The Lateran Treaty V

“Mussolini was the man sent by Providence.”

(Pope Pius XI)

AN EXTREMELY SUPERSTITIOUS man, and quite unashamed of it, Benito Mussolini, who ruled Italy with an iron hand from 1922 until 1943, often during public appearances unabashedly put his hand into his pocket to tap his private parts for good luck. He believed the gesture would protect him in case someone in his presence had the “evil eye.” Mussolini had some other questionable beliefs. He gave credence to the ill effects of the cold light of the moon upon the face of a sleeping man and to the prognostications of fortune-tellers and palm readers. Swayed though he was by the occult sciences, Mussolini never believed in God, nor, except for political convenience, did he ever call himself a Catholic.

Yet no man did more for the Vatican than did the Italian dictator. When he signed the Lateran Treaty with the Pope on February 11, 1929, he gave the Church a “shot in the arm” that proved to be critical in its economic history. Generally speaking, many people know of the Lateran Treaty, but very few know about it—why it came about, what its provisions were, and how it provided the Church with the springboard it needed to jump into Italy’s economy. If politics alone can be said to make strange bedfellows, then politics mixed with religion produces associations that defy characterization. Such was that of Il Duce and the Pope at the end of the nineteen- twenties.

Why did these two previously incompatible individuals, with their incompatible ideas, undergo a wedding of sorts? And what of the offspring produced by this “marriage of convenience”?

Before and after he assumed power in 1922, Mussolini had frequently boasted of being a nonbeliever; in fact, no one who knew him had ever known him to attend mass. Realizing, however, that Church support was indispensable to his plans, he sought to cater to the clergy. Among other things, he brought the crucifix back into the classrooms of Italy, abolished Freemasonry, and granted churches substantial amounts of money to repair the buildings damaged during World War I. Il Duce even went so far as to go through a belated religious marriage to his wife and to have his growing children baptized in the Catholic rites. In time, the man who had once written a pamphlet entitled God Does Not Exist, and who had freely blasphemed and frequently attacked the Church, sometimes, through propaganda, attempted to palm himself off as a practicing Catholic and a professed believer. Very few people ever questioned him about his change of heart. Members of the clergy were particularly silent on the subject, for the clergy more than welcomed his stentorian support.

Because he needed help in entrenching himself as a political power, and wanted to improve his public image both in Italy and abroad, Mussolini paved the way for the settlement of the Vatican’s long-standing grievance against the Italian state. The so-called Papal States lost during the Risorgimento had covered an area of some seventeen thousand square miles, including all of the city of Rome and a large hunk of territory north of the Eternal City and south of the River Po. The papal lands extended from the Tyrrhenian Sea to the Adriatic and included more than three million people. Although the popes had been hostile to the Risorgimento, by 1929 the Vatican was willing to accept a settlement for the loss of its temporal powers. When the Duce offered to make a deal, Pope Pius XI acceded.

It was raining heavily when Pietro Cardinal Gasparri drove into the Piazza Laterana on February 11, 1929, the day the agreement was to be signed. The noontime bells of the churches rang out, and Mussolini and his aides entered the Lateran Palace, to be greeted by Pope Pius’ representatives. The signing was to take place in the same room in which Charlemagne had been the guest of Leo III over a thousand years earlier. Atop the long table—a gift of the Philippine Islands—were the inkwells, the blotters, the papers.

Nodding to the Duce as he entered the room, Cardinal Gasparri said, “I am happy to welcome you to our parochial house, and I rejoice that the treaties are being signed on the feast day of Notre Dame de Lourdes.”

Mussolini registered no sign of recognition at this remark; the Cardinal then added, “And on the seventh anniversary of the coronation of His Holiness.”

“Oh yes!” Mussolini said suddenly. “That particular coincidence has not escaped me!” In silence the dictator went to the table and sat down alongside the Cardinal. Pius had sent a gold pen, blessed by him, and after the Duce had affixed his signature and all the documents had been exchanged, Gasparri presented him the pen as a gift from the Pope. The two men shook hands and left the room. The whole affair had lasted less than thirty minutes.

When the news of the Church-State treaty was finally announced, the local citizenry—as well as the rest of the world—was startled. The Italian public, clearly pleased, accorded Benito Mussolini an overflow of support, which he himself had not perhaps anticipated. He became an idol to Catholic Italy. In thousands of homes, people cut pictures of the Duce from magazines and newspapers and pasted them on kitchen and living room walls. Youths splashed pro-Duce slogans in white paint on any flat surface available. Shovels he had used to inaugurate public projects were prized as relics. Wine glasses from which he had sipped were lovingly placed on shelves by restaurant owners. Young women by the thousands offered their favors to his virility—and let it be said that many of them, in fact, were ushered into the Duce’s chambers.

