ABSTRACT
In this chapter, we explain how the state of Athens managed through trial and error to put in place a sophisticated system of public finance, that is, for collecting revenues and allocating expenditures, with diligent cross-controls to minimize the wasting of funds and keep corruption under control. To highlight the structure of the state’s annual budget, we categorize on the one hand the sources of public revenues and the means they used for their collection, and the processes for authorizing and implementing public expenditures, on the other. The budget was executed by a host of decentralized public organizations operating under strict rules of accountability and transparency, since no elected official entrusted with the management of state resources was relieved of responsibility without going through the process of logodosia (auditing) and all were open to charges for mismanagement by citizens in front of the Assembly and the Courts. We find that instrumental in the efficiency of these institutional arrangements were: (a) the democratic control over the financial magistrates; (b) the perception among the great majority of Athenians that the state budget should be balanced; and (c) if in extraordinary circumstances such as war, the state was in need of borrowing, the state might borrow the necessary funds on interest from the so-called treasuries of the gods, which by acting much like state banks they could be viewed as lenders of last resort.
