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Business Plot

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The Business Plot 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 President of the United States 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.[1] In the opinion of the committee, these allegations were credible.[2] 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.[2][3][4][5][6] Contemporaneous media dismissed the plot, with a New York Times editorial characterizing it as a "gigantic hoax".[7]
Contents
  [hide] 
Background[edit]
Butler and the veterans[edit]
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Shacks, erected by the Bonus Army on theAnacostia flats, burning after being set on fire by the U.S. military (1932)
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 theWorld 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 U.S. 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 U.S. presidential election.[8]
By 1933 Butler started denouncing capitalism and bankers, saying as a Marine general he was "a racketeer for capitalism."[9]
Reaction to Roosevelt[edit]
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."[10]
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."[10] 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."[10]
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."[11] Likewise, the U.S. treasury could be required to pay the bearer of a $10,000 Liberty Bond $16,900 in gold coins.[11] (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."[12]
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 spread through the economy, there was little reason for investment incomes and hence consumption to rise dramatically. Industrial production remained volatile."[13]
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."[13]
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."[13]
McCormack–Dickstein Committee[edit]
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.[14]
During the McCormack–Dickstein Committee hearings, Butler testified that Gerald C. MacGuire[15] 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.[16]Butler testified that the pretext for the coup would be that the president's health was failing.[17]
Despite Butler's support for Roosevelt in the election[8] and his reputation as a strong critic of capitalism,[18] 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 and veteran leaders as backers of the plot. The committee chose not to publish these allegations because they were hearsay.[19][20]
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."[19]
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.[21] 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?"[21]
On the final day of the committee,[22] January 29, 1935, John L. Spivak published the first of two articles in the communist magazine New 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.[14][23]
Butler's testimony in detail[edit]
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1933[edit]
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[24][25] and a member of the Connecticut American Legion.[26][27] Bill Doyle was commander of the Massachusetts American Legion.[28] Butler stated that he was asked to run for National Commander of the American Legion.[29]
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 the American Legion convention to ask for a speech.[30] 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."[12] 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."[31] Butler never saw Doyle again.
On September 24,[32][33] MacGuire visited Butler's hotel room in Newark.[34] In late-September Butler met with Robert Sterling Clark.[35] Clark was an art collector and an heir to the Singer Corporation fortune.[36][37] 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".[37]
1934[edit]
During the first half of 1934, MacGuire traveled to Europe and mailed postcards to Butler.[38] On March 6, MacGuire wrote Clark and Clark's attorney a letter describing the Croix-de-Feu.[39]
On August 22, Butler met MacGuire at a hotel, the last time Butler met MacGuire.[40][41] 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,[42] met MacGuire in his office.[43] In late September, Butler told Van Zandt that co-conspirators would be meeting him at an upcomingVeterans of Foreign Wars convention.
On November 20, the Committee began examining evidence. Journalist Paul Comly French broke the story in the Philadelphia Record and New York Post on November 21.[44] On November 22, The New York Times wrote its first article on the story and described it as a "gigantic hoax".
Committee reports[edit]
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.[45]
Contemporary reaction[edit]
A New York Times editorial dismissed Butler's story as "a gigantic hoax" and a "bald and unconvincing narrative."[7][46] Thomas W. Lamont of J.P. Morgan called it "perfect moonshine".[46] 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."[46] 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."[47][48]
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'."[49]
Later reactions[edit]
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'."[50] 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."[2]
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." [3]
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."[4]
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."[21]
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."[6]
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."[5]
Other commentators[edit]
The BBC's online teaser 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."[21]
Sources and further reading[edit]
References[edit]
  1. Jump up^ Schlesinger, p. 85
  2. ^ Jump up to:a b c Schlesinger, p. 83
  3. ^ Jump up to:a b Burk, Robert F. (1990). The Corporate State and the Broker State: The Du Ponts and American National Politics, 1925–1940. Harvard University Press. ISBN 0-674-17272-8.
  4. ^ Jump up to:a b Schmidt p. 226, 228, 229, 230
  5. ^ Jump up to:a b Sargent, James E.; Archer, Jules (November 1974). "Review of: The Plot to Seize the White House, by Jules Archer". The History Teacher(The History Teacher, Vol. 8, No. 1) 8 (1): 151–152.doi:10.2307/491493. JSTOR 491493.
