After winning the post-Caesar civil war, Octavian wanted to assure the Roman aristocracy and masses of the return of normalcy, meaning peace and republican procedure in rule. He began with gestures in this direction. Octavian disbanded the majority of the mobilized war-era legions, annulled illegal orders, and declared an amnesty for most civil-war actors, with the exception of Mark Antony's chief lieutenants at Actium. Reversing a Caesarian measure, Octavian also reduced the Senate in two phases, from 1000 to 800, and then finally to 600, endearing the older Rome aristocracy in the process. In 28 BCE Octavian and his friend Agrippa were joint consuls. For the first time in twenty years, the consuls stayed at home and engaged in no major military campaigns. AS well, they conducted a census, for the first time in seventy years. All this was in an effort to restore popular confidence in the mechanisms of state; the initial success of these measures is indicated in the rise in interest rates, reflecting an increase in liquid capital. The major question remaining, however, pertained to the means of governance in the post- Sulla and post-Caesar era.
The answer to the question of government was the Principate, which emerged in the two 'settlements' of 27 and 23 BCE. Until 27, there was an annual consulship, which Octavian always occupied. On January 13 of that year, He publicly resigned all of his provinces and powers in front of the Senate, to which he restored these prerogatives. The senators protested, whereupon Octavian agreed to undertake the government of the large provinces—the Gauls, Iberia and Syria. The remaining regions would be administered by a Senatorial proconsul. At the same time, the Senate continued to nominate Octavian as consul, and voted that he be given a new name—Augustus. An epithet of the gods, it means 'increase', or 'fiver of increase'. Legally, his title was 'Princeps'—the first citizen, and the Principate was the rule of the first citizen. Key to remember is that Octavian-Augustus stage-managed this process through the large numbers of senators who were his allies and owed their status to him.
The second 'settlement' came in 23. Augustus began by relinquishing his annual, repeating consulship, an office that was somewhat offensive to the traditional senatorial aristocracy. More importantly, though, the Senate changed the nature of Augustus' imperium. Usually, a proconsul's imperium lapsed when he crossed the Pomerium into the core Roman lands, which were to be directly administered by the Senate. Now, Augustus was allowed to keep his imperium wherever he was. In addition, his imperium was augmented to maius imperium, superceding that of all others in the state. Part of this involved his receipt of tribunicia potestas, the power of a tribune to introduce legislation into the Senate, as well as to veto administrative legislation and certain categories of senatorial actions. Thus, while the form of republican life was restored and guaranteed by Augustus, his individual steering power was unassailable.
With these powers Augustus undertook to reorganize the civil and military administration. Along with cutting down the size of the Senate, processes of admittance were regulated to require certain financial worth, a military career, as well as attestations to a candidate's good character. The class of equites was also reorganized. Though previously excluded from government service, this was now changed. Under Augustus, when an equestrian finished his military service, he could now enter government as a procurator, which was a financial agent of the Princeps, present in all Augustinian provinces, as well in the senatorial regions containing Augustus' financial interests. Those equites who distinguished themselves would retain the position for years, providing a career civil service. The best equites- procurators could rise higher, either to govern key provinces such as Egypt or Judaea, or to the prefecture (command) of the fleet, the watch, the corn supply, or the prestigious Palace Guard known as the Praetorian Guard. While this was beneficial for equites as a group, there was a second benefit: as the ex- military financial elites of Italian towns often with economic interests in Rome, their earlier support for Octavian now paid off. They could aspire to long-term administrative careers, and some were appointed to the senatorial order by the Princeps, even attaining the consulship. In this period the Senate began to be drawn from a wider socio-political circle, and the distinction between Rome and other Italian towns began to recede. There were similar opportunities for senators, from among whom the Princeps obtained his legates, some of whom led legions, and the best of whom would govern Augustus' own provinces. All theses administrative changes provided the manpower for an expanded bureaucracy and civil service. Mentioned above, Augustus created boards, or administrative departments. Agrippa had always had an interest in water, and had begun building aqueducts with his slave force in Rome. When he died in 12 BCE, his 240 hydraulic engineer slaves were formed into the water department under an equestrian prefect. Also, Augustus established a board to prevent the Tiber from flooding. A highway board was instituted in 20 BCE, controlled nominally by the Senate, which funded it along with the towns connected into the system. Later, a grain board in 6 CE was instituted to assure regular supplies to the capital, just as a fire department with six cohorts of 1000 slaves each was set up according to fire districts under equestrian prefects, known as vigilum. Continuing the administrative expansion, a Roman postal service emerged in Italy at least through which the towns maintained relays of horses and messengers to ensure speedy communication.
