What made Luther a heretic and not a schismatic?

If one reads over the 95-theses Luther made, they would see he is mostly upset with priests and bishops using the power of forgiveness to make money. Not the pope of the time. However, statements like this go directly in opposition to Catholic beliefs: "If it is at all possible to grant to any one the remission of all penalties whatsoever, it is certain that this remission can be granted only to the most perfect, that is, to the very fewest."

I think a read over of the Wikipedia section on Luther titled "Anti-Judaism and antisemitism" would provide another answer. The Catholic church has had a long history of asserting rules that people not attack the Jews, and providing some secluded protection for the Jews while they are under persecution.

As demonstrated in the case of "Fr. Roberto Francisco Daniel" the Catholic church will not excommunicate individuals for simply having or discussing with others beliefs contrary to Catholicism, but more explicitly teaching such contrary beliefs as truth to others, and refusing to correct themselves. It is Luther's excommunication that make's him defined as a heretic. Because if you read his works you will see that he never considered himself separated from the true Catholic Church.
Today I think Luther would more proudly put on himself the title heretic, as his intentions appear to never push for a schism in the Catholic Church (from my reading of his works, and my point of view).

To answer your title questions

This question lacks the short and simple answer:

• Schism means that you agree on doctrine but not on hierarchy.
• Heresy means you have rejected a defined doctrine of the Church.

This means you can have people who have separated themselves from the Church but agree on doctrines (say, the SSPX), and you can have people who claim to be full members of the Church when they really teach something contrary to Christ (like Hans Küng).

Luther disagreed on some fundamental doctrines of the Church, therefore he was a heretic. He also separated himself from the Church, therefore he was schismatic.

Were there any who were merely schismatic?

Yes, I think Henry VIII actually fits this definition. The doctrines of the Church of England remained largely the same until after Henry died.

What made Luther become a full heretic?

A large number of things, some personal, some theological. At a minimum, the 95 Theses demonstrate that he was not in agreement with the majority over the place of the papacy. It can also be argued that the concepts outlined in the 95 demonstrate a fundamental departure in an understanding of grace (such as the question, "Why not simply empty purgatory?"). However you interpret those facts, it is undeniable that by the time the Pope was threatening to excommunicate him (making him a clear schismatic), he was already well opposed to Catholic doctrines such as transubstantiation (On the Babylonian Captivity came out that same year).

Now, considering the timing — three years from Augustinian monk to full out rejection of transubstantiation (transubstantiation had been an established doctrine for centuries before Luther was born) is not a very long time at all — it is quite probable that the seeds of these disagreements were well established long before the 95 were posted.

I understand by your question and follow up comment, you are really asking, 'Why did Luther reject the traditional sacraments of the Catholic church, which in turn was one of the reasons why the Catholic church branded him as a heretic?' The answer is complex as the rejection of traditional views of the sacraments was not central to what Luther saw as his difference with the papacy and because his rejection of the papacy was gradual and somewhat tit-for-tat in the papacy's gradual rejection of his faith in salvation apart from works. However we can narrow the scope of his rejection of the papacy, and the papacy's rejection of Luther in this context of 'faith versus works' within the narrow subject of the sacraments.

For Luther, once faith was established apart from works he saw the devil in the traditional manner in which the sacraments had departed from the simplicity of the scriptural guidance. Starting with the scriptures only and with a will to test all traditional claims by the scripture he found plenty of fault with traditional Catholic sacraments.

First Luther thought that the sacraments had become corrupted with a view that they were effective without faith and that faith was actually at the center of any benefit that could be obtained from a sacrament. Since faith justifies apart from any work, only faith could be the key in receiving grace through a particular sacrament:

In his Explanations of the Ninety-five Theses (1518) Luther stated that it is not the sacrament but rather faith that justifies....It is also clear that the sole authority of Scripture, given more and more stress as early as in the indulgence controversy, was also decisive in discussing sacramental doctrine. Just as on the question of the authority of pope and council, so now on the doctrine of the sacraments, Luther was no longer prepared uncritically to follow certain church decisions. He tested these decisions by the statements of Scripture (MARTIN LUTHER’S THEOLOGY, Its Historical and Systematic Development, BERNHARD LOHSE, P127)

To zero in on your main question, the Eucharist, Luther did not really begin to develop his new theology until the spring of 1520 when he composed his sermon on the New Testament, this is where he started to develop his principle beliefs about the Lord's supper. The main departure points was that he did not think of it as a sacrifice and more importantly that faith again was at the center and thus the words of institution and their careful interpretation were more important than any other aspect, as it was a 'word' to be 'believed'.

