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U.S. Department of State

From the Strategic Services Unit to the Office of Special Operations

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Foreign Relations of the United States
1945-1950
Emergence of the Intelligence Establishment

Department of State
Washington, DC


From the Strategic Services Unit
to the Office of Special Operations

                           

95. Memorandum From the Assistant Secretary of War (McCloy) to the Director of the Strategic Services Unit of the Department of War (Magruder)

Washington, September 26, 1945.

//Source: Central Intelligence Agency Historical Files, HS/CSG-117. No classification marking.

SUBJECT
Transfer of OSS Personnel and Activities to the War Department and Creation of Strategic Services Unit

By letter from the Deputy Chief of Staff dated today,/1/ you have been designated to represent the War Department in the transfer of those OSS activities which will come to the War Department and in their continued operation. I shall recommend that the Secretary of War confirm this designation as requested by you.

/1/Not found. A September 27 memorandum from Secretary of War Patterson to Magruder designated the latter the administrator of the Strategic Services Unit. (Ibid., HS/CSG-601) See the Supplement. Magruder assumed command of the SSU on October 1. (SSU General Orders No. 1, October 1; Central Intelligence Agency Historical Files, HS/CSG-601) See the Supplement. Additional details are in a September 29 memorandum from Cheston to Branch and Office Chiefs, and a September 29 memorandum from Cutter to Lincoln. (Both, Central Intelligence Agency Historical Files, HS/CSG-1400, Job 83-00036, Box 10, Folder 4) A complete set of SSU General Orders (October 1, 1945-October 19, 1946) is ibid., HS/CSG-601, Job 83-00036, Box 4, Folder 9.

These activities will become for the time being, as a matter of War Department organization, subject to the authority of my office and for convenience will be referred to as the Strategic Services Unit. This assignment of the OSS activities, so to be transferred to the War Department, is a method of carrying out the desire of the President, as indicated by representatives of the Bureau of the Budget, that these facilities of the OSS be examined over the next three months with a view to determining their appropriate disposition. Obviously this will demand close liaison with the Bureau of the Budget, the State Department and other agencies of the War Department, to insure that the facilities and assets of OSS are preserved for any possible future use, so far as not presently to be liquidated in any event by reason of the termination of hostilities. The situation is one in which the facilities of an organization, normally shrinking in size as a result of the end of fighting, must be preserved so far as potentially of future usefulness to the country. However, any integration of its activities with those of other agencies of the War Department should proceed only after consultation with the Bureau of the Budget and the State Department, in view of the desire of the President (expressed in his letter of 20 September to the Secretary of State) that the Secretary of State take the lead in surveying the whole field of intelligence operations during the next few months. Obviously the whole subject is one for careful and cooperative study and analysis of the various functions now being performed by OSS.

In the meantime, the continuing operations of OSS must be performed in order to preserve them as a going operation. As you know the staff of my office is too small to exercise detailed supervision over an enterprise the size of the OSS activities to be subject to your control. It is not desirable to increase that staff. Accordingly on matters of administration, I expect that you will conform, as fully as it is practicable, with applicable War Department policies and regulations and will consult and coordinate your actions with the appropriate War Department agencies.

I am particularly anxious that you keep the Budget, Fiscal and Accounting officers of the War Department fully advised of the activities of the Unit and arrange to obtain their assistance and guidance to the fullest practicable extent. In general, I expect you to keep not only my office, but also the deputy Chief of Staff, advised of your plans and activities so that he may be in a position to furnish to the Secretary of War and to me advice and recommendations.

Major questions of policy should be discussed with my office. I am particularly anxious that my office be kept informed as to proposals for the disposition of particular substantial operations, facilities or assets of the present OSS organization. I think you should inaugurate a system of periodic written reports of progress and outlines of future plans, of which copies should be furnished to the Deputy Chief of Staff.

I desire that the status of the assets to be taken over by the War Department as of 1 October 1945 be carefully checked by the proper Budget and Fiscal officers of the War Department, to the extent that they deem necessary, and as you know, instructions for such check, by inventory and otherwise, have been given.

If you require additional assignment of staff from the War Department, I expect that you will ask for the assignment of the necessary personnel and make direct arrangements with the Deputy Chief of Staff for such assignment.

