Luther was still immersed in the Roman sacramental system when he drew up the Ninety-five Theses. Thus some explanation may be helpful to the modern reader of the Theses.
The sacrament of penance was understood to include three parts, contrition, confession, and satisfaction.
Contrition was required, although over the centuries a distinction was made between contrition (deep sorrow for one’s sin) and attrition (slight sorrow, or just knowing that one ought to be sorry for his sins), and eventually it was said that mere attrition was sufficient.
Confession was made to the priest, and was supposed to include a list of all sins committed. Any sin that was not confessed to the priest would not be forgiven. This caused Luther (and many of his contemporaries) endless anxiety. One was supposed to make such confession at least once a year, preferably during Lent.
The third part, satisfaction, includes a whole system supposed to work in this way: by virtue of the indelible character bestowed upon him in the sacrament of ordination, the priest who heard your confession was authorized to absolve you, but the absolution was contingent upon the person performing some works of satisfaction to demonstrate that his contrition was sincere. This meant that the priest in pronouncing absolution had the power to transform the divine eternal penalties for sin into ecclesiastical penalties, which the priest would then stipulate to the one confessing. This satisfaction could be prayer, so many Hail Marys and so many Our Fathers, for example. It could be giving alms to the poor, or fasting, or some combination of prayers, alms, and fasting. The priest had some discretion when he imposed these works of satisfaction, but canon law provided guidance that he was supposed to follow. (Canon law: the massive accumulation of ecclesiastical rules and regulations that had built up over the previous thousand years)
If one performed the prescribed works of satisfaction, his sins were taken care of, at least until the next time he went to confession. But if one did not fulfill his obligation before he died, he had to spend time in purgatory to make up for the works of satisfaction that he had not completed before he died. There was no way one could know for sure how long he would have to spend in purgatory.
Purchasing an indulgence amounted to a work of satisfaction. According to official Roman teaching, one was not purchasing the forgiveness of sins. He was simply performing a work of satisfaction. This is why Luther says the pope can remit only those penalties which he has imposed himself, Thesis 20–through the priest who works under him, according to the pertinent portions of canon law.
It is unlikely that the common people understood these distinctions. It is unlikely that they had ever been taught these fine points of theology. And the indulgence preachers did not worry about such distinctions either. “As soon as the coin in the offer rings the soul from purgatory springs.” That made it simple and memorable. Many people simply believed it–perhaps because they wanted it to be true.
Since Christ had given the keys to Peter, and the pope was, in Roman theology, the successor of Peter, the pope was the vicar of Christ, and therefore authorized to unlock the Treasury of Merits and distribute the excess merits of Christ and the saints to people who purchased indulgences. This is why the whole system depended upon people believing that when they purchased ecclesiastical pardon they were receiving divine pardon.
Souls in purgatory could know that their suffering was temporary–unlike the eternal suffering of hell. They knew it was temporary, but they did not know how long it would last. (Otherwise the suffering in purgatory was supposed to be the same as that of hell. Luther does raise the question whether the souls in purgatory were certain of their eventual release.)
This is why the opportunity to purchase a plenary indulgence (full release from all penalty) was so attractive. And many plenary indulgences had been sold in Germany between 1504 and 1516. Understandably, many people who had already purchased a plenary indulgence were not inclined to purchase another one. This made Tetzel’s job more difficult. So when the pope issued a new plenary indulgence, he could also declare that previous indulgences had expired. One can easily imagine what people thought of that. They were trying to play by the rules, but the pope kept changing the rules. If you already owned an expired indulgence, you might hesitate to buy another indulgence that could also expire. No wonder Tetzel was having trouble meeting his sales goals–even before Luther posted his Ninety-five Theses. And then, after the Ninety-five Theses went viral, sales of indulgences declined even more dramatically.
The question arises whether Luther sincerely expected that the pope would put a stop to Tetzel’s abuses if he only knew what was really going on, especially as Luther raises or repeats the question why the pope does not simply empty purgatory for the sake of holy love. Late in his life Luther did express deep remorse that he had placed too much confidence in the pope for far too long.