Of great practical use in the daily lives of all Catholics is the proper use of speech and their diligent avoidance of its abuse by lying. Below is an excerpt from a Catholic ethics book explaining the details of why it is wrong, and addressing the fine points.
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TRUTHFULNESS

PROBLEM

After considering man's inalienable right to life, including his duties to respect his own life and the lives of his fellow men, we have now to consider man's duty, to respect his neighbor's intellect, a duty fulfilled by observing right order in the communications between his own mind and the minds of others. One who speaks is obliged to speak the truth.

The problem arises from the fact that a man may also have an obligation to conceal the truth. He may be entrusted with a secret that he simply must not divulge. There might be little trouble on this point if people did not have the habit of asking questions, but the privilege of inquiring goes with the gift of speech. What can a man do when he is questioned point blank on a matter he must keep secret? Some truths are damaging to ourselves or others. How can a man tell the truth and yet avoid the damage? These and similar problems we must discuss, but first we must lay the groundwork. We need to explain:

(1) Lying and why it is wrong
(2) Keeping a secret and how it can be done

MEANING OF A LIE

There is some controversy on the proper definition of a lie, but we shall by-pass this controversy as far as possible, for it deals more with the name than the thing. We need a word to indicate the kind of speech forbidden by the natural law; we shall describe the characteristics of this kind of speech and to it we shall give the name "lie"; fortunately it will turn out to correspond well enough with the word "lie" in common usage.
St. Thomas adopts this procedure when he defines a lie as "speech contrary to one's mind" and we shall take this definition as ours. It may be expressed in other ways: saying what we think to be untrue, or speaking against our understanding of things, or saying that a thing is so when we believe that it is not so, or setting up an opposition between our speech and our thought. There are a number of points to be explained here:

1. A lie is "speech", and we take this term in the broadest sense as any sign used to communicate thought. Language, whether oral or written, is only one way of speaking. Looks, gestures, nods, winks, shrugs, facial expressions, tones of voice, even the circumstances in which something is said or done, all these are various ways of speech if they can convey a meaning to another mind. They are all signs capable of telling another what we think, and may be used for this purpose.
2. Whatever the sign used, it must be intended by the speaker to "convey a meaning". Involuntary looks and gestures are not speech. There is no lie in doing things which mislead others unless some statement is made, some judgment expressed, by word or act. So it is not lying to conceal our emotions under outward calm, for the calm is not intended to express our real feelings; nor is it lying to make a true but evasive answer and then spoil it by blushing, for the blush is outside our control.
3. The sign must be made "to another person", for speech is communication between one mind and another. It is impossible to lie to oneself, and when alone we may make any statements to ourselves that we please. Nor would it be lying to confide untruths to one's dog. Mere talk in other people's presence, when it is clear that the talk is not directed to them, is not speech to them.
4. The speaker must at least implicitly indicate that he is "expressing his own judgment", what he believes to be true. Fiction is not lying unless it is put forth as history, for the words are used as expressions, not of one's judgment, but of one's creative imagination. jokes and exaggerations are not lies if there is anything in the speaker's manner or in the circumstances that can give the listener a clue to the fact that the speaker is not to be taken seriously; if there is no such indication at all, not even in the circumstances, then the untruth will be a lie, though a very minor one.
5. Speech, since it consists of arbitrary or conventional signs, is to be "interpreted according to the convention". When a word has several meanings, its sense in this statement must be judged by the context; likewise, the meaning of the whole statement must be judged in the light of the total situation. Sometimes we speak literally and at other times figuratively, and the figurative meaning can be just as conventional and just as genuine as the literal. Some expressions would be lies were there no convention to the contrary, such as "not at home," "in conference," "not guilty." The first two are formulas of polite excuse and only the most naive are ignorant of the convention; the last is a legal formula by which the accused demands that the case be proved against him. Children and simple-minded persons cannot interpret delicate shades of meaning, learn all the conventions, and size up the total situation. What might not be a lie to others may be a lie to them.
6. To lie a speaker must say something he "knows to be untrue". If he mistakenly thinks that what he says is true, though as a fact it is not, he does not lie; his speech is untrue, but not untruthful. What if a person flatly says something he does not know to be true (nor does he know it to be untrue)? A categorical statement without qualification implicitly includes the statement that the speaker knows that what he says is true. Convention requires that the speaker give some indication of his doubt or qualify his statement in some way.
7. The "intention to deceive" does "not" seem strictly necessary. To deceive is, of course, the usual motive for lying. St. Augustine put it into his definition of a lie: "a statement of what is false with the will to deceive." But St. Thomas seems correct in saying that this is not absolutely essential. It may happen that one speaks falsely, knowing all the while that deception is impossible. Diplomats may tell lies to each other while fully aware that the other is in complete possession of the facts. These are genuine lies and their harm to society by the breakdown of trust among nations is evident.
8. It is possible to lie "even to one who has no right to the truth". Some distinguish between a lie and a falsehood, calling it a lie to one who has a right to the truth, but only a falsehood to one who has no right to the truth. This would be a mere matter of terminology, if these writers did not go on to permit falsehood in certain circumstances. Hugo Grotius distinguishes between lies and stratagems, condemning the former and allowing the latter, but classes among stratagems some statements that seem to be definite lies: to deceive a person with the intent of doing him a service, to use false intelligence to encourage troops, to speak an untruth when it is the only means of saving an innocent life, and his approbation of Plato's "noble lie" told for the public welfare. Grotius says many excellent things, but we cannot follow him here. If a man has a right to the truth, we can violate this by silence as well as by lying; if he has no right to the truth, we may withhold the truth by silence or evasion, but not by lying.

