The Catholic Case for Social Credit: An Interview With Felix Martin Antoniano

I have a series of videos on Major C.H. Douglas's Social Credit (No! It has nothing to do with the ChiCom "social credit"), which I'll be sharing.

From One Peter Five

By Theo Howard

What Douglas was proclaiming was simply that the financial system should return to its proper function.

Félix M.ª Martín Antoniano holds a degree in Law from the Complutense University (Madrid) and completed a Master’s degree in Stock Market and Financial Markets from the Institute of Stock Market Studies (Madrid). He is a member of the Madrid Bar Association. He has published various works in the magazines Verbo and Anales de la Fundación Elías de Tejada, and is a frequent contributor to the Catholic-Legitimist-Royalist newspaper La Esperanza.

TH: Thank you for joining me Señor Martin. Today, there is renewed debate about the welfare state as an unsustainable Ponzi scheme that is accelerating the decline of the West. Could you describe how “social security is a system of slavery” devised by revolutionaries to better control hapless and decaying Western societies?

FM: The purely technical debate about whether the structure of “Social Security” should operate according to a Ponzi scheme, that is, a “pay-as-you-go system” (or, as it is pejoratively called, a “pyramid system”), or whether it would be better to establish a “capitalization system” instead, is, in my opinion, a completely irrelevant debate. The question we should really be asking is whether or not the structure of “Social Security,” considered in itself, is adequate for achieving a correct social and economic order (understood according to the Social Doctrine of the Church), and, therefore, whether it would be advisable to eliminate it and replace it with other measures that would be more in keeping with that order.

The question can be approached from two points of view: one philosophical, and the other technical-financial.

From a philosophical perspective, it is clear that the many Social Security plans that emerged throughout the last century fundamentally originated in the Fabian school of socialism, whose way of thinking is completely imbued with the prejudices of puritanism. This mentality is characterized by a desire to control people’s lives down to the smallest detail “for their own good,” leaving no room for human free will or choice. The Catholic apologists Chesterton and Belloc were the greatest opponents of this monstrous forma mentis, which translated, within the socioeconomic sphere, into the provision of a public constitution that Belloc aptly called the “Servile State,” “Secure Capitalism,” or “State-guaranteed Capitalism.” Chesterton and Belloc, in their critiques, emphasized above all the mandatory nature of the “Social Security” structure for employees or wage earners, manifested in a dual perspective: on the one hand, not allowing them to choose whether to allocate a portion of their salary to pay a specific pension contribution (of any kind) or to keep that portion of their salary; and, on the other hand, not allowing them, when receiving social security benefits, to decide when and how to receive and use them, requiring them, on the contrary, to submit in these matters to the parameters dictated by the administrative apparatus.

From a technical-financial perspective, economist Clifford Hugh Douglas summed up the futility of the financial mechanism associated with the structure of “Social Security,” which basically consists of a policy of redistributing a portion of the aggregate or general quantity of money existing at a given time within a political community. This redistribution is carried out under the fallacious assumption that the true cause of the lack of money (with which to satisfy their needs) suffered by one sector of the population is exclusively due to an alleged excess of that general quantity of money in the hands of another sector of the same population. Douglas, on the other hand, argued that this lack of money was in fact ultimately due not to a relative but to an absolute shortage in the general quantity of money within the political community, which could obviously only be solved by the issuance of newly created money, given directly to the entire population. This money would be in the nature of a dividend, not a subsidy, because its issuance was justified by the general production and consumption data available within the political community. In his BBC speech, broadcast in November 1934, and transcribed shortly afterward under the title “The Causes of War: Is Our Financial System to Blame?”, Douglas stated, among other things, the following:

The practical effect of a National Dividend would be, firstly, to provide a secure source of income to individuals which, though it might be desirable to augment it by work, when obtainable, would, nevertheless, provide all the necessary purchasing power to maintain self-respect and health. By providing a steady demand upon our producing system, it would go a long way towards stabilising business conditions, and would assure producers of a constant home market for their goods. We already have the beginnings of such a system in our various pension schemes and unemployment insurance, but the defect for the moment of these is that they are put forward in conjunction with schemes of taxation which go a long way towards neutralising their beneficial effect. While this is inevitable under our present monetary system, it is far from being inevitable when the essentially public nature of the monetary system receives the recognition which is its due, but is not yet admitted by our bankers.

