DID ANCIENT GREEKS MANAGE THEIR CITY FINANCES PRUDENTLY?

Abstract

There were many ancient Greek cities. Each of them was in principle sovereign and, by the
4th century B.C., most of them practiced direct democracy. From their long history, it is during
the Classical and Hellenistic periods (circa 500-30 B.C.) that quite a lot is known about their
financial administration. It is clear that they made mistakes and did imprudent things as several
were heavily in debt and many experienced crises, for example. According to philosophers,
however, caution or wisdom (phronèsis) was essential for politicians and many cities worked
towards this goal. In fact, most of them could depend on diversified revenues, some of which
were stable because they came from heritage assets and foundations. Several cities put monetary
reserves in place, in particular in sacred coffers. Many of them tried to balance their revenues
and their spending, and to plan at least part of the latter. In general, they tried to pay their debts,
to keep their accounts rigorously and to manage them in a strictly controlled way. As a result,
their financial system was more complex and better organized than is often alleged. Its original
feature was to have direct democracy as a framework. On the one hand, citizens had sovereign
power in a general assembly and thus determined, for example, their obligations and those of
other residents. On the other hand, it was considered normal that wealthy people personally
contribute to the city’s spending through public charges or additional donations. Obviously,
those contributions could result in cities being dependent on their notables, whose power and
influence increased during the second half of the Hellenistic period. Nonetheless, they were
an integral part of the system and were a form of income tax. Their flexibility facilitated the
cities’ financial management and allowed to correct for shortfalls and defaults.