figures here are reconstructions built from scattered numbers in Josephus, Plutarch, Suetonius, papyri and inscriptions, and their uncertainty is part of the lesson rather than a defect in it.
The money itself
Roman coinage had a fixed internal ratio: an aureus of gold was worth 25 silver denarii, and a denarius was worth 4 sesterces, the sesterce being the unit Romans quoted large sums in. Under Augustus the aureus was struck at 42 to the Roman pound of 327 grams, so about 7.8 grams, and the denarius weighed about 3.9 grams at something close to 98 per cent silver.
The state was the only mint, and it minted for a practical reason: soldiers and officials had to be paid in something, and taxes had to come back in the same thing. Coins were also the empire's most widely distributed publication. A provincial who never saw a Roman building handled the emperor's portrait every week, with a legend on the reverse announcing a victory, a virtue, a new road or the arrival of an heir.
Example. In AD 64 Nero cut the denarius from about 3.9 grams to 3.41 and its fineness from about 98 to 93.5 per cent. Work out what he gained.
Silver per coin falls from 3.82 grams to 3.19, a drop of 17 per cent, so a pound of silver that used to yield about 86 denarii now yields about 103, which is 20 per cent more coins from the same metal. The old coins keep circulating at the same official value, so nobody is robbed on the day, and the state can pay 20 per cent more wages from the same bullion. That is the attraction, and it is a tax that requires no law, no census and no collector. The cost arrives later and elsewhere: prices adjust as the new coins accumulate, and the adjustment falls on anyone holding cash rather than on the people the emperor would have had to face in the Senate. Every debasement in this course works exactly like this, and the third century will show what happens when it is done twenty times in fifty years.
Now you. Why would an emperor short of money debase rather than simply raise the rate of tax?
Answer
Because raising rates requires machinery he does not have and consent he cannot count on. A rate change means reassessing land province by province through a census, instructing thousands of city councils, and collecting more from exactly the propertied provincials whose cooperation held the empire together, all of it visible and attributable to him. Reminting is done inside the mint, produces cash this quarter, and has no announcement. Notice that this is not a Roman failing but a standard property of pre-modern states: the option with the diffuse, delayed, invisible cost beats the option with the concentrated, immediate, visible one, and it beats it every time regardless of who is emperor. The honest qualification is that Nero's adjustment was modest and the coinage stayed good for another century, so debasement was not yet a disease. It was a habit that later became one.
What was taxed
Two direct taxes carried the system. The tributum soli fell on land, at rates that varied by province and were assessed from a census of holdings; the tributum capitis was a head or poll tax, again varying, and in Egypt it fell on adult males with exemptions that people fought hard to prove. The assessment machinery is well documented in Egypt, where the household census ran on a fourteen year cycle and thousands of declarations survive on papyrus, listing every occupant of a house by name, age and status.
Around these sat indirect taxes: customs dues, the portoria, levied at province boundaries and ports at rates of two to two and a half per cent internally and far higher on the eastern trade; a five per cent tax on inheritances and another on manumissions, both falling on Roman citizens; and a one per cent duty on auction sales. Egypt and Africa also paid a large part of their obligation in grain rather than money, shipped directly to feed Rome.
Two absences matter. There was no income tax, because there was no way to measure income. And Italian land paid no regular tribute at all, a privilege dating from 167 BC that survived until Diocletian, so the province that supplied the emperors was the one province that did not pay for them.
Example. A papyrus in Vienna, the Muziris papyrus, records a contract over a single cargo carried from the Indian port of Muziris to Egypt in the second century. The cargo is valued at close to seven million sesterces and the customs duty on this route was a quarter of the value. What does one document tell you?
That the eastern trade was enormous and that the state took a very large cut of it. Seven million sesterces is about what it costs to pay 7,800 legionaries for a year, in one ship, and the quarter duty on it is roughly 1.75 million sesterces from a single voyage. Pliny the Elder complained that India, China and Arabia between them drained 100 million sesterces a year out of the empire, which is often quoted as evidence of a ruinous trade deficit; set against a state revenue in the region of 800 million it would be about an eighth, which is large. But read what the customs rate does to the complaint. If the goods pay 25 per cent on entry, the treasury takes a quarter of that flow back at the frontier, so the trade Pliny thought was bleeding Rome was one of the state's better revenue streams. A moralist counting bullion out and an accountant counting duty in are looking at the same ships.
Now you. How much should one contract be allowed to prove?
Answer
Enough about scale and almost nothing about totals. What a single document establishes securely is that cargoes of this value existed, that they were financed by written contract with a loan against the goods, and that the tax was assessed on them, which is already more than any literary source tells us. What it cannot tell us is how many such ships sailed, whether this one was typical or exceptional, or what the trade was worth in a year. That is the standard condition of ancient economic history: the evidence is a scatter of individual facts of high quality with no denominator underneath them, and the temptation is always to multiply one good number by a guess. The defensible move is to use single documents to fix orders of magnitude and to say plainly that the aggregates are estimates.
