A History of Banking
The Knights Templar as Bankers
How the Knights Templar, a medieval military order, let pilgrims deposit money in Europe and withdraw it in Jerusalem, creating an early international banking network.
The Knights Templar were a medieval military order founded around 1119.
Banking services
- Pilgrims travelling to Jerusalem risked robbery.
- They could deposit money at a Templar house in Europe and receive a letter allowing them to withdraw funds in the Holy Land.
- This was an early form of letters of credit.
Network
The Templars had houses across Europe and the Middle East, forming an international network.
Lending
They lent to kings, including the French crown, and managed royal treasuries.
Downfall
- King Philip IV of France, heavily indebted to the Templars, arrested them in 1307.
- The order was dissolved in 1312.
Lesson
- Trust and networks enable long-distance finance.
- Lending to powerful rulers carries political risk.
Comparison
India’s hundi system similarly enabled money transfers over long distances through trusted networks.
A French pilgrim deposits coins in Paris, carries only a sealed letter on his journey, and withdraws money safely in Jerusalem.
The Templars offered it in the Middle Ages.
- The Knights Templar offered early international banking.
- Pilgrims deposited in Europe and withdrew in Jerusalem.
- They lent to kings, including France.
- Philip IV arrested them in 1307.
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