Merchant Bankers

Europe’s Original Financiers

The Templars became Europe’s first bankers, a development unintended and unforeseen yet one that arose naturally out of their situation. From their inception the Templars were an international organisation. Their purpose was in the Holy Land but their support came from Europe where they held land, collected tithes and received donations from the pious. They organised markets and fairs, managed their estates and traded in everything from wool and timber to olive oil and slaves. In time they built up their own formidable Mediterranean merchant fleet capable of transporting pilgrims, soldiers and supplies between Spain, France, Italy, Greece and Outremer.

Disciplined, honest and independent, the Templars were trusted throughout medieval society, and their experience in commerce and finance made them the ideal bankers to Popes and kings. Yet in their success as bankers and financiers lay a chief cause of their fall. The Templars, like the Church and like the Crusades, were international in conception, but the thirteenth and fourteenth centuries were a time when national states were being constructed by European kings, especially by the kings of France. Just as the Templars raised money to defend the Holy Land with their arms, so they also provided money for the new nationalism arising in the West. But the nation state of France would in turn ‘nationalise’ the Templars and destroy them.

The Templars’ Ports and Mediterranean Trade

Most of the Templars’ imports such as horses, iron and wheat came by sea. At first the Templars contracted with commercial shippers and agents, but early in the thirteenth century they began building up a fleet of their own. They had a substantial presence at all the important ports of Outremer–at Caesarea, Tyre, Sidon, Gibelet (ancient Byblos and present-day Jubail), Tripoli, Tortosa, Jeble and Port Bonnel north of Antioch. But their principal port was Acre, a walled city built on a tongue of land offering good protection for its double harbour.

All the major powers of the Kingdom of Jerusalem were represented at Acre, but in 1191, after the fall of Jerusalem to Saladin, the city became the Templars’ new headquarters in the Holy Land. According to the thirteenth-century chronicler known as the Templar of Tyre, ‘The Temple was the strongest place of the city, largely situated along the seashore, like a castle. At its entrance it had a high and strong tower, the wall of which was 28 feet thick.’ He also mentions another tower built so close to the sea that the waves washed up against it, ‘in which the Temple kept its treasure’.

After 1218 the Templars supplemented their facilities at Acre with a new fortress of their own thirty miles to the south; known today as Atlit, the Templars called it Chastel Pelerin because it was built on a rocky promontory with the help of pilgrims (pelerin in French). This castle, said a German pilgrim who visited in the early 1280s, ‘is sited in the heart of the sea, fortifed with walls and ramparts and barbicans so strong and castellated, that the whole world should not be able to conquer it.’

From their ports in Outremer the Templars’ ships sailed to the West. Their major port of call in France was Marseilles from where they shipped pilgrims and merchants to the East. Italy’s Adriatic ports were also important, especially Brindisi, which had the added advantage of being near Rome. Bari and Brindisi were sources of wheat and horses, armaments and cloth, olive oil and wine, as well as pilgrims. Messina in Sicily acted both as a channel for exports from the island and as an entrepôt for shipping arriving from Catalonia and Provence. The Templars also built ships in European ports, everywhere between Spain and the Dalmatian coast.


The White Slave Trade

Another Templar cargo was white slaves. They were transported in considerable numbers from East to West where they were put to work helping to run Templar houses, especially in southern Italy and Aragon. The Hospitallers also engaged in the trade and the use of slaves; indeed the trade in white slaves was a flourishing business for everyone, including the Italian maritime powers, especially Genoa, and most of all the Muslim states in the East.

The centre of the slave trade in the late thirteenth century was the Mediterranean port of Ayas in the Armenian Kingdom of Cilicia. Marco Polo disembarked at Ayas in 1271 to begin his trip to China at about the same time that the Templars opened a wharf there. The slaves, who were Turkish, Greek, Russian and Circassian, had been acquired as a result of intertribal warfare, or because impoverished parents decided to sell their children, or because they were kidnapped, and they were brought to Ayas by Turkish and Mongol slavers.

The pick of young strong males from the South Russian steppes or the Caucasus generally went to Egypt where they were converted to Islam and served as elite slave soldiers known as Mamelukes. In 1250 the Mamelukes seized power in Egypt for themselves–and led the final jihad that drove the Franks out of Outremer.


The Templar Banking Network

In Outremer and the Iberian peninsula the Templars provided military services, but in England, France and Italy their primary contribution was financial. Individual monasteries had traditionally served as secure depositories for precious documents and objects, but during an age of greater movement owing to the Crusades and the growth of trade and pilgrimages the Templar network in the West of preceptories, that is houses and estates, could offer a better service. The Templars developed a system of credit notes whereby money deposited in one Templar preceptory could be withdrawn at another upon production of the note, a procedure that required the meticulous and scrupulously honest record-keeping at which they excelled.

