for the Social Credit
Social Credit and the Catholic Doctrine
on Wednesday, 15 November 1939. Posted in In This Age of Plenty (book)
In this age of plenty - Appendix A
A study of Social Credit by nine theologians
As soon as C. H. Douglas published his first writings on Social Credit, the Financiers did everything they could to silence or distort Douglas's doctrine, for they knew that Social Credit would put an end to their control over the creation of money. When Louis Even began diffusing Social Credit in French Canada in 1935, one of the accusations peddled by the Financiers was that Social Credit was Socialism, or Communism. But in 1939, the Roman Catholic Bishops of the Province of Quebec appointed nine theologians to examine the Social Credit system in the eyes of the social doctrine of the Catholic Church, and give an opinion as to whether it was tainted with Socialism or Communism. After considerable deliberation, the nine theologians found that Social Credit was not tainted with Socialism nor Communism, and was worthy of close attention.
Here is the translation of the full text of the theologians, reproduced from the November 15, 1939 issue of the Montreal weekly “La Semaine Religieuse” (The Religious Week):
Report of the study commission on the Social Credit monetary system
Our readers will be interested to read the conclusions reached, after a serious study of the arguments presented from both sides, by the Commission charged by the Bishops of Quebec to examine, from the Catholic doctrine viewpoint, the Social Credit system, and especially to determine if it is tainted with the Socialism and Communism condemned by the Catholic Church.
This Commission, presided over by Father Joseph P. Archambault, S.J., also included: Msgr. Wilfrid LeBon, P.D., Canon Cyrille Gagnon, Canon J. Alfred Chamberland, Father Philippe Perrier, Father Arthur Deschênes, Father Jean-Baptiste Desrosiers, P.S.S., Father Charles-Omer Garant, and Father Louis Chagnon, S.J.
1. The Commission first delimited the field of its study.
- There is no question here of the economic or political aspect, that is to say, of the value of this theory from the economic viewpoint, and of the practical application of the Social Credit system in a country. The members of the Commission recognize they do not have any competence in these fields; besides, the Church does not have to pronounce herself in favour or against matters “for which she has neither the equipment nor the mission”, as Pope Pius XI wrote. (Cf. Encyclical Quadragesimo Anno.)
- There is no question here either of approving this doctrine on behalf of the Church, since the Church “has never, on the social and economic field, presented any specific technical system, which besides is not her role.” (Cf. Encyclical Divini Redemptoris, n. 34.)
- The only question studied here is the following: Is the Social Credit doctrine, in its basic principles, tainted with the Socialism and Communism condemned by the Catholic Church? And if so, should this doctrine be regarded by Catholics as a doctrine that cannot be admitted and diffused?
- The State, as it is mentioned in the present report, is considered in abstracto, regardless of the contingencies it may entail.
2. The Commission defines Socialism, and notes what characterizes this doctrine in the light of Quadragesimo Anno:
- Class struggle;
- Suppression of private property;
- Control of economic life by the State, in defiance of freedom and personal initiative.
3. The Commission then worded in propositions the basic principles of Social Credit.
“The aim of the Social Credit monetary doctrine is to give to all and each member of society freedom and economic security which the economic and social organism can secure. To that end, instead of reducing production to the level of the purchasing power through the destruction of goods or restrictions on work, Social Credit wants to increase the purchasing power to the level of the productive capacity of goods.”
It proposes to that end:
I. The State must take back the control of the issuance of money and credit. It will exercise it through an independent commission possessing the required authority to reach its end.
II. The material resources of the nation, represented by production, constitute the base of money and credit.
III. At any time, the issue of money and credit must be based on the movement of production, in such a way that a sound balance is constantly kept between production and consumption. This balance is ensured, at least partly, through a discount, of which the rate would necessarily vary with the fluctuations of production.
