Vespasian considered his humble origins as a strength, paving the way for new emperors which will be elected outside Italy, acclaimed by the army or the Praetorians. He abandoned all hypocrisy and decided to reform the principate as monarchy, choosing as his successors his sons Titus and Domitian, who effectively reigned after him.
With the Lex de Imperio, Vespasian ended the divine legitimacy of the power of the Julio-Claudian dynasty. He, his sons, and subsequent emperors, however, enjoyed legal legitimacy, both in Rome and throughout the rest of the empire, because the princeps was granted appointments that gave him absolute power.
In Rome, this was the Tribunicia potestas, with which the princeps could block any initiative that was displeasing to him and formally went against the interests of the plebs.
In the rest of the empire, the princeps received the Imperium proconsolaris maius et infinitum, which gave him absolute political and military power over all the provinces of the empire, placing him above the various provincial proconsuls.
To consolidate his power, Vespasian followed Augustus's example: he was highly diplomatic and sought to have the favor of the Senate, the Centuriate Comitia, the magistracies, and the priesthoods. But in practice, he left them purely symbolic powers, centralizing real ones in the hands of the princeps, surrounding himself with a team experienced advisors.
Suetonius naturally supported the old system of aristocratic power, and fiercely criticized those advisors: «He promoted the most rapacious procurators to the highest positions, only to condemn them when they became rich... He used them like sponges: when they were dry, he soaked them, when they were wet, he squeezed them».
After the excesses of Caligula and Nero, Vespasian had to restore the state's finances, which largely depended on the taxes paid by the provinces. Since his father had been a tax collector, Vespasian knew well that taxes and duties should not be exaggerated, as Tiberius had observed before him: "The shepherd should shear the sheep, not skin them."
Before imposing new taxes, he conducted a general census of state property and municipal lands to have a clear picture of the situation. He promoted a series of administrative reforms, for example, establishing that usurers could not recover their money from the children of their debtors. The problem of usury—widely practiced by Roman aristocrats—had already been addressed by Tiberius with limited success.
He reduced public distributions to the common people and the poor. He imposed new taxes, including one on the urine that dyers took from the public baths (still called vespasiani today); he imposed that tax by saying "pecunia non olet," (money doesn't stink).
To set a good example, he reduced the expenses of the imperial household and the number of public festivals and games. But instead of acknowledging his prudence, Suetonius and Tacitus accused Vespasian of being greedy and avaricious.
He also took charge of the army, which was one of the pillars of Roman power. He appointed his son Titus as head of the Praetorians and reduced their number. He increased the number of legions by creating some new ones. He fortified the defense lines and legionary camps in the most critical border areas, namely the Rhine and Danube borders, and in Britain he conquered southern Scotland.
From a military standpoint, the greatest effort was devoted to quelling the Jewish revolt, which had begun under Nero in 66 AD. It lasted several years and ended in 70 AD. with the conquest and destruction of Jerusalem by his son Titus, whose triumph is depicted in a relief of the Arch of Titus.