Section 2 | The Social Credit Generation: 1935 to 1965, Part 3

Series: Political Myth and Consequence in Alberta


Myth is powerful. Leading up to Alberta’s 2019 provincial election, the story Albertans have told about themselves and been told by others since becoming a province is firmly connected to events transpiring today.

 The following interpretation of Alberta’s dominant political and cultural history highlights and traces the contextual, defining features and nuances in the evolution of Alberta’s identity through reconstruction, as Albertans seek to rise from the ashes once more at the ballot box this spring.

 This series will be featured in the following sections:

1.       Foundations of Alberta’s Conservatism: Confederation to 1935

2.       The Social Credit Generation: 1935 to 1965

3.       Progressive Conservatism: Lougheed and the Oil Boom

4.       Return of Ideology: The Wildrose Alliance Party

5.       The Re-Merge: Jim Prentice to the United Conservative Party

The Social Credit Generation: 1935 to 1965

Part 3

Economic Policy and Government Administration


Social Credit was defined by its faulty economic policies, failed legislation, socialist and fundamentalist mentality, and authoritarian state control. It was well-known for its intolerance and discrimination of several groups in Alberta, such as the government’s extensive eugenics program and treatment of the mentally ill, persecution of minorities, such as the Japanese and Hutterites, in addition to fierce anti-Semitism.


Aberhart had no education or basis for understanding of economics yet was easily convinced of social credit economic theory the first time he was introduced to it, taking the parts he thought made sense to him and forming his own extreme version of the economic policy that Albertans were to live under. Ernest Manning, equally uneducated, never questioned Aberhart from his religious teachings to government policy and administration.


Both the rhetoric and promises of Aberhart and Manning were radical and contradictory. Manning once told a radio audience that the taxation system could be used to cream ‘unearned incomes’ from wealthy Albertans – every penny over $2000 that anyone earned would be taken by the state and ploughed into social dividends. Considered an arch-conservative a decade later, during the 1935 election campaign Manning hypocritically said, “[The] capitalist lieutenants [of other political parties] will come around offering temporary relief and big promises of a brighter future. Don’t let discouragement place you again in the tentacles of the money baron.”


Social Credit theory

Aberhart’s Social Credit government was founded on a complicated, incoherent and unexplainable economic policy idea developed by Major Douglas in Britain and was spun into the equally incoherent version Aberhart campaigned on to become the first Social Credit premier of Alberta. Major Douglas had proposed that there were plenty of goods to go around, but these could not be distributed properly due to a faulty monetary system. His explanation of how to practically address this problem was unclear. Reputable economists loudly objected that Douglas’ theories were based on fallacies. Business representatives claimed Aberhart was a charlatan and a dictator, heartlessly manipulating the downtrodden, and Manning never renounced his faith in Douglas’ monetary theory of social credit.


Douglas was exceptionally conspiratorial, and this way of thinking influenced many within the Social Credit party and government, particularly with anti-Semitic views and belief that Jews were responsible for all monetary troubles. Social credit, therefore, would be issued to end the Jewish-induced discrepancy between the value of goods and purchasing power for consumers. Douglas once explained to a Social Credit MP, “Keep steadily in mind that this is a cultural war to the death, that the economic war is only incidental.”  


Manning stated in 1943, “Ever since the first gun was fired in the war, a carefully laid conspiracy has been at work using the conditions created by the war in an effort to rob nations of their national sovereignty, to eliminate true democracy, to undermine the British Empire … and to set up a world dictatorship under a supreme international authority which would be able to dominate the economic life of every nation by controlling its money system and its armed forces.”


By the early 1940s, Major Douglas had included the Nazis to his list of conspirators, with claims that the Second World War was a sham, a plot by Jews, Nazis, Communists, Socialists, and financiers to enslave the world. According to author and professor, Alvin Finkel, “It was a mad enough theory but it found a welcome reception among his Alberta followers, including Aberhart and his successor, Ernest Manning. … Both accepted the view that there was an international conspiracy to fool people into not adopting the social credit solution to their woes.”


Funny Money

Social Credit’s Yellow Pamphlet

Social Credit’s Yellow Pamphlet

During the 1935 election, Social Credit supporters were given scripts and distributed what were known as ‘Yellow Pamphlets’, the first Social Credit document in Alberta called ‘The Douglas System of Economics,’ written by Aberhart and his Communist friend Henry B. “Hilly” Hill. Left-wing proposals in the Yellow Pamphlet included requiring citizens with money in financial institutions to turn it over to the government in exchange for government bonds, and advocated for state control over most aspects of life.


Aberhart promised each Albertan would be given ‘Prosperity Certificates’, dividends of $25 worth of credit each month for basic essentials such as food, clothing, and shelter. However, as his favorite author, utopian Edward Bellamy, proposed, Aberhart suggested that anyone who refused to participate in the program would have their civil rights withdrawn and be treated as ‘Indians’, going so far as introducing concentration camps and reservations for those who did not comply.


