The Business Plot:
In 1933, group of wealthy businessmen that allegedly
included the heads of Chase Bank, GM, Goodyear, Standard Oil, the DuPont family
and Senator Prescott Bush tried to recruit Marine Corps Major General Smedley
Butler to lead a military coup against President FDR and install a fascist
dictatorship in the United States. And yes, we’re talking about the same
Prescott Bush who fathered one US President and grandfathered another one.
Smedley Butler was both a patriot and a vocal FDR supporter.
Apparently none of these criminal masterminds noticed that
their prospective point man had actively stumped for FDR in 1932. Smedley
spilled the beans to a congressional committee in 1934. Everyone he accused of
being a conspirator vehemently denied it, and none of them were brought up on
criminal charges. Still, the House McCormack-Dickstein Committee did at least
acknowledge the existence of the conspiracy, which ended up never getting past
the initial planning stages.
Though many of the people who had allegedly backed the
Business Plot also maintained financial ties with Nazi Germany up through
America’s entry into World War II. In 1934, the Business Plot was publicly
revealed by retired Marine Corps Major General Smedley Butler testifying to the
McCormack-Dickstein Congressional Committee. In his testimony, Butler claimed
that a group of men had approached him as part of a plot to overthrow Roosevelt
in a military coup. One of the alleged plotters, Gerald MacGuire, vehemently
denied any such plot. In their final report, the Congressional committee
supported Butler’s allegations of the existence of the plot, but no
prosecutions or further investigations followed, and the matter was mostly
forgotten.
On July 17, 1932, thousands of World War I veterans
converged on Washington, D.C., set up tent camps, and demanded immediate
payment of bonuses due them according to the Adjusted Service Certificate Law
of 1924. This “Bonus Army” was led by Walter W. Waters, a former Army sergeant.
The Army was encouraged by an appearance from retired Marine
Corps Major General Smedley Butler, who had considerable influence over the
veterans, being one of the most popular military figures of the time. A few
days after Butler’s arrival, President Herbert Hoover ordered the marchers
removed, and their camps were destroyed by US Army cavalry troops under the
command of General Douglas MacArthur. Butler, although a self-described
Republican, responded by supporting Roosevelt in that year’s election.
In a 1995 History Today article Clayton Cramer argued that
the devastation of the Great Depression had caused many Americans to question
the foundations of liberal democracy. “Many traditionalists, here and in
Europe, toyed with the ideas of Fascism and National Socialism; many liberals
dallied with Socialism and Communism.” Cramer argues that this explains why
some American business leaders viewed fascism as a viable system to both
preserve their interests and end the economic woes of the Depression.
------------------------------------
The Business Plot ( 1 )
was an alleged political conspiracy in 1933.
Retired Marine Corps Major General Smedley Butler claimed
that wealthy businessmen were plotting to create a fascist veterans'
organization and use it in a coup d'état to overthrow United
States President Franklin D. Roosevelt, with Butler as leader of that
organization.
In 1934, Butler testified to the Special Committee on
Un-American Activities Congressional committee (the
"McCormack-Dickstein Committee") on these claims. In the opinion of
the committee, these allegations were credible. No one was prosecuted.
While historians have questioned whether or not a coup was
actually close to execution, most agree that some sort of "wild
scheme" was contemplated and discussed.
Contemporaneous media dismissed the plot, with a New York Times editorial
characterizing it as a "gigantic hoax".
When the committee's final report was released, the Times said
the committee "purported to report that a two-month investigation had
convinced it that General Butler's story of a fascist march on Washington was
alarmingly true" and "It also alleged that definite proof had been
found that the much publicized Fascist march on Washington, which was to have
been led by Major. Gen. Smedley D. Butler, retired, according to testimony at a
hearing, was actually contemplated."
Background
Butler and the veterans
Main article: Bonus Army
On July 17, 1932, thousands of World War
I veterans converged on Washington, D.C., set up tent camps, and
demanded immediate payment of bonuses due them according to the World War
Adjusted Compensation Act of 1924 (the original act made the bonuses
initially due no earlier than 1925 and no later than 1945).
Walter W. Waters, a former Army sergeant led this
"Bonus Army". The Bonus Army was encouraged by an appearance from
retired Marine Corps Major General Smedley Butler; as a popular
military figure of the time, Butler had some influence over the veterans. A few
days after Butler's arrival, President Herbert Hoover ordered the
marchers removed, and US Army cavalry troops under the command of General
Douglas MacArthur destroyed their camps.
Butler, although a self-described Republican, responded by
supporting Franklin D. Roosevelt in the 1932 US presidential
election.
By 1933 Butler started denouncing capitalism and
bankers, saying as a Marine general he was "a racketeer for
capitalism."
