Aristotle and his evidence:
“The Athenians, in order to raise money for the common needs, assign by auction the collection of certain taxes and tributes. Those who bid the highest amount for the right to collect these sums obtain it. The process is public, taking place in the agora, and anyone who has the necessary wealth may participate. The winners are obligated to pay the amount they promised, after which they are allowed to collect the taxes. This arrangement ensures that the state receives the maximum possible revenue, while those who win the auction may profit if they can collect more than they paid. Such assignments are done regularly and transparently, with public oversight, and the right to bid is generally reserved for citizens who have sufficient means.”
Aristotle, Politics, Book V, Chapter 6
Let's try to revive the quotation of Aristotle's Athenians in modern words:
In a dedicated period, defined by the Athenian congress, the event was held in the public place called the 'Agora', or square (in modern terms). By default, we know that some outstanding persons of the polis (city) had the right to serve as tax farmers (tax collectors).
About the Athenian tax farmers: These persons had full rights to collect taxes such as import tariffs, sales taxes, and all other levies established by the city authority within the Athenian polis.
The poletai (official auctioneers of the polis), whom we mentioned earlier, had the authority to conduct the lots, and the lots were the tax-collection rights. They “sold” (ἐπώνησαν) the right to collect a given tax (like the 2% pentēkostē on imports/exports).
The bidding was open, public, and competitive. The winner was the person (or syndicate) who promised the highest fixed amount to the city.
Each contract was for a limited term (often a year, sometimes shorter).
But what was the reason to participate in such ambiguous acts?
- The winning syndicate had to pay upfront (or in installments) the promised amount.
- That sum went directly into the state treasury (e.g., for warships, fortifications, festivals).
- From that moment, they had to try to recover the sum by collecting dues from merchants.
Let's try to understand: where was the profit?
- During the farming term, the telōnai established posts, hired guards and clerks, and extracted the fees.
- Their primary goal was to recover the money they had already advanced to the state.
- Once they had recovered their investment, every additional obol collected was pure profit.
Terms, and updates to the auctions for these rights:
The old telōnai (tax farmers) lost their rights automatically.
A new auction took place.
Sometimes, if the city urgently needed more money, they could re-auction mid-period (rare but possible if the war treasury was empty).
As we know now: No trade without risks!
- The Agora was the stage for these periodic re-auctions.
- The old rights were canceled, and the new winners were installed.
- The tax farmers then spent the next term chasing repayment of their own advance, often aggressively, to make sure they ended in the black.