Rent Seeking by the Upstream Church after the Council of Trent

The evolution of the medieval Catholic Church from a quasi-conciliar body in the thirteenth and fourteenth centuries to a Roman-centered, Italian-dominated, papal monopoly was virtually complete by the time the Council of Trent was invoked. Thus, economic as well as spiritual power was concentrated in the hands of a tightly organized, geopoliti-cally homogeneous circle of prelates in Rome. Despite the fact that the financial abuses of this body constituted the proximate cause of Luther's (and others') protests, the members of this circle were naturally eager to protect their economic interests, which centered on control of church property and revenues. One common abuse was nepotism. The official declarations of the Council of Trent took aim at some of the grossest abuses. A major decree35 prohibited bishops and cardinals from "attempt[s] to enrich their relations or domestics from the revenues of the Church,'' and further forbade them from giving ecclesiastical properties, "which are from God,'' to relatives. However, such measures appear to have been mere window dressing. According to B. M. Hallman, not only did the papal monopoly not follow the admonitions of Trent, the post-Trent abuses flourished beyond previous levels.36

Popes of the sixteenth century often supported family and friends from the papal treasury. To cite one egregious instance: In a mere six-year pontificate, Pius IV distributed 334,000 gold scudi37 from the papal treasury to members of his family, for various purposes unrelated to the provision of church services. Between 1561 and 1565 Pius IV gave 120,000 gold scudi to four nieces (mainly for dowries); 22,000 scudi to his nephews; 10,000 scudi to his brother; and more than 100,000 scudi to other relatives. On his deathbed in 1565 he gave 100,000 gold scudi to his nephew, Count Annibale d'Altemps, to whom he had also granted an annulment of marriage so that d'Altemps could marry Pius's niece, thirteen-year-old Ortensia Borromeo. We do not know if, or how, d'Altemps and his young bride were blood related, but the possibility raises numerous questions about dual standards for the privileged versus the faithful. Such practices persisted into the seventeenth century.38 Robert Bireley writes, "the papacy took on features typical of the seventeenth-century European court, so exhibiting its consonance with the times. Despite attempts of other popes to do so, only at the end of the century, in 1692, did Innocent XII take effective measures against nepotism.''39 These practices were (weakly) defended by assertions that Italians were acting as the "good signore'' by taking care of relatives, but there can be little doubt that nepotism dissipated the institutional revenues of the Church.

Another common abuse was simony. Popes and cardinals sold secular and honorary offices with new vigor after the Council of Trent. A popular device for raising money through the sale of offices involved the College of Knights, a papal creation that offered membership for a high admission fee. Pius IV created the largest college of all, the Cavalieri Pii, "in 1560, with a total of 535 offices [sold] at 500 scudi of gold each.''40 The buyer received an immediate elevation in social rank. The members who bought into these groups were often Italian bankers who were well connected with the Vatican. The interlocking of economic and spiritual power was so concentrated that by the end of the sixteenth century a mere nine Italian banking families dominated the entire College of Cardinals. Expanding the political and economic realm of the Papal States also required governors, administrators, and soldiers—thereby providing more patronage opportunities for the pope. Cardinals divided these offices up as so much booty, and "by 1550 it was customary that each cardinal should possess at least one,'' which could be sold to the highest bidder.41

There were other financial abuses as well. A major element of Luther's attack on the church focused on "property crimes''—that is, personal aggrandizement by the alienation of church property and wealth to individual benefit. In short, Luther attacked the Church as an instrument of rent seeking. But while some prelates recognized the problems within the Church and supported reforms that promised to reverse the swelling tide of protest, the property crimes denounced by reformers continued unabated after Protestant entry occurred. Thus, as Hallman points out, the abuses cited by Luther in his Address to the Nobility of the German Nation (1520) were practically the same as those cited by Pope Paul Ill's reform commission of 1537.42 Entrenched in their religious fiefdom, the Cardinals ignored exhortations by the Council of Trent against long-term rentals of church property. In 1616, "twenty four of the thirty abbeys belonging to Cardinal Scipione Borghese were rented out,'' and by the end of the century long-term rentals and other alienations in return for present income were common.43

One way of alienating church property was by last will and testament. Hallman explains:

The money disappeared permanently into the coffers of private families ... as luxuries increased in Rome, so too did the sums of money churchmen were allowed to bequeath____The incomes of our ecclesiastical rentiers [property and stock holders] were being diverted into the hands of lay rentiers, who were transforming the social fabric of Italy by buying their way into the nobility____As for last wills and testaments, they, like rental agreements, pensions, and other practices, became so customary that they were sanctioned by canon law. The privilege of bequeathing church money... now accompanies the red hat [elevation to cardinal rank] as a matter of course.44

