by Oliver Stone
The progressive reforms that the New Dealers had been able to implement provoked sharp opposition from the still powerful business community. Roosevelt and advisor Rexford Guy Tugwell, agency heads Harry Hopkins and David Lilienthal, and progressive cabinet members like Henry Wallace, Harold Ickes, and Frances Perkins incurred the wrath of much of the business and banking communities. Though some businessmen, like Joseph Kennedy, thanked Roosevelt for rescuing capitalism from shortsighted capitalists, most considered him the enemy and fought the New Deal every step of the way. A U.S. Chamber of Commerce membership survey registered 97 percent opposition to the philosophy of the New Deal.58
The most extreme of these right-wing businessmen set out to prove that the New York Times’ obituary for the Republican Right was premature. They announced formation of the American Liberty League in August 1934, a few months before the midterm elections, although they had begun gathering forces long before that.
The American Liberty League was the brainchild of members of the du Pont family, including brothers Irénée, Pierre, and Lammot, and in-law and top executive Robert “Ruly” Carpenter. Carpenter alleged that Roosevelt was being controlled by “[Felix] Frankfurter and his thirty-eight hot dogs—a gang of fanatical and communistic Jew professors.” He recruited John Raskob, former chairman of the Democratic National Committee, to the cause. Raskob, a strong proponent of shifting the tax burden from the wealthy to the working class, had engineered du Pont’s purchase of General Motors and had simultaneously served as chief financial officer in both corporations. Others brought on board included GM President Alfred Sloan, former Democratic presidential candidates Al Smith and John Davis, National Steel Corporation President Ernest Weir, Sun Oil Company President J. Howard Pew, and General Foods Chairman E. F. Hutton. Charles Lindbergh turned down the League’s offer to serve as president.59
The American Liberty League went public on August 22, 1934, announcing its intention to combat radicalism, defend property rights, and uphold the Constitution. Headed by Jouett Shouse, former chairman of the Democratic Executive Committee, the five-member executive committee included Irénée du Pont, Al Smith, John Davis, former New York Republican Governor Nathan Miller, and New York Republican Congressman James Wadsworth, Jr. Shouse announced plans to recruit 2 million to 3 million members and hundreds of thousands of contributors. The League unfurled a massive, though largely ineffectual, “education” campaign over the next few years in a concerted effort to stem the liberal tide. It fell far short, however, of its recruitment and fund-raising targets, claiming 125,000 members and 27,000 contributors. But most of the members were inactive, and most of the funds came from the du Ponts and a handful of other right-wing businessmen. Its reputation was also tarnished by two damning congressional investigations of 1934 and 1935.60
The first investigation was short-lived but shocking in its implications. In November 1934, highly decorated retired Marine General Smedley Butler told the House Special Committee on Un-American Activities that William Doyle, commander of the American Legion’s Massachusetts branch, and bond salesman Gerald MacGuire had tried to recruit him to organize a military coup against the Roosevelt administration. Paul Comly French, a reporter for the New York Evening Post and the Philadelphia Record, corroborated Butler’s account, testifying that he overheard MacGuire say at one point, “We need a Fascist government in this country 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 patriotism to do it are the soldiers and Smedley Butler is the ideal leader. He could organize one million overnight.” MacGuire had gone to France to study fascist veterans’ movements, which he envisioned as a model for the force Butler could organize in the United States.
