The Crusades, the Knights Templar, and Modern Banking - Money Lessons with Andrew Temte, PhD, CFA

Summary

Saturday Morning Muse: The Crusades, the Knights Templar, and Modern Banking

Episode Release Date: July 12, 2025
Host: Dr. Andrew Temte, CFA

Introduction

In the July 12, 2025 episode of Saturday Morning Muse, host Dr. Andrew Temte delves into the intriguing connections between the medieval Crusades, the Knights Templar, and the foundations of modern banking. With his extensive background in finance and history, Dr. Temte offers listeners a comprehensive exploration of how historical events have shaped contemporary financial systems.

Historical Context: The First Crusade

Dr. Temte begins by setting the stage in 1095, a pivotal year when Pope Urban II initiated the First Crusade. At [00:00], he explains:

“In 1095, Pope Urban II held two ecclesiastical or religious councils...”

Urban II sought to bolster the influence of the Roman Catholic Church and address the pleas of Byzantine Emperor Alexios I for military assistance against the Seljuk Turks. The Turks’ control over Jerusalem and other holy sites made pilgrimage perilous, prompting Urban II to rally European nobles with a compelling promise:

“[...] the forgiveness of sins and a fast pass into heaven for anyone who would participate in this holy war...” ([02:30])

This rallying cry galvanized both nobles and peasants, leading to the First Crusade (1096-1099), a series of military campaigns aimed at reclaiming the Holy Land and supporting Christian communities under threat.

Emergence of the Knights Templar

As the Crusades progressed, the logistical challenges of storing and securing wealth during prolonged campaigns became apparent. Dr. Temte highlights:

“Between 1096 and 1270, there were a total of eight major crusades to the Holy Land...” ([04:15])

To address this, the Knights Templar were established around 1118-1119 as a dedicated military order tasked with protecting Christian pilgrims. Members of this order pledged their assets to the organization, ensuring that their wealth was securely managed while they fought overseas.

The Knights Templar and Early Banking

Transitioning from military roles to financial innovators, the Knights Templar began issuing letters of credit around 1150. Dr. Temte elaborates:

“Knights in this order had to be single, in good health, and could hold no property or have any debts... they pledged all their assets to the order.” ([06:00])

These letters of credit functioned similarly to modern banking practices. Nobles could deposit their valuables with a Templar branch and receive a letter that allowed them to access these funds at other Templar locations across Europe and the Holy Land. This system provided security and flexibility for those embarking on extended military campaigns.

Moreover, the Knights Templar amassed significant wealth through donations, trade, and international commerce. They ingeniously navigated medieval usury laws, which prohibited charging interest on loans—a practice deemed immoral by the Catholic Church and other religious bodies. Instead of traditional interest, the Templars charged a form of rent, thereby circumventing these restrictions and establishing early banking fees.

“Usury...was considered immoral and was forbidden by the Catholic Church...so the Templars had to get creative with how to make money from providing banking services...” ([09:45])

Lessons for Modern Banking

Dr. Temte draws several key lessons from this historical narrative:

Origins of Modern Banking: Modern banking practices can trace their roots back to the Crusades and the innovative financial solutions developed by the Knights Templar.

“Pope Urban II's sermon...proved to be a catalyst for significant innovation in global trade, commerce, and banking.” ([10:15])
History of Usury: Understanding the historical context of usury highlights the evolution of financial ethics and regulations. While interest is a staple of modern banking, its acceptance and regulation have deep historical roots.

“The act of charging interest on a loan is really a relatively modern concept...” ([11:00])
Usury Laws Today: Contemporary usury laws aim to protect consumers by setting maximum interest rates, though loopholes and exemptions often limit their effectiveness. For instance, credit card interest rates as of July 2025 average 21.37%, a figure Dr. Temte suggests may be considered usurious by modern standards.

“The average rate...is something a rational person would likely consider that rate usurious.” ([11:45])

Conclusion

Dr. Andrew Temte wraps up the episode by emphasizing the enduring impact of historical events on today's financial systems. He teases future discussions on interest rates, rates of return, and the relative risks of loans, promising listeners deeper insights into financial literacy.

“If you're a student of history, you know that many of the innovations that we enjoy...were born out of conflict and strife.” ([10:20])

For those intrigued by the connections between history and finance, this episode of Saturday Morning Muse offers a compelling narrative that underscores the profound ways in which our past shapes present-day financial practices.

To explore more episodes and deepen your financial literacy journey, visit www.andrewtemte.com.

