Debt: The First 5000 Years - autonomous learning

THE MIDDLE AGES 291
capitalism of the sort long familiar in the Muslim Near West only really
managed to establish itself-quite late, compared with the situation
in the rest of the Medieval world-when merchant capitalists managed
to secure a political foothold in the independent city-states of northern
Italy-most famously, Venice, Florence, Genoa, and Milan-followed
by the German cities of the Hanseatic League.126 Italian bankers ultimately
managed to free themselves from the threat of expropriation by
themselves taking over governments, and by doing so, acquiring their
own court systems (capable of enforcing contracts) and even more critically,
their own armies.127
What jumps out, in comparison with the Muslim world, are these
links of finance, trade, and violence. Whereas Persian and Arab thinkers
assumed that the market emerged as an extension of mutual aid,
Christians never completely overcame the suspicion that commerce was
really an extension of usury, a form of fraud only truly legitimate when
directed against one's mortal enemies. Debt was, indeed, sin-an the
part of both parties to the transaction. Competition was essential to the
nature of the market, but competition was (usually) nonviolent warfare.
There was a reason why, as I've already observed, the words for
"truck and barter" in almost all European languages were derived from
terms meaning "swindle," "bamboozle," or "deceive." Some disdained
commerce for that reason. Others embraced it. Few would have denied
that the connection was there.
One need only examine the way that Islamic credit instrumentsor
for that matter, the Islamic ideal of the merchant adventurer-were
eventually adopted to see just how intimate this connection really was.
It is often held that the first pioneers of modern banking were the
Military Order of the Knights of the Temple of Solomon, commonly
known as the Knights Templar. A fighting order of monks, they played
a key role in financing the Crusades. Through the T emplars, a lord in
southern France might take out a mortgage on one of his tenements
and receive a "draft" (a bill of exchange, modeled on the Muslim suftaja,
but written in a secret code) redeemable for cash from the Temple
in Jerusalem. In other words, Christians appear to have first adopted
Islamic financial techniques to finance attacks against Islam.
The Templars lasted from 1n8 to 1307, but they finally went the
way of so many Medieval trading minorities: King Phillip IV, deep
in debt to the order, turned on them, accusing them of unspeakable
crimes; their leaders were tortured and ultimately killed, and their
wealth was expropriated.128 Much of the problem was that they lacked
a powerful home base. Italian banking houses such as the Bardi, Peruzzi,
and Medici did much better. In banking history, the Italians are