Sunday, October 21, 2012

The Knights Templar - Banking and Secrecy

by Scott Higginbotham

Image by Scott Higginbotham

The Knights Templar merged the ideal of a knight with the monastic life.  They observed the hours of service in the same fashion as monks, but relaxed those duties during times of war.  However, these warrior monks had their hands dabbling in more than just warfare and ecclesiastical duties – they were merchants, landowners, and bankers.  And running hard on the heels of their banking innovations, a system of secure communication and codes developed, evoking thoughts of a sophisticated military intelligence network.

Pilgrimage to the Holy Land was fraught with danger.  Bandits preyed on the faithful as an easy source of income as most pilgrims would not have the funds to hire a personal army.  Modern travelers use a combination of cash, debit, and credit cards (not all in one purse or wallet) when they travel to spread the risk in case of theft - the wisest course.  There were no banks, ATM’s, or credit cards during the Crusades or along the pilgrimage routes.  Of course not.Or has history proved our ill-conceived notions wrong?

But how can anyone be expected to believe that knights and Crusaders, let alone monks, have the requisite skills to become bankers?  If we can swallow that idea, then believing that they still operate in an underground lair beneath Denver’s airport where they stealthily dominate the world isn’t so far-fetched.  Yes, there are those that hold this view.  

Historical fact is indeed stranger than fiction, though. The Knights Templar were pioneers in more than just their unique role as that of warrior monks; they developed a system of banking, complete with a shadow of the system of checking accounts and credit cards that we enjoy today.  As mentioned before, the Templars were landowners and merchants; moreover, they received donations in the form of land and coin from wealthy nobles and monarchs, but were exempt from paying taxes and homage to any earthly person, save the pope.  Their wealth grew from their humble beginning as their star rose; as a consequence, banking became another revenue stream and a safer means of travel for pilgrims.

Image by Scott Higginbotham

The revenues from their estates funded their operations in Outremer and they had become savvy in business and even owned a fleet of ships to transfer goods, people, soldiers, and gold to the Holy Land.  As a direct result: “The Order also had to develop a sophisticated financial and banking operation. Money raised by its estates had to be transmitted to the 'sharp end' - the Holy Land. As the Templars developed a reputation for the secure transfer of funds, the demand grew for them to do the same on behalf of pilgrims and other travellers. From this developed a system of credit, so that a pilgrim could deposit funds at a Templar preceptory in his home country, and then draw goods and services from other Templar houses along his route. And so, in effect, the Templars invented the principles of the modern chequebook and credit card.”1

The banking service was not free, but most pilgrims found this method a better alternative than traveling with one’s life savings.  But what about fraud?  Where there is innovation, thieves search for ways around the system, however, these red-crossed monks and savvy bankers knew a little about secrecy – “The other consequence of the banking operations came from a demand for secure communications. As can be seen from today's credit card crimes, a move away from hard cash is open to fraud and forgery - how, for example, could one Templar house be sure that a document presented to them really did come from another Templar house on the other side of Europe? The knights therefore developed a system of codes, both for identification and for the safe passing of information.”2  This system of banking required deposit and withdrawal information, which was secured by coded ciphers – it’s ancillary effects led to a sophisticated network of information exchange from one preceptory to another, chiefly military intelligence.

The Knights Templar were more than just knights following a strict monastic rule.  They were also bankers who developed codes, networks, contacts, and an almost unhealthy obsession with privacy - some would call it conspiracy.  It is this devotion to secrecy that allows the facts and their legend to endure.  
Be sure to watch the short slide show of a Templar preceptory in Sussex, UK. 

So, what about their secret lair underneath Denver’s airport?  Find the truth here!
1Temple of Mysteries (2010-12-01). The Knights Templar (Kindle Locations 534-538). Temple of Mysteries. Kindle Edition.
2Temple of Mysteries (2010-12-01). The Knights Templar (Kindle Locations 541-544). Temple of Mysteries. Kindle Edition.    
Scott Higginbotham is the author of A Soul’s Ransom, a novel set in the fourteenth century where William de Courtenay’s mettle is tested, weighed, and refined, and For A Thousand Generations, where Edward Leaver navigates a world where his purpose is defined with an eye to the future.


    Since the foundation of the rank of the Templars c.1118, its main goal was to defend the pilgrims in their journey to the “Holy Land” and the Holy Sepulcher. The Templars, also known as the knights of Solomon’s Temple, were an elite of extraordinarily trained knights as well as monks; they were the ‘Milites Christi’ directly commanded by the Pope and became the proud of the Christian crusaders for their military skills and their complete devotion to God. However, the Templars also came to perform a further fundamental role: they became a key for international trading activities, as well as the protectors of states’ treasures and as money lenders. For example, they also lent money to Jean de Joinville, the Great Chronicle of Medieval France, in order to liberate the King of France Louis IX in 1250. However, how did this organization manage to become so economically powerful?
    As the knight’s temples were seen as the best place to store money, valuable goods and king’s treasures, one source of richness came from the amount of valuables the Templars had under control. When they reached the peak of their economic influence, the knights could count up to 9000 “capitanerie,” coffers similar to modern banks: they were indeed referred to as the “western world coffer.” The knights then started lending part of the money to pilgrims who were willing to go to Jerusalem, or even to different abbeys, which were in difficulties, and in turn, earn interest. Kings would also either borrow or deposit money in the different “capitanerie” when they were leaving for the Holy Land. The Templars were key for trading activities between Western Europe and the Middle East by providing facilitating transactions between money and goods. While the former needed money, the latter needed goods, such as the different types of metals. The knights then supported this exchange system and would make profits via a small commission that was placed on each exchange.
    In order then to trade, lend and deposit money and goods, the Templars invented credit letters. Similar to the modern traveller’s cheque, it was what allowed merchants to travel without the risk of being robbed or the issue of having to carry heavy metal coins: there was indeed no need to carry physical money any further. One single letter would allow its owner to receive the written sum in any “capitaneria” of the Templars- it could be in France, England or Jerusalem etc. Clients came to have a proper current account in which they could withdraw money, make payments and would receive a statement of account three times a year. This system revealed to be particularly useful after Jerusalem was lost along with the Christian oversees dominions, with the most complex exportation of goods from the Middle East to the Western world. Wealth was transferred on behalf of noble families, merchants and religious groups via the use of credit letters. A deep understanding of how the ancient world functioned is therefore a key to fully comprehend modern economies and their roots.


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