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The Vatican's vast and complex network of power and money begins with a corpse.
The body, suspended from scaffolding under a bridge over the River Thames in London, was at 7:30 a.m. on June 18, 1982.
The deceased wore a Patek Philippe watch, $13,700 worth of national banknotes, and an address book with the contact details of Italian and British dignitaries. His suit was deformed by the fact that it was stuffed with stones.
Even more bizarre than the death was the subsequent release of information. The deceased, Roberto Calvi, was chairman and general manager of Bank Ambrosino, one of the largest private banks in Italy.
(Roberto Calvi)
At the time, Calvi was in the appeal period for an unresolved criminal fraud case. He absconded illegally, and by the time he came into view again a week later, he was killed.
Calvi was born into an ordinary middle-class family and single-handedly built the local bank of Ambrosino into a world-class commercial bank. Through a secret branch of Masonics, he also became involved with some of Italy's top power brokers, and thus became a confidant of the Vatican's top figures.
As the homicide investigation progressed, the police found more and more suspicious points.
Calvi's route a few days before his death, the whereabouts of his two companions, and his last correspondence with his family all seem to have hidden plots, and the various traces of the murder scene, as well as Calvi's physical condition, are not like suicide.
(Crime scene)
However, after several deliberations, the nine-man jury finally ruled that Calvi was a suicide.
The result was strongly opposed by Calvi's family, whose wife, Clara, told an Italian media outlet that her husband was victim of a fierce power struggle at the Vatican.
This statement is not unfounded.
Just days before Calvi's death, he wrote a private email to Pope John Paul II in which he wrote that the $1.8 billion in debt that ambrosino Bank was saddled with, most of which was secured by the Vatican Bank, would wreak havoc on the church. He requested an immediate meeting with the Pope in order to explain the situation and wanted to submit an important document to the Pope.
(John Paul II)
Over the next few decades, the case went through several twists and turns:
Calvi's family appealed, and the case was eventually changed to a pending case by the British court, which became a pending case;
Both U.S. and British investigative firms hired by Calvi's family have found serious evidentiary gaps in both previous judgments;
In 1998, 16 years after Calvi's death, his family was approved to exhum his body and a thorough autopsy was carried out by a research institute in Milan, which yielded extremely complex but still inconclusive results.
It wasn't until 2002 that experts in Rome used the latest technology to reconstruct Calvi's death scene. It took another three full years for the police to find enough evidence to bring murder charges against the five suspects.
Among the suspects were the former president of the secret Freemasonry branch to which Calvi belonged, and Flavio Carlbene, who was with him in London on the day of his death.
On October 6, 2005, the much-anticipated trial began. However, the final outcome of the trial was unexpected: all charges were dismissed and all suspects were acquitted.
In 2010 and 2011, two Appeals courts in Italy continued to uphold the acquittal. One prosecutor commented: "This result is a second murder of Calvi. ”
So, what's the secret behind this Calvi that he can't rest in peace for nearly 30 years?
To answer this question, the spotlight needs to be directed at the power and money map within the Vatican. Behind it is the centuries-old struggle of the clergy over vast wealth.
Calvi's death is only the prologue. Only by understanding the undercurrents beneath the surface of the water can we understand the scandals that are now taking place in the Holy See and the challenges that Pope Francis faces in his attempts to reform.
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The Vatican was originally the center of the medieval Papal States, and after the territory of the Papal States was incorporated into Italy in 1870, the Pope retired to the Vatican. In 1929, the Vatican signed a treaty with Italy and became an independent state.
The administrative costs of the state, and the extravagant costs of living of its clergy, directly led to the Vatican having to continue to look for a variety of ways to make money.
For more than a thousand years, the Papal States mainly used methods such as taxation, the sale of indulgences, and pardons. But the people's patience with the Church reached a tipping point in 1513 when Leo X became pope.
(Leo X)
Leo X, who came from the Florentine Medici family, lived a profligate life since childhood, and when the Empress of the Church did not restrain her expenses at all, she owed huge debts, and also attacked dissidents such as Martin Luther.
