God's Bankers: A History of Money and Power at the Vatican

by Gerald Posner

  It had been only thirty-five years since the destabilizing aftershocks from the French Revolution had led to the easing of harsh, discriminatory laws against Jews in Western Europe. It was then that Mayer Amschel, the Rothschild family patriarch, had walked out of the Frankfurt ghetto with his five sons and established a fledgling bank. Little wonder the Rothschilds sparked such envy. By the time Pope Gregory asked for a loan they had created the world’s biggest bank, ten times larger than their closest rival.39

  Church leaders may not have liked the Rothschilds but they did like their cash. Shortly after the first loan, the Pope bestowed on Carl the medal of the Sacred Military Constantinian Order of St. George. For their part, the Rothschilds thought the Vatican was the most disorganized and chaotic mess they had ever encountered. They were startled to discover the church had no budgets or balance sheets. The prelates who controlled the money had no financial training. There were no independent reviews or audits. The combination of secrecy and disorder was ripe for abuse. When the Papal States fell into debt, the Pope sometimes simply repudiated the obligation and refused to pay. It was little wonder that the number of countries or banks willing to loan to the church had shrunk. Still, the Vatican rebuffed all financial reforms the Rothschilds suggested. Pope Gregory was suspicious of modernity, thought democracy was dangerous and destabilizing, and condemned even railroads as the work of the devil.40

  Gregory died in 1846. His successor was Pius IX. Pius, the fourth son of a count, confronted a new problem: a surging tide of Italian nationalism that threatened the church’s control of the Papal States.41 Since the eighth century, the Papal States had been the earthly symbol of the church’s power. By the time Pius became Pope, the Vatican’s land spread east from Rome in a broad swath that split Italy in half. It was sandwiched between two colonial powers, the Hapsburgs to the north and the French to the south. Pius was barely on the Papal throne when popular uprisings erupted across Italy. A loosely knit federation of anticlerical anarchists and intellectuals hoped to expel the colonial powers and establish a unified Italian republic with Rome as its capital. In their vision there was no room for the Papal States. Pius viewed the nationalists with alarm and disdain.42

  Determined not to lose the church’s empire and all its income, Pius tried dampening the widespread nationalist fervor with a conciliatory step: he introduced some reforms in the Papal States.43 His decrees established the first ever city and state councils and lifted some restrictions on speech. He freed more than a thousand political prisoners and created a Consultative Assembly composed of twenty-four elected lay representatives.44 The standing gallows in the center of each city were demolished, and the Pope loosened the censorship on newspapers. The changes were popular. But they were a decade too late.

  Sicily exploded in full rebellion in January 1848. There was a revolt in Palermo that same month.45 Pius scrambled to stay ahead of the deteriorating situation by making more concessions. He set forth the outlines for a constitution that alluded vaguely to limiting his own secular power.46 But the compromises from Rome got lost in the escalating violence. The nationalists drove the Austrians from Milan that spring. Fearing the Austrians might try to seize some of the church’s lands in retaliation, Pius dispatched ten thousand troops. Word spread fast that the church’s army was on the march. Ordinary Italians were enthusiastic. But almost as quickly as Pius had sent them, he reversed himself, declaring that he did not think the church should be at war with a devoutly Catholic nation such as Austria.47

  Popular sentiment boiled when Pius wavered. Romans, in particular, were furious and condemned the Pope as a reactionary posing as a reformer. Large crowds protested daily outside St. Peter’s and breakaway gangs clashed frequently with the Vatican’s Swiss Guards. On November 15, 1848, a mob surged into the Palace of the Chancellery and chased down Count Pellegrino Rossi, the Papal Prime Minister. They cornered him on a staircase and slit his throat.48 The next day an armed gang swarmed near the Palazzo del Quirinale and killed several Swiss Guards as well as the Pope’s personal secretary.49 Some in the mob insisted the Pope be taken prisoner. A few days later, disguised as a common priest—and with his face partially concealed by a large scarf and dark glasses—Pius fled Rome in a carriage for the remote sea fortress at Gaeta in southern Italy. The king of Naples guaranteed his safety.

