I

On 10 November 1941, Nogara went to the United States embassy in Rome with a schedule of dated coupons which had been detached from their securities and sent by airmail that day to Messrs J. P. Morgan & Co. Inc., New York, with instructions to collect the amounts due and credit the proceeds to the New York account of the ASSS. The purpose of his visit was to file, and have witnessed, a US Treasury Department TFA-1 Form licensing their import into the USA and authorizing J. P. Morgan, as collecting bankers, to transact on behalf of the ASSS. The witnessed and sworn TFA-1 Form, together with the schedule of dated coupons, was then sent by airmail to J. P. Morgan, New York, and, somewhere between Rome and New York, was duly intercepted, examined, and photographed by agents of the British government before being returned to the mail.

Of immediate interest is Nogara's declaration, on the TFA-1 Form, of the provenance of the securities from which the coupons sent for collection had been detached. He stated:

This merely changed the name of the account holder. But it can be no coincidence that it was executed subsequent to Mussolini's invasion of Abyssinia on 3 October 1935 and before the League of Nations’ resolution, under Article xvi of its Covenant, to impose financial and economic sanctions against the government of Italy, and any authority, person, or corporation registered in Italian territory, came into effect on 31 October 1935.Footnote ¹³ We may assume then that the unnamed ‘previous owner’ was probably an Italian registered Vatican holding company and that the transfer to the ASSS was made to place these securities, mostly early issue Canadian and US government securities and railroad stocks, technically outside Italian territory. On 3 September 1940, when Hitler's Panzer armies had swept across Europe and Switzerland's General Henri Guisan declared that Switzerland if invaded would resist, Nogara (now Vatican delegate on behalf of Pius XII) had these securities physically removed from Switzerland and placed ‘in the custody of Amministrazione Speciale per la Santa Sede in their vault in Vatican City’,Footnote ¹⁴ where it would appear they remained until the end of the war.

By May 1940, Nogara had already taken other precautions when he went to London with Giovanni Fummi, Morgan Grenfell's Rome representative, to arrange for transfer to the United States of Vatican gold held by Morgan Grenfell's London office,Footnote ¹⁵ a precaution which the British government itself had taken in May 1939 when it began shipping its entire gold reserves, worth over $500 million dollars, to Canada and the USA for safe keeping.Footnote ¹⁶ According to Owen Chadwick, citing correspondence between the US Treasury and the Federal Reserve, the Vatican gold thus transferred was, at the time, worth some $7,665,000.Footnote ¹⁷

In October 1940, Morgan Grenfell received a letter from the ASSS requesting that it be sent a list each July of the current mid-price of its London held securities. The July 1941 list, sent via the apostolic nuncio in Lisbon and again intercepted by the British government, revealed that the ASSS held seventy-eight separate securities with Morgan Grenfell, London, ranging from Argentinean, Brazilian, and Japanese government sterling loans to, mostly British, utility, mining, brewing, transportation, and industrial stocks including Rolls Royce, United Steel Corporation, General Electric, Shell Transportation & Trading Ltd, and Dow Chemical. Pencilled markings beside a number of these securities indicate that they were being actively accumulated, with particular emphasis on the war-related heavy industrials, and that a further £18,630 had been acquired through Morgan Grenfell's London office in July and August of 1941 alone.Footnote ¹⁸

Based on access to the diaries, Pollard tells us that between June 1932 and June 1933 Nogara had diversified into commercial and residential property in Paris, London, and Lausanne and created ASSS-owned companies in each location to control them. In Britain, he established British Grolux, through which he purchased ‘residential property in London and Coventry’.Footnote ¹⁹ In Luxembourg, he established a single holding company, Grolux S. A. Holdings, to administer his various property companies and into which their profits could be diverted. But by March 1940, just months before the May 1940 invasion of the Grand Duchy, there is, as Pollard tells us, ‘no further trace of the company in the Luxembourg records’.Footnote ²⁰ Thereafter, British Grolux revenues were collected by Morgan Grenfell, London, on behalf of J. P. Morgan & Co., New York, to whom 99 per cent of the shareholding was transferred from the previous owner, another Vatican holding company, Swiss-registered Profima, in December 1940.Footnote ²¹ However, according to a British government Treasury memorandum, the New York bank acquired these shares in the capacity of Trustee only, and on behalf of the previous owner Profima,Footnote ²² a fact confirmed by an entry in an ASSS account statement with J. P. Morgan, New York, which records an ‘annual commission due to J. P. Morgan & Co. incorporated as Trustee under agreement with Profima S. A. Societe Immobiliere et de Participations dated as of Dec 13 1940’.Footnote ²³

