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Social Credit and the Social Doctrine of the Church - Part I

Written by Alain Pilote on Friday, 04 November 2016. Posted in Economic Democracy (book)

Economic Democracy - Lesson 9

Social Credit: applied Christianity

Clifford Hugh Douglas once said that Social Credit is in essence applied Christianity. The Social Doctrine of the Roman Catholic Church and Social Credit show that the financial proposal applies the Church’s teaching on Social Doctrine.

Vers Demain (literally, "Towards tomorrow", the French-language version of this journal) was founded by Louis Even and Gilberte Cote-Mercier, and was first published in Canada in 1939. An edition in English called "Michael" followed in 1953. An edition in Polish appeared in 1999, and an edition in Spanish in 2003. The "white berets" have been traveling all over the world for the last 68 years bringing the message of Vers Demain to the world.

The message carried by the journals is still the same in 2007 as it was in 1939. The objective is to promote the development of a Christian society through the diffusion and implementation of the teaching of the Church in every sector of society, including financial. Our founders called it Vers Demain which means "towards tomorrow" insuring a brighter future.

Louis Even was convinced that a better world could be built primarily upon the eternal principle of the Gospel and the teachings of the Roman Catholic Church. The mission statement of the journals is clearly set on the front page of every issue under the logo:

On the far left, "A Journal of Catholic Patriots, for the Kingship of Christ and Mary, in the souls, families and countries" and on the right, "For a Social Credit Economy, in accordance with the teachings of the Church through the vigilant action of heads of families, and not through political parties." (This means, among other things, that the "Social Credit" philosophy that is referred to here has nothing to do with political parties, not even so-called "Social Credit parties", but is simply an economic reform that can be applied by any political party in power).

"Michael" is therefore a journal of Catholic patriots, that also deals with an economic reform, with "Social Credit." Why? "What does this have to do with religion?" some might ask. The "Social Credit" system is nothing but a method, a way to apply the Church’s social doctrine, which is an integral part of the teaching of the Church. So in this the "Michael" Journal does not depart from its first objective which is "to promote the development of a more Christian society through the diffusion of the teaching of the Roman Catholic Church."

Why a social doctrine?

If the Church intervenes in social matters, and has developed a set of principles that came to be called the "social doctrine of the Church", it is essentially because, as Pope Benedict XV said, "it is on the economic field that the salvation of souls is at stake."

His immediate successor, Pope Pius XI, stated, "It may be said with all truth that nowadays the conditions of social and economic life are such that vast multitudes of men can only with great difficulty pay attention to that one thing necessary, namely their eternal salvation." (Encyclical letter Quadragesimo Anno, May 15, 1931.)

Pius XII used similar words, in his June 1, 1941 radio-broadcast: "How could the Church — a so loving Mother who cares about the well-being of her sons — be permitted to remain indifferent when she sees their hardships, to remain silent or pretend not to see and not to understand social conditions which, voluntarily or not, make it difficult and practically impossible a Christian conduct in conformity with the Commandments of the Sovereign Lawgiver?" Throughout the centuries the Popes have continued to echo this message.

Permeating society with the Gospel

Compendium of the Social Doctrine of the ChurchOn October 25, 2004, the Pontifical Council for Justice and Peace published the "Compendium of the Social Doctrine of the Church." This document presents the principles of the Church’s Social Doctrine in diverse areas of public life. Work on the volume began under the presidency of Cardinal Francois Xavier Nguyen Van Thuan.

The book is dedicated to the late Holy Father John Paul II, "master of social doctrine and evangelical witness to justice and peace" who, in the 1999 Post-synodal Apostolic Exhortation Ecclesia in America recommended that "it would be very useful to have a compendium or approved synthesis of Catholic social doctrine, including a catechism which would show the connection between it and the new evangelization."

The Compendium states that: "the Church’ social doctrine is an integral part of her evangelizing ministry….nothing that concerns the community of men and women, situations and problems regarding justice, freedom, development, relations between peoples, peace, is foreign to evangelization. Evangelization would be incomplete if it did not take into account the mutual demands continually made by the Gospel and by the concrete, personal and social life of man."

One reads in Paragraph 71: "On the one hand, religion must not be restricted ‘to the purely private sphere’; on the other, the Christian message must not be relegated to a purely other-worldly salvation incapable of shedding light on our earthly existence. Because of the public relevance of the Gospel and faith, because of the corrupting effects of injustice, that is, of sin, the Church cannot remain indifferent to social matters. To the Church belongs the right always and everywhere to announce moral principles, including those pertaining to the social order, and to make judgments on any human affairs to the extent that they are required by the fundamental rights of the human person or the salvation of souls."

