And as he had done before with Grolux, Nogara selected prominent Catholic laymen to serve on the boards of the rescued banks and companies, all of whom eventually received Papal titles and decorations.81 Over several years, those handpicked directors expanded their influence as they served on interlocking boards for many of Italy’s largest firms.
Nogara later swapped some of the Vatican’s ownership in a few of the reconstituted banks for IRI bonds paying 5 percent interest.82 The investment in fascist-issued bonds was not only a good deal for the Vatican, but it further tied the church’s economic health to the Italian state. By 1935, 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.83 Only Mussolini’s government owned more than the Vatican.
Fascist politicians and businessmen served on many of the company boards in which the Vatican had a stake, putting fascist and church representatives at the same decision-making table in key industries. This commingling meant the Vatican had every reason to maintain at the minimum a benign political tolerance for Mussolini’s regime. In many respects that was not difficult. Il Duce was refreshing compared to the anticlerical mixture of socialists and freethinkers who—to the church’s great detriment—had played significant roles in Italian politics since the late nineteenth century.84 And the church did not have to make any compromises when it came to fascist social policies. Mussolini’s insistence on public morality, belief in the inferior role of women, and the ban on contraception and abortion made the fascists palatable to the church.85
Equally important was that Mussolini’s anticommunist stance was comforting. The Vatican feared godless bolshevism far more than it detested fascism. Pius had come to despise communism during his tenure as Poland’s Nuncio.86 And his Cardinal Secretary of State, Eugenio Pacelli, had been the target of an unsuccessful assassination by a communist cell when he was Germany’s Nuncio. Pacelli had an equally hard-line view.87 Both men knew that the Soviets had not just declared a rhetorical war on organized religion. In Russia the state waged a bloody war against all faiths, jailing or murdering the clergy, destroying churches or turning them into atheist museums, and banning any teaching of God to children under the age of sixteen.88
While the Vatican and Mussolini were cementing their de facto partnership, Pius issued three encyclicals on economic and social issues.89 Each reiterated a condemnation of unbridled capitalism and the accumulation of great wealth by a few, as well as decrying as “deadly” international finance and its focus on profits. He denounced capitalists “addicted to excessive gain.”90 Medieval dogma declared money itself was an unproductive pursuit. Loaning money at interest was immoral. Pius was the first Pope in decades to restate that dogma so forcefully: “The desire for money is the root of all evil.”91
Those encyclicals puzzled Italians in the private sector who were doing business with the church. What the Pope said would have precluded many of Nogara’s investments. But only a handful of ranking clerics knew that before Nogara had accepted Pius’s appointment at the Vatican, he had made it clear he would do so only if his work was not restricted by religious doctrine. Nogara had also insisted he should be free to invest anywhere in the world, no matter what the country’s politics.92 And while some in the Curia grumbled that Nogara’s financial speculation violated the church’s core values, so long as the balance sheets showed surpluses, Pius and his chief advisors were pleased.93 It was also somewhat easier for officials to give wide latitude to Nogara since he was a layman.94
Nogara’s freedom paid off. His diversification stabilized the church through the Great Depression. An unintended consequence of his investments was that as the worldwide financial crisis began easing, the Vatican and Mussolini were thoroughly entwined.
* * *
I. After World War I, Italian intelligence had penetrated the Vatican with clerical informants and lay agents, ranging from cooks to footmen to policemen. They focused not just on politically significant information, but also on compiling compromising dossiers on the sexual predilections of top clerics. Such dirt was also useful as blackmail. One of the few matters about which the informants failed to provide advance notice was Pius’s 1931 antigovernment encyclical. Mussolini shook up his intelligence agency’s leadership so he would not again be surprised.40
II. Kreuger & Toll collapsed when it was exposed for having perpetrated one of the largest twentieth-century frauds. The Vatican was merely one of hundreds of institutions swindled. The company’s Swedish chairman, Ivar Kreuger, known as the “Match King,” killed himself after his company’s deceptions were revealed. (The Kreuger family, and some subsequent authors, have contended the suicide was, in fact, murder.)50
III. In the 1930s, Italy had the largest state ownership of companies other than the Soviet Union. At the end of Mussolini’s reign in 1943, 80 percent of all Italian banks were still under IRI control.78
7
Prelude to War
The Vatican-Mussolini partnership was set against the backdrop of Italy’s flourishing alliance with Germany’s Third Reich, the so-called Rome-Berlin Axis. The church had good reason to monitor that political union. A third of Germans were Catholic. Despite the godless ideology promoted by Adolf Hitler’s National Socialist Party, the church realized it had to work with the Nazis if it meant safeguarding the rights of Catholics.