Luther set up a principle that he continually stressed from this point onward, and that Reformation church orders later endeavored to follow: “Now the closer our masses are to the first mass of Christ, no doubt the better they are; and the further from Christ’s mass, the more dangerous.” This axiom followed from the Reformation principle on Scripture. At the same time it included sharp criticism of all “additions,” which at best falsify the institution of the Supper and thus Jesus’ original intent. Further, in the words of institution “lies the whole mass, its nature, work, profit and benefit. Without the words nothing is derived from the mass.” ( (MARTIN LUTHER’S THEOLOGY, Its Historical and Systematic Development, BERNHARD LOHSE, P133)

So there you have it. It always comes back to the same two principles for Luther, first, only faith in Christ apart from works matters and second, only the scripture can be our guide in how to please God and obey him in that faith. Luther naturally then puts faith as the central way to receive a sacrament and only the scripture as the authorized guide (as oppossed to tradition) in practicing that faith, even with regard to sacraments. By having this attitude he was rejecting key elements of the Catholic faith, was excommunicated for it, and in turn believed he was actually excommunication the papacy from the true church of God by returning to simple obedience to God's word and having faith in Christ above anything else.

It is possible that if the Pope would have allowed Luther to be a christian by simple faith in Christ, Luther might not have rejected the Pope. However as Luther was rejected for what he considered simple saving faith and eventually saw that rejection full and unreasonable, Luther eventually came to the conclusion that the Pope was actually the 'anti-christ', for having been placed in the highest position of the external church and yet rejecting true faith in Christ, which Luther was convinced he had, must be an evil of an unimaginable proportion.

Luther and the Church

It must be said that Martin Luther was originally a servant of the Church, and prior to posting his 95 theses, he expressed loyalty (at least superficially) to the Pope. Despite his frequent battles with spiritual depression, Luther proved himself to be a very intelligent man, was ordained a priest, and became a doctor of theology.

Initially, he was so maniacally in favor of the papacy that he professed his desire to be “the most brutal murderer” on the pope’s behalf and “to kill all who even by syllable refused submission to the pope.”(1) Of course, this was also while he was also disregarding the guidance of his confessor, the rules of his monastery, and traditional Catholic teaching in his excessive forms of self-prescribed penance and refusal to believe that he had been absolved of sin.

Stemming from an abusive childhood relationship with his German occultist Father(2), Luther suffered from frequent God-fearing, self-judgmental panic attacks. He could not look upon a crucifix. He tried to avoid performing Mass or being in the presence of the Blessed Sacrament. His life was one continual terror of damnation.

Then came his “thunderbolt” revelation, and he felt he had broken free of his own sinfulness, not by the sacraments of the Church, but by faith alone. As Luther says, rather arrestingly:

“Be a sinner and sin on bravely, but have stronger faith and rejoice in Christ, who is the victor of sin, death, and the world. Do not for a moment imagine that this life is the abiding place of justice: sin must be committed. To you it ought to be sufficient that you acknowledge the Lamb that takes away the sins of the world, the sin cannot tear you away from him, even though you commit adultery a hundred times a day and commit as many murders.”(3)

When Luther posted his 95 theses on the church door in Wittenberg in 1517, his immediate cause of protest was the sale of indulgences by a Dominican friar named John Tetzel whose mission was to raise money, in part, for the rebuilding of St. Peter’s Basilica. Tetzel was renowned for packing in the peasant faithful with his preaching. His commercial pitch, however, went far beyond the bounds of propriety and canon law, if not common practice. Ironically, it echoed, in a way, Luther’s own doctrines of salvation by faith alone - Tetzel merely gave that saving faith a monetary value and material form. Anything could be forgiven, said Tetzel, if a punter paid his money and bought a papal indulgence. Luther struck at this inviting and disreputable target. While it was not an unusual occurrence for churchmen and academicians to publicly post theses and then debate them, this time a rhetorical firestorm erupted.

Historian H.W. Crocker III sums up Luther’s separation from Rome(4):

Luther had not, at this point, entirely broken with Rome. While he dismissed Julian II and Alexander VI as inferior popes, he wrote to Pope Leo X in loyalty and submission to Church discipline. In this, however, Luther was less than honest. He swore he would accept his own death if the pope ordered it. But when Leo beckoned him to Rome, Luther shied away. Nor did Luther confide in the pope that in his private correspondence he was already linking the office of the papacy with the Antichrist.

...[L]eo took the initiative in reforming the Church precisely on the point Luther had attacked. In 1518, the pope clarified Catholic practice on indulgences, reminding the faithful that they could not buy their way to Heaven; indulgences were merely forms of penance, alms offered for forgiveness of temporal punishment, and certainly not a blank check for sins to be committed or to buy the freedom of a soul in Purgatory. A papal emissary ensured that Tetzel was disciplined, and Luther again affirmed his submission to the pope, while concealing his continuing doubts about “whether the pope is the Antichrist or his apostle.(1)

The full break came when, in a debate, Luther denied the primacy of the pope, held the Council of Constance in error, and even praised some of the doctrines of Jan Hus. He had now moved from being one of the many vocal Church reformers - though easily the most politically powerful because of anti-papal sentiment among the people and princes in Germany - to being a Hussite heretic.

