Historical story

Doing Business in Rome

Financial crisis, inflation or the collapse of the feudal system are not matters directly associated with ancient Rome. Yet that is the case. Rome did not have a developed banking system, but entrepreneurs played a central role in the economy. Only they could not manifest themselves too openly. For the class of senators, to which Marcus Tullius Cicero belonged, trade was something inferior and – in theory – was considered taboo.

“To begin with, they condemn the professions that people find hateful, such as that of a toll clerk and moneylender. (…) It is also despicable to buy goods from wholesalers and then immediately dispose of them; for without constant lying it would be of no benefit to them, and unreliability is more harmful than anything else. (…) But of all sources of income none is better, more productive, more pleasant, more humane and noble than agriculture.”

This sentence by Marcus Tullius Cicero in De Officiis (translation Jef Ector, 1984) has misled historians for centuries. The picture that emerges is that of a senator as a politician, faithful to Republican norms and ideals dating back to idealized (non-greedy) farming ancestors. A senator who paid for his daily life in Rome with the proceeds from his large estates. But this image doesn't do justice to the entrepreneurial spirit of the average senator in the first century BC. Agriculture was indeed the economic norm for senators, and as a result of this moral precept, historians have created a great distance between the economic behavior of the ancient senator and the present-day modern entrepreneur, who tries to maximize his profits through scrupulous control and economically rational management. optimize. This view is inconsistent with the everyday economic practice of the average ancient senator. In Roman aristocratic circles there were great differences between senatorial ideology and actual behaviour.

This discrepancy is clearly visible in the literature and letters of Cicero, the same man who expressed himself so positively about agriculture in the quote above. Like any senator, Cicero owned a number of productive lands, but agriculture was by no means his main source of income. In his work Philippicae in M. Antonium he wrote that inheritances have brought him some 20 million sesterces, an amount next to which the income from land ownership pales in comparison. And this is just one alternative source of income. It is clear from his letter literature that a large part of Cicero's wealth came from the many loans he made personally or through his business contacts. In addition, the financial gifts, the income from the governorship of the province of Cilicia and the rent of properties in Rome and the port city of Puteoli also accounted for a profit that ran into the millions.

The fact that this is not about charity but about hard profit seems inevitable when we see that Cicero lent money to professional businessmen at the highest possible interest. It is therefore hard to believe that a man who manages to raise huge sums of money through so many diverse economic and non-economic activities would act like a financial ignoramus in his business ventures.

Networking

Cicero did not strive for optimal management in all his companies. The management of his various productive estates was in the hands of experienced estate managers, vilici or procuratores fundi who largely independently managed these companies and took the most important day-to-day decisions themselves. At first sight an odd choice for an entrepreneur who himself had considerable knowledge of the market situation in Rome and of the agricultural writings of the Roman farmer par excellence, Cato Maior. With personal intervention he could have made his estates more profitable.

Also managing insulae (rental properties) that Cicero owned was largely handed over to an independent intermediary. The latter formally rented the entire complex from Cicero and then let the rooms separately to the actual residents. Although this method gave Cicero the space to focus on other activities, it was at the expense of the greater profit that came from the rental of insulae could be obtained.

However, the contradiction in behavior and appearances disappears when we take a closer look at Cicero's management of his other financial activities. Cicero himself played the most important role in granting interest-bearing loans and obtaining inheritances, gifts and interest. This was a consequence of the functioning and importance of socio-political networks in Rome. Social contacts in Roman society of the first century BC. in fact, were largely initiated and regulated by a code of ethics based on norms of friendship and patronage. People were morally obliged to give favors or gifts, also called beneficia named, to be rewarded with gratia, or a return service or gift. It was normal that a political favor could be repaid with a cheap loan, a business service, a cash gift or an inheritance.

An aristocrat like Cicero was so central to a friendship and patronage network, in which services and gifts of all kinds were rewarded with equally diverse benefits. A good example is the loan of two million sesterces that the aristocrat Sulla gave to Cicero in exchange for his service as a lawyer, a loan that he never had to repay. The enormous income Cicero received from inheritances and gifts shows how important this complex system of reciprocity was to his wealth. Lacking a legal basis, this exchange of goods and services depended on its name recognition, influence and credibility. Loans and gifts were aimed at the person Cicero and his personal involvement in these activities was therefore indispensable.

