The Wall Street Plot to Overthrow a President: A Forgotten Lesson in Finance, Power, and Political Risk

History is filled with pivotal moments that, had they turned out differently, would have reshaped our world. We often think of these as grand battles or political assassinations. But what if one of the most significant threats to American democracy wasn’t a foreign army, but a cabal of its own financial elite? What if the titans of industry and banking conspired to overthrow a sitting president? This isn’t the plot of a political thriller; it’s a chapter of American history that has been largely forgotten, brought back to our attention by a reader’s letter in the Financial Times.

In 1933, at the nadir of the Great Depression, a decorated Marine Corps Major General named Smedley Butler alleged the existence of a “Business Plot”—a scheme by wealthy financiers and industrialists to stage a military coup against President Franklin D. Roosevelt. While the story has since been relegated to the footnotes of history, its echoes resonate powerfully today. It serves as a stark reminder of the immense pressures that can build at the intersection of capital, politics, and economic ideology. For anyone involved in finance, investing, or business leadership, the Business Plot is more than a historical curiosity; it’s a masterclass in political risk, the power of economic policy, and the perennial tension between Wall Street and Washington.

A Nation on the Brink: The Economic Cauldron of the 1930s

To understand why such a radical plot could even be conceived, we must first transport ourselves back to the early 1930s. The United States was a nation in agony. The Roaring Twenties had ended not with a whimper, but with the cataclysmic stock market crash of 1929. By 1933, the country’s economic infrastructure was in ruins.

The numbers paint a bleak picture. The nation’s GDP had been slashed nearly in half. Unemployment soared to a staggering 25%, leaving one in four workers jobless. Thousands of banks had failed, wiping out the life savings of millions. The very foundation of the American economy seemed to be crumbling. This was the environment that greeted Franklin D. Roosevelt upon his inauguration.

FDR’s response was the New Deal—a sweeping series of programs, regulations, and reforms aimed at providing relief, recovery, and reform. To his supporters, he was a savior. To the powerful conservative business and banking interests, however, he was a traitor to his class, a budding dictator steering the nation toward socialism.

The “Radical” in the White House: FDR’s Economic Revolution

FDR’s policies were a direct assault on the laissez-faire orthodoxy that had dominated American economics for decades. His actions, seen as essential for saving capitalism from itself, were viewed by many in high finance as an existential threat to their wealth and influence. Several key policies were particularly inflammatory:

• Abandoning the Gold Standard: In a move that shocked the financial world, FDR took the U.S. dollar off the gold standard in April 1933. This devalued the dollar, making American goods cheaper abroad and allowing the government to inflate the currency to combat deflation. For conservative financiers who saw gold as the ultimate store of value and a check on government power, this was heresy. It fundamentally altered the landscape for international trading and investing.
• Financial Regulation: The New Deal introduced landmark legislation to rein in Wall Street. The Glass-Steagall Act separated commercial and investment banking to prevent reckless speculation with depositors’ money. The Securities Act of 1933 and the creation of the Securities and Exchange Commission (SEC) in 1934 imposed new disclosure rules and oversight on the stock market, aiming to end the market manipulation that had contributed to the crash.
• Social Programs and Labor Rights: The establishment of massive public works programs and the strengthening of labor unions were seen by many industrialists as an attack on free enterprise and a dangerous move toward a collectivist state.

These policies represented a fundamental shift in the relationship between the government and the economy. Power was being transferred from the private financial sector to public institutions in Washington—a shift the old guard was not willing to accept without a fight.

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The Plot Unveiled: A General’s Startling Testimony

Enter Major General Smedley Butler. A two-time Medal of Honor recipient, Butler was a revered, if outspoken, military figure. In 1934, he went public with an explosive story. He testified before the McCormack-Dickstein Committee, a congressional committee investigating Nazi propaganda and un-American activities, that he had been approached by a bond salesman named Gerald C. MacGuire to lead a coup.

According to Butler’s testimony, the plan was to assemble an army of 500,000 veterans from the American Legion. This force would march on Washington, D.C., and, in a show of overwhelming power, force FDR to cede effective control of the country. The president would be kept as a figurehead, while a new “Secretary of General Affairs” would run the country, effectively installing a fascist dictatorship beholden to business interests. Butler claimed the plotters had financial backing from some of the wealthiest and most powerful figures in America. He named names and pointed fingers directly at the heart of Wall Street.

The congressional committee’s final report confirmed key parts of Butler’s story. It stated, “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 it expedient.” (source).

Below is a list of some of the key individuals and organizations implicated or mentioned in connection with the plot, representing a cross-section of American finance and industry at the time.

Despite the committee’s findings, no one was ever prosecuted. The media, largely controlled by conservative interests, either downplayed or ridiculed the story. As a result, one of the most audacious conspiracies in U.S. history faded into obscurity.

Lessons for the Modern Investor and Business Leader

The Business Plot is not just a historical drama; it’s a trove of enduring lessons for anyone navigating the complex world of modern markets and business.

1. Political Risk is Paramount

The most obvious takeaway is that political risk is not a theoretical concept; it is a tangible and potent force. Investors who focus solely on balance sheets and market trends while ignoring the political landscape do so at their peril. The 1930s demonstrate how quickly a government’s policy shift can upend an entire economic order, creating winners and losers overnight. Today’s investors must analyze everything from election outcomes and regulatory changes to geopolitical tensions and social unrest as core components of their investing strategy.

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2. Regulation is Cyclical

The New Deal’s wave of regulation was a direct response to the perceived excesses of the 1920s. Decades later, many of those regulations were rolled back in an era of deregulation, which some argue contributed to the 2008 financial crisis. This, in turn, led to a new wave of regulation like the Dodd-Frank Act. History shows that the pendulum of financial regulation constantly swings between tightening and loosening. Understanding this cycle is crucial for anyone in the banking or fintech sectors, as it dictates the rules of the game for decades at a time.

3. Economic Inequality Breeds Instability

The plot was born from a perception among the elite that their way of life was under threat, but the popular support for FDR was fueled by widespread economic despair. The immense gap between the wealthy and the unemployed created a volatile political environment where radical ideas—from both the left and the right—could flourish. This is a powerful lesson for today. High levels of economic inequality can lead to populist backlashes, unpredictable policy, and a less stable business environment. A healthy, functioning economy with broad-based prosperity is ultimately in the best interest of long-term investors. A study by the International Monetary Fund has shown that lower net inequality is robustly correlated with faster and more durable growth.

Conclusion: A Cautionary Tale for Our Times

The Business Plot of 1933 is a chilling reminder of how fragile democracy can be in the face of economic crisis and ideological fervor. It underscores the perpetual struggle between concentrated financial power and democratic governance. While a military coup led by Wall Street financiers seems unthinkable today, the underlying tensions that fueled the plot are very much alive.

Debates over wealth distribution, the scope of government intervention in the economy, and the regulation of new technologies like AI and blockchain are the modern arenas for this old conflict. The story of Smedley Butler and the plotters who tried to recruit him is a warning. It teaches us that a stable society and a prosperous market are not givens; they are the products of a delicate social contract that must be continually renewed. Forgetting this chapter of history would be to ignore one of its most vital lessons on the intricate and often perilous dance between money and power.

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