91 Lo Bello, The Vatican Empire, 67.
92 L’Osservatore Romano, February 12, 1929; “Pope Praises Agreement,” The New York Times, February 14, 1929; Il Monitore Ecclesiastico, March 1929; see also Berry, Render Unto Rome, 65.
93 Godman, Hitler and the Vatican, 15.
94 Ronald J. Rychlak, Hitler, the War, and the Pope (Columbus, MS: Genesis, 2000), 36–37.
95 Ludwig Kaas, “Der Konkordatstyp der faschischten Italien,” in the Zeitschrift fur auslandische offentliches Recht und Volkerrecht (Berlin: 1933), 510–11.
96 Lo Bello, The Vatican Empire, 66.
97 Cornwell, Hitler’s Pope, 115; see generally Kertzer, The Pope and Mussolini, Kindle edition, location 2065 of 10577.
98 Riccards, Vicars of Christ, 109.
99 Binchy, Church and State in Fascist Italy, 186.
100 Quoted in Godman, Hitler and the Vatican, 11; see also Paul Blanshard, “The Roman Catholic Church and Fascism,” The Nation, March 1948, 392.
101 Robert Dell, in The Nation, made an assumption that was widespread at the time about the concordat: “It seems hardly doubtful that this agreement ties the church up with Fascism and that henceforth they stand or fall together in Italy. It becomes the interest of the Papacy to support Fascist policy at home and abroad, for, although any regime that might succeed to Fascism might well accept the ‘Vatican City,’ no other regime would accept the Concordat.” Dell and others were right that the concordat inextricably bound the church and the fascist state. The mistake was in believing that no future secular government would embrace the deal Mussolini brokered. In fact, although Italians abandoned fascism in 1943, no subsequent Italian government has challenged the substance of the Lateran Pacts. See generally Robert Dell, “The Papal-Fascist Alliance,” The Nation, March 27, 1929, vol. 128, no. 3325, 368–69.
Chapter 6: “The Pope Banker”
1 Lai, Finanze Vaticane, 105–6.
2 While an undergraduate student, he also had a brief mining job at Brescia.
3 At that time, BCI was far more than simply a bank. It was the financial element in an international syndicate, giving BCI interlocking ownership and management stakes in many industries.
4 Nogara worked for Volpi in several ventures. In Bulgaria it was a mining operation (Société Minière de Bulgarie), and in Istanbul the BCI-funded conglomerate Società Commerciale d’Oriente. In Montenegro, Nogara had small equity with Volpi in a government tobacco monopoly. Volpi also used Nogara as a consultant at Thessaloniki Limited Partnership G. Volpi, A. & C. and Corinaldi at Geneva.
5 BCI was the primary financier for Volpi’s business ventures since the start of his career. Sometimes the bank even took small ownership interests in the projects. In Istanbul, BCI had enormous sums at stake. Professor Richard Webster, in his definitive history of industrial development in Italy at the start of the twentieth century, called Volpi and Nogara “the great international agents of the Banca Commerciale.” Webster, Industrial Imperialism in Italy, 158. Volpi’s surviving papers and correspondence are split between the archives of the Ministry of Foreign Affairs, Rome, and the private archives of Banca Commerciale and the Banca d’Italia (Bank of Italy), most of which are in Rome. See also Lai, Finanze Vaticane, 105–6.
6 The Rome Chamber of Commerce was the representative of the Italian creditors to the Ottoman Empire. Donald Quataert, The Ottoman Empire, 1700–1922 (Cambridge: Cambridge University Press, 2000); see also Memorandum, Treaty of Peace with Turkey from the Supreme Council of the Allied Powers, February 17, 1920, 24/98/65, 253, Cabinet Papers, National Archives, Kew, UK; see also Webster, Industrial Imperialism in Italy, 195, 255.
7 Pollard, Money and the Rise of the Modern Papacy, 145; and “The Vatican and the Wall Street Crash,” 1078.
8 Pollard, “The Vatican and the Wall Street Crash,” 1079. Nogara also had briefly bought some bonds for the Vatican in 1914, while he was working in Istanbul. It is not clear whether Pius knew about that work or if it played a factor in his hiring of Nogara.
9 Alessandra Kersevan and Pierluigi Visintin, Giuseppe Nogara: luci e ombre di un arcivescovo, 1928–1945 (Udine: Kappa Vu, 1992), 10–11.
