[New post] How the crusades spawned the world’s first financial services company
Fernando Kaskais posted: " Credit: FrankBoston / Adobe Stock The Knights Templar were not only skilled fighters, but also clever bankers who played a crucial role in the development of Europe's financial systems. KEY TAKEAWAYS The Temple Church of London allowed Christia" WebInvestigator.KK.org - by F. Kaskais
The Knights Templar were not only skilled fighters, but also clever bankers who played a crucial role in the development of Europe's financial systems.
KEY TAKEAWAYS
The Temple Church of London allowed Christian pilgrims to deposit funds in England and withdraw them in Jerusalem.
The organization was run by the Knights Templar, an order of religious knights created to protect the Holy Land from Muslim invaders.
The Templars offered their financial services to the general public, meddling in international politics and shaping the future of Europe's economy.
Europeans first began making pilgrimages to Jerusalem after the First Crusade in 1099, which was fought not only to reclaim the Holy Land from the Islamic conquest of the Levant, but also to open up an overland route for Christians looking to visit the birthplace of their faith.
Even with this route secured, such visits were filled with danger. If all went well, the journey from Italy to Jerusalem took about two months to complete: about as long as it took for English migrants to reach New York during the colonial era. Usually, though, pilgrimages took longer than two months because pilgrims were routinely slowed down by war, sickness, and robbers — threats that only grew bigger as they ventured farther from home.
Robberies were particularly commonplace, and for good reason. Pilgrims had to carry with them enough money to pay for food and shelter on the way. They were also generally unarmed and untrained, making them the perfect target in the eyes of a bandit.
For most European pilgrims, getting robbed was simply a risk they had to take if they wanted to reach the place where Jesus Christ was believed to have been crucified and resurrected. British travelers, however, had a way to minimize that risk. In London, there was an organization known as the Temple Church, where pilgrims could deposit a portion of their savings. In return they were given a letter of credit that they could use to withdraw their savings once they reached Jerusalem.
The services of the Temple Church made the pilgrimage to the Holy Land a lot safer. Now pilgrims did not have to carry as much money with them when they set out on their journey, reducing the odds of attracting robbers. Plus, if they were robbed, they would be able to replenish their finances at their destination.
In an article for the BBC, Financial Times columnist Tim Harford called the Temple Church "the Western Union of the crusades." Historians often refer to the organization as the world's very first bank, preceding Italy's Banca Monte dei Paschi di Siena by several centuries. The Temple's concept of a letter of credit was not entirely original; in the 7th century CE, Chinese merchants could deposit their coin rings at agencies in exchange for promissory notes. The key difference was that these agencies were operated by the government of the Shang dynasty, while the Temple Church was a privately owned enterprise.
The Knights Templar
The founders of the Temple Church were none other than the legendary Knights Templar. Also known as the Poor Fellow-Soldiers of Christ and the Order of Solomon's Temple, among other names, the Templars were one of several Christian military orders that sprung up across Europe to ensure safe passage to Jerusalem. The order was founded sometime around 1118, after the First Crusade, and its members fought in subsequent ones as an elite force. In between battles, they built and manned fortifications throughout the city: a means of strengthening both Christian and European presence in the Holy Land.
But the Knights Templar weren't just excellent fighters, they were also clever financiers. This side of the order is often overlooked today, which is surprising, considering the monumental role that the Temple Church played in the evolution of Europe's financial system.
Before we take a closer look at that role, it is worth asking why the Templars of all the people in London ended up becoming bankers. In her article, "The Financial Relations of the Knights Templars to the English Crown," Eleanor Ferris speculates that the order's financial services may have been born out of the "common medieval practice of depositing objects of value in consecrated places for security during times of trouble and tumult." Aside from conventions, the Temple Church happened to be a highly fortified building, constructed by skilled engineers, defended by highly trained soldiers, and located at one of the most strategic places in the city. It was, in other words, a perfect vault...
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