The Church cannot remain indifferent to the plagues of hunger and indebtedness in a world which jeopardize the salvation of souls. This is why the Church calls for reform of financial and economic systems which would put them at the service of human beings. The Church presents the moral principle upon which any financial system must be judged. The Church calls on the lay faithful to practice these principles in a practical manner. The lay faithful have the role of renewing the temporal order and bring it into line with God’s plan working for solutions of the economic plan as the ultimate mission.

Social Credit

It is for this reason that Louis Even decided to spread the Social Credit doctrine, which is a set of principles and financial proposals that were brought forth for the first time in 1918 by Scottish engineer Clifford Hugh Douglas.

When Louis Even discovered the great light of Social Credit in 1935, he immediately understood how this solution would apply Christian principles of social justice in economics. The right of all to the use of material goods and the distribution of daily bread to all through the allocation of a social dividend to every human being. Louis Even made it his duty to bring the great light of Social Credit to all because he understood the importance of this doctrine.

The four principles of Church's social doctrineThe social doctrine of the Church can be summarized in four principles, or "pillars", upon which every system in society must be founded. Here is quote from paragraph 160 through 161 of the Compendium of Social Doctrine of the Church:

"The permanent principles of the Church’s social doctrine constitute the very heart of Catholic social teaching. These are the principles of:

  1. The dignity of the human person, which is the foundation of all the other principles and content of the Church’s social doctrine;
  2. the common good;
  3. subsidiary;
  4. solidarity.

"These are principles of a general and fundamental character, since they concern the reality of society in its entirety… Because of their permanence in time and their universality of meaning, the Church presents them as the primary and fundamental parameters of reference for interpreting and evaluating social phenomena, which is the necessary source for working out the criteria for the discernment and orientation of social interactions in every area."

Primacy of the human person

The social doctrine of the Church can be summarized in a basic principle, the primacy of the human person:

"The Church’s teaching on social matters has truth as its guide, justice, as its end, and love as its driving force… the cardinal point of this teaching is that individual men are necessarily the foundation, cause, and end of all social institutions." (Pope John XXIII, encyclical letter Mater et Magistra, May 15, 1961.)

The Compendium states: "The Church sees in men and women, in every person, the living image of God Himself. This image finds, and must always find anew, an ever deeper and fuller unfolding of itself in the mystery of Christ, the Perfect Image of God, the One who reveals God to man and man to himself." (Paragraph 105.)

"All of social life is an expression of its unmistakable protagonist: the human person: ‘The human person is, and must always remain, the subject, foundation and goal of social life.’" (Pius XII, radio message of Dec. 24, 1944.)

"A just society can become a reality only when it is based on the respect of the transcendent dignity of the human person. The person represents the ultimate end of society, by which it is ordered to the person: ‘Hence, the social order and its development must invariably work to the benefit of the human person, since the order of things is to be subordinate to the order of persons, and not the other way around.’" (Vatican II, Pastoral Constitution Gaudium et Spes, 26.)

"Respect for human dignity can in no way be separated from obedience to this principle. It is necessary to ‘consider every neighbor without exception as another self, taking into account first of all his life and the means necessary for living it with dignity.’ Every political, economic, social, scientific and cultural program must be inspired by the awareness of the primacy of each human being over society." (Paragraph 132.)

Systems at the service of man

Social Credit shares the same philosophy. In the first chapter of his book, Economic Democracy, Clifford Hugh Douglas wrote: "Systems are made for men, and not men for systems, and the interest of man which is self-development, is above these systems."

John Paul IIIn his first Encyclical Letter Redemptor Hominis (The Redeemer of Man), Pope John Paul II spoke of "the indispensable transformations of the structures of economic life of poverty amidst plenty that brings into question the financial and monetary mechanisms… Man cannot relinquish himself or the place in the visible world that belongs to him; he cannot become the slave of things, the slave of economic systems, the slave of production, the slave of his own products."

So it is very clear in these quotes that all systems must be at the service of man and that includes the financial and economic systems: "Again, I want to tackle a very delicate and painful issue. I mean the torment of the representatives of several countries, who no longer know how to face the fearful problem of indebtedness. A structural reform of the world financial system is, without doubt, one of the initiatives that seem the most urgent and necessary." (Message given by Pope John Paul II, to the 6th United Nations Conference on Trade and Development in Geneva on September 26, 1985.)