The Vatican saw in the Nazis the same fervent anticommunism that was an integral element of Mussolini’s fascism. Pius knew, however, that deciding how best to deal with Germany was not as simple as concluding that Hitler was less evil than Soviet dictator Joseph Stalin. The Vatican feared that Hitler was more passionate about his anticlerical rhetoric than was Mussolini. Nazi policy was that the state alone should be revered. Since Hitler was raised Catholic and a few Third Reich ministers occasionally spoke of “positive Christianity,” some church officials hoped Hitler might soften his antichurch theme over time. The Führer gave conflicting signals. Once he declared that churches should be an integrated element of German national life. Another time he said: “You are either a Christian or a German. You cannot be both.”1 Privately, however, Hitler promised colleagues that he would “eradicate” Christianity from Germany.2
If anyone had faith that the Germans could be trusted despite the harshness of their rhetoric, it was Secretary of State Eugenio Pacelli. An admitted Teutophile, he had been the Papal Nuncio to Germany for twelve years. Within weeks of Hitler’s 1933 appointment as Chancellor, Pacelli sent the Führer a private letter in which he obliquely endorsed the Nazi’s strong anticommunist policies.3 At the time, no European country yet had recognized Hitler’s government. Hitler saw an opening in Pacelli’s note. He reasoned that if the Vatican conferred the stamp of its moral authority on the Third Reich, it might encourage other nations to follow. The same impetus had propelled Mussolini into a pact with the Vatican. And although Hitler wanted to crush the church, he did not want to repeat the mistake of his predecessor, Bismarck, by taking on so early a widely popular faith.4 The Nazi hierarchy knew that Pacelli was as likely as any church official to be receptive to a deal. During his tenure as Nuncio, Pacelli had hammered out concordats with Bavaria (1924), Prussia (1929), and Baden-Württemberg (1932).5
Hitler dispatched to Rome Vice Chancellor Franz von Papen—a Papal Knight—to determine whether the Holy See might entertain a formal treaty with the Third Reich.6 Hermann Göring, a decorated chief of the Luftwaffe and one of Hitler’s closest aides, accompanied Papen to emphasize to the Vatican that the Germans were serious. Starting in April 1933, Pacelli and Papen began secret negotiations.7 That was the same month that the Nazis ratcheted up their war against the Jews. On April 1, the National Socialists launched a nationwide boycott of Jewish businesses.8 Nazi storm troopers burned Jewish shops and assaulted Jews.9 Three days after the start of the hooliganism, the Third Reich passed its first decree directed at Jews—the Law Regarding the Admission to the Bar—banning Jewish attorney
s.10 It was the start of what some historians have called “plunder by decree.”11 A few days later a law dismissed Jews from the civil service since they were not “Aryan.” A week later another law prohibited them from serving as teachers and judges.12 The number of Jews allowed to study in universities was set at a fixed quota of one percent. Jewish war veterans and their families—more than 32,000 Jewish German soldiers had died in World War I—were cut off from benefits. On April 11, for the first time the Nazis defined Jews by blood: one Jewish grandparent marked someone as “non-Aryan.”13 Thousands of instructional charts were distributed to help average Germans distinguish Jews from Aryans.14 In May, the Nazis celebrated the first in a series of public-spectacle book burnings. They were meant to expunge from public libraries the literary and scientific contributions of Jewish intellectuals and scholars, including books by Kafka, Hesse, Brecht, Einstein, and Freud.15
The violent national boycott, the exclusionary law, and the book burnings were all an early test for the church. Would it tolerate the Nazis’ unrelenting anti-Semitism? During those first seminal months—while negotiations with the Nazis were under way—no Vatican official or German bishop condemned what was happening to Germany’s Jews.16 Breslau’s Cardinal Adolf Bertram instead dismissed a plea for intervention by averring that the Nazi “measures [were] directed against an interest group which has no very close bond with the Church.” In any case, said Bertram, “The press, which is overwhelmingly in Jewish hands, has steadfastly remained consistently silent about the persecution of Catholics.”17 Munich’s Cardinal Michael von Faulhaber, one of the most influential clerics, distributed an order directing German clergy to support the Nazi state. He reiterated his full “confidence” in the Third Reich.18 Faulhaber later wrote a letter to Pacelli: “We bishops are being asked why the Catholic Church, as often in its history, does not intervene on behalf of the Jews. This is not possible at this time because the struggle against the Jews would then, at the same time, become a struggle against the Catholics, and because the Jews can help themselves. . . .”19
