By Hareth Al Bustani
While the Crusades gave the Templars a stage to project their might, their true source of power lay within a revolutionary new financial system: the Templar Bank.
Although the Templars were committed to a life of frugality and abstinence, crusading was a costly enterprise. At the Battle of Harim in 1164, only seven of the Templars’ 67 survived, and at La Forbie in 1244, out of 300 fielded knights, only 33 lived to tell the tale. The cost of replacing them was equivalent to a ninth of the French monarchy’s annual income of 250,000 livres tournois. Meanwhile, the cost of fielding knights continued to balloon – while a knight could finance his trip to the Holy Land with 750 acres of land in 1180, by 1260 he needed five times more.
The Templar network of preceptories across Europe helped alleviate some of these financial burdens. Many new recruits, such as Hugh of Bourbouton (fl. 1136), handed over all their worldly possessions upon entering the order – including land, livestock, property, and even tenants. These preceptories generated more income from commerce, building links in local communities and securing donations, big and small, from mortals seeking to save their souls.
However, it was Pope Innocent II’s (†1143) 1139 bull, or decree, Omne datum optimum, that kick-started the brothers’ remarkable rise from donated rags to vast riches. Among various privileges, the bull not only exempted Templars from paying a tenth of their produce in tithes, but also allowed them to collect tithes of their own. Their preceptories earned similar concessions from local lords across Europe, allowing them to levy tolls and customs on fairs and markets – particularly lucrative in crowded regions such as Champagne, which sometimes boasted up to three annual fairs, and markets every week. After offering funds in atonement for the murder of Thomas Beckett (1119–1170), which helped to finance the Battle of Hattin, King Henry II tasked the Templars with collecting the Saladin tithe – ten percent rent on movable goods, from anyone but clergy and crusading knights.
The Templars amassed this capital at annual provincial chapter meetings and sent it to the brothers in the Holy Land. However, as their reputation spread across Europe, they soon found that even with all the war costs accounted for, they were running at an enormous profit.
The World’s First International Banking System
Like the monks, with pilgrims and would-be crusaders desperate for cash to fund their expeditions, the Templars began offering loans. They also offered to store funds, valuables, and documents, some of which could be used as collateral against loans. In the case of a customer’s death, the Templars would be the executors of their estate. Before heading off for a pilgrimage in 1220, Pierre Sarrasin of Paris left the Templars his assets and will. If he died, the Order would give 600 livres parisis to the Abbey of Saint Victor, to buy bread for the poor – to the benefit of Pierre’s family’s souls. An additional 100 livres would go to his mother, and the rest to his heirs once they reached adulthood. Another, Guy of Lusignan, in 1281 gave the Templars 1,500 livres, with 250 livres to be spent annually on the defense of the Holy Land.
Templars would issue receipts outlining what customers had deposited, allowing them to withdraw funds from any other branch, so long as there was enough money on hand to cover their needs. With headquarters at either end of the Mediterranean, and enormous complexes in Paris and London, this gave rise to the world’s first international banking system. Protected by enormous walls and a formidable tower, the Paris Temple, boasting a four-story, 50-meter-tall keep, was more akin to a fortress. King John (1199 – 1216) stored his crown jewels in the London Temple, such was its reputation.
Crusader Cash Crunch
With the Crusades draining capital from across Europe, before long, the Templars emerged as the continent’s most prolific money lender. Louis VII (1137–1180) himself borrowed copious amounts to finance his two-year crusade, demanding so much that he almost bankrupted the Order. They soon revised their lending policies, requiring debtors to pledge security against their loans, which could take many forms. When Robert II, Count of Artois (1250–1302), borrowed 1,578 livres parisis in 1281, he pledged all the income generated by his castellany and township, down to the chickens, until his debt was satisfied. Meanwhile, Baldwin II, Latin Emperor of Constantinople (1217–1273), notoriously dire at handling his finances, left the priceless True Cross as a guarantee against “an immense sum of money”.
