The Plots Against the President

by Sally Denton

  Butler decided that it was premature to take the information to either the president or Hoover until he had more evidence. It would be Butler’s word against Clark’s and MacGuire’s, and Butler could end up looking like the crazy one. Suspecting that the entire “plot” might be nothing more than an attempt to discredit him and neutralize him as a critic of Wall Street and Fascism, Butler chose to share the story with a journalist first. He contacted Tom O’Neil, city editor of the Philadelphia Record—a liberal newspaper owned by J. David Stern, who also published the New York Evening Post. He told O’Neil the bizarre story and asked him to assign his star reporter, Paul Comly French, a fellow Quaker, to explore the legitimacy of the conspiracy. O’Neil agreed and Butler told French everything about what he had come to call the “bankers gold group.”

  French set out to determine whether the plot was an attempt to extort money from a cabal of rich right-wingers “by selling them political gold bricks,” as Butler wondered, or whether a cabal of rich right-wingers, “enraged by Roosevelt and his New Deal policies, was putting up big money to overthrow F.D.R. with a putsch.”

  French was fired up about the story but worried too that it was so improbable that, short of ironclad evidence, he and Butler both would be disbelieved and ridiculed. He knew that much depended on the credibility, integrity, and patriotism of his main source, Smedley Butler, so he first probed into Butler’s background and interviewed the retired Marine extensively. What French found was a highly controversial figure, a whistle-blower whose salty language and “irrepressible temper and tongue kept him in the headlines,” whose candor and courage unsettled his enemies and landed him “in hot water with his superiors,” and whose blunt truth telling was generated by an idealized love of America and democracy.

  Once satisfied that Butler had no history of, or known proclivity for, lying and that his zealous outbursts were inspired by honorable motives, French began to investigate Butler’s claims that a group of wealthy Americans was arming and financing Fascist plots.

  MacGuire agreed to be interviewed by French after Butler vouched for French’s dependability. Posing as a reporter who was sympathetic to the anti-Roosevelt forces, French gained MacGuire’s trust and was invited to visit him at his suite at the Grayson Murphy New York brokerage firm. They met in MacGuire’s twelfth-floor office at 52 Broadway for a two-and-a-half hour conversation. MacGuire told French the same story that he had told Butler except for one significant amplification: that the weapons and ammunition they needed for a coup would be supplied by “Remington Arms Company on credit through the DuPonts,” who owned a controlling interest in the firm. “We need a Fascist government in this country,” MacGuire insisted to French, “to save the Nation from the communists who want to tear it down and wreck all that we have built in America. The only men who have the patriotism to do it are the soldiers and Smedley Butler is the ideal leader. He could organize a million men overnight.” MacGuire told French of his fact-finding mission to Europe, and how he had “obtained enough information on the Fascist and Nazi movements and of the part played by veterans, to properly set up one in this country.” At first MacGuire and his sponsors had planned to have Butler ask each of the million veterans to contribute a dollar to the effort, MacGuire said, but they decided instead to raise funds from wealthy simpatico financiers and industrialists.

  Throughout the interview, MacGuire emphasized the patriotism of those desirous of a Fascist government to stop Roosevelt’s Socialist plot to redistribute the wealth. They all agreed, he said, that bonds would soon reach 5 percent, creating an economic crash requiring the soldiers to save the country. MacGuire volunteered names of individuals and organizations that had pledged more than a million dollars each. He provided French with the identities of potential leaders of the Fascist plot, including a former national commander of the American Legion. MacGuire was obsessed with the “unemployment situation,” saying that Roosevelt had “muffed it terrifically” but that an ingenious plan he had witnessed in Germany would “solve it overnight.” French listened, dumbfounded, as MacGuire suggested that the United States follow Hitler’s “ideal” prototype of “putting all of the unemployed in labor camps or barracks—enforced labor.”

  Butler abhorred all the dictator talk, which he thought merely a euphemism for a big-business, corporate takeover of government. “I have been in 752 different towns in the United States in three years and one month, and I made 1,022 speeches,” Butler would later testify. “I have seen absolutely no sign of anything showing a trend for a change of our form of Government.”

