"Off we go now selling our fiefs, to win God's Temple, and lay the Saracen's low"
A song for the road
The Crusades - Greatest Hits circa 1100
Historical Notes
Property owners have used real estate as collateral for borrowing since antiquity. The early laws of ancient Israel, India, Egypt, Greece and Rome permitted landowners to borrow by using their property as security or guarantee.
The economic activity generated by the mortgage and sale of land in Western Europe during the Crusades in the 12th century, set the foundation for the establishment of modern monetary and banking systems.
References to mortgages in the Old Testament indicate that ancient Jews used the practice of mortgaging real property. The early laws of India indicate that the hypothecation of land as collateral was common to Indo-Europeans.
Property was used as security for marital obligations in ancient Egypt. A pillar or tablet set up on a piece of land in ancient Greece, inscribed with the lender’s name and the amount of the debt, indicated that the owner had pledged the property.
In Ancient Rome, Moneylenders would set up their stalls in the middle of enclosed macellae (courtyards) on a long bancu (bench) from which are derived the words banco and bank. Over time, ancient Rome perfected the administrative aspect of banking and saw greater regulation of financial institutions and financial practices.
Roman law permitted the use of property as security and mortgages were known as pignus conventum and hypotheca. Roman bank practices included the charge of interest on loans and the payment of interest on deposits. The ascent of Christianity imposed restrictions on Roman banking as the interest charges were perceived as immoral.
Banking was abandoned in western Europe after the fall of Rome and did not revive until the time of the Crusades. The need to transfer large sums of money to finance the First Crusades stimulated the reemergence of banking in western Europe at the beginning of the 12th century.
Nobles' and Knights' first act in the service of God during the Crusades, was to raise money to finance their expeditions. The sale and mortgage of their land were the traditional methods by which Jerusalem pilgrims financed a journey, which each year, might cost three or four times as much as a man's annual income.
The old French word mort-gage translated literally to death-guarantee. It actually meant that the borrower had made an agreement with the lender that if he died or did not return from the Crusades to pay his debt, then the lender would become inheritor of his lands. This practice was widespread in Western Europe and England during the Crusades.
The need for currency to go to war and the economic activity engendered outside Western Europe during this period set the foundation for the establishment of modern monetary and banking systems.