10 Gollin, Worldly Goods, 439–40.
11 Chernow, The House of Morgan, iBooks edition, 513.
12 Lai, Finanze Vaticane, 108, citing an interview by Lai of Massimo Spada, March 7, 1979.
13 See generally Pollard, Money and the Rise of the Modern Papacy, 143–49; see also Giovanni Belardelli, “Un viaggio di Bernardino Nogara negli Stati Uniti” (November 1937), in Storia Contemporanea, XXIII, (1992), 321–38.
14 Pollard, “The Vatican and the Wall Street Crash,” 1080.
15 Lai, Finanze Vaticane, 13.
16 Chernow, The House of Morgan, iBooks edition, 514.
17 Lai, Finanze Vaticane, 10–11.
18 Nogara took notes of his meetings with Pius XI, stopping when Pius XII became Pope in 1939. The journals are in the custody of the Nogara family, which has selectively made them available to historians, most extensively for John F. Pollard in his 2005 book, Money and the Rise of the Modern Papacy: Financing the Vatican, 1850–1950 (Cambridge: Cambridge University Press); Renzo De Felice also cited information from Nogara’s journals in “La Santa Sede e il conflitto italo-etiopico nel diario di Bernardino Nogara,” Storia Contemporanea, 4 (1977): 823–34; as did Belardelli in “Un viaggio di Bernardino Nogara,” 321–8. My inquiries to the Nogara family went unanswered. I asked Professor Pollard for assistance. In February 2013, he informed me by email that he had “tried to persuade” the family to publish the papers, but they had declined. Since I was unable to personally review the journals, the citations to the Archivo Famiglia Nogara (AFN) are from Pollard’s book, unless otherwise indicated.
19 Tardini quoted in Lai, Finanze Vaticane, 110.
20 Corrado Pallenberg, Inside the Vatican (New York: Hawthorn, 1960), 188.
21 Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for January 18, 1933, cited in Pollard, Money and the Rise of the Modern Papacy, 156.
22 Nogara did not then expect that the different Curia departments would still run a deficit and expect a subsidy from his well-funded ASSS. His diary reveals his frustration at the lack of adequate oversight inside the Vatican. See generally Pollard, “The Vatican and the Wall Street Crash,” 1084.
23 Massimo Spada, a layman who started working in 1929 in the Special Administration, said at that time “there were only bonds.” Lai, Finanze Vaticane, 107; Benny Lai interview with Spada, March 7, 1979.
24 Lai, Finanze Vaticane, 14, 17; Hachey, Anglo-Vatican Relations, 202, 226; Chernow, The House of Morgan, 286.
25 Seldes, The Vatican, 307–8.
26 See generally Mark Aarons and John Loftus, Unholy Trinity: The Vatican, the Nazis, and the Swiss Banks (New York: St. Martin’s/Griffin, 1998), 294–95.
27 Ibid., 294–95.
28 Giuseppe Guarino and Gianni Toniolo, eds., La Banca d’Italia e il sistema bancario, 1919–1936 (Bari and Rome: 1993), 582–83. See digital copy at http://www.bancaditalia.it/pubblicazioni/pubsto/collsto/docu/coll_sto_docum.pdf. Also Pollard, “The Vatican and the Wall Street Crash,” 1083.
29 Pollard, Money and the Rise of the Modern Papacy, 150.
30 See generally ibid., 150–53; Pollard, “The Vatican and the Wall Street Crash,” 1082–83.
31 Lai, Finanze Vaticane, 13.
32 Not all the expansion worked as planned. The telegraph office, for instance, sat mostly dormant, used only for sending out devotional prayers. The post office workers who sold the Vatican commemorative stamps kept the money instead of putting it into the church’s coffers. And the railway never turned a profit. See generally Cameron, “Papal Finance.” The Vatican prison, seldom used, was closed in the 1960s (in 2012, the prison was briefly reopened). Lo Bello, The Vatican Empire, 42–48. But the expansion of Vatican City was impressive, eventually counting between eleven and twelve thousand rooms in the connecting buildings.
34 Pollard, Money and the Rise of the Modern Papacy, 151, n. 5; The building frenzy was not limited to the property inside the mini-state’s walls. On church land in Trastevere, the Palazzo San Calisto was built for the expanding Vatican bureaucracy. The Papal villa, Castel Gandolfo, was restored, and near it a modern observatory erected. Eventually, the Via della Conciliazione was built, creating a triumphal avenue from the Tiber River to the Vatican.
