The Arithmetic Doesn't Add Up to Democracy

The Existing Order

© Oct. 16, 2009 by  LINDA MINOR

(all rights reserved)

“That an Anglo-American alliance is well calculated to support the existing order throughout the world, even at the expense of democracy against Fascism, should … give pause to anyone who calculates that Montagu Norman + J. P. Morgan = democracy.” (1)

Plot and counterplot

In 1934 General Smedley Darlington Butler, a career Marine, became whistleblower to one of the strangest plots in American history when he testified before the Congressional Committee on Un-American Activities about a series of meetings with mysterious American businessmen and bond brokers who selected him to  serve in a capacity they termed “assistant President”--an honorary position for a  military straw man to represent the views of America's World War I disgruntled veterans who, many bankers feared, were in danger of organizing a revolution against capitalism.

Butler described numerous cat-and-mouse assignations with a broker named Gerald C. MacGuire. Once he determined to his own satisfaction that something was amiss, he blew the whistle on their charade and went public, revealing the all-consuming fear of the erstwhile conspirators that one of two options was about to occur, neither of which was desirable:

• That the wealthy class would either be forced to pay higher taxes to support Roosevelt’s welfare programs; or

• That Roosevelt would change the government’s economic system completely from capitalism to socialism.

MacGuire's henchman, Robert Sterling Clark, denied, when queried by Butler, any evil motives against FDR on the part of his clique, declaring:

"This is to sustain him when others assault him…. 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 got to be prepared to sustain him when he does."(2)

Further questioning by General Butler, who played along with the game, elicited from MacGuire the following dialogue:

“We might have an assistant President, somebody to take the blame; and if things do not work out, he can drop him…. That is what he was building up Hugh Johnson (FDR's National Recovery Administration czar) for. Hugh Johnson talked too damn much and got him into a hole, and he is going to fire him in the next three or four weeks.”

[Butler] said, “How do you know all this?”

“Oh,” he said, “we are in with him all the time. We know what is going to happen.” (3)

Butler realized very quickly that the schemers were privy to highly confidential inside information from the centers of power. Everything they predicted shortly came to pass. However, if General Johnson was a disappointment to those who selected him, their choice of General Butler was about to become a disaster.

Identifying the true racketeers

General Butler was loved and admired by the soldiers he led. He identified with them, and he freely placed the blame for the wars in which he had served throughout his career on the class he felt was responsible for those wars—the bankers and businessmen whose fat he, as a career soldier, had often pulled from the fire.

Who were these plotters? Jules Archer in his 1973 book called The Plot to Seize the White House (5) did not speculate about the men who pulled the strings behind the scenes, though he accurately described the scenario that played out on the public stage.  

We know the names of at least two of those puppeteers working behind the scenes -- Grayson Mallet-Prevost Murphy, a "Manhattan private-banker," and Robert Sterling Clark, a scion of the Singer Sewing Machine Co. fortune--though their names are virtually unknown today. Research into their family history and business relationships clearly reveals a money trail and path of intrigue later used by the CIA in its covert political work.

Making the World Safe for Investment

Click to enlarge.

To the plotters it appeared that President Roosevelt had betrayed his class when he exerted his energies to benefit unemployed and impoverished citizens (even labor unions!) at the expense of the business and banking clientele who had garnered the funds to finance his election. John W. Davis, the personal attorney of J.P. “Jack” Morgan, Jr., was instrumental in setting up the legal framework to finance a propaganda-intelligence network, attempting, if not to gain control of the executive branch of government, at the very least to convince the President to pay attention to the financial elite.

Davis' boss, Jack Morgan, Jr.

