The Knights Templar weren’t just warriors, monks, farmers and politicians but also international bankers. Not to anything like the sophisticated standards of today’s bankers but by the standard of the time, the Templars were at the apex of medieval high finance.
A knight could take out a credit note, a cheque, from a preceptory in England and cash it in at a preceptory in, say, Acre in the Holy Land. So Templars didn’t have to carry physical bullion on crusade with them – they could travel relatively light and pick up the gold they needed on arrival at their destination. Over time, the Templars came to be sitting on vast piles of cash which they loaned out to monarchs, princes and bishops.
The Paris Temple was particularly active in loaning money and funded the first King of Portugal’s wars against the Moors and even lent money to popes. Most infamously, they lent money to the King of France which would eventually prove to be their undoing. Instead of paying them back, the King of France would close the Templars down in the year 1312 with some help from the pope.
But how could the Templars have got in to money lending when it was against church law and scripture to lend with interest. Well, according to Karen Ralls – an academic specialising in the Templars – they charged a kind of handling fee. This strikes me as very similar to the way that Islamic finance works today. With this branch of finance, interest can’t be earned by investors so they receive ‘enhanced capital’ instead. So Templars managed to work their way round the theological challenge while still covering their administrative expenses.
Not for nothing were the Templars respected and hated in their own time.