Domitian's reign began with certainly as much promise as those of his father and brother before. He proved to be an excellent manager of imperial government and took a hand's on approach to running the system. His Imperial court did consist of important members from the Senatorial body, future emperors Nerva and Trajan included, but relied more so on Equestrians and especially freedmen, virtually replacing all functions of the Senate. This style of rule and his quite public disdain for the Senate as a governing body, along with his rather strict moral ideology would eventually lead to his castration in the historical record by the ancient writers. Additional, mostly unfounded accusations of Christian persecutions, would add to the perception of Domitian as a tyrant, but quite contrary to popular opinion, he was quite capable as leader of the Empire.
Domitian was fortunate enough to follow in the footsteps of his frugal family predecessors. Evidence suggests that Domitian continued along this path maintaining a healthy treasury even in times of war. Initially, he raised the silver content of the Denarius back to its previous level under Augustus (it had been debased due to silver shortages, economic changes, etc.) clearly indicating the financial health of the empire. Just a few years into his reign however, he was forced to lower the silver content once again to meet with new demands. While this may suggest a weakening economy, it also suggests an Emperor who was well tuned in accordance with economic conditions and was proactive in adjusting imperial policy. As part of his financial policy, he heavily taxed the provinces and began a systematic confiscation (essentially to fund the Dacian Wars) that was obviously quite unpopular with the wealthy aristocracy. Another unpopular (though probably quite necessary) was the proposition of a new grain law. This law was designed to alleviate grain shortages and curb excess production of cheap wines. Planting of new vines was to be restricted in Italy, while existing vines in the provinces was to be reduced in half. While this particular law was never truly implemented it had the effect of further alienating the aristocracy.
At about the same time that these financial measures went into effect, Domitian named himself Censor for life, granting him complete authority over moralistic code and law throughout Roman society. While in theory, any Emperor could exhibit control over various societal conditions, Domitian took the position to heart. Styling himself some sort of paragon of virtue (despite his own separation from his wife, and later reconciliation, along with a myriad of rumors alleging sexual affairs), he took it upon himself to impose moralistic law with impunity. While many measures relating to these functions, such as cracking down on provincial corruption, reducing bribery in the courts, reducing public prostitution etc. were beneficial results, the result in the historical record illustrates the Emperor as cruel. In one example, Suetonius points out Domitian's reaction to the infidelity of the Vestal Virgins:
"and the incest of Vestal Virgins, condoned even by his father (Vespasian) and his brother (Titus), he punished severely in diverse ways, at first by capital punishment, and afterwards in the ancient fashion (buried alive). For while he allowed the sisters Oculata and also Varronilla free choice of the manner of their death (AD 83), and banished their lovers, he later (AD 90) ordered that Cornelia, a chief-vestal who had been acquitted once but after a long interval again arraigned and found guilty, be buried alive; and her lovers were beaten to death with rods."
Despite this, Domitian proved to be far more popular with the general public. Tying his reign to that of the gods Jupiter and Minerva, Domitian celebrated his divine connection by instituting the Capitoline Games (so named for the restored Temple of Jupiter on the Capitol). These games, begun in AD 86 and occurring every 4 years included the typical chariot races, gymnastics, music and literary arts with contestants from all over the empire. Domitian spared no expense in these endeavors providing public entertainment on a grand scale. In addition to his own form of the 'Olympics' in which prizes were presented by the emperor himself, gladiatorial contests included new displays to capture his audiences. Female gladiators, contestants between dwarves, nighttime games and food dropped upon the audiences by ropes suspended across the top of the Colosseum were common occurrences.
Beyond this, Domitian was also an ambitious builder. The fire from AD 80 (during the reign of Titus) as well as damage still left over from the great fire of AD 64 (Nero), left Rome with plenty of opportunity for improvement. He added the fourth level to the Colosseum and finished the temple of Vespasian and Titus as well as the Arch of Titus. The Forum Transitorium (including the Temple of Minerva) which was later renamed the Forum Nervae to erase Domitian's memory, numerous arches, the Equus Domitiani statue which was later destroyed, the Odeum for musical performances, a Stadium for his games, the Temple of Fortuna Redux, the Templum Gentis Flavie, the Domus Augustana and Domus Flavia were all erected under Domitian's reign. Along with the works of his father and brother, Domitian left a distinctly Flavian impression upon the eternal city.