  The next, and final, time that MacGuire approached Butler to see whether he would agree to lead a veterans’ march on Washington, the ex-Marine was unsparing. “If you get 500,000 soldiers advocating anything smelling of Fascism, I am going to get 500,000 more and lick the hell out of you, and we will have a real war right at home.”

  His true sentiments now exposed to MacGuire, and with the story confirmed by Paul French, Butler went to see J. Edgar Hoover in the fall of 1934. “Hoover knew a loaded gun when he saw one,” Gentry wrote. “This sounded to him like a plot to overthrow the government of the United States. However, if the Division of Investigation investigated Butler’s charges, he would risk alienating some of America’s most powerful corporation heads.” In characteristic fashion, Hoover sought to use Butler’s information to expand his own power while avoiding a delicate probe that might jeopardize his ambitions. He told Butler that he thought the plot a grave situation, but that lacking an apparent federal offense, he was powerless to pursue an investigation. Behind the scenes Hoover quickly used the opportunity to justify a larger role in national law enforcement. Indeed, the Butler exposé would, “with Hoover’s skillful handling,” as Gentry wrote, “help the director grasp control of all domestic intelligence in the United States.”

  What Hoover neglected to tell Butler was that his agency was already investigating American Fascism at the personal directive of President Roosevelt. Roosevelt had called a secret White House conference with Hoover six months earlier—just weeks after MacGuire’s return from his European Fascist research tour—to discuss the growing Nazi movement in the United States. Present at the meeting with Roosevelt and Hoover were Attorney General Homer Cummings, Secretary of the Treasury Henry Morgenthau, Secretary of Labor Frances Perkins, and Secret Service Chief W. H. Moran. In an internal memorandum, Hoover wrote that Roosevelt requested that the Division of Investigation work with the other agencies to conduct “a very careful and searching investigation” of Nazi organizations and, especially, “any possible connection with the official representatives of the German government in the United States.”

  Since Roosevelt, Hoover, and several other high-level government officials in the administration were obviously concerned about an internal Nazi threat, it seemed highly likely that they knew about the “Business Plot,” or the “Wall Street Putsch”—as the Clark-Murphy-MacGuire-veterans scheme would eventually be dubbed by the press.

  For his part, Butler reasoned that even though Hoover didn’t have the jurisdiction to investigate the charges, the nation’s top cop would undoubtedly see that the explosive information got into the right hands. If Butler considered taking his story to the White House, he didn’t need to. Suddenly Washington was abuzz with gossip that the American Legion was organizing a Fascist army to seize the capital. John L. Spivak, a veteran muckraker and foreign correspondent, an admitted Communist but one with impeccable high-placed sources, had begun digging into the rumors of a coup. At the same time, the U.S. House Un-American Activities Committee had learned of the plot—undoubtedly from Hoover—and a committee investigator called Butler to see whether he would be willing to cooperate with Congress. Indeed, Butler responded. He had been praying for just such a call.

  In the fall of 1934, the political atmosphere was highly charged heading into the midterm elections of Roosevelt’s first term in office. The newly formed American Liberty League—well funded and ubiquitous
—blanketed the country with incendiary anti-Roosevelt propaganda. It sent out more than five million pamphlets denouncing Roosevelt’s “socialist” agenda, hinting darkly at his Machiavellian plots to dismantle the Constitution and referring to the president as “King Franklin I.” Supposedly nonpartisan, the professional patriots of the Liberty League were a collection of wealthy Democrats and Republicans concerned that the new administration’s work projects and regulations of industry were interfering with the labor market and upsetting the natural method of supply and demand. “Five Negroes on my place in South Carolina refused work this Spring … saying they had easy jobs with the government,” an official with the DuPont company wrote to the former chairman of the Democratic Party. “A cook on my houseboat at Fort Myers quit because the government was paying him a dollar an hour as a painter.”

