Templar Banking and the Temple in London
The Knights Templar were not only a military religious order and a vast landowner across Europe. They were also, in the late twelfth and thirteenth centuries, one of the most important international banking organizations in the Western world. The Templars’ banking activities, especially through their London headquarters at the Temple in London, were a key part of the Order’s power and influence, and they have given the Order a permanent place in the history of finance.
This cluster page examines the Templars’ banking system. It is a companion to the article on Temple Church in London and to the article on the preceptors and commanderies.
The Origins of Templar Banking
The Templars’ banking system emerged in the late twelfth century, in response to a real practical problem: how to transfer money across the Mediterranean in safety. The Templars, with their network of preceptories and commanderies stretching from Scotland to the Holy Land, were uniquely placed to solve this problem.
The system was simple in concept. A pilgrim or a nobleman could deposit money at a Templar house in his home country, and he could withdraw the equivalent in Jerusalem, or in any other major Templar house, in the local currency. The Templars charged a small commission, typically 5–10 percent, for the service.
The system was based on a sophisticated infrastructure:
- A network of preceptories and commanderies that served as the Order’s local offices.
- A standard system of accounting that allowed the Order to track deposits and withdrawals.
- A small but well-trained staff of treasurers and accountants, many of them brothers of the Order.
- A system of safe storage for cash and valuables, using the strong rooms of the Order’s houses.
The result was a system that, in many ways, anticipated the modern traveler’s check and the modern bank transfer.
The Temple in London
The principal center of the Templars’ banking activities in England was the Temple in London, a complex in the heart of the City of London that served as the Order’s English headquarters. The Temple was located on the bank of the River Thames, between the cities of London and Westminster, and it included the famous Temple Church, a round church built in the 12th century, together with a complex of administrative and residential buildings.
The Temple in London was one of the most important financial centers of medieval England. It was the principal place of business for many of the English crown’s financial activities, and it was the site of one of the first attempts at centralized royal finance. The Temple. See Temple Church in London.
The Crown and the Templars
The English crown was one of the principal users of the Templars’ banking services. The Exchequer of the Jews was abolished in 1290, and the Treasury of the king was housed, at least in part, in the Temple in London. The Templars held many of the royal financial records, and they were the principal financial agents of the English crown.
The English kings were major borrowers from the Templars. Henry III of England (r. 1216–1272) borrowed heavily from the Order, and Edward I of England (r. 1272–1307) also had a substantial debt. The English debt to the Order, and the crown’s desire to be free of this debt, was one of the factors that led to the suppression of the Order in 1312.
The story of the suppression. See The Trial and Suppression of the Knights Templar.
The French Crown and the Templars
The French crown was an even more significant user of the Templars’ banking services. Philip IV of France (r. 1285–1314) borrowed heavily from the Order in the early years of the fourteenth century. The debt became a major political issue in the years before the arrests of 1307, and it was one of the major factors behind Philip’s decision to destroy the Order.
The story of the relationship between Philip and the Templars is told in The Trial and Suppression of the Knights Templar and in Who Was Philip IV of France?.
The English Exchequer
The Temple in London was the site of a major development in medieval English finance: the growth of the Exchequer of Receipt. The Exchequer of Receipt was the department of the royal government that received the king’s revenues, and it was housed, in part, in the Temple.
The Exchequer of Receipt, together with the Exchequer of Account (the audit office) and the Exchequer of Pleas (the court), formed the three branches of the medieval English Exchequer. The Exchequer of Receipt, in particular, developed a sophisticated system of tallies (sticks notched to record financial transactions) and pipe rolls (long scrolls recording the accounts of the sheriffs). The system was a major step forward in the development of modern accounting.
The Templars as Landowners
In addition to their banking activities, the Templars were major landowners across Europe. The Order’s estates in England were extensive, including lands in London, Essex, Hertfordshire, Kent, and many other counties. The Order’s English estates were a major source of revenue, and they were a key part of the Order’s financial power.
The English Templars were organized into a hierarchy of preceptors and commanderies, with the Master of the Temple in London at the top. The Master of the Temple was one of the most powerful religious figures in medieval England, and he had a seat in the English parliament as a representative of the clergy.
For more on the Order’s structure, see The Preceptories and Commanderies.
The Suppression in England
The suppression of the Templars in England followed a similar pattern to the suppression in France, but with significant differences. The English Templars were arrested in January 1308, and the trial dragged on for several years. The English Templars were treated relatively leniently, with most brothers eventually being pensioned off. The English Templar estates were largely confiscated by the crown, although some did pass to the Knights Hospitaller.
The Temple in London was first run by Crown-appointed keepers, then transferred to the Hospitallers in 1313, who in 1324 leased the buildings to two groups of lawyers — the future “Inner Temple” and “Middle Temple” — the two of the four Inns of Court that still occupy the site today. The story. See Temple Church in London.
The Templars’ Banking Legacy
The Templars’ banking activities, although destroyed by the suppression of 1312, had a lasting impact on the development of European finance. The Order had demonstrated that a system of international banking based on a network of correspondent houses was possible, and that the trust of depositors could be won by a combination of security and efficiency.
After the suppression, the Knights Hospitaller inherited some of the Templars’ banking functions, but the system never recovered its pre-1312 scale. The international banking system that the Templars had developed would not be replicated until the development of the Bardi and Peruzzi companies in the 14th century and the Medici bank in the 15th.
Conclusion
The Templars’ banking activities were a key part of the Order’s power and influence. The Order’s network of preceptories and commanderies, combined with the principal headquarters in Paris and London, allowed the Templars to develop an early form of international banking that served kings, nobles, and pilgrims. The system was destroyed by the suppression of 1312, but it had a lasting impact on the development of European finance.