  France’s Louis Napoleon (later Napoleon III) commissioned an expeditionary force of nine thousand troops and sent them to battle the Italian nationalists so Pius could return to Rome. The fighting was bitter and it took eight months before the French retook Rome and toppled the fledgling Republic. French army officers and three senior cardinals (the so-called Red Triumvirate) ran the city while the Pope was in exile. The French would not allow Pius to return until they were confident all the nationalist cells were eliminated.50

  Pius returned to the Vatican nine months later. He was now the reactionary that people mistakenly thought he was before the fighting had forced him to flee for his life. The Pope would never again consider any reforms nor would there be any more compromises. The disarray he witnessed upon his return to Rome further convinced him that modern thought caused disorder. Crime was rampant. Price gouging over food exacerbated widespread hunger. Jews, a favorite scapegoat, received most of the blame, especially since some had worked with the nationalists.51 Pius even made Rome’s Jews pay the cost of his return since he contended they must have somehow been the agitators responsible for his exile in the first place.52

  Worries about the chaos in Rome were soon replaced by concerns over the dire condition of the church’s finances. The bedlam meant sales of indulgences had plummeted. Collection of taxes in the Papal States had been badly affected. There was an enormous pile of two years of unpaid bills as well as new obligations to pay for the French garrison that now protected Rome. The Vatican desperately needed an infusion of cash. The Catholic bank to which Pius hoped to go for help, Paris-based Delahante and Company, had collapsed from the fallout of the Third French Revolution.53 Although the aristocratic Pius was an unrepentant advocate of a medieval view of Jews as the evil architects of everything from rationalism to Freemasonry to socialism, he reluctantly agreed that only the Rothschilds could again keep the Church afloat.54

  The new Rothschild loan was 50 million francs—more than $10,000,000. That was more than the Vatican’s entire budget for a year. Two additional loans were soon forthcoming, totaling another 54 million francs.55,III

  The Rothschilds, meanwhile, were criticized by some Jewish leaders who felt as though the family simply profited from the church without making any effort to change its harsh policies toward Jews. So the Rothschilds tried leveraging their influence to beseech the Holy See to improve conditions for the fifteen thousand Jews in the Papal States.57 They asked that the Pope cancel extra taxes levied solely on Jews, the prohibition on taking property from the ghetto, and the ban on working in professions, and that he abolish onerous evidentiary standards that put them at tremendous disadvantage in court cases. Pius sent a written assurance to the Rothschilds through the Papal Nuncio in Paris that he would help.58 Privately, he told some of his aides that he preferred martyrdom to acceding to the Rothschild requests.59 Pius ultimately made only a single concession: he tore down the walls and chained gates that ringed Rome’s notorious Jewish ghetto, the last in Europe set apart by a physical boundary.60 But it had no practical effect, as Jews were prohibited from moving anywhere else.61 When Carl Rothschild visited Rome four months later and complained that little had changed, Pius mollified the family by lifting a long-standing requirement that Jews attend proselytizing sermons every week on their Sabbath.

  Pius bristled at the church’s dependency on the Rothschilds. So did prominent Catholic bankers, like the Belgian André Langrand-Dumonceau, who declared it “shameful” to borrow money from Jews.62 Church leaders believed Jewish financiers were Freemasons, part of a larger international effort to destabilize the Vatican and push a secular philosophy in which worship of money r
eplaced that of God.63 To make the church less reliant, Pius appointed a deacon, Giacomo Antonelli, as his Cardinal Secretary of State (roughly the Pope’s Prime Minister) as well as chief of the Papal Treasury.IV Antonelli, who came from a prosperous Napolitano family, had been one of Pius’s few trusted aides in exile.65 It was a controversial selection. According to Antonelli’s biographer, Frank Coppa, “In pride he was considered a match for Lucifer, in politics a disciple of Machiavelli.”66 But he had the backing of Pius, the only person who mattered. The Pope gave him broad leeway to make the church self-sufficient.67