This memorandum is furnished for your information and guidance as an expression of my general views as to policy and procedure.

John J. McCloy/2/

/2/Printed from a copy that indicates McCloy signed the original.

96. Memorandum From the Director of the Strategic Services Unit, Department of War (Magruder) to the Assistant Secretary of War (McCloy)

Washington, October 9, 1945.

//Source: Central Intelligence Agency Historical Files, HS/HC-265. No classification marking.

SUBJECT
Strategic Services Unit as of 1 October 1945

1. Introduction. At the time of issuance of the Executive Order of 20 September providing for the "Termination of the Office of Strategic Services and Disposition of its Functions" (attached as Exhibit 1),/1/ OSS was proceeding with a program of orderly liquidation. This program was in operation to carry out the terms of a letter from the Director of Strategic Services to the Bureau of the Budget dated 25 August 1945 (attached as Exhibit 2)./2/ In this letter the Director, Major General William J. Donovan, stated that he was proceeding with the liquidation of the agency (which he estimated would be completed by 1 January or 1 February 1946). He recited that he had reiterated on many occasions since November 1944 the necessity of setting up a permanent agency to take over the functions of OSS, and he attached a statement of principles governing the establishment of a centralized United States foreign intelligence service.

/1/Document 14.

/2/Enclosure 1 to Document 3.

2. Organization of OSS. Attached as Exhibit 3/3/ is a chart of the organization of the Office of Strategic Services as it existed in general on 30 September 1945 and a copy of General Order No. 9, outlining the functions of the offices shown on the organization chart. A copy of OSS 155/11/D which designates OSS as an agency of the Joint Chiefs of Staff is attached as Exhibit 4.

/3/Exhibits 3-7 were not found.

3. Personnel. As of 30 September 1945, total personnel on duty with the Office of Strategic Services was 10, 390. Of these, 5,713 were overseas and 4,677 in this country. Personnel were distributed as follows:

Army

6,964

Navy

734

Civilian

2,692

Total

10,390

Exhibit 5 lists total personnel as of 30 September by Branch or office and by country. With the transfer to the Department of State of the Research and Analysis Branch (with which the Foreign Nationalities Branch had previously been merged), consisting of 1250 persons, the Presentation Branch, consisting of 82 persons, personnel remaining with the Strategic Services Unit of the War Department was 9,058 on 1 October 1945.

4. Finance. A 1945-46 budget of $20,000,000 had been approved by Congress. With the surrender of Japan the President recommended that this be reduced to a liquidation budget of $10,500,000 to last until 1 January 1946. In view of the Executive Order of 20 September, meetings have been held with officials of the Departments of State and War, and the Bureau of the Budget, and agreement reached by all to the following allotment of funds:

LIQUIDATING BUDGET
 

Unvouchered. 003

Vouchered .002

Vouchered .001

Total

Liquidation
Budget, 1946

2,750,000

250,000

7,500,000

10,500,000

Less, Estimated Obligation 9/30/45

1,350,000

215,000

4,435,000

6,000,000

Bal. Remaining for Obligation

1,400,000

35,000

3,065,000

4,500,000

Recommended Reserve

460,000

--

1,000,000

1,460,000

Balance

940,000

35,000

2,065,000

3,040,000

         

Recommended Transfer to State Department

15,000
*28,000

35,000

311,000

389,000

Recommended Transfer to War Department

897,000

--

1,754,000

2,651,000

 

940,000

35,000

2,065,000

3,040,000

         

* To be transferred to State Dept. as .022 Funds.

5. Equipment and Supplies. Instructions have been issued to every Branch, Office and Mission of the Strategic Services Unit to prepare a physical inventory of all non-expendable property as of 1 October 1945, including property belonging to those Branches of OSS transferred to the Department of State. A copy of the cables sent to each mission of OSS is attached as Exhibit 6. These inventories are now in preparation, and will be completed by 30 October 1945.

6. Schools and Training Establishments. Liquidation of the OSS schools and training activities was well advanced prior to their transfer to the War Department. All schools overseas have been closed and the personnel have either been returned to this country or are en route home. Except for those below listed, all schools and training areas in the United States have either been closed or the properties are being processed for return to their owners by 1 November 1945.

a) "Area N" (Congressional Country Club), which is being used as the reallocation and rehabilitation center for personnel returning from overseas.

b) "Area W" (1917 Eye Street, Washington), which now houses the staff used for psychological assessment of personnel and the staff of the Advanced Intelligence School. Both staffs are engaged in completing studies based on their work.

