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

Gerald Posner, “God’s Bankers: A History of Money & Power at the Vatican”, Simon & Schuster (2015) 513 pp. plus add’l 100 pages of notes/references

Author Gerald Posner describes 200 years of the Pope’s handling of the vast financial resources of the world-wide Catholic church.   This is the story about how money and accumulating and fighting over it, has been a dominant theme in the history of the Catholic Church.  “You can’t run the church on Hail Marys,” said one bishop who ran the Vatican Bank.

Even though the book emphasizes the impact of finances on the Church, I found the narration of Pope Pius XII’s failure to in any way criticize the Nazis during WWII inexplicable, if not criminal.  To further complicate my understanding, in 2009 Pope Benedict began the process to make Pius XII a saint.  Anyway, it is rather thought provoking to follow the Vatican’s ability to prosper during WWII by starting their own bank* which only reported to the Pope, participating in the confiscation of Jewish life insurance policies through their hidden involvement in the Italian insurance business, and trading in the gold market laundering money. The Vatican’s finances during this period were exclusively handled by Bernardino Nogara, a layman who reported only to the Pope, the same Pope whom has not yet completed his journey to sainthood (much like myself).  Incidentally, there is now some evidence that Nogara was a German spy; you just cannot make this stuff up!  It’s a real Who-Done-It, again and again, tale that even has a “The Butler Did It” episode.

*Pope Francis on Jan. 15, 2015 began cleaning house at the scandal-ridden Vatican Bank, replacing most of the institution’s advisers.  Francis’ move essentially undid a decree issued in 2013 by his predecessor, Pope Benedict XVI, who confirmed the Vatican Bank’s supervisory body for another five years, just days before announcing his retirement.

My Notes (even though this book is essentially about church finance, my notes don’t really go into much detail about this aspect, it was just to convoluted to break down in meaningful chunks.  Instead my notes gathered up other salacious tidbits):

Pg. 13:  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.  The Vatican rebuffed all financial reforms the Rothschild’s (the Vatican’s lender of last resort) suggested.  Pope Gregory XVI was suspicious of modernity, thought democracy was dangerous and destabilizing, and condemned even railroads as the work of the devil. (Gregory died in 1846, succeeded by Pius IX).  Pius IX had to confront a surging tide of Italian nationalism that threatened the church’s control of the Papal States.  Since the eight century, the Papal States had been the earthly symbol of the church’s power.  (In 1861 the nationalist army annexed most of the Papal States.  The Pope was now the secular king only of Rome; in 1869 the Pope’s territory was reduced to that contained inside the Vatican).

Pg. 17:  Pius IX likability quotient had suffered after a widely publicized incident in 1858 in which the Papal police in Bologna forcibly seized a six-year-old boy 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.  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.  What made the 1858 case different was that Pius IX personally intervened and refused to order the boy returned to his parents.  Pius instead directed the boy be brought to the Vatican where he promised to personally raise him as a Catholic. 

Pg. 19:  Pius IX in 1864 issued the encyclical, Quanta Cura and an attached Syllabus of Errors.  The Syllabus caused an uproar.  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 Pope should ever have to harmonize himself with progress…or recent civilization.  As with the kidnappings, Pius dismissed all criticism.  In 1869 he ordered all bishops and cardinals to Rome to debate the church’s role in opposing rationalism.  This First Vatican Council focused instead on whether a Pope’s authority had limits.  They concluded that on all issues of faith the Pope could unilaterally invoke infallibility.

Pg. 26-31:  Pope Leo XIII (1878-1903) followed Pius IX.  Although he started out his reign as fairly liberal, he reversed course in the final years of his Papacy and became increasingly intolerant.  Over a eighteen-month stretch he reaffirmed Syllabus, spoke out against the separation of church and state, condemned freedom of the press and religious tolerance, and reiterated the medieval philosophy of
Thomas Aquinas that only those who accepted Catholicism could be productive.  He rebuffed all appeals to reverse the Papal ban on Catholics serving in government.  He also questioned whether there was any intrinsic value in democracy.  America’s separation of church and state, combined with its embrace of personal liberty and unfettered individual capitalism, rankled the Vatican.  It was heresy, concluded Leo, to allow any secular state to develop without the integral involvement of the church at every stage. 

