Capital Goods as Collateral
Capital goods and related assets were used as collateral in financing important sectors of the Roman economy: agriculture, urban production, and retail and maritime trade. The investment in capital goods used in these sectors will have strongly stimulated economic growth?3 The most valuable categories of assets would have been slaves and (even more so) immovable property.
In a slave-based economy slaves would be valuable human resources, although there would be large differences in value between unskilled workers and well- trained or educated specialists?4 Most of the wealth in the ancient world, however, was locked up in land, so that flexible rules connected with charging land could unlock this wealth as collateral for credit. In the archive of the Sulpicii auction announcements concerning charged real estate and slaves figure prominently.[318] [319] [320] [321] In this section we will focus on the financing of land and other capital goods which were owned by borrowing farmers, merchants, manufacturers, craftsmen, and shopkeepers. Recent research has suggested that this must have been rare. Broekaert and Zuiderhoek present the working hypothesis that gaining access to fixed assets, ships, and heavy equipment in rural and urban production would have been ‘extraordinary difficult for ordinary Romans who were not in some way attached to an elite household?6 In particular, the large number of texts in the Digest and Codex on loans secured by real estate suggests that more Roman entrepreneurs were owners of these capital goods than Broekaert and Zuiderhoek seemingly expect to have been the case.Agriculture
Farms and farmland
The most valuable capital goods for agriculture would be farmland and buildings (farmhouses, stables, barns). I have comprehensively examined the sections of the Digest (title 13.7 and book 20) and the Codex (C.
4.24 andC. 8.13-34) specifically on pledge and have found more than sixty fragments which expressly mention pledges of land (usually fundus, praedium, ager) and buildings.97 From most of these texts the relationship between the loan and the charged real estate cannot be reconstructed: it remains unclear whether the borrowed funds were applied to purchase the real estate, whether the real estate was rural or urban, and what its nature was (farmland, farm building, living accommodation, commercial real estate)?8 One difficult question concerns the extent to which real estate was used as security in loans for productive purposes, rather than for acquisition finance or for loans to meet immediate needs for cash. The sources do not allow for a straightforward answer to this question. For instance, TPSulp 88 evidences the announcement of the auction of three fundi, which were charged by way offiducia cum creditore. The loan must have been for a significant amount and may have been a productive one, but the fragmentary preservation of the document prevents us from making firm conclusions. In particular, where farms were charged in order to secure loans, it is likely that in many (if not most) cases the money would have been borrowed in order to finance the agricultural enterprise.
Operative farm: fundus cum instruments
In modern historical literature the fundus is regarded as a territorial (topographical) unit, an economic unit, or a combination of both." As a territorial unit the fundus is generally understood as an agricultural plot of land, which (by assignatio) had been partitioned from the ager publicus and ultimately became the object of private ‘ownership' as a cadastral registration based on census lists.[322] [323] [324] In particular, in the agricultural writings (e.g., Cato, Varro, and Columella) the notion of fundus was conceived as an economic unit: a fully operative farm, whose assets constituted a unity. A range of slaves and movable assets were permanently connected with the operation of a fundus as an economic unit.101 These movable assets were called instrumentum and would include slave workers, livestock, agricultural tools, and storage devices. For legacies of a fundus cum instrumento, a large number of legal opinions have been collected in Title 33.7 of the Digest on whether or not certain assets are part of the instrumentum.[325] However, I have not been able to find one text in the Digest or Codex expressly dealing with the granting of a pledge over a fundus cum instrumento. But that does not necessarily mean that this did not happen in practice. In fact, in one of the few surviving epigraphic sources on charging land (Formula Baetica), we do appear to encounter the granting of security over a fundus cum instrumento (although another term is used).103 Alternatively, the scope of the pledged assets of an operating farm could be defined by making use of the ancient and much-used concept of invecta et illata.104 The late classical jurist Modestinus mentions a transaction in which the debtor granted a pledge not only over several pieces of land but also over the slaves working on the land from time to time, and this is likely to have been common.105 From the second century ad we have Gai. D. 20.1.15 pr., which says that ‘future assets can be hypothecated, for example, unharvested crops, offspring of a female slave, and the young of animals once born’. In other words, the products of both agriculture and stock rearing, and the children of slaves, could be pledged in order to secure credit granted to a farmer."1'' From the second half of the second century ad, farms as an economic unit could be pledged by way of a general ‘all assets’ pledge."'7 Urban production, services, and retail Tabernae The Roman urban economy of the late Republic and the Principate was a ‘taberna economy’.