The Investiture Controversy or Investiture Contest was the most significant conflict between Church and state in medieval Europe. In the 11th and 12th centuries, a series of popes challenged the authority of European monarchies. The issue was whether the pope or the monarch would name (invest) powerful local church officials such as bishops of cities and abbots of monasteries. The conflict ended in 1122, when Emperor Henry V and Pope Calixtus II agreed on the Concordat of Worms. It differentiated between the royal and spiritual powers and gave the emperors a limited role in selecting bishops. The outcome seemed mostly a victory for the pope and his claim that he was God's chief representative in the world. However, the Emperor did retain considerable power over his Church.
The investiture controversy began as a power struggle between Pope Gregory VII (1072–85) and Henry IV, Holy Roman Emperor (1056–1106). A brief but significant struggle over investiture also occurred between Henry I of England and Pope Paschal II in the years 1103 to 1107, and the issue played a minor role in the struggles between church and state in France, as well.
By undercutting the Imperial power established by the Salian emperors, the controversy led to nearly 50 years of civil war in Germany, and the triumph of the great dukes and abbots. Imperial power was finally re-established under the Hohenstaufen dynasty. Historian Norman Cantor:
The age of the investiture controversy may rightly be regarded as the turning-point in medieval civilization. It was the fulfillment of the early Middle Ages because in it the acceptance of the Christian religion by the Germanic peoples reached its final and decisive stage… The greater part of the religious and political system of the high Middle Ages emerged out of the events and ideas of the investiture controversy.
After the decline of the Roman Empire, and prior to the Investiture Controversy, while theoretically a task of the church, investiture was in practice performed by members of the religious nobility. Many bishops and abbots were themselves usually part of the ruling nobility. Since the eldest son would inherit the title, younger siblings often found careers in the church. This was particularly true where the family may have established a proprietary church or abbey on their estate. Since Otto the Great (936-72) the bishops had been princes of the empire, had secured many privileges, and had become to a great extent feudal lords over great districts of the imperial territory. The control of these great units of economic and military power was for the king a question of primary importance, affecting as it did imperial authority. It was essential for a ruler or nobleman to appoint (or sell the office to) someone who would remain loyal.
Since a substantial amount of wealth and land was usually associated with the office of a bishop or abbot, the sale of church offices (a practice known as simony) was an important source of income for leaders among the nobility, who themselves owned the land and by charity allowed the building of churches.
The crisis began when a group within the church, members of the Gregorian Reform, decided to rebel against the rule of simony by forcefully taking the power of investiture from the ruling secular power, i.e. the Holy Roman Emperor and placing that power wholly within control of the church. The Gregorian reformers knew this would not be possible so long as the emperor maintained the ability to appoint the pope, so their first step was to forcibly gain the papacy from the control of the emperor. An opportunity came in 1056 when Henry IV became German king at six years of age. The reformers seized the opportunity to take the papacy by force while he was still a child and could not react. In 1059, a church council in Rome declared, with In Nomine Domini, that leaders of the nobility would have no part in the selection of popes and created the College of Cardinals as a body of electors made up entirely of church officials. Once Rome regained control of the election of the pope, it was ready to attack the practice of investiture and simony on a broad front.
In 1075, Pope Gregory VII composed the Dictatus Papae. One clause asserted that the deposal of an emperor was under the sole power of the pope. It declared that the Roman church was founded by God alone – that the papal power (the auctoritas of Pope Gelasius) was the sole universal power; in particular, a council held in the Lateran Palace from 24 to 28 February the same year decreed that the pope alone could appoint or depose churchmen or move them from see to see. By this time, Henry IV was no longer a child, and he continued to appoint his own bishops. He reacted to this declaration by sending Gregory VII a letter in which he withdrew his imperial support of Gregory as pope in no uncertain terms: the letter was headed "Henry, king not through usurpation but through the holy ordination of God, to Hildebrand, at present not pope but false monk". It called for the election of a new pope. His letter ends, "I, Henry, king by the grace of God, with all of my Bishops, say to you, come down, come down, and be damned throughout the ages."
The situation was made even more dire when Henry IV installed his chaplain, Tedald, a Milanese priest, as Bishop of Milan, when another priest of Milan, Atto, had already been chosen in Rome by the pope for candidacy. In 1076 Gregory responded by excommunicating Henry, and deposed him as German king,  releasing all Christians from their oath of allegiance.
Enforcing these declarations was a different matter, but the advantage gradually came to be on the side of Gregory VII. German princes and the aristocracy were happy to hear of the king's deposition. They used religious reasons to continue the rebellion started at the First Battle of Langensalza in 1075, and for seizure of royal holdings. Aristocrats claimed local lordships over peasants and property, built forts, which had previously been outlawed, and built up localized fiefdoms to secure their autonomy from the empire.
Thus, because of these combining factors, Henry IV had no choice but to back down, needing time to marshal his forces to fight the rebellion. In 1077, he traveled to Canossa in northern Italy to meet the pope and apologize in person. As penance for his sins, and echoing his own punishment of the Saxons after the First Battle of Langensalza, he dramatically wore a hair shirt and stood in the snow barefoot in the middle of winter in what has become known as the Walk to Canossa. Gregory lifted the excommunication, but the German aristocrats, whose rebellion became known as the Great Saxon Revolt, were not so willing to give up their opportunity. They elected a rival king, Rudolf von Rheinfeld. Three years later, Gregory declared his support for von Rheinfeld, and excommunicated Henry IV again.
