Tuesday, 7 August 2012

Building walls




You might remember a previous blog about how the Roman finance world used military expansionism to feed its liquidity and manage currency values. Similar imperial expansions seen since the 1600s - and into the 1940s - were not too distant from this model either. But what happened when the Roman legions stopped marching towards the horizon? Did the Roman economy collapse as it ate out the resources trapped within its borders? The short answer is - yes, eventually, but it took two hundred years, and the initial end to expansionism was better planned than a knee jerk populist decision of wanting to bring the legions home.

For a long time we've looked at Hadrian as the wall builder - and perhaps a little defeatist in attitude when compared to the conquests of Dacia and Arabia by his predecessor and second cousin, Trajan. What we've got to remember is that both of them were businessmen at heart - from the same Spanish olive oil family. Now in those days, olive oil was an industrial product, and it would be best to compare these two Spaniards to today's Texan oil families - olive oil plantations weren't about salad condiments, they kept the lights on at night. The fact, is Trajan and Hadrian both understood money, and they both understood the need to make it. Trajan followed the well trodden path of keeping the state in cash by acquiring more resources. But the more conservative Hadrian decided to try something different. He built walls.

Now, we really have the wrong perspective of these walls. We take the medieval view that a wall is to protect you and to keep ideologically opposed armies out of your town. But this wasn't really the case in Hadrian's time. By the second century AD, most Roman cities had no walls, or had extended far beyond those built in the early Republic four or five hundred years prior. Romans didn't have such a defensive attitude, simply because they understood no one beyond the border lands had the capacity to threaten more than banditry on the empire's edges. Hadrian's most famous wall, his namesake in Northern England, was ostensibly to keep the woad painted Picts out the towns and farms of Roman Britain, but lets take a more realistic view...what was the actual threat the northern tribes posed? At this time Roman Britain had a population of six million. The Picts, with far less arable land, and living in isolated pockets could not have numbered more than a few hundred thousand. There's no doubt they had the capacity for border raids, but the Roman legions also had the capacity to make sure there wasn't a Pictish community within a week's ride of the Roman territories. So why build an 80-mile wall (at enormous cost) to stop a few northern bandits?

Money. Remember, Hadrian was an oil man, he wasn't sitting in his Tivoli Gardens sucking his thumb worried the world was about to end. What that British wall meant, just like a similar structure across southern Germany between the headwaters of the Rhine and the Danube, was that he could make money by just sitting in his garden. With those walls in place, all those commodities (including Roman coinage) that had previously been able to cross the Roman borders freely, could now be taxed and monitored. Free trade, per se, was at an end. Hadrian could now impose tariffs and restrictions on imports and exports that land traders had been able to avoid. Suddenly the mule caravans were put on the same taxation footing as seaborne traders who had been taxed since time and immemorial. There was no more smuggling through Scottish ports from Ireland or Scandinavia. Just as there could be none through central Europe. In one fell swoop, Hadrian was able to control international trade and know about every last coin or commodity leaving or entering the Roman economy.

So I guess the next question is, which worked better, Trajan's free trade expansionism or Hadrian's tariffs? That sounds like another blog.

Find out if Calvus ever had a tax audit