When American Financiers and Business Leaders Plotted to Overthrow Franklin D. Roosevelt and Install a Fascist Government in the U.S. (1933)

Economist and columnist Paul Krugman recently wrote about a current nominee for the Federal Reserve’s Board of Governors who called cities like Cincinnati and Cleveland “armpits of America” to laughs from an audience of business leaders. This same nominee has made headlines for saying “capitalism is a lot more important than democracy” and calling the 16th Amendment establishing the income tax the “most evil” law passed in the 20th century.

As crude as the comments are, many wealthy people who make decisions of consequence in the U.S. do not seem like “big believers in democracy,” as the nominee put it. It’s messy and inconvenient for those who would prefer not to answer to an elected government. The same attitudes were shared by right-wing bankers, business leaders, and conservative politicians during the worst economic crisis the country has seen.

Despite the failure of laissez-faire financial capitalism after the crash of 1929, financiers, economists, and politicians refused to admit their principles might have been very badly flawed. But in 1933, when Franklin Roosevelt was first elected, “the economy was staggering, unemployment was rampant and a banking crisis threatened the entire monetary system,” writes NPR, in a description of the Great Depression that reads as drily understated.

Still, Roosevelt’s election went too far for his opponents (and not far enough for progressives to his left). West Virginia Republican Senator Henry Hatfield wrote to a colleague, in a series of evergreen expressions, characterizing FDR’s historic First Hundred Days as “despotism”:

This is tyranny, this is the annihilation of liberty. The ordinary American is thus reduced to the status of a robot. The president has not merely signed the death warrant of capitalism, but has ordained the mutilation of the Constitution, unless the friends of liberty, regardless of party, band themselves together to regain their lost freedom.

Wall Street agreed, except for all that stuff about the Constitution and the welfare of the ordinary American.

In what became known as the “Business Plot” (or the “Wall Street Putsch”)—a group of bankers and business leaders allegedly created a conspiracy to overthrow the president and install a dictator friendly to their interests. The conspirators included investment banker and future Connecticut Senator Prescott Bush (father of George H.W. Bush), bond salesman Gerald MacGuire, and Bill Doyle commander of the Massachusetts American Legion.

The plot was famously exposed by Major General Smedley D. Butler, who testified under oath about his knowledge of a plan to form an organization of 500,000 veterans who could take over the functions of government, as you can see Butler himself say in the 1935 newsreel footage above. The members of the Business Plot believed Butler would lead this irregular force in a coup. He had previously been “an influential figure in the so-called Bonus Army,” writes Matt Davis at Big Think, “a group of 43,000 marchers—among them many World War I veterans—who were camped at Washington to demand the early payment of the veteran’s bonus promised to them.”

Butler’s willingness to challenge the government did not make him sympathetic to a coup. He heard the conspirators out, then turned them in. But his allegations were immediately dismissed by The New York Times, who wrote that the story was a “gigantic hoax,” “perfect moonshine!,” “a fantasy,” and “a publicity stunt.” A congressional investigation corroborated Smedley’s claims, to an extent. The conspirators may have had weapons, violent intent, and millions of dollars. But no one was ever prosecuted. Many, like New York Mayor Fiorello La Guardia, waved the coup attempt away as “a cocktail putsch.”

The same attitudes that let the conspirators suffer no consequences, and let them go on to serve in high office, also seemed to drive their way of thinking. Roosevelt could be brought to see reason, they believed. Since his class interests aligned with theirs, he would see that fascism best served those interests. Sally Denton, investigative reporter and author of a book about the multiple plots against FDR (The Plots Against the President: FDR, A Nation in Crisis, and the Rise of the American Right), explains in an interview with All Things Considered:

They thought that they could convince Roosevelt, because he was of their, the patrician class, they thought that they could convince Roosevelt to relinquish power to basically a fascist, military-type government.

What MacGuire proposed was more corporatist than militarist in appearance, at least, notes Davis. The President could remain as a figurehead, but “the real power of the government would be held in the hands of a Secretary of General Affairs, who would be in effect a dictator," but whose job description, as MacGuire put it, was “a sort of super secretary.”