  6. ^ Jump up to:a b Weber (2007). The Clarks of Cooperstown. Knopf. ISBN 0-307-26347-9. Unknown parameter |unused_data= ignored (help)
  7. ^ Jump up to:a b "Credulity Unlimited". The New York Times. November 22, 1934.
  8. ^ Jump up to:a b Schmidt, p. 219 "Declaring himself a "Hoover-for-Ex-President Republican," Smedley used the bonus issue and the army's use of gas in routing the "Bonus Expeditionary Force"  – recalling infamous gas warfare during the Great War  – to disparage Hoover during the 1932 general elections. He came out for the Democrats "despite the fact that my family for generations has been Republican," and shared the platform when Republican Senator George W. Norrisopened a coast-to-coast stump for FDR in Philadelphia....Butler was pleased with the election results that saw Hoover defeated; although he admitted that he had exerted himself in the campaign more "to get rid of Hoover than to put in Roosevelt," and to "square a debt." FDR, his old Haiti ally, was a "nice fellow" and might make a good president, but Smedley did not expect much influence in the new administration."
  9. Jump up^ Schmidt p. 2
  10. ^ Jump up to:a b c Peter L. Bernstein (2000). The Power of Gold: the history of an obsession. NY, NY: John Wiley & Sons.
  11. ^ Jump up to:a b Jeff Shesol (2010). Supreme Power: Franklin Roosevelt Vs. the Supreme Court. NY, NY: W.W. Norton & Co.
  12. ^ Jump up to:a b Jules Archer (1973). Skyhorse Publishing. p. The Plot to Seize the White House: The Shocking True Story of the Conspiracy to Overthrow FDR. Missing or empty |title= (help)
  13. ^ Jump up to:a b c Barry J. Eichengreen (1992). Golden Fetters: The Gold Standard and the Great Depression, 1919–1939. NY, NY: Oxford University Press.
  14. ^ Jump up to:a b Archer, p. x (Foreword)
  15. Jump up^ Wikisource: McCormack–Dickstein Committee report, Testimony of Maj. Gen. S. D. Butler (ret)
  16. Jump up^ Wikisource: McCormack–Dickstein Committee report, pg. 2
  17. Jump up^ Archer, p. 155.
  18. Jump up^ Schmidt, p. 231
  19. ^ Jump up to:a b Public Statement on Preliminary findings of HUAC, November 24, 1934, page 1
  20. Jump up^ Beam, Alex (2004-05-25). "A Blemish Behind Beauty at The Clark".The Boston Globe: E1.: "In his congressional testimony, Butler described Clark as being "known as the "millionaire lieutenant" and was sort of batty, sort of queer, did all sorts of extravagant things. He used to go exploring around China and wrote a book on it, on explorations. He was never taken seriously by anybody. But he had a lot of money." "Clark was certainly eccentric. One of the reasons he sited his fantastic art collection away from New York or Boston was that he feared it might be destroyed by a Soviet bomber attack during the Cold War..."(Clark) was pointed out to me during a trip to Paris," says one on his grandnieces. "He was known to be pro-fascist and on the enemy side. Nobody ever spoke to him.""
    Wikisource: McCormack–Dickstein Committee
  21. ^ Jump up to:a b c d BBC Radio 4 Document "The White House Coup – Greenham's Hidden Secret"