In August of 1934, shortly after General Butler was clued that such an organization would appear, Davis incorporated the American Liberty Lobby. MacGuire's boss, Grayson Mallet-Prevost Murphy, a Guaranty Trust vice-president,  served as the Lobby's treasurer, and other members included the elite of the General Motors-DuPont structure. The same men had been involved in the Association against the Prohibition Amendment (AAPA), used by Democratic Party chairman John J. Raskob to repeal Prohibition. (6) In 1928, Murphy's name was listed as a member of AAPA.(7)

MacGuire, who was on the payroll of Murphy's brokerage office, G. M-P Murphy & Co., had not only offered eighteen $1,000 bills to Butler (which were rejected), but had also promised to present the General as keynote speaker at an upcoming American Legion convention in Chicago, where a speech written by John W. Davis about the need to return to the gold standard would be made available for him to read. MacGuire boasted that his boss, Murphy, had donated $125,000 to found the veterans’ group, ostensibly designed along a similar pattern observed in Europe (notably in Mussolini's Italy), which, he bragged, was completely within their control.

Grayson M.-P. Murphy and the

Bankers’ intelligence network

Murphy, who graduated from West Point in 1903 with General Hugh S. Johnson of the NRA, had first attended the William Penn Charter School in Philadelphia and the Quakers' Haverford College. During his Army stint he was in the Military Intelligence Division--an elite intelligence group set up during the Spanish-American War. He had also been one of two men selected by Secretary of State John Hay, under instructions from President Theodore Roosevelt, for a secret mission to “gather information in South American countries which might play a role should the United States involve itself in conflict within the Gulf of Mexico or the Caribbean.” (8)  Acting both as a military attaché and as a consulate aide, Murphy traveled incognito to Venezuela and returned to brief the President personally. (9)

What we can glean from the remainder of his career—including his role in the 1934 plot—reveals much about America’s incipient intelligence organization before either the Office of Strategic Services or Central Intelligence Agency were formed.

G.M-P Murphy & Co., formed in 1907, specialized in the preserving assets of bankrupt companies for the benefit of creditors, working on commissions paid to him by  creditors desiring to get possession of assets held as security for defaulted loans. Gerald MacGuire, at the time he approached Gen. Butler, sold bonds for the Murphy company, and it is clear from testimony given before the Congressional Committee on Un-American Activities that MacGuire was

“continuously on the payroll of G.M.P. Murphy & Co., regardless as to whether he was making tours of inspection at the expense of Clark or whatever he was doing.” (10)

Ostensibly, MacGuire’s numerous travel expenses were paid by an organization called the Committee for a Sound Dollar and Sound Currency, Inc. (whose members, MacGuire claimed, included both Grayson Murphy and Robert Sterling Clark. Clark undoubtedly had access to a huge pool of cash set aside to promote the the American Legion's Chicago convention, for which he tried unsuccessfully to recruit General Butler as a speaker. (11) The American Legion’s purposes apparently coincided with those of MacGuire’s employer, Grayson Murphy, whose company’s $125,000 donation had financed the Legion’s incorporation.

Unless Murphy’s company was a mere cover for intelligence work, it is difficult to understand what MacGuire contributed to the company which paid him to travel throughout Europe, studying the role military groups had played in setting up Fascist governments in Spain, Italy and Vischy France. Murphy’s background, besides heading "protective committees" to foreclose on creditors’ interests in collateral on existing loans, was military intelligence and planning of secret military operations--forerunner to the role of today's CIA. He was part of a super-secret intelligence organization within the military, funded by the American Red Cross and coordinated by Major General Ralph H. Van Deman—General Pershing's senior intelligence officer and Chief of Allied Counterintelligence.

