The flood of cash had a liberating effect on the miserly Pontiff. Cardinal Pietro Gasparri, Secretary of State to two Popes, had once said, “The Vatican, even with its gardens, is merely a palace, not a state.”26 Although Pius shared with his predecessors the unrealistic desire to restore the Papal States, he felt that the church had to make the mini-state it called home grander. He was confident he had sufficient resources from the surge in Peter’s Pence. Pius nearly doubled the Vatican’s size by purchasing adjacent properties, including the Italian Mint. A single building to house the new Pontifical Biblical Institute cost a then record 400,000 lire.27 Having given up on streamlining the bureaucracy, Pius added three Roman palaces for more office space for the Curia.28
Physical expansion was only one way the Pope intended to enhance the church’s stature. He spent millions more building churches throughout Italy to accommodate the growing Catholic population.29 And when a major earthquake ravaged some Italian towns in 1908, Pius used the disaster to demonstrate that the church was as effective as the state in helping the victims.30 The faithful rewarded his activism with more than 6 million lire in additional contributions.31
Pius had a tremendous mistrust of secular politicians. Those misgivings were amplified as Italy’s socialists gained popular support. They were a hodgepodge of disparate groups, inspired partly by Karl Marx, and consisting of a loose affiliation of peasant leagues, worker’s cooperatives, trade unions, and political activists. Many were allied with anarchists. Their movement had little room for God and none for organized religion.32 As the cardinal of Venice, Pius had rallied the city’s Catholics to form an alliance with political liberals to oppose the socialists. Now, as Pope, socialism’s surge so alarmed him that it trumped his antiquated opposition to modernity. He lifted the church’s ban on Catholics voting in and running for public office.33 The result was dramatic. Catholics were elected to the Italian parliament in 1904 and 1909. And so many were victorious in 1913 that they blocked a socialist takeover of the Italian legislature.34
Pius also reached an arrangement with Italy to give the church an unrestricted right to buy and sell property.35 Before then Black Nobles helped the Vatican circumvent complicated Italian laws about the acquisition and inheritance of real estate and other assets. Pius now agreed the church would no longer hide its investments through proxies.36
Bankers like Pacelli became ever more important as the laws about the church’s role in business became less restrictive. Besides being the president of the Banco di Roma, Pacelli was also a Roman city councilor and on the board of some of Italy’s most successful companies. And he had forged strong relationships with prelates inside the Curia. Pius trusted him, as did powerful cardinals, such as Merry del Val and Vives y Tuto, the respective Secretaries of State, and the Inquisition.37 Pacelli convinced Pius to invest millions to help the Bank of Rome expand its operations to Egypt, then an Italian colony.38 By 1913, half of the Vatican’s income came from interest earned on its giant stake in Pacelli’s bank.