The Templar banking experience was documented by Louis IX’s chronicler, Jean de Joinville. In 1250, when Joinville was with the army at Acre, he deposited 360 livres of his pay to the Templars for safekeeping. However, when he tried to withdraw 40 livres, the local commander claimed he not only had no record of any such transaction, but had never heard of Joinville. The chronicler raised the issue to the Grand Master, Reginald of Vichiers (†1256), a man with whom he was well acquainted, who retorted:
“Lord of Joinville, I like you very much, but know for certain that if you do not wish to withdraw this demand, I will love you no more, for you wish people to believe that our brothers are thieves.”
Four days later, Vichiers sought out Joinville, and sheepishly admitted that he had not only found his money, but relieved the commander of his duties. In truth, the Templars kept extensive records of all financial transactions, with the most prolific customers, such as the Queen Mother Blanche of Castille (1188–1252), receiving detailed accounts three times a year, at Candlemas, Ascension, and All Saints.
Joinville first met Vichiers during an earlier encounter, after Saint Louis’s capture at the Nile Delta during the Seventh Crusade. Struggling to raise the last 30,000 livres of the king’s ransom, he asked the Templars if they had enough money on their ships, stationed off the Egyptian coast, to cover it.
The master replied that those funds belonged to another client, and the Templars had vowed not to loan it to anyone else. After the two exchanged “many hard and abusive words,” the then-marshal, Vichiers, stepped forward and loudly speculated that if Joinville just took the money by force, the Templars would be able to keep their oath, and just replace the missing money from the king’s deposit at Acre. With that, Joinville took his cue, barging forwards with an axe, whereupon Vichiers said that to avoid violence, he had no choice but to give up his keys.
St Louis (1226–1270) was only one of many royals and nobles to borrow from the Templars. When King John’s excommunication was lifted in 1213, he borrowed nine marks of gold from the Templars for an offering of absolution. He also borrowed 2,100 marks shortly before signing the Magna Carta, and 2,000 more later that year, to pay his soldiers in Poitou and Gascony.
However, the Templar financial network stretched far beyond just royalty. During the papal schism, Pope Alexander III (1159–1181) himself relied heavily on Templar loans and administrative services to stay afloat. When Pope Innocent III (1198–1216) rolled out proportional taxes in 1198, requiring the clergy to help fund the Crusades, he tasked the Templars with collecting funds and transporting them safely to the Holy Land.
In 1281, the Templars collected vast sums for tithes, redemption from people who failed to fulfill their crusading vows, and 100,000 livres tournois for King Philip III’s (1270–1285) proposed crusade. However, Pope Martin IV (12181– 1285) instead spent this dealing with a rebellion in Romagna, ending up 155,000 livres tournois in debt.
Because, technically speaking, charging interest was against canon law, the Templars instead billed for administrative fees and expenses, or manipulated the currency exchange. Eventually, they dropped the act, flat out charging England’s Edward I (1272–1307) 5,333 livres, six sous, and eight deniers for “administration, expenses, and interest”.
Royal Bank Robbers
Protected by the auspices of God, and aside from the impregnable Paris Temple, the Templars felt little need to fortify their holdings. Damnation aside, robbing from the Order was a good way to get blacklisted from its financial and administrative services. However, during the Barons’ War with Simon de Montfort, a desperate Prince Edward was willing to take that chance – breaking into the London treasury, smashing open its strongboxes, and making off with £10,000 of his enemies’ money. Sure enough, like father, like son – Edward II (1307–1327) would also go on to rob £50,000 in cash, jewels, and precious stones.
In a slightly more egregious incident, in 1285, Peter III of Aragon (1276–1285) invaded his brother the King of Mallorca’s county of Roussillon. Paranoid his sibling was conspiring with the French to usurp his domain, he broke into the local preceptory, discovering not only his brother’s treasure, but incriminating documents confirming his suspicions.
Unfortunately for the Templars, by the fourteenth century, they had grown too wealthy for their own good. Eager to relieve himself of his crushing debt to the Order, and to get his hands on their vast riches, Philip IV (1285–1314) would make the ultimate run on the bank – coercing the Pope into ordering the seizure of all Templar assets. While these were forwarded onto the Hospitallers, all the royals of Europe made sure to dip their hands into the Templars’ deep pockets first.
Hareth Al Bustani is a journalist, specialising in Japanese, British and Roman history. Follow him on Twitter @harethb
This article was first published in The Medieval Magazine – a monthly digital magazine that tells the story of the Middle Ages. Learn how to subscribe by visiting their website.