The ‘Business Plot’ to Overthrow Franklin D. Roosevelt
by Carlton Martz
During his campaign for president in 1932, Franklin D. Roosevelt (FDR), who came from a wealthy family, appealed to common people to help him rebuild America during the Great Depression. He promised to help suffering Americans by putting them back to work, stopping farm foreclosures, and regulating the banks. Central to his appeal was his criticism of the banks and financial investors that had come to be known as Wall Street.
As president, he ended the gold standard. In this system, the value of the dollar was based on the total amount of gold held by the federal government. The fixed amount of gold restricted government spending. These spending limits would have hindered Roosevelt’s New Deal programs to bring relief to Americans.
Roosevelt seized failing banks and placed them under federal control. Wall Street bankers and stockbrokers were happy that the banks were saved, but they did not like the idea of federal regulation of banks. They were even more opposed to ending the gold standard. They feared Roosevelt would spend wildly, and that their fortunes would shrink.
Gen. Smedley Butler
Smedley Butler was a well-admired military leader and supporter of FDR. Butler was born in 1881 in Chester, Pennsylvania, into a Quaker family. His father was a longtime Republican member of Congress. Though Quakers are traditionally pacifist, 16-year-old Smedley insisted on joining the fight when the Spanish-American War broke out in 1898. He badgered his mother to take him to join the U.S. Marine Corps.
Butler had a long military career, rising through the ranks to become an officer and ultimately a major general. He served in the Philippines, Haiti, Mexico, and other Caribbean countries, as well as China during the Boxer Rebellion (1899–1901) and in World War I. He won two Congressional Medals of Honor. By the 1920s, he was widely known as “the soldiers’ general,” beloved by the rank and file.
Over time, his views about the use of Marines abroad changed. He spoke out that the Marines were being used mainly to protect American business investments and called the use of the military abroad a “racket,” which got him into trouble with his superiors.
In 1931, he retired and began to make public speeches against the power of Wall Street. Around the same time, Butler took up another cause: the bonus payment for World War I veterans that had long been promised by the U.S. government. In July 1932, 14 years after the end of World War I, a group of thousands of veterans and their families held a demonstration in Washington, D.C.
Known as the “Bonus Army,” they set up camp, demanding that Congress pass a law to give them their bonus pay. Now a celebrity among veterans, Butler was invited to speak to the Bonus Army. His speech received a standing ovation.
Butler was shocked when President Herbert Hoover ordered Gen. Douglas MacArthur to clear and burn the Bonus Army’s camp. A long-time Republican, Butler decided to campaign for the Democrat FDR in the 1932 election.
The Plot Begins
In July 1933, Butler was approached at his home by two well-dressed men. One of the two men was Gerald MacGuire, who identified himself as part of the Connecticut American Legion. At this first meeting, MacGuire tried to convince Butler to run for commander of the American Legion at the upcoming convention. For years, Butler had been critical of the American Legion’s leadership. He believed the leaders had failed to adequately support veterans. However, Butler turned down the offer.
A month later, the two men went to Butler’s home again with a new plan. They wanted Butler to gather hundreds of American Legion members (“Legionnaires”) to back Butler for commander at the Legion convention in Chicago. MacGuire assured Butler that $100,000 was in the bank to support the expenses of the Legionnaire backers.
MacGuire also gave Butler a prepared speech to deliver at the convention. Butler refused MacGuire’s new plan. The prepared speech demanded that the Legion pressure Roosevelt to restore the gold standard, supposedly to pay the Bonus Army. Butler became suspicious about the motives of MacGuire and the other man.
MacGuire approached Butler about the new plan a third time in September. Butler asked who was backing this plan. MacGuire mentioned several wealthy Wall Street businessmen, including his boss, stockbroker Grayson Murphy, a founder of the American Legion. MacGuire boasted that Murphy had received a medal from Benito Mussolini, the Fascist leader of Italy, whom Butler despised.
MacGuire also named Robert Clark as a backer of the plan. Clark was a stock investor whom Butler knew as the “millionaire lieutenant” in China. To convince Butler of the plan, MacGuire pulled 18 one-thousand-dollar bills from his wallet and offered them to Butler. (This would be the equivalent of around $400,000 in 2023.) Butler angrily refused what he considered an obvious bribe.