Butler rejected MacGuire’s entreaties. “If you get the 500,000 soldiers advocating anything smelling of Fascism,” he warned, “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.” Testimony revealed that Doyle and MacGuire were fronting for many of the same Morgan and du Pont–linked bankers and industrialists who had formed the American Liberty League. MacGuire denied the charges, and New York Mayor Fiorello LaGuardia mockingly dismissed the episode as a “cocktail putsch.” Morgan partner Thomas Lamont called the allegations “Purest moonshine! Too utterly ridiculous to comment upon!” But James Van Zandt, national commander of the American Legion and a future congressman, lent support to Butler’s testimony, reporting that “agents of Wall Street” had also approached him.61
After hearing the testimony, the House committee, chaired by John McCormack of Massachusetts, reported that it had been “able to verify all the pertinent statements made by General Butler” except for MacGuire’s direct solicitation of his services, which it accepted as fact. It concluded that “attempts to establish a fascist organization in the United States . . . were discussed, were planned, and might have been placed in execution when and if the financial backers deemed it expedient.”62 The committee, strangely, chose not to call many of those implicated to testify, including Colonel Grayson Murphy, General Douglas MacArthur, Al Smith, former American Legion Commander Hanford MacNider, John Davis, Hugh Johnson, and Thomas Lamont. Butler decried the fact that their names had been omitted from the final report.
The second set of hearings, which began earlier but lasted longer, was conducted by North Dakota Senator Gerald Nye. Nye had been appointed to the Senate upon the death of his predecessor and twice reelected. He immediately identified with the Progressives, including George Norris, William Borah, and Robert La Follette, sharing their desire to avoid overseas entanglements that might involve the United States in foreign wars and their opposition to using the military to protect American businessmen’s overseas investments. In February 1934, Nye proposed what would become one of the most remarkable congressional investigations in U.S. history. He called upon the Senate Foreign Relations Committee to investigate individuals and corporations involved in manufacturing and selling arms, munitions, and other implements of war. Its targets would include steel, airplane, and automobile manufacturers, arms and munitions makers, and shipbuilders. The focus on arms merchants rather than bankers represented a departure from the views of Harry Elmer Barnes and other revisionist historians who had written blistering critiques of U.S. involvement in the war. Barnes wrote in 1934 that arms dealers “never exerted so terrible an influence upon the promotion of warfare as did our American bankers between 1914 and 1917.”63
The idea for the hearings had come from Dorothy Detzer, a tireless peace activist who served as the National Executive Secretary of the U.S. chapter of the Women’s International League for Peace and Freedom. Detzer’s twin brother had been a victim of mustard gas in the Great War. Needing someone to sponsor the proposal in the Senate, she approached twenty senators. All turned her down. George Norris suggested that she try Nye, who agreed to do it. Peace groups around the country organized support for the resolution. In April, the Senate authorized hearings into the “munitions trust,” focusing on war profiteering, the role of weapons makers’ propaganda in pushing the government toward war, and whether the government should have a monopoly of all weapons manufacturing in order to remove the profit motive from war fighting. The resolution’s cosponsor, Senator Arthur Vandenberg, pledged to find out if the country would be allowed “to live at peace among ourselves and with our neighbors and without artificial encouragement to friction and misunderstanding and then to conflict, and then to disaster.” Vandenberg wanted to find out if “these sordid intrigues which we know to exist elsewhere” were also occurring in the United States.64
Nye, Vandenberg, and Vice President John Nance Garner selected four Democrats—Homer Bone of Washington, Bennett Champ Clark of Missouri, Walter George of Georgia, and James Pope of Idaho—and three Republicans—Nye, Vandenberg, and W. Warren Barbour of New Jersey. Clark nominated Nye as chairman of the Special Committee Investigating the Munitions Industry, and Pope seconded the nomination. Heari
ngs were delayed to give the committee time to begin its research, which was coordinated by Stephen Rauschenbusch, son of the renowned Social Gospel minister Walter Rauschenbusch. A young Harvard law graduate named Alger Hiss served as a legal assistant, on loan from Jerome Frank of the Agricultural Adjustment Administration.65
Progressives rallied to the cause. An article in the Railroad Telegrapher captured the festering anger that many workers still felt toward the munitions makers a decade and a half after the end of the World War: “the American people are showing signs of awakening to the system which encourages wars, slays and tortures millions to build a few swollen fortunes, and leaves the common man and woman staggering under crushing debts. . . . Labor’s millions are called on to fight all wars, to suffer the mud, lice and blood of the trenches while the bosses gather their dollars and the bosses’ sons become officers. And, after the war is over, labor pays and pays and pays.” In an editorial titled “Murder Incorporated,” the New Republic stated that the investigators would have to follow “the torturous track of blood money . . . the track is there, the blood-dripping profits are there, a vast, worldwide network of incorporated murder is there.”66
