Smedley Butler & the “Business Plot,” Part II

Did the conspiracy really exist? Was it the passing pipedream of a few crackpots and investment bankers, as contemporaries seemed to suspect? Was it an elaborate double-​bluff, through which the Roosevelt administration tarred supporters of sound money as “gold-​bugs” and cranks? Or was it all the fabrication of a Smedley Butler now past his prime and eager for fresh publicity?

Barring the appearance of fresh and creditable evidence, we should most certainly withhold final judgment-​-​But, my! It is fun to speculate. And after all, so much of history is simply well-​documented conspiracy.

Anthony Comegna

Assistant Editor for Intellectual History

[For release for morning papers, Nov. 20, 1934]…

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.

In the course of his sworn testimony. General Butler testified that…one Gerald C. MacGuire, of New York, and William Doyle, of Boston, Mass…suggested to him that he become a candidate for national commander of the American Legion at its convention at Chicago to be held in October 1933 and further stated that he told him that he was not interested and realized that he could not be elected commander…

MacGuire returned on several other occasions and suggested to him that he go to the Legion convention at Chicago and make a speech urging a resolution…that the United States return to the gold standard…

Butler further testified that on this occasion MacGuire showed him a bank book, the pages of which were flipped, indicating deposits of approximately $42,000…

Butler then testified that he saw MacGuire again and that MacGuire appeared in his hotel room in Newark during the reunion of the Twenty-​ninth Division in September 1933 and while in Butler’s room took a wallet from his pocket, threw a bunch of $1,000 bills on the bed and that when Butler asked him ” How much money have you got there “, MacGuire is alleged to have replied “$18,000 “, and on further questioning is alleged to have told Butler that he got the money from contributions the night before and has not had an opportunity to deposit them and wanted to give them to Butler for his help…

Before MacGuire left Newark, according to Butler, he told the general that they were anxious “to see the soldiers’ bonus paid in gold. We don’t want the soldier to have rubber money.”

Butler testified that during that week he had a telephone call from Clark and that he and his wife met Clark at the railroad station in Philadelphia the following Sunday…

The American Legion convention in Chicago passed the resolution endorsing the gold standard; and according to Butler, after the convention MacGuire stopped by to see him and suggested that Butler go to Boston to attend a veterans’ dinner again for the purpose of advocating the gold standard, which the general says he refused to do…

MacGuire, according to Butler…had gone to Germany to see what Hitler was doing, and found that that situation would not do in the United States either, and that he had been in France, where he found just exactly the organization that we ought to have in this country and called it an organization of “super-​soldiers”, but that Butler did not remember the French name for that organization.

Butler further testified that MacGuire at that time told him that this French super organization was composed of about 500,000 men, and that each one of them was the leader of 10 others, and that that was the kind of an organization that we should have in the United States…

I said, “The idea of this great group of soldiers, then, is to sort of frighten him [Roosevelt], is it?” “No, no, no; not to frighten him. This is to sustain him when others assault him.” He said, “You know, the President is weak. He will come right along with us. He was born in this class. He was raised in this class, and he will come back. He will run true to form. In the end he will come around. But we have got to be prepared to sustain him when he does…”

Butler claims that MacGuire then told him that the President was overworked, that he needed an assistant to take over the many heavy duties, and that such a position would be created and would probably be called “a secretary of general affairs”, and that then all that was accomplished the President of the United States would be like the President of Finance…

Butler testified that in the conversation MacGuire suggested that if necessary the Vice President and Secretary of State would resign and that this secretary of general affairs would become the Secretary of State and follow through to the Presidential succession.

Butler further stated that he discussed this entire matter with his confident, Paul French, and that it was agreed between them that French should see MacGuire in New York.

Paul Comley French, a reporter for the Philadelphia Record and the New York Evening Post, followed the general on the witness stand, testified that General Butler had spoken to him about this matter, and that they agreed that French should go to New York to get the story.

