The CIA under Harry Truman

Preface Emerging from World War II as the worlds strongest power, the United

States was hardly equipped institutionally or temperamentally for world

leadership. In the autumn of 1945 many Americans, in and out of govern

ment, were not at all eager to wield their nations power to bring about

some new global order. Indeed, manyperhaps mostAmericans

thought that victory over the Axis powers would in itself ensure peace

and stability. In any event, Americans remained confident that the United

States would always have enough time and resources to beat back any

foreign threat before it could imperil our shores.

Americas wartime leaders, however, knew from experience that the

nation could never return to its prewar isolation. President Truman bore

the full weight of this knowledge within weeks of the death of Franidin

D. Roosevelt. In July 1945, as he discussed the future of Europe with

Joseph Stalin, Winston Churchill, and Clement Attlee at Potsdam, Tru

man secretly authorized the use of atomic bombs on Japanese cities. The

unexpectedly rapid defeat of Japan and the growing tensions between the

United States and the USSR over occupation policies in Germany and

Eastern Europe persuaded many observers that the wartime Grand Alli

ance of America, Britain, and Russia was breaking up, and that the

United States might soon confront serious new dangers in the postwar

world.

In responding to this challenge, the Truman administration in 1946 and

1947 created a new peacetime foreign intelligence organization that was

not part of any department or military service. The early history of that

new body, which became the Central Intelligence Agency (CIA), offers a

window on the Truman administrations foreign policya window that

this volume seeks to open a little wider. By describing American plans

and actions in founding and managing the nations new central intelli

gence service, this volume should help scholars to identify the key deci

sions that animated the CIA, and to fit them into the context of the Cold

Wars first years.

The CIAs early growth did not follow a predestined course. Two histori

cal eventsone past, the other contemporarywere uppermost in the

minds of the Truman administration officials who founded and built CIA.

The Japanese surprise attack on Pearl Harbor demonstrated that the

United States needed an effective, modern warning capability. Soon after

this disaster it was clear that the intelligence failure at Pearl Harbor was

xi
primarily one of coordinatioüthat analysts had failed to collate all

available clUes to Japanese intentions and movements. The second

eventStalins absorption of Eastern Europeoccurred before the wor

ried eyes of the Truman administration. The war in Europe was barely

over when American and foreign reports on Soviet conduct in the occu

pied territories began to trouble observers in Washington, London, and

other capitals. Although the lessons of Pearl Harbor were perhaps upper

most in the minds of the President and his advisers in 1946 and 1947,

their concern over Soviet conduct eventually dominated the organization

of a postwar intelligence capability.

During World War H the United States had built a formidable intelli

gence and covert action agency, the Office of Strategic Services (OSS). In

1944, its chief, William J. Donovan, formally urged the President to cre

ate a permanent, worldwide intelligence service after the war ended. Pres

ident Roosevelt made no promises, and after Roosevelts death (and the

German surrender) President Truman felt no compulsion to keep OSS

alive. Americas commanders in the Pacific had no use for Donovan and

OSS~ and Truman himself feared that Donovans proposed centralized,

peacetime intelligence establishment might one day be used against

Americans.

Recognizing the need for an organization to coordinate intelligence for

policymakers, however, President Truman had solicited proposals for cre

ating such a capability even before he abolished OSS 2 In his Executive

order dissolving the Office on 1 October 1945, he noted that America

needed a comprehensive and coordinated foreign intelligence program.

Over Donovans objections, Truman gave the State Department the OSS

Research and Analysis Branch, while the War Department adopted the

remnants of the OSS clandestine collection and counterintelligence

branches, which it named the Strategic Services Unit (SSU). The capabil

ity that OSS had developed to perform subversive operations abroad

was abandoned.3

In late 1945 departmental attention and energies therefore turned to argu

ments over the powers to be given to a new intelligence office. The

State, War, and Navy Departments, who quickly agreed that they should

~Richard Dunlop, Donovan: Americas Master Spy (Chicago: Rand McNally, 1982),

pp. 467-468; William J. Donovan to Harold D. Smith, Director, Bureau of the Budget,

25 August 1945, reproduced in Thomas F Troy, Donovan and the CIA: A History of the Estab

lishment of the Central Intelligence Agency (Washington: Central Intelligence Agency, 1981),

p. 455.

2Harry S. Truman, Memoirs: Years of Trial and Hope (New York: Doubleday, 1956 1965

paperback edition citedi), II: 73-76.

