The Plots Against the President

by Sally Denton

  “The press … handled the Butler affair with its tongue in its journalistic cheek,” one historian wrote of the marginalization of the story. The press campaign against Butler got off to a quick start, with Time magazine leading the way with a caricatured version of the plot called “Plot Without Plotters.” In Time’s satirical imagining, Butler is carried to Washington by an imaginary white horse, where he then forces his way into Roosevelt’s office—“his spurs clinked loudly”—and orders the president to relinquish his office to Butler and his five-hundred-thousand-man army. “Such was the nightmarish page of future United States history pictured last week in Manhattan by General Butler himself,” Time reported. “No military officer of the United States since the late tempestuous George Custer has succeeded in publicly floundering in so much hot water as Smedley Darlington Butler.”

  “What can we believe?” asked the New York Times. “Apparently anything, to judge by the number of people who lend a credulous ear to the story of General Butler’s 500,000 Fascists in buckram marching on Washington to seize the Government. Details are lacking to lend verisimilitude to an otherwise bald and unconvincing narrative … The whole story sounds like a gigantic hoax … It does not merit serious discussion.”

  No American newspaper published the entire testimony, many newspapers suppressed the story altogether, and the large majority ridiculed it. The nation’s leading newspapers’ dismissal of allegations by a U.S. marine general that an alliance of Legionnaires, bankers and stockbrokers had tried to hire him to overthrow the government was mystifying. While neither the public nor much of the press seemed to take Butler seriously, the McCormack-Dickstein Committee apparently did. The few Washington newsmen who had been following the story were not satisfied with the brief initial findings and closely pressured the committee to release the hearing transcripts. When it finally published its 125-page report three months later, it was vividly marked “EXTRACTS.” Stunningly, the committee stated that it “was able to verify all 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 organizations of Fascist character.” The committee summarized its conclusion: “Evidence was obtained showing that certain persons had made an attempt to establish a fascist organization in this country. There is no question but that these attempts were discussed, were planned, and might have been placed in execution when and if the financial backers deemed it expedient.”

  As shocking as the findings were, the committee added a further announcement attached to the end of the document in boldface type:

  In making public the foregoing evidence, which was taken in executive session in New York City from November 20 to 24, inclusive, the committee has ordered stricken therefrom certain immaterial and incompetent evidence, or evidence which was not pertinent to the inquiry, and which would not have been received during a public hearing.

  Rumors immediately swirled through Washington that the investigation was halted and the testimony redacted because it threatened national security. Some speculated that the committee bowed to pressure from the conspirators themselves, who were not only among the richest men in America but who were high-level political figures as well, such as John W. Davis and Al Smith, who had each headed the Democratic Party and were onetime presidential candidates. Deleted from the official report were references to the American Liberty League as well as the identities of nearly all the alleged plotters. While the committee’s desire to protect the reputations of innocent people was considered laudable, the destruction of evidence and testimony only served to fan the flames of suspicion for decades to come. If not for French’s copyrighted exposé, the only conspirator to ever be publicly identified would have been the low-level Gerald MacGuire.

  Despite the committee’s findings that a Fascist plot had been confirmed, no further action was taken. “The Congressional Committee investigating un-American activities has just reported that the Fascist plot to seize the government … was proved,” Roger Baldwin, the director of the American Civil Liberties Union, said in a publicly released statement. “Yet not a single participant will be prosecuted under the perfectly plain language of the federal conspiracy act making this a high crime.” When the committee’s authority to subpoena witnesses expired at the end of 1934, the U.S. Justice Department did not initiate a criminal investigation. When the committee asked the House of Representatives to extend its term to January 1937, the House refused and the committee died in January 1935. The untimely death of MacGuire at thirty-seven eliminated the only witness who could have testified against the alleged plotters in the event that the investigation continued.

  After the committee died, John Spivak began writing a series of articles about the investigation, and Dickstein provided him access to the official files. Apparently inadvertently, the committee’s secretary turned over Butler’s complete testimony as well as other internal documents and evidence that had been deleted from the committee’s published findings. But Spivak’s sensational exposé, although meticulously researched and informed by the committee’s evidence, was predictably ignored, appearing as it did in the Communist publication New Masses.

  For his part, Butler was satisfied that the coup had been thwarted, but he never missed an opportunity to blast the committee for “bowing to the power of Wall Street and for censoring his remarks.” In a radio broadcast in 1935 he denounced the committee for suppressing his testimony and failing to follow up with interviews of the conspirators.

  Historians disagree about the veracity of Butler’s claims, though not about his personal or professional credibility. He had reasons for hating Wall Street, and his increasingly defiant self-righteousness was off-putting. By 1933 he was sounding a perpetual cry about class conflict and seemed to thrive on drama. After retirement he wrote to a former aide that “you and I were cut out to be pirates and the civilized drone-like life is not to my liking.”

