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U.S. Department of State

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  Foreign Relations Series
  Volume Summary, 1945-1950
  Emergence of the Intelligence Establishment


Table of Contents:                                                            Read the Volume Online
Foreword
Summary

Foreword

(This is not an official statement of policy by the Department of State; it is intended only as a guide to the contents of the volume.)

Since 1861, the Department of State's documentary series Foreign Relations of the United States has constituted the official record of the foreign policy and diplomacy of the United States. Historians in the Office of the Historian collect, arrange, and annotate the principal documents comprising the record of American foreign policy. The standards for the preparation of the series and the general deadlines for its publication are established by the Foreign Relations of the United States statute of October 28, 1991. (22 USC 4351, et seq.) Volumes in the Foreign Relations series are published when all the necessary editing, declassification, and printing steps have been completed.

In preparing this volume, the editors collected documents that were rather unique by Foreign Relations standards. Instead of diplomatic correspondence documenting the formulation and implementation of foreign policy issues, they searched for documents on high-level governmental plans, discussions, administrative decisions, and managerial actions that established the institutions and procedures for the coordination of intelligence collection and analysis and covert action. During their search the editors consulted research in a wide variety of archives. The largest group of records came from the Central Intelligence Agency. Many documents are also drawn from the Department of State's centralized indexed files and lot (office) files. In addition, the editors made extensive use of the Presidential and other papers at the Franklin D. Roosevelt Library in Hyde Park, New York, and the Harry S. Truman Library in Independence, Missouri. Finally, they conducted research in the records of the Bureau of the Budget, Department of War, Department of the Navy, Joint Chiefs of Staff, and the National Security Council.

Most of the documents were originally classified. The Historical Documents Review Division of the Department of State, in concert with the appropriate offices of other agencies and foreign governments, carried out their declassification.

The following is a summary of discussions and decisions documented in the volume. Parenthetical citations are to numbered documents in the text.

Summary

Introduction and Overview

At the close of World War II, U.S. policymakers began to explore the option of developing a permanent foreign intelligence system in peacetime that would continue the intelligence functions performed by the wartime Office of Strategic Services (OSS), the armed forces, and the Federal Bureau of Investigation (FBI). After some legislation, much bureaucratic wrangling, and awkward administrative arrangements, the creation of the Central Intelligence Agency was the ultimate result.

In addition to an extensive documentary history of the early CIA, this volume presents a full record of its immediate predecessor, the Central Intelligence Group (CIG), and the other government departments and agencies that were active in the creation of the new intelligence program during the Truman administration. The 435 documents in the printed volume and the approximately 460 documents in the microfiche supplement complement the recent CIA documentary publication, CIA Cold War Records: The CIA under Harry Truman (1994). Emergence of the Intelligence Establishment, 1945÷1950, makes available a much larger collection of documents, including many more CIA records. The CIA History Staff provided essential assistance to this project. Documents were also obtained from the retired records of various governmental departments at the National Archives and Records Administration as well as the collections at the Department of State, the Franklin D. Roosevelt Library, and the Harry S. Truman Library.

The documents in Emergence of the Intelligence Establishment are arranged topically in nine chapters. Among the early developments recorded in the volume are: 1) the dissolution of the Office of Strategic Services (OSS), 2) conflicts between the Bureau of the Budget (BOB), the Department of State, the FBI, and the military concerning postwar intelligence, 3) the emergence of the armed forces' leadership on the issue, 4) the dispute between the Department of State and the military services, and 5) the end of the impasse culminating in Truman's establishment of the National Intelligence Authority (NIA) and the successor CIG.

Documents, including internal CIA materials not previously open to the public, also cover the proposals and actions of the early Directors of Central Intelligence. Further, issues such as the Department of State's efforts to create a national intelligence organization, the transition of the War Department's Strategic Services Unit, which had sought to preserve the OSS's clandestine role, to the Office of Special Operations of the CIG, the passage of the National Security Act, which established the CIA, the uses and purposes of psychological warfare, and the role of the National Security Council in intelligence policy are all addressed in this volume.

