The spirit of money

The Intersection of Religion, Economics, and Money

Throughout history, religion has played a significant role in shaping economic policy, despite the separation of church and state in many Western countries. For over two millennia, money has been essential in facilitating complex exchanges, with religious institutions often trusted to ensure ethical practices.

The Knights Templar: Pioneers of Ethical Banking

The Knights Templar, a medieval Catholic military order, developed a sophisticated financial system that can be seen as a precursor to modern banking. They established a network of financial centers across Europe and the Holy Land, offering services such as money transfers, loans, and safekeeping of valuables.

Unlike many contemporary moneylenders, the Templars operated with a strong ethical code, often providing interest-free loans to pilgrims and nobles alike. Their banking practices were rooted in their religious beliefs, emphasizing fairness and service to the community rather than personal gain.

The Templars’ approach to finance demonstrated that it was possible to create a robust financial system while adhering to moral principles.

Religious Perspectives on Money

Two prominent religious figures had strong opinions on financial matters:

1. Jesus: Known for his peaceful demeanor, Jesus notably lost his composure when confronting money lenders. This incident is often interpreted as a metaphor for the exploitation of vulnerable individuals by unethical financial practices[1].

2. Mohammed: The founder of Islam, who began his career as a merchant, emphasized the importance of ethical trade. Like Jesus, he prohibited usury (lending money at interest). During the period when trade ethics remained central to Islamic practice, the religion flourished, ruling a vast empire that fostered numerous innovations[1].

The Multifaceted Nature of Money

Money’s definition can vary depending on context, often involving a temporal aspect that relates past and future events. In civilization, money plays diverse roles:

– Armies plunder and protect it
– Governments derive power from it
– Philosophers define it
– Laws safeguard its exchanges
– Bankers control its flow
– People build dreams with it
– Investment bankers profit from it
– Economists strategize around it
– Businesses control time with it
– Consumers vote with it
– Religions moralize it[1]

Historical Perspectives on Ethical Finance

For centuries, Abrahamic religions discouraged usury and promoted ethical trade practices. These views aligned with those of philosophers like Aristotle, who argued against using money to generate more money through interest. Today, we often equate civilization with technological innovation, sometimes at the expense of wisdom and ethics.

The Tally Stick System in England

England experienced a 700-year period known as “Merry England,” initiated by King Henry I in the 1100s through the use of tally sticks. This system allowed the king to bypass money lenders and control his own accounting. Tally sticks became the primary method for tax collection and were even used for everyday transactions. This era was characterized by prosperity, absence of debt, and no boom-bust cycles[1].

The Rise of Central Banking

The establishment of the Bank of England in 1694 marked a significant shift in monetary policy. Tally sticks were initially accepted as deposits but were soon replaced by notes. This transition ushered in a new era of debt-based economics, which became the model for central banks worldwide[1].

Modern Banking Challenges and Solutions

Professor Werner, the founder of quantitative easing, advocates for a return to small, independent banks operating in local communities. He argues that this approach, as demonstrated in Germany, could lead to more responsible lending practices. Werner suggests that local bankers, familiar with their community members and businesses, would be better positioned to make wise investments[1].

Ethical Alternatives to Traditional Banking

One potential solution to address the issues associated with usury is profit-sharing, a method still used in Islamic banking. In this system, banks purchase assets on behalf of borrowers and share in the profits instead of charging interest. This approach balances risk-taking and incentivizes both parties to ensure the success of the investment[1].

The Need for Ethical Guidance in Finance

As religious influence on economic matters has waned in many societies, there is a need for alternative sources of ethical guidance. Historically, civilizations often relied on councils of wise individuals to provide guidance on temporal matters. While a top-down approach may no longer be suitable, a grassroots movement could potentially fill this void[1].

Conclusion: Reimagining the Role of Bankers