Another common practice ostensibly outlawed by the Council of Trent was the holding of multiple benefices by a single bishop or cardinal. The secular meaning of benefice is a feudal estate in land. In ecclesiastical parlance, it is a form of preferment (e.g., endowment) that provides a living for a prelate. By holding multiple benefices, high church clerics were opportunistically usurping resources of the church for their own use. The possession of multiple benefices meant that cardinals and bishops were, in effect, always absent from some of their spiritual charges, since they could not be in residence simultaneously in more than one place. Once more, the admonitions of Trent were disregarded. Calculating the incidence of multiple benefices held by cardinals and bishops before Trent, Hallman found that approximately 90 percent of the prelates were "double-dipping" or worse. Cardinal Farnese, Vice Chancellor of the Roman Catholic Church during the convocation of the Council of Trent, for example, held no less than sixty-four separate benefices simultaneously. Comparable data during the post-Trent period are more difficult to come by, but Hallman comments, "the years of reform did nothing to alter the practice of gathering together packages of benefices and conferring them as a whole ...If anything this practice probably increased with the years. And when vacancies were in short supply 'expectative graces' were granted.''45

The weight of historical research on the subject demonstrates that the wholesale side of the medieval church not only resisted actual and effective reform in the wake of the Protestant Reformation; it succeeded in conducting "business as usual," shielded from view by the cloak of secrecy that enshrouded the Vatican. Patronage, nepotism, and simony all intensified, made possible by the re-monopolization of the Roman-Italian Church after the Great Schism of the fourteenth century. While some in the Catholic Church recognized the need for genuine reforms on the wholesale side, the serpentine Roman bureaucracy, entrenched in its power for at least a century before the Council of Trent, defied actual reform at the wholesale level of church organization.

The Protestant Reformation can be understood as a reaction to perceived abuses at the retail and wholesale levels of the Catholic Church, whereas the Roman Catholic Counter-Reformation may be viewed as an incumbent monopoly firm's response to entry, either actual or threatened, by a rival firm. In the wake of the Protestant Reformation the average price of the Z-good (i.e., religious services or assurances of salvation) was lowered because the Catholic Church could no longer practice price discrimination in the upper reaches of the demand curve. As expected, it engaged in vigorous competition with new entrants to retain members and prevent defections to the new religion. To be sure, the resort to violence and repression to increase the cost to individuals of defecting is not what one would expect from the stewards of a religion based on Christian principles of love and forgiveness. Expectations notwithstanding, it is clear that the Catholic Church tried to maintain, and even increase, demand for its services in the face of Protestant entry.

Clearly, to stay in business the Roman Catholic Church could not simply re-institute strictness (which, as we noted in an earlier chapter, only works in small, club-like organizations). It had to increase benefits to religious orders while lowering costs to the public. Tridentine reforms, many of which involved greater form than substance, allowed the institutional Church to present an appearance of cleaning up abuses at the retail level of church organization, and this may have been sufficient in some regions of Europe to maintain memberships in the Catholic Church and to prevent further attrition. Also, certain of the retail products of the church that dealt with social services flourished before and after the Protestant Reformation and the Catholic Counter-Reformation. Between the twelfth and fourteenth centuries the Catholic Church's activities provided models for Protestant charitable organizations.46 The reforms introduced at the wholesale level, however, had almost no salutary effect on the faithful.

We speculate that the probable result of the Counter-Reformation was to lower the price of membership in the Catholic Church, at least modestly. The overall effect on economic efficiency is unclear, however, because the Church attempted to support demand by increasing non-price competition as well. This involved considerable use of organizational resources. Both before and after the Protestant Reformation the Roman papal apparatus found it necessary to make side payments to church and state officials in other countries to keep them in the fold. Indeed, the Reformation may be viewed in part as a consequence of the failure of side payments to keep certain countries beholden to the Italian cartel. But in the end, the side payments bestowed on governmental and church interests were insufficient to maintain the hegemony of the Catholic Church's monopoly. Concessions, including financial concessions, made to French monarchs such as Francis II and to aristocrats in several nations appear to bear this out. These concessions were insufficient in amount and distribution to bring Protestant nations, such as England and Germany, back into the fold.

In the final analysis, the Catholic Church's response to Protestantism, in practice as well as appearance, failed to clean up the wholesale side of church operations or to broaden participation in the Catholic version of Christian religion. The "sins of the fathers,'' in the form of blatant venality, must have been obvious to Protestants and Catholics alike. Rampant abuses of church property continued at ever-increasing levels in the sixteenth century. A part—perhaps a large part—of the failure of the Counter-Reformation to re-establish a universal church must be placed at the door of the organizational defects that allowed such venality to continue. The concentration of wealth and power by the Pope in Rome, the centralization of the Roman Catholic Church, and the establishment of an Italian "club" as its administrative bureaucracy help explain the success of Protestantism at this juncture of history.

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