  Antonelli began by ending the Vatican’s financial subsidies for clerical orders such as the Jesuits and Franciscans. They had historically been a costly drain.68 Although it caused a furor among the religious orders that relied on getting money from Rome, Pius refused any entreaty to reverse the decision. And as part of an ambitious restructuring of the church’s debt—and against the advice of a majority in the Curia—Antonelli raised taxes and introduced new tariffs in the Papal States. He negotiated with the Rothschilds to consolidate some of the Vatican’s outstanding debts into a single forty-year loan.69 It was for a then staggering 142,525,000 francs (around $30,000,000, some 40 percent of the church’s outstanding debt) at a 5 percent interest rate.70 Antonelli proved as tough a negotiator as James Rothschild. He resisted the bankers’ demands that the Vatican’s extensive real estate serve as collateral. In 1859, with the new loan in place, Antonelli balanced the Papal budget for the first time since the start of the century.71

  Antonelli soon devised a plan to entirely bypass the Rothschilds: the church would sell interest-bearing debt directly to the faithful without using an investment bank. Two Catholic newspapers offered the chance to test his do-it-alone proposal. In 1861, the Vatican brought the Jesuits’ fortnightly La Civiltà Cattolica (Catholic Civilization) to Rome. And it purchased L’Osservatore Romano (The Roman Observer), a paper that became required reading in far-flung Catholic communities.72 Besides generic articles about faith, Antonelli crammed both papers with appeals for donations. The cash that came in was double his target.73 The Pope approved the sale of future debt without the Rothschilds.

  In 1860, the church issued 60 million lire in Vatican “bonds.” Priests urged the faithful to buy them as their “religious duty.” Bishops collected the money and sent it to Rome.74 And when the church eventually needed help managing its debt, Antonelli and Pius ushered in two Paris-based Catholic bankers, the Marquis de la Bouillerie and Edward Blount.75 Free of the Rothschilds, it was not long before Pius rebuilt some of the wall around Rome’s Jewish ghetto.76

  Catholics gave money to the church despite Pius’s unpopularity. Italians longed for a unified Italy. They knew the Papal States were an obstacle to achieving that. The Pope’s likability quotient had also suffered after a widely publicized incident in 1858 in which the Papal police in Bologna forcibly seized a six-year-old boy, Edgardo Mortara, from his Jewish parents after a Catholic housekeeper told friends she had secretly baptized the child years earlier when he had been gravely ill as an infant.77 Once children were baptized the church considered them to be Catholic and therefore Jewish parents could not be trusted to raise them. For centuries, children allegedly baptized in the Papal States had been taken from their birth parents and raised either by a Catholic family or placed into a church-run institution dedicated to the conversion of Jews.78

  What made the Mortara case different was that the youngster’s confinement to a Rome conversion center had sparked appeals to Pius personally to intervene and order the boy returned to his parents. Pius instead directed the boy be brought regularly to the Vatican’s Esquiline Palace, where he promised to personally raise him as a Catholic.79

  The boy was, of course, awed by the splendor of the Papal Court, and Pius steadfastly ignored many appeals for his release. Napoleon III, who found it galling that the French garrison made it possible for the youngster to be held, condemned the kidnapping, as did his devout and popular wife, Empress Eugénie. The Prime Minister of the Italian state of Piedmont—seeing this as an opportunity to weaken the Papacy—promised to return the boy to his parents.80 And Catholics in America and Britain denounced the boy’s taking. Pius dismissed the outcry as a conspiracy of “freethinkers, the disciples of Rousseau and Malthus.”81 Later, in a reference often used about Jews, Pius chided his critics as “dogs” and complained there were too many in Rome.82

  When a delegation of Roman Jews visited Pius and pleaded for the boy’s release, the Pope erupted in anger, accusing them of stirring up popular sentiment against the Papacy. Personal appeals from the Rothschilds went unanswered. La Civiltà Cattolica fed the widely held belief that Jews murdered Christian children in order to use their blood in rituals. It reported Eastern European Jews had kidnapped and crucified children and suggested that the child’s parents wanted him back only so they could torture him since he was now a Catholic.83 The paper also published a story about Edgardo’s early months in Rome, claiming that “he begged to be raised in a Christian home,” and that, supposedly, without any coaxing, he said, “I am baptized and my father is the Pope.”84