Whether at Paris or Acre or elsewhere, the Templars kept daily records of transactions, giving details of the name of the depositor, the name of the cashier on duty, the date and nature of the transaction, the amount involved and into whose account the credit was to be made. These daily records were then transferred to a larger register, part of a vast and permanent archive. The Templars also issued statements several times a year, giving details of credits and debits and stating the origin and destination of each item.

With their branch offices, so to speak, at both ends of the Mediterranean, and with major strongholds at the Paris and London Temples, not only could they take deposits but they could also make funds internationally available where and when they were needed.

International Financial Services

An obvious extension to guarding Crusaders’ documents and money was to make funds available during the expeditions themselves. The Templars operated treasure ships offshore from which campaigning knights and nobles and kings could make emergency withdrawals. The Templars also provided loans, for example to Louis VII, the king of France, during the Second Crusade. This was the beginning of the Templars’ close financial association with the French monarchy, effectively becoming its treasurers.

From financing crusades it was a small step for the Templars to become an integral part of the European financial system. King John of England borrowed from the master of the Temple in London around the time of Magna Carta in 1215. After the Fourth Crusade, in which Latins overthrew the Byzantine emperors and put a Frenchman on the throne instead, the Latin Emperor Baldwin II borrowed an immense sum which was secured against the True Cross. As part of their integral relationship with the European financial system, the Templars also became involved in the web that Italian merchants and bankers had spun across Europe and the Levant.

In return for these services the Templars received various privileges and concessions. By Papal bull and the decrees of French and English kings, the Templars were given full jurisdiction over their estates and their inhabitants. They also obtained royal consent to organise weekly agricultural markets and annual fairs which formed a focus for local trade and brought much income to the order both from the dues paid by those taking part and through boosting the local economy generally. Combining agriculture with capital the Templars were notably successful in the commercial exploitation of their estates, as in sheep-farming in England, for example, which in combination with the Templars’ ability to provide credit turned them into major suppliers of wool. Not least among the benefits they obtained was the unimpeded export of goods and funds from the West to Outremer.

Additionally the Templars made profits on currency conversions and imposed charges on their services. Though not always openly stated in documents, they charged interest on loans, sometimes under the name of expenses to get round medieval scruples against interest, though sometimes they felt bold enough to declare that too. In 1274, for example, Edward I of England repaid the Templars the sum of 27,974 livres tournois together with 5333 livres, 6 sous, 8 deniers for ‘administration, expenses and interest’–the total cost of the loan approaching 20 per cent.


The Paris and London Temples

The Paris Temple was the Templar headquarters in France. Built on land acquired by the Templars in the 1140s, nothing of it survives today and it is remembered only by a street name in the Quartier du Temple, the northern part of the Marais district of the city. But from the twelfth to the fourteenth century it was one of the key financial centres of northwest Europe.

The Temple was located to the north of the city walls and was fortified with a perimeter wall and towers. Inside there was an impressive array of buildings, and in the late thirteenth century the Templars added a powerful keep about 165 feet high–nearly twice as high as the White Tower, the keep at the centre of the Tower of London. This Templar keep in Paris was the heart of the Templar bank, and it was also effectively the treasury of the kings of France. During the French Revolution it served as a prison for Louis XVI and Marie Antoinette, and it was from the keep that the king was led out to his execution.

The London Temple, or the New Temple as it was called, would have been comparable to that of Paris, but only Temple Church, consecrated in 1185, remains today, amid the Inns of Court off the south side of Fleet Street. The nave of Temple Church is round, as was typical with Templar churches, its plan following that of the Church of the Holy Sepulchre in Jerusalem. King John was actually resident at the New Temple at the time of Magna Carta in 1215 and was accompanied to his famous meeting with the barons at Runnymede by the master of the London Temple. But while the kings of England entrusted Templars with military, diplomatic and financial commissions, they were always careful to keep the royal treasury as part of the royal household where it was run by royal officials, so that at most the New Temple merely served to provide additional safe-deposit space.


Vulnerable Relationships with Kings

The Templars’ experience made them useful to the French monarchy and to the Papacy, both of which wanted to maximise their revenues from taxation and reform the managing of their finances. For example, during the 33-year reign of Philip II, which extended from the late twelfth century well into the thirteenth, the king’s revenues were increased by 120 per cent thanks to Templar management.

Yet Templar holdings were never entirely secure. Only the Paris Temple presented a truly formidable obstacle to a raid; Templar houses elsewhere in France were raided by the king; the London Temple was raided by kings of England in the thirteenth and fourteenth centuries when in desperate need; and in Spain the kings of Aragon did the same. But these were passing events in desperate times of need, and restitution was made. Ultimately the Templars’ best protection was not the stone walls of their treasure houses but practical and moral constraints. The kings needed the Templars and their services too much to alienate them, nor could they afford to put themselves on the wrong side of a spiritual cause–at least not until Philip IV of France came up with a rationalisation in October 1307.

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