The 1933 ‘Business Plot’: Smedley Butler Blows the Whistle on Industrialists & Bankers Coup to Overthrow the Gov’t, or Ruse for FDR Support?

An outstanding Major General of the Marine Corps, Smedley Butler, became involved in a controversy known as the Business Plot, when he told a congressional committee that a group of wealthy industrialists (including Goodyear, US Steel, JP Morgan, Heinz, and Maxwell House) were planning a military coup to overthrow the US government & FDR, with Butler selected to lead a march of veterans, install a Fascist dictatorship ruled by business magnates with a private army of half a million US soldiers. However this coup was disrupted by Butler’s integrity and willingness to be one of the military industrial complex’s first whistle-blowers. The individuals involved all denied the existence of a plot and the media ridiculed the allegations. A final report by a special House of Representatives Committee (McCormack-Dickstein Committee (1934–1937)) confirmed most of Butler’s testimony, but what was the real story? The first 2 pages here outline the official story and page 3 is Dr. Henry Makow’s diagnosis that it was merely a bankers ruse to drum up support for their puppet, FDR. 

On July 1, 1933, Major General Smedley Butler met with MacGuire and Doyle for the first time. Gerald C. MacGuire was a $100-a-week bond salesman for Grayson 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 the American 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.”

A year earlier, 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 to 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 U.S. Army cavalry troops under the command of General Douglas MacArthur destroyed their camps.

By 1933 Butler started denouncing capitalism and bankers, going on to explain that for 33 years he had been a “high class muscle man” for Wall Street, the bankers and big business, labeling himself as a “racketeer for Capitalism. (Wikipedia)

Peter L. Bernstein wrote in The Power of Gold: the history of an obsession, that Roosevelt’s election was upsetting for many conservative businessmen of the time, as his “campaign promise that the government would provide jobs for all the unemployed had the perverse effect of creating … fears of socialism and reckless government spending.”

Huppi.com has the following on ‘The Business Plot’:

In the summer of 1933, shortly after Roosevelt’s “First 100 Days,” America’s richest businessmen were in a panic. It was clear that Roosevelt intended to conduct a massive redistribution of wealth from the rich to the poor. Roosevelt had to be stopped at all costs.

The answer was a military coup. It was to be secretly financed and organized by leading officers of the Morgan and Du Pont empires. This included some of America’s richest and most famous names of the time:

• Irenee Du Pont – Right-wing chemical industrialist and founder of the American Liberty League, the organization assigned to execute the plot.
• Grayson Murphy – Director of Goodyear, Bethlehem Steel and a group of J.P. Morgan banks.
• William Doyle – Former state commander of the American Legion and a central plotter of the coup.
• John Davis – Former Democratic presidential candidate and a senior attorney for J.P. Morgan.
• Al Smith – Roosevelt’s bitter political foe from New York. Smith was a former governor of New York and a co-director of the American Liberty League.
• John J. Raskob – A high-ranking Du Pont officer and a former chairman of the Democratic Party. In later decades, Raskob would become a “Knight of Malta,” a Roman Catholic Religious Order with a high percentage of CIA spies, including CIA Directors William Casey, William Colby and John McCone.
• Robert Clark – One of Wall Street’s richest bankers and stockbrokers.
• Gerald MacGuire – Bond salesman for Clark, and a former commander of the Connecticut American Legion. MacGuire was the key recruiter to General Butler.

The plotters attempted to recruit General Smedley Butler to lead the coup. They selected him because he was a war hero who was popular with the troops. The plotters felt his good reputation was important to make the troops feel confident that they were doing the right thing by overthrowing a democratically elected president. However, this was a mistake: Butler was popular with the troops because he identified with them. That is, he was a man of the people, not the elite. When the plotters approached General Butler with their proposal to lead the coup, he pretended to go along with the plan at first, secretly deciding to betray it to Congress at the right moment.

What the businessmen proposed was dramatic: they wanted General Butler to deliver an ultimatum to Roosevelt. Roosevelt would pretend to become sick and incapacitated from his polio, and allow a newly created cabinet officer, a “Secretary of General Affairs,” to run things in his stead. The secretary, of course, would be carrying out the orders of Wall Street. If Roosevelt refused, then General Butler would force him out with an army of 500,000 war veterans from the American Legion. But MacGuire assured Butler the cover story would work:

“You know the American people will swallow that. We have got the newspapers. We will start a campaign that the President’s health is failing. Everyone can tell that by looking at him, and the dumb American people will fall for it in a second…”

The businessmen also promised that money was no object: Clark told Butler that he would spend half his $60 million fortune to save the other half.