The emphasis throughout the collection is on the institutional growth of the national intelligence system and the development of the broad lines of national intelligence policy. The selected documents therefore are not country-specific and do not attempt to supplement earlier regional documentation in the Foreign Relations series. They also do not focus on covert operations, intelligence sources or methods, or "raw" and finished intelligence papers.

Initial Planning

A crucial early development leading to the CIA's creation was the 1944 proposal which Major General William J. Donovan of the OSS drafted at President Roosevelt's request. The "Donovan Plan" was the first proposal for a peacetime intelligence organization¸one directly accountable to the President rather than another agency. Donovan called for this independent agency to have its own budget and a solely consultative function.

Subsequent proposals for the intelligence program included an organization divided between military and civilian direction, with the Departments of State, War, Army, and the Navy all sharing portions of the agency's leadership. Further recommendations from the Joint Intelligence Committee (JIC) of the Joint Chiefs of Staff (JCS) involved separate intelligence advisory groups to assist intelligence organization and policy planning.

When newspapers published the Donovan Plan and the JIC proposal, a significant public controversy ensued over the propriety of a permanent intelligence system. Perhaps because of this bad publicity, in the following months Roosevelt took no action on any of the proposals, and upon his death Truman, who lacked experience in intelligence affairs, inherited the problem. Postwar Transition

As the war ended, Truman immediately initiated measures to liquidate the entire war apparatus, and intelligence seemed to be included. Concerned about a possible dismantlement of the intelligence structure, General Donovan wrote letters to President Truman and Director of the Bureau of the Budget Harold Smith urging creation of a successor to OSS. (Document 4) At the same time, the Joint Chiefs renamed and revived the JIC proposal with minimal changes.

Meanwhile, the Bureau of the Budget, which had its own agenda regarding the intelligence structure, emphasized the Department of State's role in intelligence. In the fall of 1945, Harold Smith presented Truman with two documents on intelligence, both of which he signed immediately. The first document, Executive Order 9621, disbanded OSS and immediately divided its functions and operations between the Departments of War and State. (Document 14) The second was a September 20 letter charging Secretary of State James Byrnes with coordination of an interdepartmental panel to develop "a comprehensive and coordinated foreign intelligence program." (Document 15) The Budget Bureau also delivered to Truman a study that offered guidelines on planning the intelligence structure and again emphasized the paramount role of the Department of State in the fledgling intelligence community (although it subsequently became clear that key officials in the State Department were not happy with this notion). (Document 38)

The parts of the former OSS which the War Department inherited became the transitional Strategic Services Unit (SSU). This unit was directed by Brigadier General John Magruder, who was instructed to "insure the facilities and assets of OSS are preserved." (Document 95) Some in the military envisioned the SSU to be the nucleus for future U.S. intelligence operations, but its functions were limited and involved no covert intelligence activity.

Disagreement at the Department of State

Growing controversy within the Department of State over the new intelligence structure surfaced at this time. At issue was whether the State Department should have its own intelligence organization and, if so, its nature. The Department had previously developed rudimentary intelligence capabilities during the war. Secretary of State Edward R. Stettinius (1944÷1945) appeared to show interest in an internal intelligence organization, but his short tenure precluded any progress on the matter.

A study by the Bureau of the Budget recommended unifying the existing fragments of intelligence work in the Department of State. The proposed Office of Intelligence and Research would coordinate foreign intelligence and information analysis for the Department. The break-up of the OSS and the resulting mandate to integrate some former OSS operations into the Department of State added to the immediacy of its internal intelligence debate. Many assumed Truman's September 20 letter directing the Secretary of State to take the lead in coordinating intelligence planning signaled a predominant role for the Department in postwar intelligence.