"As a democratic society, see carefully to all that is happening in this powerful world of money! The world of finance is also a human world, our world, submitted to the conscience of all of us; for it too exist ethical principles. So see especially to it that you may bring a contribution to world peace with your economy and your banks and not a contribution — perhaps in an indirect way — to war and injustice!" (John Paul II, homily at Flueli, Switzerland, June 14, 1984.)

In his encyclical letter Centesimus Annus that was issued in 1991 for the 100th Anniversary of Leo XIII’s encyclical Rerum Novarum, Pope John Paul II drew a list of the basic human rights:

"The right to life, an integral part of which is the right of the child to develop in the mother’s womb from the moment of conception; the right to live in a united family and in a moral environment conducive to the growth of the child’s personality; the right to develop one’s intelligence and freedom in seek ing and knowing the truth; the right to share in the work which makes wise use of the earth’s material resources, and to derive from that work the means to support oneself and one’s dependents; and the right freely to establish a family, to have and to rear children through the responsible exercise of one’s sexuality. In a certain sense, the source and synthesis of these rights is religious freedom, understood as the right to live in the truth of one’s faith and in conformity with one’s transcendent dignity as a person."

Capitalism must be corrected

The social doctrine of the Church stands above existing economic systems, since it confines itself to the level of principles. An economic system is good only to the extent that it applies the principles of justice taught by the Church. As Pope John Paul II wrote in 1987, in his encyclical letter Sollicitudo Rei Socialis: "The tension between East and West is an opposition... between two concepts of the development of individuals and peoples, both concepts being imperfect and in need of radical correction... This is one of the reasons why the Church’s social doctrine adopts a critical attitude towards both liberal capitalism and Marxist collectivism."

We may understand why the Church condemns Communism or Marxist collectivism which as Pope Pius XI wrote, is "intrinsically evil" and anti-Christian with its avowed goal being the complete destruction of private property, family and religion. Why would the Church condemn capitalism?

In the second chapter of his encyclical Centesium Annus, John Paul II recalls the different events that have taken place in the world since Leo XIII’s Rerum Novarum up to the present day, including the two world wars and the establishment of Communism in Eastern Europe. He indicates how Leo XIII was right to denounce socialism which far from solving the social question, would turn out to be a huge failure causing millions of innocent victims to suffer:


"Pope Leo foresaw the negative consequences — political, social and economic — of the social order proposed by ‘socialism’… One must emphasize here the clarity in recognizing the evil of a solution which, by appearing to reverse the positions of the poor and the rich, was in reality detrimental to the very people whom it was meant to help. The remedy would prove worse than the sickness. By defining the nature of the socialism of his day as the suppression of private property, Leo XIII arrived at the crux of the problem."

John Paul II said that the fundamental error of socialism is atheism because when a person denies the existence of God, of a superior being who created man, one also denies the existence of all moral law. The dignity and rights of the human person are destroyed, which leads to dictatorships where the State decides what is good for the individual. This also leads to social disorder and anarchy, where each individual makes up his own conception of good and evil.

Even if Marxism has collapsed, this does not mean the triumph of capitalism. Even after the fall of Communism there are still millions of poor people and situations of injustice in the world:

"The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces." (Centesimus Annus, 42.)

In this encyclical letter, John Paul II recognizes the merits of free enterprise, private initiative and profit: "It would appear that, on the level of individual nations and of international relations, the free market is the most efficient instrument for utilizing resources and effectively responding to needs. But this is true only for those needs which are ‘solvent’, insofar as they are endowed with purchasing power, and for those resources which are ‘marketable’, insofar as they are capable of obtaining a satisfactory price. But there are many human needs which find no place on the market. It is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied, and not to allow those burdened by such needs to perish." (n. 34.)

The fault that the Church finds with present capitalism is then neither private property nor free enterprise. Far from wishing the disappearance of private property the Church rather wishes its widespread availability so that all may become real owners of capital and be real "capitalists":


"The dignity of the human person necessarily requires the right of using external goods in order to live according to the right norm of nature. And to this right corresponds a most serious obligation, which requires that, so far as possible, there be given to all an opportunity of possessing private property... Therefore, it is necessary to modify economic and social life so that the way is made easier for widespread private possession of such things as durable goods, homes, gardens, tools requisite for artisan enterprises and family-type farms, investments in enterprises of medium or large size." (Pope John XXIII, encyclical letter Mater et Magistra, May 15, 1961, nn. 114-115.)