Reaction to Roosevelt
The election of Roosevelt was upsetting for many
conservative businessmen of the time, his "campaign promise that the
government would provide jobs for all the unemployed had the perverse effect of
creating a new wave of unemployment by businessmen frightened by fears of
socialism and reckless government spending."
The Hoover administration had steadfastly defended
the gold standard even when Britain abandoned it in September 1931.
With a devalued currency, British manufactured goods became cheaper than
American counterparts, resulting in more economic hardship for American
industry. Roosevelt's campaign had promised to re-evaluate America's commitment
to the gold standard and, through a series of actions from March 6 to April 18,
1933, abandoned it.
Conservative businessmen and other supporters of the gold
standard were dismayed. Hoover, who had championed the standard, wrote that its
abandonment was the first step toward "communism, fascism, socialism,
statism, planned economy." He argued that the standard was needed to stop
governments from "confiscating the savings of the people by manipulation
of inflation and deflation....We have gold because we cannot trust
Governments."
Roosevelt also dissolved any "gold clause" within
contracts, public or private, that guaranteed payment in gold. This clause was
part of every government bond and most corporate bonds. "It was a standard
feature of mortgage agreements and other contracts. For creditors, it offered
protection against inflation or congressional tinkering with the
currency." For debtors, though, it was dangerous, as "The gold
dollar, before Roosevelt reduced it, was $1.69. This meant that a bank, for
example, could suddenly require a farmer to make mortgage payments in gold
coin-transferring a $10,000 mortgage into one worth $16,900, raising the
farmer's debt burden by nearly 70 percent."
Likewise, the U.S. treasury could be required to pay the
bearer of a $10,000 Liberty Bond $16,900 in gold coins.(The constitutionality
of this Roosevelt policy was later challenged before the Supreme Court in
the Gold Clause Cases.)
With the end of the gold standard, "conservative
financiers were horrified. They viewed a currency not solidly backed by gold as
inflationary, undermining both private and business fortunes and leading to
national bankruptcy. Roosevelt was damned as a socialist or Communist out to
destroy private enterprise by sapping the gold backing of wealth in order to
subsidize the poor."
Ending the gold standard allowed the country to escape the
cycle of deflation, but the shift was not painless. "Since higher
prices were not yet accompanied by higher wages, inflation meant lower [real]
incomes for those fortunate enough to be employed. Until the effects of
increased investment spending ramified through the economy, there was little
reason for investment incomes and hence consumption to rise dramatically.
Industrial production remained volatile."
To encourage foreign investment, Roosevelt had
the Reconstruction Finance Corporation purchase gold with dollars,
thereby driving up the price of gold and reducing the value of the dollar.
Still, this did not immediately affect the balance of trade. Those considering
buying American goods anticipated that there would be a further depreciation
that would allow their own currency further purchasing power and therefore
greater profits, so they held back their orders. At the same time, Americans
fearing additional depreciation purchased more foreign commodities in fear they
would lose purchasing power in the future. "The volume of U.S. imports
rose by 10 percent between 1932 and 1933. In contrast, exports stagnated. The
consequence was a deteriorating balance of trade."
Another Roosevelt policy also had an unanticipated effect on
the recovery: the National Industrial Recovery Act of June 16, 1933,
provided established minimum wages of 40 cents an hour and revised upward the
entire wage structure of many of the industries it covered; this placed upward
pressure on labor costs.
The sustained recovery of industrial production "had to
await stabilization of the dollar in 1934, along with the concomitant growth of
commodity exports and capital imports."
McCormack–Dickstein Committee
The Committee began examining evidence on November 20, 1934.
On November 24, the committee released a statement detailing the testimony it
had heard about the plot and its preliminary findings. On February 15, 1935,
the committee submitted its final report to the House of Representatives.
During the McCormack–Dickstein Committee hearings, Butler
testified that Gerald C. MacGuire attempted to recruit him to lead a coup,
promising him an army of 500,000 men for a march on Washington, D.C., and
financial backing.
Butler testified that the pretext for the coup would be that
the president's health was failing.
Despite Butler's support for Roosevelt in the election and
his reputation as a strong critic of capitalism,
Butler said the plotters felt his good reputation and
popularity were vital in attracting support amongst the general public and saw
him as easier to manipulate than others.
Though Butler had never spoken to them, Butler implicated
several prominent businessmen, including chemical industrialist Irénée du
Pont, and veteran leaders as backers of the plot. The committee chose not to
publish these allegations because they werehearsay.
Given a successful coup, Butler said that the plan was for
him to have held near-absolute power in the newly created position of
"Secretary of General Affairs", while Roosevelt would have assumed
a figurehead role.