  Antonelli knew the impassioned controversy was bad for business. Contributions from the faithful had plummeted due to the international outrage. Antonelli asked the Pope to reconsider. But Pius would not budge. “I have the blessed Virgin on my side,” he told his Secretary of State.85 And as for those who might not want to give money to the church because they were alienated by the taking of the boy, Pius told Antonelli that was his job to fix it.86,V

  The Pope had picked a bad time to test the limits of his secular power. Although the French had returned Pius to Rome, the nationalists had not abandoned their quest to unite Italy. A new wave of bloody insurrections kicked off across the peninsula in 1859. The resurgent instability caused distress inside St. Peter’s. Napoleon’s armies joined Sardinian militias in fighting Austrian troops and soon all of Italy was engulfed in civil war. The Hapsburgs eventually lost Lombardy. And the Bourbons relinquished control of Naples. Venice and Sardinia fell into the nascent unified Italian Republic. In 1861, the nationalist army annexed most of the Papal States. The Pope was now the secular king only of Rome.

  Antonelli beseeched Pius to liberalize the Vatican’s investments. Having lost the Papal States’ income, the church would either have to downsize the Pope’s court and Curia or find creative ways to bring in more cash. Approving Vatican “bonds” as he had the previous year was only the first step, Antonelli told the Pope. Antonelli confided to a colleague that he thought Pius would give him more leeway over the finances so long as the Pope did “not consult the Holy Spirit.”88

  Pius gave his answer later that year in an encyclical, Quanta Cura (Condemning Current Errors) and an attached Syllabus of Errors. The Syllabus caused an uproar.89 It, relied on edicts of previous Popes to denounce eighty tenets of modern life, including freedom of speech, divorce, the right to rebel against a lawful government, and the choice of people to practice religions other than Catholicism. Syllabus deplored materialism, science, liberalism, and democracy. Its eightieth statement declared there was no reason any “Roman Pope” should ever have to “harmonize himself with progress . . . [or] recent civilization.”90

  Syllabus was an unrelenting broadside condemning the modern world and held stubbornly to the notion that the church could thrive according to the standards of a bygone century.91 Its harsh tone was particularly startling since Pius was himself an ex-librarian. He understood the church’s history better than many of his predecessors. Some had hoped that Pius might revert to the reformer traits that marked his early Papacy. But Syllabus crushed such expectations. Antonelli knew that Western governments were dumbstruck by the denunciations of freedom of thought and of conscience.92 In private, he tried explaining away Pius’s anti-intellectual diatribe.93 But much in the same way that the kidnappings of the Jewish children had undermined the Pope’s moral standing, Syllabus undercut his intellectual integrity. Italian
university students burned copies in protest. A few priests left their orders citing Syllabus. Secular newspapers trashed it.

  As with the kidnappings, Pius dismissed all criticism. He boasted that Syllabus was a seminal pronouncement and the attacks only reinforced his view that he alone had been divinely selected to guide the church. Eventually, to settle any simmering internal dissent, he ordered all bishops and cardinals to Rome in 1869 to debate the church’s role in opposing rationalism. Seven hundred ninety-two made the journey.94 The First Vatican Council—held in the acoustically dreadful St. Peter’s—focused instead on whether a Pope’s authority had limits. After seven months of raucous debate a majority of the bishops voted in favor of a declaration that on all issues of faith the Pope could unilaterally invoke infallibility.95

  But there was little time inside Pius’s inner circle to celebrate. The day after the infallibility vote France declared war on Prussia.96 The war was the ideal pretext for Napoleon to withdraw his garrison and leave Rome undefended.97 Pius pleaded in vain to other Catholic countries for help. None did. Appalled by the two kidnappings and convinced that the Pope was an obstructionist, no leaders had any incentive to risk the lives of their troops to save a Pontiff who was so incredibly at odds with modern society.