  The group, hoping to encourage Americans to work and to get rich, had agonized over its name. One founding member suggested Association Asserting the Rights of Property, which was then shortened to the National Property League. Just before filing official papers for the organization, John W. Davis lighted on the catchy name the American Liberty League. The new patriotic sounding name “hid the fact that it was really about rich men protecting their interests,” as the biographer of founder Alfred E. Smith wrote after reviewing correspondence between the wealthy board of directors. Claiming widespread support from a cross-section of business and finance, its leadership actually drew exclusively from a minuscule group of extremely wealthy individuals. Its thirty-two-room headquarters in the National Press Building in Washington emblemized its provenance as well as its income, which exceeded that of the national Republican Party. In fact, fewer than two dozen bankers and businessmen had contributed more than half the Liberty League’s funds, and, notably, its founding members included more conservative “Jeffersonian Democrats” than Republicans. “The financial community,” reported the New York Times, “sees in the movement the nucleus of a new force for conservatism.”

  Ultimately, the gap between rich and poor had become too wide, too starkly apparent for the League of multimillionaires to have credibility with most Americans. As George Wolfskill wrote in The Revolt of the Conservatives, “New Deal spokesmen did not have to refute the views of the League; they only had to call the roll.”

  Socialists or not, Roosevelt and the Democrats won both Houses in an unprecedented landslide, increasing the Democrats from 60 to 69 in the Senate and from 309 to 322 in the House of Representatives. Not since Civil War Reconstruction had one party gained such an overwhelming majority. Roosevelt was now assured of a responsive and productive Seventy-fourth Congress of the United States—Wall Street’s worst nightmare.

  Chapter Thirty-seven

  The Investigation

  In November 1934, the House Committee on Un-American Activities met in a secret executive session in New York City. Chairman John W. McCormack and vice chairman Samuel Dickstein were the only committee members at the hearing. They called General Smedley Butler, Gerald MacGuire, and Paul Comly French to appear. Butler spoke first, providing detailed testimony about everything that had occurred beginning with the first visit from MacGuire and Doyle on July 1, 1933, through all his meetings with MacGuire and Clark.

  “To be perfectly fair to Mr. MacGuire,” Butler testified, “he didn’t seem bloodthirsty. He felt that such a show of force in Washington would probably result in a peaceful overturn of the government.” After he had been asked dozens of times by both MacGuire and Clark to accept the leadership of the coup d’état, Butler said, he had decided to enlist the assistance of French to gather corroborative evidence. Butler named the alleged conspirators whom he believed the committee should call as witnesses, although these names were stricken from the official record of the hearings that would be released to the public. During his appearance Butler sought especially to spark the indignation of committee chairman McCormack—a Massachusetts Democrat who, though a Legionnaire, was an avid supporter of Roosevelt and the New Deal.

  Next came French, who confirmed and verified Butler’s story to the letter, adding the Remington Arms connection. The congressmen, by all accounts, were stunned by the allegations raised, by the dangerous implication of an impending coup d’état, and by the sheer political and economic power of the alleged participants. They broke for lunch and reconvened in the afternoon to interrogate MacGuire. Not surprisingly, MacGuire denied all of Butler’s allegations implicating MacGuire in bribery, in an effort to unseat the American Legion leadership, and in a Fascist military coup. The bond salesman who earned $150 per week insisted that all his contacts with Butler were to enlist Butler’s support of a Clark-funded group called the Committee for a Sound Dollar and Sound Currency and that he merely wanted Butler to speak in support of that movement. That committee, MacGuire testified, was organized to support President Roosevelt and “his position on sound money … We were against the inflationists and the people who were trying to bring about inflation in the country.”

  MacGuire denied attempting to get Butler to attend the Chicago convention and speak on behalf of the gold standard. He denied providing Butler with the speech written by John Davis and claimed never to have discussed money with Butler, nor to have shown him evidence of deposits totaling a hundred thousand dollars. He admitted that Robert Sterling Clark had paid for his trip to Europe so MacGuire could “study securities,” but denied that he’d had any discussions with Butler about European Fascist takeovers supported by veterans’ armies or of any “superorganization” of veterans in the United States. He denied offering Butler eighteen thousand dollars and repudiated French’s claims that he had discussed a Fascist coup.