The banker diversified the Vatican’s holdings, making small investments in Italian gas and electric companies, French banks, Swiss railways, and even a few stocks in Italy, Germany, and Spain.39 Pacelli was the president of Italy’s only film producer. Although the Pope was suspicious of the new medium and had issued several decrees banning priests from seeing films, no church official complained when Pacelli invested some Vatican money in the new technology.40
But there was a limit to what Pius would do for Pacelli. One of the Bank of Rome’s directors, Marchese Alberto Theodoli, was also a Black Noble. He asked Pius to transfer whatever money the Vatican still had on deposit with the Rothschilds to the Bank of Rome. Pius refused. The Pope told Theodoli and Pacelli that whenever previous Popes had moved the Church’s money away from the safekeeping of Jews to the control of Christians, it turned into a disaster.41 But that was a minor disagreement compared to the quarrel they had about Italy’s invasion to expand its African empire by seizing Libya from Turkey in 1911. The Bank of Rome provided the money for a consortium of Italian companies that hoped to exploit Libya’s rich oil and mineral deposits by converting the country into Italy’s colonial “fourth shore.” The bank financed everything from uniforms to supplies for the army.42 Pacelli also poured money into the country, investments that would only flourish in the wake of an Italian military victory.43 He lobbied Pius to endorse Italy’s fight for the colony as justified. And he did persuade a few cardinals to ratify the campaign as a battle of civilizations between Christianity and Islam. But Pius refused. He told Pacelli that he would not abandon the Vatican’s long-standing policy of neutrality. The church’s strength, Pius argued, was its impartiality. “In ancient times,” Pius lamented, “the Pope with a word might have stopped the slaughter, but now I am powerless.”44
But Pacelli was persistent. He beseeched the Pope for a Vatican endorsement of the Libyan expedition. Since patriotic Italians facing war flooded the Vatican with contributions, Pacelli cited that as evidence of the war’s popularity and that it had unintended benefits for the church.45 Pacelli never shared with the Pontiff that the church was at significant risk should the Bank of Rome stumble in its Libyan venture.46 Eventually, so irritated by Pacelli’s refusal to accept a simple no, the Holy See began distancing itself from him. Pacelli was surprised to discover that he suddenly had to make an appointment through Pius’s private secretary. Next, their weekly meeting was canceled. The harder Pacelli tried recouping his influence, the more Pius pushed him further away. Pacelli’s entrenched foes, jealous of his friendship with the Pope and covetous of his power, began a whisper campaign attacking his character. Leading cardinals who had been his friends did nothing to help him. After twenty years as the chief lay advisor to two Pontiffs, Pacelli was finally without influence. His fall was so great that when Pius was on his deathbed in a couple of years, a Papal chamberlain turned him away.
* * *
I. The Index Librorum Prohibitorum was active from 1559 until Pope Paul VI eliminated it in 1966. Catholics could be excommunicated for owning or reading the banned books. The Koran and Talmud were prohibited. More than 3,000 authors and 5,200 books were banned over the centuries. The writers ranged from ancient ones such as Aristotle and Plato to philosophers such as Voltaire and Kant to novelists such as Hugo and Balzac. Sometimes, seemingly objectionable books never got listed, such as Charles Darwin’s work about evolution, The Origin of Species, and Adolf Hitler’s Mein Kampf.19
5
An Unholy Alliance
The seventy-nine-year-old Pius died on August 20, 1914, having lived just long enough to see the outbreak of World War I. By the time the cardinals began gathering for their conclave, the Germans had captured Brussels and were within thirty miles of Paris. The Russians had advanced into East Prussia. Thousands had died in major battles. Pressured by their own governments and spurred by nationalism, the French, German, and Austrian cardinals arrived in Rome each promoting their own partisan as the next Pope. They also had compiled short lists of cardinals they intended to oppose at all costs.
After ten rancorous ballots Bologna’s Cardinal della Chiesa, a long shot, emerged to become Benedict XV.1 After deadlocking on more partisan choices, a majority overcame the German and Austrian objections and coalesced around the moderate della Chiesa. Having endured Pius’s brutal modernist purge, the cardinals settled on a leader they hoped could guide the church through the war without becoming mired in the often debilitating internal theological battles waged by traditionalists on reformers. The diminutive, thin Genovese aristocrat—his nickname was Picoletto (tiny one)—not only had a reputation as a Francophile but he had been a cardinal for only three months.2
Judging by his appearance, it did not seem that Benedict could match Pius’s unrelenting fire. A childhood accident had left him with only one working eye and ear. His voice was high-pitched. One shoulder was noticeably higher than the other, and he had a halting limp and an ashen complexion. “I am but an ugly garg
oyle on the beauties of Rome,” he commented once about his demeanor.3
Benedict promptly set to mark the Papacy as his own. He dismissed his strongest rival, the British-educated Spaniard Cardinal Merry del Val, giving the Secretary of State just enough time to clean out his desk.4 And he kept Pacelli ostracized but also shunned the advice of other senior advisors he inherited. A fresh start appealed to Benedict—especially since he faced navigating the church through the uncertainty of a worldwide war. The conflict battered the church’s balance sheet. Peter’s Pence contributions from warring nations like France and Belgium plummeted.5 After Italy declared war against Germany in 1916, donations from German Catholics also tumbled.
