The History of Templar Banking

The Knights Templars was a Christian military order 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.

After the first Crusade ended and Jerusalem fell into European-Christian hands, a large influx of pilgrims came to visit the Holy City. Since the surrounding area was dangerous,

the Templars dedicated themselves to the defense of Christian pilgrims to Jerusalem. The city had been captured by the First Crusade in 1099 and pilgrims began to stream in, traveling thousands of miles across Europe.

Those pilgrims needed to somehow fund months of food and transport and accommodation, yet avoid carrying huge sums of cash around because that would have made them a target for robbers. The knights were responsible, not only for safeguarding pilgrims but their valuables as well. This forced them to establish what can be described as an early deposit and withdrawal system. Fortunately, the Templars had that covered. A pilgrim could leave his cash at Temple Church in London, and withdraw it in Jerusalem. Instead of carrying money, he would carry a letter of credit. The Knights Templar were the Western Union of the crusades.

A pilgrim could deposit money or valuables within a Templar stronghold and receive an official letter describing what they had. That pilgrim could then withdraw money along the route to take care of their needs, equal to what they had in safekeeping. This kept the pilgrims safe since they were not carrying valuables, and further increased the power of the Templars. Soon, the order grew even more money savvy. By the 12th century, they could freely move their wealth from one property to the next.

The “Western Union” of medieval Europe could also transfer funds from the account of one person to that of another. They recognized the need for a secure and reliable banking system. This led to the establishment of the Templar Bank, which quickly became one of the most innovative and successful financial institutions of its time.

The Templar Bank was known for its extensive network of branches throughout Europe and the Middle East, as well as its advanced record-keeping methods, which allowed for the safekeeping of assets and the provision of loans. It was an early example of a multi-national corporation, with operations spanning multiple countries and currencies.

The Templar Bank also played a crucial role in funding the Crusades. The order used its wealth and financial expertise to provide support for Crusaders, including loans, supplies, and transportation for troops and equipment. The Templar Bank was instrumental in facilitating the movement of soldiers and supplies to the Holy Land, which helped to ensure the success of the Crusades.

The Templars began issuing letters of credit in 1150, allowing pilgrims to deposit their funds at one place and withdraw them at another Templar location. 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. Templars were much closer to a private bank - albeit one owned by the Pope, allied to kings and princes across Europe, and run by a partnership of monks sworn to poverty. 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.

Because of the Knights Templar fearsome fighting reputation and their trustworthiness, following the "Code of Chivalry", many nobles and wealthy people in medieval times consider their assets to be in a safe place, if under the control and protection of the Knights Templar.

Modern scholars have stated that the letters were encrypted with a cipher alphabet based on a Maltese Cross; however there is some disagreement on this, and it is possible that the code system was introduced later, and not something used by the medieval Templars themselves.

The Templar code uses 25 symbols (pieces of the Maltese Cross) to represent the letters of the alphabet. The Templar cipher is a substitution encryption system historically used by the Knights Templars in the Middle Ages to protect their communications. Only the Templars knew the secret of their cipher. This was the start of international banking which still needs ciphers to work today.

The Templars established financial networks across the whole of Christendom. They acquired large tracts of land, both in Europe and the Middle East. They bought and managed farms and vineyards, they built massive stone cathedrals and castles, they were involved in manufacturing, import and export, they had their own fleet of ships and at one point, they even owned the entire island of Cyprus.

The Knights Templar were not Europe's bank forever, of course. The order lost its reason to exist after European Christians completely lost control of Jerusalem in 1244. Now that the Holy Land was no longer under European control, European pilgrims stopped making pilgrimages. Without pilgrimages, there was no reason for them to place their savings with the Templars, causing its funds to gradually deplete. The Knights Templar held on for a few more decades after this point. Though they had lost a large portion of their clientele, their financial services remained available for wealthy citizens, members of the European nobility and the Templars were eventually disbanded in 1312.

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. So in 1307, on the site of what is now the Temple stop on the Paris Metro, Philip launched a raid on the Paris Temple - the first of a series of attacks across Europe.

Templars were tortured and forced to confess any sin the Inquisition could imagine. The order was disbanded by the Pope, and the last Grand Master of the Templars, Jacques de Molay, was brought to the center of Paris and publicly burned to death.

The Knights Templar Bank was not only one of the earliest banking institutions, but it was also a pioneer in the field of banking. They introduced many innovative practices that would lay the foundation for modern banking. Their forward-thinking approach to finance helped to shape the banking industry as we know it today. Their practices, such as providing loans, safekeeping assets, and establishing a network of branches, were ahead of their time. They also introduced early forms of banking checks and letters of credit, which paved the way for the development of modern credit and debit cards. The Knights Templar Bank remains an enduring fascination in popular culture. From books to movies to video games, their reputation as skilled financial pioneers and warrior monks has captured the imagination of many. The Knights Templar Bank may be gone, but its impact on the world of banking will never be forgotten. From their humble beginnings as warrior monks in the Holy Land to their rise as financial pioneers, the Knights Templar Bank remains an enduring symbol of the power of innovation, ingenuity, and determination.