French testified that he came to New York, September 13, 1934, and went to the offices of Grayson M.-P. Murphy & Co. on the twelfth floor of 52 Broadway and that MacGuire received him shortly after 1 o’clock in the afternoon and that they conducted their entire conversation in a small private office…

French testified that MacGuire stated, “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 patriotism to do it are the soldiers and Smedley Butler is the ideal leader. He could organize one million men over night.”

Continuing, French stated that during the conversation MacGuire told him about his trip to Europe and of the studies that he had made of the Fascist, Nazi, and French movements and the parts that the veterans had played in them.

French further testified that MacGuire considered the movement entirely and tremendously patriotic and that any number of people with big names would be willing to help finance it. French stated that during the course of the conversation, MacGuire continually discussed “the need of a man on a white horse” and quoted MacGuire as having said “We might go along with Roosevelt and then do with him “what Mussolini did with the King of Italy.”

MacGuire, according to French, expressed the belief that half of the American Legion and the Veterans of Foreign Wars would follow General Butler if he would announce the plan that MacGuire had in mind…

Gerald C. MacGuire was called to the stand late in the afternoon of Tuesday, November 20 and…

MacGuire in brief, claimed that the object of his visit was to induce Butler to run for commander of the American Legion and that he had also talked to General Butler about forming a committee for a sound dollar, and a sound currency.

MacGuire denied that he had in any way thought of unseating the royal family of the American Legion, but that he felt that if Butler could become a delegate at the Chicago convention, he might become commander.

MacGuire admitted that they did discuss the possibility of Butler becoming a delegate from Hawaii.

MacGuire claimed that he wanted to interest Butler in this Committee for a Sound Dollar, because, being a public man, he could go out and speak for the movement and that they wanted him to have an opportunity to make a little money.

MacGuire denied that he had at any time ever given Butler a prepared speech and claimed that he, MacGuire, was always for President Roosevelt.

At this point, MacGuire stated that he had met Butler on eight or nine different occasions, but that he had never talked to the general about taking 200 or 300 men to the Legion convention in Chicago, nor that he had ever shown Butler a bank book or that he had ever told Butler that he had large sums of money at his command.

MacGuire testified that he had been in Newark on the occasion of the reunion of the Twenty-​ninth Division. That it was a Sunday and that all he had done was to hear Butler’s speech and that he, MacGuire, then left.

To a question by chairman of the committee, MacGuire answered “I never had any money and he (Butler) never asked me if I had any.”

MacGuire acknowledged that he had mentioned the name of Robert Sterling Clark to Butler in connection with the Committee for a Sound Dollar and that he had told Butler that Clark would back up such a committee with money…

MacGuire had a hazy recollection that Clark had talked to Butler, but denied emphatically that Clark had called him up while MacGuire was at the convention in Chicago, and that he did not make arrangements for Clark to meet Butler and did not know how the meeting was brought about…

MacGuire denied telling Butler anything about any governmental set-​ups in Europe, although he stated that he had told Butler that in his opinion “Hitler would not last another year in Germany and that Mussolini was on the skids “.

MacGuire again emphatically denied that he had said anything about the European veterans. Then MacGuire stated that Paul French had come to him and outlined a lot of things that Butler was trying to do with different veteran outfits in the country, and that he told French that Butler should not be mixed up with that kind of stuff…

While being questioned by both Congressman McCormack and Dickstein, MacGuire suddenly remembered that Clark had given him some money in connection with some bond transactions and fixed the sum at $25,000, which he stated he placed on deposit with the Manufacturers Trust Co., in a “special account”, and further stated that Clark had paid his expenses in going around the country looking over various municipalities in connection with the purchase of their bonds.

MacGuire testified that this $25,000 was to go back to Mr. Clark, and that he had repaid $20,000 of it to Mr. Albert G. Christmas and that Christmas again gave him another check for $20,000 which he redeposited in the Manufacturers Trust Co. in the special account.

It should be noted here that Albert G. Christmas, attorney, 160 Broadway, represents Mr. Clark.