Those implicated in the plot by Butler all denied any
involvement. MacGuire was the only figure identified by Butler who testified
before the committee. Others Butler accused were not called to appear to
testify because the "committee has had no evidence before it that would in
the slightest degree warrant calling before it such men... The committee will
not take cognizance of names brought into testimony which constitute mere
hearsay."
In response, Butler said that the committee had deliberately
edited out of its published findings the leading business people whom he had
named in connection with the plot.
He said on February 17, 1935, on Radio WCAU, "Like
most committees it has slaughtered the little and allowed the big to escape.
The big shots weren't even called to testify. They were all mentioned in the
testimony. Why was all mention of these names suppressed from the
testimony?"
On the final day of the committee, January 29,
1935, John L. Spivak published the first of two articles in the
communist magazineNew Masses, revealing portions of the Congressional committee
testimony that had been redacted as hearsay. Spivak argued that the plot was
part of a "conspiracy of Jewish financiers working with fascist
groups", referring specifically to Felix Warburg, the
McCormack–Dickstein Committee, and certain members of the American Jewish
Committee in collusion with J.P. Morgan. Hans Schmidt concludes that
while Spivak made a cogent argument for taking the suppressed testimony
seriously, he embellished his article with his "overblown" claims
regarding Jewish financiers, which Schmidt dismisses as guilt by
association not supported by the evidence of the Butler-MacGuire
conversations themselves.
Butler's testimony in detail
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1933
On July 1, 1933, Butler met with MacGuire and Doyle for the
first time. Gerald C. MacGuire was a $100-a-week bond salesman for Murphy &
Company and a member of the Connecticut American Legion. Bill Doyle was
commander of the Massachusetts American Legion. Butler stated that he was asked
to run for National Commander of the American Legion.
On July 3 or 4, Butler held a second meeting with MacGuire
and Doyle. He stated that they offered to get hundreds of supporters at
theAmerican Legion convention to ask for a speech. MacGuire left a
typewritten speech with Butler that they proposed he read at the convention.
"It urged the American Legion convention to adopt a resolution calling for
the United States to return to the gold standard, so that when veterans were
paid the bonus promised to them, the money they received would not be worthless
paper."The inclusion of this demand further increased Butler's suspicion.
Around August 1, MacGuire visited Butler alone. Butler
stated that MacGuire told him Col. Murphy underwrote the formation of the
American Legion in New York and Butler told MacGuire that the American
Legion was "nothing but a strike breaking outfit."
Butler never saw Doyle again
.
On September 24, MacGuire visited Butler's hotel room
in Newark. In late-September Butler met with Robert Sterling Clark.
Clark was an art collector and an heir to the Singer
Corporation fortune. MacGuire had known Robert S. Clark when he was
a second lieutenant in China during the Boxer Rebellion. Clark
had been nicknamed "the millionaire lieutenant".
1934
During the first half of 1934, MacGuire traveled to Europe
and mailed postcards to Butler.On March 6, MacGuire wrote Clark and Clark's
attorney a letter describing the Croix-de-Feu.
On August 22, Butler met MacGuire at a hotel, the last time
Butler met MacGuire. According to Butler's account, it was on this occasion
that MacGuire asked Butler to run a new veterans' organization and lead a coup
attempt against the President.
On September 13, Paul Comly French, a reporter who
had once been Butler's personal secretary, met MacGuire in his office. In late
September, Butler told Van Zandt that co-conspirators would be meeting him at
an upcoming Veterans of Foreign Wars convention.
On November 20, the Committee began examining
evidence. Journalist Paul Comly French broke the story in the Philadelphia
Recordand New York Post on November 21. On November 22, The New
York Times wrote its first article on the story and described it as a
"gigantic hoax".
Other testimony
Some parts of Gen. Butler's story were supported by the
statements of others. Paul Comly French, a reporter for the Philadelphia
Record and the New York Evening Post, testified to the same effect.
Committee reports
The Congressional committee preliminary report said:
This committee has had no evidence before it that would in
the slightest degree warrant calling before it such men as John W. Davis,
Gen. Hugh Johnson, General Harbord, Thomas W. Lamont,
Admiral Sims, or Hanford MacNider.The committee will not take cognizance
of names brought into the testimony which constitute mere hearsay.This
committee is not concerned with premature newspaper accounts especially when
given and published prior to the taking of the testimony.As the result of
information which has been in possession of this committee for some time, it
was decided to hear the story of Maj. Gen. Smedley D. Butler and such others as
might have knowledge germane to the issue. ...