On the basis of the above, it can be seen that Nogara, with considerable agility, reacted to the threat of war by repatriating some securities back to the ASSS vaults in the neutral territory of the Vatican City, increasing his holdings of others in the relative security of Morgan Grenfell's London office, transferring a portion of Vatican gold to the safety of the Federal Reserve Bank in the United States, and placing his property investments in the protective custody of a Trust with J. P. Morgan's bank, New York. But if, as some have argued, Pius XII and the Vatican had a ‘special relationship with Germany’, harboured pro-German sentiments ‘not diminished by the nature of the Nazi regime’, maintained a negative attitude ‘towards the democracies’, and changed their policy only ‘when it became evident that the Germans were going to lose the war’,Footnote ²⁴ then the question has to be asked: why did they permit Vatican assets to be transferred to the banks and vaults of the democracies and why did they do so in the early years of the war when it seemed certain, as they themselves believed, that Germany would win and Hitler establish himself as master of Europe? Would it not have made more sense, and been more commensurate with their alleged political leanings, to have invested these resources instead in the then growing and profitable German economy? Certainly Vatican assets were, of necessity, invested in fascist Italy, since the tiny City State had no significant currency of its own and depended on a lira income to function. But no investments were made in Germany.Footnote ²⁵ This poses a serious challenge to those who maintain that the Vatican was hoping for a German victory (as a bulwark against Bolshevism), and one which becomes more acute when, as we shall see, its delegate, Nogara, was engaged in the astonishing feat of routinely transporting thousands of Vatican securities across war-torn Europe to the United States, investing the proceeds in the US war economy, and making the United States the financial hub from which the Vatican, despite the financial constraints imposed by war, was able, by cable instruction, to administer and fund the needs of its world-wide church from dollar accounts within the US banking system.

II

Throughout the duration of the Second World War, in addition to the military offensive, an economic war was waged against the Axis powers. To maintain its war effort, Germany needed to import, inter alia, strategic ores and metallic elements (iron ore, zinc, chromium, tungsten, etc.) which had to be paid for in either gold or hard currency. To limit Axis access to two such hard currencies, namely sterling and dollars, ‘blocked’ sterling and ‘blocked’ dollar accounts were created. These accounts were ‘blocked’ on the books of a bank or broker such that they could be used only for transactions within the sterling/dollar area or sold to other residents within that monetary area,Footnote ²⁶ thereby preventing them from falling into enemy hands. Moreover, to prevent foreign-owned US assets being transferred into the hands of the enemy, either voluntarily or by force (in the case of occupied countries), in April 1940, President Roosevelt issued Executive Order 8389 which, as amended in June 1941, froze all such assets held by all European countries and/or their nationals, excluding Great Britain but including Switzerland, Italy, and San Marino, though not the Vatican. By means of these Freezing Orders, all payments, transfers of credit, foreign exchange dealing, gold earmarking, or export to, for, or on behalf of the named countries and/or their nationals and all trading in securities which bore evidence, by tax stamps or seals, that they had ever been in the jurisdiction of the named countries, were forbidden unless specifically authorized under special regulation or licence issued by the US secretary of the Treasury.Footnote ²⁷

In Great Britain, Trading with the Enemy (TWE), a branch of the Treasury and Board of Trade, became concerned when it learnt, through a series of letter intercepts, that religious institutions in Ireland, the UK, and the empire made deposits into Vatican sterling accounts in London banks against which lira credits were made available to them in Italy. Upon investigation, however, it transpired that that no violation of foreign exchange controls had taken place. Cheques drawn on the Vatican's London sterling accounts were used to make payments solely within the sterling area. No purchase of foreign currency was involved and TWE accepted the Vatican assurance that ‘there is no obligation to surrender foreign exchange to the Italian Government’.Footnote ²⁸ Indeed, the Foreign Office itself made use of precisely such arrangements in order to fund the British minister to the Vatican, Sir D'Arcy Osborne, who, by now, had taken refuge in the neutral territory of the Vatican City itself. As R. A. B. Mynors of the Treasury observed, the Vatican operated ‘a gigantic compensation system, typical of which’ was the arrangement whereby Osborne's salary was paid by the Foreign Office into a Vatican sterling account in London which used it to support a Catholic mission in India, thus keeping it within the sterling area, while Osborne's salary was advanced by the Vatican to a comparable amount in Italian lira.Footnote ²⁹