By the end of the 18th century, liberal political thought swept through Western Europe, social unrest reached its climax during the French Revolution, and the church's cash flow and social status became increasingly unstable.
This upheaval did not abate until the first half of the 19th century, and church incomes declined significantly.
Some advisers suggested that the church develop a source of income other than some of the believers' donations, but this was rejected. Most clergy believe that modern economic theory is reprehensible, and the Vatican's banned listing of John Mill's Principles of Political Economy is a typical statement.
Against this backdrop, Gregory XVI, who became pope in 1831, was astonishing: he borrowed £400,000 (equivalent to more than $40 million today) from the Rothschilds, a European banker.
(Gregory XVI)
The money became a lifesaver for the church, and the family's Paris head, James de Rothschild, became the "papal banker." The Jewish background of the Rothschilds has caused great opposition among the believers.
(James de Rothschild)
Gregory XVI also had its limitations.
The Rothschilds believed that the financial management of the church at that time was chaotic, its personnel lacked financial knowledge, there was no independent audit, embezzlement of public funds occurred frequently, and financial reform was urgently needed. But Gregory XVI refused.
After his successor sheltered the Ninth Emperor, not only the old problems remained, but new ones also surged forward.
(Pius IX)
In 1848, the Sicily Revolution broke out, and Pius IX made many legal and policy concessions, but it was too late. At the end of that year, he fled Rome and went into exile for nine months before finally returning to the Vatican.
After such a toss, the financial situation of the church was even worse.
Desperate, Pius IX reluctantly appealed to the Rothschilds again, borrowing a total of 54 million francs. In return, Pius IX symbolically demolished the fence around the Jewish ghettos of Rome.
Pius IX also made an important personnel appointment: his most trusted confidant, Giacomo Antonelli, as Secretary of State for the Cardinal and Papal Treasurer.
(Giacomo Antonelli)
As soon as Antonelli took office, he carried out a series of drastic reforms:
He ended the Vatican's financial subsidies to the clergy; raised the papal states' tariffs and imposed new ones; he struck a deal with the Rothschilds to package all of the Vatican's outstanding debts into a 40-year loan, and rejected the family's idea of using much of the Vatican's real estate as collateral.
Under the strong control of Antonelli, in 1859, the church's finances were balanced for the first time since entering the 19th century.
Antonelli soon had a new plan: he planned to bypass the Rothschilds, who had helped the church, and sell bonds directly to the faithful.
He conducted a trial sale on two copies of theological paper, raising twice as much as expected, and was a great success. In 1860, the Church issued sixty million lire bonds.
After this battle, Pius IX of the Rothschild family was successfully thrown out, and the walls of the Roman Ghetto, which had been demolished, were immediately rebuilt.
But the good days didn't last long. In 1861, most of the papal states was incorporated into the Kingdom of Sardinia; in 1870, the city of Rome was incorporated into Italy, and the territory of the papal states retreated to the Vatican.
Political turmoil has reignited financial crisis. After several rounds of deliberation, Pius IX and his think tank decided to restore the system of devotion to the faithful. In good years, the contribution system is only used for special purposes. Today, the church needs a donation to barely maintain its daily operations.
However, even in despite the crisis, Pius IX was repulsive to other, more radical means of fundraising, such as the issuance of lottery tickets. He doesn't trust capitalism. First, he believed that capitalism would lead to the separation of church and state, and second, he believed that capitalism was an evil industry for the Jews.
The tide of the times is rolling in. In 1874, Italy banned the compulsory opening of religious classes in schools, and in 1876, Parliament passed a bill prohibiting clergy from making political speeches when preaching. Each change was met with fierce protests from Pius IX.
In 1878, Pius IX died. Spies from the Italian government have infiltrated the Vatican and brought back news that the church hierarchy is plotting to elect new non-Italian leaders in other countries.
To prevent the birth of a hardline foreign pope, Italy sent word to the Vatican that if they dared to go abroad for a meeting, they would be forever barred from returning to Rome. The Vatican can only obey.
In the end, Leo XIII was elected as the new pope.
