If you ever come to London I would highly recommend a visit to that area[1]. take the district line to "Temple" and walk into temple court. This is a set of interconnecting pretty courtyards surrounded by buildings used as offices for lawyers working at the nearby high court. These courtyards have a feel similar to an Oxford/Cambridge college and have been used as settings for "Harry Potter" and other films (to give you a flavour). As you wander through, eventually you will come across a statue of two knights on the back of a single horse, symbol of the templars[2]. Next to this is the Temple Church[3], with its distinctive round medieval tower where the templars themselves are buried. This is a lovely place to listen to concerts etc. I used to deliberately get the tube to temple every day so I could walk through this area to work because it's really lovely.<p>[1] <a href="https://www.openstreetmap.org/#map=18/51.51245/-0.11150" rel="nofollow">https://www.openstreetmap.org/#map=18/51.51245/-0.11150</a><p>[2] This is the scene in the main photo in TFA<p>[3] <a href="https://www.templechurch.com/" rel="nofollow">https://www.templechurch.com/</a>
Too bad so few popular and reliable records exist, as I would be really interested in what their leverage ratio was for loans to deposits, what calendar they used to synchronize everywhere in the world (presumably astronomical), whether the Templars picked it up by learning and adapting Islamic Hawala during the crusades, what the Medicis did differently (covered a bit in Fergusson's The Ascent of Money). The necessary conditions for their early portfolio risk management practices would be fascinating, and probably even available in surviving Islamic texts.<p>The vow of poverty seemed to be the lynchpin of templar banking, where the way to solve the basic principal/agent problem and ensure the alignment of interests to make the templars disinterested in the transactions themselves other than ensuring their integrity. Relating to money with a vow of poverty doesn't mean suffering, it's just a vow to eschew the trappings and symbols of wealth, as the whole system relied on Templars recognizing that they did not need money when instead they had power. They could afford to be humble. This problem of how to find and prove people who can be trusted to uphold higher values that create stability continues to today I'm sure.<p>If you are ever in Portugal, I recommend seeing the last Templar castle in Tomar. I found its scale and engineering quite spectacular, as well as how well it appears to have been preserved.
I did a walking tour of Bruges the other week and heard an interesting story about salt. Salt was a valuable commodity and could function as currency, carrying it around was risky and impractical. So there was a guild house that became a place where you could store your salt and get given a little note about how much salt they owed you. Later on if you wanted to exchange the value of your salt with someone else it became more practical to swap the little notes directly rather than trek down to the salt house and swap physical salt so people started doing that. Boom, paper money. I find all these kind of stories fascinating.
The tragic end to the Knights Templar brings to mind David Graeber's idea of bringing back the jubilee: <a href="https://davidgraeber.org/articles/after-the-jubilee/" rel="nofollow">https://davidgraeber.org/articles/after-the-jubilee/</a><p>Excerpted from Wikipedia:
The Templars were closely tied to the Crusades; as they became unable to secure their holdings in the Holy Land, support for the order faded. Rumors about the Templars' secret initiation ceremony created distrust, and King Philip IV of France, while being deeply in debt to the order, used this distrust to take advantage of the situation. In 1307, he pressured Pope Clement to have many of the order's members in France arrested, tortured into giving false confessions, and then burned at the stake. Under further pressure, Pope Clement V disbanded the order in 1312.<p>--------------------<p>Perhaps if they were not so scrooge-like, their order would still be around today.<p>The financial stress of our debt-laden culture has led to deep mistrust, cospiracism, disfunction, environmental harm, and the stunting of growth for developing nations around the world.<p>We should learn from these stories of the past.
><i>They can use their international reach to try to sidestep taxes and regulations.
And, since their debts to each other are a very real kind of private money, when the banks are fragile, the entire monetary system of the world also becomes vulnerable.
We are still trying to figure out what to do with these banks.
We cannot live without them, it seems, and yet we are not sure we want to live with them.
Governments have long sought ways to hold them in check.
Sometimes the approach has been laissez-faire, sometimes not.
Few regulators have been quite as ardent as King Philip IV of France.</i><p>Very interesting leaps taken to come to the conclusion that Philip IV ("government") was trying to "regulate" the private money sector, back then.<p>First of all he waged very costly wars (against Aragon, England and Flanders) and found himself - no surprise - with unmanageable debt i.e. not enough silver (also a very important difference between today's "banking") in 1295. By that time even the Templars hadn't enough money to help him out so he began to loan from the much richer Florentine bankers and to devalue his own royal currency (tied to silver) with the high price of social unrest/domestic instability.<p>The crackdown on Templars preceded a power struggle with the clergy (a common theme in the centuries before and afterwards) represented by the pope Boniface VIII. Long story short: Philip IV won and consequently established the nearly 70 years long so called "Avignon Papacy". The next pope Clement V was basically under his thumb. Only in this greater context could he go on and "restructure" the "Templar Banks", technically the property of the Church.<p>Of course in this cascade of perpetual debt and wars he utilized all his domestic "regulatory" powers[0]: constantly raising taxes (1289), seizing assets of Lombard merchants (1292), heavily debasing currency (1295), unheard/provocative taxation (50%) of the French clergy (1296), expelling Jews and seizing all their assets (1306).<p>[0]<a href="https://en.m.wikipedia.org/wiki/Philip_IV_of_France#Finance_and_religion" rel="nofollow">https://en.m.wikipedia.org/wiki/Philip_IV_of_France#Finance_...</a>
I'm pretty sure they got this 'original' idea from the practice of their Muslim contemporaries. This is a very similar concept to the origin of cheque where it's too dangerous to carry gold and cash along the silk road from Middle East countries to China and beyond.
