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When the Holy See entered into the Lateran Treaty with the Kingdom of Italy in February 1929, it thereby acknowledged that it had now permanently lost control of the Papal States, that middle portion of Italy which had formed part of its feudal empire since ad 752. The Treaty, in turn, acknowledged and recognized the sovereign and independent status of the State of Vatican City, regularized and codified its relations with the Kingdom of Italy, and, by means of a Financial Convention, provided a financial indemnity to compensate for the loss of income incurred by the occupation and annexation of the former Papal States by the Kingdom of Italy in 1861.2The Financial Convention, known as the Conciliazione, provided for payment, in cash and government stock, of a total compensation package of 1.75 billion lira.3
At that time, the two main financial agencies of the Catholic church were the Amministrazione per i Beni della Santa Sede, which administered the patrimony of the Vatican, and the Amministrazione Pontificia per le Opere di Religione (AOR/IOR), which was created by Leo XIII in 1887 to act as a financial agency offering banking facilities to Catholic dioceses, institutions, and religious orders.4But in June 1929, as the first payments from the settlement began to come through, the Amministrazione Speciale per la Santa Sede (ASSS) was established by Pius XI (Achille Ratti) to oversee and invest this new and welcome stream of income on behalf of the Vatican. Bernardino Nogara, a member of the board of directors of Banca Commerciale Italiana, Italy's largest private bank, and a trusted friend of the Ratti family, was appointed to head it. Nogara had extensive connections in the international financial community and immediately set to work to use both his connections and expertise to invest these resources in leading Italian companies and top-quality securities in banks and financial institutions around the world.5Thus, on 26 July 1930, Lord John Swanwick Bradbury was passed a note verbale by the London manager of Banca Commerciale Italiana exploring the possibility of major investments being made by the ASSS in the United Kingdom.6Bradbury previously served as private secretary to the chancellor of the Exchequer...