Very interesting quote. So it sounds like Pius XI was saying there was only one person alive who could replace him as pope, and that was Pacelli.
Then, when Pope Pius XII died, I guess we were all out of popes.

Indeed we were.
What I don't understand ... and maybe this is because I don't understand how the government of the Church works, but ... if there was no one in the hierarchy that either Pius XI or Pius XII could trust, why didn't they just throw all those bums out of there and get new people? A pope has supreme power, and can fire bishops, cardinals, and anyone else he wants. And if a bishop or cardinal is someone that the pope says is not worthy or trustworthy enough to be pope, how is he trustworthy enough to be a monsignor or a cardinal or anything else?
Why not just fire the whole curia and start over? It seems drastic, but that's a lot less drastic than saying, "There's only one person left in the world who can be a good pope; you better hope he doesn't die."
It makes me think of the
scene in The Untouchables where the whole Chicago police force was corrupt, and Sean Connery said to Kevin Costner when they were trying to recruit a trustworthy officer, "If you're afraid of getting a rotten apple, don't go to the barrel. Get it off the tree." And they went to the police academy and signed out the cadet with the most accurate shooting record, who fortunately turned out to be Andy Garcia, and he was the only honest cop they could get to take down Al Capone. Why didn't the last Popes Pius do that too? Just recruit priests straight out of the seminary who had a simple faith and zeal, and throw out the entire curia who were all corrupted, masonic, suspected of modernism, and who knows what else? It would bring some growing pains of its own, I'm sure, but it seems like a vastly better option than sitting around moaning about how there's nobody that can be pope anymore ...
WHICH TURNED OUT TO BE TRUE!!!!