Franklin Delano Roosevelt vs. the Banks:
Morgan's Fascist Plot, and How It Was Defeated
Part II

by L. Wolfe

Printed in The American Almanac, July 4, 1994


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Part 1 of this article was printed in American Almanac, Vol. 8, No. 23, of June 27, 1994.

Senate Banking Committee hearings investigating the New York commercial banks, convened by Roosevelt allies in the Senate, continued through the second week in June 1933.

After that, committee special counsel Ferdinand Pecora turned his guns on Kuhn Loeb and its flamboyant head, Otto Kahn. The affable Kahn, whom Pecora described as far more slippery and congenial than Morgan, was instructed to relax the stonewall that the Morgan partners had put up in the face of Pecora's attack. While he refused to give in significantly on any proposed regulation of the private bankers, Kahn, unlike Morgan and his partners, admitted to serious mistakes in the handling of the speculation of the 1920s. He spoke of a frenzy that had gripped even the staid banking community, claiming that partner and Fed-creator Felix Warburg had tried to warn people of their errors, ``but it was too late.'' He even offered some kind words for the New Deal, and finally conceded prophetically, that in order to protect private banking itself, there might have to be some regulation of the securities and other sales, ``even if it hurts my own pocketbook.''

The Dillon Read partners were similarly congenial, as Pecora brought out more evidence of the private bankers' manipulation of the financial markets and their highly irregular practices. The hearings were suspended until late fall, when they resumed to examine certain specific speculative swindles.


Roosevelt's Legislative Agenda

The hearings had already achieved Roosevelt's tactical purpose. This becomes obvious when one grids the hearings with other events.

On May 25, the lead headlines of The New York Times blared that ``Morgan Paid No Income Tax in 1931 and 1932; Neither Did His Partners.'' Other front-page items included the announcement of preparation for a congressional vote on the administration's $3.3 billion public works bill, the largest ever proposed, as well as the announcement by Treasury that it was beginning a major expansion of credit, the first of an expected $4 billion.

On May 26, The Times featured front-page stories with headlines such as ``Morgan's Foreign Financing Detailed'' and revelations about ``insider'' private lists for stock offerings and the public officials who were on them. Another story reported on the progress in Congress of the Glass-Steagall banking bill.

Glass's bill, which had passed the Senate the day before, was originally drafted primarily to enhance the powers of the Federal Reserve system, while containing a clause that would have restated the Fed's independence from the Treasury Department and its existence as a private banking operation. Roosevelt chose to use the Morgan agent Glass's own bill as a vehicle for his major legislative attack on the Morgans.

The President asked House banking Chairman Rep. Steagall to draft a parallel House bill that would force a divorce between deposit banks and their securities operations, while doing what he could to water down the efforts of Glass to increase the power of the Fed. The major commercial banks had already been forced to accept this unpalatable concept. They were hoping that they might be thrown the crumb of loosened restrictions on interstate banking operations. But, under orders from Roosevelt, Steagall made sure that the bill would contain no provisions that would allow for essentially unregulated interstate banking operations, in violation of state charters.

In order to try to gain more widespread support for its passage, Roosevelt let it be known that he would support a federal deposit insurance program, provided that it would not insure very large deposits, or be used to bail out bankers' profit sheets, and provided that state banks would have easy access to the program, without being forced to meet criteria established by the Federal Reserve. Roosevelt was extremely wary of the concept of deposit insurance, because it could become, as it has in the current depression, a means to bail out the banks in a crisis, while not forcing them to make sufficient contributions to the system to cover a real emergency. Roosevelt was not happy with the proposal that emerged, but he saw it as necessary to get the separation of deposit banking from securities operations.

It was impossible for Morgan and his Wall Street allies, given the publicity around the hearing, to mount an effective effort to block the bill, which was passed later in June, and signed by the President. While expressing his ``unhappiness'' about some of its provisions, Roosevelt called the bill the most significant piece of banking legislation in 20 years.

The bill as passed gave the Morgans and the other private banks, as well as any commercial banks who had securities operations, one year to decide whether they would remain deposit banks, i.e., banks which took deposits, or whether they would sell and market securities. Morgan chose to remain a deposit bank.