In addition, a few students are completing Oriental language courses at the University of Pennsylvania under contract arrangements between the University and OSS.

7. Missions Outside Continental USA. As of 30 September 1945 OSS had the following missions abroad:

a) Great Britain: Headquarters are in London. Attached for purposes of administration to USFET. Included within the mission are sub-missions for Norway and Denmark.

In addition to its direct intelligence functions, an important function of SI is to maintain close relations with British SIS. A principal concern of X-2 is the interrogation of SS, Abwehr and PSNA personnel. R&A is supplying dossiers containing integrated files of evidence collected in London to the Office of U.S. Chief of Counsel for the Prosecution of Axis Criminality (OSS).

b) France: Headquarters are in Paris. Attached for purposes of administration to USFET. Included within the mission are sub-missions for Holland and Belgium.

Intelligence is collected by the Nice Mission, by personal contacts, by liaison with the Basque refugee groups, and through other sources. In addition, SI maintains a productive exchange of information with DGER for all types of intelligence, including Safe Haven intelligence. X-2 activities have been materially curtailed by reductions in personnel, but field units continue operating in Bordeaux, Metz, Marseille, Nice, and Brussels; close contact is maintained with the Embassy in Paris and the US Consulates in Brussels and Marseille. R&A was engaged in servicing USFET, US Group CC, the CCC, and maintained liaison with the Army Engineers at Versailles. Weekly meetings are held with representatives of the Embassy, the Military and Naval Attaches, and USIS.

c) MedTO: Headquarters are in Rome. The mission is responsible to the Commanding General AFHQ. One X-2 and two R&A men are attached to the American Group of ACC in Bucharest. Also, two members of R&A are attached to the US Embassy in Belgrade, and one to the US Legation in Sofia.

Preparatory to establishing new clandestine networks, OSS terminated the activities of its SI Branch in Italy prior to 30 September. On that date there remained a counter-espionage program, a medical intelligence program, an intelligence Photographic Documentation Project, and an active R&S research program with offices at Milan and Rome.

d) Germany: Headquarters are in Biebrich in the American Zone. This is an autonomous mission responsible to Lt. General Clay through the Intelligence Officer of the US Group CC. Included within the mission is a sub-mission for Czechoslovakia, with headquarters in Prague.

Major activities are carried out by SI, X-2, R&A. SI is occupied principally with production units located in Berlin, Bremen, Heidelberg, Kassel, Munich, and Nuremberg. Units also operated in the British Zone and in Eastern Germany. X-2 has as its primary objective the penetration of German society and economy. R&A furnished information and material to US Group CC, CCC, and the Finance Branch, G-5, USFET.

e) Austria: Headquarters are in Vienna. Responsible through C-2 to the Commanding General, USFA. Detachments are maintained at Salzburg and Zell-am-See, and a small intelligence team in the Trieste area.

This mission provides secret, economic and political intelligence and counter-intelligence to the US Command. Intelligence coverage includes the French and Russian Zones. A number of special studies and analyses of industrial and economic conditions to aid USFA in determining occupational policies in Four Power Council have been prepared. The Commanding Officer of the mission has devoted a part of his time to acting as interpreter to the CG, USFA, in the Four Power Conference.

f) METO: Headquarters are in Cairo. Responsible to the Commanding General, AMET. Included within the mission are sub-missions in Istanbul and Athens. In addition, there is maintained an open office in Casablanca, and operatives in Addis Ababa, Tunis, Tangier, and Algiers, who report directly to Washington. Although the unit in Greece is technically under the jurisdiction of AFHQ, by informal arrangement it is serviced from Cairo.

This mission serves the AMET military commander by aiding and cooperating with OIC in supplying intelligence for the protection of ATC. It also supplies secret political and economic and counter-espionage intelligence to the State Department representatives, R&A, and the Army and Navy Liquidation Commission. It provides C-2, AMET, and the Military and Naval Attaches with military intelligence as well as economic and political material.

g) China: Headquarters are in Chungking and Kinming, with field house at Hsian and Chihkiang. It is expected that headquarters will be moved to Shanghai in the near future.