Beginning in 1917 Murphy, as an appointee of President Wilson, worked for the Red Cross in France and as an officer in the Army:

“Douglas MacArthur took over the brigade and received his first general's star. … The 42nd also got a new G3, Major Grayson M.P. Murphy, a West Point graduate who had left the army to pursue a very successful career in finance and banking. Murphy had come to France as head of the American Red Cross, and in June 1917, went with Pershing to Chaumont as a part of the permanent staff of AEF Headquarters. While on Pershing's staff, Murphy coordinated Red Cross activities with the army's medical service in the field. His West Point background and good service in the infantry in the Philippines impressed Pershing enough to send him to the 42nd Division in the critical position of G3 [operations and planning].” (12)

“Your Servant—The Red Cross”

According to an article styled “Your Servant—The Red Cross” by Geddes Smith, published in The Independent in 1917, the work performed by the Red Cross War Council in World War I closely resembled contemporary services provided under contracts awarded to Halliburton, a profit-making corporation, for the soldiers in Iraq. Geddes describes those services as follows:

“The Red Cross is servicing France. [We only hope no pun was intended!] The War Council, thru its commissioners, asked France what immediate service was most wanted. ‘Give us canteens,’ was the answer…. The word canteen … means, first, a field kitchen close behind the first line of trenches from which hot coffee and tea … and cold lemonade and such drinks are served out to fighting men…. It means, also, an outpost of civilization—a place where a poilu leaving the front can … shave and wash his mud-stained body and disinfect his germ-laden clothing…” (13)

Red Cross services also included the provision of food supplies, linens and clothing for persons left homeless by the war, infirmaries and rest-stations for soldiers, all of which were paid for out of donations collected by the Red Cross from the general public—estimated at $100,000,000. Today Halliburton is paid by a combination of corporate profits and American tax dollars to provide the same types of services for America’s armed forces.

Rambling with Wild Bill Donovan

Within a year after the war’s end, Murphy returned again to Europe with a man who was to become the first American head of a civilian intelligence organization in America, William J. Donovan. According to Donovan’s biographer, the job Donovan and Murphy performed was to gather information concerning a proposed Morgan bank bond issue for a consortium of capitalists who wanted statistics from Europe before these bankers, lawyers and investors underwrote, bought or sold bonds for European reconstruction; the names of the capitalists, however, were not disclosed. (14)  Donovan and Murphy “toured Europe together to make their own intelligence estimates and establish a private intelligence network to keep them and like-minded members of America’s ‘peacetime’ intelligence subculture advised of changes in Europe.” (15)

Morgan Syndicate

Raskob with his boss, Du Pont

FDR had been elected in 1932 with financial and political assistance from corporations such as General Motors, then in control of major shareholders John J. Raskob and Pierre and Lammot Du Pont, whose desire was to use war-generated profits to diversify and consolidate their corporate holdings. That ambition was consistent with the Morgan banking network's goals, with which General Motors had long been affiliated.

Professor Carroll Quigley, of the opinion that there were different factions within the Morgan bank establishment, stated in his book Tragedy and Hope:

“To Morgan all political parties were simply organizations to be used, and the firm always was careful to keep a foot in all camps. Morgan himself, Dwight Morrow, and other partners were allied with Republicans; Russell C. Leffingwell was allied with the Democrats; Grayson Murphy was allied with the extreme Right; and Thomas W. Lamont was allied with the Left.”  (16)

Thomas Lamont’s rise in influence within the bank followed the chairmanship of World War I head of the American Red Cross, Henry Pomeroy Davison, (17) whose banking career had begun in the Astor Bank, and who reared his sons (F. Trubee Davison and H.P., Jr.) at Locust Valley, Long Island, New York, near the estate of Robert S. Lovett. Lamont's "left-leaning tendencies" caused concern among members of the more conservative faction, who detested the role Leffingwell and Lamont had played in advising FDR to take the dollar off the gold standard. In response to removal of the gold backing on the dollar, Roosevelt’s own budget director, Lewis W. Douglas (who was brother-in-law of Rockefellers' attorney John J. McCloy), predicted the end of Western Civilization, while Montagu Norman of the Bank of England (also a Brown Brothers partner) feared the entire world would plunge into bankruptcy. (18)

These apocalyptic opinions reflect also the sentiments of the Anglo-American political philosophy supported by the same bankers who desired to rid the world of anti-capitalism—any tendencies leading to labor unrest and anarchy—which they equated with Communism. The British Foreign Secretary in 1925, Austen Chamberlain, for example, had commented:

