As mentioned on page 4 of this issue, the first two major texts marking the beginning of the Church's social doctrine are Rerum Novarum, written by Leo XIII in 1891, and Quadragesimo Anno, written by Pius XI, 40 years later in 1931. Louis Even wrote several articles commenting on social encyclicals, including the following two insightful pieces focusing specifically on these two documents.
by Louis Even
Although the Vatican has published more than thirty encyclicals dealing with social issues, Rerum Novarum by Leo XIII, published May 15, 1891, is considered to be the first in the series. It was truly a great light at a time when the working class was suffering from unjust conditions—conditions born of an industrial revolution that could and should have benefited all social classes.
"The ancient workingmen's guilds were abolished in the last century, and no other protective organization took their place. Public institutions and the laws set aside the ancient religion. Hence, by degrees it has come to pass that working men have been surrendered, isolated and helpless, to the hardheartedness of employers and the greed of unchecked competition."
Was this unbridled competition driven to raise the standard of living for all by increasing the quantity of goods available through industrial development? No. No matter how kind or humane an employer might have been, he was still bound by the demands of the financier behind him. Money had to yield more money—always more—not merely to support a luxurious lifestyle for the financier, but to feed an insatiable appetite and a growing power over others.
Money had already become the primary goal of enterprises—enterprises that were hiring more and more workers, including children. The individual existed to serve industry, and not the other way around. The industry, in turn, was meant to serve money.
Almost at the beginning of Leo XIII's encyclical, two sentences—surely referring to this voracious appetite invite curiosity due to the use of an imprecise expression not found elsewhere in the document:
"The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by covetous and grasping men."
"A devouring usury has added to the evil. Repeatedly condemned by the Church, it has continued to be practiced under a different guise by greedy men driven by insatiable greed."
What is this "devouring usury under another form"? What does this new form of usury entail, this addition to the oppression of workers?
Usury has been repeatedly condemned by the Church, the Pope reminds us; yet here it is practiced in a new form. But what form? The reader of Rerum Novarum may have glossed over this question, but those who paused on it remained intrigued, especially in 1891.
Historically, usury, as condemned by the Church, was understood to be any interest on money. Later, once interest was legitimized, it was only excessively high interest that was called usury. At the end of the 19th century, the time of Rerum Novarum, catechism teachers set the acceptable limit at five percent; anything beyond that was deemed usurious.
But this "usury under another form"—is it still excessively high interest? If so, how high? Or could it be something else entirely? And if so, in what form?
In a book written in 1935, English priest Fr. F. H. Drinkwater identified this "devouring usury under a different form" as the monopolization of credit, which was increasingly becoming synonymous with the monopolization of money—a process still mysterious to nearly all laypeople at the time.
Fr. Drinkwater recounts that a committee at the University of Fribourg, under the presidency of Msgr. Mermillod, prepared materials for the drafting of Rerum Novarum. Among the committee members was at least one Austrian expert in monetary and banking credit systems. A text prepared by him, and presumably approved by the committee, showed how bank-created credit—already the common monetary instrument in commerce and industry—was essentially a monetization of the productive capacity of the entire community.
Such newly created money, therefore, could only be considered social in nature and not the property of the banks. Social, because its value originates from the community and because it can command any service or product, regardless of origin. Control over this source of money thus grants those in charge tremendous power over all economic life.
Moreover, the bank that lends, not its depositors'money, but rather money it creates out of thin air via simple accounting entries—gives up nothing of its own. The interest it demands is undeniably usurious. No matter the set interest rate, it always exceeds 100 percent interest, since it is charged on a loan made from a capital of zero. Usury is indeed devouring as borrowers can never repay more money than what was put into circulation.
Total repayments always exceed the total amount of loans. The payment of interest requires an ongoing cycle of new loans bearing further interest—leading to an accumulation of private and public debts that are collectively unpayable.
In an article published in England's Catholic Times on May 9, 1941, and reprinted in The Social Crediter on May 24, 1941, Fr. Drinkwater returned to this passage in Rerum Novarum about "a devouring usury":
"When the encyclical was finally published, it was, in several respects, based on the research and findings of the Fribourg group. But on one key point, the encyclical disappointed those who had hoped it would go further.
"The Fribourg group had hoped for something much more explicit regarding monetary reform. Its members, particularly those from Vienna, were very familiar with how credit is created and the social dangers of such immense power in private hands." Fr. Drinkwater quotes one Fribourg sociologist: "If we fail to reform our current credit system, all other means to save us from social peril will be futile."
Fr. Drinkwater continued: "Explaining why this aspect was omitted—or merely reduced to a vague condemnation of usury under another form—would require more research than any one individual can undertake."
What exactly was the content of the text on the credit monopoly? We may never know, since it did not appear in the final encyclical. Was it omitted at Fribourg before submission to Rome? Was it removed en route or within the Vatican? Or did Leo XIII himself decide to leave it out? Fr. Drinkwater notes: "All we can say for certain is that obstacles were deliberately placed somewhere along the way."
He then reflects on how the truth about money is consistently suppressed. "Men like Bishop Berkeley and Abraham Lincoln (we might also mention C. H. Douglas, or more recently Nobel laureate Maurice Allais) understood the influence of financial powers, yet their insights were always pushed into obscurity:
"Money powers know how to control sources of information and public authority—not to mention income streams—and can silence critics in countless ways or dismiss them as mere cranks."
Fr. Drinkwater concludes: "Even if Pope Leo XIII had spoken clearly [about the credit monopoly], the money powers would have found a way to stifle the impact of his words. If tomorrow a Pope were to speak clearly about the powers of money, his words would fall flat, unheard by the world.
"How do I know this? Because Pope Pius XI did speak clearly, 10 years ago, in Quadragesimo Anno. And who noticed that part of his encyclical, aside from a few monetary reformers, most of whom weren't even Catholic?
"If you don't believe me, take a look at the various official explanations of the encyclical published by the Catholic Society—the body responsible for such interpretations in this country. You'll be astonished at how skillfully it tones things down the moment it approaches any indiscretions of the Sovereign Pontiff."
This is exactly what we'll explore in the next article, which focuses on the encyclical Quadragesimo Anno by Pius XI, in which the "devouring usury practiced under another form" is finally named: it is the monopoly of credit.
Subscribe