TH: When Douglas talked about the need for a recognition of the public nature of the monetary system, did he have in mind the rampant phenomenon of private banks creating the money supply (credit) which Pius XI refers to in Qudragesimo Anno as “this dictatorship being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will?”

Secondly, what would be your response to the objections of some traditional Catholics who might say that such a social credit system sounds worryingly similar to the notion of a “universal basic income” promoted by various revolutionary oligarchs today?

FM: Regarding the first question, Douglas always publicly denounced what he called “the Credit Monopoly” as the greatest tyranny ever exercised over societies, and which coincides perfectly with Pope Pius XI’s definition. The economy has no other purpose than to produce the goods and services required by the population to cover their real needs without undermining their freedom and social independence. And the financial system linked to an economy is a mechanism that must serve to streamline and facilitate this socioeconomic objective. And for the financial system to fulfill this purpose, it must always adapt to the physical realities of the economy. But what the “Credit Monopoly” does is precisely the opposite: it molds or subordinates the economy (and, therefore, the entire social order) to the financial system, turning it into the most powerful mechanism of social control that has ever existed in history.

Douglas distinguishes between the “real credit” of a political community—that is, the community’s capacity to produce goods and services as, when, and where required by the people—and “financial credit,” that is, the capacity to issue money as, when, and where required by the people. Well, “financial credit” must always be placed at the service of the “real credit” of the political community, and there is no reason why this should not always be the case.

What Douglas was proclaiming was simply that the financial system should return to its proper function, which is to reflect the real data of the economy, rather than manipulating and distorting it for the private interests of an oligarchy. In other words, it is simply a matter of changing “financial policy,” which effectively has a “public nature” per se. It is important to emphasize that all this has nothing to do with a policy of “nationalizing the banks” or anything like that, as the latter would only have to do with “financial administration,” which is something completely different. Douglas, at the end of his speech before the King of Norway and prominent figures from the business world on February 14, 1935, said it clearly:

The great difficulty, of course, is that it is extraordinarily hard to bring sufficient pressure to bear upon this world-wide monopoly of credit. That is the practical difficulty. If that can be done I believe that nobody will lose. I am not myself, for instance, and advocate of the nationalisation of the banks. I believe this again to be one of those misapprehensions so common in regard to these matters, for nationalisation of the banks is merely and administrative change: it does not mean a change in policy, and mere administrative change cannot be expected to produce any result whatever in regard to this matter. A change in monetary policy can be made without interfering with the administration or ownership of a single bank in the world; and if it could be got into the heads of the comparatively few people who control these enormous monetary institutions that they would lose nothing but power –and that they will lose that power anyway– the thing would be achieved.

The question, ultimately, is not whether banking institutions should be publicly or privately owned, but whether the financial credit of a political community should be considered a public good, subject to objective rules regarding its issuance and withdrawal from circulation for the common good, or whether, on the contrary, it should be considered a private asset of bankers, which they could manage (issue or withdraw) at will for their own private interests. A clear manifestation of this dilemma could be seen in the public confrontation on this extremely important issue between Douglas and Reginald McKenna, former British Chancellor of the Exchequer, who at the time held the presidency of the Midland Bank, which at that time was the world’s largest commercial bank in terms of deposits.

Regarding your second question, I must first emphasize that the Dividend is only one device or tool among others with which to effectively achieve the aforementioned purpose of the Economy. But there are other mechanisms, alternative or complementary, that could implement this proper alignment of “financial credit” with the “real credit” of the community. The “universal basic income” is a measure that fits within the philosophy and structure of “Social Security,” previously rejected, and therefore runs counter to the policy advocated by Douglas. I think the Canadian publicist M. Oliver Heydorn perfectly summarized the substantial differences between this “universal income” and the Dividend instrument proposed by Douglas in an article titled “The (Big!) Difference Between a ‘Basic Income’ and the National Dividend” (later expanded in another titled “A National Dividend vs. a Basic Income – Similarities and Differences”), which appeared on his excellent website, the “Clifford Hugh Douglas Institute.” Mr. Heydorn condensed the essential differences between the two concepts into three. I cite them briefly:

1) The Structural Nature of the Proposed Benefit: Whereas the basic income is typically conceived as a fixed amount that would be granted unconditionally and would be enough for a person to survive on, the National Dividend would vary depending on the performance of the economy. In other words, the dividend is indexed to productivity. No productivity, no dividend. The greater society’s productivity, the greater the dividend.

