Savior of Rome: Tiberius and Quantitative Easing during the Early Roman Empire

A Stimulus for Rome

When the emperor Tiberius came to power in AD 14, Rome was at the height of its power and its citizens enjoyed material wealth that were unknown before its time. Trade flowed freely from as far west as Spain to Egypt and Mesopotamia in the east. Enterprising individuals were able to make profits in a variety of ways, taxes were low, and the conquests made by Tiberius’ predecessor and first Roman emperor, Augustus, brought not only more land under the auspices of the Empire, but more importantly new sources of gold and silver. Truly, Tiberius inherited the Pax Romana that Augustus created, but as the former would find out later in his reign – all good things must come to an end.

In AD 33 Tiberius and Rome found themselves in the midst of an economic recession that threatened to undo everything that Augustus had built, but the emperor used foresight and put into place a monetary policy that was very much like the modern idea of quantitative easing. By injecting a surplus of money into the Roman economy and offering individuals interest free loans, Tiberius may just have saved the Roman economy and perhaps the Roman Empire itself. An examination of the Roman economy during the early Empire reveals that although Tiberius may have inherited some economic problems from Augustus, he compounded the existing issues in some ways, but ultimately helped end the recession through a stimulus plan.

Quantitative Easing Defined

Quantitative easing is a modern term used to describe a monetary policy that is intended to invigorate a stagnated economy, which is usually on the verge of or in a recession. Economic principles hold that the size and composition of a central bank’s balance sheet influences the markets overall. A bank’s balance sheet includes all of its reserves and assets as well as its liabilities. As a bank’s holdings and assets increases, the interest rates then decline: in other words the more money a central bank has the lower interest rates are for those borrowing money. Central banks with a large sum of assets generate additional income, which may then encourage the government to spend more money on things such as infrastructure projects, or it may cut taxes. During a recession, like the one the United States recently experienced, if a central bank is in this financial situation, it can then give low interest loans to other banks or the government in an effort to stimulate the economy.

When the recession hit the United States in late 2008, the Federal Reserve, which is the United States’ central bank, started the process of quantitative easing in October in order to stimulate the economy and prevent the recession from worsening. The Federal Reserve’s large holdings and liquidity drove the interest rates to zero, which then allowed it to lend large amounts of funds to other banks and the government in the process described above. Although quantitative easing is often effective in the short term in allaying the worst effects of a recession, and possibly preventing a depression, it poses the threat of creating an inflationary cycle. One must remember that although quantitative easing is a modern term used to describe modern economic processes, an examination of the economy in the early Roman Empire reveals that Romans experienced a genuine recession and that Tiberius used methods similar to quantitative easing to stop it.

The Roman Economy Prior to and During the Recession of AD 33

When Augustus became emperor of Rome in 27 BC he ushered in an era known as the Pax Romana, or “Roman Peace.” Although the Roman legions continued to fight in order to expand Rome’s borders, within the borders of Rome its citizens lived relatively peaceful, prosperous lives. Augustus promoted free trade both within Roman territory and with Rome’s neighbors. The many roads throughout the Empire became arteries that brought trade to and from Rome and maritime trade also increased exponentially during Augustus’ rule. Despite being divided into a rigid class, one could almost say “caste” system that divided Roman citizens between Patricians and Plebeians, members of all classes of Roman society can and did become wealthy under Augustus. Truly, Augustus’ reign was a golden era for the Roman economy, but there also existed fissures waiting to become cracks.


The Roman economy, both during the Republic and Empire, was built upon a fractional reserve banking system with a state minted currency, which was the silver coin known as the denarius. Demand for the denarius increased when Augustus became emperor for a number of reasons. Rome’s expansion meant that more people were using the currency and a growing urban population required more liquidity. Also, Augustus came to power during the Civil Wars by defeating Mark Antony, which meant that the new emperor had to keep his legions happy and loyal by giving them ample amounts of denarii. By the time Tiberius came to power in AD 14 a surplus of denarii was only one of the economic problems that the new emperor had to face.

Tiberius and the Roman Recession of 33

When Tiberius assumed the title of emperor, Rome’s monetary policies and potential economic woes were the least of his problems. Tiberius’ rule was challenged by legions on the German border and once his position was accepted he, much like Augustus before him, was forced to dole out large sums of denarii to the army in order to quell future rebellions. Combined with what took place during Augustus’ reign, the denarius began to be devalued. If a drop in the value of the denarius was the only economic problem Tiberius faced then a recession may not have taken place during his rule, but the emperor compounded the economic issues and ultimately brought on the recession with some of his own policies.