This link became a lifeline after the Italian armistice in September 1943 when 75,000 British POWs walked out of their internment camps, over 4,000 of whom headed towards the Vatican seeking food, clothing, and shelter. The Foreign Office, cannily billing the War Office, deposited thousands of pounds into the Vatican's AOR/IOR account with Barclays Bank in Fenchurch Street, London, against which the Vatican advanced Osborne the lira funds necessary to run a covert rescue operation under the very noses of the Germans who had meanwhile entered the city.Footnote ³⁰ At one point, when the numbers seeking refuge grew exponentially and the need for additional funds became increasingly urgent, Osborne borrowed a 5,000,000 lira interest-free loan directly from the ASSS itself against a promise to make a comparable sterling deposit into an ASSS account in the sterling area, once Rome had been liberated.Footnote ³¹ These funds enabled a team of British officers, who had been given sanctuary in the Vatican, to administer the rescue operation while a team of Vatican priests acted as ‘leg-men’ to deliver the funds to ex-POWs hidden in and around Rome.Footnote ³²

Michael Phayer argues that the British government would have used this route to fund the Jewish rescue organization in Italy, Delasem, but the Vatican refused. The British, he claims, had already authorized the funds, but the Vatican blocked the transfer.Footnote ³³ His evidence, however, relies on linking as connected two quite disparate documents. The first is a telegram from the British Foreign Office, dated 6 March 1944, informing Washington that authorization has been given for transfer of $20,000 in ‘lira equivalent’ to H. M. Minister at the Vatican ‘for his charitable relief work’.Footnote ³⁴ No mention is made of Delasem and the transaction involved is clearly the usual compensation arrangement whereby lira equivalent is paid out by the Vatican without need for foreign currency exchange. The second is a Vatican document, dated 16 March 1944, recording a request from a papal count, resident in Italy, that the Vatican instruct the apostolic delegate, London, to collect $16,000 from Delasem, London, deposit it in the Vatican's AOR/IOR account with Barclays, and allow the count to withdraw it in US dollars from the AOR/IOR in Vatican City. At that point, the count, with the US dollars in his pocket, would pay an equivalent sum in Italian lira to Delasem, Rome.Footnote ³⁵ But these documents clearly do not relate to the same transaction. The dollar amounts are different, the parties to the transaction are different, and, most importantly, the transactions themselves are different. The latter involved a foreign exchange transaction and was, as the AOR/IOR official who passed the note to the Vatican secretary of state advised, strictly prohibited by Washington. It was the secretary of state's concurrence with this judgement and his stated intention to give no such instruction to the apostolic delegate in LondonFootnote ³⁶ which Phayer cites as evidence that the Vatican blocked British efforts to get funds to support Jewish rescue efforts in Italy. In fact, as we shall see, the British government was explicitly unwilling to allow its funding route to the British Minister to the Vatican, or indeed any other funding route, to be used for Jewish relief work.

When Sir Herbert Emerson, League of Nations high commissioner for refugees, inquired, just eight weeks after the 16 October 1943 round-up of the Jews of Rome, if he could use this route to get ‘remittances to the Vatican for work amongst the Jews’, the reply from Mynors of the Treasury was:

When, in response to an appeal made by the World Jewish Congress through the US State Department, Emerson approached the Foreign Office to see if funds could be made available to the International Red Cross for Jewish relief in central Europe, the Foreign Office, in the person of A. W. G. Randall, who was aware of the US interest, did not explicitly reject the idea, but replied with a list of such stringent conditions that a Treasury colleague remarked ‘the conditions enumerated in Mr. Randall's letter to Sir H. Emerson of 22/12 will apply, and should be enough to strangle most proposals’.Footnote ³⁸ Even as late as 1946 when a Jewish MP, Sydney Silverman, appealed directly to the chancellor of the Exchequer, Hugh Dalton, to allow the Jewish community fund food parcels through Sweden for Jewish survivors of Polish concentration camps, Dalton replied, with regret, that Britain's meagre foreign exchange reserves made this impossible.Footnote ³⁹