IV. The present economic system, thanks to the many discoveries and inventions that favour it, produces an unexpected abundance of goods, while at the same time reducing the need for human labour, therefore creating permanent unemployment. An important part of the population is thus deprived of any power to purchase goods made for it, and not only for a few individuals or groups. So that all may have a share of the cultural inheritance bequeathed by their forefathers, Social Credit proposes a dividend, of which the amount is determined by the quantity of goods to be consumed. This dividend will be given to every citizen, whether he has other sources of income or not.
4. Now, one must see if there is any taint of Socialism in the propositions mentioned above.
Concerning Paragraph I: This proposition does not seem to include any Socialist principle, nor consequently be contrary to the social doctrine of the Church. This affirmation is based on the following passages of the Encyclical Letter Quadragesimo Anno:
“There are certain categories of goods for which one can maintain with reason that they must be reserved to the collectivity when they come to confer such an economic power that it cannot, without danger to the common good, be left to the care of private individuals.”
And the Encyclical goes on: “In the first place, then, it is patent that in our days not alone is wealth accumulated, but immense power and despotic economic domination is concentrated in the hands of a few, and that those few are frequently not the owners, but only the trustees and directors of invested funds, who administer them at their good pleasure.
“This power becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying, so to speak, the lifeblood to the entire economic body, and grasping, as it were, in their hands the very soul of production, so that no one dare breathe against their will.”
To want to change such a situation is therefore not contrary to the social doctrine of the Church. It is true though that by entrusting to the State the control of money and credit, the State is given considerable influence over the economic life of the nation, an influence equal to that presently exercised by the banks, for their own profit, but this way of doing things does not entail, in itself, any Socialism.
Money being, in the Social Credit system, only a means of exchange, of which the issuance is strictly regulated by the statistics of production, private property therefore remains intact; moreover, the allotment of money and credit could even perhaps be less determined by those who control it. To reserve for the community (the control of) money and credit is therefore not against the social doctrine of the Church.
Saint Thomas Aquinas says it implicitly, in his Summa Theologica (Ethica, Volume 5, Lesson 4), when he asserts that it belongs to distributive justice — which, as it is known, is the concern of the State — to distribute common goods, including money, to all those who are part of the civil community.
In fact, money and credit have been, in the past, under the control of the State in several countries, including the Pontifical States; and they are still so in the Vatican. So it would be difficult to see in this proposition a Socialist principle.
Concerning Paragraph II: The fact that money and credit are based on production, on national material resources, seems to entail no Socialist character. The base of money is a purely conventional and technical matter.
In the present discussion, this point is agreed to in principle by several opponents.
Concerning Paragraph III: The principle of a balance to be kept between production and consumption is sound. In a truly humane and well-ordered economy, the aim of production is consumption, and the latter must ordinarily use up the former — at least when production is made, as it should be, to answer human needs.
As for the discount, of which the principle is admitted and even currently practiced in industry and trade, it is only a means to realize this balance; it allows the consumers to get the goods they need at a lower cost, without any loss for the producers.
Note that the Commission does not express an opinion on the necessity of a discount caused by a gap which, according to the Social Credit system, exists between production and consumption. But if such a gap does exist, to want to fill it through a discount cannot be considered as a measure tainted with Socialism.
Concerning Paragraph IV: The principle of the dividend is also reconcilable with the social doctrine of the Church; besides, it can be compared to the State's power to grant money. The Commission does not see why it would be necessary for the State to own capital goods to pay this dividend; presently — although in an opposite sense — the power to tax, which the State possesses in view of the common good, entails this note even more so, and yet it is admitted. The same affirmation applies to the Social Credit discount: both are based on the principle of the discount in a cooperative system. Besides, cooperation is held in high esteem in Social Credit.
The only control of production and consumption that is necessary for the implementation of Social Credit is the control of statistics, which determines the issue of money and credit. Statistics cannot be considered as a real control or a constraint upon individual freedom; it is only a method of collecting information. The Commission cannot admit that statistical control requires the socialization of production, or that it is tainted with Socialism or Communism.