While the nation waited for the hearings to commence, two important and timely books appeared that fueled public anger and provided more grist for the inquisitors. Merchants of Death by H. C. Engelbrecht and F. C. Hanighen, which was chosen as a Book-of-the-Month Club selection, and Iron, Blood, and Profits by George Seldes were released on the same day in April 1934. They detailed not only the sordid dealings of U.S. munitions makers but those of their compatriots in other parts of the world. Doubleday also reprinted in pamphlet form the startling exposé of the European arms industry from the March issue of Fortune titled “Arms and the Men.” That article also seethed with visceral anger. It began:
According to the best accountancy figures, it cost about $25,000 to kill a soldier during the World War. There is one class of Big Business Men in Europe that never rose up to denounce the extravagance of its governments in this regard—to point out that when death is left unhampered as an enterprise for the individual initiative of gangsters the cost of a single killing seldom exceeds $100. The reason for the silence of these Big Business Men is quite simple: the killing is their business. Armaments are their stock in trade; governments are their customers; the ultimate consumers of their products are, historically, almost as often their compatriots as their enemies. That does not matter. The important point is that every time a burst shell fragment finds its way into the brain, the heart, or the intestines of a man in the front line, a great part of the $25,000, much of it profit, finds its way into the pocket of the armament maker.67
Roosevelt voiced approval of the hearings and urged stronger international steps to curb what he called the “mad race in armament which, if permitted to continue, may well result in war.” “This grave menace to the peace of the world,” he added, “is due in no small part to the uncontrolled activities of the manufacturers and merchants of engines of destruction.”68
Republican Senator Gerald Nye of North Dakota led the 1934 hearings on the U.S. arms industry that revealed the nefarious practices and enormous wartime profits of American munitions companies. “The committee listened daily to men striving to defend acts which found them nothing more than international racketeers, bent upon gaining profit through a game of arming the world to fight itself,” he said. Among the more damning details brought to light by the hearings was that U.S. companies were helping Nazi Germany rearm.
The committee’s eighty researchers and accountants combed the books of the United States’ leading corporations. Committee members were astonished by the findings. Senator Pope promised that the people will be “amazed by the story of greed, intrigue, war scare propaganda and lobbying which will be made public” during the hearings. He added that the information would “shock the entire Nation when disclosed.”69 Just before the start of hearings, the New York Times reported that a majority of the seven committee members favored complete government operation of war materials manufacturing plants. Pope expressed optimism that the evidence would be so disturbing that there would be “almost universal demand” for such actions.70
On September 12, Felix, Irénée, Lammot, and Pierre du Pont took the stand together and were grilled about the firm’s enormous profits during the war years. The company had received orders of $1.245 billion between 1915 and 1918, a 1,130 percent increase over company orders in the four years prior to the war.71 During the war, du Pont had paid 458 percent dividends on original par value stock. The hearings that day also revealed that in 1932 Army Chief of Staff General Douglas MacArthur had gone to Turkey, where, according to a letter from an executive of the Curtis Wright Corporation, he had “apparently talked up American military equipment to the skies in discussions which he had with the Turkish general staff.” At that point, Nye interjected, “It looks to me like Gen. MacArthur was pretty much of a salesman. It makes one begin to wonder if the Army and Navy is just a sales organization for private industry.”72
The hearings produced troubling revelation after troubling revelation. U.S. and foreign arms dealers had divided foreign markets through cartel arrangements, sharing secrets and profits and designing German submarines that were busy sinking Allied ships during World War I. More recently, American companies had been helping Nazi Germany rearm. Officials of United Aircraft and Pratt and Whitney testified that they had sold planes and aircraft equipment to Germany for, they claimed, commercial, not military, use. Nye was incredulous. “Do you mean to say,” he asked, “that through all of these negotiations you hadn’t the ghost of an idea that Germany was buying for military purposes?”73 U.S. policy since 1921, Secretary of State Cordell Hull reiterated, had been to oppose the sale of any military equipment to Germany.