(Leo XIII)
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Leo XIII inherited a "legacy" of about 30 million lira, which included gold, bank deposits, and many IOUs that could not be recovered at all. In addition, he inherited a deficit of 45 million lira.
Leo XIII was also surprised to find that a large part of this financial mess was caused by the former Treasury Minister, Antonelli. During his reign, he not only accumulated great personal wealth, but also promoted all four of his brothers to the top of the Vatican's institutions. In addition, he deployed a secret network to sell precious collections donated by believers and take the money out of Italy.
Leo XIII also found that many of the lower clergy lacked financial common sense. All this led him to decide to take care of everything on financial issues and do it himself.
Beginning in the 1880s, Leo XIII, who preferred to invest modestly, secretly invested most of his faithful's donations into the Roman real estate market. He entered the early stages of the massive speculative wave of the real estate market and ate a huge dividend.
On this basis, he made a large investment in the newly formed Bank of Rome, bought a stake in the Rome tram system, and took control of a British water supply company.
In addition, Leo XIII became close friends with Ernesto Pasili, the new president of the Bank of Rome after the bursting of the housing bubble.
(Ernesto Passili)
Relations between the Vatican and the Italian government were still strained, and the well-connected Passilian became an unofficial intermediary between the two sides, playing a great role in mediating.
Leo XIII never gave up on the naïve illusion of a complete restoration of the Papal States, and was not discouraged by repeated setbacks. When Passiel saw this, he advised the Pope that the power of the Church did not lie in secular diplomacy, but in its financial independence, and consequent power.
Under Pacili's influence, the Pope began to invest in banks, construction companies, utilities, and opened a nationwide peasant union, workers' unions, and food cooperatives to help Italy's poor workers and peasants. By the beginning of the 20th century, the Vatican had opened 44 small Catholic banks throughout Italy.
However, although Leo XIII's fiscal concept was very open, his political line was extremely conservative and even reactionary. He was against the separation of church and state, against the Catholic modernization movement, and even some of his ideas seemed to his supporters to be too out of touch with the times.
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Leo XIII died in 1903. After ten rounds of voting, Pius X was elected the new pope.
(Pius X)
Pius X was the first pope in history to come from an ordinary working-class family. He was extremely conservative, humble, disciplined, and simple, in contrast to the popes who had lived extravagant lives in the past.
Pius X was eager to make a difference. He began by attacking the Vatican's redundant bureaucracy, ordering a reduction of 37 departments to 19. But the establishment of the Holy See did not take him seriously.
As a result of the struggle between the two sides, the Vatican's institutional setup has only changed its form, and the substance has not changed in the slightest.
Pius X's opposition to the Catholic modernization movement was also trite, but it was appreciated by the equally conservative extremists. Every time the media reported a verbal clash between the pope and the leaders of the United States, Britain, France and other countries, the church received a record number of donations from believers.
Backed by abundant cash, Pius X purchased a number of real estate projects, doubling the size of the Vatican's assets. Due to the unsuccessful streamlining of the institutions, Pius X simply bought three more Roman palaces to provide more spacious office space for the Holy See.
In order to resist the social movements that were surging at the time, Pius X worked hard to increase the political influence of the Church. After the earthquake of 1908, the church played an extremely important role in post-disaster relief. The Pope also lifted the ban on religious non-election to public office for the first time, with immediate results, with Catholics elected to the Italian Parliament in 1904, 1909 and 1913.
Pius X also reached an agreement with the Italian government that would allow the church to buy and sell property without restriction. Since then, the church no longer has to hold assets through the "white glove".
This change has also made the role of financiers like Pacili more prominent. Pius X and Passili maintained a good relationship inherited from their predecessor, and by 1913 half of the Vatican's income came from interest on its huge stake in the Bank of Rome.
Under Passili's direction, the Vatican invested in Italy, France, Switzerland, Germany, Spain and other countries, and the Church gave him considerable authority.
For example, the Pope was resistant to the emerging cinematic technology of the time, but when Pasili, the only filmmaker in Italy at the time, asked them to invest some of their money in the film industry, the Church had no objection.