China Theater Headquarters directed on 22 August that the OSS intelligence organization and network continue at full strength for an estimated 90 to 120 days to gather intelligence of value to that Headquarters during the reoccupation period. A [illegible text--secondary?] objective of the program in China is to lay the groundwork for a long-term post-war intelligence net. A special unit has been set up, under the strictest possible security, to draw up a plan for the reorganization of this net.

Intelligence reported as of 30 September covered the China Theater from Manchuria to French Indo-China. Intelligence missions were located at Mukden, Chenhsien, Peiping, Suchang, Tientsin, Changsha, Hongyang, Kuezui, Tsingtao, Hsian, Taiyuan, Shanghai, Taihoku in Formosa, Hankow, Canton, Nanking, Kien, Nanchang, Hongkong, Hangchow, Fort Bayard, Hanoi, and Vientiane.

Intelligence was disseminated to G-2 of the Army Commands in China Theater, the Navy Group and the State Department representative.

h) India-Burma: Major installations are maintained at Kandy, Calcutta, Rangoon, and New Delhi, with supply and training sub-bases at Comanbo, Trincomalee and Galle on Ceylon. Small missions are located in Singapore, Bangkok, Saigon and Batavia. These teams were established for the purpose of gathering current and long range strategic intelligence. Administrative and supply functions are centered at Kandy and Calcutta.

Information gathered in the Theater is furnished directly to the Ceylon and New Delhi headquarters of the US Theater Commander and to the State Department representative who serves as the US Theater Commander's political advisor. Counter-intelligence is coordinated with the British CICB, and R&A at New Delhi maintains contact with FEA and the American Mission.

i) Hawaii: This office was established as an outpost of R&A and for liaison purposes. It has now ceased operation and is in the process of liquidation.

8. Activities in Connection with War Crimes. In his capacity as "Chief of US Counsel for the Prosecution of Axis Criminality", Mr. Justice Jackson enlisted the aid of several branches of OSS; namely, Office of the General Counsel, and the R&A, SI, X-2, Presentation, Field Photographic, and Reproduction Branches (Exhibit 7). The Office of the General Counsel was designated as a central office to coordinate and correlate these activities, to analyze and screen evidentiary material, including that received from other agencies such as MIS and OID and to recruit prosecution lawyers.

Since the initiation of this project, a great volume of evidentiary documents and studies, including films, movies, graphic and pictorial exhibits, briefs, interrogations and affidavits have been collected from many sources and sent overseas to London, Paris and Nuremburg, where they are further processed for the trials. The personnel now actively engaged in War Crimes work in Washington and in ETO are numerically as follows:

Office of General Counsel

Washington

10

 

ETO

37

     

Research & Analysis

ETO

8

     

Presentation

ETO

8

     

Field Photographic

Washington

21

 

ETO

26

     

Reproduction

ETO

4

     

SI

ETO

12

     

X-2

Washington

1

 

ETO

7

     

Total

 

138

The above does not include the large number of SSU personnel devoting part time to War Crime work or related activities, nor does it include the group of British nationals employed full time on this project by SSU.

9. A report showing the reorganization of the Strategic Services Unit and objectives with respect to partial liquidation and future activities will follow.

John Magruder/4/
Brig. Gen.

/4/Printed from a copy that bears this typed signature.

97. Memorandum From the Director of the Strategic Services Unit, Department of War (Magruder) to the Assistant Secretary of War (McCloy)

Washington, October 25, 1945.

//Source: Central Intelligence Agency Records, Job 83-00036, Box 3, Folder 16. Secret; American Eyes.

SUBJECT
Strategic Services Unit as of mid-October, 1945

1. This report is submitted pursuant to your letter of 26 September 1945./1/ It covers significant changes during the first half of October in the situation described in letter to you dated 9 October 1945,/2/ subject: Strategic Services Unit as of 1 October. Reference should be made to that letter for a more complete description of SSU's organization in the field and its continuing activities.

/1/Document 95.

/2/Document 96.

2. The total personnel strength of SSU has been reduced from 9,058 as of 1 October to 7,640 as of 19 October. Of the latter figure, nearly 3,000 persons--either in this country or en route home or awaiting transportation from abroad--are in process of separation. By 1 December it is estimated that overall SSU personnel strength will be reduced to 1,913. Details of present and contemplated future deployment are set forth in the table attached hereto as Exhibit 1./3/

/3/Exhibits 1-3 are in the Supplement.

