Financial crisis of 33 facts for kids

A silver coin of Tiberius.

A big money problem, like a financial crisis, happened in the Roman Empire in the year 33 CE. This was during the time of Emperor Tiberius. The crisis started because the government changed some rules and took money from certain people. This meant there was less money moving around. An old law was then brought back, which made people demand their loans back early. This caused a "credit crunch," meaning it was very hard to borrow money. It also made real estate prices drop a lot. The problem was finally fixed when the government gave out special loans that didn't have any interest.

How the Crisis Started

Old Laws and Money Flow

Long ago, in 49 BCE, Julius Caesar made a law about lending money. This law said that people who lent money had to own a certain amount of farmland in Italy. This rule was made during a war to stop money from leaving Italy. But over time, people mostly ignored it.

Later, during the early rule of Emperor Augustus, the Roman government put a lot more money into the economy. They gave out cash, built many public projects, and bought land for soldiers who had finished their service. This made interest rates much lower, dropping from about 12% to 4% each year.

Changes Under Tiberius

However, as Augustus's rule ended, the government spent less on public projects. When Tiberius became emperor, he spent even less. The Roman government actually saved a lot of money during his time. Even though there wasn't much new money entering the economy, gold and silver coins were leaving the Roman Empire. This happened because Romans bought many luxury goods, especially from places like India.

In 31 CE, a powerful official named Sejanus was arrested. After this, many of his followers were also prosecuted, and their money and property were taken by the Roman state. Around the same time, some big businesses went bankrupt. Also, one bank failed, and other banks refused to help it. These events made the prices of real estate and farmland go down a lot. This led the Roman government to step in and try to help.

The Crisis Unfolds

Enforcing an Old Law

In 33 CE, Roman courts started to enforce Caesar's old law. They began to prosecute people who weren't following it. When this issue was brought to the Roman Senate and Emperor Tiberius, they decided to give lenders 18 months to follow the law. It's said that almost all senators were not following this law!

This decision caused a big problem. Lenders suddenly demanded their loans back early. This meant there was much less money available for people to use. To try and fix things, moneylenders were told to buy more Italian farmland. But this only made the crisis worse. Everyone needed cash quickly, so more loans were called back. People had to sell their property very fast, often for much less than it was worth, just to get money.

Banks Fail and Prices Drop

Many banks in Rome and across the empire started to fail. It became very hard to borrow money, and interest rates went up a lot. With prices falling quickly, people who had cash decided to wait. They hoped prices would drop even more before they bought anything. Some historians believe that because public spending had stopped for a while, many slave owners used up their savings to care for their slaves who didn't have enough work. This made the crisis even worse.

Government Steps In

The crisis was finally solved when the government helped. Emperor Tiberius chose five senators to form a special group. This group offered interest-free loans to landowners who were in financial trouble. These loans were given for three years. A huge amount of money, 100 million sesterces, was set aside for this program. The loans were secured with farmland that was worth twice the loan amount. After Tiberius, his successor, Caligula, started spending a lot on public projects again when he became emperor in 37 CE.

Learning from the Past

What Historians Say

Several Roman writers, like Tacitus, Suetonius, and Cassius Dio, wrote about this financial crisis. Their accounts were quite short, but Tacitus's was the most detailed. Historians M.K. Thornton and R.L. Thornton noted that even though Roman writers usually didn't focus on economics, their descriptions of this crisis were very good. This suggests the crisis made a big impact at the time.

Today, what we know about this crisis comes from these old Roman writings. A well-known modern summary was written by Tenney Frank in 1935. His article came out during the Great Depression, another big financial crisis. Later historians have developed more ideas about why the crisis happened. For example, historian Michael Crawford thought that money leaving the empire for imports was a bigger cause than Tiberius spending less.

Lessons for Today

People have compared the Roman crisis of 33 CE to modern financial problems, like the 2007–2008 financial crisis. They see similarities in how real estate prices dropped and how governments stepped in to help. Historian Colin P. Elliott pointed out that people become more interested in the 33 AD crisis after big modern crises. These include the Great Depression, the 1973 oil crisis, Black Monday in 1987, and the 2007-2008 crisis. It shows that even ancient history can teach us about today's world.