But the partnership came to an end after Italy's colonial war of aggression against Libya in 1911. Passigli, representing the Bank of Rome, demanded that the pope publicly express his support for the war, but Pius X firmly rejected him. And Pasili's subsequent lobbying brought the relationship between the two down to a freezing point.
Pius X did not forgive Pacilli until his death in 1914.
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When Benedict XV succeeded to the papal throne, it was not a good time.
(Benedict XV)
It was the height of the First World War, which led directly to a sharp drop in donations from the faithful from all over Europe; the church had no reliable financial advisers due to the stalemate with Pasili; hyperinflation, which led to a sharp decline in the purchasing power of the lira; And Benedict XV himself was profligate...
As a result, after Benedict XV's tenure of office, the church could not even pay the salaries of the clergy.
Benedict XV was not only not good at managing money, but also performed poorly in politics. He privately peddled war loans, raised money for Italy, bought a large number of Austrian stocks (a decision that later took a huge toll on the church), and leased a real estate property in Rome to a manufacturer who supplied Germany with weapons.
In 1917, the third year of the outbreak of war, Benedict XV published a peace plan in an attempt to become a peace mediator for the war, which was ridiculed by all sides and further weakened the influence of the Church. In 1919, the Allies refused to allow the Vatican to send people to the Paris Peace Conference, and Benedict XV's diplomatic influence was reduced to a minimum.
By the end of the war, the church under Benedict XV had lost nearly 60 million lira, or about 40 percent of its total assets.
In January 1922, Benedict XV died unexpectedly from complications of influenza. The cost of his funeral was borrowed by the church from the Rothschilds.
After 14 rounds of voting, the new Pope Pius XI was born.
(Pius XI)
Immediately after taking office, he conducted an internal financial audit, implemented a series of measures to reduce operating costs, and appointed his long-time maid, Mrs. Linda, to manage the Vatican's vast internal affairs system, making her the first woman in history to work and live in the Vatican.
The mess pius XI needed to deal with was much more than financial.
Mussolini, who came to power in 1922, was at odds with the Pope in political terms, but since 98 percent of Italy's population was Catholic, he chose to cautiously maintain a temporary peace with the Holy See.
The Holy See has chosen the same coping strategy. They have no choice.
In 1928, the audit work carried out at the beginning of The inauguration of Pius XI was finally completed after six years, and it was concluded that everyone had already known it: the Vatican really had no money.
Pius XI knew he had to do something, but he went in the wrong direction. Instead of relaxing the cumbersome financial restrictions on the church, he pinned his illusions on Mussolini.
in Mussolini
What really worked was the American branch of the Holy See. Due to the arrival of a large number of European immigrants, the number of Catholics in the United States increased rapidly, coupled with the modernization of Catholicism in the United States very early, so the development of Catholicism in the local area was quite vigorous.
The Vatican borrowed 3 million lira from the United States in the form of mortgages. In return, Pius XI conferred the Highest Honor on more than a hundred American citizens over the next few years.
It was this money borrowed from the United States that allowed the Vatican to free itself from its heavy financial burden and have the energy to think about political matters.
After more than a year of intense negotiations, on February 11, 1929, the Vatican signed the Treaty of Lateran with fascist Italy. The content of the treaty consists of three parts: a political treaty, a relationship agreement, and a financial convention.
Under political treaties, the Vatican became an independent state, with the popes equivalent to secular monarchs but given theocracy. The Italian government recognizes the validity of church marriages, and public schools must receive Catholic religious education.
According to the relationship agreement, Catholicism was the only religion in fascist Italy, Freemasonry was outlawed, private family evangelical meetings were banned, protestant Bibles were banned, all church holidays were national holidays, and priests were not required to perform military service and jury duties.
Under the Financial Convention, churches enjoy tax exemptions. As compensation for the treaty, the church received a huge settlement payment (about $1.3 billion now), which accounted for one-third of italy's annual government budget at the time. The Vatican wanted Italy to raise the price again, but found that it could not squeeze more oil and water, so it asked Italy to pay the salaries of 25,000 parish priests.