A few days later, Butler realized he needed to gather evidence about the financial backers of MacGuire’s proposal. He wrote to MacGuire saying he would carry out the plot, after all, but only with proof that the Legionnaires would be paid.
Meeting the Financier
MacGuire arranged a meeting between Gen. Butler and Robert Clark. Clark pressed Butler to make the gold standard speech. Clark said he paid the chief lawyer for the J.P. Morgan Wall Street firm to write the speech. “We want the gold,” Clark told Butler, supposedly for the benefit of the soldiers. Clark revealed to Butler that he had $30 million and did not want to lose it because of the New Deal.
Clark told Butler that FDR was weak. Butler’s speech at the Legion convention, he argued, would gain the soldiers’ support and force FDR to restore the gold standard. When Butler refused again to make the speech, Clark became irritated. He offered to pay Butler’s home mortgage. He also said that other wealthy backers of the plan preferred Gen. MacArthur to Gen. Butler, whom they considered “too radical.”
Later, the American Legion convention voted to endorse the gold standard without Butler’s speech. But Roosevelt did not change his policy.
Fascist Influences
Meanwhile, MacGuire went to Europe to study fascist groups in Italy, Germany, Spain, and France. In particular, he studied how veterans’ groups in those countries helped support fascism and dictatorship. He would later testify that Robert Clark funded his study-trip.
Upon his return in the spring of 1934, he met with Smedley Butler again. This time, he tried to persuade Butler to assemble and lead a veterans’ army, like the Cross of Fire group that had staged an insurrection in France. He told Butler it would be a peaceful military takeover of Roosevelt’s presidency. The pretext, he said, would be FDR’s poor health. Butler’s patriotism, beloved reputation among veterans, and his speech before the Bonus Army two years earlier made him the perfect man for the job, MacGuire thought.
If Gen. Butler’s army would topple Roosevelt, the plot involved Roosevelt turning over power to a “Secretary of General Affairs” who would act as dictator and restore the gold standard. FDR would remain as a figurehead, like the powerless king of Italy. If FDR resisted, he would be forced to resign.
Butler was appalled. He believed that MacGuire’s new plot was treason. He told MacGuire he needed time to think about it, but really, he wanted time to carefully think about how he should alert the government. The plot was so outrageous, who would believe it?
Alerting the Press
Alarmed, Butler first went to the press. He contacted reporter Paul French of the Philadelphia Record who investigated Butler’s story. Butler introduced him to MacGuire as someone sympathetic to MacGuire’s cause, so that MacGuire revealed to French all the details of the plot.
Butler himself went to J. Edgar Hoover, director of the federal Division of Intelligence (which later became the FBI). But Hoover said there was no federal crime, yet, for him to investigate. In reality, Hoover was already investigating American fascist groups and may have been aware of MacGuire’s activities.
The House Committee Investigation
Beginning on November 20, 1934, members of the House of Representatives’ Special Committee on Un-American Activities met secretly in New York City to take testimony about what the press would call the “Business Plot” (because it was funded by wealthy and prominent businessmen). Rep. John McCormack (D-Mass.) and Rep. Samuel Dickstein (D-NY) led the hearing. Smedley Butler, Gerald MacGuire, and the reporter Paul French each gave testimony under oath.
Butler testified to what he experienced in the meetings he had with MacGuire and Clark. At the first meeting, MacGuire told Butler that Roosevelt himself did not want Butler to attend the American Legion convention. “I thought I smelled a rat, right away,” Butler testified, “that they were trying to get me mad — to get my goat.” Butler continued, “I could not reconcile . . . their desire to serve the ordinary man in the ranks, with their other aims.”
Butler recounted what he said to Clark in their first meeting:
I have one interest and that is the maintenance of democracy. That is the only thing. I took an oath to sustain democracy, and that is what I am going to do and nothing else. I am not going to get these soldiers marching around and stirred up over the gold standard.
Regarding MacGuire’s plot to replace FDR with a dictator, Butler quoted MacGuire:
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. Everybody can tell that by looking at him, and the dumb American people will fall for it in a second.
Next, Paul French testified about his independent investigation of Butler’s claims. He confirmed Butler’s story to the committee. “During the course of [our] conversation,” French said, “[MacGuire] continually discussed the need for a man on a white horse, as he called it, a dictator who would come galloping. . . [with] a group of organized veterans to save capitalism.”