As regards the military, Augustus' major reform involved creating a standing army, as opposed to earlier forces which were supposedly disbanded at the end of campaigns and could become politically unstable. Augustus set up twenty-eight legions, each with 5,500 men. These legions were organized into ten cohorts, each one further subdivided into six units under centurions. Furthermore, the legions became permanent formations, with names, numbers, regimental banners, and fixed bases; a real esprit de corps and fighting tradition emerged. All the regular soldiers had to be Roman citizens, and served for twenty years, for 225 denarii a year. On retirement, they received money or land equivalent to 3,000 denarii. Most senior centurions would retire to the equestrian order. Augustus also created a retirement fund for the forces, based upon sales taxes and death duties. This broke the financial connection between (retired) soldiers and roman generals. Now, the forces depended financially upon the Princeps. The army also acquired a new elite—the Praetorian Guard. Their primary responsibility was to guard the person and property of the Princeps himself, and to engage in campaigns to which he would direct them. There were nine praetorian cohorts, each containing 1,000 men. They served for sixteen years, were paid 730 denarii a year, and were commanded by equestrian prefects. 3,000 of these camped just outside Rome. Thus, all the regular standing Roman forces amounted to 500,000 men. In addition there were the auxiliaries, recruits from the less civilized parts of the Empire. Not born as Romans, they camped adjacent to the Legions, were commanded by their own nobles, and on retirement, a portion obtained Roman citizenship. These auxiliaries provided a large proportion of imperial forces, and were well integrated into the professional army. Still, Augustus' measures did not increase the size of the military. In reality, a de-militarization of the ancient world took place, as there had been sixty Octavian legions before 30 BCE.
Finally, Augustus continued his role as a super proconsul through concern with the provinces and frontiers. He (and Agrippa) toured the provinces repeatedly, examining them, conducting censuses, and reorganizing their tribute to Rome. It was now standardized into 1) a land tax and 2) a head tax on non-agricultural wealth. He also built roads and founded Roman towns in these areas. On the level of foreign affairs, relations with Parthia were concerning. In 22 BCE they thought a Roman attack was imminent; instead, he went west and founded new towns, after which he repeated the process on Greece and Asia Minor. Impressed, the Parthians then sent negotiators to Augustus. The emerging settlement determined that the Euphrates was the boundary between the two states, and that Armenia would be a Roman client state. Returning the Rome in 19 BCE, Augustus also worried about the northern provinces and the Barbarians beyond their borders. In 17-16, Agrippa had conquered the Canteberrians, then moved on to organize northern Gaul into three provinces, including a new road system. In 16, Augustus toured the area and applied the same divisions to Iberia. From 25-9 BCE, Roman arms were used in the Alpine-Danube area as well. Between 25- 17, Roman generals conquered the northern and Western Alpine passes, previously harassed by Etruscan tribes. In 15, Augustus' stepsons Tiberius and Drusus took their forces from Gaul to the Alpine-Danubian region, taking all lands west of the Danube by 13. In 13, Agrippa was active in Pannonia—eastern Hungary, Yugoslavia, and Austria. When the latter died in 12 BCE, Tiberius took over the campaigns, carrying all by 9, at which point the frontier of Rome reached the Danube River. This led over time to the Romanization of the Balkans. In Germany, there was a serious effort to push the frontier beyond the Rhine to the Elbe, to correct the defensive difficulties of the Danube-Rhine angle. Drusus began in 12 BCE, but in spite of successful sweeps, the lack of towns and rulers to capture made all accomplishments ephemeral. Drusus died in 9 BCE, and Tiberius assumed responsibilities here too by 4 CE. Around this time the Germanic tribe of the Marcomanni arrived in the region under the chief Marobaduus. In 5 CE, Tiberius led armies as far east as the Elbe River, and his fleet explored Jutland. In 6, he planned to conquer the Marcomanni by bringing converging legions from bohemia and the Danube. Things bogged down in Bohemia, though, as The recently subdued Pannonian and Dalmatian tribes revolted, requiring Tiberius to fight his way to the staging point at Sermium, along the way exhausting his tactical reserve. The revolt was only put down in 9 CE. The Germans between the Rhine and Elbe had observed this, and though they had not become restive at the outset, a leader named Cherusi, who had served as a Roman auxiliary, was planning to revolt as well. Augustus' legate in the region was Quinctillius Varrus. He had been a succesful legate in Syria, but did not understand the local tribal and political dynamics in the German borderlands. In the fall of 6 CE he took three legions to the Rhine. While in the Teutoburgian forest, the Germans ambushed him, nearly decimating his forces. Varrus committed suicide, and a large portion of Rhineland and Elbe-area Germany was lost to the Empire. It was the one military disaster for Augustus, and he gave up the idea of taking the German woods. Though he sent Tiberius back tot he Rhine area to show that Rome was not cowed, this river became the limit of the Roman frontier. The area was divided into two provinces, each receiving four legions, and auxiliary arrangements with Germans on or near the border began to emerge.