J. Edgar Hoover: The Man and the Secrets

by Curt Gentry

  *In two separate cases in St. Paul, Minnesota, William Hamm, Jr., president of the Hamm Brewing Company, and Edward Bremer, president of a local bank, were kidnapped, then released unharmed after the payment of ransom. The FBI prepared an “iron-clad case” against Roger “Terrible” Touhy and his gang on the Hamm kidnapping. However, much to Hoover’s chagrin, all were acquitted. Only then did the Bureau decide that both kidnappings had been committed by the Karpis-Barker gang.

  BOOK FIVE

  A Curious Relationship

  “I do not wish to be the head of an organization of potential blackmailers.”

  —J. Edgar Hoover, as quoted

  by Morris Ernst in “Why I

  No Longer Fear the FBI,”

  Reader’s Digest, December 1950

  “What’s the use of having information in our files if the director can’t use it?”

  —Associate Director Clyde Tolson

  at a meeting of the

  FBI executive conference

  16

  Coup d’Etat

  As plots go, this one was decidedly zany. But it was also—coming just months after a 1932 assassination attempt on the president-elect, and considering the rabid hostility of those allegedly involved—frighteningly possible, and it would, with J. Edgar Hoover’s skillful handling, help the director grasp control of all domestic intelligence in the United States. In July 1933 Major General Smedley Darlington Butler, ex-commandant of the U.S. Marine Corps and twice recipient of the Congressional Medal of Honor, who had recently been forced to retire after denouncing Benito Mussolini,* was visited by two prominent American Legion officials: Gerald C. MacGuire and William Doyle.

  There was, initially, nothing suspicious about their proposal. They wanted Butler to run for the post of national commander at the American Legion convention in Chicago in October. Butler, MacGuire said, was just the man to lead a rank-and-file revolt against the Legion’s entrenched leadership.

  Butler was interested. He’d felt that the Legion had been “selling out” the common soldier for years. But he was also practical. He doubted if the average veteran could afford to attend the convention. They’d anticipated that problem, MacGuire told him. Sufficient funds had been collected to bring thousands of veterans to Chicago. As confirmation, he produced a bank deposit book, pointing to two entries that totaled more than $100,000.

  That this was only a small portion of the money available became apparent at their next meeting, when MacGuire told Butler that nine very wealthy men had agreed to put up the funds for his campaign, one of whom he identified as his employer, the Wall Street financier Grayson M.-P. Murphy.*

  At this same meeting, MacGuire gave Butler the draft of a speech he was to deliver at the convention. Skimming through it, Butler saw that it demanded that the United States return to the gold standard. When asked why this demand had been included, MacGuire explained that it was to convince the veterans that their World War I bonuses should be paid in hard currency, rather than in paper money.

  Now very suspicious, Butler told MacGuire that before making a decision he wanted to talk to some of the principals. Shortly after this, Butler was visited by the Wall Street broker Robert Sterling Clark. Clark told him that he had thirty million dollars and that he was willing to spend half of it to save the other half. If Butler made the speech, Clark said, the veterans would follow his lead, and their combined voice would go a long way toward forcing the government to return to the gold standard.

  From Clark, Butler also learned that he wasn’t the only candidate for the job. “Although our group is for you,” Clark told him, “the Morgan interests say that you cannot be trusted, that you are too radical…They are for Douglas MacArthur.” Deciding that there was “something funny about that speech,” Butler told Clark that they’d better pick MacArthur; he wanted no part of it.

  That October the American Legion convention endorsed the gold standard resolution.

  In the spring of 1934 MacGuire again contacted the retired major general. He’d just returned from Europe, he said, where he’d studied the role of veterans groups in the formation of the Nazi party in Germany, the Fascisti in Italy, and the Croix de Feu movement in France. He and his sponsors had concluded that the American veterans could play a similarly important role. What was needed to save the United States from the “Communist menace,” MacGuire said, was a complete change of government. To effect this, MacGuire and the men he represented wanted Butler to lead a march of half a million veterans on Washington, where they would stage a coup d’état.