MacGuire swore that this money was for the purpose of buying securities and that he had used the money to purchase letters of credit for that purpose…

Continuing under oath MacGuire said that the $1,125 was drawn for expenses and that the $6,000 was tied up with other amounts, but that the cash was paid back to Christmas.

However, MacGuire testified he had no receipt from Christmas or anything else to show it. MacGuire admitted that he had bought and sold bonds to the value of approximately 9 million dollars for Clark, through the Murphy firm, but that this was the only time he had ever been handed any cash personally with which to buy them…

He further claimed that he converted all of these letters of credit into cash at the First National Bank of Chicago and that he put the money into a safe deposit box in Chicago and that after the convention was over, he brought all of the cash back to Mr. Christmas, less expenses, because he had not purchased any bonds.

MacGuire could not explain why he had paid a premium of one-​half of 1 percent, amounting to $150, on $30,300 worth of letters of credit only to cash them without having any purchases in mind and then bringing the currency back to New York.

Later in the questioning MacGuire admitted that he received $10,000 in currency from Christmas, while MacGuire, Christmas, and Clark were having luncheon at the Bankers Club, which had nothing whatever to do with these other funds.

MacGuire stated under oath, that he took this $10,000 and placed it in his safety deposit box at the Seaman’s Savings Bank; that it is no longer there; that he does not know when he took it out, nor does he remember what he did with it.

Again under questioning, MacGuire did not have any receipts for any of the sums of cash which he claims he repaid to Christmas as agent for Clark, in one case a sum of about $30,000. Note from the committee. Deposits in the Manufacturers Trust Co. special account which totaled $20,000 and the $10,000 which he admits he received in cash at the Bankers Club, are not part of the $31,000 which was used by the committee on sound money…

Resuming his testimony on Friday, November 23, MacGuire failed to produce a book to which he had previously referred, in which he stated he had entered the moneys which he handled in connection with his trip to Chicago…

The congressional committee then went into the carbons of reports presented by MacGuire which he had written while he was in Europe. Some were addressed merely “Gentlemen”, others to Mr. Clark and one to Mr. Christmas. Mr. MacGuire had previously testified he had been sent to Europe by Mr. Clark to study economic conditions.

In his letter of April 6, 1934, which is headed “My dear sir”, MacGuire writes as follows:

“There is no question but that another severe crisis is imminent. There have been various pieces of information given me to the effect that the Communists have been arming and are scattered in the outlying districts of Paris. However, this does not mean, to my mind, that there will be anything such as occurred in Vienna. If anything, it appears to me that the Communists may be used as a goat by the military, and that if this group should by any chance start demonstrations against the government, it may serve to call forth a “coup d’etat”, which, it might be said, would be the use of the military.

I had a very interesting talk last evening with a man who is quite well up on affairs here and he seems to be of the opinion that the Croix de Feu will be very patriotic during this crisis and will take the cuts or be the moving spirit in the veterans to accept the cuts. Therefore they will, in all probability, be in opposition to the Socialists and functionaries. The general spirit among the functionaries seems to be that the correct way to regain recovery is to spend more money and increase wages, rather than to put more people out of work and cut salaries.”

In letter on March 6, 1934, addressed merely to “Gentlemen” MacGuire writes:

“The Croix de Feu is getting a great number of new recruits, and recently attended a meeting of this organization and was quite impressed with the type of men belonging. These fellows are interested only in the salvation of France, and I feel sure that the country could not be in better hands, because they are not politicians; they are a cross section of the best people of the country from all walks of life, people who gave their “all” between 1914 and 1918 that France might be safe, and I feel sure that if a crucial test ever comes to the Republic that those men will be the bulwark upon which France will be saved.

There may be more uprisings, there may be more difficulties, but as is evidenced right now when the emergency arises party lines and party difficulties are forgotten as far as France is concerned, and all become united in the one desire and purpose to keep this country as it is, the most democratic, and the country of the greatest freedom in the European Continent.”