Manning, with no prior business experience, was put in charge of trade and industry and given discretion over who received business licenses. Complaints were raised that licenses were being denied to Asian minorities and those who opposed Social Credit. His appointment drew media criticism with comments such as, “The all-wise Superman who is going to be a dictator of Alberta business with supreme power over everybody, employee, and employer, is – the good Lord save us all – a conceited, half-baked youngster whose sole business experience has been gained as assistant preacher of the Aberhart Bible College.”


Once in government, Aberhart’s proposed Prosperity Certificates, a special Albertan currency known to the public as ‘funny money’ would come with strings attached. In anticipation of the promised prosperity cheques, all Albertans were required to sign ‘registration covenants’ stating their loyalty to the Aberhart government, detailing their assets and liabilities on the backs, and acceptance that both the monthly dividends and their salaries would be paid in this Alberta credit. As well, they had to convert their Canadian currency into Alberta credit, never to ask for the credit to be turned back into hard currency. Anyone who planned to leave Alberta for more than a month at a time needed written permission from the government prior to doing so. People rushed back to Alberta from out of province trips to sign up out of fear for losing their civil rights and property. The Prosperity Certificates were a reckless promise and never actually transpired.

The Money Barons

In 1936, supposed Social Credit ‘expert’ John Hargrave from England made a visit to Aberhart to suggest an eleven-point plan for social credit implementation in Alberta. Hargrave had once been a leader in the Boy Scouts and potential successor to Baden Powell. He had organized a “woodsy” army of unemployed youth to advocate Social Credit theory, called the Kindred of Kibbo Kift, which the Hitler Youth were modeled after. Hargrave later renamed the organization the Green Shirts after their green military-style uniform.


Manning claimed to believe in private enterprise and violently rejected “the slippery, slimy slopes of socialism,” yet supported a state-regulated society, recommending Ottawa set up a national financial commission with the same powers that socialists called for and “would have taken away from the chartered banks the power to make economic decisions. The first step the socialist government in Britain took in 1945 was to nationalize the Bank of England, using the same arguments with the same intentions.” He also opposed compulsory, contributory social insurance programs.


Manning’s argument for opposition to centralization stems from his belief that humans are essentially alone in their struggle for salvation, therefore “a collectivist state belittled this struggle and made individuals more vulnerable to behaviour that might lead to eternal damnation.” Ironically, for all of Aberhart’s and Manning’s condemnation of Ottawa and finance, Aberhart accepted a $2.25 million loan from Ottawa, having found the provincial treasury with a debt of $150 million, in addition to bond maturities, interest payments, relief payments, and maturing bank loans totalling $14,915,000. Numerous suggestions from Conservative Prime Minister R.B. Bennett that Alberta accept the appointment of a federal loan council to oversee its debt were turned down.

Unconstitutional Legislation

Both Aberhart and Manning attempted to implement several pieces of legislation doomed to be deemed unconstitutional, as being ultra vires – beyond provincial constitutional jurisdiction, by the federal government. This gave Aberhart and Manning the opportunity to disown responsibility for their poorly crafted legislation by pushing the missive to Albertans that Alberta was intentionally being singled out and punished by Ottawa. The legacy of Social Credit ineptitude continues to this day in the form of an assumed inherent antagonism in some individual Albertans toward Ottawa.


On March 4, 1938, the Supreme Court of Canada struck down all of the statutes passed in the name of social credit, including bills that would take control over all banks within the province and revoking civil rights of bank employees who did not comply, out of fear of a Jewish conspiracy; prevent any Alberta law from being challenged in court; the Bank Taxation Bill to impose taxes on bank capital and reserves; and the Accurate News and Information Bill to restrict and impose fines on the media. Manning had always defended all of the legislation put forth as reasonable and had particularly strong support for the Accurate News and Information Act, which would force newspapers to be “fairer” in their coverage of Social Credit by forcing them to print government-supplied articles equal in length to those attacking the government. Major Douglas had suggested cancelling Alberta’s contract with the RCMP to set up a Social Credit provincial police force. Once applications had begun to be received, critics warned of the “Gestapo” potential of this decision, and as a result the provincial police force never came to fruition. Social Credit also repealed their Recall Act in 1937 to save Aberhart’s seat in the Legislature, after Aberhart’s Okotoks-High River constituents secured the required signatures to recall him. Former Conservative MLA Ernest Watkins listed twelve disallowed statutes altogether: four declared invalid by the courts, five disallowed by the federal cabinet, and three withheld by the provincial lieutenant-governor before being rules ultra vires by the courts.