And what type of government would replace Roosevelt’s New Deal? MacGuire was perfectly candid to Paul French, a reporter friend of General Butler’s:

“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 the patriotism to do it are the soldiers, and Smedley Butler is the ideal leader. He could organize a million men overnight.”

Indeed, it turns out that MacGuire traveled to Italy to study Mussolini’s fascist state, and came away mightily impressed. He wrote glowing reports back to his boss, Robert Clark, suggesting that they implement the same thing.

If this sounds too fantastic to believe, we should remember that by 1933, the crimes of fascism were still mostly in the future, and its dangers were largely unknown, even to its supporters. But in the early days, many businessmen openly admired Mussolini because he had used a strong hand to deal with labor unions, put out social unrest, and get the economy working again, if only at the point of a gun. Americans today would be appalled to learn of the many famous millionaires back then who initially admired Hitler and Mussolini: Henry Ford, John D. Rockefeller, John and Allen Dulles (who, besides being millionaires, would later become Eisenhower’s Secretary of State and CIA Director, respectively), and, of course, everyone on the above list. They disavowed Hitler and Mussolini only after their atrocities grew to indefensible levels.

The plot fell apart when Butler went public. The general revealed the details of the coup before the McCormack-Dickstein Committee, which would later become the notorious House Un-American Activities Committee. The Committee heard the testimony of Butler and French, but failed to call in any of the coup plotters for questioning, other than MacGuire. In fact, the Committee whitewashed the public version of its final report, deleting the names of powerful businessmen whose reputations they sought to protect. The most likely reason for this response is that Wall Street had undue influence in Congress also.

Note: Further, the committee deleted all portions of the testimony involving other prominent persons: J.P. Morgan, the Du Ponts, the Rockefeller interests, Hugh Johnson, and Franklin D. Roosevelt.

The final report issued by the committee in February 15, 1935 buried the story even further. John L. Spivak sums up the burial succinctly: “I… studied the Committee’s report. It gave six pages to the threat by Nazi agents operating in this country and eleven pages to the threat by communists. It gave one page to the plot to seize the Government and destroy our democratic system.” (Source)

Even more alarming, the elite-controlled media failed to pick up on the story, and even today the incident remains little known. The elite managed to spin the story as nothing more than the rumors and hearsay of Butler and French, even though Butler was a Quaker of unimpeachable honesty and integrity. Butler, appalled by the cover-up, went on national radio to denounce it, but with little success.

[box type=”shadow” ]While the Committee found that Gen. Butler was telling the truth, discrediting such a stalwart was problematic for the plotters. Quickly, the corporate press weighed in and sought to raise doubts about the war hero, settling on branding him naive. The discredit Knudsen meme was: “it was all idle cocktail party chatter.” This red herring was trumpeted under the Associated Press headline “The Cocktail Putsch.” New York Mayor Fiorello LaGuardia dismissed the plot as “someone at the party had suggested the idea to the ex-Marine as a joke.”

From 1934 through 1936, the League got thirty-five pro-League front page stories in the New York Times. TIME ridiculed Butler in a Dec. 3, 1934 cover story, even though Butler’s story was corroborated by VFW head James E. Van Zandt, who also said he was approached to lead the coup.  Though, TIME did put a footnote on an early 1935 article stating; “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.”[/box]

Butler was not vindicated until 1967, when journalist John Spivak uncovered the Committee’s internal, secret report. It clearly confirmed Butler’s story:

In the last few weeks of the committee’s life it received evidence showing that certain persons had attempted to establish a fascist organization in this country…

There is no question that these attempts were discussed, were planned and might have been placed in execution if the financial backers deemed it expedient…

MacGuire denied [Butler’s] allegations under oath, but the committee was able to verify all the pertinent statements made to 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 principle, Robert Sterling Clark, of New York City, while MacGuire was abroad studying the various form of veterans’ organizations of Fascist character.

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