Transcript

A (0:00)

Foreign. Hi, I'm Andy Tempte, and welcome to the Saturday Morning Muse. Start your weekend with musings that are designed to improve financial literacy around the world. Today is July 12, 2025. Today we're going to talk about the history of banking, and our starting point may be a surprise for many listeners. So here we go. In 1095, Pope Urban II held two ecclesiastical or religious councils, the Council of Piacenza and the Council of Clermont. The Emperor of the Byzantine Empire, Alexios I, well, he'd written a letter to Pope Urban II asking for military assistance to repel advancements and territorial threats from the Seljuk Turks. The Seljuq Turks also had control of Jerusalem and other Christian holy sites in the Middle east, making Christian pilgrimages to the Holy Land much more dangerous. At the time, a pilgrimage to the Holy Land was the ultimate vacation destination for Christians who could a, afford it and B, weren't subjugated to a lord or noble. Well, Urban was looking for a way to increase the influence of the Roman Catholic Church in Europe and used Alexios plea as a tool to consolidate power. At the Council of Clermont In November of 1095, Urban gave a really killer speech where he admonished the violent, immoral behavior of the European nobility and issued a rallying cry for European nobles to go help protect Christians from Turkish persecution and to protect the capital of the Byzantine Empire, Constantinople, what is modern day Istanbul in Turkey. So, just for a little history lesson here, the Byzantine Empire was Christian and the Turks, the Seljuk Turks, were Muslim. Anyway, Urban used the promise of the forgiveness of sins and a fast pass into heaven for anyone who would participate in this holy war to go protect Byzantium, Eastern Christians and as an extension, relics and sites in the Holy Land. In modern speak, he told the French nobles at Claremont, hey, you losers. You're all a bunch of murderous sinners who don't stand a chance in h e double toothpicks to get into heaven. But if you pack your bags and go on this armed pilgrimage under my banner, your sins will be forgiven and you'll all be redeemed in the eyes of God. Now, in the context of medieval Europe, this promise of eternal life and the forgiveness of sins was met with great enthusiasm. Nobles and peasants alike responded to this call to arms, which we now call the first crusade, which ran from 1096 to 1099. If you want to learn a little bit more about the First Crusade and the Council of Claremont, check out the British History podcast with Jamie Jeffers. He's talking about this period of history from an English perspective right now. So what are the Crusades impact on modern banking? Why does this matter? Well, between 1096 and 1270, there were a total of eight major crusades to the Holy Land. If you were a European noble with property and valuables, you needed a place to securely store your wealth when you packed up for what was likely to be a multi year journey in 1118 or 1119. The poor fellow Soldiers of Christ and the Temple of Solomon was established as a religious military order to protect Christian pilgrims traveling to the Holy Land. This organization is known today as the the Knights Templar. Knights in this order had to be single, in good health, and could hold no property or have any debts. They pledged all their assets to the order. While originally designed as an elite fighting force and they were really great fighters. In about 1150, the Knights Templar began issuing letters of credit to European nobles who wanted to ensure that their wealth was secure and that they could access their wealth during their pilgrimage and participation in a crusade. How this worked was a noble would deposit their assets with a Templar branch. Think of a bank branch today in their home country in Europe. In return for a letter of credit. This letter of credit could be used at other Templar branches along established routes to and from the Holy Land. The noble would present the letter of credit and could withdraw the resources that they needed to support themselves and their band of lesser nobles and peasants. Because you didn't travel on something like this alone, it took a lot of heavy lifting and a lot of resources. Now, while an individual knight in the order was sworn to poverty, the Knights Templar as an organization accumulated vast wealth through donations from big nobles and other governments, various trade relationships, they owned ships and did all sorts of international commerce and what we would think of today as banking fees. The Templars also made loans to prospective knights that wanted to go to the Holy Land and skirted medieval usury laws by instead charging a form of rent in return for making loans to nobles and governments. Now, the word usury is defined as the practice of making loans that unfairly enrich the lender. Usury. And this practice of charging excessive or really any interest in that day was considered immoral and was forbidden by the Catholic Church and other religious orders like Muslims, the Jewish and others around the world. So the Templars and other early bankers had to get creative with how to make money from providing banking services to their clients. So what's the modern lesson? What have we learned today? First, modern banking can trace its roots back to the Crusades. And religious conflict between Christians and Muslims. Pope Urban II's sermon in the fall of 1095 that gave rise to the Crusades proved to be a catalyst for significant innovation in global trade, commerce, and banking. Now, if you're a student of history, you know that many of the innovations that we enjoy, the fruits of today, were born out of conflict and strife. It's amazing how industrious and innovative humans can be when we're under threat. Second, the history of usury is important. In banking, the act of charging interest on a loan is really a relatively modern concept, as interest and usury were outlawed for centuries on moral and religious grounds. Today, charging interest on a loan is commonplace. But usury laws exist in most countries around the world, and usury laws set caps on the amount of interest that can be charged. Usury laws set this maximum interest rate that can be charged on a loan. And in the United States, usury laws are set at the state level, and there are wide varieties of exceptions to these laws. Usury laws are supposed to protect consumers and borrowers like you and me, but there are many loopholes and exemptions that limit their effectiveness. Just take a look at the average interest rate on the credit cards that you carry in your pocket in any rational person would likely consider that rate usurious. The average rate as of July 2025 on credit cards is 21.37%. Now, in future episodes, we're going to talk about how interest rates and other rates of return are set and how the relative risk of a loan factors in. But until next time, I wish you grace, dignity and compassion. My name is Andy Tempte. This is the Saturday Morning Muse. You can find the show on all the major streaming services as as out on YouTube. Please like subscribe, rate and most importantly, share this public good with your friends, your colleagues, your neighbors, and maybe a family member or two. The show is produced by Nicholas Tempte and we'll see you next time on the Saturday Morning Museum.