referred to as the ‘Indian Machiavelli', Chanakya compiled many of his economic and political ideas into his book Arthashashtra, which due to its harsh political pragmatism is widely considered a precursor to Machiavelli's The Prince. Standing as arguably the first systematic book on economics, the Arthashashtra discusses numerous theories, such as monetary and fiscal policies, welfare and ethics, economic management, international relations and war strategies. Many of the topics that Chanakya introduced in the book are still prevalent in modern economics.
Chanakya believed in the power of an autocracy for effective management of an economy, with a solid legal system needing to be observed in order for an economy to thrive.
Perhaps the first person to visualize the concept of a ‘nation', Chanakya's teachings offer a bureaucratic framework for the management of a society. Chanakya taught that ‘artha' (sound economies) has paramount importance for the duties and obligations of a king.
“HENCE THE KING SHALL BE EVER ACTIVE IN THE MANAGEMENT OF THE ECONOMY. THE ROOT OF WEALTH IS [ECONOMIC] ACTIVITY AND LACK OF IT [BRINGS] MATERIAL DISTRESS. IN THE ABSENCE OF [FRUITFUL ECONOMIC] ACTIVITY, BOTH CURRENT PROSPERITY AND FUTURE GROWTH WILL BE DESTROYED.”
CHANAKYA FROM THE ARTHASHASTRA
Legend has it that one night whilst working Chanakya was visited by a Chinese traveller. Chanakya immediately extinguished the oil lantern that he was working with and lit another. When the Chinese traveller asked if it was an Indian custom to do so, Chanakya is said to have responded “No my dear friend. There is no such custom. Actually, when you entered, I was working. It was an official work, pertaining to my empire, my nation. The oil filled in that lamp has been bought from the money from the National Treasury. Now, I am talking to you. This is a personal and friendly conversation, not related to my nation; so I cannot use the lamp now, as it will lead to wastage of the money of the National Treasury. Hence, I extinguished that lamp and lit this other lamp, since the oil in this lamp has been bought from my personal money.”
“TAXATION SHOULD NOT BE A PAINFUL PROCESS FOR THE PEOPLE. THERE SHOULD BE LENIENCY AND CAUTION WHILE DECIDING THE TAX STRUCTURE. IDEALLY, GOVERNMENTS SHOULD COLLECT TAXES LIKE A HONEYBEE, WHICH SUCKS JUST THE RIGHT AMOUNT OF HONEY FROM THE FLOWER SO THAT BOTH CAN SURVIVE. TAXES SHOULD BE COLLECTED IN SMALL AND NOT IN LARGE PROPORTIONS.”
Chanakya FROM THE ARTHASHASTRA
03 THE KNIGHTS TEMPLAR
c.1119–1314
The Knights Templar were a medieval Christian military organization, officially endorsed by the Catholic Church to provide a pivotal role in protecting pilgrims on their journey to visit the Holy Lands.
Despite the traditional imagery of the Knights Templar, the military face of the organization was actually relatively small; the vast majority of the organization existed to support the knights and to manage the financial infrastructure of the network.
Whilst the Templars themselves were sworn to poverty, due to their extensive sponsors (comprised of nobility and royalty across Europe), within the organization they controlled vast amounts of money throughout Europe.
However, what most people don't realize, aside from the images of swords, horses and crusades, is that the Knights Templar were actually the pioneers of multinational banking.
Many aristocratic figures wishing to participate in the Crusades would entrust the Templars with their wealth whilst they were away. In return, the Templars would issue a ‘letter of credit' for the pilgrims. The vast network of Templars stretching across Europe and to the Holy Lands allowed the system to function efficiently. The pilgrims would deposit their valuables with a local Templar before departure, receiving a document indicating the value of their deposit, which they would then use upon arrival in the Holy Lands to retrieve their funds. In addition, by not carrying their wealth on their person whilst travelling, the Pilgrims were less susceptible to being robbed. Essentially, this was an early form of banking, and was quite possibly the first formal system to support the use of cheques.
As a result, the vast network of Templars was able to acquire large holdings of land across Europe and the Middle East, build churches and castles, and engage in various import and export activities. With up to 20,000 members at its peak, they even had their own fleet of ships. The network they developed, and the way in which they operated, is widely regarded to be the first example of a multinational banking corporation.
AT ONE POINT, THE
KNIGHTS TEMPLAR
OWNED THE ENTIRE
ISLAND OF CYPRUS
LEGEND HAS IT THAT THE KNIGHTS TEMPLAR WERE THE PROTECTORS OF THE ‘HOLY GRAIL'…
… ALTHOUGH THE IDENTITY OF THE ‘HOLY GRAIL' IS STILL DISPUTED – MANY BELIEVE IT TO BE THE CHALICE JESUS DRANK FROM AT THE LAST SUPPER, OTHERS CONSIDER IT TO BE THE SHIPPING ROUTES TO THE ORIENT, WHILST SOME SAY IT WAS THEIR ORGANIZATIONAL STRUCTURE OF THEIR MULTINATIONAL BANK.
04 NICOLE ORESME
c.1320–1382
Undoubtedly one of the greatest economic thinkers of the middle ages, the European roots of the quantity theory of money originate from the workings of Nicole Oresme.
Born in Normandy (France) around 1320, Oresme studied theology, and eventually rose to become Bishop of Lisieux, and chaplain and advisor to King Charles V.
Oresme lived throughout a period of great financial upheaval in France; unlike the contemporary relative stability of many Western currencies, French monarchs freely manipulated their currency for personal gain. For example, between 1295 and 1305 the value of the French currency was reduced by 80 %, subsequently to return to its original value in the following decade and then to fall once again the next decade.
Thus, much of Oresme's work deals with his concerns about the persistent, aggressive and arbitrary changes to the value of money resulting from successive devaluations by the French ruling classes for their own personal gain.
As the author of the first independent, comprehensive economic thesis, Oresme represents a key milestone in the development of early economic literature.
His thesis provided the first statement on the quantity theory of money, taking inspiration from the monetary policies of his contemporary French monarchs. Oresme condemned devaluations and instead highlighted the importance of maintaining the perceived value of the national currency in order to provide stability.
ORESME'S LEGACY WAS SEALED WHEN HE OUTLINED THAT THE RULING MONARCH HAD A DUTY TO THEIR NATION TO ACT AS PROTECTOR (AS OPPOSE TO OWNER) OF THEIR NATIONAL CURRENCY
LAYING THE FOUNDATIONS FOR SUBSEQUENT FREE-MARKET ECONOMISTS TO BUILD UPON ULTIMATELY ORESME BELIEVED THAT THE PRODUCTION OF MONEY SHOULD BE LEFT TO THE FREE MARKET.
05 THE MEDICI FAMILY
c.1397–1737
No family has contributed more to the development of medieval banking than the Medici.
Established in c.1397 and based in Florence, at their height in the 15th century the Medici family operated the largest bank in Europe, and were Europe's wealthiest family. With their great wealth came great power; the Medici's rose to become highly influential in Italy and later throughout Europe. The family produced four Popes and two regent Queens of France.
So