Although the Romans were a literate society, no Roman historian ever wrote a complete history or analysis of the recession of 33. Because of this, modern historians are forced to examine how the recession took place and ultimately how Tiberius solved the problem through a number of different sources that include: banking and trade receipts, military records, and anecdotal accounts from Roman historians and biographers. Modern historians and economists point to Tiberius’ decision to suspend Augustus’ public work projects as one of the primary factors that precipitated the recession. By eliminating the projects he sent workers home and more importantly took money out of circulation. Historians believe that his primary reason for doing so came from his frugal personality; for example, when he became emperor the public coffers held 25 million denarii and when he left there were 675 million. Tiberius extended his frugality to all Roman society by enacting wage freezes as well. The Roman historian Suetonius wrote:

Tiberius cut down the expenses of public entertainments by lowering the pay of actors and setting a limit to the number of gladiatorial combats on any given occasion. . . His proposal was that a ceiling should be imposed on the prices of household furnishings, and that market values should be annually regulated by the Senate. At the same time the aediles were to restrict the amount of food offered for sale in cook shops and eating houses, even banning bakery items. And, to set an example in his campaign against waste, he often served at formal dinner parties half-eaten dishes left over from the day before, or only one side of a wild boar – which, he said, contained everything that the other side did. (Suetonius, Tiberius, 34)

Perhaps even more harmful than eliminating public works projects and enacting wage freezes was the re-issuing of usury laws. During the Republic, most Romans viewed making money off of loans as a dishonorable way to make a living so usury laws were enacted that made doing so illegal, except in the strictest of circumstances. Under Augustus the usury laws were allowed to lapse or were not enforced as the emperor believed that to do so would be bad for the booming Roman economy. In many ways Tiberius was a Republican at heart and so he brought back the usury laws in the belief that they would help instill a more communal attitude amongst Romans, especially in regards to business. Although Tiberius may have had pure motives in his economic policy, it, combined with the problems he inherited from Augustus all contributed to create a credit bubble that burst and contracted the Roman economy in 33. Tiberius could have blamed his predecessor, but instead he initiated a program that may have saved the Roman economy.

The First Case of Quantitative Easing in History?

As discussed above, the term “quantitative easing” is a modern one, but the concept is relatively simple and can be applied in any money based economy. The essential ingredient in quantitative easing involves a central bank giving loans at low or no interest rate in order to put more money back into the economy, which will then hopefully stimulate spending and investment. An examination of Tiberius’ policy reveals that his policy was not much different than the one American political and financial leaders took nearly 2,000 years later in 2008. Realizing that denarii needed to be injected into the Roman economy Tiberius gave a large sum of interest free loans to banks and investors. Suetonius wrote:

Tiberius showed large-scale generosity no more than twice. On the first occasion he offered a public loan of 100 million sesterces, free of interest, for three years, because a decree which he had persuaded the Senate to pass – ordering all moneylenders to invest two-thirds of their capital in agricultural land, provided that their debtors at once disbursed in cash two-thirds of what they owned. (Suetonius, Tiberius, 48)

Tiberius also chartered specific Senators to make interest free loans to various businesses and individuals, especially ones that specialized in trade. As trade expanded during the reign of Augustus, Tiberius sought to keep the trade routes open and further expand them in order to end the recession.

Trade is a vital part of any economy, especially a pre-modern market type economy like the one in Rome in AD 33. Trade is the primary method whereby currency flows within the borders of a market economy and in a sense is also a market economy’s barometer; when trade is booming then so is the economy. Tiberius knew that besides injecting more denarii back into the Roman economy through low interest loans he also needed to get the currency distributed throughout the Empire. One of the lasting legacies of Tiberius’ monetary policies is the city of Palmyra, which was located in what is today modern Syria. Although Palmyra was first built before Tiberius’ rule during the Hellenistic Period, Tiberius helped make the city wealthy and famous. The emperor directed trade routes through the Levantine city that helped bring exotic spices and minerals from the Far East into Rome and in turn Palmyra received copious amounts of denarii that Tiberius had recently released into the economy. Palmyra’s position as an economic powerhouse that began under Tiberius would last for around 200 years.

 Economic recessions are not exclusive to the modern world. Any economy that is currency based is faced with the real threat of contraction for a number of reasons. The way in which political and monetary leaders deal with recessions is also not a purely modern phenomenon as evidenced by the emperor Tiberius and the Roman recession of AD 33. Despite inheriting some economic problems and adding to them with some of this own policies, the emperor Tiberius initiated an aggressive monetary policy that brought the Roman economy back from recession and possibly even the brink of collapse.


Malchow, Joseph. “The Quantitative Easing (and Fall) of the Roman Empire.” Sovereignty, Technology, and Global Change (2011): 1-34.

Mathews, John. “Roman Life and Society.” In The Oxford History of the Roman World, edited by John Boardman, Jasper Griffin, and Oswyn Murray, 388-412. Oxford: Oxford  University Press, 2001.

Reinhart, Vincent. “Monetary Policy in a Low-Interest-Rate Environment.” NBER International Seminar on Macroeconomics 6 (2009): 346-353.

Suetonius. The Twelve Caesars. Translated by Robert Graves. London: Penguin Books, 2007.

Temin, Peter. “The Economy of the Early Roman Empire.” Journal of Economic Perspectives 20 (2006): 133-151.

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