> If you had been at the great fair of Lyon in 1555, you could have seen the answer. Lyon's fair was the greatest market for international trade in all Europe.<p>This is interesting to me as I live in the city and it's long been a center for trade, geographically positioned on two major rivers and with access to Paris, Switzerland, and Italy. Try as I might, though, I can't Google up anything about that fair in 1555 - does anyone have a link to a Wikipedia-style/level article about it?
In Our Time, BBC radio show with Melvyn Bragg, has an episode on the Templars; <a href="https://www.bbc.co.uk/programmes/m001cpwt" rel="nofollow">https://www.bbc.co.uk/programmes/m001cpwt</a>. Worth a listen if you're interested and want an inciteful overview.
The actual title of this article is "The warrior monks who invented banking", but there is a fairly extensive literature on Roman banking dating back at least 1000 years previously:<p><a href="https://en.wikipedia.org/wiki/Roman_finance" rel="nofollow">https://en.wikipedia.org/wiki/Roman_finance</a><p>In particular, the Sulpicii of Puteoli left some records of what look like modern banking practices:<p><a href="https://www.world-archaeology.com/books/bankers-of-puteoli-the/" rel="nofollow">https://www.world-archaeology.com/books/bankers-of-puteoli-t...</a><p>> "Much of the business of the Sulpicii consisted of short term loans, of amounts ranging from £1,000 to £20,000 and for periods of up to a month – for the sake of simplicity, I am reckoning a sesterce as being the equivalent of £1. A number of loans took place at auction sales – for these were a large part of the activity of a Roman forum – a Roman forum must have been very much like e-Bay. A banking house would manage the auction and supply immediate payment to the vendor, but would allow the purchaser several days to pay; if more time was needed, this could be provided at a cost."
Nice article. Wish they had gone on to cover Cosimo Medici! He was the best. Inventing banking and then using the profits to fund the renaissance? Need people like that today.
>"But at this particular fair, gossip was starting to spread about an Italian merchant who was there, and making a fortune.<p><i>He bought and sold nothing: all he had was a desk and an inkstand.<p>Day after day he sat there, receiving other merchants and signing their pieces of paper, and somehow becoming very rich.</i><p>The locals were very suspicious.<p>But to a new international elite of Europe's great merchant houses, his activities were perfectly legitimate.<p>He was <i>buying and selling debt</i>, and in doing so he was <i>creating enormous economic value</i>.<p>A merchant from Lyon who wanted to buy - say - Florentine wool could go to this banker and borrow something called a bill of exchange. This was a credit note, an IOU, but it was not denominated in the French livre or Florentine lira.<p>Its value was expressed in the ecu de marc, a private currency used by this international network of bankers.<p>And if the Lyonnaise merchant or his agents travelled to Florence, the bill of exchange from the banker in Lyon would be recognised by bankers in Florence, who would gladly exchange it for local currency.<p>Through this network of bankers, a local merchant could not only exchange currencies but also translate his creditworthiness in Lyon into creditworthiness in Florence, a city where nobody had ever heard of him - <i>a valuable service, worth paying for.</i>"<p>PDS: Fascinating!
This article was an interesting (and quick) read. Thanks for posting it.<p>FTA: <i>Few regulators have been quite as ardent as King Philip IV of France.
... He owed money to the Templars, and they refused to forgive his debts.
... the last grandmaster of the Templars, Jacques de Molay, was brought to the centre of Paris and publicly burned to death.</i><p>Which is a novel way to default on your loan, close your account, and start doing business with Florentine Franzesi bankers.<p><i>The royal treasure was transferred from the Paris Temple to the Louvre around this time.</i><p>In other words -- he seized the Templars assets.<p>It's against this backdrop that the wikipedia page on Philip IV of France achieves renewed vitality and is worth perusing.<p><a href="https://en.wikipedia.org/wiki/Philip_IV_of_France" rel="nofollow">https://en.wikipedia.org/wiki/Philip_IV_of_France</a>
We're in a time when histories of money attract a bit more interest. We are exiting a period where theoretical/rhetorical histories^ are a little less dominant.<p>In any case, it's interesting how often religion is deeply involved in what we would now call the financial services sector. In many ancient civilisations, temples minted coins and performed other banking-esque functions. Many ancient law codes dedicate a lot of ink to debt, and debt-related things.<p>I wonder how much of the Templars' methods were picked up in the Mediterranean and Levant, where civilisation was deep rooted and continuous.<p>^I want to use the term "pseudohistory," but without the accusatory implications. What I mean is models with thought experiment at their core. EG historical materialism, Smith, etc
> We don't actually know how the Templars made this system work and protected themselves against fraud. Was there a secret code verifying the document and the traveller's identity?<p>Really? We don't know? If that's true, that surprises me.
So I read the text until "Checks and balances" and found a mistake in the text which makes me believe now this was written by AI and maybe audited by a human.
Those wonderful knights templar! Brave Christian crusaders! Warrior monks!<p>> Our financial system today has a lot in common with this model.<p>This bit might be true, but what was the real story?
One way to do this over large distances is the bank of Alice and the bank of Bob meet and exchange papers/signatures/codes in advance, enough to do a years worth and then they can verify each other’s cheques
until the next exchange. They could settle in gold.<p>For fraud prevention this system might allow for a “personal identification number” for the cheque to be memorised.