Colonel Alfred McCormack, Special Assistant to the Secretary of State for Research and Intelligence, took on the dual task of reassembling the OSS programs as Department of State entities and of providing advice on the interagency intelligence planning mandated by the President. McCormack sought to settle intelligence matters within the Department before dealing with the interagency plans (Document 39), but outspoken dissent and undermining efforts by others in the Department, in particular Assistant Secretary of State for Administration Donald S. Russell, complicated his tasks. Russell and the heads of the geographic bureaus, arguing that "intelligence is only as good as it is translated into action" by the geographic units, lobbied for a decentralized structure under their control (Documents 81 and 82), while McCormack favored a more centralized organization in the Department that would be "free of operations or policy involvements" and could serve other units of the Department as well as the geographic bureaus. (Document 83) Because it soon appeared that the whole Department was deadlocked on the intelligence issue, the military increasingly decided to take the lead on the issue.

FBI and Military Proposals

Meanwhile FBI Director J. Edgar Hoover had his own ideas on postwar intelligence. Since 1941, on the President's direction, the FBI had been conducting intelligence operations in the Western Hemisphere. Hoover proposed in December 1944 that after the war the FBI should run a "world-wide intelligence system" following the pattern established in the Western Hemisphere.

However, neither Truman nor the influential Harold Smith was pleased with the FBI approach, and Truman even suggested in September 1945 that the FBI budget should be reduced "as soon as possible to at least the prewar level." (Microfiche Supplement, September 5, 1945) Although Hoover continued to advocate that his agency assume responsibility for the new intelligence program (Supplement, September 21, 1945), Truman seems never to have seriously considered it. Later Hoover would reverse his position and argue that if he could not have his way, he would not be "seeking for the Federal Bureau of Investigation the responsibility for a world-wide intelligence system." (Document 5)

Leaders of the armed forces also continued their efforts to advance proposals that conferred major responsibilities for foreign intelligence on their own departments. Secretary of the Navy James Forrestal actively advocated a national intelligence structure along the lines of what the Joint Chiefs had proposed. Forrestal was eager to set up meetings between the heads of the concerned agencies to make progress towards a consensus. (Documents 26 and 27) Secretary of War Robert B. Patterson also commissioned a study on the matter (Document 32), and the resulting Lovett report (Document 42) further supported the basic premises of the earlier JCS proposal, which had failed to reach the President before he approved the BOB recommendations.

President Truman grew dissatisfied with the pace of the planning and eventually ordered the Secretaries of State, War, and Navy to prepare plans jointly. (Document 44) But they found no consensus and the debate continued to languish over the same issues as before. The Department of State (with mixed dissent) and Budget Bureau proposals tended to emphasize a decentralized, Department of State-based organization, while military-backed plans stressed independence and centralization as key features. This disagreement again stalled the planning process. (Document 46; Supplement, November 19, 1945, November 28, 1945, December 1945, and December 27, 1945) Truman then consulted Rear Admiral Sydney Souers, Deputy Director of Naval Intelligence and future Director of Central Intelligence, who, not surprisingly, endorsed the JCS plan while criticizing the State Department's McCormack plan. (Document 64)

When Secretary of State Byrnes failed to decide between the competing ideas of his own staff, in early January 1946 military leaders submitted their own plan. Byrnes reviewed this JCS plan, which he approved with very minor changes. (Documents 66, 68; Supplement, January 12, 1946, and January 18, 1946)

Truman and his advisers were receptive to the military proposal, since it coincided closely with Truman's own ideas on intelligence. Thus, over the objections of Harold Smith, the President issued a directive asking the Secretaries of State, War, and the Navy to create an independent Central Intelligence Group whose Director would be appointed by the President. (Document 71)

The New Intelligence Program

Rear Admiral Sydney W. Souers became the first Director of Central Intelligence (DCI) the day after Truman issued the directive. Once created, the CIG had an imposing agenda before it, which included integrating the transitional intelligence programs into permanent operations. General Magruder offered all needed assistance to transfer SSU to the CIG. A committee chaired by Colonel Louis J. Fortier was appointed by Souers to study this option; the Fortier Committee quickly recommended accepting Magruder's offer. (Document 105) The National Intelligence Authority shortly issued a directive to implement this transfer. (Document 106)

Essentially an interim director, Souers was replaced in June 1946 by General Hoyt Vandenberg. Vandenberg proved a more aggressive DCI who sought to extend the power of his office and his agency. One of his first tasks was to manage the CIG's intense rivalry with the FBI.