35 Pollard, “The Vatican and the Wall Street Crash,” 1082.
36 Hachey, Anglo-Vatican Relations, 228.
37 Arnaldo Cipolla, “Due Giorni in Vaticano,” La Stampa, November 16, 1931.
38 Binchy, Church and State, 514, 517–22.
39 See a digital copy of the encyclical at http://www.papalencyclicals.net/Pius11/P11FAC.HTM.
40 Alvarez, Spies in the Vatican. 159–65.
41 The previous month, Pius had issued another encyclical, Quadragesimo Anno (The 40th Year), that included an oblique criticism about Jewish control of international finances: “[I]t is obvious that not only is wealth concentrated in our times but an immense power and despotic economic dictatorship is consolidated in the hands of a few, who often are not owners but only the trustees and managing directors of invested funds which they administer according to their own arbitrary will and pleasure. This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will.” See Quadragesimo Anno at http://www.vatican.va/holy_father/pius_xi/encyclicals/documents/hf_p-xi_enc_19310515_quadragesimo-anno_en.html.
42 Kent, The Pope and the Duce, 119–24; see Kertzer, The Pope and Mussolini, Kindle edition, location 1173, 1912 of 10577.
43 Pollard, Money and the Rise of the Modern Papacy, 157.
44 Hachey, Anglo-Vatican Relations, 229.
45 Ibid., 259.
46 R. J. B. Bosworth, “Tourist Planning in Fascist Italy and the Limits of Totalitarian Culture,” Contemporary European History 6, no. 1 (March 1997): 17. Holy Years are always profitable for the church, and normally held every twenty-five years. Sometimes, new saints were rushed through the canonization process in order to attract pilgrims and tourists. For instance, to meet the 1950 deadline for a Holy Year celebration, Pius XII crammed through in near record time the sainthood of Maria Goretti, an eleven-year-old Italian girl who had been killed while resisting a rape. Many church elders were skeptical of her qualifications for sainthood. However, her case drew front-page newspaper coverage and her elevation to a saint resulted in record numbers of Italian worshippers at that year’s event. See Hoffman, Anatomy of the Vatican, 118. See also Kertzer, The Pope and Mussolini, Kindle edition, location 1567 of 10577.
47 Archives of the Archdiocese of Chicago, Mundelein Papers, 1872–1939, 3/36, letter of Pius to Cardinal Mundelein, December 12, 1933; Pius reveals in that letter that he had seriously underestimated the impact of the Great Depression, especially as it had affected America, a country whose Catholics he considered a reliable source of money.
48 Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for February 25, 1931, cited in Pollard, Money and the Rise of the Modern Papacy.
49 Ibid., March 23, 1932; see also Pollard, “The Vatican and the Wall Street Crash,” 1086.
50 Pollard, “The Vatican and the Wall Street Crash,” 1086.
51 Ibid., April 6, 1933.
52 Ibid., August 19, 1932, and July 30, 1933.
53 Pollard, “Conservative Catholics and Fascism: The Clerico-Fascists,” 39.
54 Lai, Finanze Vaticane, 13.
55 Pius might have considered it a relief not to be bothered with too many details of what Nogara was doing. A trait that one author noted in his book about the modern-day Vatican was also true about church officials then: “Vatican officials would sooner talk about sex than money.” Kenneth L. Woodward, Making Saints: How the Catholic Church Determines Who Becomes a Saint, Who Doesn’t, and Why (New York: Touchstone, 1996), 110.
56 Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for September 21, 1933, cited in Pollard, Money and the Rise of the Modern Papacy.
57 Lai, Finanze Vaticane, 108. This was a long-term strategy, picking up steam with even larger purchases in 1933.
58 The church still owns some of the property Nogara bought. David Leigh, “How the Vatican Built a Secret Property Empire Using Mussolini’s Millions,” The Guardian, January 21, 2013, 1; Regarding the actions undertaken by Nogara at the time, see Nogara’s diary, entry of Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for July 24, 1933, as cited in Pollard, Money and the Rise of the Modern Papacy, AFN; McGoldrick, “New Perspectives on Pius XII and Vatican Financial Transactions During the Second World War,” 1033.
59 Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for February 15, 1932, cited in Pollard, Money and the Rise of the Modern Papacy; Gollin, Worldly Goods, 442–44.
60 Nogara’s eight years of diary entries do not provide details about how, where, or why he invested the Vatican’s money. It is instead a generic listing of his audiences with Pius XI, one about every ten days. It resembles more an expanded day journal than a comprehensive personal diary.
61 John F. Pollard, “The Vatican and the Wall Street Crash: Bernardino Nogara and Papal Finances in the Early 1930s,” The Historical Journal 42, no. 4 (December 1999): 1087–88.
62 Nogara first used a shell corporation in 1913 when he was in Constantinople and bid on government contracts that could be issued only to Ottoman subjects. By the time he was utilizing shell and holding companies at the Vatican almost twenty years later, he was as knowledgeable as any banker of his day.