Employees

This does not mean that all tasks were performed by Cicero itself. He had several managers and agents at his disposal to support him in this. It is striking, however, that their activities were not limited to one specific economic branch. Even the employees most in direct contact with Cicero had a very diverse range of tasks. Crucial was the expertise and support of his good friend T. Pomponius Atticus. This Athens businessman acted as a chief executive who handled Cicero's financial transactions, inheritances and outstanding loans, independently taking out loans, providing financial advice and auditing the accounts. In addition, he was indispensable as a liaison with political allies and as an assistant for matters on a personal level, such as purchasing statues for Cicero's estates. Cicero's dispensators, versatile agents such as his freed slaves Tiro, Eros, and Philotomus, engaged in activities ranging from taking out loans and keeping accounts, to collecting monies and personally carrying out simple projects or tasks. Tiro, for example, was active in both financial and literary fields, although he had no specialist knowledge in either field.

The broad employability of these employees shows that Cicero did not make a clear distinction between the different sectors in which he was active. The company around the person Cicero, to which all these activities belonged, did not only involve economic activities. Non-economic tasks were also included in this category. In fact, it was precisely the non-economic objectives that were central.

Cicero's priorities were politics, luxury and the pursuit of philosophical and literary ambitions. These cases demanded a lot of his time and often cost a lot of money. In order to finance this life, Cicero had to optimize his income while at the same time not harming his life as a public and literary figure. He achieved this through specific methods of managing his individual activities. Farming and renting out apartments were things that could be efficiently taken over by others. However, as with his political activities, the person Cicero was much more important for successfully earning income from inheritances, gifts and loans.

Through the network of friendship and patronage, all these activities were intertwined in a comprehensive system of reciprocity, in which, for example, Cicero's senate support of business by individual businessmen was rewarded with cheap loans and lucrative business opportunities. Cicero's activities in the political sphere were thus inextricably linked and much more compatible with that branch of income in which Cicero's direct involvement was indispensable. Viewed solely from his individual economic activities, Cicero's actions as an entrepreneur were not always equally distributed and aimed at achieving optimal profit. But when one considers the entire range of tasks of his company, his management method can be called logical and economically rational.

Ethos

Why, then, did Cicero continue to glorify agriculture in his literary work? The answer to this question lies in the interest of Cicero as the figurehead of his company as a whole. Through the reciprocal nature of the friendship and patronage system, his socio-political, private and business contacts provided a large part of his income as well as expanding and strengthening his influence within politics. Now within the Roman aristocratic class there was an ethos in which greed, trade, participation in the feudalism and the conscious pursuit of inheritance were objectionable. Participation in these activities damaged a senator's image, negatively affecting his political influence. Because politics played such a big part in his life, it was unwise for Cicero not to conform to this ideological image. In addition, with his capacity as a support advocate in the senate, Cicero also managed to obtain important financial benefits from his business contacts, so that his political position of power also influenced his financial situation.

Towards his colleagues in politics, Cicero therefore behaved like a senator who was only active in politics and agriculture. In reality, he derived his income from a wide variety of economic activities, ranging from both morally acceptable business to reprehensible enterprises managed in a personal, yet disguising manner. In this way he maintained his political position of power and at the same time (and as a result) he was able to make enormous profits from the reciprocal nature of the informal friendship and patronage networks.

The entrepreneur Cicero had set himself the goal of becoming a great man in the Roman politics of his time. He obtained the enormous wealth that was needed for this from a diverse number of sources of income. Where the person Cicero was central, his personal involvement was necessary. Due to the functioning of the reciprocity system, this concerned those activities that did not fit into the image that Cicero wanted to convey to the outside world. However, it was precisely this ambiguity that ultimately allowed Cicero to maintain his position as a senator and live a life of philosophy and luxury without losing his reputation as a moralistic senator and champion of the old Republican values. This ambiguity was therefore the most relevant strategy in the effective management of Cicero's business. He managed to make a profit in many ways, but at the same time maintained the status necessary to be able to make a profit. Cicero's whole life, including the ambiguity in what he said and what he did, was part of his undertaking. Its management proved so effective that he had the time and resources to establish himself as a successful politician and writer. It was ultimately these activities within his enterprise that made him one of the most famous statesmen of Roman history.