Some definitions to start:
“The Vatican” is the 108 acre plot of land in Rome, West of the Tiber River.
“The Papacy” is the office traced back to St. Peter who traditionally is considered to have been buried at “The Vatican,” so could we say he was the first Pope to “live” there?
The Lateran Treaty of 1929 created Vatican City as a political city state. Constantine gave Pope Militades the land in 313 AD. In 326, the Constantinian Basilica was built on what is thought by many to be the tomb of St. Peter. Pope Symmachus (498-514 A.D.) constructed a palace on Vatican land. Popes have lived at the Vatican since the return from Avignon in 1377.
Ask why the area is called the Vatican and you find various answers. But most seem to think it has something to do with the Latin “vates,” which means “tellers of the future.” Many fortune tellers used to set up shop on the West Bank of the Tiber.
More interesting to many Busted Halo readers would be some financial info on “The Vatican.” So many young adults believe, erroneously, that the Vatican is incredibly wealthy, hoarding billions that could be better used to serve the poor, etc. In fact, the Vatican’s annual budget is about $260 million. For comparison, Harvard’s is $1.3 billion and Microsoft spends $4.7 billion on R&D alone. Overall, the Vatican is worth about $1 billion. Harvard’s endowment was $36 billion before thecrash of 2008. Today Harvard’s endowment is $26 billion. Yale’s is $16 billion. Thus, Harvard’s and Yale’s endowments are 26 and 16 Vaticans (cf. Allen 2004; Fabrikant, New York Times, 09/10/2009). Bill Gates is worth $40 billion and Warren Buffet is worth $25 billion (http://www.forbes.com/2009/03/11/worlds-richest people-billionaires-2009-billionaires_land.html). Charitable organizations in the United States are much richer than the Vatican. The United Way takes in $3.8 billion in revenues, Goodwill $3.2 billion, and the Salvation Army $1.57 billion (http://www.forbes.com/2009/11/22/americas-largest-charities-personal-finance-charity-09-nonprofits_land.html)
The Vatican’s art treasures are “priceless,” which in reality means they cannot be bought. Who has enough to pay for “priceless”? Those art works are held in trust for all humanity. The Vatican cannot sell the Sistine Chapel or the Pieta, and they must pay to maintain and protect those treasures. The Vatican does not own the property of Catholic churches around the world. The local dioceses own those properties. The Vatican can’t take them by “eminent domain.”
See John L. Allen’s excellent All the Pope’s Men: The Inside Story of How the Vatican Really Thinks for more on the operation of the Vatican.