A failed economic assault on ancient Rome offers a window into the possibilities and perils of this strategy.

This ancient case study begins in the late summer of 89 BC, when Mithridates VI of Pontus—the ruler of a medium-sized kingdom along the southern Black Sea coast (present-day northeastern Turkey)—declared war on Rome. The trigger had been a Roman ally’s recent raid on Pontus.

At the time, the Roman state extended from the Atlantic Ocean to modern Turkey, but its power was rooted in Italy. Mithridates lacked the military capacity to invade Italy or directly attack the city of Rome. Instead, the king decided to damage the Roman heartland indirectly by attacking buffer states that separated his realm from the Roman provinces along the Aegean coast, before breaking through into Roman territory outside Italy. Through these attacks, he sought to turn allied states against Rome, and disrupt the Roman economy.

Mithridates’ strategy unfolded across 88 BC. As his armies swept through Roman Asia Minor, they captured Roman officials, seized cities, and confiscated the local treasuries that supported the Roman regime. Then, once he had secured these lands, Mithridates sent out a letter that was received as an order to kill Roman businessmen, tax collectors, and government contractors whose fortunes depended on the Roman government’s activities in the region.

“With that one letter,” the rhetorician Valerius Maximus would later write, “he killed 80,000 Roman citizens, businessmen who were spread throughout the cities in Asia.” Other sources count as many as 150,000 Roman men, women, and children living in the cities and towns of Asia Minor who were rounded up and killed by people acting on Mithridates’ orders.

Forces loyal to Mithridates also attacked the Athenian island of Delos, the most important commercial port linking Italy with the Greek world. The geographer Strabo wrote that traders engaged in the import-export business “favored Delos,” but “it was frequented by Romans more than any other people.” The geographer Pausanias recorded Mithridates’ forces “put[ting] to death the foreigners residing” on the island before “plundering much of the property belonging to the traders.”

These attacks suggest that Mithridates targeted Roman business and commercial interests in order to chill the financial relationships that linked Rome to its provinces in the Eastern Mediterranean. All these murders of Romans abroad instilled fear—and also represented a direct assault on the economy of the Roman homeland.

First century Rome possessed an extremely sophisticated financial sector in which credit flowed easily, and wealthy people based much of their fortunes on their holdings of nomina, creditor notes that functioned like modern bonds. Romans could hold, sell, or exchange nomina with one another or cash them out, facilitated by bankers working in the Roman Forum.

This Roman financial system depended upon bankers correctly estimating the credit risk of individual debtors so that they could accurately price the loans they held or sold. This process worked well under normal conditions. But Mithridates murdered so many tax collectors, contractors, and traders based in Asia Minor and Delos that the nomina tied to business activities there lost all of their value at once. The sophistication of the Roman financial sector compounded the damage because these suddenly worthless nomina had been sold to investors, used as collateral to buy houses, and served to capitalize Roman banks. Massive amounts of wealth disappeared from Roman banks, investors, and property owners overnight.

The Roman economy crashed. In a speech delivered in 66 BC, Cicero recalled how “very many people lost large fortunes in Asia … there was a collapse in credit at Rome, because repayments were interrupted. Indeed, it is not possible for so many people in one state to lose their property and fortunes without the result that many others are dragged into the same calamity with them.” The historian Philip Kay has compared the financial crisis Mithridates caused to the subprime mortgage crisis in the U.S.

But unlike the 2008 U.S. financial crisis, Rome’s public finances collapsed alongside its private wealth thanks to Mithridates’ economic warfare. Tax revenue collected by Roman contractors in Asia paid for the distribution of subsidized grain to Roman citizens, one of the few public welfare programs the Republic provided. With Asia occupied by Mithridates and Rome’s tax collectors murdered, the Roman poor faced a sudden disruption to the funds that ensured their food supply. Such a desperate sense of panic fell upon the city that a mob murdered one of Rome’s chief judicial magistrates when he tried to mediate a dispute between lenders and debtors.

Rome struggled to respond to this economic crisis. Its leaders introduced emergency measures to restrict the amount of debt lenders could take on and to compel lenders to renegotiate loans that could not be repaid. Rome also injected capital into the economy by minting large numbers of silver coins, some of which were made from bullion borrowed by the state from the treasuries of Roman temples as an emergency measure.

None of this worked particularly well. Then, as Roman anxiety and anger rose, the great commanders Marius and Sulla pushed Rome into a civil war sparked by an argument over who would lead the army against Mithridates.

It is hard to imagine Mithridates’ economic attack inflicting greater damage on the Republic. Yet ultimately, this economic war failed to defeat Rome. And it would end up in disaster for Mithridates.

Few Romans would have known the name Mithridates before 88 BC. But once Mithridates directly affected the life of every Roman citizen, the Republic had no choice but to pour their resources into his defeat. The Republic fought on, pushing back Mithridates from Roman territory and forcing him to sign a peace treaty in 84 BC.

Rome fought two more wars with Mithridates until 63 BC, when his own son betrayed him, and the old king killed himself so he could avoid being paraded through the city of Rome in a triumphal procession.