2) The Social Purpose of the Proposed Benefit: Whereas the basic income is normally allied to a policy of full employment (i. e., the amount given to citizens must not be so great as to serve as a disincentive to seeking work in the formal economy), the National Dividend is allied to a policy of increasing leisure. Social Credit is opposed to full employment as a fixed objective.

3) The Financing of the Proposed Benefit: Whereas the basic income is usually conceived as being funded within the financial constraints of existing economic orthodoxy, i.e., through redistributive taxation, or an increase in public indebtedness, or the redistribution of profits from publicly owned corporations, etc., the National Dividend is financed through the debt-free creation of new credit that would be issued by a National Credit Office.

Figure 2. The Circulation of Financial Credit in a Social Credit system

TH: Was Douglas proposing a kind of cooperativism for the entire national economy? I believe C.H. Douglas was an Anglican. How have Catholics responded to his ideas over the years? If we consider distributism, corporatism, and social credit in the same period, why was the interwar period such a fertile time for alternative economic models?

FM: In response to the first question, one could draw some analogy between the political economy advocated by Douglas and the functioning of cooperatives, but it seems to me that these comparisons serve to confuse rather than clarify the issue. Douglas focused his attention on the accounting applied to the economic activity of modern industrial societies and realized that it was erroneous and flawed. The amount of money reaching the consumer population during the production process was not sufficient to cover the prices of those goods and services produced. In other words, supply is incapable of creating its own effective demand. Since the purpose of economics is the production and distribution of goods and services that satisfy the needs or requirements of consumers, the financial system fails to achieve this objective, causing, on the one hand, the generation of enormous quantities of goods that cannot be sold, and, on the other hand, large masses of the population unable to purchase them. In other words, the capitalist system is not self-liquidating. H. Belloc, in a speech given on May 26, 1933, later transcribed in G. W.’s Weekly of June 8, 1933, under the title “The Restoration of Property,” expressed it as follows:

We have had during the last fifty or sixty years inventions and discoveries, such as the internal combustion engine and the distribution of electric power, which might have aided enormously the distribution of property if our philosophy [= the philosophy prevailing in the modern economic world] had been right. But more important in my judgment is this. Industrial Capitalism has broken down. It has broken down for a very simple arithmetical reason–it distributes less purchasing power than [the amount of monetary prices] it creates. I am not going to speak of Major Douglas’s scheme of Social Credit, because that is merely an indirect method of distributing property, which I prefer to achieve by direct means. Industrial Capitalism has broken down, not because it is tired or old or wicked, but because it is producing an amount of wealth greater than it is distributing purchasing power for [buying] that wealth; and to put it very crudely indeed, if I want to make a hundred thousand boots, or rather employ men to make those boots, by the time the boots are made I have distributed to the men who make them the money wherewith to purchase thirty thousand boots, and what I am to do with the seventy thousand boots left? I must sell them to the Colonies. And supposing they also learn to turn a handle, and produce the boots themselves, where are you? That is why Industrial Capitalism has broken down.

To correct this defective financial accounting and to readjust “financial credit” to the “real credit” of civil society, so that the economy fulfills its proper purpose, Douglas established his three principles for the proper functioning of any financial system associated or linked to the economic system of a political community. He presented them on May 2, 1930, as an annex to the report he had drafted for the “Committee on Finance and Industry” (better known as the “MacMillan Committee,” which had been created to investigate the causes of the global economic crisis arising from the New York Stock Exchange crash of October 1929). The annex read as follows:

a) That the cash credits of the population of any country shall at any moment be collectively equal to the collective cash prices for consumable goods for sale in that country (irrespective of the cost prices of such goods), and such cash credits shall be cancelled or depreciated only on the purchase or depreciation of goods for consumption.

b) That the credits required to finance production shall be supplied, not from savings, but be new credits relating to new production, and shall be recalled only in the ratio of general depreciation to general appreciation.

c) That the distribution of cash credits to individuals shall be progressively less dependent upon employment. That is to say, that the dividend shall progressively displace the wage and salary, as productive capacity increases per man-hour.