  Although to Butler “the whole affair smacked of treason,” he did not, for once, voice his thoughts: instead he pressed for more details.

  If Roosevelt yielded to their demands, they might allow him to remain president, MacGuire said, but without real power, analogous to Mussolini’s handling of the king of Italy. The secretary of state, who would be their own man, would actually run the government.

  But first they would have to remove the vice-president (John Nance Garner) and the current secretary of state (Cordell Hull)—“by force, if necessary.”

  If Roosevelt opposed them, however, “if he were not in sympathy with the Fascist movement,” then he would be “forced” to resign.

  What about the financing of the putsch? Butler asked. That had already been arranged, MacGuire told him, claiming they had three million dollars in hand and could get another three whenever they needed it.

  “Is there anything stirring yet?” Butler pressed. “Yes, you watch,” MacGuire told him. “In two or three weeks, you will see it come out in the papers.” He refused to be more explicit.

  Was he in? MacGuire asked. Butler stalled, saying he wanted more time to think about it.

  Two weeks later, the formation of the American Liberty League was announced, its stated purpose to oppose “radical” movements in the national government. Its 156 sponsors—all of whom had made sizable cash contributions—either headed or were on the directorates of some of America’s biggest corporations: U.S. Steel, E. I. du Pont de Nemours, General Motors, Standard Oil, J. C. Penney, Montgomery Ward, Goodyear Tire, Mutual Life Insurance, and a score of others. Among them were Irénée and Lammot du Pont, Sewell Avery, Alfred P. Sloan, S. B. Colgate, Elihu Root, E. F. Hutton, John J. Raskob, J. Howard Pew, and E. C. Sams. Altogether the assets they controlled were in excess of $37 billion.

  The treasurer of the American Liberty League was, Major General Butler noted, none other than Grayson M.-P. Murphy.

  There was definitely something crazy about the whole affair—Butler, who had gained prominence for speaking out against fascism, being asked to become an American duce.

  Butler did not, at this time, take his story to either President Roosevelt or FBI Director Hoover. It would be only his word, he knew, against that of MacGuire, Doyle, and Clark. Deciding he needed independent verification, he contacted a journalist acquaintance, Paul Comly French of the Philadelphia Record. Posing as someone sympathetic to the plot, French won over MacGuire, whom he visited at his office in Murphy’s brokerage firm. According to French, MacGuire told him “substantially the same story as related by the General.” He also added some new information: all the arms and ammunition they needed could be obtained from the Remington Arms Company on credit through the Du Ponts, who owned a controlling interest in Remington.

  This time, when MacGuire again asked him if he wanted to lead the march on Washington, the ex-Marine bluntly responded: “If you get 500,000 soldiers advocating anything smelling of Fascism, I am going to get 500,000 more and lick the hell out of you, and we will have a real war right at home.”1

  Only then did Butler take the story to J. Edgar Hoover. Hoover knew a loaded gun when he saw one. This sounded to him like a plot to overthrow the government of the United States. However, if the Bureau investigated Butler’s charges, he would risk alienating some of America’s most powerful corporation heads.

  Hoover informed Butler that since there was no evidence that a federa
l criminal statute had been violated, he did not have the authority to order an investigation.

  At about this same time a congressional subcommittee was investigating Nazi propaganda in the United States. It is possible that Hoover or one of his aides suggested that Butler take his evidence to them. If so, this was probably the director’s first use of what later became known as the House Un-American Activities Committee.

  On November 20, 1934, Butler appeared before the committee in private session and related his story of the proposed Fascist coup d’état. French, whose article exposing the plot appeared that same day, also testified, as did James Van Zandt, national commander of the Veterans of Foreign Wars, who had been similarly approached and who corroborated much of Butler’s story. But of those who had approached Butler, only MacGuire was called to testify, and while he admitted that he had met with the general on several occasions, he claimed that Butler had “misunderstood” him.