On May 26, as Pecora clashed with Virginia Senator Carter Glass to the applause of the gallery, Roosevelt submitted legislation repealing the gold clause, and permitting payment of all debt in legal tender. All new bonds would have no gold clause and would bar repayment in gold for any currency or bonds that previously contained the gold clause. This last clause caused particular ire for the private bankers, who had been hoarding gold-backed securities with the idea of redeeming them for their clients, and thereby further looting the nation's gold supply.

The same day, the administration's so-called Industry Bill, authorizing a $3.3 billion public works program, passed Congress. The bill also tightened up the tax code to make manipulations of the type Morgan bragged about as being ``legal'' more difficult.

The New York Times reported on May 27, 1933 that Roosevelt was about to ask for ``wide power'' to deal with tariffs. The Times had reported previously that such powers were primarily to lower tariff barriers, but the administration now said, in a blow to the British ``free trade'' crowd, that they planned to use, where necessary, the broad powers requested also to raise tariffs to protect recovering American industry, and to boost investment in America's industrial potential.

By the next day, the gold bill had been pushed through both congressional committees, over the strenuous objections of Morgan flunky Glass.


The Fascist Plot Develops

Some time between April and June of 1933, the Morgan interests decided to give their backing to a plan for a major destabilization of the United States government. The intended goal was to create a situation which would overturn what some people were calling ``the Roosevelt Revolution.'' The alternative? One of the options was the imposition of an Americanized form of fascist state, imposed by the power of armed men, acting with the financing and direction of the House of Morgan.

The plot involved using an asset that had already been created for such a purpose--the networks of the American Legion.

The legion today is thought to be a rather docile association of veterans, with a ``right wing'' slant on things. It was founded in 1919 with money from Morgan and other New York bankers and their allies as a union-busting organization of thugs for hire. Its leadership, appropriately called the ``Royal Family,'' was culled from bankers, stockbrokers, and the like.

Many disgruntled veterans resented their brothers being used as cannon fodder for policies that they neither supported, nor even understood. The disgust led to the formation of a rival organization, the Veterans of Foreign Wars (VFW), which, as the depression deepened, lobbied for the immediate cash payment of promised veterans' bonuses.

In the early summer of 1933, as the plans for a fascist plot developed, its organizers hoped to draw upon both the Legion and the VFW to a form of people's militia, modeled on Mussolini's fascisti, using the veterans' anger over Roosevelt's reduction and cancellation of bonus payments.

However, in 1934, the man whom these fascists wished to lead their army, Maj. Gen. Smedley Darlington Butler, the most honored and decorated soldier in the land, blew the whistle on the whole rotten affair. In spectacular revelations to the House Un-American Activities Committee in November and December, Butler reviewed his first-hand knowledge of the the plot, identifying the House of Morgan and its operatives as playing a central role.

Smedley Butler appeared to be an unlikely candidate for the fascist coup plotters. Twice decorated with the Congressional Medal of Honor, he had served with distinction in every American military action of the twentieth century. A Quaker from a prominent Pennsylvania family, he thought of himself as a patriot who would never betray the values embodied in the Constitution. He had been both the most distinguished serving officer in the nation, and also its most outspoken. He had even served for two years on special assignment as police commissioner of Philadelphia in 1920s, where he fought the rackets while respecting constitutionally guaranteed rights, only to be hamstrung by partisan politics.

Butler, as a ranking Marine officer, had been placed in charge of the deployments of Marines on behalf of American business and banking interests in foreign lands. For a long time, he held his tongue, loyally carrying out orders, which he had personally questioned. But, following a stint in China in the late 1920s during which he perceived his orders were to protect Standard Oil's interests, even at the expense of American citizens, he began to speak out.

In December 1929, speaking to veterans in Pittsburgh, he stated that in his deployment in 1912 in Nicaragua, he had helped rig elections to back the candidate desired by the banking firm of Brown Brothers. He was immediately called on the carpet by Navy Secretary Adams, a man whose name was later to appear on the Morgan preferred list. But the local press, and then some national press, covered the remarks and they were later favorably reported by various members of Congress. Two days after his attack, the Hoover administration was forced to beat a hasty retreat from its public support of ``gunboat diplomacy,'' and it repudiated the Teddy Roosevelt corollary to the Monroe Doctrine, stating that it would not intervene ``by right'' into the internal affairs of an Ibero-American nation.

