God's Mammon

In heaven, according to the book of Revelation, the streets are paved with gold and the walls are encrusted with jewels. The myth persists in some quarters that the Christian church resembles that sort of heaven on earth. Tales of untold wealth are propagated even by churchmen. The late Episcopal bishop James A. Pike once wrote wildly in Playboy that the Society of Jesus owned 51% of the Bank of America. Eugene Carson Blake, general secretary of the World Council of Churches, has predicted that tax-sheltered churches would some day be able to control the entire U.S. economy.

For the authors of the church-as-Fort Knox school, the favorite target, naturally enough, is the Roman Catholic Church and its prosperous American branch. Five years ago, Business Journalist James Gollin (Pay Now, Die Later), a nonpracticing Jew, decided it was time to stop the guesswork and to start investigating the secret church accounts. He distills his results in Worldly Goods (Random House; $10), a fascinating book and the first reliable report on American Catholic wealth.

Instead of a giant money machine, Gollin has discovered a religious empire that is decentralized, poorly managed and barely able to keep going at its current level. On paper, his estimate of the total wealth of the 48 million-member church is impressive. He calculates the combined assets of U.S. dioceses and religious orders at $34.2 billion, which is only slightly less than the worth of American Telephone and Telegraph. But Catholic assets consist mostly of churches and schools, which are costly to run and consume income instead of producing it.

Timid Grandmother. Most of the church's small margin of liquid assets is simply plunked into savings and checking accounts--the "cigar box" approach. The rest consists of securities and commercial property worth almost $1 billion, which puts the church a notch above the Rockefeller Foundation. But this money is often badly invested. One bank trust officer scanned a diocesan portfolio and remarked, "If your grandmother were unusually timid, this is what she'd do with her money." Sometimes the yield does not even cover the cost of investment. Gollin thinks U.S. dioceses are "perhaps the least effectual investment institution in this country, if not in the world."

Gollin says the bishops are partly to blame for the myths about Catholic wealth because they keep money matters secret. This "famine of information" also exists within church councils. The bishops are misinformed about their own holdings and have plunged into ill-advised building sprees because they did not realize how poor they really were. Another victim of secrecy is the beleaguered parochial school system, which consumes 60% of parish incomes. Gollin says that new public support will never come until the account books are opened and the bishops convince taxpayers that the schools really need the money.

Decentralization is as much at fault as secrecy. In money matters, the chief pastors of the country's 18,244 parishes are largely autonomous. Even central purchasing plans for dioceses are surprisingly rare. One diocese saved $241,000 a year just by consolidating parish insurance policies.

Bemoaning the economic ignorance of most priests, a financial adviser to the New York archdiocese told Gollin, "It's a good thing they have God on their side." They need secular help as well. Urban parishes increasingly depend on raffles, lotteries, Monte Carlo nights and bingo to make ends meet. Priests often consider gambling demeaning, if not immoral, but their parishes need it. The annual $15,000 or so it provides may keep the parish school open. One priest explains, "Bingo isn't a sign of greed. It's a confession of defeat--an admission that the parish can't keep its head above water."

The 500 religious orders in America are legendary lodes, but Gollin guesses that they really hold only $150 million in cash and securities. Most of their $8.2 billion in assets is tied up in unprofitable universities and other schools. However, he figures that they can keep solvent if they concentrate on more businesslike use of their skilled, dedicated manpower, and abandon such unprofitable pastimes as raising vegetables and selling fruitcakes.

Mussolini's Millions. Gollin guesses that the wealth of Catholicism round the world totals $70 billion, most of it tied up in real estate. As for the church's headquarters, Gollin's two chapters on Vatican finances depict a much shrewder investment operation than that in the American branch office. In 1929 Mussolini paid the Vatican, which was then virtually broke, $92 million in return for Italy's previous takeover of the Papal States. By 1968, Vatican-employed businessmen, chiefly Bernardino Nogara, a Jewish banker, had parlayed this into a $300 million stake in the Italian economy--plus another $200 million worth of investments in other nations.

Pope Paul VI has drastically overhauled Vatican money management by putting it all under one roof for the first time. He has also gradually switched its control from laymen to clergymen. In the 1930s, the Vatican's lay wizards made major gains through speculation in foreign currencies, which is against canon law. Today's Pope wants future church investments to be not only legal but moral, whether or not they are profitable. He has even considered forming a Third World investment syndicate, regardless of the financial return. Meanwhile, for other reasons, Paul is damping a movement that would cost the church untold millions and drastically alter its economy. If priests were allowed to marry, the church would have to pay them enough to support their families.

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