“If I ever had to choose in my own country between anarchy and dictatorship, I expect I should be on the side of the dictator.” (19)

Butler never met with Grayson Murphy, though, upon his insistence that he be introduced to one of MacGuire’s principals in the plot, he was paid a visit from Robert Sterling Clark, a multimillionaire, deprecatingly dubbed “the millionaire lieutenant” during the war. A grandson of Edward Clark, attorney for and partner of Isaac Singer, inventor of the sewing machine, Robert S. Clark was also one of three sons of Alfred Corning Clark, who had served as Singer’s president until his death in 1896. The Clark family involvement in the scheme adds another layer of depth and texture to a tapestry woven by an assortment of banking families who were working behind the scenes in 1934 to wrest control of America’s central bank out of "liberal" hands and place it within those of an Anglo-American military- fascist elite.

Six years after Alfred Corning Clark died, his widow married the Right Rev. Henry Codman Potter, Episcopal Bishop of New York, who serves as a link between Clark and an offshoot of the family of Alexander Brown of Baltimore, the oldest merchant banking family in America. 

Brown Brothers of New York is the bank with which President George H.W. Bush’s father was a partner after its merger with the investment banks of the sons of robber baron E.H. Harriman in 1926.

 NOTES:

1. Quincy Howe, England Expects Every American To Do His Duty (New York: Simon & Schuster, 1937), 198.

2. The quotes from MacGuire were obtained from Wikisource website.

3. Retired General Johnson (West Point Class of 1903) was then administrator of the National Recovery Administration. Time magazine (October 31, 1934) reported: “Each and every reporter at Hyde Park was aware that General Hugh Samuel Johnson had at last cooked his goose with the President. In his speech on the textile strike week before, NRA’s Johnson had denounced the strikers in such violent terms that Labor swore it would have the General’s scalp. In the same address General Johnson sealed his official doom, as far as the President was concerned, when he said: ‘During the whole intense [NRA] experience I have been in constant touch with that old counselor, Judge Louis Brandeis. As you know, he thinks that anything that is too big is bound to be wrong. He thinks NRA is too big, and I agree with him.’ Vastly displeased was the President with General Johnson’s public claim to intellectual kinship with Supreme Court Justice Brandeis, before whom the National Recovery Act must sooner or later come for adjudication.”

     Time had first reported on Johnson’s background as follows: “He set up the General Staff's Purchase. Storage and Traffic Division to eliminate competitive government buying, sat on the War Industries Board with Bernard Mannes Baruch. Resigning from the army in 1919 as a Brigadier General, he joined the Moline (Ill.) Plow Co. of which George Nelson Peek, new administrator of the Farm Relief Act, was president. In 1927 he went to Mr. Baruch at No. 120 Broadway as economic expert and factfinder. Mr. Baruch lent him to President Roosevelt to help draft the Industrial Recovery Act.” Time (May 29, 1933).

4. “America's Armed Forces: Part 2—In Time of Peace: The Army,” Common Sense (October 1935), page 8.

5. Jules Archer, The Plot To Seize The White House (New York: Hawthorn Books, 1973).

6. The correlation between the two committees is shown in an article by David Kyvig at the website maintained by the Coalition to Oppose the Arms Trade (COAT).

7. The entire list of the membership was published by the Washington Post in 1928 under a front-page headline “New Wet Board’s Purpose Mystery to Party Leaders.” Washington Post (April 23, 1928), 1.

The names listed were determined by the Post to be disproportionately Republicans, who would later abandon Herbert Hoover in order to elect Franklin Roosevelt. Besides Murphy, the name of George H. Walker (grandfather of the first President Bush) was also listed. At that time he was employed by W.A. Harriman & Co., which in 1931 was to merge with the established private banking firm of Brown Brothers & Co., of which Bank of England chairman Montagu Norman was a partner.