Butler, however, was passed over for commandant of the Marine Corps, an appointment which, considering his rank and his service credentials, should have been his.


Butler Is Court Martialed

In January 1931, while in uniform at what was supposed to be an off-the-record private meeting, Butler delivered a stinging attack on Mussolini, recounting a story told to him about how Mussolini had been riding in his limosine and had run over a little child. Butler's friend, who was in the car with Mussolini, screamed. ``Mussolini said that you shouldn't do that, that it was only one life and the affairs of state could not be stopped for one life,'' Butler told his shocked audience. ``How can you talk disarmament with a man like that?''

An Italian diplomat, present at the meeting, sent a wire to Rome, and the Italian government filed a protest with the State Department. The pro-Mussolini press castigated Butler for insulting the head of a ``friendly power.'' The secretary of state, Henry Simpson, cabled a personal apology, on behalf of Herbert Hoover, to Il Duce.

On Jan. 29, Butler, the commandant of the Quantico Marine base at the time, was placed under arrest and told that he was to be court-martialed by direct order of President Hoover, with the full approval of the secretary of the Navy.

The plans for the court-martial provoked a tremendous outpouring of support for Butler. The anti-fascist local press leveled charges against the Hoover administration that it was knuckling under to the ``thug'' Mussolini and sacrificing America's most distinguished military figure. Franklin Roosevelt, then the governor of New York, and a friend of Butler's dating from his days as secretary of the Navy, worked to help the general and spoke out against his court martial.

Hoover and Adams were forced to back down. By Feb. 9, the court-martial was cancelled, and Butler was given only a mild reprimand. He refused, however, to retract his statement, saying only that he had been told in advance of the meeting that what he said would be confined to the four walls of the room.

Bulter's attack on Il Duce had angered the Morgan interests, who had played a major role in financing Mussolini's fascists. According to testimony in congressional hearings, the House of Morgan had syndicated a $100 million loan to Mussolini's government in 1925, and had made subsequent loans to that government, as well as a $30 million loan to the government of the city of Rome. Dillon Read, which had participated in the Morgan loan, also arranged a loan of $30 million for the city of Milan.

Through the mid-1930s, Morgan partners, including Thomas Lamont, continued to praise the fascist experiment in Italy.


American Fascism

It was becoming increasingly obvious to Butler and many others that the American Legion was a stooge of these fascist bankers. As early as 1923, the legion's Commander in Chief Alvin Owsley, had openly embraced Mussolini, and endorsed fascism as a viable policy for the United States. Having done that, he announced that the legion was, if necessary, prepared to kick out the elected government of the United States and back anyone who would follow a policy of ``Americanism.''

``If ever needed,'' he stated, ``the American Legion stands ready to protect our country's institutions and ideals as the Fascisti dealt with the destructionists who menaced Italy.''

Asked if this meant taking over the government, he stated: ``Exactly that. The American Legion is fighting every element that threatens our democratic government--soviets, anarchists, I.W.W., revolutionary socialists and every other red.... Do not forget that the Fascisti are to Italy what the American Legion is to the United States.''

In late March 1931, National Commander Ralph T. O'Neill presented Italian Ambassador de Martino, the same person who had made the formal demand for satisfaction over Butler's remarks, with a copy of a resolution passed by the American Legion's National Executive Committee praising Mussolini as a great leader. Meanwhile, the Legion's leadership, heavily intermeshed with the Freemasonic movement, propagandized against the ``non-Aryan'' pollution of the American stock, repeating the racialist garbage of the eugenics movement. They argued for the end of immigration for all but the Anglo-Saxon races, claiming that the nation must protect itself against the threat of ``communist'' and ``anarchist'' infiltrators, and all other enemies of ``Americanism.''

Throughout the 1920s and early 1930s, the legion was used as a recruiting base for the rebirth of the Ku Klux Klan, with many of the southern legion branches run by and operating as Klan cells.