On April 25, thousands of German priests became part of what historian John Cornwell calls an “anti-Semitic attestation bureaucracy,” by surrendering their parish marriage and baptism records.20 The Nazis used those documents to verify blood purity. In less than two months, on July 14, the Nazis enacted the Law for the Prevention of Genetically Diseased Offspring. It institutionalized sterilization for people determined to have one of nine supposedly hereditary conditions, including deafness and blindness, bipolar and schizophrenia, “feeblemindedness,” physical deformity, and even alcoholism. Vatican officials discussed what to do since such mandatory sterilization was a gross violation of church teachings and a 1930 encyclical Pius had issued, Casti Connubii (Of Chaste Wedlock).21 The Pope feared, however, that any criticism might jeopardize the ongoing negotiations with the Third Reich. The Vatican stayed silent.22 Pius privately told his bishops not to rule out a future campaign against the sterilization decree, but neither did he encourage them to start one. Eventually 400,000 Germans were sterilized, and the Vatican did not issue a Pastoral Letter against it for another decade, only after the tide of the war had begun to turn against the Nazis).23,I
Less than a week later, on July 20, Papen and Cardinal Pacelli signed a thirty-three-article pact—a Reichskonkordat—that was the result of nearly three months of negotiations.25 Hitler granted, at least on paper, many of the safeguards the church wanted. The National Socialists guaranteed the right of Catholics to practice their faith as well as the freedom to express it publicly without retribution. Catholics were “protected in their establishments and their activity.” Religious orders were exempted from paying taxes on stipends they received from the church. The right to operate Catholic schools was reaffirmed.26 Government workers were forbidden from criticizing the church.27 And there was a special accommodation for the Kirchensteuer, the church tax on German Catholics that had been in effect since 1919. The church often had trouble getting the faithful to pay it voluntarily, so the Third Reich agreed to collect the 8 to 10 percent tariff through automatic payroll deductions of Catholic wage earners.28 It was the first time that any country had agreed to provide the Vatican a share of government-collected tax money. It uniquely tied the church to the Third Reich.29,II
In return, the Vatican gave Hitler the formal endorsement he wanted. Article 16 of the Reichskonkordat required German bishops and cardinals to swear an oath of loyalty to the Third Reich. It was a dramatic reversal from 1932 when a German bishops’ conference had banned membership in the Nazi Party and forbade anyone wearing a swastika from receiving the sacraments.31 The agreement also decreed that a “special prayer . . . for the welfare of the German Reich” be inserted into every Sunday and Holy Day Mass.
The Germans also prevailed on the most contested provision, Article 32: it banned all clergy from joining any political party. That accelerated the demise of the Catholic Center Party, forcing the resignation of priests who had been elected to the Reichstag.32 And all church organizations and orders were prohibited from expressing any political opinions. The definition of “political” was left to the discretion of the Nazis. The Reichskonkordat was clear: anything that was not about “the dogmatic and moral teachings and principles of the Church” was suspect.33
And to ensure the purity of the priesthood, the Nazis required all priests practicing in Germany to be natural-born citizens who had a German education. They would answer only to German superiors. Religious instruction had to encourage patriotism and devotion to the state.34
Pacelli had tried inserting a sentence to protect Catholics who had converted from Judaism, what the Nazis dubbed “non-Aryan Catholics.” Under the Third Reich’s race laws, such converts were considered Jews. Even children and grandchildren of converts, of whom there were some 300,000 in Germany, were still Jews according to the Nazis.35 Church officials fretted that if only blood controlled Jewish identity, there would be no further inducement for Jews to convert to Catholicism.36 In the worst historical persecutions against Jews—even the bloody Spanish Inquisition—converting was enough to avoid torture or death. Pius XI had made conversion one of the central tenets of his Papacy.
