Coughlin's focus changed during the 1930s as he preached more and more about the negative influence of international bankers and Wall Street on the general welfare of the public. He also spoke about the need for monetary reform. Coughlin claimed that the Depression was a "cash famine". Some modern economic historians, in part, agree with this assessment. Coughlin proposed monetary reforms, including the elimination of the Federal Reserve System, as the solution.
By 1934 Coughlin was perhaps the most prominent Roman Catholic spokesman on political and financial issues, with a radio audience that reached millions of people every week. When he began criticizing the New Deal that year, Roosevelt sent Joseph P. Kennedy and Frank Murphy, prominent Irish Catholics, to try to tone him down. Ignoring them, Coughlin began denouncing Roosevelt as a tool of Wall Street. Coughlin supported Huey Long until Long was killed in 1935, and then supported William Lemke's third party in 1936. As Coughlin turned into a bitter opponent of the New Deal, his radio talks escalated in vehemence against Roosevelt, capitalists and "Jewish conspirators". He was opposed in his efforts by another nationally known priest, Monsignor John A. Ryan. Kennedy, who strongly supported the New Deal, warned as early as 1933 that Coughlin was "becoming a very dangerous proposition" as an opponent of Roosevelt and "an out and out demagogue." Kennedy worked with Roosevelt, Bishop Francis Spellman and Eugenio Cardinal Pacelli (the future Pope Pius XII) in a successful effort to get the Vatican to silence Coughlin in 1936. In 1940-41, reversing his own views, Kennedy attacked the isolationism of Coughlin and of aviator Charles Lindbergh.
In 1935, Coughlin proclaimed, "I have dedicated my life to fight against the heinous rottenness of modern capitalism because it robs the laborer of this world's goods. But blow for blow I shall strike against Communism, because it robs us of the next world's happiness. He accused Roosevelt of "leaning toward international socialism on the Spanish question." Coughlin founded the National Union for Social Justice, an organization with a strong following among nativists and opponents of the Federal Reserve, especially in the Midwest. As Michael Kazin notes, Coughlinites saw Wall Street and Communism as twin faces of a secular Satan. Coughlinites believed that they were defending those people who cohered more through piety, economic frustration, and a common dread of powerful, modernizing enemies than through any class identity.
One of Coughlin's campaign slogans was: "Less care for internationalism and more concern for national prosperity" which went well with the 1930s isolationist movement in the United States. Coughlin's organization especially appealed to Irish Catholics. In 1936, Coughlin helped found a short-lived political party, the Union Party, which nominated William Lemke for President. Coughlin promised to retire if Lemke did not get nine million votes, and when he received only 900,000 Coughlin stopped broadcasting briefly. He resumed in 1937.
He began publication of a newspaper, Social Justice, during this period, in which he printed antisemitic polemics such as The Protocols of the Elders of Zion. Like Joseph Goebbels, Coughlin claimed that Marxist atheism in Europe was a Jewish plot. The December 5, 1938 issue of Social Justice included an article by Coughlin which closely resembled a speech made by Goebbels on 13 September 1935 attacking Jews, atheists and communists, with some sections being copied verbatim by Coughlin from an English translation of the Goebbels speech. At a rally in the Bronx in 1938, he gave a Nazi salute and said, "When we get through with the Jews in America, they'll think the treatment they received in Germany was nothing."
On November 20, 1938, two weeks after Kristallnacht, when Jews across Germany were attacked and killed, and Jewish businesses, homes and synagogues burned, Coughlin said "Jewish persecution only followed after Christians first were persecuted. After this speech, and as his programs became more antisemitic, some radio stations, including those in New York and Chicago, began refusing to air his speeches without pre-approved scripts; in New York, his programs were cancelled by WINS and WMCA, leaving Coughlin to broadcasting on the Newark part-time station WHBI. This made Coughlin a hero in Nazi Germany, where papers ran headlines claiming "America is Not Allowed to Hear the Truth". On December 18, 1938 two thousand of Coughlin's followers marched in New York protesting potential asylum law changes that would allow more Jews (including refugees from Hitler's persecution) into the US, chanting, "Send Jews back where they came from in leaky boats!" and "Wait until Hitler comes over here!" The protests continued for several months. Donald Warren, using information from the FBI and German government archives, has also argued that Coughlin received indirect funding from Nazi Germany during this period.