Turning now to your second question, I think the interwar period was a fruitful period for reflection on the “social question” for three reasons. First, especially in the Catholic sphere, because of the impetus the Popes had given to social thought since Leo XIII published his encyclical Rerum Novarum. Furthermore, the appearance of Quadragesimo Anno in 1931 further promoted this desire to find solutions to the social problem. The second reason, of a more general nature, is simply what (as we have seen before) Belloc denounced as the breakdown or collapse of industrial capitalism. After the First World War, the classical capitalist model simply entered into crisis and fell into total disrepute. Douglas’s reflections on the functioning of the capitalist system came to mind precisely during the First World War, while he was working as an accountant in a British RAF factory. The third and final reason was the global economic crisis following the crash of 1929, which further deepened the crisis of capitalism and, as a side effect, helped to foster and strengthen the analysis and diagnosis of the ills of capitalism in order to find the appropriate treatment.

Special mention should be made of the intellectual movements and publications that developed during the interwar period in Great Britain, constituting truly fertile ground conducive to the proliferation of multiple ideas on this transcendental subject. Among the main currents that emerged, two clearly defined and completely opposed battlefields quickly formed: on the one hand, what we might call the “Catholic camp,” composed of the Social Credit and Distributist schools (at least until Chesterton’s death in 1936 and Belloc’s incapacitation in 1940); and, on the other hand, the “reformed capitalist camp,” composed fundamentally of Fabian Socialism, whose principal mastermind in the discipline of finance was J. M. Keynes, the absolute antithesis of Major Douglas. It is also worth mentioning separately (adopting a unique position, although tending more towards the erroneous Fabian side) the Guild-Socialist or National-Guildist movement, more or less related to the corporatist or fascist system. Douglas was an Anglican, but of the “Anglo-Catholic” branch, and, although he did not take the final step of converting to the true Religion, he himself recognized that his ideas were only compatible with the worldview of the Social Doctrine of the Church. For example, in the July 24, 1948, issue of the weekly The Social Crediter, the official organ of the “Social Credit Secretariat,” Douglas wrote (emphasis added):

We have from time to time expressed the opinion that the Roman Catholic outlook on economics and sociology is the essentially Christian outlook; and that no other Christian body of opinion is so consistent in its official attitude. It is beyond question that the anti-Christian venom of the Communists is focused on Roman Catholicism, and that Protestant bodies, when not used as tools (and even then), merely excite contempt.

Douglas also acknowledged that his financial proposals were designed to foster a socio-economic order that departed from the ideologies of Guild Socialism and Fabianism, but which were in perfect harmony with the social philosophy of Chesterton and Belloc’s Distributism. Thus, for example, in relation to the latter, Douglas, in a critique of the drift that Distributism had taken after Chesterton’s death and Belloc’s incapacity, made the following statement in the January 16, 1943, issue of “The Social Crediter” (emphasis added):

It is profoundly significant that what is now called Socialism, and pretends to be a movement for the improvement of the under-privileged, began as something closely approaching the Distributivism of Messrs. Belloc and Chesterton, of which the financial proposals embodied in various authentic Social Credit Schemes form the practical mechanism, although developed without reference to it. It was penetrated by various subversive bodies, and perverted into the exact opposite of Distributivism—Collectivism.

And more explicitly (if that were possible) he acknowledged this convergence of Social Credit with Distributism in the quarterly magazine “The Fig Tree,” in its June 1938 issue, with these words:

Mr. Chesterton and his Distributists, in common with the Catholic Church, were fundamentally right in recognising stable property tenure as essential to liberty. The terms of tenure are probably far from satisfactory, either now or in the past, but they are most certainly not being improved by being transferred to the mercy of international usurers, whose policies are rooted in spurious values.