But the Germans rejected any protection for “non-Aryan Catholics.” Nazi theorists considered converted Jews dangerous. By adopting Catholicism they might be able to mask their Jewishness and become sleeper agents spreading corruption inside Germany.37 (Five years later Pacelli issued an appeal to bishops to help obtain up to 200,000 exit visas for non-Aryan Catholics.)38
A delighted Hitler boasted that the “treaty with the new Germany means the acknowledgment of the National Socialist State by the Catholic Church.”39 The Reichskonkordat convinced ordinary Germans that the Vatican approved of the Third Reich. German Catholics embraced the Nazis without any lingering reservations. In the months following the agreement, a record number of Catholics became Nazi Party members (some clergy also joined, with one bishop entering the SS).40
That September (1933), after the German Reichstag ratified the agreement, the Papal Nuncio to Germany, Archbishop Cesare Orsenigo, celebrated with a Pontifical High Mass at Berlin’s grand eighteenth-century St. Hedwig’s cathedral. Catholic SS members received special invitations. The cathedral’s vaulted dome was festooned with Papal flags that hung next to those emblazoned with swastikas. In his sermon, Orsenigo praised Hitler as “a man marked by his devotion to God, and sincerely concerned for the well-being of the German people.” Since the crowd was so large—thousands could not squeeze into the standing-room-only cathedral—loudspeakers broadcast the service to enthusiastic throngs outside.
The Reichskonkordat was important for the Nazis.41 It gave them the parliamentary votes of the Catholic Center Party, further tightening their grip on government.42 And Hitler was right. His first treaty with a foreign power—even one as Lilliputian as the Vatican—polished his image.43 In a Sunday sermon, Cardinal von Faulhaber, who came to regret the deal, praised the Füh
rer: “This handshake with the papacy, the greatest moral power in the history of the world, is a feat of immeasurable blessing. . . . May God protect our Chancellor for our people.”44
The Nazis were proud the Vatican stayed the course through the negotiations during the first major escalation of their campaign against Jews. Hitler told other Nazis that the treaty had created a political tone that was “especially significant in the urgent struggle against international Jewry.”45 The Führer boasted privately: “I shall be one of the few men in history to have deceived the Vatican.”46
Two weeks after the Pontifical High Mass in Berlin, the Nazis issued new race orders that excluded Jews from all artistic, dramatic, literary, film, and news enterprises. The following day, Jewish farmers were banned from owning farmland and were denied inheritance rights to family property.
Just a month after the agreement, Pope Pius XI told a British diplomat that he knew about “German persecutions of the Jews.”47 But he gave no indication that he intended to say anything in protest. The Pope had been raised and educated in a church theology steeped in anti-Semitism.48 Moreover, he had demonstrated he was no reformer when it came to relations between the church and Jews. Five years before the Reichskonkordat, Pius had rejected the efforts of a reformist Catholic movement, the Friends of Israel, to remove Holy Week references to the “perfidy of Jews” and “perfidious Jews.”49 He thought the protesting Jews were attempting to promote Zionism and create a homeland in Palestine.50 That was taboo. His predecessor, Pius X, had made that clear in a 1904 meeting with the father of Zionism, Theodor Herzl. The Pope told Herzl: “We cannot prevent the Jews from going to Jerusalem, but [we] could never sanction it. . . . The Jews have not recognized our Lord. Therefore, we cannot recognize the Jewish people, and so, if you come to Palestine and settle your people there, we will be ready with churches and priests to baptize all of you.”51 In accord with that rhetoric, Pius XI disbanded the Friends of Israel.52
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