8. William R. Corson, The Armies of Ignorance: The Rise of the American Intelligence Empire (New York: The Dial Press/James Wade, 1967), 597.

9. This trip to Venezuela occurred at the same time that an international lawyer who was a leader in the Pan-American Society, Dr. Severo Mallet-Prevost of Philadelphia (son of Dr. Grayson Mallet-Prevost), sailed to Venezuela in order to promote a loan to be made by Speyer & Co. It appears that Dr. Mallet-Prevost was Murphy’s uncle.

10. The transcript of the hearings of the Committee, often referred to as HUAC or the “MacCormack-Dickstein Committee,” can be found online in three segments, together with Smedley Butler’s brochure, War Is a Racket and other materials about the plot.

11. The Congressional Committee Report, however, upon examining the membership list, did not find those names. See Report of Congressional House Special Committee on Un-American Activities, 73rd Congress, 2d Session (New York: November 24, 1934). Also see the chapter entitled “Wall Street Buys the New Deal,” in Antony C. Sutton, Wall Street and FDR (New Rochelle, New York: Arlington House Publishers, 1975). Had Butler agreed to speak at the convention, he would have received no less than $18,000 in cash for reading a speech written by John W. Davis, demanding a return to the gold standard.

12. James J. Cooke, The Rainbow Division in the Great War, 1917-1919 (Praeger Publishers, 1994), 133, citing as source: John J. Pershing, My Experiences in the World War (New York: Frederick A. Stokes Co., 1931), Vol. 1, 71, 108, 280. The author also cites fascinating excerpts from General Patton’s diary relating run-ins he encountered with Murphy: “Maj [sic] Murphy told me he could not put smoke in plan as stencil was already cut. The biggest fool remark I ever heard showing just what an S.O.B. the late chief of Red Cross is.” Cooke, 148, quoting from Martin Bluenson (ed.), The Patton Papers, 1885- 1940, Vol. 2 (Boston: Houghton-Mifflin Co., 1972), 628.

13. Geddes Smith, “Your Servant—The Red Cross,” The Independent; 91, 3590 (September 22, 1917), 462.

14. Richard Dunlop, Donovan: America’s Master Spy (Chicago: Rand McNally & Company, 1982), 137. We can reconstruct the names of those investors were by examining the bond issues underwritten immediately after their summer tour in 1920.

15. William R. Corson, The Armies of Ignorance, op. cit., 598.

16. Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: The Macmillan Company, 1966), 945.

17. “Davison …conceived the plan which resulted in the formation of the Bankers' Trust Company, intended to serve as a depository for the funds of national banks and insurance companies. In 1902 George F. Baker and Francis L. Hine of the First National Bank invited him to become vice-president and director. There he soon won recognition from J. Pierpont Morgan, Sr., who frequently consulted him, especially in the monetary crisis of 1907, when Davison had an important part in determining the action of New York banks. During the next year he joined the Monetary Commission headed by Senator Aldrich and in the capacity of banking expert with that commission he visited France, Germany, and England. He then acquainted himself with the prevailing European idea of a flexible national currency. In association with Senator Aldrich, Paul M. Warburg, Frank A. Vanderlip, and A. Piatt Andrew, he took part in drawing up the ‘Jekyl Island’ report that led to the crystallization of sentiment resulting in the creation of the Federal Reserve System. Having become a partner in J. P. Morgan & Company, he served with distinction in 1910 as chairman of the Six-Power Chinese Loan Conference at Paris.”  Dictionary of American Biography Base Set. American Council of Learned Societies, 1928-1936.

18. Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Atlantic Monthly Press, 1990), 358-359.

19. Quoted in Clement Leibovitz and Alvin Finkel, The Chamberlain-Hitler Collusion (UK: Merlin Press Ltd., 1997), 39.

20. Published by World Peace Foundation (1927), 718.