It's not often that I would direct readers to Father Patrick O’Hare’s book, The Facts About Luther. Now, this is one of the worst biographies available in print about Luther. But, I found an interesting section in which Father O’Hare whitewashes the utter shambles that the Church was in at the time of the Reformation:
“Julius II had it brought under his notice that the ancient basilica of St. Peter, which had been given to the Church by the Emperor Constantine, was now falling into decay. He determined to use the opportunity and to employ all the architectural talent of that brilliant period in order to erect a new basilica in its place, which by its magnificence should be worthy of its position as the memorial of the great Apostle and the central church of the Catholic world. Julius II commenced the work and devoted large sums to its accomplishment. These, however, were far from sufficient, and it became evident that the cost of a building of such magnitude could be defrayed only by a successful appeal to the piety of the Christian world. Accordingly, Leo X, the successor of Julius, who died in 1513, proclaimed an Indulgence; that is to say, he granted an Indulgence of a most simple kind to all, wherever they might be, who would contribute according to their means towards the expense of the rising edifice”[Source: Father Patrick O’Hare, The Facts About Luther (Reprint 1987) Tan Publishers, 60-61].
Now, the corruption of the practice of indulgences was far more complicated. The practice over time developed, or should I say, became corrupted. The indulgence developed from the practice of penance. The indulgence originally was a granted permission to relax or commute the penance imposed upon a repentant sinner as an outward sign of sorrow. It was the opportunity to substitute one penalty for another. The original intent was to help the penitent. Serious sins required extreme satisfaction. If the penitent was unable to perform acts of extreme satisfaction due to health reasons or extenuating circumstances, the church in its mercy allowed a substitution: often amounted to a reduction in the satisfaction required, or, as it developed giving money.
Pope Boniface VIII (14th century) made use of the idea of a “general” indulgence. Certain times a year/years (like every 100 years) pilgrims could come to Rome and could receive a general indulgence: the removal of all the penalties for their sins. This general indulgence also required one to engage in the whole scope of penance (contrition and confession) as well the payment of certain amount of money. Through this, the original intent of the personal, internalized sacrament of penance became external and commercialized. Pope Sixtus IV (1471-1484) declared that general indulgences could apply also to the dead. By this he increased money revenue.
Also worth mentioning is the development of a type of indulgence granted to soldiers who fought for the Papacy against Islam. Remember, Mohammed had let his soldiers know that everyone who died fighting for Isalm would be immediately allowed into paradise. What of the Papal army? Pope Leo IV gave assurances to his troops they would likewise receive a heavenly reward. John VIII promised those going on the crusade absolution for their sins. Leo IX used the promise of a remission of penance in his recruiting of troops. Eventually, the forgiveness granted included not only those involved in penance, but purgatory as well.
Now about Luther. A few points. There was no complete dogma on the indulgence when Luther posted the 95 Theses. There was no official doctrine as to the effect of the indulgence upon Purgatory. Hence, Luther was not really a heretic (in official “Thus spoke Rome” terms). The Roman Catholic Church in its political inanity attacked Luther with no good cause. It was they who went "too far", not Luther in not addressing the situation. They went as far as they could to not address the situation. Hey, if my source of income was going to be challenged, i'd fight it too. It's sinful human nature.
Interestingly, the 95 Theses does not deny the validity of the indulgence. Rather, Luther attacked and exposed the abuse of the sale of indulgences. Luther was troubled that those he was ministering to were ignoring the good works he was directing them towards, but rather were purchasing indulgences as a means of satisfaction. They were also being purchased to alleviate suffering of those in Purgatory.
A Roman Catholic once suggested to me that “an abuse of a doctrine or practice does not make the entire system null and void nor the principle behind the doctrine untrue.” Luther came to realize that the entire system of indulgences was non-biblical and non-Christian. For the perfect work of Christ requires no indulgence. Luther said, “The indulgences are not a pious fraud, but an infernal, diabolical, antichristian fraud, larceny, and robbery, whereby the Roman Nimrod and teacher of sin peddles sin and hell to the whole world and sucks and entices away everybody’s money as the price of this unspeakable harm.”
In Biblical terms,
"For if Abraham was justified by works, he has something of which to boast, but not before God. For what does the Scripture say? “Abraham believed God, and it was accounted to him for righteousness.” Now to him who works, the wages are not counted as grace but as debt. But to him who does not work but believes on Him who justifies the ungodly, his faith is accounted for righteousness, just as David also describes the blessedness of the man to whom God imputes righteousness apart from works: “Blessed are those whose lawless deeds are forgiven, and whose sins are covered; blessed is the man to whom the LORD shall not impute sin.”
In other words, Christ has paid the penalty for my sin, I do not need an indulgence. My righteousness is the perfect righteousness of Christ, given to me as a gift. My perfect works are Christ’s works, given to me as a gift.