Vatican efforts to fund humanitarian relief efforts for Europe fared no better. In April 1944, when Pius XII chartered shipments of flour for Rome, where he was already providing over 100,000 hot meals a day to a starving population, and later when he attempted to import foodstuffs from Spain and Argentina for Italy and Greece, these initiatives were blocked by the British government, leading the Vatican secretary of state to comment to Osborne, as the latter thanked him for giving sanctuary to yet another British ex-POW, ‘the Holy See always replies in the affirmative; it is the British Government who reply in the negative’.Footnote ⁴⁰ Nevertheless, despite lack of co-operation from the authorities, it appears it was possible to funnel financial assistance to Rome's Jewish community through the Vatican. Harold Tittmann's son, who was with him in the Vatican at the time, records that both his father, who was US chargé d'affaires to the Holy See, and Osborne provided funds for Jewish refugees in Italy ‘through counterpart funds deposited in a New York bank’.Footnote ⁴¹ The most likely explanation is that the two diplomats, both working from within the Vatican City, simply used the prisoner relief funds available to them to help Jews, and the Vatican, as Tittmann records, obligingly ‘turned a blind eye’ while a ‘French Canon of St. Peter's, Monsignor Herissé’ acted as ‘the “leg man” between them and the Jewish organization in Rome’.Footnote ⁴² Vatican account statements with J. P. Morgan, New York, give some support to this claim as they record deposits of $5,000 on behalf of Tittmann,Footnote ⁴³ but since monitoring of these accounts appears to have ceased after September 1943 (when Rome was occupied by the Germans), we have no record of what additional funds may have been transferred after that date, when they were so urgently needed. Tittmann, however, records that during the last four or five months of occupation, the British organization took care of ‘the relatively few men that we had along with theirs. All that was necessary for me to do was to supply the cash which I was always able to produce.’Footnote ⁴⁴ Thus, in all likelihood, the 6 March 1944 telegram to which Phayer refers was confirmation by the British that funds supplied by the US government for their ex-POWs had been passed to Osborne ‘for his charitable relief work’.

III

Sometime in February 1941, the British government began to make regular and systematic intercepts of the ASSS and AOR/IOR bank statements as they were dispatched between these agencies and their US banks and finance houses. Expense entries in ASSS account statements with J. P. Morgan & Co., New York, reveal that correspondence with the Vatican went by the air clipper flying boat between New York and Lisbon and by train as registered mail between Lisbon and Rome.Footnote ⁴⁵ Intercepts were also made of letters passing between the Vatican and religious institutions or personnel from various countries around the world, but not regularly, intermittently, and only when they, like the intercepted bank statements, passed through Lisbon. It would be difficult to believe that the British government established an interception post in Lisbon merely to monitor correspondence with the Vatican. It is more likely that there was a general mail interception and espionage post established in Lisbon, one of the last open ports on mainland Europe, and that Vatican correspondence was simply caught in its net.

What do these intercepts reveal? We learn that the ASSS had its account with J. P. Morgan & Co. while the AOR/IOR banked with National City Bank of New York. This mirrored the arrangement in London where the ASSS account was with Morgan Grenfell, the sister bank of J. P. Morgan, while the AOR/IOR banked with Barclays. Both had small sub-accounts, Special Account G. L. in the case of the ASSS with an average balance of $20,000, and Sub Account ‘A’ in the case of the AOR/IOR with an average balance of $100,000. In November 1941, when Nogara went to the United States embassy in Rome to secure a licence to dispatch ASSS securities to J. P. Morgan & Co., New York, he explicitly stipulated that they should be deposited in Special Account G. L.Footnote ⁴⁶ These were certainly blocked custody accounts and the deposits from collected coupons and dividends, which constituted the only activity within them, were from securities for which, as yet, no special licence, releasing them from the US Freezing Orders, had been obtained. This suggestion is confirmed by a J. P. Morgan bank statement reference to the ASSS Special Account as ‘Your Rubric G. L. Custody Acct’ and by a City Bank reference in an AOR/IOR Sub-Account ‘A’ statement to a $5 fee ‘for filing application for attachment of US Treas Dept Form TFEL No 2 to securities from Blocked Counties’.Footnote ⁴⁷ TFEL-2 Certificates were physically attached to imported securities which bore evidence, by tax stamps or seals, that they had been in the jurisdiction of a blocked country. As seen, trading in such securities was forbidden. But the TFEL-2 Certificates, once issued by the US Treasury Department, certified that they were free from any blocked interest and could, therefore, be legitimately traded on the American markets.Footnote ⁴⁸ The significance of these custody accounts is that they provide clear evidence that the Vatican was systematically dispatching its securities via Lisbon, even those which had been registered in blocked countries, to the safety of special custody accounts in the United States and, once clearance had been obtained from the US Treasury Department, was able to trade them freely on the US markets. This enabled the Vatican to maintain, by means of its accounts within the US banking system, an uninterrupted stream of income from its previous investments and, as will become apparent, together with its other sources of income, continue to provide financial support for the needs of the schools, hospitals, mission stations, and dioceses of its church throughout the world, while at the same time engaging in major investments in the US war economy. But before exploring these issues further, it is necessary first to clarify the legal status of the Vatican under the US Freezing Orders.