  MacGuire was “hanging himself by contradictions and admissions,” Dickstein admitted to reporters after the committee adjourned at the end of the day. McCormack refused to comment to the New York Times, explaining that the testimony had been given in executive session, but promised that a public hearing would be held “if the facts warrant.” Paul French had broken the story two days earlier in both the Philadelphia and New York newspapers under the headline: $3,000,000 BID FOR FASCIST ARMY BARED, which was reprinted in the country’s major newspapers.

  Calling Butler’s allegations “a damned lie,” Grayson M.-P. Murphy told French, “I haven’t been able to stop laughing. I hope you come in armed, because I may start shooting, even if this is going to be a bloodless revolution. To say a thing like this about a man who has a record like mine in the Spanish-American War, in the Philippines, in the World War, to say that a man who would serve his country like that would turn around and try to overthrow the Government, is hitting below the belt.” French reported that the tall, silver-haired Murphy, his blue eyes shining, had smiled throughout the entire interview.

  Robert Sterling Clark, who had been subpoenaed by the committee, was traveling in Europe when the story broke. Reached by telephone in Paris, he told the press that he had “strongly urged” Butler “to use his influence in favor of sound money and against inflation.” But he adamantly denied that he was the sponsor of an “American Fascist movement.” Still, vice chairman Dickstein announced that both Clark and his New York attorney, who had accompanied Clark to Europe, were under surveillance in Paris. “I believe that Clark has cold feet,” Dickstein told the Chicago Daily Tribune. “It looks as if he were afraid to appear before our committee. But we will get his testimony. Any one can see there is something wrong in this matter.” Dickstein pointed to MacGuire’s inability to explain to the committee financial transactions involving more than a hundred thousand dollars. “MacGuire is shielding somebody I believe. Probably a lot of people.”

  Newspapers reported the “immediate emphatic denials by the purported plotters.” Leading the charge was General Hugh “Old Iron Pants” Johnson, who “barked” at the New York Times reporter. “He had better be pretty damn careful,” Johnson said, referring to Butler. “Nobody said a word to me about anything of this kind, and if they did I’d throw them out the wi
ndow. I know nothing about it.” Thomas Lamont, Liberty League contributor and J. P. Morgan partner, called it “perfect moonshine. Too unutterably ridiculous to comment upon!” General MacArthur was unavailable for comment, but his aides “expressed amazement and amusement.”

  The committee examined various financial transactions between MacGuire and Clark and concluded that MacGuire had been the cashier for the plotters. Dickstein vowed that as many as sixteen people who had been identified by Butler, including Clark, would be subpoenaed. But as days passed without further scheduled hearings, gossip began spreading through Washington that a cover-up was under way. Despite assurances from both McCormack and Dickstein that the committee planned a full investigation of the plot, they apparently only called one more witness—Frank N. Belgrano, a San Francisco banker and president of the Transamerica Corporation who would soon become national commander of the American Legion—but apparently sent him home without taking his testimony. The committee released its eight-thousand-word “Public Statement on Preliminary Findings” on November 24, 1934. Signed by McCormack and Dickstein, it began, “This committee has had no evidence before it that would in the slightest degree warrant calling before it such men as John W. Davis, General Hugh Johnson,” and then went on to list some of the other men who had been named by Butler as accomplices. Both congressmen insisted that they were pursuing the inquiry and planned to call Clark and others. The committee “still intends to get to the bottom of a Wall Street plot to put Major Gen. Smedley D. Butler at the head of a Fascist army here,” Dickstein told the New York Times. “The committee’s statement of the evidence … was intended only to satisfy the great public interest in the plot.” The newspaper account indicated Dickstein was eager for the statement to be seen “neither as whitewash … nor as sensationalism.”