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Foreign Relations of the United States 1945-1950 Emergence of the Intelligence Establishment Department of State Washington, DC

Department of State Intelligence

                           

72. Memorandum From the Assistant Secretary of State for Administration (McCarthy) to the Under Secretary of State (Acheson)

Washington, September 5, 1945.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Records of the Office of the Assistant Secretary for Administration--Subject Files, 1944-47: Lot 53 D 28, Box 15, Folder Nelson, Otto L. No classification marking.

Mr. Acheson:

I am at present faced with innumerable problems, some of them of very great magnitude, for which I cannot recommend solutions until I have some information on the subject of organizational lines. For example:

Mr. Hoover wants our advice as to what he shall tell the Appropriations Committee about the disposition of his special intelligence organization covering South America. This costs about 3-1/2 million dollars a year, and Mr. Hoover will probably have to give testimony on the subject within the next ten days. If we are to have a Special Assistant for Intelligence, the recommendation on this should be his.

I am also receiving numerous applications, either oral or written, from the highest type of personnel who are available anywhere, but whom we must pick up now if we are actually to secure their services. With our present divided personnel system, however, it is difficult to convince these people that we really have something good for them.

Our estimates must go to the Budget very shortly, but I have no way of knowing how to set up the requirements of the Offices of the Secretary, the Under Secretary and others until we determine upon some organizational plan.

Most confidentially, I understand that Mr. Kurth, who is our budget man and who is virtually irreplaceable, will offer his resignation shortly in order that he may accept a better job with the Treasury. Under our present organization I have nothing better to offer him; under a new arrangement, I believe I could move him up and thus save his services for the Department.

It seems to me that it will be highly desirable to secure the Secretary's approval for taking the following steps immediately, in order that we may know at least in what direction we are proceeding. I, therefore, recommend:

1. That there be appointed a Deputy Under Secretary, who would not be a policy officer but who would be responsible for the coordination of business within the Department and general overall relations with other Departments. His office should be adjacent to yours, preferably between yours and the Secretary's. Under him would be the Central Secretariat. In addition, the Offices of Near Eastern and African Affairs, Far Eastern Affairs, European Affairs, and Controls would report through him to the Under Secretary, but he would not be in a position to overrule any of these on matters of policy as they proceeded to the Under Secretary.

2. That the organizational units under the Assistant Secretary for Administration be regrouped in such a way as to form four offices: Personnel, Administrative Management, Budget and Finance, and Central Services, and that each of these offices be charged with both Departmental and Foreign Service activities within its field.

3. That there be appointed an Assistant Secretary for Transportation and Communication, and that the Office of Transportation and Communications now under the Assistant Secretary for Economic Affairs be transferred to this new Assistant Secretary.

4. That Mr. Russell be assigned as Assistant Secretary for Congressional Relations and that his office be combined with that of the Legal Adviser.

5. That there be appointed a Special Assistant for Research and Intelligence, and that he proceed to build an organization as conceived by the Bureau of the Budget, and, I believe, all others concerned.

Unless we are to get a quick determination on some or all of these matters, I shall have to proceed on the assumption that the old organizational chart and Departmental Orders will continue to apply, and make budgetary and other arrangements accordingly.

McCarthy/1/

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

73. Telegram From the Department of State to the Embassy in the United Kingdom

Washington, September 12, 1945, 5 p.m.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Decimal File 1945-49, 111.111/9-1245. Confidential; No Distribution; U.S. Urgent. Drafted by McCarthy. An incoming copy of this telegram bears the classification Secret. (Ibid., Records of the Bureau of Intelligence and Research: Lot 58 D 776) Byrnes was in London to attend the Council of Foreign Ministers meeting.

7860. For Secretary Byrnes. McCarthy has been investigating the proposition of setting up in the Department a Special Assistant for Research and Intelligence. The plan which follows has the concurrence in principle of Stone, Lyon, Matthews, Thorpe, Warren, and Kurth. Speedy action on the matter is urgent for the reasons explained later in this cable.