The so-called communist menace used to help organize a fascist counter-reaction was a bogeyman. The Communist Party, U.S.A. and its splinter groups, were effectively run by police agents, and other stooges, and were even funded by the bankers themselves, including Morgan. Many well-meaning people, upset with the effects of Anglo-American policy, wandered into these circles, only to have their actions rendered impotent by the overall control of these movements and their ideology.

Thus, both the ``left,'' and the fascist and neo-fascist ``right'' were effectively British policy assets, to be used for whatever purposes the times required.

Butler, still the highest-ranking officer in the Marines, refused to retire, preferring to serve one more year. In August, he chose an address made before an American Legion convention in Connecticut to deliver perhaps the most remarkable speech ever given by a serving officer about the misuse of military power. ``I have spent 33 years ... being a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer for capitalism,'' Butler said.

He continued:

``I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I helped make Mexico and especially Tampico safe for American oil interests in 1916. I helped make Haiti and Cuba a decent place for the National City (Bank) boys to collect revenue in. I helped rape half a dozen Central American republics for the benefit of Wall Street.... In China, I helped see to it that Standard Oil went its way unmolested.... I had ... a swell racket. I was rewarded with honors, medals, and promotions. I might have given Al Capone a few hints. The best he could do was operate a racket in three cities. The Marines operated on three continents....''

To the dismay of the bankers who directed the legion, Butler's remarks were greeted with riotous applause. In Washington, Hoover refused to answer reporters' questions about the general's statements. The major press blacked out most of what Butler said, but the word leaked out in the regional press, and was spread through word of mouth.

Navy Secretary Adams demanded that someone silence Butler, but no one dared to say anything, especially after the Mussolini flap. Butler continued to hammer away on the theme that the American military was being deployed to collect bankers' debts and secure looting rights in foreign countries.

When Butler finally retired, he was no longer constrained in comments by military protocol. He now traveled the country, addressing anyone who would listen, attacking the bankers who controlled the deployment of the military.

On Dec. 5, 1931, an article under his byline appeared in Liberty Magazine, titled ``To Hell with the Admirals! Why I Retired at 50.'' In it, Butler charged the leadership of the Navy with complicity in policies that now revolted him and in working to try to prevent his promotion and ulitmately, to silence him. He attacked a number of Central American leaders as Wall Street stooges, naming again Brown Brothers and Morgan. In Honduras, the government-controlled press showered him with epithets and demanded that he be silenced. In the U.S.A., the Navy had a plaque that had been erected in his honor removed from the Navy Building.

In the spring of 1932, the bankers moved preemptively to prevent Butler from becoming a political force. Gifford Pinchot, the governor of Pennsylvania and a member of a banking family, lured Butler into seeking the GOP nomination for U.S. Senate against James Davis, a Morgan private-list member, who was Hoover's secretary of labor. Butler stumped the state, and held true to his promise to campaign in GOP wards for two issues which the party did not support--an end to Prohibition and the passage of the soliders' bonus bill that would pay their bonuses due in 1945, now. To ensure Butler's defeat, Pinchot ordered his machine at the last minute to work for Davis.


The Bonus Army

In late July 1932, the Bonus Army of unemployed starving veterans descended upon Washington to back passage of the Bonus Bill. Butler was asked by the head of the VFW to come to lend the soliders support. As the soldiers rallied in Washington, the bill passed the House but was overwhelmingly defeated in the GOP-dominated Senate. Butler was asked to address the 10,000 angry veterans who had set up a shanty town on the banks of the Anacostia River.

He urged them to fight on. ``If you don't hang together, you aren't worth a damn,'' he said. ``They may be calling you tramps now, but in 1917 they didn't call you bums.... When you go home, go to the polls in November, lick the hell out of those who are against you. You know who they are.... Now go to it.'' The crowd roared.

Butler stayed with the veterans, talking to them through the night and into the next day. As he prepared to leave, he warned them against allowing their frustrations to well over into violence: ``You are all right as long as you keep your sense of humor....''

