Institute for the Works of Religion, the proper name for 'The Vatican Bank,' was created in June 1942 by Pope Pius 12 to deal with the money crises caused by WW2, to prepare for post-war recovery efforts, and to work against communist takeovers, especially in Italy and France.
The IOR ( its Italian acronym ) is not a division of the Vatican City State; nor is it an office of the Catholic Church's organizational and curial structures. It is an independent 'charitable institute,' run by a board of supervisors ( usually laymen ), overseen by a committee of cardinals under papal direction.
The principal purpose of the IOR is to promote acts of charity inspired by the Christian faith.
Of course, the Vatican had been in the banking business for a very long time prior to 1942. During the Avignon Papacy ( 13091378 ), bereft of its financial base in Rome and in the Papal States and ever at odds with Kings and Emperors, the papacy developed an extensive banking system in order to support its centralization of church authority and administration and to free itself from secular control, thus playing a crucial role in the rapid rise of banking in our modern sense.
One would think that with so much experience with money, power, and organization, the papacy would be competent to run a bank. Nothing could be farther from the truth. The administration of the Vatican Bank has been so unbelievably sordid and incompetent that it defies a rational presentation, giving rise to conspiracy theories ( IN HIS NAME, Yallop, 1984 ) and conspiracy theories about conspiracy theories ( A THIEF IN THE NIGHT, Cornwell, 1989 ).
THE CHICAGO CONNECTION. Although the Vatican is rich in real property holdings and art treasures, it is seriously and chronically short of cash. In 1032 the Norse King Canute imposed a tax ( Peter's Pence ) upon all his subjects in the British Isles to assist the pope. This tax quickly developed into an independent revenue-stream for the direct support of the reigning pope and his projects, such as, protecting pilgrims and building St Peter's Basilica. Among the biggest contributors of all time to the Vatican were Cardinal Spellman ( + December, 1967 ) of New York and Cardinal Cody ( + April 1982 ) of Chicago, giving these donors enormous clout with the pope. This clout led to the appointment of Archbishop Paul Marcinkus ( + February 2006 ) of Cicero, Illinois as president of the Vatican Bank for 18 years from 1971 to 1989. ( It is alleged that Marcinkus and Cody made frequent trips between Chicago and Rome carrying suitcases full of cash. )
Under the Marcinkus presidency the Vatican Bank suffered many obscene catastrophes. To mention just two: 1 ) the employment of Roberto Calvi, 'God's Banker' made famous by Godfather 3 and other movies, as chief financial advisor. Calvi advised the Vatican to invest in Banco Ambrosiano, of which he was chairman and the Vatican became the principal shareholder. In 1981 Calvi was convicted of money laundering but given a four year suspended sentence. Calvi hung himself ( or was hung ) from Blackfriars Bridge in London on 17 June 1982. 18 June 1982 his secretary Graziella Corrocher jumped out of ( or was thrown out of ) her office window in Milan. Two days later Banco Ambrosiano collapsed, leaving its shareholders and depositors out in the cold. Out of a sense of 'moral obligation,' the Vatican paid out 250,000,000.00 USD to the outraged depositors; and 2 ) as if they had learned nothing from the Calvi fiasco, the Bank employed Michele Sindona as chief financial advisor. In addition to laundering Mafia funds, Sindona assisted the Vatican in making shady investments leading to the collapse of his USA based Franklin National Bank in 1974, costing the Vatican over 40 million USD. In March 1986, Sindona was poisoned in a Milan prison while awaiting trial for his crimes.
Pope John Paul 1 ( elected 26 August 1978, dying under suspicious circumstances 33 days later ) did his best to free the Vatican Bank from Marcinkus and a group called P2, a renegade and illegal Masonic Lodge headed by Licio Gelli ( a dedicated Fascist ) and peopled by such outstanding characters as Berlusconi, Calvi, Sindona, Marcinkus, and a host of prominent Italians. To avoid prosecution in the Banco Ambrosiano affair, Licio Gelli escaped to Switzerland where he was arrested. But, mirabile dictu, he managed to escape from a modern Swiss prison in Geneva and flee to South America. Sadly, after the sudden death of John Paul 1, John Paul 2 ( + 02 April 2005 ), turned a blind eye and a deaf ear to all indications regarding the criminal activities of the Vatican Bank.
Marcinkus was indicted but given diplomatic immunity by the Vatican.
Criminal charges against the Vatican Bank continue to this very day.
HOPE: In June 2013, Pope Francis appointed a commission with full powers to investigate the Vatican Bank and to recommend reforms, even its termination. Harvard Professor Mary Ann Glendon heads the commission.
Nick Patricca is professor emeritus at Loyola University Chicago, president of Chicago Network and playwright emeritus at Victory Gardens Theater.