In order not to penalize unfairly non-hostile friendly foreign nationals or institutions, General Ruling No. 4 of the Freezing Order provided for the issuance of General Licences whereby those so licensed ‘shall, while so licensed, be regarded as a person within the United States who is not a national of any blocked country’ and ‘[t]he term “blocked account” shall not be deemed to include … the accounts of generally licensed nationals’.Footnote ⁴⁹ On 14 June 1941, the Vatican was issued with General Licence No. 44 whereby: ‘The Roman Curia (or Curia Romana) of the Vatican City State is hereby licensed as a generally licensed national and all persons to the extent that they are acting for and on behalf of the Vatican City State are hereby licensed as generally licensed nationals.’Footnote ⁵⁰ This meant that the Vatican was thereby exempt from regulations prohibiting payments, credit transfers, foreign exchange dealing, and gold earmarking, though not regulations governing securities since they related to the securities themselves and not the persons transacting them. As seen, the Vatican was subject to, and complied with, regulations governing the control of imported securities but, as will become apparent, had greater flexibility when it came to other financial transactions, including currency transactions and money transfers. With this in mind, we need to examine the two main Vatican accounts, the ASSS account with J. P. Morgan and the AOR/IOR account with City Bank.

IV

As an account of the Vatican City State Treasury, the ASSS account with J. P. Morgan focused almost exclusively on income and investments. The thirty-four weeks of calendar year 1942 for which fairly consecutive account statements are available indicate an average balance of $3,250,000 and deposits of $1,350,976, of which $1,063,115 (79 per cent) were made by the apostolic delegate and AOR/IOR. These funds constituted revenue from prosperous dioceses and religious institutions across the United States though, unlike income tax, were derived from voluntary contributions from the faithful rather than mandatory payments. Income from investments amounted to a further $280,778 (20 per cent) which, assuming an annual return of approximately 4 per cent, suggests a total portfolio of around $7,000,000, or $7,060,000 if $2,395 worth of collected coupons deposited into Special Account G. L. are taken into account. Withdrawals over the same period amounted to $1,417,816, with $698,298 (49 per cent) used to buy gold at $35 dollars an ounce purchased through and deposited with the US Federal Reserve Bank of New York. A further $214,002 (15 per cent) was transferred back to the apostolic delegate and AOR/IOR and $189,657 (13 per cent) was transferred to banks and individuals outside the United States, including $118,624 to Banco de la Nación Argentina. More difficult to explain are payments of $306,263 (22 per cent) to: three US leaf tobacco brokerage firms; a Geneva-based import/export quality-control company; the American Radiator Co; and General Foods Corp. It is not clear from the accounts what these payments were for, and they certainly remain a puzzle.Footnote ⁵¹

Although often referred to as ‘The Vatican Bank’, the AOR/IOR would, on the basis of its account statements for the period under discussion, be more properly described as a financial institution offering a limited range of banking facilities to its clients, and these only by virtue of the fact that it was itself a client of a large international bank through which the services it offered were transacted. Its surviving City Bank account statements for the forty-four weeks of calendar year 1942, reveal an average balance of $3,500,000 and deposits of $2,216,822, of which $990,302 (45 per cent) were made by the apostolic delegate. Deposits by religious orders and institutions on behalf of their personnel, colleges, or institutional headquarters in Rome amounted to $526,943 (24 per cent). Conspicuous is the fact that no corresponding withdrawals against these latter deposits are recorded, nor indeed could they be, since foreign exchange dealing in the currency of enemy countries was explicitly forbidden. Rather, this is the ‘gigantic compensation system’, noted by Mynors above,Footnote ⁵² whereby funds deposited were advanced by the Vatican to the beneficiaries to a comparable amount in Italian lira, without need for a foreign currency transaction. Missionary societies and Mass stipends, which traditionally fund schools, hospitals, and clergy working in underdeveloped counties, contributed deposits of $548,694 (25 per cent) while dividends and yields from investments accounted for deposits of $56,228 dollars (3 per cent). Assuming again an average annual return of around 4 per cent, this would suggest an investment portfolio of approximately $1,400,000, or $2,600,00 if $49,376 worth of collected coupons deposited into its Sub ‘A’ custody account are included.Footnote ⁵³