WRONGNESS OF LYING

Two main arguments can be used to show that lying, as we have defined it, is intrinsically wrong and therefore forbidden by the natural law:
1. "Argument from the frustration of a natural faculty": Speech is an ability given to man by nature, and hence by the Author of nature, to communicate thought. This is its essential and primary end, without which speech would not be speech.
But to use speech to lie, to communicate as thought what is not thought, to say what one knows to be untrue, is to abuse the faculty of speech by destroying its essential and primary end, to use it contrary to the evident intention of nature's Author in giving it to man, and thus is a violation of the natural law.
Therefore lying is forbidden by the natural law.
2. "Argument from the social nature of man": Human society is built on mutual trust and faith among men. It requires constant communication between men, and all these means of communication are comprised in the term "speech" as explained before.
But if lying should ever become lawful, we could never tell when a person is lying and when he is not, whether his next statement will be a lie or the truth; we could not even accept his assurance that the statement he is now making is the truth. His speech would cease to have any meaning for us, and, if this practice became widespread, there would be an end to human communication and thus to human society.
Therefore lying is forbidden by the natural law.

QUESTIONS ON THE ARGUMENTS
Answers to the following questions help to bring out the full force of the arguments:

1. We use other faculties for purposes not intended by nature without considering this an abuse, as when an acrobat walks on his hands; why should the use of speech contrary to its main purpose be thought an abuse? The answer is that faculties may have many secondary purposes for which it is quite lawful to use them, provided their fitness for their essential and primary purpose is not thereby destroyed. Thus we use speech for entertainment and there is nothing wrong with fiction recognized as such. But lying is no mere use of speech for a secondary purpose leaving the primary purpose intact, but a destruction of its primary purpose; this is an abuse and a frustration of nature's gift of speech.
2. The purpose of speech is the good of society; can it not sometimes happen that the good of society is promoted more by a lie than by the truth, for instance, to save an innocent man's life or to avert war? The trouble with this argument is that it can be extended to include murder or any other crime if done for similar reasons. It is the familiar refrain: the end justifies the means. A lie may avert a particular evil, but always brings a greater evil in its train, the loss of mutual trust among men. And who is to draw the line between the cases in which lying would be allowable and those in which it would not?
3. Could not the natural law itself indicate certain circumstances in which the truth should not be expected and lying would be lawful? These circumstances would be either publicly known or private to the speaker. If publicly known, they form part of speech and all understand what the symbols mean in these circumstances, so that there is no lie; thus we know what "not guilty" means in a court of law. But to serve the purpose of deception for which lying is advocated in the objection, these circumstances would have to be private to the speaker. It is precisely in such circumstances that the rights of others are usually involved and the knowledge of the truth is particularly necessary for society. Suppose a man were allowed to lie when in extreme difficulty; since we can never be sure whether he is in extreme difficulty or not, we can never trust him. A man who has once been caught lying in a matter of any consequence can never be fully trusted again.
4. If we may defend our lives by killing an unjust aggressor, may we not also do so by telling a lie? If we may repel force by force, may we not repel a lie by a lie, or force by a lie? There is no parallel between these cases. Physical force is not wrong in itself, but is one of man's natural powers and has its legitimate use. Unjust aggression is the use of force without any right to do . so, and in this lack of right its evil consists. The attacker unjustly resorted to force and is repelled by a legitimate use of force; to repel the attack by a wrong use of force, violating the conditions of a blameless self-defense, would also be wrong. As there is a right and wrong use of force, there