The Special Assistant and his organization would be responsible for the collection, evaluation and dissemination of all information regarding foreign nations. These functions are now spread throughout the Department. To unite them in one organization, which would become the Department's encyclopedia, would free the operating offices of the intelligence function and thus relieve them of a very considerable burden. Intelligence would furnish the date upon which the operating offices would determine our policy and our actions. Sources of information would be our own field installations and those of other departments as well as all Washington agencies and other domestic sources.

Under the Special Assistant there would be two offices, one for counterintelligence and one for intelligence. The former would be constituted by shifting to it those divisions now engaged in counterintelligence work but scattered throughout other offices of the Department. There is a pressing need for the consolidation of these divisions along with their personnel, files, and equipment for proper exercise of the counterintelligence function.

We do not have even the nucleus of an Office of Intelligence in the Department at present. During the past few years we have depended heavily upon OSS for intelligence research and analysis. This agency has two highly effective branches around which we could build the Office. The personnel of these branches are experienced and they have done and are doing invaluable work for us. Their complete abolition would be disastrous and would impose a new and heavy load upon the Department, one which we could bear only with great difficulty, if at all.

OSS is dissolving rapidly and its best people are departing daily. Seven hundred employees will be dropped before October 1. The remaining one thousand will be dropped before January 1. The Bureau of the Budget is preparing a draft of an executive order which would transfer to the State Department two OSS units, the Research and Analysis Branch and the Presentation Branch, with their functions, personnel, property, records, and funds. I propose that you authorize me to concur in this executive order. If it is signed, we should immediately place the two branches in an interim office, under our Special Assistant for Research and Intelligence. Before the first of the year we should absorb into our permanent intelligence structure such functions, personnel, property, and records of the two branches as we desire to retain. The remainder would pass out of existence at that time. This transaction would not prove embarrassing to us, since the same executive order would transfer all secret and operational intelligence activities of OSS to the War Department.

McCarthy believes that the man for the Special Assistant's job is Colonel Alfred McCormack, now in G-2 of the War Department, who was made Special Assistant to the Secretary of War in 1942 but was subsequently commissioned. He is described as a brilliant organizer and intelligence man who could attract highest caliber personnel as he has done in the War Department. That Department considers his work most outstanding. He was graduated from Princeton in 1921 and from Columbia Law, where he stood sixth, in 1922. He was Phi Beta Kappa and editor of The Law Review. After serving as chief clerk to Justice Harlan Stone, he joined the firm of Gravath, de Gersdorf, Swaine and Wood at $3,300 in 1926, and had progressed to $75,000 per year in 1942. He is forty-four. Apparently McCormack has been active in politics only in connection with Dewey's campaign for the district attorneyship of New York City. He advised the Republican National Committee in 1940 on the application of the Hatch Act. He classes himself as an independent voter. McCarthy does not know whether McCormack would accept. The matter has not been discussed with him.

I concur in McCarthy's recommendations that (1) we set up a Special Assistant for Research and Intelligence, (2) we concur in the proposed executive order, (3) McCormack be offered the Special Assistantship, and (4) I be authorized to proceed immediately in all these measures./1/

/1/Secretary Byrnes replied in telegram 9513 from London, September 15: "I approve your four recommendations as to research and intelligence." (Ibid.)

Acheson

74. Memorandum From Acting Secretary of State Acheson to the Secretary of State's Special Assistant for Research and Intelligence (McCormack)

Washington, October 1, 1945.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Records of the Bureau of Intelligence and Research: Lot 58 D 776, Birth of the Intelligence Organization in the Department of State. No classification marking. On September 27 Acheson announced the appointment of McCormack as Special Assistant to the Secretary of State in charge of research and intelligence. (Department of State Bulletin, September 30, 1945, p. 499)

At a time when we were communicating with the Secretary of State in London regarding the establishment of an intelligence agency within the State Department, I sent him a message from which the following is an excerpt:/1/

/1/For the full text, see Document 73.