That would have been the only way Mithridates ever reached Rome.

The post How Economic Warfare Backfired in Rome appeared first on Zócalo Public Square.

Inside the union hall and behind the big room used for banquets is a library named for Edward Tchakalian, an Armenian-American labor activist who uncovered a statewide scheme of paying janitors sub-minimum wages for long hours of work within the Ralphs, Albertsons, and Vons/Safeway grocery chains.

When I visited the hall recently, I met Juan Estrada, a shy man who’s worked as a janitor in Universal City for 18 years. He and six of his coworkers participate in what’s called a cundina. It is a lending circle, and a method to build savings. A cundina, also known as a tanda, which translates roughly to “taking a turn” or “doing a circle,” is a worldwide phenomena for poor people whose access to capital is limited. In Korean it is called kye, susu in West Africa and the Caribbean, juntas in Peru, and hui in China.

There are many variations of cundinas, but the easiest way to do it is to pool your resources. Typically each cundina takes contributions from at least six and as many as 12 people. Each participant contributes a certain amount monthly, from $50 to $200 or so. Then, you draw a number from 1 to 12. You receive the whole pot for the month that corresponds to the number you drew.

Estrada told me that he participated in a cundina back home in Guatemala. But this cundina was different for two reasons. First, it was established through Building Skills Partnership, a partnership between building owners, employers, and the union. And second, it’s connected with a bank called Mission Asset Fund. The bank reports the savings of the cundina members to credit agencies and allows the participants to build credit. (The participants also attend a credit class and learn about their credit histories). And the bank arranges things so that the cundina contributions and disbursements are automatically drawn and maintained through each of their bank accounts.

As a modern updating of an old tradition, the cundina epitomizes the union hall where it operates. “Union hall” may sound archaic, like a place where men in coveralls sit around and wait for their number to be called before heading to Walgreens for a malt. But SEIU-United Services Workers West is a different sort of union. It’s relatively young, forged by janitors who organized in L.A. office buildings in the 1980s and ‘90s. Today, its members are 40,000 security officers, janitors, and airport workers across the state. For this union, serving members means offering classes and training that allows them to build skills and gain power.

I’ve been spending time in union halls since I was a teenager who, having grown up in L.A.’s foster care system, was trying to find a voice and do something different. I’ve worked for unions, and even drove around the country visiting union halls. But I hadn’t encountered a union hall with programming quite like this.

Members of the cundina. From left to right: Dolores Santa Maria, Juan Estrada, Ana Velasquez, and Nynor Galindo.

On the day I visited the union hall, a group of janitors was taking an English as a Second Language class from an instructor from Los Angeles City College. They practiced vocabulary amidst some foldout tables, a low-hanging chandelier, some intricate curlicue molding on the ceiling, and, embossed on the walls, residual imprints of the funeral parlor. The union also offers computer literacy classes, citizenship classes, nutrition classes, a green janitor education program that teaches people how to clean in ways that produce less waste, and financial literacy classes.

The union’s emphasis on financial literacy, and its support of cundinas, is designed to counter payday lenders that are all too prevalent today, especially in poorer parts of Los Angeles. Dr. Steven Graves, a professor of geography at California State University, Northridge, has mapped the prevalence of payday lenders across L.A. Low-income areas with a high percentage of African American and Latino residents have many more payday lenders than other neighborhoods. Graves has mapped 50 payday lenders just in South Los Angeles.

The long-term consequences of the quick cash offered by these lenders can be severe. According to the Center for American Progress, one in five title loan borrowers will lose their car, one in four online payday loan borrowers’ bank accounts will close, and four out of five borrowers will need to borrow multiple times just to stay afloat.

Traditional cundinas are not always a beneficial alternative, however. Some people have shunned them for fear of getting scammed or someone taking off with their money. Dolores Santa Maria, another union member who participates in the cundina, told me, “I’ve never believed in a cundina before. There are many other people that leave with all the money. I always figured I can work on saving by myself.”

But she tried this one, and noticed that, as she built credit, she started to get offers of credit cards—she mentioned Best Buy—“because people can see I’m a responsible borrower and my credit is going up.”

Nynor Galindo, a now-retired janitor, participates in the cundina in part because there are no fees or interest payments. In response to every point made during the cundina gathering, Galindo would chime in, “And zero interest!” With the cundina, he and his partner Ana Velasquez were able to pay off all of their credit card debt 18 months earlier than expected and avoid high interest payments.

The collaborative nature of the cundina can make the difference. Estrada said when his family had an emergency in Guatemala, he was able to switch numbers with a friend in the cundina so he could collect his money in an earlier month and send it to his relatives.

Now with the help of the union’s cundina and financial literacy courses, Estrada is thinking far beyond payday—he’s saving up so he can buy a piece of property back home in Guatemala.

The post Inside a South L.A. Union Hall, a Tool for Saving Money—and for Fighting Predatory Payday Lenders appeared first on Zócalo Public Square.