Social Credit with its dividend to every individual would acknowledge every human being as a capitalist, a co-heir of the natural resources and progress, some of which are human inventions and technology.

Capitalism has been vitiated by the financial system

The fault that the Church finds with the capitalist system is the fact that each and every human being living on the planet does not have access to a minimum of material goods. So they are not allowed to have a decent life and even in the most advanced countries there are thousands of people who do not eat their fill. It is the principle of the destination of human goods that is not fulfilled: there is plenty of production, it is the distribution that is defective.

And in the present system the instrument that makes possible the distribution of goods and services, the symbol that allows people to get products, is money. It is therefore the money system, the financial system that is at fault in capitalism.

Pope Pius XI wrote in Quadragesimo Anno in 1931: "Capitalism itself is not to be condemned. And surely it is not vicious of its very nature, but it has been vitiated."

What the Church condemns is not capitalism as a producing system, but, according to the words of Pope Paul VI, "the calamitous system that accompanies it," which is the financial system:

Paul VIPaul VI

"This unchecked liberalism led to dictatorship rightly denounced by Pope Pius XI as producing `the international imperialism of money’. One cannot condemn such abuses too strongly, because — let us again recall solemnly — the economy should be at the service of man. But if it is true that a type of capitalism has been the source of excessive suffering, injustices and fratricidal conflicts whose effects still persist, it would be wrong to attribute to industrialization itself evils that belong to the calamitous system that accompanied it. On the contrary, one must recognize in all justice the irreplaceable contribution made by the organization and the growth of industry to the task of development." (Paul VI, Encyclical Letter Populorum Progressio, on the development of peoples, March 26, 1967, n. 26.)

The defect of the system: money is created by the banks as a debt

It is the financial system that does not accomplish its purpose; it has been diverted from its end that is to makes the goods meet the needs. Money should be nothing but an instrument of distribution and a symbol that gives a claim, in other words a simple accounting system.

Money should be a servant, but the bankers in appropriating the control over its creation, have made it an instrument of domination. Since people cannot live without money everyone must, and this includes governments, corporations, and individuals; must submit to the conditions imposed upon them by the bankers to obtain money. Money means having the right to live in today’s society. This establishes a real dictatorship over economic life, and so the bankers have become the masters of our lives. Pope Pius XI was quite right when he said in Quadragesimo Anno:

Pius XIPius XI

"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." (n. 106.)

There is no way any country can get out of debt in the present system, since all money is created as a debt: all the money that exists comes into circulation only when it is lent by the banks with interest. And when the loan is paid back to the bank, this money being withdrawn from circulation, it ceases to exist. In other words new money is created every time banks make a loan and this same money is destroyed every time loans are paid back.

The fundamental flaw in this system is that when banks create new money in the form of loans, they ask the borrowers to pay back more money than what was created. The banks create the principal, but not the interest. And since it is impossible to pay back money that does not exist, debts must pile up, or you must borrow also the amount to pay the interest. This does not solve your problem because you fall even deeper into debt.

This creation of money as debt by the international bankers is the means of imposing their will upon individuals and of controlling the world:

"Among the actions and attitudes opposed to the will of God, the good of neighbour and the ‘structures’ created by them, two are very typical: on the one hand, the all-consuming desire for profit, and on the other, the thirst for power, with the intention of imposing one’s will upon others." (John Paul II, encyclical letter Sollicitudo rei socialis, n. 37.)

Since money is an instrument that is basically social, the Social Credit doctrine proposes that money be issued by society and not by private bankers for their own profit. Pope Pius XI stated in Quadragesimo Anno:

"There are certain categories of goods for which one can maintain with reason that they must be reserved to the community 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."

The effect of compound interest

Institutions like the International Monetary Fund and the World Bank pretend to help countries in financial difficulties with their loans, but because of the interest charges (compound interest) they have to pay them back and so these countries end up even poorer than they were before the loans were made. Here are some striking examples: During the time period of 1980-1990 Latin American countries paid $418 billion in interest on original loans of $80 billion... and they still owed the capital even though they paid it back more than five times!