The extent to which the Vatican had transferred and entrusted the funding of its global church to the United States is demonstrated by the use to which these funds were put. Investment income was immediately reinvested in the US economy, further gold purchases made on behalf of the AOR/IOR, some funds distributed to religious institutions and churches within the United States, but over $690,836 was cabled, on direct instruction from the Vatican secretary of state, pontifical missionary society, or religious superior, to apostolic delegates and religious personnel around the world for redistribution among dioceses and mission stations under their care. Transacted under General Licence No. 44 or special licence or through authorized banks, these transfers were made on a regular basis to Hawaii, Canada, Cuba, Chile, Brazil, Surinam, Bolivia, Argentina, Uruguay, Turkey, Egypt, Palestine, Syria, Iraq, Iran, Ethiopia, Equatorial Africa, Kenya, Belgium Congo, Angola, Madagascar, South Africa, India, China, Philippines, Indonesia, Australia, New Zealand, and Samoa.Footnote ⁵⁴ To provide relief for its harassed churches in Nazi-occupied Europe, where Catholic schools, monasteries, and churches had been confiscated or closed, Catholic youth organizations and publications suppressed, and numerous priests and religious arrested and interned in concentration camps,Footnote ⁵⁵ the AOR/IOR maintained a separate account with the Chase National Bank of New York.Footnote ⁵⁶ From this account funds were transferred to Credit Swiss, Zurich, at first through a Banco de la Nación Argentina account with the Central Hanover Bank of New York,Footnote ⁵⁷ and later through a Swiss-registered account with Barclays Foreign, London.Footnote ⁵⁸ When the British government attempted to close the Barclays account, on the grounds that Switzerland was a blocked country, the Vatican appealed directly to the US government, whose Freezing Order was at issue, and did so with apparent success.Footnote ⁵⁹ Dollar transfers from Chase to Barclays Foreign, totalling some $168,000, continued at least up to September 1943, the last date for which we have records, and the United States government made Swiss Francs, Spanish pesetas and Portuguese escudos available to the Vatican in recognition of the humanitarian nature of its activities, including its assistance to Allied POWs held behind enemy lines.Footnote ⁶⁰ This gives some credence to a statement made by Monsignor Egidio Vagnozzi, a member of the apostolic delegation, Washington, DC, that the Vatican transferred all its foreign assets into US dollars because of the ‘spirit of co-operation of the Government of the United States regarding the use of the said funds in countries whose assets had been frozen, or in countries which had been invaded by the enemy’.Footnote ⁶¹

Noting, in a memorandum submitted to the US Treasury Department by the papal delegate (Nogara),Footnote ⁶² that a percentage of the pesetas and escudos referred to above were earmarked for food supplies for the Vatican, Phayer asserts ‘I have found no records of exports to the Vatican by either land or sea from the Iberian Peninsula’Footnote ⁶³ and speculates that Nogara may have used these funds to invest in the profitable Portuguese tungsten mining industry, which, at the time, was supplying Nazi Germany with this key strategic ore.Footnote ⁶⁴ There is no evidence for this. But there is ample evidence to the contrary. Food exports to Italy and Axis-occupied countries from neutral states were subject to a British naval blockade. British Ministry of Food and Foreign Office records show that from October 1941, key Vatican officials, including Pius XII's nephew, Carlo Pacelli, were actively purchasing foodstuffs and other essential supplies from Portugal and Spain for export to the Vatican and, as the war progressed, to the severely malnourished population of Rome. The British government, under pressure from President Roosevelt, issued the necessary Navicerts to allow these shipments through their blockadeFootnote ⁶⁵ though after the Allied landing in Sicily, in June 1943, when, for military reasons, this was no longer possible, convoys of up to fifty Vatican lorries per week brought supplies from northern Italy which, according to British Foreign Office reports, were feeding up to half the population of Rome.Footnote ⁶⁶ Contra Phayer, therefore, the evidence appears to support the claim that the Spanish pesetas and Portuguese escudos were used for the purpose which Nogara stated.