The crisis created by the plunging revenues was exacerbated by Benedict, who turned out to be a spendthrift.6 He yearned for the days of a majestic Papacy. Some of his directives—such as reinstalling the right of lay Catholics to kiss his slippers and again banning anyone from eating with the Pope—came at no cost. But to restore the pomp that predecessors had eliminated was expensive.7 And since he relied on the mediocre advice of a few handpicked cardinals who had little better business sense than he, the Vatican had trouble figuring out how to stem the hemorrhaging.8 Compounding the problem was that the church’s fixed costs had soared as the buying power of the lira had nose-dived due to hyperinflation.9 Only a year after becoming Pope, Benedict had trouble paying even the salaries of his court.10
Unaware of the church’s own dismal finances, when the Bank of Rome got squeezed in a credit crunch, its chairman, Count Carlo Santucci, a devout Black Noble, beseeched Benedict for a bailout. Santucci was the Pope’s own pick to replace Pacelli as the bank’s chief. He convinced the cash-strapped Benedict that the best way to protect the church’s stake in the bank was to invest more money. The Vatican scrounged up 9 million lire, with which it could ill afford to part.11 But the infusion was not enough. Halfway through the war, the Vatican’s 42.5 million lire equity in the Bank of Rome was worth less than 15 million.12 And it lost millions more in trying to save several regional Catholic banks.
Benedict had no better luck in misguided efforts to bolster five leading Italian Catholic dailies.13 They had lost advertisers during the war and the cost of paper and ink had risen steeply. During peacetime, they had eked out small profits, but the war brought debt of some 8 million lire. A couple teetered on the verge of bankruptcy. The Vatican did not want to use its own money, instead asking American bishops for a long-term, low-interest-rate loan of $500,000. But since the U.S. church was in the middle of its own financial crunch, the American bishops declined.14 Benedict had no choice but to dissolve the centralized financial hierarchy that ran the newspapers. The Pope reluctantly approved a long-term loan of nearly 2 million lire and also convinced another Black Noble, Count Giovanni Grosoli, to forgive some remaining debts he had previously advanced.15
Benedict fared little better politically than he did financially. He lobbied through intermediaries to prevent Italy from joining the Allies (Britain, France, and Russia). Catholic newspapers argued that joining the war was bad for the country (those “stay neutral” pleas were covertly subsidized by a German diplomat based in Rome).16 At one stage the Pope thought he had brokered a deal by which Austria would abandon its claim to its former Italian territories in return for Italy staying neutral. That deal fell through.17
Benedict knew he had few good options. Italy and the Austro-Hungarian Empire were crucial Catholic bastions. That they might fight each other was distressing enough. Benedict agonized publicly about “the monstrous spectacle of this war with its streams of Christian blood.”18 But equally sobering was the thought that only one could be victorious. A loss by the Austrians could weaken their role as a wall against Russian Orthodoxy. And if Italy joined the Allies and lost, social instability might spread throughout the country. Although Benedict had no love for Rome’s secular government, he realized the possibility of widespread civil unrest in the wake of a defeat would be terrible for the Vatican.