In short, Douglas’s proposals received enormous support and publicity among the Catholic community of the Canadian Province of Quebec, with the main driving force being the publicist Louis Even and his magazine Vers Demain, which is still published today. In fact, when a controversy arose in the 1940s between the Anglo-Protestants of Western Canada and the Franco-Catholics of Quebec over the true interpretation of Douglas’s doctrine, Douglas did not hesitate for a second to side with the Quebec Catholics as those who had truly and correctly understood his thinking. Regarding the Catholic reception of Douglas’s teachings in general, and particularly in Quebec, I wrote a monograph entitled “The Catholic Critical Reception of Social Credit,” which was published in the January-February 2024 issue of Verbo magazine, where more information can be found.

TH: And is it not the case that Pius XII spoke favourably with regard to Douglas’ Social Credit ideas? Have these ideas for Social Credit Schemes been implemented on a local or regional level at all? If so, what kind of fruits were there?

FM: Regarding Pope Pius XII and his pro-Social Credit stance, the only information I know is provided by Mr. Alain Pilote, a Catholic apologist for the “Louis Even Institute,” an organization based in the Province of Quebec dedicated to disseminating the Social Credit doctrine and publishing the aforementioned publication Vers Demain as its official organ. The information in question is included in his book “Economic Democracy in the Light of the Social Doctrine of the Church.” In the second edition (2019) of the English version of the book, it appears specifically on page 187 and reads as follows:

In 1950, a group of influential businessmen asked a bishop, H. E. Albertus Martin of Nicolet, Quebec, to go to Rome and obtain from Pope Pius XII a condemnation of Social Credit. Upon returning to Quebec, the Bishop told the businessmen: “To get a condemnation of Social Credit, Rome is not the place to go to. Pius XII said to me: ‘Social Credit would create, in the world, a climate that would allow the blossoming of family and Christianity.’”

Mr. Pilote does not, however, provide any source for the origin of this information. In any case, more important seems to us to be the fact that the Bishops of the Province of Quebec, in view of the enormous spread of Douglas’s proposals in the French-Canadian Province during the second half of the 1930s, mainly thanks to the actions of publicist Louis Even, in August 1939 commissioned a commission of nine theologians to conduct a study on Social Credit, as some Catholic sociologists in the Province accused him of being inclined toward socialism. Once the report was completed, it was published for the first time in the official organ of the Bishopric of the Diocese of Quebec City on November 7, 1939. Its conclusion, as reproduced in English translation on page 187 of Pilote’s book, reads as follows:

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.

Regarding the second question, to my knowledge, only one serious attempt has been made to implement Social Credit to date. I am referring to the momentous events that occurred in the Province of Alberta, in Western Canada, following the takeover of the Provincial Government by a Social Credit Cabinet in August 1935. It should be noted that the Provincial Government was unable to implement a Social Credit policy for the simple reason… that it was not allowed to do so. The opposition that arose from the Federal Government, supported by international banking and its media, was brutal, unlike anything ever seen before. Everyone was asking the same question: what did the omnipotent international powers care about the attempt to test Social Credit in a remote province of Canada, in the most remote corner of the world? Why such fierce and ruthless opposition to what, in principle and at first glance, one might consider an insignificant policy promoted in a province lost in the world? Added to this was the subsequent attempt to “interpret” that “experiment” in a multitude of academic publications that, in reality, had no other purpose than to misrepresent the facts as much as possible.

The current President of the Social Credit Secretariat since 2001, Frances Hutchinson, a convert to the Catholic religion, was the first to attempt a summary of those surprising events in Chapters 5 and 6 of her book Understanding the Financial System: Social Credit Rediscovered, published in 2010. At the beginning of Chapter 6, this economist makes the following warning:

In August 1935 the vast yet sparsely populated Province of Alberta, in the West of Canada, was big news on a world scale. Over the subsequent decades of the twentieth century volumes of academic works were written to explain away the aberration of a popularly elected government attempting to buck the trend by introducing revolutionary legislation in defiance of the colonial constitution and the conventional party system. Although the events in Alberta gave rise to an immense literature, the full history of events is told here for the first time.