Pg. 34:  The Index Librorium Prohibitorium was active from 1559 until Pope Paul VI eliminated it in 1966, Catholics could be excommunicated for owning or reading the banned books.  More than 3,000 authors and 5,200 books were banned over the centuries.  The writers ranged from 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 Darwin’s and Hitler’s.

Pg. 46:  Following Leo XIII came Pius XI 1922-39.  In 1928 the financial audit of the Vatican’s resources was complete and concluded what many suspected: the Vatican was down to its last dollars.  But even these results were not enough to compel Pius XI to loosen the church’s restrictions on commercial investments.  Instead, that same year he banned bishops and priests from any involvement in banking even with Catholic institutions, unless they agreed to be personally liable to the faithful for any losses.  The Pope put his faith in Mussolini who he believed would not let the church go under. 

Pg. 59:  By 1935 the Catholic Church’s economic health was tied to the health of Mussolini’s fascist-issued bonds.  With the exception of farming, there was no sector of the Italian economy in which the Vatican did not have a significant investment or ownership interest.

Pg. 81:  In 1939 Pius XII became Pope.  Three days after his election, Nazi troops marched into Czechoslovakia and divided it into two states.  Pius convened a meeting with four leading German cardinals and told them he believed that a condemnation would only worsen the tension.  He felt his relation with Germany presented the Third Reich with an unprecedented opportunity to repair the fraying relationship he had inherited.  He wanted excellent relations with the country (Germany) he considered his second home. 

Pg. 111:  The Vatican in early 1939 was fearful that any war would threaten the money the church got from the Kirchensteuer, the 8 to 10 percent tax imposed on every German Catholic.  This tax in 1939 returned enough money to Rome to pay for most of the church-state’s operating expenses.  (Note: the Nazis collected and paid the tax to the Vatican throughout the war.  In 1943, the ax revenue hit a then record, just over $100 million (a 2014 equivalent of $1.7 billion)).

Pg. 117:  The Pope and his financial man, Nogara, knew that the Allies tracked all the church’s financial dealings since the Vatican used Western banks.  Therefore in June, 1942 they formed their own bank, the IOR.  This freed them of any wartime restrictions.  They could operate anywhere worldwide, did not pay taxes, have to show a profit, produce annual reports, disclose balance sheets, or account to any shareholders.  The bank had only one shareholder: the Pope.

Pg. 143:  Following WWII, Nazi fugitives had shed their military uniforms, donned civilian clothes, and were frantically trying to avoid the American and British military police searching for them.  The Allied Nazi hunters had no idea then that a handful of Catholic clerics in Rome anxiously awaited the Nazis.  These church clerics provided those fugitives not only a place to sleep and some food, but also false travel documents as well as a ticket by boat to a welcoming foreign country.  The Pope was not in on this but his silence during the war had fostered an environment in which otherwise dutiful Catholics could participate in mass murder and not fear excommunication.  “It was curious that Catholic priests kept helping me on my journey,” Eichmann recalled years later.  “They helped me without asking any questions.” (P. 148).

Pg. 151:  The OSS kept from the diplomats any knowledge of Juan Peron providing five thousand visas for ‘anti-Bolshevik’ German soldiers.  The CIA picked up the costs for running the escape route for men using these visas.

Pg. 153:  In 1949 Pius XII announced he would excommunicate any Catholic who ‘defended and spread the materialistic and anti-Christian doctrine of Communism.’  The church’s harshest punishment now applied to anyone who even read communist newspapers or literature.  This was quite a contrast to the Pope’s laissez-faire attitude during the war, when it came to whether Catholicism was incompatible with Nazi Party membership.  (Pius XII died in 1958 and was succeeded by John XXIII who would strip away much of the imperial Papacy pomp and, unlike Pius XII, John believed that the church should stay out of secular politics.  The Curia was worried as the Pope had answered when asked, “How many work in the Curia,” and he said, “About half.”