™8 Tabernae were primarily used for commercial services: as shops for retail business, for moneylending (taberna argentaria) and moneychanging, as workshops (e.g., taberna ferraria: smithy), as accommodation for providing services (e.g., barbers, doctors, and fullers), and as bars and inns."'9 Would the users of these tabernae have been able to offer them as collateral in order to finance the purchase of stock, inventory, tools, raw materials, etc.? In the Digest there are texts discussing the pledge of a ‘taberna’. 103 Section 9.2 (p. 277). w4 Scaev. D. 20.1.32 (see section 9.2). 105 Mod. 20.1.26.2 (Wagner 1968: 117-20). io' Pomp. D. 20.2.7 pr. (products of the pledged farmland); Scaev. D. 20.1.32 (animals born at the farm). See also Marci. D. 20.1.13 pr. on the pledge of a herd (section 9.2). 107 See section 9.3. 108 See section 3.4. "" Holleran 2017: 153-9. The granting of a pledge of a taberna as a building would only have been effective if the debtor had owned it. Tabernae were structures typically consisting of ground-floor rooms opening directly onto the street (or portico or arcade), which, after opening hours, could be closed with wooden shutters placed in grooved thresholds.[326] They were often part of larger building complexes (e.g., Trajan's Markets in Rome), which one would expect to be mostly publicly owned, certainly when they were connected to a forum or public bath complexes. But there were certainly tabernae which were situated on land and in buildings which were privately owned. In Rome, Pompeii, Puteoli, and other cities, the ground floors of apartment blocks (insulae) and private houses often had tabernae.[327] This would, however, still make it legally impossible to pledge an individual taberna, because—as part of a larger building—it was not a separate piece of property.“[328] These tabernae would often form part of the real estate investment portfolio of wealthy members of the elite, who let them—often via middlemen—to third parties.“[329] But occasionally tabernae were (small) separate buildings, consisting of the store itself and an adjoining ‘living room’,“[330] which were situated on land owned by their operators.“[331] Thus in Scaev. D. Larger production facilities Where tabernae were used as workshops, these would be small production or service facilities in which only a limited number of persons would be working. Most small-s cale workshops in Pompeii would be run by two to three workers.[335] There is also archaeological evidence for larger production facilities, such as a bakery employing at least five persons. In Rome and Ostia we even find large-scale facilities, such as a fullery employing fifty or more persons.[336] [337] These large facilities, which did not have shops or living quarters, had been constructed for the purpose of investment in the urban production economy.122 In these production facilities, heavy equipment (e.g., millstones, ovens, furnaces, presses), tools, and raw materials would be located.[338] [339] [340] [341] [342] These large facilities and their inventory would require substantial capital. In the majority of cases these large production facilities would be owned by elite members, towns, or the state and they would be rented by the producers.^4 It would have been beyond the financial means of most merchants and craftsmen to own large commercial and productive facilities and accordingly, this category of real estate would often not be available as collateral for productive credit. One cannot exclude the possibility, however, that some of these facilities were owned by the manufacturers themselves, who could then use them as collateral for loans from bankers or other financiers. Moreover, it is certainly possible that elite investors in commercial real estate would leverage their investments by using borrowed money in order to finance its acquisition. 125 These investors may have charged the purchased investment real estate to their financiers. The rights of pledge of these ‘acquisition secured creditors' would even enjoy ‘super priority' over other security interests.126 Maritime trade Financing ships Also for maritime trade there is evidence of loans which were secured by capital goods typically used for this sector of the Roman economy.1” Plutarch describes how Cato financed a society of shipowners and merchants which, with fifty ships, was of considerable size even for modern standards.