As for Butler, not only did he call the plot treason, but he also came to feel considerable regret for his service as “a high-class muscle man for Big Business, for Wall Street and the bankers,” as he later wrote in his essay “War is a Racket,” published in the socialist magazine Common Sense. “I was a racketeer,” he confessed, “a gangster for capitalism.” In exposing the plot, he decided to side with the flawed, but functional democracy of our own country over the will of capitalists bent on holding power by any means.

via Big Think

Related Content:

20,000 Americans Hold a Pro-Nazi Rally in Madison Square Garden in 1939: Chilling Video Re-Captures a Lost Chapter in US History

How Warner Brothers Resisted a Hollywood Ban on Anti-Nazi Films in the 1930s and Warned Americans of the Dangers of Fascism

Umberto Eco Makes a List of the 14 Common Features of Fascism

Josh Jones is a writer and musician based in Durham, NC. Follow him at @jdmagness


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  • Michael Wilson says:

    The economic system did not fail. The Federal Reserve failed and then Congress added to the problems. Besides the nation has never had anything that can be described as laissez-faire as an economic system

  • Lonnie says:

    It’s ironic how the rich want fascism and the poor want communism. The middle class just sits and smh while the two extremists argue. This is our government today. I wish Gary Johnson had won the presidency!

  • Gerald says:

    It is hard to put too much stock in Mr. Krugman’s opinions, after all this is the guy who told us that Trump’s election meant “we are very probably looking at a global recession, with no end in sight.”

    Also, the Great Depression resulted from government intervention in the markets, not “laissez-faire financial capitalism after the crash of 1929.” You can get the details here: https://fee.org/articles/what-caused-the-great-depression/

  • Wirkman says:

    “Despite the failure of laissez-faire financial capitalism after the crash of 1929, financiers, economists, and politicians refused to admit their principles might have been very badly flawed.”

    Well, that is a bizarrely unhistorical mishmash. Herbert Hoover was a progressive Republican who engaged in massive make-work projects and pressured businesses to keep wages up — and much more — after the crash. This was not laissez faire. Pretending it was is unconscionably bad history. It was dirigisme, and the fiscal stimulus Hoover engaged in was objected to by FDR himself on the campaign trail. Imputing the secondary depression to limited government is witless.

    And identifying laissez faire as the cause of the crash is also counter-historical. See the analysis of Phillips, McManus, and Nelson, “Banking and the Business Cycle: A Study of the Great Depression in the United States” (1937), which demonstrated quite conclusively that the behavior of Benjamin Strong at the Federal Reserve was responsible for the capital structure instability that led to the Crash of 1929. Significantly, a young Austrian economist, F.A. Hayek, who visited the the U.S. in the 1920s, predicted the crash for that very reason. Meanwhile, America’s most illustrious monetary theorist, Irving Fisher, held to a different thesis, so on the eve of the crash extolled the economy’s inevitable future rise.

    It pays to think critically about these matters.

    That being said, I leave to others the proper appraisal of the attempted coup. Which I find interesting. The activities of Prescott Bush and his progeny seem to me to indicate a deeply malign influence on American history, but I suppose I could be wrong.

  • Wirkman says:

    I should go on to say that I have long admired Smedley Butler and his resistance to the coup attempt, but I wonder whether the final line of this article might present an unrealistic interpretation of the motives of the plutocrats.

    “In exposing the plot, [Butler] decided to side with the flawed, but functional democracy of our own country over the will of capitalists bent on holding power by any means.”

    The fly in the ointment, here, is that the capitalists gained power in the subsequent period. Massive power and wealth. Prescott Bush went on to engage in (if what I have read is accurate) extremely shady and disturbing business relations with the Nazi government of Germany’s “Third Reich,” and capitalists set up a system that allowed banking to go on through World War II in a way that increased their power, not diminished it — while setting up a system that allowed Nazis to despoil the countries they conquered and engage in a massively predatory finance system. The plutocrats — perhaps not to a man, but the main cabal of their ranks — greatly profited from the Administrative State set up by FDR.

    And FDR did not, please remember, get the U.S. out of the Great Depression. The depression lingered throughout the peace years, and though the war years were busy, standards of living were not appreciably up from the previous period. (See the work of economic historian Robert Higgs for the definitive study.)

    So I wonder whether the coup attempt was not motivated by public spirit. And the banking class, after it was put in its place, did what bankers normally do: get ahead in massive financial deals, which is what activist governments in war and peace require.

    Yes, I am wondering, now, whether the coup was more earnest and public-minded than the businessmen’s activities in the period after it was suppressed, when private-public partnerships became the norm, and laissez faire was well-buried in distant memory, as a hope that never really took full flower. I am not saying that they were for laissez faire.
    But opposing FDR’s policies is not a sure sign of malign intent. FDR’s grab bag of interventionist policies were not only almost all spectacular failures, many were quickly determined to be unconstitutional. Think on that. A coup is attempted in the face of unconstitutional presidential action. This does not make the organizers of the coup necessarily and wholly evil. Some might even sympathize.

    You know, the kind of person who wishes to oust unconstitutional government, and put in place policies that work.

    For the first time, I am beginning to wonder about the whole mess.

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