The next day, Hoover ordered Gen. Douglas MacArthur to drive the veterans from Washington at bayonet point, unleashing violence against the unarmed ``army.'' The nation was stunned.

Butler phoned the governors of a number of states and received their agreement to provide relief for the veterans who wanted to return home. He told the leaders of the Bonus Army of this arrangement, and urged them to break camp. They agreed. Butler then delivered a sharp attack on the Hoover administration for its heartlessness.

For his actions, Butler earned the praise of many Americans, including the Democratic nominee for President, Franklin Roosevelt.


Butler and Roosevelt

Butler, a lifelong Republican who claimed he had never voted for a Democrat, had greeted Roosevelt's nomination with a wire to his former navy secretary: ``We salute your nomination as one of the greatest blessings granted any nation in its hour of need.''

On July 7, speaking in New York, Butler demanded that the government be rescued from the ``clutches of the greedy and dishonest.''

``Today, with all our wealth, a deadly gloom hangs over us. Today, we appear to be divided. There has developed, through the past few years, a new Tory class, a group that believes that the nation, its resources, and its manpower was provided by the Almighty for its own special use and profit.... On the other side is the great mass of the American people who still believe in the Declaration of Independence and in the Constitution of the United States.

``This Tory group, through its wealth, its power and its influence, has obtained a firm grip on our government, to the detriment of our people and the well-being of our nation. We will prove to the world that we meant what we said a century and half ago--that this government was instituted not only to secure for our people the rights of life, liberty, and the pursuit of happiness, but the right to eat, and to all our willing millions, the right to work.''

Butler was particularly useful to Roosevelt in countering the line from the bankers' press that a Democratic victory would open the door to a ``socialist America.'' In an interview on Oct. 2, the two-time Medal of Honor winner branded that charge an ``absurd myth.'' He said that his nationwide tour on behalf of veterans' rights and for Roosevelt had convinced him that the American people wanted a change in administration. ``I learned that the average American is convinced that no change in our form of government is necessary or adviseable,'' Butler stated.

Less than a week before the election, at a rally in Queens, New York, Butler told cheering veterans that he was a ``member of the Hoover for Ex-President League because Hoover had used gas and bayonets on unarmed human beings.... Nobody has any business occupying the White House who doesn't love his own people. I was raised a Republican, but I was born an American. I have no ring through my nose and I vote for whom I please.''

When Roosevelt won an overwhelming victory, Butler sent him a telegram of congratulations.

Three weeks before the inauguration, when an assassin's bullets were fired at the President-elect, Butler wondered aloud whether those bullets weren't being ordered by the bankers' cabal which was enraged that Roosevelt would not be their President.

All of this would make it seem remarkable that the Morgan interests would even consider turning to Butler as the putative leader for their fascist coup against Roosevelt.

Plain spoken, he gave voice to the concerns of the millions of veterans who were poor and angry, and distrusting of all establishment figures, including most of the leaders of their own organizations.


Butler's Blind Side

Butler, like most well-intentioned patriots, had a blind side: He lacked a true understanding of history. He often stated his hatred of British imperialism and everything that it stood for, and denounced those who preferred the British king to the American republic and its Constitution. A populist, he attacked ``Wall Street'' as the sponsors of evil and anti-American policies against foreign lands and the American people. But he was blind to the true sponsorship of those policies by an international oligarchy whose powerful center was not New York, but London.

Those behind the offers to be made to Butler also believed that every human being, even a patriot, is corrupt or corruptible, that each person has his price, be it monetary, sexual, or other inducement. Butler seemed easy prey: After he had left the service, his financial situation bordered on the catastrophic, and he was heavily in debt. If all the appeals to the general's ego and all the ``promises'' of support for his soldier causes failed, Smedley Darlington Butler, could be ``bought,'' they thought.

On July 1, two American legion officials visited Butler at his Newton Square, Pa. home. They were Bill Doyle, the commander of the Massachusetts American Legion, and Gerald C. MacGuire, who was a former commander of the Connecticut department of the legion. Both identified themselves as Purple Heart veterans.

MacGuire was in the employ of Col. Grayson Mallet-Prevost Murphy, who ran a leading New York brokerage that traded in stocks and international bond syndications, working with the House of Morgan.