MacGuire denied that he had spent a great deal of time going into veteran matters there, but he does use and gives a description of the Croix de Feu, which does compare with what Butler testified

MacGuire had told him, and again MacGuire denied that he had told Butler about it.

In other parts of the correspondence what MacGuire wrote to Clark and Christmas about foreign veteran groups tallies with what Butler claims MacGuire told him, but which MacGuire denies he did.

In a letter dated April 24, 1934, addressed to “Gentlemen”, MacGuire wrote:

“I just returned from a trip to Brussels, Rotterdam, Amsterdam, Hamburg, Copenhagen, Berlin, Prague, Leipzig, Vienna, Munich, Zurich, Basle, Geneva, and thence back to Paris.

I was informed that there is a Fascist Party springing up in Holland under the leadership of a man named Mussait, who is an engineer by profession and who has approximately 50,000 followers at the present time ranging in age from 18 to 25 years. It is said that this man is in close touch with Berlin, and is modeling his entire program along the lines followed by Hitler in Germany. A number of people are quite alarmed because of the German influence and the probable financial support that this man is getting from Berlin. Generally speaking, trade conditions in Holland are extremely poor, the Germans have placed restrictions against the import of all foodstuffs from this country, and the large cotton mills that the Dutch have have been closed down for a considerable length of time, mainly because of our old friend Japanese competition in the Far East, particularly in the territories that the Dutch have as a market.”

In another letter MacGuire said, “everywhere you go you see men marching in groups and company formation.”

MacGuire could not explain why he gave a check for $20,000 to Albert G. Christmas on September 15 and received a check back from Christmas 3 days later for the same amount…

To all such questions MacGuire answered, “It is too far back” or “I don’t recall.”

Neither could MacGuire remember what the purpose of his trip was to Washington or whether he had given the Central Hanover bank thirteen $1,000 bills or that he had bought one of the letters of credit with a certified check drawn on the account of Mr. Christmas.

In the course of the questioning MacGuire could not remember whether he had ever handled thousand-​dollar bills, and certainly could not remember producing 13 of them at one time in the bank. It must be remembered in this connection that the $13,000 purchase with $1000 bills at the bank came just 6 days after Butler claims MacGuire showed him eighteen $1,000 bills in Newark.

From the foregoing it can readily be seen that in addition to the $30,000 which Clark gave MacGuire for the sound money committee that he produced approximately $75,000 more, which MacGuire reluctantly admitted on being confronted with the evidence.

This $75,000 is shown in the $26,000 that went into the Manufacturers’ Trust account, $10,000 in currency at the luncheon, the purchase of letters of credit totaling $30,300, of which Christmas’ certified check was represented as $15,000, expenses to Europe close to $8,000. This still stands unexplained.

Whether there was more and how much, the committee does not yet know.

The committee is awaiting the return to this country of both Mr. Clark and Mr. Christmas. As the evidence stands, it calls for an explanation that the committee has been unable to obtain from Mr. MacGuire.

Source: INVESTIGATION OF NAZI PROPAGANDA ACTIVITIES AND INVESTIGATION OF CERTAIN OTHER PROPAGANDA ACTIVITIES PUBLIC STATEMENT OF SPECIAL COMMITTEE ON UN-AMERICAN ACTIVITIES HOUSE OF REPRESENTATIVES SEVENTY-THIRD CONGRESS SECOND SESSION RELEASED TO THE PRESS REPRESENTATIVES BY HON. JOHN W. McCORMACK AND HON. SAMUEL DICKSTEIN WHO WERE SITTING AS A SUBCOMMITTEE RELEASED IN NEW YORK CITY, N. Y. NOVEMBER 24, 1934, United States Government Printing Office, Washington, D.C.: 1934; See also: John L. Spivak, A Man in his Time (New York: Horizon Press, 1967), pp. 311, 322-25; Antony Sutton, “Chapter Ten: FDR: Man on the White Horse,” in Wall Street and FDR, New York: Arlington House Publishers, 1975.