In my latest book on the Templars – The Knights Templar: History & Mystery – I explain how this order of holy warriors got so rich, so quick. What was the key to their financial acumen?
The Templars were a money making machine – and the fund raising was directed towards a very clear purpose: equipping its knights on the front line on crusade in Outremer (modern Israel, Jordan, Syria, Egypt, and Lebanon) and the Iberian Peninsula (modern Spain and Portugal).
There’s an old adage that ‘finance is the sinews of war’ – and this was something appreciated by the Templars. A steady stream of money had to be generated to ensure that the Saracens could be defeated and the crusader states in the Holy Land defended.
A network of wealth generating hubs
Very early on, the Templars began building a network of wealth generating hubs across Europe called ‘preceptories’. These were estates that I describe as medieval agri-businesses. Pigs, cattle, sheep, crop cultivation, dairy production, etc – were the means to making money in preceptories from England to Italy, which was then funnelled to the front line.
The land on which the preceptories were located were typically donated by monarchs and nobles to assist in the crusading effort. For example, in 1137, the wife of King Stephen of England donated the manor of Cressing Temple in Essex to the Templars. The magnificent barley and wheat barns they built are still standing today.
This became a hive of economic activity turning the nearby village of Witham into a thriving market town. Similarly, a noble called Gilbert de Clare, Earl of Hertford, gave the Templars land in the county of Hertfordshire. The knights founded a new town, Baldock, which became a bustling centre of commerce.
Templars involved in high finance
The Templars are normally pictured as dashing knights on horseback charging into battle. But many could be found pouring over ledgers and totting up figures – managing deposits for wealthy clients or paying out money on receipt of a verifiable credit note (a cheque basically). This was the banking operation of the Knights Templar.
The 12th and 13th centuries saw the need for a more complex financial infrastructure. Kingdoms needed to raise more money to fund wars. Soldiers and pilgrims departing for the Holy Land wanted somewhere safe to place their wealth – and draw down on it when needed. The rich occasionally needed to place their valuables in the medieval equivalent of a safe deposit box.
Enter the Templars. Their thick-walled, well-guarded preceptories were like militarised bank branches. Jewels, gold, silver could be deposited in them without fear of being stolen.
Templars as debt collecting heavies
The knights branched out into money lending, which had traditionally been the preserve of Jewish merchants due to the papal prohibition on usury. The Templars sidestepped this awkward theological point by levying handling fees and management charges – but not interest.
Loans were arranged against future earnings. One noble who borrowed from the Templars agreed to the knights clawing the debt back from rents and income earned from his estate. The order got so good at finance that they even managed state assets for the kings of England and France.
There is also evidence that the Templars collected debts on behalf of other lenders. In 1252, an abbot in St Albans, England, had borrowed 115 Marks from an Italian merchant who told him to make repayments to the London Temple. This would have carried the implicit understanding that failure to keep up with payments might lead to an unwelcome visit from the knights.
If you want to know more about how the Templars got so rich, so quick – buy my new book: The Knights Templar – History & Mystery – published by Pen & Sword – available on Amazon, Waterstones, Barnes & Noble, and WHSmith.
church ,templers and mordern day capitalist,all share an enemyi.i islam.Makes sense doesnt it. Alll the more reason for me to believe in islam. Spirituality clashes with materialistic mind.
Capital requirements is a band aid. Banks make money by borrowing at a low rate (deposits are loans to the bank) and lending at a higher rate. If banks have to hold some capital they will compensate by lending to sub-prime borrowers at a higher rate.
The Templars most probably kept lending the King beyond the point of sustainable debt levels, his default was inevitable at that point. This is the end for all usury, the only real solution for this problem is not to practice usury in the first place
As far as I know the prosecution of the Templars was a poplar move (maybe you know more about this), probably their depositors wanted the King to get them their money back, not realising most of it went to finance the King.
So like modern banks, the Templars could have done with better capital requirements! That is interesting, so you are saying that the Templars loaned out most of the money deposited with them. Once the French king disrupted the churning of that money – the merry go round stopped.
The Templars, like the Midici and modern bankers, had high income, but no equity. The French king interpreted the high income as high wealth, i.e. the lost treasure of the Templars. In fact their assets were not gold and silver, it were debt obligations on the French King (and others)! By defaulting on his debts he bankrupted them.
You can read my post Bacon on Usury which traces how usury went from a forbidden practice to the basis of modern economy.