The budget, as far as it can be reconstructed
Modern estimates of imperial revenue in the first and second centuries cluster around 800 million sesterces a year, with serious arguments for figures a good deal higher. Estimates of what the army cost cluster around 400 to 500 million. Take the middle of both and the army absorbs somewhere over half of everything the state collected, with the grain distributions in Rome, building, the imperial household, salaries and gifts sharing the rest.
That single ratio explains a great deal of what follows in this course. A state spending more than half its revenue on soldiers has no room for a bad year, no reserve to speak of, and no way of increasing the army without a proportional increase in revenue. When later emperors need more soldiers, they will not be able to afford them, and the strain shows up as debasement, as tax in kind, and eventually as a completely rebuilt fiscal system.
How heavy was it?
Now put the revenue against the size of the economy it came from. Take sixty million people and a bare subsistence income of about 250 sesterces a head, which is the sort of figure the price of wheat and the wages in Egyptian documents support. That gives an economy of about 15 billion sesterces. Revenue of 800 million is 5.3 per cent of it.
Even doubling the revenue estimate leaves the Roman state taking a tenth of national income, against thirty to forty-five per cent in a modern developed country. By the standards of any later state the empire was very lightly taxed.
Both halves of that finding matter. It explains the durability: taxation at that level is survivable for the people paying it in most years, and the provinces had little to gain from revolt. It also explains the fragility, because a state taking five per cent has no elasticity. There is no fat to cut and no capacity to double the army in an emergency, and when the third century demands exactly that, the empire will have to reconstruct itself to get it.
Who did the collecting
Under the Republic the taxes of a province were auctioned to companies of publicani, who paid the state up front and extracted what they could, an arrangement the earlier course shows going badly wrong in Asia. The empire kept tax farming for customs but moved the direct taxes onto a different basis: the city.
Each self-governing city was assessed a total, and its own council was responsible for collecting it from the surrounding territory and delivering it. The men on the council, the decurions, were personally liable for any shortfall. In good times this was a cheap and effective arrangement, since the local rich knew who owned what and had every incentive to keep the assessment low and the peace good. In bad times it turned membership of a city council from an honour into a liability that men would go to considerable lengths to escape, which is a slow-acting poison and one of the more revealing symptoms of the later empire.
Example. Suetonius reports that Vespasian said on his accession that 40,000 million sesterces were needed to put the state on its feet. Test the figure.
Against a revenue near 800 million a year, 40 billion is fifty years of the entire income of the empire, which no ruler could contemplate raising and no state that size could conceivably spend. Compare a figure from the same author that is credible: Tiberius left 2,700 million in the treasury at his death, itself about three and a half years of revenue and remarkable enough that everyone commented on it. Vespasian's number is a hundred times the largest hoard anyone had ever heard of. The likely explanations are a corruption in the numeral, which is the commonest error in the transmission of ancient texts, or a rhetorical figure meaning an unimaginable sum. The habit worth taking from this is simple: when an ancient number is impossible, do not throw the source away, because the surrounding facts may be perfectly good. Check whether the number can be checked against another number in the same author, and say which one you trust and why.
Now you. What made Tiberius's 2,700 million sesterces possible, and why did no later emperor accumulate anything like it?
Answer
He built no monuments to speak of, gave no games worth mentioning, fought no wars of conquest, spent the last eleven years of his reign on Capri, and inherited a state at peace with an army just reduced to twenty-five legions. The surplus is the arithmetic of an emperor who did none of the expensive things emperors were expected to do, and he was detested for it, which is the point. Popularity in Rome was bought with buildings, games and cash handouts, and a ruler who declined to buy it was storing up a different kind of danger. Caligula, who reportedly spent the whole reserve within about a year, was the immediate answer to the question of what happens to a hoard with no institution behind it. There was no permanent fund, no rule about reserves and no distinction between the emperor's money and the state's, so a surplus was only ever one accession away from being somebody's spending money.
Where the money went, and what it did on the way
One more consequence deserves a paragraph, because it connects the taxes to the economy that later lessons measure.
Taxes were collected mostly in cash in the interior provinces, and spent mostly in cash on the frontiers, where the soldiers were. That flow is a one-way movement of coin out of Spain, Gaul, Asia and Africa towards the Rhine, the Danube and the Euphrates, and the only way for those interior provinces to get the coin back to pay next year's tax is to sell something to the regions where the money now sits. A tax system of that shape does not merely take money: it forces the taxed to produce a surplus for a distant market, and it thereby creates long-distance trade in ordinary goods, not just luxuries.
That is a modern reconstruction rather than a Roman theory, and it is testable, which is what makes it useful. If it is right, the archaeology should show mass movements of oil, wine, grain and pottery between provinces, peaking when the tax system worked best. It does, and a later lesson goes through the evidence.
Before that, though, the taxes had to be assessed and collected, and the previous lesson left one soldier for every 240 inhabitants. The next lesson counts the civilian side of the administration, which turns out to be smaller still.