The CIG under Vandenberg faced the task of taking over all FBI foreign operations, which meant Central and South America. The challenge was even greater because of J. Edgar Hoover's lack of cooperation with and general hostility towards the new agency. Even before discussing the matter with the CIG, Hoover was setting the maximum time he wanted to continue FBI operations in Latin America when it became clear that his agency would be supplanted in those areas. The FBI Director said, "The most I will agree to now is to stay in the Western Hem. for 1 year. I am more and more certain that this is a project we must get out of." (Document 111) Naturally it was in the national interest to ensure a smooth transition on foreign intelligence, but Vandenberg, whose agency was hardly ready to assume FBI operations, found it difficult to convey this to the FBI's director. (Document 113) Hoover made an effort to inform not only Vandenberg, but also many others that he intended to cease FBI Latin American operations shortly. (Document 116; Supplement, July 22, 1946)

Others in the administration became involved in settling the dispute. Hoover had written Attorney General Tom Clark on this issue, and the NIA soon asked Clark to order the FBI to maintain its operations until relieved by the CIG. (Documents 118 and 120) Admiral William D. Leahy, who had been active in the intelligence program, became an unofficial negotiator and informed Vandenberg that the President and the Attorney General wanted to expedite the transition. (Documents 124 and 125) The pressures on both sides seemed to resolve the issue, and in a matter of months the CIG had effectively taken over FBI international intelligence operations.

Creation of the Intelligence Agency

During his tenure, Vandenberg also initiated policy changes to strengthen the role of the DCI in the intelligence structure. While Souers had been more consultative, Vandenberg sought to be more assertive. (Document 160) Though his efforts produced some results, Vandenberg was never fully satisfied with the level of autonomy in his office. Indeed, he faced formidable opposition to increasing the powers of his office from Admiral Thomas B. Inglis of the Intelligence Advisory Board. (Document 189) During Vandenberg's brief tenure, the powers of his office were never fully clarified.

Vandenberg nonetheless had a profound influence on the CIG and its organization. One of his key struggles was obtaining a statutory basis for the CIG. At that point, the CIG was an interdepartmental group rather than an autonomous agency, and its authority derived from Presidential directive rather than legislation. Without a statutory basis, the CIG lacked its own budget and the ability to develop longer term goals. Very high on Vandenberg's agenda was obtaining this legislative mandate. (Documents 198 and 201) Although enactment of the National Security Act of 1947, which created an independent Central Intelligence Agency to succeed the CIG, did not occur until after Vandenberg's resignation, his efforts were instrumental in achieving this key legislation.

The third Director of Central Intelligence was Rear Admiral Roscoe H. Hillenkoetter. Replacing Vandenberg in May 1947, Hillenkoetter took office just as the national security bill was in Congress. On its passage, Hillenkoetter assumed the responsibility of reorganizing the CIG as needed. Hillenkoetter also made recommendations regarding the transition from the National Intelligence Authority to the National Security Council (NSC), which the National Security Act also established, and other changes in the intelligence advisory structure. The development of the NSC and its functions became a major issue in Hillenkoetter's tenure. (Documents 220, 225, 331, 335, and 336) A more troubling issue Hillenkoetter faced was the allegations of "intelligence failures" in which the CIA did not warn of impending major developments, particularly in the Bogota riots of 1948. These allegations brought the agency and Hillenkoetter himself under the scrutiny of the NSC, Congress, and the nation.