Henry IV then proclaimed Antipope Clement III to be pope. In 1080, Rudolf died, effectively ending the internal revolt against Henry. In 1081, Henry invaded Rome, for the first time, with the intent of forcibly removing Gregory VII and installing a more friendly pope. Gregory VII called on his allies, the Normans in southern Italy, and they rescued him from the Germans in 1085. The Normans sacked Rome in the process, and when the citizens of Rome rose up against Gregory, he was forced to flee south with the Normans. He died soon thereafter.
The Investiture Controversy continued for several decades as each succeeding pope tried to diminish imperial power by stirring up revolt in Germany. These revolts were gradually successful. Henry IV was succeeded upon his death in 1106 by his son Henry V, who had rebelled against his father in favor of the papacy, and who had made his father renounce the legality of his antipopes before he died. Nevertheless, Henry V chose one more antipope, Gregory VIII. Later, he renounced some of the rights of investiture with the Concordat of Worms, abandoned Gregory, and was received back into communion and recognized as legitimate emperor as a result.
English investiture controversy of 1103 to 1107
At the time of Henry IV's death, Henry I of England and the Gregorian papacy were also embroiled in a controversy over investiture, and its solution provided a model for the eventual solution of the issue in the empire.
William the Conqueror had accepted a papal banner and the distant blessing of Pope Alexander II upon his invasion, but had successfully rebuffed the pope's assertion after the successful outcome, that he should come to Rome and pay homage for his fief, under the general provisions of the "Donation of Constantine".
The ban on lay investiture in Dictatus Papae did not shake the loyalty of William's bishops and abbots. In the reign of Henry I, the heat of exchanges between Westminster and Rome induced Anselm, Archbishop of Canterbury, to give up mediating and retire to an abbey. Robert of Meulan, one of Henry's chief advisors, was excommunicated, but the threat of excommunicating the king remained unplayed. The papacy needed the support of English Henry while German Henry was still unbroken. A projected crusade also required English support.
Henry I commissioned the Archbishop of York to collect and present all the relevant traditions of anointed kingship. "The resulting 'Anonymous of York' treaties are a delight to students of early-medieval political theory, but they in no way typify the outlook of the Anglo-Norman monarchy, which had substituted the secure foundation of administrative and legal bureaucracy for outmoded religious ideology"
Concordat of London, 1107
According to René Metz, author of "What Is Canon Law?", a concordat is a convention concluded between the Holy See and the civil power of a country to define the relationship between the Catholic Church and the state in matters in which both are concerned. The concordat is one type of an international convention. Concordats began during the First Crusade's end in 1098. 
The Concordat of London (1107) suggested a compromise that was later taken up in the Concordat of Worms. In England, as in Germany, the king's chancery started to distinguish between the secular and ecclesiastical powers of the prelates. Employing this distinction, Henry gave up his right to invest his bishops and abbots while reserving the custom of requiring them to swear homage for the "temporalities" (the landed properties tied to the episcopate) directly from his hand, after the bishop had sworn homage and feudal vassalage in the commendation ceremony (commendatio), like any secular vassal. The system of vassalage was not divided among great local lords in England as it was in France, since the king was in control by right of the conquest.
Concordat of Worms and its significance
On the European mainland, after 50 years of fighting, the Concordat of Worms provided a similar, but longer lasting, compromise when signed on September 23, 1122. It eliminated lay investiture, while leaving secular leaders some room for unofficial but significant influence in the appointment process.
While the monarchy was embroiled in the dispute with the Church, it declined in power and broke apart. Localized rights of lordship over peasants grew. This resulted in multiple effects: 1) increased serfdom that reduced human rights for the majority, 2) increased taxes and levies that royal coffers declined, and 3) localized rights of Justice where courts did not have to answer to royal authority. In the long term, the decline of imperial power would divide Germany until the 19th century. Similarly, in Italy, the investiture controversy weakened the emperor's authority and strengthened local separatist forces.
The papacy grew stronger from the controversy. Marshalling for public opinion engaged lay people in religious affairs increasing lay piety, setting the stage for the Crusades and the great religious vitality of the 12th century.
The dispute did not end with the Concordat of Worms. Future disputes between popes and Holy Roman Emperors continued until northern Italy was lost to the empire entirely. The church would Crusade against the Holy Roman Empire under Frederick II. According to Norman Cantor:
The investiture controversy had shattered the early-medieval equilibrium and ended the interpenetration of ecclesia and mundus. Medieval kingship, which had been largely the creation of ecclesiastical ideals and personnel, was forced to develop new institutions and sanctions. The result during the late eleventh and early twelfth centuries, was the first instance of a secular bureaucratic state whose essential components appeared in the Anglo-Norman monarchy."
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- Henry IV: Letter to Gregory VII, Jan 24 1076.
- Gregory VII: First Deposition and Banning of Henry IV (Feb 22, 1076)
- Gregory VII: Second Banning and Dethronement of Henry IV (March 7, 1080)
- Gregory VII: Dictatus Papae 1090
- Ban on Lay Investitures, 1078
- The Concordat of Worms 1122
- The Canons of the First Lateran Council, 1123
- Avalon Project, Yale University: Documents relating to the War of the Investitures