THE MACGUIRE AFFAIR

By Gerard Colby

In the summer of 1934 Gerald MacGuire, a lawyer in the Morgan brokerage office of Grayson M. -P. Murphy and an official of the American Legion, visited General Smedley Butler at his home in Newton Square, Pennsylvania. Butler, former Commandant of the Marine Corps and holder of two Congressional medals of honor, had ended his 33-year career in the Marines three years earlier amid a storm of diplomatic protest over his public description of Italian dictator Benito Mussolini as "a mad dog about to break loose in Europe." The General had stubbornly rejected Hoover's demand for a retraction and had retired from the service a proud but bitter man. But he was also probably the most popular soldier in America. As such, he was an attractive prize for any movement, and it was for this reason that MacGuire, mistakenly banking on the General's personal bitterness and the then frequent brandings of Roosevelt as a "dictator," paid the old soldier a call.

America, MacGuire told Butler, was in great danger from a "communist menace," and needed a complete change of government. Then MacGuire made his pitch. A "militantly patriotic" veterans' organization, like the fascist Croix de Feu operating in France, was the only kind of organization that could force a change in Washington; he suggested Butler lead such an organization in "a march on Washington." "We have three million dollars to start with on the line," he told Butler, "and we can get three million more if we need it."61

"To be perfectly fair to Mr. MacGuire," Butler testified some months later:

"he didn't seem bloodthirsty. He felt such a show of force in Washington would probably result in a peaceful overthrow of the government. He suggested that 'we might even go along with Roosevelt and do with him what Mussolini did with the King of Italy.' . . . Mr. MacGuire proposed that the Secretary of State and Vice President would be made to resign, by force, if necessary, and that President Roosevelt would probably allow MacGuire's group to appoint a Secretary of State. Then, if President Roosevelt was 'willing to go along,' he could remain as President. But if he were not in sympathy with the fascist movement, he would be forced to resign, whereupon, under the Constitution, the Presidential succession would place the Secretary of State in the White House. . . . He told me he believed that at least half of the American Legion and Veterans of Foreign Wars would follow me.'"62

Butler was amazed at MacGuire's plan but played along to uncover details. "Is there anything stirring yet?" he asked MacGuire.

"Yes, you watch," the broker replied. "In two or three weeks, you will see it come out in the papers. There will be big fellows in it. This is to be the background of it.'

Exactly two weeks later, on August 23, the American Liberty League publicly announced its existence, with MacGuire's employer, Grayson M. P. Murphy, as its treasurer.

Butler knew MacGuire spoke for certain financial interests, mostly those of J. P. Morgan & Company. A year before, in July 1933, MacGuire and another Legion official, William Doyle, had payed him a similar visit to ask him to lead a well-financed "rank-and-file' movement to oust the Legion's autocratic leadership at the Chicago convention that autumn. To assure Butler of backing, MacGuire showed him two entries in a bank deposit book, for $42,000 and $64,000. Butler's suspicions grew- "Soldiers don't have that kind of money," he said later-but he suggested he be given some time to think it over. "I wanted to get to the bottom of this thing and not scare them off.' '64

MacGuire took the bait and at a second meeting presented information that nine very wealthy men were doing the financial backing, one being Grayson M.-P. Murphy.

"I work for him," MacGuire assured the General, "I'm in his office."65

"What has Murphy got to do with this ?"

"Well," answered MacGuire, "he's the man who underwrote the formation of the American Legion for $125,000. He paid for the field work for organizing it and has not gotten all of it back yet."

"That is the reason be makes kings, is it?" remarked Butler. "He has still got a club over their heads."

"He's on our side," insisted MacGuire. "He wants to see the soldiers cared for.' '66

What Murphy really wanted, as did most of Morgan's "sound money circle, was a reversal of Roosevelt's abandonment of the gold standard. Only on the solid arbiter of gold, reasoned Morgan, could the economy recover. Butler suspected this when MacGuire handed him a drafted speech to be read at the convention, calling for a resolution urging that the United States return to the gold standard. MacGuire tried to mask the request in terms of the veterans' interests. "We want to see the soldiers' bonus paid in gold. We don't want the soldiers to have rubber money or paper money."67

Butler insisted on meeting some of "the principals" involved, and shortly afterwards the General had another caller - Robert Sterling Clark, Wall Street broker who had supported Al Smith's 1928 campaign with a $35,000 donation.68 Clark identified himself as one of the men interested in seeing the General become the Legion's new National Commander. "Our group is for you," he remarked, but "the Morgan interests say that you cannot be trusted, that you are too radical, and so forth, that you are too much on the side of the little fellow. . . . They are for Douglas MacArthur." After Clark mentioned that the "gold speech" "cost a lot of money, 69 Butler remarked: 'It looks to me as if it were a big business speech. There is something funny about that speech, Mr. Clark."