  Murphy, Clark, MacArthur, and the members of the American Liberty League were not called. By the time the committee finally issued its report, all of their names, together with any mention of the league, had been excised. Nevertheless, the committee stated that it “was able to verify all the pertinent statements made by General Butler,” adding, “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 it expedient.”2

  After French’s exposé, many of the sponsors of the American Liberty League withdrew their support, and by 1936, when Roosevelt ran for a second term, the league was so thoroughly discredited the Republican party begged them not to endorse their candidate.

  Although the organization faded from view, its backers remained if anything more anti-Roosevelt than ever, their contributions now channeled into the support of other right-wing groups such as America First, the Sentinels of the Republic, and the Crusaders.

  Nor was this the last that was heard of Major General Smedley Darlington Butler. In August 1936 he made a second appointment with J. Edgar Hoover. Despite the publicity given his appearance before the committee—and his later charges that the committee report had been a “whitewash”—Butler had again been approached by a representative of the Fascist right wing, with still another plot.

  This one Hoover would take directly to FDR, bypassing even the attorney general.

  Although Hoover did not inform Butler of this, the FBI was already investigating American fascism when Butler first approached him in the fall of 1934. On May 8, 1934, the president had called a White House conference to consider the implications of the growing Nazi movement in the United States. It was promoting a doctrine complementary to fascism and had grown noticeably since the 1933 ascent to power of Adolf Hitler. Present, in addition to Roosevelt and the FBI director, were Attorney General Cummings, Secretary of the Treasury Morgenthau, Secretary of Labor Frances Perkins, and Secret Service Chief W. H. Moran.

  Roosevelt requested that the FBI, working in conjunction with the other agencies, conduct “a very careful and searching investigation” of the Nazi movement, and especially its antiradical and anti-American activities, with particular focus on “any possible connection with official representatives of the German government in the United States.”3

  Hoover instructed the field offices that this should be a “so-called intelligence investigation”—that is, for informational rather than prosecutorial purposes. Although it soon outgrew its boundaries, it was initially intended to be a limited investigation, conducted within specific guidelines, concentrating primarily on Fritz Kuhn’s German-American Bund.*4 It was also a departure from the 1924 edict of Attorney General Harlan Fiske Stone that the activities of the Bureau “be limited strictly to investigations of violations of law.”

  Butler’s new plot was the creation of Charles E. Coughlin, the fiery radio priest from Royal Oak, Michigan. Although once an ardent Roosevelt supporter (“I will never change my philosophy that the New Deal is Christ’s deal”), Father Coughlin had by 1936 turned on the president and all he represented, allying himself with those who opposed the “Jew deal” and declaring that given a choice between communism and fascism, he would gladly embrace the latter.5 He was especially critical of the president’s “hands off” policy toward President Lázaro Cárdenas of Mexico, whose anticlerical decrees greatly concerned the Catholic church. If Roosevelt wouldn’t act, Coughlin decided, he would. In the late summer of 1936 the priest approached General Butler and urged him to lead an armed expedition into Mexico, its purpose to overturn the Cárdenas government and restore the church.

  Butler reported the conversation to J. Edgar Hoover. Attorney General Cummings being away from Washington on an extended trip, the FBI director sent a memorandum regarding the Coughlin-Butler incident directly to the president. He also sent Roosevelt, during this same period, several other memorandums regarding the American Communist party and the activities of one Constantine Oumansky, an attaché to the Russian embassy whom Hoover suspected, from his travels around the country, of being a spy.

  It is not known how seriously Roosevelt took General Butler’s various charges. Having been the target of an assassination attempt even before he was inaugurated, and well aware that some of his enemies would go to almost any extreme to remove him from office, it is probable that FDR took the American Liberty League affair quite seriously.* As for Coughlin, Roosevelt was probably less concerned with the priest’s holy crusade than with his political influence, which was considerable: Coughlin’s weekly listening audience was said to number ten million.