Grayson Murphy, who was on Morgan's ``preferred client list,'' was a director of Morgan's Guaranty Trust bank and several Morgan-connected corporations. He and his banking house had played an important role in syndicating Morgan loans to fascist Italy, for which he was decorated by Mussolini.

Murphy came from a long line of traitors. The Mallet-Prevost families have been central to British intelligence operations since the eighteenth century. They have been involved in assassinations, in espionage and political warfare against the enemies of London, (including their control of the traitor and assassin of Alexander Hamilton, Aaron Burr, who was married to a Prevost), and their direct control of the forces that ran the mobs of the French Revolution. Through intermarriages and financial manipulations, the Mallet-Prevost interests evolved into the Schlumberger financial empire, whose interests continue to be deployed as an asset of British intelligence and played a role in the assassination of President Kennedy.

Grayson Mallet-Prevost Murphy carried on his family's tradition of treason as a high-ranking officer in a private intelligence operation that reported to the Morgan cabal, and interfaced directly with British intelligence, with a specialty in covert operations. As early as 1903, he had been selected by President Theodore Roosevelt for secret assignments, which included planning U.S. military interventions into the Americas to collect debt, during which time he deployed directly with Morgan interests. Later, he became the head of American Red Cross relief efforts in post-World War I Europe, a post he used to develop a network of informants and operatives in European governments. In the 1920s, he made several ``fact-finding'' trips to Europe, accompanied by ``Wild Bill'' Donovan who was later to become Office of Strategic Services director; these missions, which included trips to Italy for meetings with Mussolini prior to his coup, were carried out at the behest of Morgan and London interests, and the reports about them were hidden from the U.S. government.

In February 1919, the intelligence operative Murphy had been one of 200 elite serving U.S. officers who met in Paris with the guidance of Morgan & Company operatives to found the American Legion. Murphy personally underwrote that operation to the tune of $125,000, and solicited additional funds from allies of Morgan in the industrial and financial community.

Murphy, it was admitted to Butler in subsequent conversations, retained his role as ``kingmaker'' for the legion's ``Royal Family'' by virtue of the fact that the legion still owed him and his friends a great deal of money.

MacGuire informed Butler that both he, MacGuire, and Doyle, were speaking for a group of ``influential'' legionnaires who were extremely dissatisfied with the legion's current leadership, because it had betrayed the common soldier. He announced that they were planning to dislodge the current regime at an upcoming Chicago convention. They asked Butler to join their ranks, and to deliver a rabble-rousing speech against the ``Royal Family.''

Butler, although sympathetic, declined their invitation, stating that he wanted to stay out of internal legion politics.

MacGuire then revealed that he was the chairman of a ``distinguished guest committee,'' and was on the staff of the outgoing national commander, Gen. Louis Johnson, a former secretary of Defense (and another figure on Morgan's preferred-client list). MacGuire claimed that he had had Johnson include Butler's name on the invitation list, but that Johnson had taken the list to Louis Howe, Roosevelt's personal political secretary, and that Howe had crossed Butler's name off the list, stating that the President was opposed to any invitation of Butler. They offered no reason for this, but Doyle said that they had come up with a plan for Butler to address the convention anyway: He would be appointed a delegate from Hawaii, which would therefore give him the right to speak.

Butler, smelling a rat, declined their offer. Later, Butler said that he did not believe their story about Roosevelt being against him, and that it appeared they were trying to plant ideas in his head about the President.


The Plotters Try Again

In August, Doyle and MacGuire returned, with a new plan for the convention. They now agreed that it would be undignified for Butler to try to speak from the floor. The new plan called for him to gather 200-300 legionaires and take them by train to Chicago. They would scatter throughout the audience, and when Butler appeared in the gallery, they would stage a demonstration. Along with ``allies'' of MacGuire-Doyle faction, they would stampede the convention with cries demanding that Butler speak. They would guarantee that nothing would proceed until the general delivered a speech.