3. A provisional organization of SSU has been prescribed by General Order No. 2 dated 12 October 1945, attached hereto as Exhibit 2.

4. In addition to secret intelligence, counter-espionage and administrative services units, the portions of OSS transferred to SSU included related para-military activities. To reduce these related activities and at the same time create an efficient peacetime clandestine intelligence agency has required great care so that necessary elements and assets of the para-military branches will not be lost. In order to assure maximum effectiveness of the peacetime unit, steps have been taken to incorporate personnel with experience in the specialized training given by OSS (Schools and Training Branch) techniques of photographic intelligence (Field Photographic Branch) and the production of personal documents and identity papers (CD and Reproduction Branches) required for clandestine operations. In addition, so that the United States may in the event of future wars be prepared to use effectively and to develop doctrines and techniques used by OSS in this war for sabotage, support of underground forces (SO Branch) and clandestine subversion of enemy morale (MO Branch), personnel have been incorporated in the reduced organization equipped to collect and process intelligence on future foreign developments in these techniques. While in all cases the number of people to be retained is very small, outgoing personnel must be screened with care to select the best fitted persons.

5. The SSU budget for the current fiscal year has been reduced by the House to $8,500,000. (H.R. 4407) Of this sum $2,846,176 remains unobligated. (See Exhibit 3) This balance will not cover SSU operations beyond 1 January. Thereafter an additional appropriation of $625,000 per month will be required if the assets of SSU are to be preserved until the effectuation of plans for peacetime intelligence. The above unobligated sum, which must be available if SSU is to continue in operation until 1 January, makes no allowances for contingencies and depends upon adherence by the State Department to a previously projected plan of reduction in force. In addition if this sum is to be sufficient it is necessary to have Congress alter the form of the appropriation in the House Bill to shift approximately $600,000 from the vouchered to the unvouchered funds category. (See Exhibit 3) Steps are being taken to do this.

6. Overseas Missions

a. Great Britain. Activities continued along the lines described in the above-mentioned letter of 9 October. Intelligence was made available on a regular basis to the American Delegation, Council of Foreign Ministers.

b. France. An interesting aspect of continuing operations was X-2's control of certain enemy agents--with the knowledge of the French--so as to uncover any revival of enemy intelligence.

c. Germany. Clandestine activity was stepped up in areas [8 lines of source text not declassified].

[1 paragraph (7-1/2 lines of source text) not declassified]

e. MedTO. X-2 conducted penetrations designed to uncover subversive activities against Allied interests and continued its work relevant to the complete liquidation of the former German Intelligence Service in Italy and the Balkans. In addition, it performed general security services for all American agencies. Work on the Intelligence Photographic Documentation Project (IPDP) was being brought to a close by SSU, but an effort was being made to have this project continued by other branches of the service.

[4 paragraphs (1 page of source text) not declassified]

j. Hawaii. This mission closed on 15 October.

7. Action has been initiated to transfer from the SSU rolls personnel engaged in the following activities:

a. War Crimes. Request has been made of Mr. Justice Jackson that he review SSU personnel engaged in this work (see letter of 9 October) to determine whether they might not be transferred to the Office of Counsel under the Assistant Secretary of War.

b. Strategic Bombing Survey. Negotiations are under way with the U.S. Strategic Bombing Survey (USSBS) to secure agreement for the transfer to USSBS of 51 persons now furnished by SSU on 120 days' temporary duty for employment in the strategic bombing survey of Japan. All but one of these are at present under orders to proceed to Japan.

c. Intelligence Photographic Documentation Project. Recommendation has been made that this project be transferred to the jurisdiction of the Joint Topographic Subcommittee of the JIC of JCS. If adopted, this recommendation would permit a reduction of 132 members of the Field Photographic Branch now engaged in this work.

John Magruder/4/
Brig. Gen., USA

/4/Printed from a copy that bears this typed signature.

98. Memorandum From the Acting Director of the Office of Controls, Department of State (Lyon) to the Secretary of State's Special Assistant for Research and Intelligence (McCormack)

Washington, November 13, 1945.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Intelligence Files, Bureau of Administration, 1942-51: Lot 79 D 137, Office of Strategic Services, Box 1. No classification marking.