"The Special Assistant and his organization would be responsible for the collection, evaluation and dissemination of all information regarding foreign nations. These functions are now spread throughout the Department. To unite them in one organization, which would become the Department's encyclopedia, would free the operating offices of the intelligence function and thus relieve them of a very considerable burden. Intelligence would furnish the data upon which the operating offices would determine our policy and our actions. Sources of information would be our own field installations and those of other departments as well as all Washington agencies and other domestic sources.

"Under the Special Assistant there would be two offices, one for counterintelligence and one for intelligence. The former would be constituted by shifting to it those divisions now engaged in counterintelligence work but scattered throughout other offices of the Department. There is a pressing need for the consolidation of these divisions, along with their personnel, files, and equipment for proper exercise of the counterintelligence function....

"...The Bureau of the Budget is preparing a draft of an executive order which would transfer to the State Department two OSS units, the Research and Analysis Branch and the Presentation Branch, with their functions, personnel, property, records and funds. I propose that you authorize me to concur in this executive order. If it is signed, we should immediately place the two branches in an interim office, under our Special Assistant for Research and Intelligence. Before the first of the year we should absorb into our permanent intelligence structure such functions, personnel, property, and records of the two branches as we desire to retain. The remainder would pass out of existence at that time."

Since the Secretary concurred in these general principles, and since the President has signed the Executive Order, the excerpts which I have quoted can well serve as the general basis of a directive for you as Special Assistant to the Secretary for Research and Intelligence.

It is desired that you take the following steps towards the creation of your intelligence unit:

1. Participate in such future discussions as may take place regarding the disposition of those parts of OSS as are not specifically disposed of in the Executive Order, but which may be disposed of administratively. You will represent the Department of State in these discussions, at which I understand representatives of the War Department and OSS will also be present.

2. Establish a board consisting of Mr. Lyon, and such other representatives of the Department of State and OSS as you consider appropriate, for the purpose of surveying those parts of OSS which have been, or will be, transferred to the Department of State for the purpose of advising you which parts of OSS we wish to retain beyond January 1 and which parts we wish to dissolve at that time.

3. Have the board conduct simultaneously a survey of those organizations within the present structure of the Department of State which are presently engaging in intelligence activities, for the purpose of advising you which of these organizations should be transferred to your own intelligence agency between now and January 1.

4. Consolidate the units within OSS which we wish to retain and the units of the Department of State now participating in intelligence activities so that, by January 1, all intelligence activities within the Department will be under your own control.

I attach hereto a copy of a memorandum signed by the President on September 20, 1945./2/ It directs the Secretary of State to "take the lead in developing a comprehensive and coordinated foreign intelligence program for all Federal agencies concerned with that type of activity. This should be done through the creation of an interdepartmental group, heading up under the State Department, which would formulate plans for my approval. This procedure will permit the planning of complete coverage of the foreign intelligence field and the assigning and controlling of operations in such manner that the needs of both the individual agencies and the Government as a whole will be met with maximum effectiveness."

/2/An undated draft of Document 15 is attached.

I understand that this memorandum was signed by the President before he received a memorandum, also attached, which was drafted by the Joint Chiefs of Staff./3/ The JCS memorandum differs in some respects from the President's memorandum to the Secretary of State. In addition, it is a more detailed document.

/3/Not attached but presumably the same as Document 13.

The steps which I have directed in this memorandum will have the effect of uniting and consolidating the intelligence activities of this Department. As regards the next step--that of "developing a comprehensive and coordinated foreign intelligence program for all Federal agencies concerned with that type of activity"--please make a careful and immediate study of the President's memorandum and the JCS memorandum and advise the Secretary of State as to what measures he should take.

I am directing Mr. Lyon to serve temporarily as your deputy in effecting the matters which I have outlined. He will also help you get established in the Department and deal with the appropriate offices under the Assistant Secretary for Administration in securing space, funds, et cetera.

Dean Acheson

75. Memorandum From the Assistant Secretary of State for Administration (McCarthy) to the Secretary of State's Special Assistant for Research and Intelligence (McCormack)

Washington, October 4, 1945.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Decimal File 1945-49, 101.5/10-445. No classification marking.