``A speech about what?,'' Butler asked. MacGuire and Murphy showed him the draft of the speech. Butler said that most of the soldiers he knew didn't even have enough to eat, and that he had hardly any money, and he asked how he would get them to Chicago. At that, MacGuire showed him a bank deposit book with two recent deposits, one for $42,000 and a second for $64,000. Don't worry, butler was told: If he could round up the soldiers, MacGuire and his friends would take care of getting them to Chicago and pay their expenses while there.

The speech Butler had been handed was a rabble-rousing defense of the gold standard, featuring a demand that the Roosevelt policy severing the U.S. from gold be reversed immediately, so that the soldiers' bonuses could be paid with ``sound money.'' Butler was later to learn that the speech had been written by John W. Davis, the former Democratic presidential candidate who was chief counsel to J.P. Morgan and Company, and the personal counsel to J.P. Morgan.

Unbeknownst to Butler, one of the funding conduits for this fascist plot was the Committee for a Sound Dollar and Sound Currency, Inc., a group backed by and composed of members of Morgan's ``preferred-client list.'' MacGuire was himself an official of the committee, which produced a stream of propaganda calling for a return to the gold standard and denunciations of Roosevelt's policy. Included among its members were several Morgan partners and Walter E. Frew, of the Corn Exchange Bank, which was controlled through National City Bank after a 1929 deal engineered by Morgan and exposed by the Pecora congressional investigation. Frew personally gave MacGuire $30,000 for the project under discussion with Butler.

A short time after the second visit, MacGuire went to see Butler again, this time alone. After listening to another pitch for him to round up 500 veterans, Butler told MacGuire that he would not risk his personal prestige unless he was told who might be standing behind him. MacGuire stated that he had the backing of ``some of the most powerful men in America.'' He claimed to have already a small war chest funded by nine men, with the largest contribution being $9,000 and the smallest $2,500. However, he would name only three men, showing their checks to Butler: his boss, Murphy; another financier, Robert S. Clark, a member of Morgan's ``preferred-client list'' and an heir to the Singer Sewing fortune; and John S. Mills, who was intermarried into the du Pont family. All three were members of the Committee for a Sound Dollar.

MacGuire told Butler that an expense account would be opened in Chicago with the money from the ``nine men.''

In September 1933, Butler was invited to address the American Legion's 29th Division in Newark.

MacGuire showed up again to ask him whether he was prepared to deliver the gold standard speech in Chicago and carry out the plans that had been discussed. Butler said that he wasn't going, and told MacGuire that he thought that he and his backers were ``bluffing. You haven't got any money.'' With that, MacGuire took out his wallet and placed a pile of 18 $1,000-dollar bills on the bed in Butler's hotel room. MacGuire claimed that there had been ``some contributions'' made to the cause the night before.

Butler, angry at being ``bribed,'' managed to control his temper enough to demand that he meet with one of the principals. MacGuire agreed to ``send over'' Ronald S. Clark to see him.

One week later, Clark arrived by train in Paoli, Pa. to see Butler. Clark, as Butler described him, carried himself as a member of the ``ruling class.'' Clark told Butler that he was going to the American Legion convention in a private railroad car attached to the Pennsylvania Limited and that he had already made arrangements for the train to stop at Paoli to pick up Butler. A suite of rooms had been booked at the Palmer House, Chicago's most exclusive hotel.

Clark asked Butler about the ``gold speech,'' and expressed amusement that Butler had thought that MacGuire or Doyle had written it. ``That speech cost a lot of money,'' he told Butler, and revealed that Davis had been its author. Butler stated that he didn't see what difference it made to soldiers whether the nation was on the gold standard. Clark replied that the soldiers' bonus must not be paid in ``rubber money,'' and said that gold-backed dollars were the only answer.

Butler challenged him, stating that it looked like the speech was ``a big business speech.'' Clark replied,

``I have $30 million dollars. I don't want to lose it. I am willing to spend half the $30 million to save the other half. If you go out and make that speech in Chicago, I am certain that they will adopt a resolution and that will be one step toward the return to gold, to have the soldiers stand up for it. We can get the soldiers in great bodies to stand up for it.''