V

We learn from these accounts that at the onset of the Second World War the Vatican rapidly moved its securities and gold reserves from areas under threat of Nazi occupation to the United States, made the United States the financial hub from which it funded and administered its global church, and had, at any one time, over $10,000,000 invested in the US economy.Footnote ⁶⁷ If, to the contrary, accounts statements had come to light which revealed that during the early years of the war, when German armies seemed invincible and all Europe falling under their control, the Vatican had moved its assets to Germany, administered and funded its global church from within the German banking system, and invested the equivalent of 197,000,000 Reichmarks in the German economy; this would be offered as irrefutable evidence that the Vatican had pro-Nazi sympathies, maintained a special relationship with Germany, and hoped for a German victory in the war as a bulwark against Bolshevism. Thus, the concomitant argument must be allowed: that the Vatican transferred its assets and financial administration to the USA for the duration of the war must be accepted as compelling evidence of its pro-Allied and pro-democracy sympathies, and of its special relationship with the United States.

This argument becomes more pressing when we analyse the type of investments the Vatican was making in the US economy, and especially the change in investment strategy adopted once war began. Subsequent to his visit to the United States in 1937, Nogara, as Pollard tells us, adopted a policy of investing in US Treasury Bills, manufacturing companies, and utilities, especially electricity supply companies.Footnote ⁶⁸ By 1941, however, investments in Great Britain were focused on the heavy industrials, Rolls Royce, United Steel Corporation, Dow Chemical, Westinghouse Electric, Union Carbide, and General Electric, all of which were being actively accumulated.Footnote ⁶⁹ From that same date, new investments in the United States were made almost exclusively in either US Treasury Bills or war-related industries.Footnote ⁷⁰ Account statements from J. P. Morgan and City Bank reveal that by 1942, a large proportion of the Vatican's considerable investment income was generated by, in addition to the companies named above, Chrysler, General Motors, American Smelting and Refining, Ingersoll Rand, the American Aviation Corp., Texas Corp., Goodyear Tyre & Rubber; Du Pont, Humble Oil, and the National Lead Company, all of which fed directly into the military production of the US war economy.Footnote ⁷¹ Citing a Vatican purchase in 1940 of minor shareholdings in an Italian insurance company, La Fondiaria, which itself formed only a small part of a syndicate underwriting German insurers some of whom were later implicated in the Holocaust, Phayer claims that thereby, though only a trickle, ‘Vatican money found its way to the grisly side of the Holocaust.’Footnote ⁷² By the same token, though less tenuously, Vatican Bank statements give evidence that a torrent of Vatican money flowed directly into the Sherman tanks, B52 bombers, and well-equipped young GIs who defeated the Nazi regime and ended the bestial murders of the Holocaust forever. If the weight of investment counts, Vatican money was clearly behind the Allies.