Mr. J . Franklin Carter/1/ and Mr. Henry Field have been engaged, during the period of the war, in some special intelligence activities directly under the President. Before the conclusion of the war, President Truman told them that he wished them to continue the projects which they initiated under orders from President Roosevelt and to continue their work at least until June 30, 1946.

/1/Carter was a newspaper columnist who had run a small, informal intelligence organization for President Roosevelt during World War II. See Troy, Donovan and the CIA, pp. 142, 226-227, 266-267, 275, and 276.

In the meantime, with the conclusion of the war, the Bureau of the Budget has been called upon by the Congress to review the war connected activities in the various agencies and to discontinue, or at least to cut down to a minimum, such activities. We are concerned with Mr. Carter's project because he and his associates have been administratively attached to the State Department. Actually this has meant only that the State Department has been the channel through which funds flowed to Mr. Carter from the President's fund.

In connection with a consideration as to whether these special activities should be continued, the Bureau of the Budget, speaking as the President's agent, believes that the Secretary of State should take a look at the activities and make a recommendation to the President as to whether they should be continued; if so, what unit within the State Department they could best be affiliated with.

I talked to Mr. Carter and Mr. Field today and they told me they were going to speak with the Secretary about this shortly after his return. It will not be possible, of course, for the Secretary to give an immediate decision on this and someone will have to advise the Secretary as to such details as he may need before he gets in touch with the President.

Since these are essentially intelligence activities, I suggest that you see Mr. Carter and Mr. Field early next week and be prepared to advise Mr. Byrnes on the subject. Mr. Carter and Mr. Field will not see Mr. Byrnes until after they have talked to you.

I suggested to Mr. Carter that he call you on Monday/2/ in order to arrange for an appointment very shortly after that.

/2/October 8.

Frank

I understand that Mr. Lyon has some very interesting information on this and suggest strongly that you see Lyon first./3/

Frank

/3/The postscript is handwritten.

76. Circular Telegram From the Department of State to Certain Diplomatic Missions

Washington, October 22, 1945, 4 p.m.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Decimal File 1945-49, 103.918/10-2245. Secret. Drafted by McCormack and cleared in OFS, NEA, EUR, and ARA, and by Donald Russell. Sent to Ankara, Athens, Brussels, Bucharest, Budapest, Cairo, Chunking, London, New Delhi, Paris, Rome, Sofia, The Hague, Tirana, and Colombo for Yost. The time of transmission is handwritten on the source text.

By Executive Order of the President, full text of which appeared in Radio Bulletin No. 225, the Office of Strategic Services was terminated as of October 1, 1945, and the various branches of that organization were divided between the War Department and the Department of State. The Research and Analysis Branch, excepting for its staffs now in Germany and Austria, was transferred to the Department of State where it now functions as part of the Interim Research and Intelligence Service set up by the same Order and under Mr. Alfred McCormack, Special Assistant to the Secretary of State.

The Research and Analysis Branch has for some time maintained outpost staffs in various foreign stations. These staffs have engaged in the procurement of intelligence materials, including maps of all kinds and printed as well as documentary sources. In certain places the R and A staffs have also done political and economic reporting, in cooperation with the State Department missions.

It is desired that the work hitherto performed by the R and A staffs should be continued for the present and that State Department missions should aid and guide these staffs as far as possible.

For administrative purposes the R and A staffs abroad will continue, until further notice, to be serviced by that part of the former Office of Strategic Services which is now under the War Department and which is now known as the Strategic Services Unit. In like manner the R and A staffs will continue to use SSU codes and communications and will receive direction from the R and A office in Washington. However, where difficulties may arise regarding the status of R and A staffs abroad, the State Department representative should, if necessary, attach such staffs to his mission, pending further instructions from Washington.

Byrnes

77. Memorandum From Secretary of State Byrnes to the Secretary of State's Special Assistant for Research and Intelligence (McCormack)

Washington, October 23, 1945.

//Source: Truman Library, Papers of J. Anthony Panuch. Top Secret.

As Special Assistant to the Secretary of State, in charge of research and intelligence, you are designated as the representative of the Secretary in all matters relating to communications intelligence activities, including the collection, analysis, decryption and translation of communications and the derivation of intelligence from those and related activities.