  22. Jump up^ Archer, p. 189
  23. Jump up^ Schmidt, p. 229
  24. Jump up^ Schmidt, p. 224
  25. Jump up^ s:McCormack–Dickstein Committee#Testimony of Gerald C. Macguire
  26. Jump up^ Archer, p. 6.
  27. Jump up^ This contradicts MacGuire's testimony: "You are a past department commander in the American Legion?" "No, sir; never held an office in the American Legion I have just been a Legionnaire—oh, I beg your pardon. I did hold one office. I was on the distinguished guest committee of the Legion in 1933, I believe." Wikisource: McCormack–Dickstein Committee report, testimony of Gerald C. MacGuire
  28. Jump up^ Archer, p. 6
  29. Jump up^ Wikisource: McCormack–Dickstein Committee report, pg. 1
  30. Jump up^ Wikisource: McCormack–Dickstein Committee report
  31. Jump up^ Wikisource: McCormack–Dickstein Committee report
  32. Jump up^ Archer, p. 178
  33. Jump up^ Wikisource: McCormack–Dickstein Committee report, pg. 20
  34. Jump up^ Wikisource: McCormack–Dickstein Committee report
  35. Jump up^ Wikisource: McCormack–Dickstein Committee report
  36. Jump up^ Schmidt, p. 239, 241
  37. ^ Jump up to:a b Archer, p. 14
  38. Jump up^ Wikisource: McCormack–Dickstein Committee report, pg. 3
  39. Jump up^ Wikisource: McCormack–Dickstein Committee report, pg. 10
  40. Jump up^ Archer, p. 153
  41. Jump up^ Wiksource: McCormack–Dickstein Committee report, pg. 3 and pg. 20
  42. Jump up^ Mennonite Church Historical Archives Paul French Biographical Information
  43. Jump up^ Wikisource: McCormack–Dickstein Committee report, pg. 5
  44. Jump up^ Archer, p. 139
  45. Jump up^ 74th Congress House of Representatives Report, pursuant to House Resolution No. 198, 73d Congress, February 15, 1935. Quoted in: George Seldes, 1000 Americans (1947), pp. 290–292. See also Schmidt, p. 245
  46. ^ Jump up to:a b c Schmidt, Hans (1998). Maverick Marine (reprint, illustrated ed.).University Press of Kentucky. p. 224. ISBN 0-8131-0957-4.
  47. Jump up^ "Plot Without Plotters". Time magazine. 1934-12-03.
    "Gen. Butler Bares 'Fascist Plot' To Seize Government by Force; Says Bond Salesman, as Representative of Wall St. Group, Asked Him to Lead Army of 500,000 in March on Capital – Those Named Make Angry Denials – Dickstein Gets Charge.". The New York Times: 1. 1934-11-21.;
    Philadelphia Record, November 21 and 22, 1934;Time magazine, February 25, 1935: "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 February 16, 1935. p. 1, "Asks Laws To Curb Foreign Agitators; Committee In Report To House Attacks Nazis As The Chief Propagandists In Nation. State Department Acts Checks Activities Of An Italian Consul – Plan For March On Capital Is Held Proved. Asks Laws To Curb Foreign Agitators, "Plan for “March” Recalled. 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. The committee recalled testimony by General Butler, saying he had testified that Gerald C. MacGuire had tried to persuade him to accept the leadership of a Fascist army."
  48. Jump up^ Archer, p. 173
    Philadelphia Post, November 22, 1934
  49. Jump up^ Schlesinger, p 85; Wolfe, Part IV: "But James E. Van Zandt, national commander of the Veterans of Foreign Wars and subsequently a Republican congressman, corroborated Butler's story and said that he, too, had been approached by "agents of Wall Street". "Zandt had been called immediately after the August 22 meeting with MacGuire by Butler and warned that...he was going to be approached by the coup plotters for his support at an upcoming VFW convention. He said that, just as Butler had warned, he had been approached "by agents of Wall Street" who tried to enlist him in their plot.""Says Butler Described. Offer.". The New York Times: 3. 1934-11-23. Quoted material from the NYT
    Schmidt, p. 224 But James E. Van Zandt, national commander of the Veterans of Foreign Wars and subsequently a Republican congressman, corroborated Butler's story and said that he, too, had been approached by "agents of Wall Street."
    Archer, p.3, 5, 29, 32, 129, 176.
  50. Jump up^ Wolfe, Part IV: "New York's Mayor Fiorello LaGuardia,..  a (supporter) of the fascist program of Mussolini, coined the term cocktail putsch to describe the Butler story: It's a joke of some kind, he told the wire services, "someone at a party had suggested the idea to the ex-marine as a joke."
  51. Jump up^ Maverick Marine: Excerpt at coat.ncf.ca
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