The Knights Templar were warriors, monks, farmers, royal advisers and bankers all rolled into one. Whether they sat on fabled mountains of gold – it was certainly widely believed (particularly by certain monarchs) that they did – they certainly lent vast sums to popes and princes. The Paris Temple in particular was a heavily fortified bank in the eyes of the French kings.
As today’s banking system sees its reputation torn to shreds, it’s worth recalling that our banks owe a debt to the Templars for creating an early system of lending and credit. So how did it work?
Well, in a pre-capitalist age without modern banking, you might have to haul large amounts of bullion around with you when you went off on crusade or even dig a hole in the ground to hide it. Not exactly sophisticated. Your wealth would largely be based on land and that was at risk of being seized by somebody unscrupulous while you were away. So step forward the Knights Templar with an easier way to access your money while on crusade without having to heave great sacks of it with you.
They issued letters of credit – a promise to pay the bearer the designated amount. These could be cashed in – bit like old fashioned travellers’ cheques – at Templar houses or preceptories. The order would charge a kind of administration fee to avoid the charge of usury. It was sin to charge interest on loans – a religious rule still followed today by Islamic financial institutions where ‘enhanced capital’ is OK but not outright earning of interest. Jewish lenders were permitted to charge interest, which contributed to anti-Jewish feeling in times of economic crisis or political upheaval.
Templar enthusiasm for the world of high finance may have originated at the Champagne Fairs – a massive market held in Troyes and other towns in the Champagne district of France. This was where the first Templars originated from so the order had strong links to this part of the world. Merchants would come from all over Europe bringing goods from further afield including the Middle East. To ease the flow of transactions, the Templars developed their credit note system. The knights themselves would have been selling their wool and other produce from their manors to fund their crusading activities in outremer.
- The mysterious Templar attack on the Assassins (thetemplarknight.com)
- Pope recognizes Knights Templar – History.com This Day in History – 1/13/1128 (worldhistoryreview.org)