In Canada things are even worse: 93% of the national debt of $562 billion (in 2003) was made up of interest charges: the original capital borrowed ($39 billion) represents only 7% of the debt. The remaining $523 billion covers what it cost to borrow that $39 billion!

According to the Jubilee 2000 Coalition for every dollar flowing as aid to poor countries each year $8 are sent back in debt payments. It is examples of debt systems like these that brought Saint Leo to write: "The avarice that claims to do its neighbour a good turn while it deceives him is unjust and insolent... He who, among the other rules of a pious conduct, will not have lent his money at usury, will enjoy eternal rest... whereas he who gets richer to the detriment of others deserves, in return, eternal damnation." Saint John Chrysostom also wrote: "Nothing is more shameful nor cruel than usury."

Debts must be cancelled

Any sensible person will realize that it is criminal to require nations to continue to pay interest on debts that have already been paid several times. We can see now why the Church condemns usury and calls for the cancellation of debts. When you understand that the money lent by banks is literally created out of nothing, with a simple stroke of the pen (or entering digits in computers), then it is easy to understand that debts can be cancelled without anyone being penalized.

On December 27, 1986, the Pontifical Justice and Peace Commission issued a document entitled An Ethical Approach to the International Debt Question. Here are some excerpts to help emphasize our point:

"Debtor countries, in fact, find themselves caught in a vicious circle. In order to pay back their debts, they are obliged to transfer ever greater amounts of money outside the country. These are resources which should have been available for internal purposes and investment and therefore for their own development.

"Debt servicing cannot be met at the price of the asphyxiation of a country’s economy, and no government can morally demand of its people privations incompatible with human dignity... With the Gospel as the source of inspiration, other types of action could also be contemplated such as granting extensions, partial or even total remission of debts... In certain cases, the creditor States could convert the loans into grants.

"The Church restates the priority to be granted to people and their needs, above and beyond the constraints and financial mechanisms often advanced as the only imperatives."

Pope John Paul II wrote in his encyclical letter Centesimus Annus (n. 35): "The principle that debts must be paid is certainly just. (Note from the "Michael" Journal: to pay the capital is just, but not to pay the interest.) It is not right to demand or expect payment when the effect would be the imposition of political choices leading to hunger and despair for entire peoples. It cannot be expected that the debts which have been contracted should be paid at the price of unbearable sacrifices. In such cases it is necessary to find — as in fact is partly happening — ways to lighten, defer, or even cancel the debt, compatible with the fundamental right of peoples to subsistence and progress."

In preparation for the Great Jubilee of the Year 2000 Pope John Paul II mentioned on several occasions the need to cancel all debts. Here are excerpts from his weekly audience of Nov. 3, 1999:

"In the jubilee years of Old Testament times, people recovered family property lost through payment of debt, and those who had lost their freedom through debt, were freed. This was because the land belonged to God, who gave it to the whole community to use for its own benefit. The jubilee reminds us of the demands of the common good and of the fact that the world’s resources are meant for everyone. It is thus an appropriate time to give thought to reducing substantially, if not cancelling outright, the international debt which seriously threatens the future of many nations."

Once debts are written off the only way to stop debts building up again and allow nations to make a fresh start is for each nation to create its own debt-free and interest-free money, and stop borrowing at interest from commercial banks and international institution such as the International Monetary Fund and the World Bank. If you leave to private bankers the power to create money, the debts will build up again. This reminds us of the words of Sir Josiah Stamp, former head of the Bank of England:

"Banking was conceived in iniquity and born in sin... Bankers own the earth. Take it away from them, but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again... Take this great power away from them, and all great fortunes like mine will disappear, and they ought to disappear, for then this would be a better and happier world to live in... But, if you want to continue to be the slaves of the bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."

For those who do not understand how banks create money, the only way a debt can be cancelled is to have someone pay it back. But when those who understand the principles of Social Credit and the mechanisms of the banking system say "cancel" the debt, we actually mean it: erase it! We do not ask anyone to pay it and we certainly do not ask the Government to "print money" to pay the debt. What we propose is that the Government stop borrowing at interest immediately. It is perfectly able to create money on its own, interest free. This is the only solution that goes to the root of the problem and solves it once and for all and it would finally put money at the service of the human person.

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About the Author

Alain Pilote

Alain Pilote

Alain Pilote has been the editor of the English edition of MICHAEL for several years. Twice a year we organize a week of study of the social doctrine of the Church and its application and Mr. Pilote is the instructor during these sessions.