Pope’s claim to temporal power based on 8th-c forgery
The document used to justify the pope owning his own kingdom turns out to be a fake. But it was very useful. This forged “Donation of Constantine” even let the pope claim to be the overlord of emperors and kings, the supreme ruler in former Western Roman Empire. Naturally, the book that finally exposed the document as fraudulent was banned by the Vatican.
Actually, there is no evidence that Constantine, the first Christian emperor, ever attended a church service and, in fact, he was baptised only on his deathbed in 337. It has been claimed that, like Napoleon, Constantine saw Christianity as a tool to unify his empire and let him exercise social control through the bishops.  However, one thing is certain: he did not follow the script of “the most famous forgery in history”, the Donation of Constantine, as it was written more than 300 years after his death. 
This document announces that the Emperor is withdrawing to a new capital at Constantinople in order to give the pope “the city of Rome and all the provinces, districts and cities of Italy or of the western regions”. Constantine also purportedly decrees that the papal reign in Italy and the Western Roman Empire was to continue “until the end of the world”.
By the High Middle Ages some had begun to question the authenticity of the Donation of Constantine, but it was dangerous to express this openly. In 1229-1230 a couple of doubters were burned alive at Strasbourg.  It wasn’t until 1517 that this forgery was publicly proven to be a fake, (the same year that Martin Luther launched his own protest against papal power). The brilliant humanist Lorenzo Valla (who had the protection of a royal patron) argued that the document’s barbarous Latin meant that it could not possibly date from the time of Constantine. The Vatican responded by placing Vallo’s work on the Index of forbidden books. 
Of course, discrediting the basis for the pope’s temporal power was one thing, but ending it was another. Exposing the Donation of Constantine as a fake did nothing to help those living in his theocracy in the Papal States.  They were only freed by force of arms. In 1870 Pius IX refused to negotiate a peaceful surrender, and Italian troops were obliged to breach the walls.
In terms that echo the claims of the Donation of Constantine, Pius IX rejected the legitimacy of his overthrow in the name of democracy. He had long maintained that the Church was a perfect society, entitled by Christ to exercise temporal power and to use force while doing so.  Even after he was deposed, Pius IX continued to insist that he was still King of Rome: “This corner of the earth is mine; I received it from Christ.” 
Theologian and Cardinal Yves Congar felt that this was a missed opportunity for Pius IX to reconcile himself with his loss of power and return the Church to its true role of preaching: “When the events of the time invited him to abandon the terrible lie of the Donation of Constantine... he did not respond...but plunged the Church into demands proper to a temporal power.” For 58 years after the loss of the papal kingdom, successive popes refused to leave their enclave, claiming pathetically to be “prisoners of the Vatican”. The papal boycott only ended when the dictator Mussolini signed the Lateran Pacts  which once again gave the pope an autonomous state. The pope’s original kingdom, based on a forged grant by the emperor Constantine, was replaced by a microstate based on a real grant by the dictator Mussolini.
Superficially the restored kingdom is only a shadow of the Papal States that stretched all the way across central Italy. The present Vatican City State is the smallest microstate in the world and it has no lay inhabitants. Even so, as “Sovereign of the State of the Vatican City”  the pope still exercises temporal power indirectly. He adroitly uses his revived “state” to lobby in international bodies and to exert pressure through international “treaties”.  He no longer wields temporal power directly as he once did over his subjects in the Papal States, yet still manages to do so indirectly over millions of people worldwide. Though now historically discredited, the Donation of Constantine helped to lay the groundwork for the temporal power of the pope today.
For more on the Church's troubled relations with the historical record see
♦ The Vatican and the Holocaust: A Preliminary Report International Catholic-Jewish Historical Commission (2000)
♦ Timely eviction of the Slovak National Memory Institute (2007)
♦ Secret archives at the Vatican and in each diocese worldwide
* Matthias Schulz, “Schwindel im Skriptorium”, Spiegel, 13 July 1998. http://www.spiegel.de/spiegel/print/d-7937763.html
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2. Anthony Gottlieb, “When the Lights Went Out in Europe”, review of Charles Freeman, The Closing of the Western Mind, New York Times, 15 February 2004. http://www.nytimes.com/2004/02/15/books/when-the-lights-went-out-in-europe.html
3. “Donation of Constantine” http://www.fordham.edu/halsall/source/donatconst.asp
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5. Philip Schaff et al, Nicene and Post-Nicene Fathers: Series II/Volume I/Constantine/Prolegomena/The Mythical Constantine, 1885, Wikisource.
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8. Pius IX, Syllabus of Errors, #19 (1854), #24 (1851). http://www.ewtn.com/library/PAPALDOC/P9SYLL.HTM
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10. Yves Congar, Mon Journal du Concile, Paris: Cerf, 2002, vol. 1, pp. 114-116. http://www.traditioninaction.org/ProgressivistDoc/A_086_CongarPomp.html
11. “How the Lateran Treaty made the Catholic Church into a state”, Concordat Watch. http://www.concordatwatch.eu/topic-841.843
12. “Titles of some 19th-century divine-right monarchs”, Concordat Watch. http://www.concordatwatch.eu/kb-12871.843
13. “The Vatican’s triple crown: church, government and state”, Concordat Watch. http://www.concordatwatch.eu/topic-823.843