PUBLIC FINANCE
Greek city-states did not, as a rule, regularly tax their citi-
zens. Th ey did regularly impose duties on imports and ex-
ports and freely imposed taxes on noncitizens, such as the
metoikion, the fee that each metic had to pay for the privilege
of living in Athens. Metics who performed extraordinary
services to the state might be granted the right of isoteleia,
or “equal taxation,” which amounted to a freedom from any
fees or taxes, equal to that freedom enjoyed by citizens. Dur-
ing times of crisis the state could, by a vote of the assembly
of citizens, impose taxes on its citizens, either calculated by
head or based on the value of a citizen’s property. Th e state
had many other ways of raising funds, however. War could
produce income, from treasure plundered from defeated cit-
ies, from the sale of prisoners of war into slavery, or from the
sale of captured ships.
Th e city owned property—public lands in its own terri-
tor y or i n ter r itor ie s c apt u re d i n w a r. Th i s l a nd c ou ld b e le a s e d
out for grazing or farming, and the products of any mines on
public land would go into the city’s treasury, to be spent as
the citizens saw fi t. Th e most famous example of this practice
was the discovery at the end of the sixth century b.c.e. of a
vein of silver in Attica, the territory around Athens, at a place
called Laurium. Th e initial plan for this windfall, reported
to be worth about 100 talents, was to distribute it among the
citizens equally—economic historians have noted this plan
as evidence for the relative lack of sophistication in ancient
economic thinking. Eventually, however, the citizens of Ath-
ens decided to use this new wealth to supplement their navy,
a choice that proved wise a few years later when the Persian
army of Xerxes invaded Greece.
Athens, which commanded a naval empire during the
fi ft h century b.c.e., received tribute from its “allies” annually.
Th ese funds were supposedly to allow Athens to support its
navy, which was to be used to defend its allies, but much of
the income from this tribute went to glorify the city, being
spent on the monumental building of the Athenian acropolis
and on the city’s own fortifi cations. Th ucydides reports that
at the height of its power, Athens received 600 talents per year
in tribute.
Th e most remarkable source of public revenue for the an-
cient city of Athens, and for other cities of the Greek world,
was the leitourgia, or institution of “liturgies.” Th is was a
system by which the wealthy citizens of the democracy were
obliged to perform expensive public services from their own
resources. Th e two most notable kinds of liturgy were the
choregia, sponsorship of the performance of a play, either
a comedy or a tragedy, during the public festivals, and the
trierarchy, the private funding of a warship. Th e latter was
extremely expensive; it could cost a talent of silver to keep a
warship afl oat, with a full crew, and in good repair for a year.
Consequently, by the fourth century this duty was performed
collectively, by groups of wealthy citizens. Th e benefi t of litur-
gies for the state was obvious—costly services performed at no
public expense—and the benefi ts for the euergetēs, the person
performing the liturgy, were real as well. He received public
acclaim as well as an enhanced reputation as a good citizen
and a man of wealth and prominence. To perform some lit-
urgies poorly, resulting in a shabby production of a play, for
example, brought shame from the community; in other cases,
such as fi elding an ill-equipped warship, the sponsor might
be liable for legal prosecution.
Th e raising of public money was accomplished with as
little public bureaucracy as possible. At Athens the nine ar-
chons, elected public offi cials, oversaw a small staff of secre-
taries who managed duties, fees, and rents. Major taxation
was handled privately almost everywhere in antiquity, from
democratic Athens to Egypt under the Macedonian Ptol-
emies, with the state auctioning off the right to collect taxes.
People who bought these rights, the so-called tax farmers,
would pay a fee up front and then collect taxes from those
who owed them. Th e stability of a state could depend on how
carefully the conduct of the tax collectors was managed and
how diligently the public offi cials ensured that no one was
compelled to pay more than the law required.FINANCIAL SERVICES
Beginning in the Classical Period our evidence shows that
fi nancial services were off ered by private banks and, very of-
ten, by religious institutions connected to particular temples.
Banks and temples took deposits, off ering to hold money
securely on behalf of depositors. Th e evidence suggests that
these deposits themselves did not earn interest. Banks would,
however, both make and receive loans, charging interest in
the former case and paying interest in the latter. Th e most
profi table loans in antiquity were so-called bottomry loans,
loans used to purchase goods to be transported by ship and
sold. Th e return on such a loan could exceed 100 percent but
could amount to nothing if the ship was lost. Loans of this
sort were the basis for the banker Pasion’s wealth.
Th ese fi nancial institutions of the Classical Period con-
tinued to evolve and under the Greek rulers of Egypt during
the Hellenistic Period reached a very high level of sophisti-
cation, including such seemingly modern services as spend-
thrift trusts, living trusts, annuities, and giro payments (a
means of monetary exchange in which ownership of a bank
deposit changes hands within the record-keeping system of
the bank).ROME
BY DAVID B. HOLLANDER
Th e Romans acquired and kept their empire in no small part
because of their adept management of economic resources.
According to Cicero, the fi rst-century b.c.e. politician and
writer, the Romans had oft en gone to war on behalf of mer-
chants, but their economic policies went far beyond the mere
protection of commercial interests. Th e Romans were mas-
ters at exploiting the resources of conquered territory though366 economy: Rome