In the early 1920's, an engineer and military man from England, Major C.H. Douglas, came up with a theory to explain why there seemed to be "poverty in the midst of plenty". His theory of Social Credit blamed banks for tying up capital that could be circulated amongst the general population. A high school principal and radio evangelist, William
Aberhart , was introduced to his theory through a fellow teacher, Charles Scarborough. While at first reluctant, Aberhart finally converted to Social Credit after he read an account of Douglas' theory in 1932.
Aberhart set out to spread this message among his followers. He gradually introduced Social Credit into his Sunday radio program, "Back to the Bible Hour". He also spoke to his students at the Prophetic Bible Institute in Calgary about Social Credit. Graduates from the institute helped set up numerous Social Credit study groups in Calgary. By early 1935, the movement had spread throughout Alberta.
Aberhart became president of the new Social Credit League. He wrote a number of documents explaining Social Credit to his followers, including a Yellow Pamphlet, entitled "The Douglas System of Economics". For this, he drew opposition from so-called "Douglasites" for not fully comprehending Social Credit theory. He soon resigned as president so that Douglas could take his place; however Douglas had already distanced himself from the League. Aberhart agreed to return, but only if the dissidents were removed. The majority of Social Credit League members were still behind Aberhart. Regardless of how true to Douglas' theory he was, Aberhart's charismatic voice and his appeal to people's religious values won him much support.
A provincial election was on the horizon in Alberta in 1935. The governing
UFA, preoccupied with controlling Alberta's mounting debt, had been unable to remedy the province's economic plight. Albertans, having suffered drought, ridiculously low grain prices and unemployment, were ready to embrace the radical solutions advocated by Social Credit. Among these solutions was the redistribution of capital among the population by the government.
At first, Aberhart believed that Social Credit should be implemented without a change in government. He never envisaged the movement contesting the upcoming provincial election. However, after the UFA voted down a proposal to adopt Social Credit as part of its policy platform in February 1935, Aberhart's friends began discussing the possibility of entering provincial politics. The UFA eventually invited Social Credit League members to speak in the Legislature, and they hired Douglas as an economic advisor. But changes were not forthcoming.
Finally, at a Calgary convention in April, Aberhart addressed a majority of
followers who wanted the Social Credit League to contest the upcoming provincial election. He agreed on one condition: he would select candidates for each riding from lists of nominations presented by each local
association. With this concession, the Social Credit League entered the election campaign in July.
The campaign was perhaps the most lively to occur in Alberta. People's resentment at their present state mixed with hope for a better future stimulated heated debate and the highest ever voter turnout in a provincial election. The UFA lost all their seats, while the Social Credit League won fifty-six to the Liberals' five and the Conservatives' two. Aberhart was proclaimed Premier of Alberta.