The Congressional committee final report said:
In the last few weeks of the committee's official life it
received evidence showing that certain persons had made an attempt to establish
a fascist organization in this country. No evidence was presented and this
committee had none to show a connection between this effort and any fascist activity
of any European country. There is no question that these attempts were
discussed, were planned, and might have been placed in execution when and if
the financial backers deemed it expedient.This committee received evidence from
Maj. Gen Smedley D. Butler (retired), twice decorated by the Congress of the
United States. He testified before the committee as to conversations with one
Gerald C. MacGuire in which the latter is alleged to have suggested the
formation of a fascist army under the leadership of General Butler.MacGuire
denied these allegations under oath, but your committee was able to verify all
the pertinent statements made by General Butler, with the exception of the
direct statement suggesting the creation of the organization. This, however,
was corroborated in the correspondence of MacGuire with his principal, Robert
Sterling Clark, of New York City, while MacGuire was abroad studying the
various forms of veterans organizations of Fascist character.
Contemporary reaction
A New York Times editorial dismissed Butler's
story as "a gigantic hoax" and a "bald and unconvincing
narrative."Thomas W. Lamont of J.P. Morgan called it "perfect
moonshine". General Douglas MacArthur, alleged to be the back-up
leader of the putsch if Butler declined, referred to it as "the best laugh
story of the year." Time magazine and other publications also
scoffed at the allegations.
When the committee released its report, editorials remained
skeptical.
Time wrote: "Also last week the House Committee on
Un-American Activities purported to report that a two-month investigation had
convinced it that General Butler's story of a Fascist march on Washington was
alarmingly true." The New York Times reported that the committee
"alleged that definite proof had been found that the much publicized
Fascist march on Washington, which was to have been led by Major. Gen. Smedley
D. Butler, retired, according to testimony at a hearing, was actually
contemplated."
Separately, Veterans of Foreign Wars commander James E.
Van Zandt stated to the press, "Less than two months" after
General Butler warned him, "he had been approached by 'agents of Wall
Street' to lead a Fascist dictatorship in the United States under the guise of
a 'Veterans Organization'."
Later reactions
Pulitzer Prize-winning historian Arthur M. Schlesinger,
Jr. said, "Most people agreed with Mayor La Guardia of New
York in dismissing it as a 'cocktail putsch'." In Schlesinger's summation
of the affair, "No doubt, MacGuire did have some wild scheme in mind, though
the gap between contemplation and execution was considerable, and it can hardly
be supposed that the Republic was in much danger."
Robert F. Burk wrote: "At their core, the accusations
probably consisted of a mixture of actual attempts at influence peddling by a
small core of financiers with ties to veterans organizations and the
self-serving accusations of Butler against the enemies of his pacifist and
populist causes."
Hans Schmidt wrote: "Even if Butler was telling the
truth, as there seems little reason to doubt, there remains the unfathomable
problem of MacGuire's motives and veracity. He may have been working both ends
against the middle, as Butler at one point suspected. In any case, MacGuire
emerged from the HUAC hearings as an inconsequential trickster whose base
dealings could not possibly be taken alone as verifying such a momentous
undertaking. If he was acting as an intermediary in a genuine probe, or as
agent provocateur sent to fool Butler, his employers were at least clever
enough to keep their distance and see to it that he self-destructed on the
witness stand."
Many years later, McCormick continued to vouch for Butler:
"General Smedley Butler was one of the outstanding Americans in our
history. I cannot emphasize too strongly the very important part he played in
exposing the Fascist plot in the early 1930s backed by and planned by persons
possessing tremendous wealth."
In a book about art collector Robert Sterling Clark, art
historian and non-profit executive Nicholas Fox Weber wrote: "Butler's
testimony to the House Committee, which was played down in the newspaper and
magazine accounts at the time, and made to seem largely specious by influential
commentators, seems credible about the attempt to overthrow FDR, and Robert
Sterling Clark's role in it. Butler's Claims, moreover, were supported by the
committee's subsequent investigations and conclusions."
James E. Sargent, reviewing The Plot to Seize the White
House by Jules Archer, wrote: "Thus, Butler (and Archer) assumed that
the existence of a financially backed plot meant that fascism was imminent, and
that the planners represented a widespread and coherent group, having both the
intent and the capacity to execute their ideas. So, when his testimony was
criticized, and even ridiculed, in the media, and ignored in Washington, Butler
saw (and Archer sees) conspiracy everywhere. Instead, it is plausible to
conclude that the honest and straightforward, but intellectually and
politically unsophisticated, Butler perceived in simplistic terms what were, in
fact, complex trends and events. Thus, he leaped to the simplistic conclusion
that the President and the Republic were in mortal danger. In essence, Archer
swallowed his hero whole."
Other commentators
The BBC's online précis for its documentary program The
White House Coup said, "The coup was aimed at toppling President
Franklin D. Roosevelt with the help of half-a-million war veterans."
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