  Even though MacGuire contradicted or denied Butler’s testimony, the committee found corroborating evidence through bank records, MacGuire’s letters from Europe discussing Fascist organizations, and other circumstantial details confirming MacGuire’s claims about the inner workings of the American Liberty League. Butler’s claims were also corroborated by Paul French, who had extensively interviewed MacGuire. Even so, French’s testimony was heavily reliant on what MacGuire had told him, and MacGuire was a problematic witness who had perjured himself numerous times and whose credibility was slippery from the start. Still, Butler’s personal integrity and trustworthiness were never challenged. Though a firebrand, Butler’s patriotism and pro-defense stand were not doubted, and he maintained an admirable independence from partisan organizations that sought his support.

  “The committee found that Butler was telling the truth,” Robert T. Cochran wrote in Smithsonian magazine years later. “Nothing much happened because few people really wanted to believe him, and because some prominent people were implicated, the story was hushed up.” The conspiracy “quickly and quietly fizzled,” as Military History magazine put it. After the committee issued its final report, Time published a mock photograph of General Butler and Jimmy Durante with the caption: “Schnozzle, Gimlet Eye. Fascist to Fascists?” A small footnote buried on the same page, printed in five-point type, reported that the committee was convinced “that General Butler’s story of a Fascist march on Washington was alarmingly true.”

  Once the story made the national newspapers after the release of the expanded report in which the committee confirmed the existence of a plot, letters came in from around the country directed to the committee, the White House, and the Division of Investigation. A letter from an official of Six Companies Inc. in Boulder City, Nevada—the colossal engineering and construction firm that was building Hoover Dam—alerted Congressman McCormack to the Fascist plot hatched
within the American Legion. The letter, which McCormack forwarded to Hoover, and which has never before been cited or published, corroborated Butler’s story. “Dear John,” the letter began, addressing Congressman McCormack with apparent familiarity. The author described how two men claiming to be representatives of an Eastern-based organization called the “American Fascist Veterans Association” planned to overthrow Roosevelt and had tried to recruit him to head up a Western division. “They told us … that General Butler would line up the Marines … that the Veterans of Foreign Wars Department heads were all members … and that the Republican National Committeeman was treasurer.” The author of the letter wrote that since the Hoover Dam project was a “Republican contractors’ job” and because the Six Companies consortium had been “strong for Hoover,” he had been afraid to speak out sooner. Further, his workforce was composed of untold hundreds of previously unemployed and hungry veterans whom he legitimately feared could be incited to join a veterans’ uprising.

  Some Americans who had read the news stories about the coup plot began asking Roosevelt to make a public statement in response to the Dickstein-McCormack Committee findings. A letter from a longtime supporter of Roosevelt who resided in Santa Barbara, California, suggested that “the President take the people into his confidence and openly state what his relations are with regard to those Fascist groups supported by powerful financiers.” Roosevelt’s reaction and response to the alleged plot has never been published, although Spivak reported that the president had personally intervened to bring the committee to a standstill—and the plot to a halt.

  Contemporaneous and contemporary historians largely neglected the “Business Plot.” While it has been written about over the past seventy-five years—mostly in endnotes of Roosevelt biographies—and was reportedly the basis for Fletcher Knebel’s 1962 political thriller Seven Days in May and Sinclair Lewis’s 1935 novel It Can’t Happen Here, it has been mostly marginalized or ridiculed by historians. “No one quite knew what to make of the Butler story,” historian Arthur M. Schlesinger Jr. concluded. “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.” Nicholas Fox Weber, Robert Sterling Clark’s biographer, deemed both the plot and Clark’s alleged role in it to be credible. “The Fascist plot which General Butler exposed did not get very far,” according to one account. “But that plot had in it the three elements which make successful wars and revolutions: men, guns and money.” Butler biographer Hans Schmidt reviewed all the available evidence and found “little reason to doubt” that Butler was telling the truth, but he questioned MacGuire’s motives and wondered if he was “working both ends against the middle,” as Butler had suspected. The scholarly Schmidt concluded that Butler may indeed have “blown the whistle on an incipient conspiracy” to overthrow the government, though the depth and breadth of the plot would never be thoroughly examined.

  Whether the plot was what New York mayor Fiorello La Guardia dismissed as a fanciful “cocktail putsch” or what the secretary of war, secretary of the Navy, Commander James Van Zandt of the VFW, and numerous U.S. senators and representatives concluded was a real threat to the Roosevelt presidency, it is a fascinating tale of intrigue that sheds light on the power struggles of 1930s America. What is clear is that some of the nation’s wealthiest men—Republicans and Democrats alike—were so threatened by Roosevelt’s monetary policies that they actually flirted with antigovernment paramilitarism and sought to manipulate the American Legion to support the gold standard. How serious they were, and how far they went or were willing to go, would be debated over the next century. Perhaps at no other time in American history since the Civil War had the very stability of the nation been in play. The country’s richest and most powerful men feared the collapse of capitalism and were willing to go to extremes to save it. Political parties were shifting allegiances and the nation’s dispossessed were inflamed with anger and frustration. Those on the Right genuinely feared a Communist takeover of the republic, while those on the Left felt threatened by totalitarian schemes. “History is littered with governments destabilized by masses of veterans who believed that they had been taken for fools by a society that grew rich and fat at the expense of their hardship and suffering,” said a twenty-first-century secretary of veterans affairs, lending credence to the possibility of a veterans’ rebellion. If the Butler charges did nothing else, they successfully identified the Liberty League as a group of right-wing fanatics and effectively neutralized the group’s anti-Roosevelt smears.