Clark's answer was calm but blunt:

"I've got thirty million dollars," he explained. '1 don't want to lose it. I am willing to spend half of the thirty million to save the other half. If you get out and make that speech in Chicago, I am sure that they will adopt the resolution and that will be one step toward the return to gold, to have the soldiers stand up for it."

At that, the General dropped his pretense and flatly refused. Undismayed, Clark asked to use the phone and called MacGuire long distance. "You've got forty-five thousand dollars," he told MacGuire, "You'll have to do it that way,"70 and left.

Butler, then, was obviously aware of MacGuire's contacts when he was visited again the following year by MacGuire. He was also aware that at the Legion Convention in October 1933 a gold standard resolution had been passed. But what the General did not know was that MacGuire had been subsequently sent to Europe in the spring of 1934 on "business" which amounted to a survey of the role played by veterans in Mussolini's Fascisti, in Germany's Nazi Party, and in France's fascist Croix de Feu movement. 'The Croix de Feu is getting a great number of recruits," he wrote Clark from Paris, and I 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 71

MacGuire's favorable impressions of European fascism did not exist in a social vacuum, however. Many business leaders, including those in the Du Pont camp, and even some liberals for a time, had been infatuated with the fascist movement. General Motors' William Knudsen, for example, on his return from Europe, described Hitler's Germany to a reporter as "the miracle of the twentieth century." Even Alfred I. du Pont's daughter Madeleine had contracted the fascist epidemic during her stay in Germany, and her third marriage to Friedrich Hermann Ruoff had spawned three young Nazi zealots. In America many openly fascist organizations had sprung up, including the Khaki Shirts, the Blue Shirts, the White Band, the Nationalists, and the Silver Shirts. Lawrence Dennis emerged as the "theoretician" of American fascism, and The American Guard magazine appeared, published by the "Swastika Press." More home-grown brews also were stirred, including the racist Southern Committee to Uphold the Constitution, the Crusaders, the para-military Minute Men and Women of Today, and the anti-Semitic Sentinels of the Republic, all financed, and some even created, by the Du Ponts' American Liberty League.

Colorful Smedley Butler, however, was not made of this stuff. Appalled by MacGuire's offer, he contacted a crusading reporter for the Philadelphia Record, Paul Comly French. "The whole affair smacked of treason to me, Butler remarked, and French decided to travel to New York. On September 13, 1934, French visited Gerald MacGuire at the brokerage firm of Grayson M.-P. Murphy Company and, posing as a sympathizer trusted by Butler, won MacGuire's confidence.

"The whole movement is patriotic because the Communists will wreck the nation unless the soldiers save it through fascism," MacGuire reportedly told French. "All General Butler would have to do to get a million men would be to announce the formation of the organization and tell them it would cost a dollar a year to join."72

"At first he suggested that the General organize this outfit himself," French later told the House Investigating Committee, "and ask a dollar a year dues from everybody. We discussed that, and then he came around to the point of getting outside financial funds, and he said it would not be any trouble to raise a million dollars. He said he could go to John W. Davis or Perkins of the National City Bank, and any number of persons and get it. . . Later, we discussed the question of arms and equipment, and he suggested that they could be obtained from the Remington Arms Company on credit through the Du Ponts. I do not think at that time he mentioned the connections of Du Ponts with the American Liberty League, but he skirted all around it. That is, I do not think he mentioned the Liberty League, but he skirted all around the idea that that was the back door. One of the Du Ponts is on the board of directors of the American League and they own a controlling interest in the Remington Arms Company. . . - He said the General would not have any trouble enlisting 500,000 men.

MacGuire then showed French a letter of support: "It's from Louis Johnson, the former National Commander of the American Legion." "He said that he had discussec~ the matter with him," French related, "along the lines of what we were now discussing, and I took it to mean that he had discussed this fascist proposition with Johnson, and Johnson was in sympathy with it."

On November 20, 1934, General Butler revealed the whole ugly scheme by testifying before a private session of the Special House Committee on Un-American Activities. He suggested that if the Committee wanted to get to the bottom of this, they question the biggest interests involved: Grayson M. -P. Murphy, General Douglas MacArthur, Hanford MacNider, ex-National Commander of the American Legion, and leaders of the American Liberty League.

The Committee called none of these, but it did have James Van Zandt, National Commander of the Veterans of Foreign Wars, and Gerald MacGuire testify under oath. Van Zandt corroborated Butler's testimony and admitted knowing of the plot. MacGuire, on the other hand, would admit only that he had met occasionally with Butler, but claimed that he had been "misunderstood." French's testimony, however, corroborated Butler's and Van Zandt's. But the Committee, perhaps frightened of the implications, refused to delve further into the conspiracy, suppressing much of the most incriminating testimony in its official report to the House on February 15, 1939. Nevertheless, the report confirmed a plot to overthrow Roosevelt with a fascist coup d'etat:

"In the last few weeks of the Committee's official life it received evidence showing that certain persons had made an attempt to establish a fascist organization in this country.... There is no question that these attempts were discussed, were planned, and might have been placed in execution when and if the financial backers deemed expedient.