The Treaty of Rutland greatly elevated Mussolini's position among the Catholic populace, and a month later, in the national elections, the National Fascist Party won 98 percent of the parliamentary seats.
The Church, on the other hand, was distressed when it received this unprecedented wealth, because Pius XI had no reliable financial advisers. After much inquiry, he found a candidate: Bernardino Nogara.
in Bernardino Nogara
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Nogara is a Catholic who graduated from a prestigious university and has had a successful career in the Bank of Italy. In addition, he met Mussolini through his previous work experience, so he successfully passed the Italian entry review.
The importance pius XI attached to Nogara can be seen in the treatment he provided to him. He created a new department for Nogara called the Special Administrative Department of the Holy See, which was solely responsible for the use of huge settlement funds, and even the cardinal had no right to interfere.
Nogara only reports to the Pope, and his annual report to the Pope is only visible to the Pope himself. He lived in a sprawling apartment in the Doge's Palace, adjacent to the Pope's private residence.
The establishment of the Holy See was naturally dissatisfied with this newlywed of a privileged position, but Nogara was not a vegetarian either, and he had been playing in the fiercely competitive Italian bank for many years, and the personnel struggle was a piece of cake for him.
He quickly hired several old colleagues, not only consolidating his power, but also making their financial work more mysterious and low-key, completely separated from the rest of the Holy See's work blocks.
Nogara also came to the pro-establishment. He asked each department of the Vatican to prepare an annual budget and issue monthly statements of income and expenditure. These things are commonplace for ordinary businesses, but they are novel to the Vatican.
Nogara's real big moves are behind. He expanded the Vatican's investments, which had been concentrated on Roman banks and bonds, to Swiss, French and other Italian banks, as well as in heavy industry in Hungary and Germany.
At the behest of Pius XI, Nogara also set off the biggest architectural boom in the Vatican. Through the continuous construction of buildings, the Holy See has its own post office, telegraph office, railway station, power plant, printing plant, radio station, VIP reception, museum, gallery, library, and industrial area consisting of garages, shops and factories.
And with that, there are people. In the two years following the signing of the Treaty of Rutland, the Holy See added more than five hundred new posts.
Nogara did not invest in the U.S. stock market, but the Great Depression of the early 30s spread across the globe, and the Vatican did not hide from it. Donations from believers plummeted, Vatican assets across Europe continued to depreciate, and loans sent around the world could not be recovered...
By the end of 1933, at the height of the Great Depression, the Vatican's economic losses exceeded 100 million lira. 74 Catholic community banks collapsed and thousands of Catholics lost a total of more than 1 billion lira in their deposits.
In response to the crisis, Nogara stockpiled $4 million worth of gold bars for the Vatican in just a few months and invested heavily in prime properties in Britain, France and Switzerland that plummeted in prices due to the Great Depression.
Nogara also pioneered the use of arbitrage, profiting from price fluctuations by reselling government bonds from different countries.
However, this financial instrument is too radical for the Holy See. Nogara then registered different companies in Various European Countries and secretly held the assets of the Holy See in a nested manner.
The Great Depression triggered a credit crisis in Italy, with many banks' share prices battered and churches suffering heavy losses. Nogara, along with other bankers and businessmen, formed a team to persuade Mussolini to create a government agency called the Institute for Industrial Reconstruction ,or IRI) whose role was to give the banks a backstop.
After the IRI was formed, Nogara persuaded it to allow the Vatican to redeem part of its stake in the bank, allowing the church to avoid millions of dollars in losses and transfer the debt to the Italian Ministry of Finance.
He also bought a majority stake in Italy's major gas company, Italia Gas, for less than a quarter of the price, through inside sources. The deal later became one of the Holy See's most lucrative investments.
In times of turmoil, Nogara was undoubtedly instrumental in stabilizing the holy see's finances. But he also had an unintended consequence:
As the financial crisis eased, the Vatican and Mussolini became completely intertwined, which in turn brought the Holy See into contact with Nazi Germany.
(To be continued)