[343] Cato's innovation (according to Plutarch) was that in order to spread risk, he financed the society as a whole, rather than its individual partners. This society is likely to have existed for several years, with complex accounts and annual renewals for the coming sailing season. 12[344] There is evidence for the existence of these shipowner and merchant partnerships in the Principate as well.1[345] Rathbone suggests that ‘it was the unprecedented scale of trade in the Roman world that encouraged formation of these societates’.[346] [347] We do not know whether Cato only financed the purchase of the shipped cargoes or also the acquisition of the ships. From Roman Egypt there is evidence of the so-called misthoprasia (p,iadonpaaia), which was a kind of long-term financial lease of ships entered into between maritime carriers and financiers. Rathbone notes that there is only one clear allusion to the misthoprasia in the Digest.112 Ulp. D. 14.1.1.15 says that for the purposes of the actio exercitoria the exercitor ‘either may be the owner (dominus) of the ship, or has leased it from the owner for a lump sum (aversio) for a set period or for ever (in perpetuum)’.[348] There are, anyhow, only a few texts in the Digest and Codex on loans for financing the construction, purchase, fitting out, or repair of ships, and for the maintenance of the crew.134 Rathbone thinks that the reason for this is that in the Western empire many, if not most, shipowners used their own resources, whether or not they were pooled with those of partners, in order to purchase these relatively cheap capital goods. He argues that the cargoes were much more valuable than the ships themselvesTh5 Broekaert and Zuiderhoek have recently questioned this conclusion. They argue that even for ships with limited tonnage, more capital was required than was previously thought.^6 The capital required for medium-sized and larger ships would only be available to wealthy members of the elite, persons financially supported by elite members, or by pooled finances.137 Moreover, they stress that Rathbone’s model only takes the costs of acquiring ships into account, while the operating costs should not be underestimated.138 But all this does not exclude that of the many texts in the Digest and Codex on secured loans, which do not disclose the purpose of the loan, the nature of the charged property or the identity of the parties, some were on the acquisition finance of ships. Besides, it may not be without significance that the few Digest texts on loans for the purpose of acquiring or operating ships all grant the lenders a preferential position (privilegium).[349] Such intervention in the general rules on ranking would have been motivated by the recognition that third-party finance of ships was of significant interest for Roman society. In conclusion, although quantitatively speaking there is not much evidence in the transmitted sources for the finance of the acquisition and operation of ships, definitely not by bankers, it certainly was not without significance in the Roman economy. Maritime loans Loans for purchasing the merchandise to be shipped are more frequently attested in the Roman legal sources, as well as in epigraphic and literary sources from the Greek-Hellenistic world?[350] [351] This does provide some support to Rathbone's view that cargoes, rather than ship owning, attracted finance by third parties.141 Maritime loans were the principal source for financing international commerce in antiquityTh[352] The maritime loan is known under various names in the Roman legal sources. The classical sources use expressions like mutua pecunia nautica,[353] which may have been derived from the Greek δάνειον ναυτικόν, pecunia traiecticia (‘travelling money'), and pecunia usuris maritimis.[354] [355] Mod. D. 22.2.1 defines pecunia traiecticia as ‘ea pecunia est quae trans mare vehitur' (‘money which is transported overseas'). The term chosen by the Compilatores, fenus nauticum, came to be used relatively late, at the time of Diocletian.145 The maritime loan would finance a single seaborne round trip, more precisely the merchant's purchase of the outward cargo and the carriage costs. The proceeds of the outward cargo would be used to purchase the return cargoTh6 Characteristically for this type of loan, the borrower did not have to repay the loan when the cargo did not arrive intact at its port of destination. As Paul writes in D. 22.2.7, the lender would typically agree with the borrower as follows: ‘I lend ten as a maritime loan on terms that I recover capital and interest at a certain rate if the ship is safe’. The lender rather than the borrower would bear the risk of shipwreck and other perils of the sea. In modern terms the maritime loan provided both credit and insurance.[356] Because of the large amounts of the loans and the high degree of risk for the lender, the statutory maximum rate of interest (12 per cent) did not apply to maritime loansTh[357] For the same reason, maritime loans would be secured by a pledge of the cargo and (if the borrower owned it) the shipTh[358] 3.5
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