"This committee received evidence from Major General Smedley D. Butler (retired), twice decorated by the Congress of the United States. He testified before the Committee as to conversations with one Gerald C. MacGuire in which the latter is alleged to have suggested the formation of a fascist army under the leadership of General Butler.

"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 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."73

Despite the Committee's report, no indictments were handed down. Corporate leaders who were implicated in the conspiracy by sworn testimony, including the Du Ponts, were never even called for questioning. "The Congressional Committee investigating un-American activities has just reported that the Fascist plot to seize the government ... was proved," observed lawyer Roger Baldwin, head of the American Civil Liberties Union, "yet not a single participant will be prosecuted under the perfectly plain language of the federal conspiracy act making this a high crime. Imagine the action if such a plot were discovered among Communists! Which is, of course, only to emphasize the nature of our government as representatives of the interests of the controllers of property. Violence, even to the seizure of the government, is excusable on the part of those whose lofty motive is to preserve the profit system."74

Indeed, Butler's testimony was at first subjected to a shower of ridicule. Even the New York Times, which had described the Liberty League's founding as having "a real chance to be useful"75 hurriedly dismissed the "so-called plot of Wall Street interests" as having "failed to emerge in any alarming proportion," while Time, the leading anti-New Deal publication of J. P. Morgan's trusted friend and journalist protégé, Henry Luce, called it a "plot without plotters ... no military officer of the United States since the late tempestuous George Custer has succeeded in publicly floundering in so much hot water as Smedley Darlington Butler."

Thanking their stars for having such sure-fire publicity dropped in their laps, Representatives McCormick and Dickstein began calling witnesses to expose the 'plot.' But there did not seem to be any plotters. . . Mr. Morgan, just off a boat from Europe, had nothing to say but partner Thomas Lamont did: 'Perfect moonshine! Too utterably ridiculous to comment upon!' "76

Significantly, among Time's leading stockholders at the time was Luce's college chum, Henry P. Davison, like Lamont, a partner of J. P. Morgan & Company.77 Morgan's friend Grayson M.-P. Murphy derided Butler's charges as "a joke-a publicity stunt" and received wider coverage than Butler's own testimony or Van Zandt's and French's corroboration. Then a curtain of silence fell. When the House Committee released its report, there was little comment from the press. Of all the country's large newspapers, most of which were (and are) controlled by well-financed syndicates, only the liberal New York Post, French's Philadelphia Record, and two New Jersey papers printed the details of the conspiracy and the corroborating testimonies. Not a word of the plot was printed in Delaware's Du Pontcontrolled press, and the "MacGuire Affair" slipped into the fog of unrecorded history.

Beyond the superficial rationale of class allegiance, many reasons have been put forth as to why Roosevelt may have shied away from pressing further into the "MacGuire Affair" investigation. There is little doubt that hearings and indictments against such leaders of finance would have precipitated a national crisis, and probably an international one as well. Economically, such a course of action would only have tottered an already weakened public faith in the prevailing economic system Wall Street represented and Roosevelt was pledged to preserve. Legal proceedings against such powerful interests, also, would have precipitated a political crisis, not only for the Roosevelt administration, but for the private enterprise essence of the state as a whole and its property values of government. Apparently, the initial exposure had also sent the wolves into hiding, so that no more was really needed than the Committee Report's verbal hand-slapping that "Armed forces for the purpose of establishing a dictatorship by means of Fascism . . . have no place in this country.'"78

Such gestures seem impotent if viewed in a historical vacuum. But the Dickstein-McCormick Committee was conducting its investigation in the shadow of another, more publicized spectacle which already had the country spellbound and the forces of reaction in full retreat-the Senate munitions hearings.

Notes

61. Dickstein-McCormick Special Committee on Un-American Activities, House of Representatives, 73rd Congress, 2nd Session, Testimony of Major General Smedley D. Butler, November 20, 1934, pp. 8-114, DC

62. Ibid.

63. Ibid.

64. Ibid.

65. Ibid.

66. Ibid.

67. Ibid.

68. Lundberg, America's Sixty Families, p. 179.

69. Dickstein-McCormick Committee, bc. cit.

70. Ibid.

71. Ibid., Ill, Report (No. 153), Union Calendar No. 44, 74th Congress, 1st Session, House of Representatives, "Investigation of Nazi And Other Propaganda," p. 111; DC 6 II in testimony).

72. Ibid., Testimony of Paul Comly French.

73. Ibid., Report.

74. Kahn, High Treason, p. 204.

75. New York Times, August 25, 1934, p. 12.

76. Time, December 3, 1934, pp. 1-2.

77. Time, Statement of Ownership, October 1, 1935.

78. Dickstein-McCormick Committee, Report, 1935.

Source: Excerpt from DuPont Dynasty (Secaucus, NJ: Lyle Stuart, Inc.), pp. 324-330.