But if the Lateran Treaty was a major coup for Mussolini, it was to be an even bigger victory for the Vatican. Mussolini, like all his bloodstained predecessors, has gone the way of all flesh, but the Vatican remains. And today the Vatican is solidly entrenched in the Italian economy.

The 1929 treaty was actually a unity of three separate agreements: the Lateran Pact, which provided for the creation of the new State of Vatican City; the Financial Convention, which granted payments to the Church for the loss of its temporal powers; and the Concordat, which gave the Vatican powers and privileges to administer its own special affairs.

According to the articles of the Lateran Pact, the State of Vatican City was set up as a sovereign entity. Three basilicas—San Giovanni Laterano, Santa Maria Mag-giore, and San Paolo—and their accompanying buildings were classified as extraterritorial and were given immunity from Italian property taxes and real estate laws; the same status and immunity were given to the pontifical villa at Castel Gandolfo, where popes have traditionally spent their summer months, and also to a number of Church-owned office buildings in various parts of Rome. The Vatican agreed to recognize the existence of Italy and Italy’s occupation of Rome as a permanent thing. And Italy agreed to accept the Church’s canon law, which meant that divorces could not be granted by the state and that marriage ceremonies performed in church would fulfill civil requirements.

Under the terms of the Financial Convention, Italy consented to make a large money settlement for the loss of Vatican properties. A sum of $40 million was paid in one lump; in addition, 5 percent government bonds worth about $50 million were transferred to the Holy See. Italy also agreed to pay the salaries of parish priests stationed on its soil. (During the summer of 1959, the Italian parliament passed a law revising the pay scale provided for by this original agreement. Priests now receive $529 a year from the Italian government; higher-ranking clerics get about $600. Over thirty thousand priests are currently on the Italian payroll, a fact not generally known, even to the Italian people.)

The third document of the Lateran Treaty, the Concordat, carried a number of economic clauses that were of special interest to the Vatican. Members of the Roman Catholic clergy and citizens of the State of Vatican City were exempted from paying Italian taxes. The Church was given control of the various organizations, lay and clerical, functioning in the name of Catholicism throughout Italy. This meant that the Vatican would supervise the financial affairs of these organizations, which were referred to and defined as “ecclesiastical corporations.” It also meant that the Italian government would have no legal right to intervene in activities of these organizations and could not block the formation of any new organization to which a pope granted approval.

The Concordat also stipulated that Protestant Bibles could no longer be distributed in Italy, that evangelical meetings in private homes were forbidden, and that Catholicism was to be Italy’s official religion. Furthermore, religious teaching was to be extended into state schools and religion made a compulsory subject at the primary and secondary levels; Church-related educational institutions were to receive preferences over similar lay or state institutions. Finally, February 11 was named a national holiday to commemorate the signing of the treaty.

The noneconomic consequences the Lateran Treaty was to have in Italy need not concern us here. The financial effects of the pact were far reaching, however, though not immediately visible. On June 7, the very day the Lateran Treaty was ratified, Pope Pius created the Holy See’s Special Administration and appointed Bernardino Nogara, a relative of the Archbishop of Udine, to watch over the large sum of money the Italian government had granted the Vatican. From the time Nogara received his appointment the names of prominent and trusted Vatican laymen began to appear on the boards of directors of various Italian companies. Significantly, Nogara’s name rarely if ever showed on any company’s roster of officers, but it is known that no Vatican layman, no matter how good his rapport with the pontifical family, could receive such an appointment if he did not have the blessing of Nogara. It should be mentioned that in later years the Nogara name did appear on a few corporation listings, where it was teamed in each case with several other key Vatican names.

What can be deduced from this is that Nogara wanted his own men in at the policy-making level of any company in which he placed Vatican funds. He made his careful investments one by one, and he appointed an “agent” to go with each. Where the sum was big, so was the name. Where the sum was bigger, several Vatican names could be found. Nogara never put “his” money into anything unless the sentinel went along.

One of Nogara’s early targets was a gas combine called Italgas. Soon after the end of World War I, an Italian financier by the name of Rinaldo Panzarasa managed to get control of six small gas companies. These were La Stige, Italgas, La Societa Italiana Industria Gas di Torino, La Gas e Coke di Milano, La Veneta Industria Gas di Venezia, and La Romana Gas; they furnished home fuel for twelve of Italy’s largest cities, including Milan, Rome, Turin, and Venice. The companies were grouped by Panzarasa into a combine that came to be known as Italgas —and didn’t prosper. In fact, Panzarasa’s gas fortunes, figuratively, exploded.