After 1936, Coughlin began supporting an organization called the Christian Front, which claimed him as an inspiration. In January 1940, the Christian Front was shut down when the FBI discovered the group was arming itself and "planning to murder Jews, communists, and 'a dozen Congressmen' and eventually establish, in J. Edgar Hoover's words, "a dictatorship, similar to the Hitler dictatorship in Germany". Coughlin publicly stated, after the plot was discovered, that he still did not "disassociate himself from the movement", and though he was never linked directly to the plot, his reputation suffered a fatal decline.
Boyea (1995) shows that the Roman Catholic Church did not approve of Coughlin. The Vatican, the Apostolic Delegation in Washington, D.C., and the archbishop of Cincinnati all wanted him silenced. They recognized that only Coughlin's superior, Detroit Bishop Michael Gallagher, had the canonical authority to curb him, but Gallagher supported the "Radio Priest". Due to Gallagher's autonomy and the prospect of Coughlin leading a schism, the Roman Catholic leadership did nothing.
A radio battle was fought in the late 1930s between The Reverend Walton E. Cole, a Unitarian minister in Toledo, Ohio, and Coughlin. Cole tried to prevail upon the Roman Catholic hierarchy to have Coughlin's inflammatory broadcasts stopped. Walton Cole’s widow, Lorena M. Cole, donated his papers to the Claremont School of Theology with personal notes and reminiscences about this tense episode.
In spite of his early support for Roosevelt, Coughlin's populist message contained bitter attacks on the Roosevelt administration. The administration decided that although the First Amendment protected free speech, it did not necessarily apply to broadcasting, because the radio spectrum was a "limited national resource" and regulated as a publicly-owned commons. New regulations and restrictions were created to force Coughlin off the air. For the first time, operating permits were required of those who were regular radio broadcasters. When Coughlin's permit was denied, he was temporarily silenced.
Coughlin worked around the restriction by purchasing air time and having his speeches played via recordings. However, having to buy the time on individual stations seriously reduced his reach and strained his resources.
According to Marcus' book, Coughlin's opposition to the repeal of a neutrality-oriented arms-embargo law triggered more successful efforts to force him off the air. In October 1939, one month after the invasion of Poland, the Code Committee of the National Association of Broadcasters (NAB) adopted new rules which placed "rigid limitations on the sale of radio time to spokesman of controversial public issues". Manuscripts were required to be submitted in advance. Radio stations were threatened with the loss of their licenses if they failed to comply. This ruling was clearly aimed at Coughlin due to his opposition to prospective American involvement in World War II. As a result, the September 23, 1939 issue of Social Justice stated that he had been forced from the air "...by those who control circumstances beyond my reach" (pp 173-177).
Coughlin reasoned that although the government had assumed the right to regulate any on-air broadcasts, the First Amendment still guaranteed and protected freedom of the written press. He could still print his editorials without censorship in his own newspaper, Social Justice. However, the Roosevelt administration stepped in again, this time revoking his mailing privileges and making it impossible for Coughlin to deliver the papers to his readers. He had the right to publish whatever he wanted, but not the right to use the United States Post Office Department to deliver it. The lack of a conduit to his followers seriously reduced his influence, and after the attack on Pearl Harbor and the declaration of war in December 1941, the anti-interventionist movement (such as the America First Committee) began to sputter out, and isolationists like Coughlin were seen as being sympathetic to the enemy. In 1942, the new bishop of Detroit ordered Coughlin to stop his controversial political activities and confine himself to his duties as a parish priest. Coughlin complied and remained the pastor of the Shrine of the Little Flower until retiring in 1966. He refused numerous interview opportunities, and continued to write pamphlets denouncing Communism until his death in Bloomfield Hills, Michigan in 1979, at the age of 88.
Coughlin was reported by an occasional parish visitor to have kept his rectory in Hazel Park, Michigan.