Support for the hearings came in from across the political spectrum as the committee landed blow after blow. In late September, John Thomas Taylor, the legislative representative of the American Legion, announced that he supported the plan proposed by the earlier War Policies Commission to have the government seize 95 percent of any abnormal profits in wartime.74 Nye promptly announced that he would introduce legislation raising income taxes to 98 percent on all incomes above $10,000 on the day the United States entered a war in order to entirely eliminate war profits.75 Nye said that he and two other committee members actually preferred to nationalize the entire arms industry in the event of another war.76
Public interest in the hearings was tremendous. England made plans to hold its own hearings. Hearings were already under way in several Latin American countries, spurred by disturbing revelations about nefarious dealings between those countries and the arms makers. Nye had received more than ten thousand congratulatory letters and telegrams. He was being flooded with speaking requests. The adulation made the Washington Post nervous. It editorialized that the outpouring of support was no surprise because “The inquiry revealed much information of a sensational character and gave to the average citizen a new conception of the uncontrolled forces which combat in effect, if not in intent, the efforts to secure world peace. To see glaring publicity given to what has been essentially a secret traffic, evoked a responsive chord among all who desire a better world order.” The Post begrudgingly praised the committee’s “excellent work.”77
In early October, Nye gave a national address over NBC radio in which he defended his plans for nationalizing the arms industry and sharply increasing wartime taxes. “Do that and then observe the number of jingoists diminish,” he suggested. If such steps were taken, he confirmed, “war may not be as unpreventable as pictured.” He summarized the committee hearings to that point: “The committee listened daily to men striving to defend acts which found them nothing more than international racketeers, bent upon gaining profit through a game of arming the world to fight itself.”78
Calls for nationalization by Nye and other committee members sparked a vigorous national debate in late 1934. In December, th
e Washington Post pooh-poohed Nye’s proposals and referred readers to an op-ed piece insisting that the topic had been thoroughly vetted in Geneva for the past fifteen years and that it was “an undisputed fact” that “enlightened opinion” was against it. The du Ponts and others weighed in along similar lines.79 Commentators pointed out the problems with Nye’s plan. If the weapons industry were nationalized, Walter Lippmann asked, how would the United States decide about exporting weapons to other countries? If the United States nationalized its weapons industry, would other countries follow suit? If so, what would happen to countries with no munitions plants? How would determination be made about the many products that could be used for commercial as well as military purposes? The Chicago Tribune pointed specifically to Japan’s buying scrap metal in the United States and cited the du Ponts’ contention that bales of cotton could be munitions of war. Others asked what would happen to the war industries during peacetime. And, if the factories were obsolescent and unused, would the nation be able to gear up quickly enough to meet an emergency?80
With public pressure building for decisive action, Roosevelt decided to get out ahead of and defuse the issue. On December 12, he announced that he had asked a high-powered group of government and industrial leaders to come up with a plan to end war profiteering. Roosevelt told the reporters, “The time has come to take the profits out of war.” Three hours later the group met at the White House to begin its work. Arriving arm in arm were none other than the commission chairman, Bernard Baruch, and Hugh Johnson, the commission’s executive director. Others asked to assist with drafting the legislation included the secretaries of state, war, labor, agriculture, treasury, and navy, Rail Coordinator Joseph B. Eastman, Army Chief of Staff MacArthur, Assistant Secretary of the Navy Roosevelt, Assistant Secretary of Agriculture Tugwell, Assistant Secretary of Labor Edward F. McGrady, and George Peck, the head of the Export-Import Bank. Nye Committee members erupted in anger, accusing the administration of trying to restrict their inquiry before the investigation was completed.81