It might be argued that these investments represented the shrewd judgement of the Vatican's delegate, Nogara, who recognized that war is profitable and who, acting on his own initiative, made these investments with an eye only to maximizing gain. Pius XII and other Vatican officials would have known nothing about his activities and had they done so, it could be argued, they would probably have disapproved. Statements by the US Chargé d'Affaires to the Holy See suggests otherwise. In June 1941, when Pius XII learnt that the Vatican had been granted a General Licence under the US Freezing Orders, he summoned Tittmann to a meeting in his private apartments to ensure that ‘certain special accounts in New York banks’ and his own private account would be included under the licence, and their existence kept secret from the Nazis. We have no record of his private account, but the special accounts must certainly refer to the custody accounts into which Vatican securities were being deposited, and about which Pius XII was, therefore, fully aware. Tittmann further records that, in an attempt to dispel the despondency felt in the Vatican by May 1941 that any US aid to England would be ‘too little, too late’ and a German victory in Europe, accordingly, inevitable, he provided the pope with ‘a detailed list of our war preparations … a prodigious list of figures describing the rearmament activities of the United States’. In his next meeting with Pius XII: ‘I found him most eager for additional news and statistics of our preparations to defeat the aggressors, and he seemed to have grasped in a surprising manner the significance of the memorandum detailing our war efforts.’Footnote ⁷³ This does not sound like the description of a man oblivious to the implication of where financial resources are placed, and it is inevitable, given his obvious comprehension and interest, that he discussed these issues with the well-informed Nogara, and knew exactly where his delegate was investing Vatican money. Pius XII had previously exhibited an equally surprisingly pragmatic side to his character when, once his efforts to prevent war had failed, he took the astonishing decision, within weeks of the invasion of Poland, to co-operate with German conspirators plotting to assassinate Hitler, restore democracy to Germany, return independence to Poland, and sue for peace with Great Britain and France.Footnote ⁷⁴ Although these plans came to nothing, Pius XII's decision to involve himself in this audacious last-ditch effort to avert the appalling threat Hitler posed to the peace and security of Europe, indicates a mindset focused on the practical good to be achieved as the key criterion in decision making. His close friend and confidant, German Jesuit Father Robert Leiber, characterized him as pragmatic man who ‘thought along realistic lines’ and approached problems with ‘a sober matter-of-factness’.Footnote ⁷⁵ This may provide some insight into later decisions to criticize the Nazis and the Holocaust in only the most general and muted of terms, when in fact he wanted ‘to cry out loud and strong’ but felt compelled to silence.Footnote ⁷⁶ He seems to have judged that nothing would be achieved by a public protest and that, as in Holland,Footnote ⁷⁷ such outspoken criticism would merely increase the suffering of Jews and Catholics alike and jeopardize thousands of Jews given refuge in convents and monasteries across Europe, especially later in his own diocese of Rome. In his oft-quoted June 1943 address to the Sacred College of Cardinals, Pius XII gives expression to just such thinking: ‘Every word from Us in this regard… must be seriously considered and weighed in the very interests of those who suffer so as not to make their position even more difficult.’Footnote ⁷⁸ The same line of thought was echoed by the German first consul to the Holy See and avowed anti-Nazi, Albrecht von Kessel, who advised the pope ‘not to issue any statements … without very careful consideration’, because: ‘a fiery protest by Pius XII against the persecution of the Jews … would not have saved the life of a single Jew. Hitler, like a trapped beast, would react to any menace that he felt was directed at him with proportionate violence.’Footnote ⁷⁹

Characterizing Pius XII as a pragmatic realist may provide a framework in terms of which we can make some sense of both his anti-Nazi pro-democracy stance, as judged by his covert actions and US investments, and his comparative silence in the face of one of the worst atrocities in European history, though it still leaves open the question of whether it also provides a moral justification. Evaluating consequences, even known consequences, as a component in determining the moral worth of an action is a debate which involves philosophical and ethical considerations, and is here left to others to address.Footnote ⁸⁰ But in this context it is worth noting that Tittmann was of the opinion that Pius XII's failure to speak out was perhaps because ‘the belief is held that there is little hope of checking Nazi barbarities by any method except that of physical force coming from without’,Footnote ⁸¹ and later concluded: ‘Personally, I cannot help but feel that the Holy Father chose the better path by not speaking out and thereby saved many lives.’Footnote ⁸²

VI

These account statements do not settle the debate about the role of Pius XII and the Vatican during the Second World War but, as has been argued here, they certainly offer a new perspective on the political orientation of the wartime pontiff and provide a startling counter-balance to the pro-Nazi impression given by the reports of the German ambassador to the Holy See, Ernst von Weizsäcker, and his predecessor, Diego von Bergen, upon which many of those who take a contrary view base their arguments.Footnote ⁸³ Berlin, however, had long been suspicious of the objectivity of these diplomatic dispatches and sent their own man, Ludwig Wemmer, to Rome to make his own independent reports directly back to the Reich Security Main Office (RSHA).Footnote ⁸⁴ Wemmer gave a very different version of where Vatican sympathies lay: ‘Official Vatican circles are not fixedly Anti-German. They are afraid of Communism and are very enthusiastic about an Anglo-American core Europe’.Footnote ⁸⁵ This more objective and agenda-free assessment tallies with the evidence provided by the Vatican's account statements. Pius XII had genuine affection for Germany, though not the criminal element into whose hands it had fallen; he feared Bolshevism, an ideology dedicated to the annihilation of the church of which he was head, but his sympathies lay with the Allies and the democracies, especially the United States, into whose war economy he had transferred and invested the Vatican's considerable assets.

If these newly available documents help cast new light on the role of Pius XII and the Vatican during the Second World War, it is worth remembering that many more documents yet remain to be released, and these in turn may finally enable a more informed and balanced judgement to emerge about this very contentious issue.Footnote ⁸⁶