  Years later, after McCormack had become Speaker of the House, he told an interviewer that legal technicalities had precluded the committee from subpoenaing Robert Sterling Clark. “There was no doubt that General Butler was telling the truth … Millions were at stake when Clark and the others got the Legion to pass that resolution on the gold standard in 1933. When Roosevelt refused to be pressured by it, and went even further with the gold standard, those fellows got desperate and decided to look into European methods, with the idea of introducing them into America. They sent MacGuire to Europe to study Fascist organizations … If General Butler had not been the patriot he was, and if they had been able to maintain secrecy, the plot certainly might very well have succeeded … When times are desperate and people are frustrated, anything like that could happen … If the plotters had got rid of Roosevelt, there’s no telling what might have taken place … This was a threat to our very way of government by a bunch of rich men who wanted Fascism.”

  Chapter Thirty-eight

  Are You Better Off Than You Were Last Year?

  The historical record of President Roosevelt’s reaction to the “Business Plot” is conspicuously silent, although he doubtless possessed a strong opinion on the matter. The Dickstein-McCormack Committee sent a copy of its findings to Roosevelt, who responded, simply: “I am interested in having it. I take it that the committee will proceed further.”

  General Butler’s motive baffled serious journalists, historians, and scholars, who pursued the story in years to come. Having railed against capitalist profiteers since World War I, Butler could not have been expected to be a reliable ally for Wall Street interests. He had classic macho military values, albeit as a maverick warrior who had outspokenly challenged the bureaucratic and political hierarchy of the elitist American Legion. Emotionally anti-war and anti-imperialist, Butler aroused speculation that he was associated with a loose-knit coalition of progressive populists bent on driving a wedge between Roosevelt and the Wall Street titans and other conservative forces in American politics. Proponents of this theory suggested that Butler was aligned with Huey Long and Father Coughlin in a political ploy to move Roosevelt leftward. Others posited a theory that no criminal prosecutions arose from the evidence because some of Roosevelt’s own advisers had participated in the plot and it was considered a matter of national security to suppress the details.

  The role of the press was similarly confusing. Was the story downplayed because of potential embarrassment to influential figures, or was it marginalized because the plot was so absurdly far-fetched that it resembled one of the potboiler adventure stories that Butler wrote for various magazines, if not a Marx Brothers zany comedy? “An apparently serious effort to overthrow the government, perhaps with the support of some of America’s wealthiest men, largely substantiated by a Congressional Committee, was mostly ignored,” wrote Clayton E. Cramer in History Today. “Why?”

  Roosevelt’s secretary of the interior, Harold Ickes, would charge an alliance between the American Liberty League and the country’s major newspapers, which distorted and covered up the news “in the interest of both their advertisers and in defense of the capitalist class.” In any event, the Liberty League was fast becoming the most significant anti-Roosevelt organization in the country. With infinite resources, much of it from the du Pont family, it would spend millions to destroy the New Deal. Providing editorials to
thousands of newspapers, radio stations, and libraries, it was described as sponsoring “one of the most extensive propaganda campaigns of the twentieth century.”

  Another formidable Liberty League coalition blossomed as well. By early 1934 the League was providing a large share of money to anti-Roosevelt groups, including, ironically, to Huey Long’s Share Our Wealth Movement and Coughlin’s National Union for Social Justice, as well as the ubiquitous “rainbow of colored shirts.” Uniting malcontents on the Left and Right to “save the Constitution,” the Liberty League consortium was the fiercest challenge to Roosevelt and the New Deal by big business.

  “Roosevelt’s friends took the American Liberty League seriously,” said Samuel Rosenman, one of Roosevelt’s closest advisers and an original Brain Truster. “So did he.”

  Whether spurred by the plot or not, Roosevelt did indeed turn leftward, and he went after Wall Street with renewed vigor. “If the First Hundred Days had comforted the afflicted,” wrote Roosevelt biographer Ted Morgan, “the Second Hundred Days would afflict the comfortable.” Much of the legislation for the Second Hundred Days was directed against the wealthy, including a bill dismantling holding companies, an inheritance tax, and a tax on corporate income. At the heart of what was derisively called the soak-the-rich policy was the Securities Exchange Act, which regulated securities and prohibited exploitative stock market practices that swindled consumers. For the first time in American history, stock exchanges were required to register with the federal government and bow to oversight by the newly created Securities and Exchange Commission. Roosevelt appointed the indefatigable “hellhound of Wall Street” and J. P. Morgan nemesis Ferdinand Pecora to the commission, prompting Will Rogers to exclaim, “There’s finally a cop on Wall Street.” Further inciting the wrath of Wall Street was Roosevelt’s appointment of Joseph P. Kennedy as chairman of the commission—Kennedy being a notorious swashbuckling Irish stockbroker whose anti-Morgan sentiments were legendary. When a hue and cry arose comparing Kennedy at the SEC to the fox in the henhouse, Roosevelt responded: “Set a thief to catch a thief.”