Knights and bank II

[NOTE: This is the second part at looking at how organizations of knights affected banking.]

In the first part, the Templar Knights had lent to the French king and then were exterminated by the king after a political battle.  France's King Phillip also forced the Catholic church to end the Templar order.

Any resources of the Templars that were not taken by France were absorbed by other orders of knights, principally the Hospitaller Knights.

Templar Knights had produced many innovations in banking -- secure accounts, a type of travelers check, safe deposit boxes, and structured large loans.

With the end of the Templars, the Hospitallers soon gave up banking too because they feared the same outcome would hit their order.

This meant the field of banking was opened for new lenders to use the Templar's innovations.  Pawn shops met the needs of small borrowers but governments needed bigger lenders.

Many of the large lenders didn't require interest payments on the loans because usury was still viewed as anti-religious.  Instead the lenders requested extra "conditional" payments on the loan.  Banks would receive rent payments, or ownership of crops, or direct reception of taxes.  For example, the kingdom of Naples that controlled the southern half of modern Italy was completely run by banks.

As the banks run by orders of Knights stopped, family-run banks grew.  These family dynasties grew quickly.  Italian cities became known for their banks. Florence banks dominated international finance and the gold florin coin was widely used. By the 1300s two Florence families, the Bardi and Peruzzi families, grew amazingly wealthy from their banking businesses.

In England, King Edward III ran up big debts from these Italian banks to fund a war against France. When the king was unable to repay the loans, the king defaulted on the loans in 1342 and the Bardi and Peruzzi houses went bankrupt.

Those bankruptcies caused a massive economic depression that probably ranks as the worst ever in human history.