Reference is made to the Executive Order which President Truman signed on September 20, 1945, terminating the Office of Strategic Services and disposing of its functions.

The Department continues to receive from the Strategic Services Unit requests for State Department designations at the various diplomatic missions. Many of the requests are for replacements; others are for new assignments. Too, there is some indication that personnel in one branch of the former OSS organization, not transferred to the State Department, are transferring or attempting to transfer to branches of the organization now connected with the Department of State.

In view of the forementioned Executive Order and President Truman's letter of September 20, 1945 to Secretary Byrnes on the subject of OSS, FC has been hesitant to approve requested designations by SSU until such time as the future activities of the Unit have been determined.

I believe you will agree that during the interim period of the organization increases in personnel as well as replacements and transfers which are not absolutely necessary, should be kept at a minimum. To send SSU employees to our European missions at this time--when the work may be terminated within a matter of weeks--appears to be an unnecessary expenditure of government funds as well as an imposition on the time and effort of our already over-occupied offices.

In order that I may discuss the matter with the proper SSU officials, I would appreciate your advising me whether the requests for State Department designations should be held pending a decision regarding the future activities of the SSU--particularly the organization's relationship with this Department.

Frederick B. Lyon/1/

/1/Printed from a copy that bears this typed signature.

99. Memorandum From the Director of the Strategic Services Unit, Department of War (Magruder) to the Assistant Secretary of War (McCloy)

Washington, November 15, 1945.

//Source: Central Intelligence Agency Historical Files, HS/CSG-579, Job 83-00036, Box 4, Folder 7. Secret; American Eyes.

SUBJECT
The Strategic Services Unit at the Beginning of November

1. This letter covers developments during the last half of October in the situation of SSU as described in previous reports dated 9 and 25 October 1945./1/

/1/Documents 96 and 97.

2. The total personnel strength of SSU has been reduced from 7,640 to 6,447 in the fortnight from 19 October to 2 November. Of the latter figure more than 2,350 persons are in process of separation, either in this country, en route here or awaiting transportation from overseas. Details of SSU deployment are set forth in the table attached as Exhibit 1./2/

/2/Exhibits 1 and 2 are in the Supplement.

3. For details of liquidation of seven OSS operational branches see Exhibit 2. Of these branches, nuclei of no more than nine persons from the Morale Operations Branch and three persons from the Special Operations Branch will be transferred to the Secret Intelligence Branch to process and study information on foreign developments in clandestine propaganda and sabotage and to preserve the techniques evolved by OSS in the past war. The other five branches, viz. Operational Groups Command, Field Photographic Special Projects, Field Experimental Unit, and Research & Development, are being liquidated completely. Their records and reports will be maintained by SSU.

4. The following progress has been made in arranging transfer from SSU rolls of personnel engaged in War Crimes, Strategic Bombing Survey and Intelligence Photographic Documentation work. (Initial steps were reported on 25 October.)/3/

/3/Not further identified.

a. The Strategic Bombing Survey personnel has all been transferred to USSBS.

b. Mr. Justice Jackson has agreed that SSU War Crimes personnel be transferred to another agency of the War Department for attachment to his office on temporary duty. When necessary data has been received from Mr. Justice Jackson discussion will be had with representatives of the Office of the Judge Advocate General to effect this transfer.

c. G-2, A-2 and ONI have indicated approval of a plan to place the Intelligence Photographic Documentation Project under the direction of the Joint Topographic Subcommittee of the JIC of JCS. Under this plan 132 members of the Field Photographic Branch would be transferred out of SSU and detailed to IPDP. This proposal has already been submitted to you for approval.

5. The following are the major developments in the missions overseas:

a. Europe-Africa-Near East. In France, MTO, and the Near East, reorientation of activities continues along the lines indicated in the previous reports. The missions in Germany and Austria are now concentrating on strategic intelligence, with an acceleration of clandestine activities in Germany. SI and X-2 operations will be closely coordinated and under cover. [20 lines of source text not declassified]

[2 paragraphs (19 lines of source text) not declassified]

John Magruder/4/
Brig. Gen., USA

/4/Printed from a copy that bears this typed signature.

Continue with Document 100


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