is a right and wrong use of speech. A lie is a wrong use of speech and is properly repelled by the right use of speech, which is telling the truth. To repel a lie by telling another lie is simply returning evil for evil. To repel force by a lie is likewise wrong. One may summon all one's powers and abilities to aid in defense against an unjust attack, but one must use these powers legitimately, not abuse them. Lying does not cease to be an abuse of the faculty of speech merely because it occurs under circumstances of threatened violence. One might as well say that a person may save his life by committing adultery, the abuse of a different faculty. We are not allowed to accomplish a good end by the use of intrinsically evil means.

SECRETS

The natural law obliges us always to tell the "truth," but does not oblige us always to "tell" the truth. If we speak, what we say must be true; but there are times when we may refuse to speak. There are times when

(1) We must reveal the truth.
(2) We must not reveal the truth.
(3) We may either reveal the truth or not as we please.

We must reveal the truth when the other party has a right to it or when it is necessary for the fulfillment of some other urgent duty. When a lawful superior or a judge in court questions us on matters within the limits of his jurisdiction, he has a right to the truth and we must tell it. One with whom we enter into a contract has a right to know all the conditions of the contract, and we are not allowed to keep back any secret clauses from him.
We must not reveal the truth when it is a strict secret. A secret is knowledge which the possessor has the right or the duty to conceal; the natural law either permits or commands him to conceal it. For want of a better term we shall call a truth that one has a "duty" to conceal a "strict" secret. A person may be obliged to keep a secret because:

(1) The knowledge of its very nature is private.
(2) He has promised not to reveal it.

The first is called a "natural" secret, because the matter it deals with is private in nature. What belongs to a person's private life, to the closed circle of the family, to the status of business firms and corporations, to military and diplomatic affairs of governments, cannot be aired in public without injury to the parties concerned. Those who share in such matters are bound to keep them secret. Others who happen to find out about them are also bound in charity to keep them secret, but not to the jeopardy of their own rightful interests.
The second comprises secrets of "promise" and secrets of "trust". If one promises not to divulge some information he has, he is bound to keep his promise, and this is called a secret of promise. Often knowledge is confided to another under the condition, expressed or implied, that the matter is confidential and not to be revealed, and this is called a secret of trust or an entrusted secret. Every secret of trust is also a secret of promise in the sense that a promise of secrecy is involved, but not conversely, for one may have accidentally found out a truth not intended for him and then promises not to make it known; in this case it is only a secret of promise. Both secrets of promise and of trust may also be natural secrets or not, depending on the nature of the matter. Professional secrets are typical examples of secrets of trust, and are usually natural secrets also.

WHY WE MUST KEEP SECRETS

That the natural law at times "permits" the concealment of the truth should be evident from the nature of man. Besides being a member of society, a man is also an individual. He has not only social and public relations, but also private and personal affairs of his own. The natural law gives man a right to his own personal dignity and independence, to freedom from meddling and prying into his private affairs. To preserve this right the concealment of the truth is often necessary.
But more than this, the natural law at times "commands" the concealment of the truth. One of the purposes of speech and of human society itself is that man can get help from his fellow man, that he can get advice from his friends and consult experts without danger of making private affairs public, that when he organizes with other men for the pursuit of a common goal they can exchange information with one another without fear of betrayal to a hostile group. One of the main purposes of speech would be lost unless we can also control how far the knowledge we communicate will spread. For this purpose the concealment of the truth is sometimes necessary.

