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Ondelette: it wan't an Inquisitor but a bischop who said that, when the crusaders, approaching Béziers on their way to Toulouse (my home town), started getting bored and hungry for bounty. Since the entire population of Béziers sought refuge in the cathedral, the crusaders didn't know what to do or how to tell the difference between the catholic majority and the cathars. So the bischop said, kill them all, God will know what to do with their souls.
The Inquisition started two decades later.
(Just as a matter of interest.) There are, though, some really interesting parallels between the Albigense crusade and Inquisition on the one hand, and the "war on terror" on the other. It starts with war, ostensibly for a noble cause but actually with considerable economic interests involved (Toulouse in the 13th century was the richest city in France, but subordinate to Paris only in name. The spoliation of the Counts of Toulouse - faithful catholics all - was as much an aim of the crusaders, as control of Iraq's oil was an aim of the US military.) Following war, "justice", with torture, forced confessions and all, designed to force the resisting population to accept their new lords.
The real beauty, in terms of comparisons: when the Inquisition started in Toulouse, the rule was that any person who denounced a heretic, would receive that person's possessions. It took very little time for the Inquisitors to realize that they were getting phony denunciations by people who wanted their neighbors' homes or wealth. The policy was abruptly abandoned. The US in Afghanistan used a similar policy of rewarding anyone who denounced anyone else, but was apparently even more dogmatic than the Inquisition: it still hasn't sorted out which of the Guantanamo prisoners were arrested for no reason at all except money.