The Commission therefore answers in the negative to the question: “Is Social Credit tainted with Socialism?” The Commission cannot see how the basic principles of the Social Credit system, as explained above, could be condemned on behalf of the Church and of her social doctrine. The Commission nevertheless wants to remind Catholics that Social Credit — of which the purely economic or political aspect was not judged here — remains only a monetary reform, and that what is most important, is a reform of institutions, through the combination of people who practice the same trade into vocational groups, and moral renovation, according to Pope Pius XI's explicit recommendations.
Study of some objections
The Commission also studied some of the objections usually put forward against the preceding conclusion.
First objection: The control of money and credit necessarily entails the control of production, until its eventual socialization.
Answer: The control of money and credit does not take away from private individuals nor corporations the ownership of tools and capital goods, even if it can imply, to some extent, an indirect control of this production. This indirect control which, at least usually, must be exercised in view of the common good, does not have any Socialist character, just as the rational control of production by the banks could be called individual liberalism.
Second objection: The dividend encourages idleness.
Answer: The State will not issue money or credit according to its wishes, but according to the requirements expressed by the statistics of production, which is intimately linked to the work of the citizens. It is most likely that some will refuse to work; but one should not think that the dividend will automatically support everyone forever. For even though the dividend may, at first, be quite big to fill the gap between production and consumption, a continuous increase in production, due to an equivalent increase in work, will be required to maintain the dividend at the same level.
However, the Social Crediters should not lay too much stress on the dividend, especially on the permanent basic dividend, which is not essential for the system; but the principle in itself cannot be condemned.
Third objection: The dividend, and even the discount, will deprive the workers of their wages, and the producers, of their profits.
Answer: This could be true, to some extent, and always in an indirect way, if there was actually no gap between production and consumption. But the Social Credit system is precisely based on this gap: it is a question that is purely economic and technical. From this, the dividend cannot be condemned on behalf of the social doctrine of the Church. Besides, it seems that a gap actually exists between the cost of some production — fisheries, natural resources, etc. — and the price of consumption.
Fourth objection: At first sight, one sentence of Douglas inspires some doubt: “The dividend shall progressively displace wages and salaries”. (Warning Democracy, p. 34.)
Answer: In Douglas's works, the word “dividend” does not always have the same meaning. Douglas foresees here an entirely cooperative economic system. Then it is easy to understand that the cooperative workers are paid no longer with salaries, but with dividends. In this case, they are, in a way, the very owners of the production system.
This replacement of wages by dividends cannot therefore be considered as being contrary to the social doctrine of the Church; all the more so since the Pope (Pius XI) himself, in Quadragesimo Anno, admits the legitimacy of an order in which the contract of partnership would correct, as far as possible, the wage-contract. Cooperation is a form of contract of partnership, in which the dividend tends to replace wages normally and progressively.
Here are the words of Pius XI: “And first of all, those who hold that the wage-contract is essentially unjust, and that in its place must be introduced the contract of partnership, are certainly in error. They do a grave injury to Our Predecessor (Leo XIII), whose Encyclical (Rerum Novarum) not only admits this contract, but devotes much space to its determination according to the principles of justice. In the present state of human society, however, We deem it advisable that the wage-contract should, when possible, be modified somewhat by a contract of partnership, as is already being tried in various ways to the no small gain both of the wage-earners and of the employers. In this way wage-earners are made sharers in some sort in the ownership, or the management, of the profits.”
It is true that it is difficult to imagine a cooperative system that has reached such an extent that every wage would disappear, to be replaced by dividends only; however, this does not make the hypothesis erroneous. Moreover, the Commission wants to point out that some expressions of Douglas, on this issue, are rather confused. However, this seems to be his thought, according to the Social Credit leaders.
These objections cannot, in the opinion of the Commission, invalidate the previous judgement, formulated from a Catholic social point of view. Let us add that a deeper study of this system, from a purely economic viewpoint, is essential, because of the importance of the issue nowadays.
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