  It is known that Roosevelt was far more concerned with fascism—and such native demagogues as Huey Long, governor of Louisiana and a potential presidential rival; his former assistant, the anti-Semitic hatemonger Gerald L. K. Smith; and William Dudley Pelley, who bragged that his semimilitary Silver Shirts numbered twenty thousand strong—than he was with American communism. As Stanley Kutler has noted, “Until 1939 organized labor and its leaders were important allies of the New Deal and could do little wrong in the eyes of the Administration. Communist influence of labor unions—alleged or real—was not a matter of great concern. The Popular Front mentality was still in vogue. Enemies on the left were minimized, and the Communist Party’s political activism generally served the Administration’s purposes.” According to Robert Jackson, one of FDR’s attorneys general, not until 1939 and the signing of the Nazi-Soviet pact did “Roosevelt become very anti-Communist—militantly so.”6

  On August 24, 1936, Franklin Delano Roosevelt summoned J. Edgar Hoover to the White House for a private meeting. Exactly what was said during this and a subsequent meeting the following day is a matter of dispute, since there is only one record of what occurred: Hoover’s own memorandum for the files.† In short, there is only Hoover’s word for what was said and—equally important—what emphasis was given to the subjects they discussed.

  According to Hoover, the president called him to the White House because he wanted to discuss “subversive activities in the United States, particularly Fascism and Communism.” However, if Hoover’s memorandum is an accurate depiction of what was discussed, the only reference to fascism was mention of the Coughlin-Butler incident and the American Liberty League affair. The rest of the meeting was devoted to Hoover’s reports on Communist activities, particularly those involving the American labor movement. According to Hoover, the West Coast longshoreman’s union, headed by Harry Bridges, “was practically controlled by Communists”; the Communists “had very definite plans to get control of” John L. Lewis’s United Mine Workers Union; and the Newspaper Guild had “strong Communist leanings.” If the Communists gained control of just these three unions, Hoover maintained, they “would be able at any time to paralyze the country.”

  The president (still according to Hoover) stated that “what he was interested in was obtaining a broad picture” of the Communist and Fascist movements and their activities as they might “affect the economic and political activity
of the country as a whole.”

  Hoover told the president that the FBI lacked authority to conduct such an investigation. Roosevelt asked if he had any suggestions. Hoover just happened to know of a loophole: “I told him that the appropriation of the Federal Bureau of Investigation contains a provision that it might investigate any matters referred to it by the Department of State and that if the State Department should ask for us to conduct such an investigation we could do so under our present authority.”7

  The following day the president and the director met with Secretary of State Cordell Hull. Hoover’s memorandum of the meeting states, “The President pointed out that both of these movements were international in scope and that Communism particularly was directed from Moscow…so consequently, it was a matter which fell within the scope of foreign affairs over which the State Department would have a right to request an inquiry to be made.”8

  Apprised of the situation, Hull told the director—in language that does not appear in Hoover’s memorandum for the files—“Go ahead and investigate the hell out of those cocksuckers.”9

  Roosevelt asked Hoover to coordinate the FBI investigation with military and naval intelligence. He also stressed that he “desired the matter be handled quite confidentially.”10

  Not knowing—except from Hoover’s memos—what the president actually wanted, it is not possible to say whether the FBI director went beyond the president’s intent. If Roosevelt simply wanted a general intelligence operation to establish that the Fascist and Communist movements were foreign directed, Hoover definitely exceeded his mandate. On August 28 Hoover’s aide Ed Tamm submitted a tentative outline for the investigation. In its “general classification” were the maritime, steel, coal, clothing, garment and fur industries; the newspaper field; government affairs; the armed forces; educational institutions; Communist and affiliated organizations; Fascist and anti-Fascist movements; and activities in organized labor organizations. This was, the director noted in the margin in blue ink, “a good beginning.”11