Aberhart believed it was his responsibility to arbitrate and protect public morality. In 1941, the government passed a law appointing a three-person film censorship board in response to supposed widespread complaints about American movies having dominant communist influence, to protect Albertans from seeing these kinds of films and only view ones “not offensive to a democratic and Christian way of life.” In 1947, Manning’s government announced that all films shown in public, including educational movies, industrial safety films, and children’s cartoons, would be subject to censorship board approval.


A New Enemy

Following Aberhart’s death in 1943, Ernest Manning needed to define his premiership by constructing a new and positive image of himself and Social Credit. During the Great Depression and Second World War, Ernest Manning toed the Douglasite line within the Social Credit Party, warning a Jewish conspiracy was guilty of the world’s economic and financial troubles. The advent of the Cold War gave Manning the opportunity to reinvent Social Credit by shifting Albertan’s focus to a new common enemy – heretic communists and socialists.


The Second World War undermined Social Credit strategies for mobilizing the public against The Money Barons. The post-war era also modified Social Credit by several major events: the failure of the predicted massive postwar depression to develop, the public’s growing desire for material progress and support for social insurance programs, the Leduc oil discoveries and increased American influence which followed, and most importantly by Alberta’s emerging prosperity, which ended the economic conditions Aberhart had once believed interfered with man’s quest for salvation and thereby removed the immediate need for social credit monetary solutions.


The initial need for a new image therefore became an election tactic to fight off the challenge of the Co-operative Commonwealth Federation (Alberta’s New Democratic Party in present day) but turned into an enduring element in Alberta political discourse due to Manning being unable to successfully implement key legislation, and, realizing that Social Credit’s socialist policies had failed, needed to be reinvented as a bastion of free enterprise. Since social credit economic policy would never be implemented, Manning focused his sights on social policy instead, and claimed socialists and communists had infiltrated Canadian society with the intent to destroy democracy, and that Social Credit stood for “the application of Christian principles in all phases of public life.” He fixated on the Social Credit aspect that individuals are the most important entity in society – in order to realize their personal relationship with God, as per Aberhart’s brand of Christianity – and moved forward with the notion of private ownership. At Ernest Manning’s funeral, his son Preston admitted that his father “integrated his faith and his work rather than keeping them in separate compartments.” Throughout his years as premier, Manning had continued to denounce Albertan’s interest in socialist practices, yet his actions continued to demonstrate the socialist, authoritarian will of his government.

Social Control


In another attempt to control the public, Manning endeavoured to disallow men and women from drinking together in public in Alberta’s cities, saying that if they wanted to drink together, they could do so in the privacy of their own homes. This move incurred wrath from the Calgary Herald with comments such as, “[the people living in Alberta’s largest cities were considered] so degenerate that they cannot be granted the same privileges as the people who live in every other part of the province.”


Manning attempted again, in 1957, to fulfill the original Social Credit campaign pledge to give all Albertans a form of the earlier unfulfilled promise of Prosperity Certificates. This time, his administration had set aside $11 million, one-third of its anticipated energy royalties for the year, for “citizen participation dividends” to Alberta’s 550,000 adults.


Lasting Myth

Aberhart had tried and failed to turn Social Credit into a viable federal political movement in the 1930’s and 1940’s, and Manning in turn tried and failed. It had been Manning’s goal to polarize federal politics in order to force voters to choose between what he decided would be a social conservative government and an atheistic-socialist one. Manning once predicted the ultimate division of the Canadian nation into two camps: on the one side would be the advocates of state dictatorship who believed in a “purely materialistic concept of life” and one on the other side of those who believed in a “properly functioning Christian democracy based on the highest ideals of our British traditions.” He had remarked that he wanted to have led this national Social Credit-social conservative movement, had there been support for one.


For those who believe that Social Credit had provided good government – an intentional phrase and myth created by Manning – and that Aberhart and Manning had been two of Alberta’s finest leaders, there are several specific criticisms in addition to those described here. Ernest Manning, over a handshake with California tycoon Howard Pew – a fellow evangelical who had once funded Billy Graham – turned over drilling rights to remote Alberta acreages. Former Alberta Public Affairs Bureau employee under Lougheed, David G. Wood, has stated that Social Credit failed to recover Albertan’s “fair ownership share” of oil and gas royalties due to oil and gas policies that were not based on the needs of the province but on industry desires. Ted Byfield, founder of the Alberta Report magazine, criticized Manning’s failure to “confront and defeat Ottawa arguably denies [him] the title of Alberta’s greatest premier,” when the federal government set rail transportation rates for livestock and processed grain products.


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Alberta Premiers of the 20th Century; Bradford Rennie; 2004

Like Father, Like Son; Lloyd Mackey; 1997

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Moral Clarity; Susan Neiman; 2009

Storming Babylon; Don Braid and Sydney Sharpe; 1991

The Armageddon Factor; Marci McDonald; 2011

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