EXTENT OF THIS DUTY

A secret of trust is the strictest kind of secret and binds in justice, because it is based on a contract expressed or implied. To have a secret of trust the matter must not already be public knowledge, must not have been made known to a third party without obligation of concealment, and must be something whose revelation would cause harm.
How far does the duty of keeping a secret extend? This is a question of a conflict of rights, when the right of one party to have a certain matter kept secret conflicts with the difficulties the other party experiences in trying to keep it secret. In general, one is no longer bound to secrecy:

(1) If the matter has otherwise been divulged, because it no longer is an actual secret
(2) If the other party's consent can rightly be supposed, because then the other party waives his rights

The first of these conditions is self-evident, but the second needs some explanation. One may be expressly released from the obligation of secrecy and then is no longer bound. Even if this release is not expressly given, conditions may be such that it can reasonably be presumed, for no one has the right to expect a man to keep a rather ordinary secret at the expense of his life. The laws on excuses from duty, as previously explained, apply to natural secrets and secrets of promise; one is no longer held to keep the secret when doing so would cause grave hardship. However, one who has expressly promised to keep the secret even under grave hardship must keep his promise, unless it were morally wrong for him to have made such a promise. Graver reasons are required to release one from a secret of trust. But even this, strict as it is, may cease to bind if the holding of the secret would cause serious damage, not merely hardship, to the community at large, or to the holder of the secret, or to the giver of the secret, or to an innocent third party threatened by the giver of the secret.
We may mention here as an aside that the secret of the confessional is founded on supernatural, not on natural rights, and thus receives an absolute character. The priest binds himself not to divulge it for any reason whatever, even under pain of death, for the penitent's supernatural right takes precedence even over the confessor's natural right to life.

MENTAL RESERVATION

What means can one use to keep a secret when directly questioned about it? One means is to refuse to answer, to keep silence. This is the best thing to do if feasible, but it is not always effective in guarding the secret, for silence is often interpreted as consent. Evasion that distracts. the questioner without giving him the information he wants is another method, but it requires more ready wit than some people can command. Sometimes the only feasible method is mental reservation.
Mental reservation is limiting the obvious sense of words to some particular meaning intended by the speaker. It is important to distinguish between a "strict" and a "broad" mental reservation, according as the reservation is kept strictly in the mind or is given some outward manifestation.
A "strict" mental reservation gives no outward clue to the limited meaning intended by the speaker, or even to the fact that he is limiting the meaning. You ask a person, "Did you eat?" and he answers, "No," meaning "no meat," but he ate other things. You ask, "Did you take my book?" and he answers "No," meaning "not yesterday," but he took it today and has it now. In these cases the reservation is purely mental and in no wise communicated to the listener. The questions by all the conventions of language mean, "Did you eat anything?" Are you responsible for the loss of my book?" A strict mental reservation is the same as a lie.
A "broad" mental reservation gives some outward clue to the limited meaning intended by the speaker, even though it may not be noticed or taken up by the listener. The clue may be nothing else but the circumstances in which the words are said. A doctor is asked whether his patient has a certain disease and answers "I don't know," meaning, "I don't know, secrets apart and in my nonprofessional capacity." The very fact of his profession is sufficient clue to his meaning, and the questioner ought to know that he cannot speak in his professional capacity.
"Equivocation," or the use of double meaning expressions, is a form of mental reservation. If both meanings are legitimate, even though one meaning may be more obvious than the other, it comes under the heading of broad mental reservation. In this type of equivocation the speaker says what is true, though his words are also capable of another meaning which is false; if the incautious hearer takes the wrong meaning, he is deceiving himself. Thus a person may speak of his child without saying whether it is his child by birth or adoption; if the hearer unhesitatingly takes it for a child by birth, that is his fault for making a hasty judgment. If, however, the meaning intended by the speaker is so recondite that it could not possibly be found out by the hearer, the equivocation would be equivalent to a strict mental reservation and a lie.
A "broad" mental reservation is not a lie. There is no discord between one's thought and one's speech because sufficient clue is given to the restricted meaning of one's words. Speech does not consist in words alone, but also in the speaker's manner and in the circumstances. In a broad mental reservation these sufficiently indicate the speaker's thought. It is true that the listener may not notice the clue given him, but it is objectively present.
May then a person use a broad mental reservation at any time and for any reason? A broad mental reservation is not a lie and is not intrinsically wrong; in itself it is a legitimate use of speech. But an act can become wrong by its motive or its circumstances. An unrestricted use of broad mental reservation would have ruinous social effects and would break down mutual trust among men. It is not the normal mode of speech, and we cannot be constantly combing over every sentence uttered to us to find possible hidden meanings. We expect our neighbor to speak to us with candor and sincerity, and take his words in their obvious sense in the ordinary transactions of life. The broad mental reservation is to be used only as a refuge to guard a secret from prying questioners who have no right to the information they seek. With this motive and in these circumstances a broad mental reservation is morally allowable, not otherwise.