As such representative you are authorized:

a. To maintain liaison with such Army and Navy organizations as may be engaged in those activities and with any other organizations of the Federal Government whose operations may be related to those activities;

b. To acquaint such organizations with the intelligence requirements of the Department and to establish priorities for interception, decryption and translation of such communications and related material as may be of interest to the Department, and to assist such organizations by furnishing to them information in possession of the Department which may be of aid in their operations and which can be furnished with due regard to security;

c. To keep the Secretary of State informed of all agreements and arrangements made by any organization of the Federal Government with friendly powers for the exchange of information related to communications intelligence activities or of intelligence derived therefrom, and to establish or maintain, in cooperation with Army, Navy or other Federal Government communications intelligence organizations, liaison with organizations in the Governments of friendly powers for the exchange of information related to such activities and intelligence derived therefrom.

d. Upon organization of an Office of Intelligence within the Department, to receive on behalf of the Department and to disseminate within the Department and to appropriate diplomatic representatives of the United States, under due safeguards as to security, information and intelligence derived in whole or in part from communications intelligence activities.

James F. Byrnes/1/

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

78. Memorandum From the Secretary of State's Special Assistant for Research and Intelligence (McCormack) to the Assistant Secretary of State for Public and Cultural Relations (Benton)

Washington, October 23, 1945.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Decimal File 1945-49, 101.5/10-2445. No classification marking.

Since receiving your attached memorandum of September 26 to Frank McCarthy,/1/ I have talked with Lt. Colonel Little, Chief of the Morale Operations Branch, of the Strategic Service Unit. Col. Little, if I understand him correctly, thinks that his unit should continue its activities in the post-war era along the following lines:

/1/Not found.

(1) Propaganda in foreign countries by means of covert sources, i.e., "black" propaganda;

(2) Collection of information relating to foreign propaganda, by means of field agents; and

(3) Analysis of foreign propaganda, the emphasis under (2) and (3) being on "black" propaganda and on propaganda which is disseminated through other than the usual public media.

As to (1), it is my view that the United States should not maintain clandestine operators in a foreign country against which we are not at war, and through such operators to attempt so-called "black" propaganda operations; that to do so would be contrary to the fundamental premises of our own Governmental system and would be honoring the totalitarians by imitating them.

As to the collection of information concerning foreign propaganda, by use of agents abroad, that is no doubt desirable, but I think that it is neither desirable nor feasible to maintain the Morale Operations Branch as a separate collecting organization, apart from the other intelligence collecting operations.

As to the third point, I believe that a rounded intelligence research organization should include among its operations the systematic and careful analysis of the propaganda of foreign countries, including the types of propaganda that the MOB has concentrated on.

Do you agree? If so, do you think that the State Department should take over that part of the Morale Operations Branch, SSU, which is engaged in the analysis of foreign propaganda?

I should like to get your views as to the need of such a service to your organization.

79. Memorandum From the Assistant Secretary of State for Public and Cultural Relations (Benton) to the Secretary of State's Special Assistant for Research and Intelligence (McCormack)

Washington, October 24, 1945.

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Decimal File 1945-49, 101.5/10-2445. No classification marking.

On your memorandum of the 23rd,/1/ dealing with your talk with Colonel Little of General Donovan's staff:

/1/Document 78.

1. I agree with you emphatically that the United States should not maintain any kind of clandestine or under-cover propaganda operation.

2. I agree that we should have full information on foreign propaganda, not only in this country, but in other major countries, and I hope, with you, that such information can be adequately collected without the maintenance of any "separate collecting organization" such as the Morale Operations Branch.

3. I emphatically agree that this foreign propaganda must be systematically and carefully analyzed, and if the best way to proceed to collect it and to analyze it is through taking over that part of the Morale Operations Branch, which has been trained in this work, then the State Department should certainly proceed and take over--with the responsibility for operations centered under you.

If Congress agrees that we are, through the State Department, to operate an overseas information service, this service seems to me to be essential to its intelligent direction and operation.

WB

Continue with Document 80