By 1520, Luther was penning such reformist tracts as his “Epitome,” which openly declares “that the true Antichrist is sitting in the temple of God and is reigning in Rome - that empurpled Babylon - and that the Roman curia is the Synagogue of Satan….[T]here will be no remedy left except that the emperors, kings, and princes, girt about with force of arms, should attack these pest in the world, and settle the matter no longer by words but by the sword….[W]hy do we not attack in arms the Roman Sodom which has without end corrupted the Church of God, and wash our hands in their blood?”(2) (emphasis added)

1. Quoted in Durant, p. 349
2. Ibid.

In Luther’s mind, the religious hierarchy of the Church deserved no special esteem and no independence under its own canon law from the state. Canon law, in Luther’s view, was merely the law laid down by the Antichrist in Rome. The real church, according to Luther, was an invisible institution, held only in the faith of men. The state - the German princes, the German “Reich” - was the only true, temporal reality, and it was to it, not to the Church in Rome, that men and law should be subordinate.

In Luther’s words:

No one need think that the world can rule without blood. The civil sword shall and must be red and bloody.(5)

Luther’s political platform was earthly, populist, and nationalist - completely at odds with the ideals of Christendom, which were historical, hierarchal, and Catholic, with all nations unified under Christ’s Church, resting on the bones of St. Peter in Rome, with the pope, the Vicar of Christ, a monarch set over kings by Christ. The German people and their rulers were more than ready, by this time, to throw off the power of the Italian Pontifex Maximus. This secular seizure of localized power not only enthroned Lutheranism as the state religion, but also nailed the lid on the coffin concerning the communion of Luther's Germany with St. Peter's Rome.

Interestingly, Germany can claim credit for being the birthplace of Protestantism, as well as Nationalism, both of which have survived to this day. German nationalism, as we know, came into its own fullness at the turn of the 20th century, but was drastically deflated by the end of the second World War.

By 1525, Germany had been launched into a state of revolutionary turmoil. In less than 10 years Luther’s spiritual disposition had radically evolved from a ma*****stic Augustinian monk into a Germanic-tribe religious Chieftain. It goes without saying that Western Christianity has never been the same.

The Catholic Encyclopedia summarizes Luther’s theological wake:

Luther the reformer had become Luther the revolutionary; the religious agitation had become a political rebellion. Luther's theological attitude at this time, as far as a formulated cohesion can be deduced, was as follows:

• The Bible is the only source of faith; it contains the plenary inspiration of God; its reading is invested with a quasi-sacramental character.

• Human nature has been totally corrupted by original sin, and man, accordingly, is deprived of free will. Whatever he does, be it good or bad, is not his own work, but God's.

• Faith alone can work justification, and man is saved by confidently believing that God will pardon him. This faith not only includes a full pardon of sin, but also an unconditional release from its penalties.

• The hierarchy and priesthood are not Divinely instituted or necessary, and ceremonial or exterior worship is not essential or useful. Ecclesiastical vestments, pilgrimages, mortifications, monastic vows, prayers for the dead, intercession of saints, avail the soul nothing.

• All sacraments, with the exception of baptism, Holy Eucharist, and penance, are rejected, but their absence may be supplied by faith.

• The priesthood is universal; every Christian may assume it. A body of specially trained and ordained men to dispense the mysteries of God is needless and a usurpation.

• There is no visible Church or one specially established by God whereby men may work out their salvation.

Luther and the Eucharist

By 1521, Luther had vehemently replaced the doctrine of transubstantiation (which He considered to be the pagan brain child of Aristotelian Scholasticism) with consubstantiation. He taught that there is a change of the substance of the bread and wine, but emphasized that it is symbolical of our union with the spiritual body of Christ. This change must be interpreted not only sacramentally but spiritually and is aimed at the change of the natural man by a common life with Christ. The sacramental change finds its fulfillment in the incorporation into Christ and fellowship with all Christians. However, all further considerations of just how the presence of Christ comes about are purposely omitted by Luther.

In his The Babylonian Captivity of the Church, he labels the doctrine of transubstantiation as the "second captivity,” which the Roman Church imposes as a matter of faith.(6) Luther rejects it because it lacks the support of Scripture, of an approved revelation and of reason. For himself, the literal sense of Scripture imposes the belief that the species do not change. He maintained that there is no peril of idolatry in the fact that the substance of bread remains because it is Christ that is adored and not the bread.

To show the reasonableness of his stand against transubstantiation, Luther appeals to an example: "Fire and iron, two different substances, are so mingled in red-hot iron that every part of it is both fire and iron. Why may not the glorious body of Christ much more be in every part of the substance of the bread?"(7) He sees a further analogy in the Hypostatic Union.9 The Divinity is not present under the accidents of the human nature in Christ.

In short summary, Luther’s argumentative reasoning for the rejection and denial of the Catholic definition of the Eucharist are as follows:

1. Transubstantiation is not in accord with the Scriptures.
2. This dogma is a philosophical explanation based on Aristotelian metaphysics.
3. It is unnecessary in view of the analogy with the Hypostatic Union and the omnipresence of the humanity of Christ.

1. http://www.newadvent.org/cathen/09438b.htm
2. Ibid
3. Ibid.
4. See H.W. Crocker III, Triumph: The Power and the Glory of the Catholic Church: A 2,000-Year History
5. See Phillip Hughes, A History of the Church: An Introductory Study, vol. 3, p. 520
6. Luther, The Babylonian Captivity of the Church. October, 1520
7. Ibid.