Political and Psychological Warfare

Another dimension to the emerging national intelligence structure was the role of covert operations. When the War Department took over OSS "special operations," it tried to preserve its capabilities until a decision could be made about a successor group, but beyond some interest in clandestine intelligence gathering nothing was done in the area of covert activities until the founding of the Central Intelligence Agency. Even then, legal questions arose as to whether Congress intended the new agency to engage in covert operations. (Document 241) Ultimately, it was the State-Army-Navy-Air Force Coordinating Committee (SANACC), the peacetime successor to the State-War-Navy Coordinating Committee (SWNCC), that laid the groundwork for covert action programs as a result of its continuing interest in "psychological warfare." In November 1947 SANACC agreed on "black" (covert) and "white" (overt) information programs, the former to be run by the Department of State, with the advice of the DCI and a military representative. (Document 249)

But Secretary of State George C. Marshall and the service Secretaries objected to this plan (Document 250), and principals in the Department of State did not want to allow the new Central Intelligence Agency into the covert action area without outside monitoring or control. When the CIA insisted that "whatever agency is chosen to indicate the type of Black operations to be conducted, or the material and/or propaganda to be disseminated¸the Central Intelligence Agency must alone be the Agency to determine how the material is disseminated" (Document 251), the National Security Council tried to resolve the issue by approving NSC 4÷A, which authorized the DCI to conduct covert psychological operations that were "consistent with U.S. foreign policy and overt foreign information activities." (Document 257)

Bureaucratic dissension nonetheless continued. (Documents 266 and 267) The Department of State's Policy Planning Staff, which was proposing political warfare initiatives in support of indigenous anti-Communist elements in the free world, became increasingly disenchanted with the CIA's performance under NSC 4÷A, and proposed the creation of a separate organization directly under the NSC and headed by a Director of Special Studies. (Documents 269 and 276) Ultimately, after much further wrangling and indecision, the NSC approved NSC 10/2 in June 1948, establishing an Office of Special Projects (soon renamed Office of Policy Coordination) within CIA. Headed by "a highly qualified person" nominated by the Secretary of State and acceptable to the Director of Central Intelligence, the office would conduct covert operations, "to the maximum degree consistent with efficiency," independently of the other components of the Agency. The DCI, in cooperation with State and Defense representatives, would continue to ensure that covert operations were consistent with U.S. foreign and military policies, and disagreements would be referred to the NSC. (Document 292) This complicated arrangement did not really satisfy the CIA, however, and the controversy continued beyond the period covered in this volume.

The CIA Under Scrutiny

The final issue of this period was the culmination of growing concerns about the role and early performance of the Central Intelligence Agency. Allen Dulles chaired a survey group, which reviewed intelligence organization and operation. When the executive secretary of the group complained at the outset that the CIA's mission and actual operations were uncertain, undefined and subject to much controversy and bitterness, he reflected general dissatisfaction with the agency's activities. (Document 344) The subsequent Dulles Report (January 1949) was harsh in many of its judgments and made several recommendations to institute substantial changes in the intelligence structure. The basic premise of the report was that intelligence operations had to be more coordinated. It cited poor planning and management as the root of intelligence failures. At the same time, the role of the NSC as a proper supervisory panel was reaffirmed. Moreover, there were many specific recommendations concerning the DCI, including one that argued that the position should be filled by a civilian. (Document 358) Some of the criticisms in the report seemed to apply directly to Hillenkoetter, and following the report seemed to apply directly to Hillenkoetter, and following the report his leadership in the agency declined, although he remained in office for nearly 2 years afterward.

This volume closes with the discussion and implementation of the Dulles recommendations. The NSC remanded the report to the Secretaries of State and Defense for a more concise list of recommendations for NSC decision. The NSC considered the resulting McNarney report (named after General Joseph T. McNarney, the Department of Defense representative) in July 1949. While reaffirming the Dulles report in some areas, such as the criticisms of the deficiencies in national intelligence, the McNarney report endorsed only in part other portions, such as the presence of military officers in key CIA positions. It also labeled the attack on the CIA's leadership as "too sweeping" and emphasized that the "shortness of time" and "lack of common understanding" were more fundamental sources of the problem. It further proposed that the CIA "should interpret and follow the NSC Intelligence Directives so as to refrain as far as possible from competitive intelligence activities in the production of research intelligence estimates." As approved by the NSC, the McNarney report became NSC÷50. (Document 384)

The volume concludes with the publication of National Security Council Directives 1÷14. (Documents 422÷435) Extensive additional documents concerning all the topics presented in the printed volume are reproduced in the microfiche supplement.

June 1996

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