Butler was educated at the Haverford School, a private secondary school for the sons of wealthy Quaker families in Philadelphia. Although brought up as a pacifist he runaway from school at sixteen to join the army. Butler lied about his age and secured a second lieutenant's commission in the US Marines.
After six weeks of basic training Butler was sent to Guantanamo, Cuba, in July 1898. He saw action against the Spanish before being sent to China during the Boxer Rebellion. At the Battle of Tientsin on 13th July, 1900, Butler was shot in the thigh when he climbed out of a trench to retrieve a wounded officer. In recognition of his bravery Butler was promoted to the rank of captain. Butler was badly wounded for a second time when he was shot in the chest at San Tan Pating. In 1903, Butler was sent to Honduras where he protected the U.S. Consulate from rebels.
In 1914 Butler won the Medal of Honor for outstanding gallantry in action while fighting against the Spanish at Veracruz, Mexico. Major Butler returned his medal arguing that he had not done enough to deserve it. It was sent back to Butler with orders that not only would he keep it, but that he would wear it as well. Butler won his second Medal of Honor in Haiti on 17th November, 1915.
Promoted to the rank of brigadier general at the age of 37 he was placed in command of Camp Pontanezen at Brest, France, during the First World War. This resulted in him being awarded the Distinguished Service Medal and the French Order of the Black Star.
Following the war, Butler transformed the wartime training camp at Quantico, Virginia into a permanent Marine post. In 1923 the newly elected mayor of Philadelphia, W. Freeland Kendrick, asked Butler to leave the Marines to become Director of Public Safety. Butler refused but eventually accepted the appointment in January 1924 when President Calvin Coolidge requested him to carry out the task.
Butler immediately ordered raids on more than 900 speakeasies in Philadelphia. He also ordered the arrests of corrupt police officers. Butler upset some very powerful people in his crusade against corruption and in December 1925 Kendrick sacked Butler. He later commented "cleaning up Philadelphia was worse than any battle I was ever in."
Butler returned to the US Marines and in 1927 was appointed the commander of the Marine Expeditionary Force in China. Over the next two years he did what he could to protect American people living in the country.
At the age of 48, Butler became the Marine Corps' youngest major general. Butler became the leading figure in the struggle to preserve the Marine Corps' existence against critics in Congress who argued that the US Army could do the work of the Marines. Butler became a nationally known figure in the United States by taking thousands of his men on long field marches to Gettysburg and other Civil War battle sites, where they conducted large-scale re-enactments before large crowds of spectators.
In 1931, Butler said in an interview that Benito Mussolini had allegedly struck a child with his automobile in a hit-and-run accident. Mussolini protested and President Herbert Hoover instructed the Secretary of the Navy to court-martial Butler. Butler became the first general officer to be placed under arrest since the Civil War. Butler was eventually released without charge.
Major General Wendell C. Neville died in July 1930. Butler was expected to succeed him as Commandant of the Marine Corps. However, he had upset too many powerful people in the past and the post went to Major General Ben Hebard Fuller instead. Butler retired from active duty on 1st October, 1931.
Butler went to Senator John McCormack and told him that there was a fascist plot to overthrow President Franklin Roosevelt. Butler claimed that on 1st July 1934, Gerald C. MacGuire a Wall Street bond salesman and Bill Doyle, the department commander of the American Legion in Massachusetts, tried to recruit him to lead a coup against Roosevelt. Butler claimed that the conspirators promised him $30 million in financial backing and the support of most of the media.
Butler pretended to go along with the plot and met other members of the conspiracy. In November 1934 Butler began testifying in secret to the Special Committee on Un-American Activities Authorized to Investigate Nazi Propaganda and Certain Other Propaganda Activities (the McCormack-Dickstein Committee). Butler claimed that the American Liberty League was the main organization behind the plot. He added the main backers were the Du Pont family, as well as leaders of U.S. Steel, General Motors, Standard Oil, Chase National Bank, and Goodyear Tire and Rubber Company.
Butler also named Prescott Bush as one of the conspirators. At the time Bush was along with W. Averell Harriman, E. Roland Harriman and George Herbert Walker, managing partners in Brown Brothers Harriman. Bush was also director of the Harriman Fifteen Corporation. This in turn controlled the Consolidated Silesian Steel Corporation, that owned one-third of a complex of steel-making, coal-mining and zinc-mining activities in Germany and Poland. Friedrich Flick owned the other two-thirds of the operation. Flick was a leading financial supporter of the Nazi Party and in the 1930s donated over seven million marks to the party. A close friend of Heinrich Himmler, Flick also gave the Schutz Staffeinel (SS) 10,000 marks a year.
On 20th November, 1934, the story of the alleged plot was published in the Philadelphia Record and the New York Post. Four days later the McCormack-Dickstein Committee released its preliminary findings and the full-report appeared on 15th February, 1935. The committee reported: "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 government 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."
Although the McCormack-Dickstein Committee claimed they believed Butler's testimony they refused to take any action against the people he named as being part of the conspiracy. Butler was furious and gave a radio interview on 17th February, 1935, where he claimed that important portions of his testimony had been suppressed in the McCormack-Dickstein report to Congress. He argued that the committee, had "stopped dead in its tracks when it got near the top." Butler added: "Like most committees, it has slaughtered the little and allowed the big to escape. The big shots weren't even called to testify. Why wasn't Colonel Grayson M.-P. Murphy, New York broker... called? Why wasn't Louis Howe, Secretary to the President of the United States, called? Why wasn't Al Smith called? And why wasn't General Douglas MacArthur, Chief of Staff of the United States Army, called? And why wasn't Hanford MacNider, former American Legion commander, called? They were all mentioned in the testimony. And why was all mention of these names suppressed from the committee report?"
John L. Spivak, who had been mistakenly given access to the unexpurgated testimony of the people interviewed by the McCormack-Dickstein Committee. He published an article in the New Masses entitled Wall Street's Fascist Conspiracy on 5th February 1935. This included the claim that "Jewish financiers" had been working with "fascist groups" in an attempt to overthrow President Franklin Roosevelt. The article was dismissed as communist propaganda.
In November 1935 Butler wrote an article for the socialist magazine Common Sense: "I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested."
Butler also published a book entitled War is a Racket (1935). It was a powerful denunciation of war. He wrote: "In the (First) World War a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows. How many of these war millionaires shouldered a rifle? How many of them dug a trench? How many of them knew what it meant to go hungry in a rat-infested dug-out? How many of them spent sleepless, frightened nights, ducking shells and shrapnel and machine gun bullets? How many of them parried a bayonet thrust of an enemy? How many of them were wounded or killed in battle?"
Smedley Butler continued to campaign against the Military Industrial Complex until his death on 21st June 1940.