The Law Firm of Piacentile, Stefanowski & Malherbe LLP

Smedley Butler and the “Business Plot”: The Time a Whistleblower Saved American Democracy

Born in 1881 in Pennsylvania to a Quaker family, Smedley Butler would defy his peaceful upbringing by joining the Marines before turning 17. He served in some of the biggest US conflicts at the time, like the Spanish-American War and WWI. Known for his leadership, he earned the nickname “The Fighting Quaker” and became one of the youngest major generals, as well as the most decorated US Marine in history. After serving in the military for 34 years, he retired in 1931.

Upon his retirement, Butler became an outspoken critic of American interventions and wars. Specifically, he criticized alleged American imperialism and the growing fascist movement in Europe from his unique perspective as a veteran. In 1932, Butler and other WWI veterans formed a protest in Washington DC demanding the payment of bonuses owed to them. The protest lasted a few days until President Herbert Hoover commanded US troops to destroy the protesters' camps. As a consequence, despite being a Republican, Butler expressed his support for Franklin Roosevelt, a Democrat, in the 1932 presidential election.

In 1933 Butler was visited at his home by members of the American Legion, a non-profit organization of veterans. Led by their commander Gerald C. MacGuire, they claimed to want to discuss internal Legion matters. According to MacGuire, they needed Butler’s help because he was one of the most prominent voices among military men at the time and would attract the general public's interest. Unbeknownst to Butler, MacGuire’s true intentions were to form a coup against President Roosevelt.

The two had several in-person meetings, including one in which MacGuire showed Butler a bank statement of over $100,000 (more than $2 million in today’s money). MacGuire claimed that the money had been collected from members of the American Legion, which raised Butler’s suspicions since it was highly unlikely that a group of veterans would have that much money. Furthermore, MacGuire told Butler that he wanted to form a convention to urge President Roosevelt to return to the gold standard, which the President had abandoned by that time. This made Butler even more suspicious of MacGuire’s true intentions since this issue had little to do with veteran matters.

Butler refused to help MacGuire with his plans, but the two remained in touch. Between 1933 and 1934, they exchanged letters and postcards while MacGuire traveled throughout Europe. The purpose of this trip, according to MacGuire, was to find out how veterans functioned in foreign governments. Finally, in August of 1934, MacGuire met Butler in person again and directly asked him to lead the coup against President Roosevelt. Based on what he observed throughout his travels, MacGuire believed that the only way to save America was to create a military state run by soldiers and veterans. MacGuire’s disdain for President Roosevelt came from the President’s plan to implement the New Deal, not just from FDR's departure from the gold standard. MacGuire, along with many other conservative politicians and businessmen believed that the New Deal was going to take the US down the path towards communism.

Inspired by what he saw in Europe, especially by the French movement Croix-de-Feu, MacGuire’s plan would have included a private army of 500,000 veterans and more than $50 million donated by powerful men. They would have marched down to Washington DC, with Butler at the helm, and would have forced President Roosevelt to back out from the New Deal. Then they would have given the President the option to either resign or appoint a new Secretary of State, who would have taken over the executive branch. This would have left the President as a symbolic figurehead with no real power. Supporters of this coup included Prescott Bush (father of former President George H.W. Bush), executives from the DuPont Corporation, members of the Democratic Party, associates from J.P. Morgan, the director of Goodyear Tire and Rubber Company, among others. Additionally, weapons for the coup would be supplied by Remington Arms Company. This was confirmed by other plotters, politicians and important figures in the military, whom Butler met later on.

Butler had no intention of joining this coup but he knew he needed more information if he wanted to expose them. He sought out the help of his friend Paul Comly French, who was a writer for the Philadelphia Record. French met with MacGuire, who laid out his plans and expressed his belief that fascism was the only way to save the US. With this secondary testimony, Butler was ready to blow the whistle by testifying before Congress. Hearings were held by the McCormack–Dickstein Congressional Committee, which was later renamed the Special Committee on Un-American Activities. These hearings were held in November of 1934. Butler named everyone he knew who was involved in the plot, including MacGuire, while French published articles about the coup in the Philadelphia Record and New York Post. MacGuire testified under oath before the Committee denying all of the allegations against him. Unfortunately, the Committee did not find Butler’s testimony compelling enough to warrant a subpoena to everyone else involved in the plot. In the end, the Committee determined that the coup was definitely discussed and planned but, since it was far from being put into action, no charges were brought against the accused conspirators.

After testifying, General Smedley Butler continued advocating for veterans and expressing his anti-war views. In 1935 he wrote a book called War is a Racket, wherein he expressed his frustration with the military and the involvement of American corporations in foreign affairs. He died of what was thought to be cancer on June 21, 1940 in Philadelphia. The full story of the attempted coup was not known at the time because the complete transcripts of the testimonies were not made public. This was due to the fact that President Roosevelt himself intervened to suppress the most scandalous portions of those transcripts, possibly in an attempt to avoid outrage from the public. Once the transcripts were published in their entirety, the event became known as “The Business Plot”. The people involved denied the allegations, labeling it a giant hoax, and for the most part were unaffected by Butler’s testimony. Some, like Prescott Bush, became prominent figures in American politics.

While there is no way of knowing if the coup would have succeeded or not, it is safe to say that Butler’s actions impeded its development. The story of the Business Plot shows the effect that one whistleblower can have in protecting American institutions, the general public, and democracy.