How the Crusades Shaped Finance in the West

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A fight for ascendancy between Rome and Constantinople led to a new relationship between Popes, Kings, and bankers that both funded the Crusades and formed a new economic system.

Michael Hudson has devoted his career to the study of debt.

Introduction[edit | edit source]

By the late 11th century the geopolitics of Christendom had come to be shaped by a confrontation between Rome and Constantinople, in which Rome and France acted as a unit, with Germany and the Normans as the variables. Although German kings leaned toward the East in rejecting the papacy’s demand for control, they had to rely on the Pope to crown them as emperors. Eventually, the support for the papacy (in the form of money and troops) of Norman kings like Robert Guiscard and William the Conqueror made Rome the rising geopolitical power in Christendom.

Popes and Bankers[edit | edit source]

Money was increasingly the key to this power. It paid for armies—or for protection. The Byzantine Empire bought peace with Arabs and other potential attackers by paying them off with the gold it earned through foreign trade. Rome had no such commercial revenue sources or reserves. The 13th-century popes solved this problem by sponsoring an emerging class of Christian bankers to finance crusades against the Near East, Germany and other realms that resisted papal control. Credit became the new sinews of war. That dynamic inverted Church doctrine from opposing usury to embracing it as the key to military and hence religious victory.

The Business of the Cross[edit | edit source]

The Crusades came about after an attempt to heal the rift between Constantinople and Rome. When the Patriarch Alexios III asked Rome for protection against a military threat from the East, Pope Urban II saw it as an opportunity for the two branches of Christianity to unite. He declared a kind of military pilgrimage to Jerusalem via Constantinople in which soldiers would achieve salvation by protecting Christians from heathens.

The words “crusade” and “crusader” did not exist in the medieval vocabulary. Innocent III (1198-1216) spoke of “the negotiuim crucis, the ‘business of the cross’” and “‘the business of the Holy Land,’ quite literally the negotium terrae sanctae.”[1] The popes arranged for debts to be taken on by kings and nobles, churches and monasteries, backed by pledging rents from Church land, that of the nobility and the royal demesne to pay Christian bankers.

How the Crusades Shaped Finance in the West[edit | edit source]

Organizing the credit system to finance this fighting became the dynamic that shaped the West’s economic relations between kings, their subjects and the papacy during the 12th and 13th centuries. It enabled Innocent III, his cousin Gregory IX (1227-1241), Innocent IV (1243-1254) and Alexander IV (1254-1261) to become emperors in their own right. They were Italian, but no longer were representatives of local aristocracies. Their ambition emerged from the evangelism that the German reformers had inspired, but the new popes no longer were in partnership with the German kings.

The original intention was not to create a financial revolution but to free the church from control by secular Roman families using the church for their own gains, by banning simony and introducing ecclesiastical celibacy. But the driving logic of that fight led to a drive for tight control of all Christian patriarchates’ secular realms.

Fighting the wars to impose this control cost money, and that required credit. This led the papacy to sponsor a financial class, and in due course its power came to exceed that of the church, installing its leaders in the papal seat itself. By the 13th century popes were excommunicating kings, nobles and church officials not for practicing usury but for resisting paying it to the papacy’s bankers. Christian theology was rewritten, indeed reversed as financial dynamics led to a transformation of social life and organization that has been ongoing down to the present day.

  1. Jessalynn Bird, Edward Peters and James M. Powell,Crusade and Christendom: Annotated Documents in Translation, from Innocent III to the Fall of Acre, 1187-1291(Philadelphia, 2013):2.

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