CONCLUSION

By nature man is a social being, and the gift of speech is perhaps the chief means by which man's social life is carried on. Like all other gifts, speech may be used or abused, may be directed by man to the end for which it evidently exists or may be diverted from that end and frustrated of its natural purpose. This is why truthfulness is good and lying is wrong.
But speech can be abused in two ways: by saying what one knows to be untrue, and by revealing truths one has no right to reveal. One is never allowed to do the former, since here the abuse of speech is direct and therefore intrinsically wrong. One would have no difficulty about the latter were it not for other people's prying minds and impertinent questions; against these a man has a right to protect himself, a right which often becomes a duty when other people are involved. One in such a difficult situation is allowed, sometimes obliged, to summon all his ingenuity to extricate himself from the difficulty and to guard the trust others have placed in him. This and no other reason is why a broad mental reservation is lawful. To use it too readily and apart from such situations is a breach of sincerity and a destruction of mutual trust among men.

SUMMARY

A lie is "speech contrary to one's mind". This definition indicates the kind of speech forbidden by the natural law. Speech is any sign used to communicate thought, including language, gestures, tones of voice, even circumstances. To lie a speaker must intend to express to another person as his true judgment a judgment that he knows is untrue. Deception may be foreseen as unsuccessful and the hearer may have no right to the truth; even so, the statement can be a lie. But fiction, jokes, figures of speech, and expressions of politeness are not lies, since speech must be interpreted according to convention.
Lying is "forbidden by the natural law", because it is an abuse of a natural faculty, destroying its essential and primary end; and because it is contrary to man's social nature, which requires mutual trust among men.
Lying is not mere use of speech for a secondary end, leaving the primary end intact. It may promote a particular good, but by evil means and at the expense of a greater good, mutual trust. There is no way of restricting lying to make it allowable in extreme cases only. There is no parallel between killing in self-defense and lying in self-defense, for one is a right use of force, the other a wrong use of speech.
A "secret" is knowledge the possessor has a right or a duty to conceal. A "natural" secret deals with matter private in nature, a secret of "promise" with matter one has promised to conceal after finding it out, a secret of "trust" with matter confided after exacting a promise of secrecy.
The natural law at times "permits", at times "commands" concealment of the truth. Man has a right to personal dignity and freedom from meddlers. He must be able to seek advice and consult experts without making private affairs public or being betrayed to his enemies.
We are excused from secrecy if the matter has otherwise been divulged, or with the other party's expressed or presumed consent. Even a secret of trust ceases to bind if serious damage would result from keeping it.
"Mental reservation" is limiting the obvious sense of words to some particular meaning intended by the speaker. A "strict" mental reservation gives no outward clue and is a lie. A "broad" mental reservation gives an outward clue and is not a lie, because the true meaning is expressed though the hearer fail to take it. The speaker allows the hearer to deceive himself. Broad mental reservation may not be used indiscriminately, but for a proportionately good reason, the guarding of a secret.

[From "RIGHT AND REASON - Ethics in Theory and Practice", Austin Fagothey, S.J. (1952)] pp. 310-321]