John XXIII was the antithesis of his predecessor; he had consistently tried to have the Church denounce the Nazi’s during the war and had, of course, been ignored.  No-one, except him, anticipated his election; he had his acceptance speech in his pocket!

Pg. 166:  Only three months after taking office, John XXIII called for only the second Vatican council in the church’s two thousand-year history.  (This council kept him too busy to tinker with the IOR Vatican bank).  In any event, on June 3, 1963, John XXIII died and was succeeded by Paul VI. 

Pg. 180:  Paul VI reconvened the Second Vatican Council only three months after his election.  A month later, twelve fundamental changes to the liturgy, the largest revision in church history, were approved.  The most notable to lay Catholics was the end of the Latin Mass.  Traditionalist were irate.  Many in the Curia were incensed at moves they viewed as diluting their powers.  Decisions that used to be the exclusive province of Rome were delegated to the countries where the issues originated.  Local dioceses would now decide contested marriage court cases that previously went straight to Rome.  The council also finally renounced the belief that all Jews bore collective historical guilt for the death of Jesus.  It also renounced its centuries-old policy that it was a duty of Catholics to convert Jews.

Pg. 181:  Paul VI made a noticeable political shift to the left.  He increasingly criticized the American bombing of North Vietnam that had started in 1965.  In 1966 the church announced $15 million in aid for North Vietnam and at the same time it dispatched two Vatican officials to visit Vietnam.  His 1967 reception for Soviet President Nikolai Podgorny marked the first state reception for a communist official at the Vatican.  His encyclical that same year called for economic and social justice and set a goal of ‘just distribution’ of wealth in Third World countries to help bridge the gap between rich and poor.  Paul VI died in August, 1978 and was succeeded by John Paul I who would reign until 2005.

Pg. 409:  The full extent of the sex abuse scandal was made clear in a February 2004 145-page research report issued by New York’s John Jay College of Criminal Justice.  The U.S. Conference of Catholic Bishops had authorized the study.  It concluded that 95 percent of American dioceses had at least one complaint of a sexual assault by a priest against a minor (the incidents before 1950 were not counted).  During the five-plus decades, 4,392 priests had been accused of abusing 10,667 children, a figure that in some years was as high as 10 percent of all priests.  Four out of five victims were minor boys.  Less than 5 percent of incidents had been reported to the police. 

Pg. 432:  Benedict XVI (2005-13) gave an address at the University of Regensburg, a discourse about the gap between Europe’s secularism and Islam’s rigid orthodoxy.  He quoted a fourteenth-century Byzantine emperor: “Show me just what Muhammad brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached.”  The speech prompted a firestorm.  Riots erupted in a dozen countries.  Six churches in the Palestinian territories were torched, a sixty-six year old nun in Somalia was executed, an Italian priest was shot to death on the steps of his parish church in Turkey, and an EU diplomat was stabbed to death in Morocco.  The Islamic calamity over this incident was to prove to be the template for the rest of Benedict’s papacy. 

Pg. 437:  The worldwide recession that started with the bursting of the American housing bubble in 2006, had a devastating impact on the Vatican’s finances.  The Vatican turned from a budget surplus of $3.1 million in 2006 to a $13.5 million deficit in 2007. 

Pg. 491:  Benedict XVI’s resignation in 2013 may have been precipitated by a report he received from the three cardinals he had appointed to investigate a ‘gay network’ of ranking clerics.  In that report were details about regular sex parties and the charge that as a group not only did they exert undue influence in the Curia but that some of them were blackmailed by lay outsiders. 

Pg. 512:  Pope Francis has dramatically restructured the Vatican bank (IOR).  Going forward the bank would primarily be a payment service and financial advisor for employees, Catholic charities, and religious orders.  The revamped IOR would no longer be able to trade in property and stocks.