Committee members McCormack and Dickstein questioned MacGuire for three days. He denied almost all of Butler’s story. Frequently, he answered the committee members’ questions by saying “Not to my recollection,” or “I do not remember.” In sworn testimony, he denied Butler’s and French’s assertions about the plot to overthrow FDR.
The committee wanted to question financier Robert Clark, who Butler had said offered him a bribe to lead an insurrectionary veterans’ army. But Clark was in Europe and never appeared before the committee.
The Press Reacts
On November 21, 1934, the day after the committee first met to take testimony, Paul French broke the story in the Philadelphia Record and the New York Post. Most of the rest of the press did not seem to take the plot very seriously.
The New York Times barely covered the plot but quoted denials of men named by Butler. Thomas Lamont, a partner in J.P. Morgan & Co., called Butler’s story “perfect moonshine!” Grayson Murphy, MacGuire’s boss, said the plot was “an absolute lie.” Gerald MacGuire told reporters that he had only gone to see Butler to sell him some bonds and that Butler’s testimony was “a publicity stunt.”
Later The New York Times declared the plot “a gigantic hoax.” In December 1934, Time magazine labeled Butler’s story a “Plot without Plotters.”
The Committee’s Final Report
Despite the press’s mockery, the McCormack-Dickstein Committee staff dug up bank records, letters, and other documents that verified Butler’s testimony. Then, on February 15, 1935, it submitted its final report to the House of Representatives. Among its findings were the following:
- The committee “received evidence showing that certain persons had made an attempt to establish a Fascist organization in this country.”
- “There is no question that these [fascist] attempts were discussed, were planned, and might have been placed in execution when and if the financial backers deemed it expedient [suitable].”
- “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 [proved] 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.”
The committee concluded, “Armed forces for the purpose of establishing a dictatorship through the instrumentality of the proletariat [working class], or a dictatorship predicated on racial and religious hatreds, have no place in this country.”
The final report deleted the identity of nearly all the plotters and censored some of the testimony. No criminal charges were ever filed against the alleged plotters. Nonetheless, Butler seemed satisfied that the plot had been stopped due to the publicity.
The committee sent a copy of its report to President Roosevelt. FDR said he was “interested” in the report. Otherwise, FDR remained silent about its findings.
The Business Plot Ends
The Business Plot hardly has made a footnote in American history. The press mostly ignored the committee’s findings. However, journalist John Spivak published the testimony in 1935 with the names and businesses that had been deleted. Even then, there was a muted reaction from the press, Congress, and the public.
Some have speculated that this silence — and FDR’s silence — was due to the fact that some of FDR’s own advisers within the Democratic Party were involved in the Business Plot. Therefore, the details were mostly hidden from the public for national security. Spivak was also a communist, which did not enhance his credibility with the press, members of Congress, or the White House.
Author Jules Archer interviewed committee chair John McCormack in 1971. McCormack said Butler was telling the truth. He told Archer that the plotters got “the wrong man for the job.”
Historians and journalists have puzzled over the fact that the plotters sought “the wrong man’s” help. After all, Butler was a friend and supporter of FDR and an outspoken critic of Wall Street and of war. Therefore, some have theorized that the Business Plot may have been an attempt by powerful people to discredit one of FDR’s strongest allies, Smedley Butler.
In other matters, Congress passed the long-delayed World War I veterans’ Bonus Act in 1936 — over FDR’s veto. (FDR said the bill was technically not a relief bill for veterans.) Meanwhile, Gen. Smedley Butler wrote War is a Racket, a 1936 book that examined how U.S. industries and Wall Street profited from America’s entry into World War I. He died in 1940.
Extremist, neo-fascist, and seditious movements have arisen in the United States since Butler’s time. Recently, some extremists were convicted of the crime of seditious conspiracy in the January 6, 2021, attack on the U.S. Capitol. Unlike the McCormack-Dickstein Committee, the House hearings about “1/6” were not secret, and the mainstream press did not ignore the hearings’ findings.
Questions for Discussion
1. Why do you think the major press did not take the Business Plot seriously?
2. Do you think the U.S. Justice Department should have prosecuted anyone? If so, who?
3. Why do you think fascism was popular among some Americans in the 1930s?
This article was originally published in BRIA, the quarterly curricular magazine of Teach Democracy (formerly Constitutional Rights Foundation). Click here for a high-school classroom activity on this article, as well as a source list for the article. You can also subscribe to BRIA for free here.