Figure 3. William Aberhart, founder of the Alberta Social Credit Party, with his cabinet in 1935

I obviously cannot go into detail here on the description of those events, but I would at least like to excerpt a fragment from a brief summary, which appeared in the January 24, 1953, issue of The Social Crediter, which might help give us a slight idea of ​​what really happened in Alberta (emphasis added):

During the latter part of [1937] and in 1938, seven Acts specifically designed to implement Social Credit were passed into Law by the Legislative Assembly of Alberta. All these were disallowed by the actions of the Federal Government, the Lieutenant Governor of the Province or the Courts. With the advent of war in 1939 the Alberta Government abandoned its offensive to implement Social Credit and, until William Aberhart’s death [= Provincial Prime Minister] in 1943, confined its efforts to the resistance of the Federal Government’s pressure to centralise power under cover of the war. Aberhart’s strategy was to use the war years to consolidate his position and to win wider and better informed support for a determined renewal of the offensive. When [Ernest] Manning succeeded to the Premiership the ground which had been gained was thrown away. The policy of the Alberta Government underwent a fundamental change. […] With the end of the war, the Alberta Government’s departure from any pretence of pursuing Social Credit became more open and shameless. Douglas was repudiated. Informed Social Crediters were purged from the ‘Party’ and from key Government positions. The Social Credit Board [= an advisory body] –the only reliable local source of information on Social Credit– was dissolved. The Alberta Government became the Canadian model of orthodox administration acclaimed by big business and the money monopoly. In 1938 the last of the Social Credit Acts was disallowed. That is fourteen years ago and since then no attempt has been made to introduce Social Credit. Social Credit has not only ‘not been tried’, it is no longer attempted in Alberta. Progressively the emphasis of legislation has been shifted to ‘welfare’ measures (collectivism, socialism). The Alberta Government has become a Welfare State Government, but it is still called a Social Credit Government.

It is impossible to address in detail, within the narrow scope of an interview, the essence of the problem in the contemporary financial-economic system and the response given by Social Credit for its proper correction. I have limited myself to only the fundamental points, constituting a first approximation so that the novice reader will then be encouraged to study and delve deeper into this extremely important issue on their own. In this regard, although it may be somewhat lengthy, I believe it appropriate to reproduce an editorial published by Arthur Brenton, editor of the weekly The New Age from July 1923 until its closure in April 1938, in its issue of March 8, 1934. It read as follows (emphasis added):

The Douglas Movement bases its educational activities on two fundamental propositions, the one being technical and the other political. The first is that the financial system automatically causes a shortage of purchasing power. The second is that something called the Money Monopoly exits, and that the people at the head of it are deliberately preventing the public from getting to understand that this is so. The Douglas advocate, insofar as he is able to make contact with the public, is called upon to explain the “how?” of the technical proposition, and the “who?” of the political one. “Give us a reason–give us a name“, cry the multitudes, oblivious of the fact that in the first case they are without a background which would make the reason intelligible to them; and that, in the second, no direct evidence can be brought against any person at all. “Show as a sign”, cried the multitudes of old, “that the words you speak are true”; and they were told that they were not going to be given a sign–that if they could not feel the power of the truth in the words spoken, no sign would communicate that feeling.

It is true that the reason is intelligibly communicable, but only to those who are patient enough to undergo the discipline of systematic research. But to the Douglas advocate the task of contacting such people and persuading them, in an atmosphere of mass-incredulity, to assume the antecedent possibility of the proposition being true (without which assumption who is going to spend time on study?) comes as near to being insuperable as any task that can be conceived. The masses, when they demand a reason, are demanding something which is really a substitute for reasoning–something which commands conviction without demanding thought. This is because they have been trained to expect instruction in that form, and because it has always been possible for them to get it in that form in respect of the policies and programmes which political parties have strewn about for them to wrangle over. Little pieces of irreconcilable truths is all they want, and it has been all that they have been allowed to have. And, mentally disarmed as they have become by this armoury of heterogeneous convictions about trivialities, they yet expect, mostly subconsciously, to understand the financial technique for economic synthesis and political reconciliation merely by inspecting an article in a newspaper or hearing a speech in a meeting-place.