The Social Credit League was created by a Calgary high school principal, William Aberhart, who was also a prominent radio evangelist. He went on to be a charismatic political leader in 1932 after discovering the unorthodox economic theory of a British engineer named C.H. Douglas. This theory argued that all citizens have a claim to part of the wealth that we have jointly produced yet which is taken from us by financiers who control the money system. Douglas saw his theory as an explanation of "under-consumption" in advanced industrial societies. If banks were put under social control, this under-consumption could be remedied by distributing a "cultural dividend" to all citizens, also known as a social credit, thus giving the ordinary citizen greater usable income.

Although Aberhart understood few details of Douglas's theory, he liked social credit as an alternative to socialism, since it did not advocate state ownership of industry. Following his conversion to social credit, he devoted his radio program to converting listeners. By 1934 he was pressuring the provincial government to accept his modified social credit plan. When the UFA government rejected his plan as unconstitutional, Aberhart converted his Social Credit study groups into the Social Credit League.

The League dominated the 1935 Alberta election campaign with dramatic public meetings, promised $25/month per person, and attacked the UFA and Liberal parties as the political instruments of bankers. Aberhart gave people what they wanted in those difficult depression years: hope at a time of profound insecurity, and a way to express anger towards "poverty in the midst of plenty."

Aberhart's party swept the UFA party from provincial office in the summer of 1935, and took all Alberta seats in the fall 1935 federal election. Social Credit ran Alberta for 36 years. In 1943, Premier Aberhart died, and his right-hand man Ernest C. Manning took over the party and government. Manning remained Premier through 1968, leading one of Canada's most conservative provincial governments.

But by the early 1970s, urban Alberta voters viewed the Social Credit government as old fashioned on social and cultural matters. The Social Credit party was decisively rejected in the 1971 Alberta election, in favour of Peter Lougheed's Conservatives. By 1978, Social Credit had ceased to be a serious contender in Alberta provincial elections.

With support from small business people and big business elites, British Columbia's Social Credit party, under the leadership of W.A.C. Bennett, ran that province from 1952 through 1972. When British Columbia's New Democratic Party finally won in 1972, it was because both the Liberal and Conservative parties had decided to run their own candidates, thus splitting the right-wing vote three ways. But once the old Liberal-Conservative-Social Credit alliance re-formed under WAC Bennett's son, Bill Bennett, Social Credit returned to power for another 15 years.

Nationally, Social Credit never moved effectively beyond its Alberta base as a distinctive third party and had no impact on federal government policy.