The Knights Templar are often characterised as the first bankers in the world. To some it seems odd that Christian soldiers could have been involved in usury – lending and charging interest – when the church condemned this. We know for certain that they operated as a kind of bank using cheques and taking deposits.
Usury was a sin – so were the Templars sinners?
There is an awful lot of confusion about the Knights Templar and the way they operated as bankers and money lenders. How could they have been involved in banking when usury was a divine sin? What was their relationship with Jewish lenders?
The first thing to say is that in ancient and feudal societies, there was often a rather sniffy attitude towards earning a living through trade – and certainly through usury. Charging interest on loans was seen as a form of theft or deception. In the Koran, it’s described as the work of the devil. Assuming various mistranslations of the Christian bible, it seems to be roundly condemned in both the Old and New Testament.
The Torah makes a distinction between interest deducted before the loan is handed over and interest deducted afterwards. What is clear – as with so much of the Old Testament – is that many prohibitions applied within the Jewish community did not apply outside.
In other words, there was a loophole allowing interest to be charged to gentiles because…well….they’re gentiles. But Jews could not charge other Jews interest. However, the main reason that usury became associated with Jewish communities was that members of this religion were often barred from the professions and membership of the trade guilds – so they had to make a living somehow.
DISCOVER MORE: Why were Jews expelled from England?
The medieval economy was crying out for more usury!
For Christians – brought up with the stark image of Jesus driving the money lenders out of the Temple (a story that has been opened up to other interpretations by scholars in recent times) – there could be no usury, or so it seemed.
The thing was that medieval monarchs, barons, traders and pilgrims needed loans. As the economy of the Middle Ages became more sophisticated, this ban on usury became an obstacle to growth and the easier movement of goods. The whole economy could not rely solely on Jewish lenders for credit and so we see banking groups emerge in northern Italy and credit arrangements at trade fairs across Europe.
So, did the Templars practice usury?
And then there were the Templars. A lot of their members came from aristocratic backgrounds and when they joined, they turned over their wealth to the order. Or sympathetic lords made vast donations – including one ruler of Aragon who turned almost his entire kingdom over to the Order though that was whittled down a bit after his death.
But essentially, the Temple was sitting on vast piles of land and bullion by the thirteenth century. Their hundreds of thick walled preceptories were not just places of worship but banks as well.
READ: Was there Templar treasure hidden at Gisors in France?
Templar banking meant people could be more mobile
This sprawling network of preceptories across Europe and the Middle East allowed the Order to offer a way for people to become more mobile without fear of losing their wealth. So, if you were a pilgrim going to Jerusalem or a crusader off to fight Saladin, you could deposit physical wealth and land deeds with the Order. You could then withdrawals whenever you needed – subject to what could be described as bank charges.
The added bonus of dealing with the preceptories was that you knew you were leaving your money in a heavily guarded place. Nobody was going to come and rob the place because it also housed the most fearsome knights in Christendom. Rather like having a barracks inside your local branch of Citibank.
As I mentioned, there were banking groups emerging in Italy in the early Middle Ages and one of the families that would become major bankers would be the Medici. This family would also provide great rulers like Lorenzo de Medici and…..popes. So being involved in banking/usury would not be a barrier to advancement in the church.
Did the church turn a blind eye?
All of which leaves the question – why didn’t the church condemn the usurious activities of the Templars and other Christian money lenders? One website I read this week suggested that the church “forgot” about the rule against charging interest. This is nonsense. What the church did – in its cynical and calculating way – was to suggest upper levels of interest that could be charged beyond which, the lender would be acting unethically.
Put another way – a great big ecclesiastical blind eye was turned towards the usury of the Temple. So long as it facilitated the crusades called for by successive popes and greased the wheels of war and pilgrimage, nobody was going to complain. The Order only came a cropper when a cash strapped French king decided he could no longer keep his greasy mitts off the Paris Temple that was renowned for sitting on more bullion than any other.
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.