Benedict failed to get Italy to stay neutral. The Italians declared war on Germany and joined the Allies in 1915. That did not change the Allied view that the Pope was unabashedly pro-German.19 British intelligence had confirmed that Benedict had authorized purchases of so-called Italian War Loans that raised money for the war.20 And the Allies had also learned that Benedict believed that Germany and Austria-Hungary—the Central Powers—would prevail. His conviction was so strong that he approved a substantial Vatican investment in Austrian stocks, a decision that resulted in sharp losses.21 The Allies also knew that the Vatican rented one of its Roman properties to an arms manufacturer that supplied the Germans (when the British eventually leaked that to the press, the church feigned shock, claiming it was not aware of its tenant’s business).22
Even the Allies did not know the extent of the Vatican’s secret connection to the Central Powers. Germany was covertly funneling cash to the church through Swiss banks and labeling it “Peter’s Pence.”23 That helped stabilize the church’s finances. The German Foreign Ministry separately sent the Vatican cash from a propaganda slush fund. And the Austrians joined with a clandestine subsidy to Benedict.24 Besides the secret payments, Matthias Erzberger, the head of Germany’s Catholic Center Party, raised money for the Vatican from German businesses and wealthy industrialists. So pleased was the Pope with the large donation Erzberger presented to him in 1915 that the Pontiff thanked him with special gifts and a Papal decoration.25
In January 1917, Italian authorities charged Monsignor Rudolf Gerlach, a Papal chamberlain, as a German spy.26 The Vatican, tipped off to Gerlach’s imminent arrest, whisked him from Italy to Switzerland. Several lay co-conspirators were put on trial and found guilty, while Gerlach was convicted in absentia and sentenced to life.27 Benedict was shocked, by all accounts, that someone he trusted had acted both as a German paymaster for covert operations as well as passing secret communications through the Vatican’s diplomatic pouches.28,I The Gerlach episode fueled rumors across Italy that the Pope had struck a secret deal with the Central Powers to return to the church most of the Papal States after the war.30
The Pontiff released a seven-point peace plan on August 1, 1917, three years into the war.31 Benedict and his Secretary of State, Cardinal Gasparri, thought it would make the church a key mediator for peace. But the Allies ignored it, having long ago decided to snub any Papal entreaties for ceasing hostilities. America had entered the conflict only four months before Pius released his plan. With the United States in the war, the Allies felt even more confident to disregard the Vatican. Some mocked the plan’s generalities: “We have never ceased to urge the belligerent peoples and Governments to become brothers once more.” Even the Central Powers derided as naive and impractical Benedict’s call for countries to disarm after the war.32 The Papal peace overture was such a flop that it only further weakened the church’s influence.33
Although the Allies ignored the Pope, since they considered him pro-German, many Catholics in war-torn Europe thought he had abandoned them by failing to endorse either side (a French priest in Paris reflected a common sentiment, “Holy Father we do not want your peace”).34 When Italy’s army was routed at Caporetto in November 1917, Italians blamed the Pontiff for spreading “defeatism.”35 As the war stretched on, donations to the church kept declining. The annual pilgrimages to St. Peter’s dried up and large-scale Papal audiences—used by the Vatican as fundraising events—disappeared.
The nadir for Benedict’s diplomatic influence came when the Allies refused to allow the Vatican to be included in the 1919 Paris Peace Conference.36 When the war had begun, Benedict’s main worry was that Russian Orthodoxy might seep westward. The Bolshevik Revolution during the middle of the war meant now that hostilities were over, the threat from Russia had dramatically changed. The hard-line Russian communists were equal-opportunity atheists, zealously eradicating temples, churches, and synagogues and promising to export their godless revolution around the globe.37
&n
bsp; Not long after the war ended a small cadre of clerical advisors insisted to Benedict that finances, not politics, be paramount. Since he had become Pope, the church had lost almost 60 million lire—about 40 percent of its capital—on a broad range of soured investments.38 Years of war had left much of Europe ravaged and millions of Catholics faced high unemployment and a great recession.39 Distressed congregants in Germany, Austria, and Hungary were clamoring for financial aid from the Vatican.40
The only positive glimmer was that French Catholics somehow managed to increase their donations in the run-up to Joan of Arc’s highly publicized canonization. Forty thousand French pilgrims came to Rome for the ceremony.41 But it was not enough. The Vatican’s crisis forced it to open its books in 1919 to the Italian government to avoid cash-strapped bureaucrats from taxing the church’s income.42
God's Bankers: A History of Money and Power at the Vatican Page 6