63 In March 1939, not long before Henri de Maillardoz moved from Credit Suisse to the Vatican, he presided over a special board meeting of Grolux, Nogara’s Luxembourg holding company. Maillardoz ensured that the company’s bylaws were amended so it could operate in secrecy from Switzerland for the remainder of the war. The Luxembourg holding company’s full name was Groupement Financier Luxembourgeois (Grolux S.A.). Grolux also worked in tandem with another of Nogara’s Swiss-based holding companies, Profima. Memorial du Grand Duché de Luxembourg, Recueil Special, 1931. 1037–44, 1177–78; see also Ernest Muhlen, Monnaie et circuits financiers au Grand Duché de Luxembourg (Luxembourg, 1968), 105; Pollard, Money and the Rise of the Modern Papacy, 161; and McGoldrick, “New Perspectives on Pius XII and Vatican Financial Transactions During the Second World War,” 1032–35.
64 Companies House, London, File 270820, British Grolux Ltd., Annual Returns, 1932–33; 1936–37; 1945–46; Pollard, Money and the Rise of the Modern Papacy, 160–61; see also Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for April 20, 1932, cited in Pollard, Money and the Rise of the Modern Papacy.
65 Pollard, “The Vatican and the Wall Street Crash,” 1088.
66 OSS files, Box 168, XL 1257, report from Berne, July 7, 1945, NARA.
67 Chernow, The House of Morgan, 96, iBooks edition, 514.
68 Ibid., hardcover edition, 495–97.
69 Chernow, The House of Morgan, iBooks edition, 514.
70 ScdA, “CV di Bernardino Nogara,” November 14, 1958, Archivo Storico della Banca Commerciale Italiana, Historical Archive of the Banca Commerciale Italiana, Milan, ASBCI. Nogara became a director on the board of Montecatini Company, later Montecatini Edison. His experience there encouraged him to subsequently invest in synthetic resins, textiles, and electric power.
71 Nogara was a director, among others, of a leading bank, Istituto Italiano di Credito Fondiario; Italy’s biggest insurance firm, the Assicurazioni Generali; one of the country
’s largest railway companies, the Società Italiana per le Strade Ferrate Meridionali; the property behemoth Istituto Romano per di Beni Stabili; chemical conglomerate Società Elettrica ed Elettrochimica del Caffaro; petrochemical society per l’Industria Petrolifera e Chimica; the mining company Società Mineraria e Metallurgica de Pertusola; the papermaker Cartiere Burgo; and the electrical supply utility Società Adriatica di Elettricità.
72 Pollard, Money and the Rise of the Modern Papacy, 173.
73 Vera Zamagni, The Economic History of Italy, 1860–1990: Recovery After Decline (Oxford: Clarendon Press, 1997), 300–3.
74 Gollin, Worldly Goods, 445–46.
75 See generally De Rosa and De Rosa, Storia del Banco di Roma, Vols. 1–3, an authorized history of the bank.
76 Lo Bello, The Vatican Empire, 70–71.
77 Pollard, Money and the Rise of the Modern Papacy, 172–73.
78 Ibid., 173; Christopher Kobrak and Per H. Hansen, eds., European Business, Dictatorship, and Political Risk 1920–1945 (New York: Berghahn Books, 2004), 225–26.
79 Raghuram Rajan and Luigi Zingales, Saving Capitalism from the Capitalists: How Open Financial Markets Challenge the Establishment and Spread Prosperity to Rich and Poor Alike (New York: Random House, 2003), 213.
80 Lo Bello, The Vatican Empire, 69–70.
81 Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for September 21, 1933, cited in Pollard, Money and the Rise of the Modern Papacy; Grilli, La finanza vaticana, 71; Some of the key directors Nogara selected included Felippo Cremonesi, the Marquis Giuseppe Della Chiesa (Benedict XV’s nephew), Giuseppe Gualdi, Francesco Mario Odasso, Giovanni Rosmini, Prince Francesco Boncompagni Ludovisi, and Count Franco Ratti (Pius XI’s nephew).
82 Gianni Toniolo, L’economia dell’Italia fascista (Bari, Italy, 1980), 135; Gollin, Worldly Goods, 446–47.
83 Archivo Famiglia Nogara, Personal Papers of Bernardino Nogara, Rome, diary entry for November 4, 1931, cited in Pollard, Money and the Rise of the Modern Papacy: The church was the most powerful financial force in Rome. In Milan, Nogara installed his son-in-law as head of a holding company that became the city’s largest purchaser of real estate.
God's Bankers: A History of Money and Power at the Vatican Page 75