The Templar Knight

Many of you want to know if the Knights Templar were running a sophisticated banking system – way ahead of our modern financial services sector today.

Two things are often asserted about the Templars and their wealth.

Firstly that they possessed massive amounts of “treasure”, some of which may have been discovered in Jerusalem. Details are never very specific but it’s deemed to be a combination of money, land and – of course – sacred relics like the Ark of the Covenant of incalculable value.

Secondly that they operated as bankers taking deposits from pilgrims, knights and nobles who could then draw on their money at any Templar house from London to Jerusalem. This meant that the wealthy didn’t have to drag their loot behind them in caskets with the risk of robbery on the way to their destination.

The Templars as bankers

I’m going to focus on the second type of wealth in this blog post. As the Templars emerged, they would have known about how money lenders operated, many of them in the Jewish communities. Jews were often barred from other professions and Christians were not allowed to charge interest. So, this ‘encouraged’ Jews into the money lending space, which made them quite unpopular on occasion.

They weren’t the only people handling large amounts of gold and bullion. The church, innkeepers and goldsmiths would also have stored a great deal of money. When Edward I of England seized private deposits in 1294, he shook down the monasteries first. The notorious King Philip of France, nemesis of the Templars, had already fleeced the monks, Jews and merchants before his greedy gaze shifted to the knights.

Bankers or pawnbrokers?

Your medieval bank manager will see you now!

In terms of other medieval financial activity contemporary with the Templars, there were also medieval pawnbrokers. This profession dates its activities back to China three thousand years ago. But it only really got going in Europe alongside the first proper banks in northern Italy in the 15th century, long after the Templars had been crushed.

However, there were occasions were the Templars looked very much like pawnbrokers. For example, to fund his wars against his own barons in England, Henry III took out large loans from the Templars and deposited the Crown Jewels with them as security. The order also brokered a real estate deal for Henry III helping him to buy the island of Oleron, paying the seller by instalments over five years.

The Templars, very early on in their history, found themselves handling a large number of bequests, donations and tithes on members. But they quickly transformed themselves from being custodians of other people’s wealth to deposit bankers. Why?

Templar bankers and the Crusades

The reason was the Crusades. A massive military undertaking necessitated a huge channelling of resources from western Europe to the Middle East. One has to assume the Templars realised that their network of preceptories (estates) from England to the Levant gave them the infrastructure to achieve that.

When huge taxes were levied in England or France to fund the crusades, the Templar network could be used to transmit that money to where it was needed. This put the knights in a great position on crusade. Not only could they offer a Christian king additional military muscle in the shape of their knights but they could also a line of credit to a king or prince. And money, as we know, equals power.

The idea of issuing a medieval equivalent of cheques – pieces of paper that could be taken from one place to another and used to withdraw hard cash where required – may have come from medieval trade fairs. Money changers would often have stalls at the great fairs in Europe.

Customers could go from one fair to another cashing in cheques instead of carrying large amounts of coin with them. Note that the first Templars originated in the Champagne region of France famous for its great fairs in the city of Troyes – a place of huge significance for the order. Maybe they picked up some ideas on how to run a global financial operation there.

I mentioned northern Italy as the place where modern banks would get going in the 1400s dominated by families like the Medici. But even in 12th century Genoa, we can see the first signs of deposit banking. Could it be that Italian Templars brought some financial acumen from Genoa or Venice into the order? Pure speculation of course.

Did the Templar bankers use secret codes?

How the Templars avoided fraudulent transactions is a bit of a mystery. It’s given rise to chatter about secret codes used to ensure cheques were genuine. I’ve even seen these codes published online – not so secret then!

The problem for the Templars was that their underlying mission – the reason for their existence – crumbled away in the late 13th century. Most of the Holy Land was lost. By that stage, they were engaged in all kinds of financial activity that bore little relation to crusading activity.

Wall Street might have given the Templars the thumbs up

You could argue that showed foresight – using the skills they had built up internally to help the king of France manage his books more effectively, for example.

Modern fund managers would probably cheer the Templars as a corporate entity for diversifying away from a failing venture. But that’s not how the medieval mind worked.

Losing all their castles in the Levant and failing to protect the Christian kingdoms of Jerusalem, Antioch and Tripoli meant that God no longer favoured these valiant warriors. And tongues wagged. And monks wrote poisonous diatribes. Bit by bit their reputation was trashed.

Without their core purpose, the Templars were unable to survive no matter how talented they were as bankers.