By 1932, the worth of Panzarasa’s group of companies had plunged from $13.7 million to $1.4 million. Italgas was in trouble, and when the Fascist Italian government refused Panzarasa any kind of financial help, Nogara moved in swiftly. With Senator Alfredo Frassati and the Marquis Francesco Pacelli (whose brother later became Pope Pius XII) providing the front, Italgas fell into the embrace of the Vatican. Nogara built up this decadent organization so that it could begin to service other major cities in Italy. Today Italgas, which sold a total of 679 million cubic meters of gas during the fiscal year 1967-8, is the sole supplier of gas for Italian homes in thirty-six cities. The Vatican remains its controlling stockholder.

But all was not clear sailing after the Vatican embarked for new financial horizons. Italy, like other parts of the world, was lashed by economic storms between 1929 and 1933. Three of the country’s major banks in which the Vatican had invested heavily—the Banco di Roma, the Banco di Santo Spirito, and the Sardinian Land Credit — were floundering. Among other problems, the largest of these banks, the Banco di Roma, possessed large packets of securities that had lost much of their worth and nearly all of their prestige. No one knows, even to this day, what deal Nogara made with Mussolini to bail out the Vatican, but in short order the moribund shares were transferred to the government holding company, I.R.I. (Istituto di Ricostruzione Industriale), that the Duce had formed as a catchall for shaky industrial organizations and banks. Mussolini, whose ignorance of economics made him an easy target for Nogara, let the Vatican bank transfer the securities, not for the current market prices, but for prices commensurate with their original worth. All told, I.R.I. paid the bank approximately $632 million—a sum far in excess of what the securities were then worth. The tremendous loss was written off by the Italian treasury.

Between 1929 and the outbreak of World War II, Nogara assigned Vatican capital and Vatican agents to work in diversified areas of Italy’s economy—particularly in electric power, telephone communications, credit and banking, small railroads, and the production of agricultural implements, cement, and artificial textile fibers. Many of these ventures paid off.

Nogara gobbled up a number of companies including La Societa Italiana della Viscosa, La Supertessile, La Societa Meridionale Industrie Tessili, and La Cisaraion. Fusing these into one company, which he named CISA-Viscosa and placed under the command of Baron Francesco Maria Oddasso, one of the most highly trusted Vatican laymen, Nogara then maneuvered the absorption of the new company by Italy’s largest textile manufacturer, SNIA- Viscosa. Eventually the Vatican interest in SNIA-Viscosa grew larger and larger, and in time the Vatican took control—as witness the fact that Baron Oddasso subsequently became vice president.

Thus did Nogara penetrate the textile industry. He penetrated other industries in other ways, for Nogara had many tricks up his sleeve. This selfless man, who probably did more to infuse life into the Italian economy than did any other single businessman in Italy’s history, recognized that the subsurface strength of the Lateran Treaty lay in Clauses 29, 30, and 31 of the Concordat. Although some intellectuals had inveighed against the concessions Italy had made on education, marriage, and divorce, few observers had paid any close attention to those clauses of the Lateran Treaty that were mainly economic in nature. To most people they seemed of secondary importance.

But not to Nogara, the man with the dollar sign on his mind and the sign of the Cross in his heart. Clauses 29, 30, and 31 dealt with tax exemptions and the formation of new, tax-exempt “ecclesiastical corporations,” over which the Italian state would have no controls.

Nogara reasoned that if he could get Mussolini to put a liberal interpretation on the word “ecclesiastical,” he would be able to save Vatican corporations millions of dollars a year in Italian taxes. This was no small task, yet the Vatican Hercules succeeded at it.

The cunning Nogara euchred Mussolini into granting every Catholic corporation, whether its actual function was ecclesiastical or fiscal, either full exemption from taxes or substantial tax abatements. Somehow, Mussolini was convinced that a Vatican-owned bank was “a temple doing the work of God”! and that what was good for God was good for the Vatican—and that that was good for Italy.

The friendship of the Vatican and the Fascists continued throughout most of the thirties. It was especially strong after Italy invaded Ethiopia in 1935. A Nogara munitions plant supplied arms for the Italian army. But the friendship started to wane toward the end of the reign of Pius XI, who died in 1939.

When Pius XII took possession of the pontifical throne, Mussolini, who was suspicious of his polyglot intellectualism and believed him to possess the “evil eye,” refused to kneel and kiss his hand, and he commanded photographers not to take pictures of him and Pius XII which would in any way convey the idea the Duce might be the humble servant of the Church. Relations between the Italian dictator and the Vatican had crumbled, but by then the Catholic Church was well entrenched in the Italian economy. Nogara was still steering the financial ship, and the Church had no worries about its future course.

Benito Mussolini had never quite been able to achieve the empire of which he dreamed, but he enabled the Vatican and Bernardino Nogara to create a dominion of another kind.

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