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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Comments (6)
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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.

  • David Wurdeman says:

    I think the busi­ness plot was VERY real, and seri­ous. I also think infor­ma­tion about it was delib­er­ate­ly sup­pressed how­ev­er. Because “if” it had been acknowl­edged, the con­se­quences for the U.S. would have been extreme­ly seri­ous. Can you imag­ine men like DuPont and Hearst and oth­er lead­ing cap­tains of indus­try, hauled before a Fed­er­al court to face charges of high trea­son?

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