When Butler asked why he thought that they could make Roosevelt, who was opposed to the gold standard, listen, Clark replied from the standpoint of his faction:
``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 to be prepared to sustain him when he does.''

Butler lost his mercurial temper. He said that he would not go to Chicago and that he refused to be part of a plan to use the soliders to impose the gold standard and force the President ``back to his class.''

Clark then tried to bribe Butler: ``Why do you have to be so stubborn? Why do you want to be different from other people? We can take care of you....'' He offered to pay the mortgage on Butler's house and to take care of his family.

Butler blew up. He took Clark into his trophy room, where his medals were displayed along with gifts from many poor peoples around the world. ``I will not betray their trust,'' he told Clark.

Not wanting to close off all relations with Butler, Clark called MacGuire in Chicago, and said that Butler had given him ``excellent'' reasons for not going and that he wouldn't be going either. ``I apologize to him for my connection with it,'' he told MacGuire. ``You can put this thing across. You have got $45,000. You can send those telegrams. You will have to do it that way.''

Clark apologized again, and Butler regained his composure. He drove Clark back to the Paoli station, thinking that there would be no further contact from these people, and that his temper had cost him the chance to learn more of the plot.


The Legion Is Manipulated

Within a week, the legion convention was underway in Chicago. According to a New York Times report, the convention was swamped by ``a flood of telegrams'' supporting the gold standard and adopted by acclamation a resolution supporting it.

On his way back from Chicago, MacGuire stopped to see Butler, this time arriving in a hired limo. He and his cohorts had been successful in getting their person in office as commander and had passed the gold resolution, he boasted to the general. ``Yes,'' said Butler, ``but I see you didn't endorse the soldiers' bonus.''

``Well, we have to have a sound currency before it is worthwhile to endorse the bonus,'' MacGuire replied.

``Their man'' who had been elected commander was Frank N. Belgrano, Jr., who happened also to be a senior Vice president of Gianinni's Bank of Italy/Bank of America, the bank that handled Mussolini's business accounts in the United States and internationally. Although the bankers had controlled the legion from its outset, this was the first time that an actual banker had served as its head.

Two weeks later, the persistent MacGuire was back again in Newtown Square. This time he offered Butler $1,000 and transportation in a private railroad car to Boston to make a speech to veterans, to be arranged through Doyle and other conspirators. The speech was to be in support of the gold standard. Butler refused. Undaunted, MacGuire persisted, ``Well, then, we'll think of something else.''

At the end of October, 1933, Butler arrived in New York City to make some campaign speeches on behalf of a fellow Marine who was running for municipal office. To his surprise, he was met at Penn Station by MacGuire. Butler was planning on a nationwide recruiting tour for the VFW, in order to counter the treachery of the legion and its Royal Family. MacGuire knew of his plans, which surprised the general. He was even more surprised when MacGuire proposed that he accompany Butler ``to talk to the soliders in the background and to see if we cannot get them to join a great big superorganization to maintain democracy.''

This was the first time that MacGuire was to mention the creation of an organization that would essentially supersede the legion, the first indication that something more than support for the gold standard was a goal. Butler told MacGuire that he couldn't stop him from following him around, but that he wanted no part of such organizing, which he said would ``fiddle with this form of government.'' MacGuire assured him that this was not their goal, that everything would be ``very democratic.''

MacGuire also offered to finance the general's tour through payments of $750 for each speech in which he inserted a short reference to the need for a return to the gold standard. Butler again refused to have words put in his mouth, at any price. MacGuire left, and disappeared for a time from the scene.

The White House was made aware of MacGuire's activities in trying to use the general to work against Roosevelt policy. On December 11, a former New York City detective, and associate of the Senate Banking Committee counsel and former assistant New York District Attorney Ferdinand Pecora, Val O'Farrell sent a confidential letter to Roosevelt's personal secretary Col. Louis Howe detailing the offer and praising Butler for refusing it. O'Farrell indicated that it was his belief that a plot against the U.S. government was underway.

To be continued.


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The preceding article is a rough version of the article that appeared in The American Almanac. It is made available here with the permission of The New Federalist Newspaper. Any use of, or quotations from, this article must attribute them to The New Federalist, and The American Almanac.


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