3William J. Donovan, Memorandum for the President, 13 September 45, Document 1;

Executive Order 9621, 20 September 1945, Document 3.

XI
oversee the proposed office, stood together against rival plans proposed

by the Bureau of the Budget and J. Edgar Hoovers Federal Bureau of

Investigation (FBI). The Army and the Navy, however, would not accept

the State Departments demand that the new offices director be selected

by and accountable to the Secretary of State. The services instead pre

ferred a Joint Chiefs of Staff plan, which was also part of the report on

armed services unification that Ferdinand Eberstadt had prepared for

Navy Secretary James Forrestal.4 In. December 1945 an impatient Presi

dent Truman asked to see both the State Departments and the Joint

Chiefs proposals and decided that the latter looked simpler and more

workable. After the holidays President Truman created the Central Intelli

gence Group (CIG), in a diluted versiOn of the JCS proposal.5 President

Truman persuaded one of the authors Of the Eberstadt plan, Sidney

Souers, a Missouri businessman and Naval Reserve Rear Admiral, to

serve for a few months as the first Director of Central Intelligence (DC!).6

And soon 22 January 1946 theCentral Intelligence Group was born.

Having signed a directive creating CIG, the President invited Rear Admi

ral Souers to the White House two days later to award him a black cloak

and wooden dagger as mock symbols of office.7

With only a handful of staffersmost loaned from the State Department

and the servicesCIG was but a shadow of the wartime OSS.8 Directed

to coordinate the flow of intelligence to policymakers, it had no authority

to collect clandestine foreign information from agents in the field or to

effect consensus among the various intelligence-producing departments.9

Last-minute compromises in .the Joint Chiefs plan to appease the State

4Troy, Donovan and the CIA, pp. 297-300, 3.15, 322; William D. Leahy, Memorandum for

the Secretary of War and Secretary of the Navy, Establishment of a central intelligence ser

vice upon liquidation of OSS, 19 September 1945, Document 2.

5Sidney W.Souers, Memorandum for Commander Clifford, 27 December 1945, Document

5; Troy, Donovan and the CIA, p. 339.

6Truman, Memoirs: Years of Trial and Hope, II: 74-76. Souers, a banker and insurance ex

ecutive who had been a prewar pillar of the Democratic Party in St. Louis, later recalled that,

on learning of Trumans nomination for the Senate in 1934, he had thought to himself, I

would not hire that man in my business for more than $250 a month. After the war Souers be

came close to Thiman and served the President as the National Security Councils first execu

tivØ secretary, from 1947 to 1950, and remained as an adviser on foreign affairs after leaving

the NSC. William Henhoeffer and James Hanrahan, Notes on the Early DCIs, Studies in In

ielligencŁ.33 (Spring 1989): 29.

7Trüman to the Secretaries of State, War, and Navy, 22 January 1946, Document 7; Diary

of William D. Leahy, 24 January 1946, Library of Congress.

8The history of CIG is recounted in several works. The most detailed is Arthur B. Darling,

The Central Intelligence Agency: An Instrument of Government, to 1950 (University Park, PA:

Pennsylvania State University Press, 1990). Thomas froys Donovan and the CIA discusses

the founding of CIG at length. Anne Karalekas provides a brief but clear synopsis in her His

tory of the Central Intelligence Agency, m William M. Leary, editor, The Central Intelligence

Agency: History and Documents (University, AL: University of Alabama Press, 1984).

91n intelligence parlance, clandestine collection is a term for the secret gathering of infor

mation, often by espionage. .

.

.

XII
Department and the Bureau of the Budget had made CIG an interdepart

mental body that lacked its own budget and personnel.1° But from this

humble beginning CIG soon began to grow. President Truman liked the

Groups Daily Summary, which spared him the trouble of wading

through the hundreds of intelligence and operational cables from overseas

posts that the departments passed on to the White House. CIG

answered to the President through the National Intelligence Authority

(NIA), which comprised the Secretaries of State, War, and Navy, joined

by the Presidents representative, Fleet Admiral William Leahy, who was

Chief of Staff to the Commander in Chief (and had headed the Joint

Chiefs of Staff since 1942). This proximity to the Oval Office, along

with Leahys friendly patronage, gave DCI Souers more influence than

CIGs weak institutional arrangements might indicate. The President

read the CIGs Daily Summary and Weekly Summary six mornings a

week, and Admiral Leahy helped the new Group overcome bureaucratic

obstacles thrown in its path by jealous departments.12

After five quiet months as DCI, Rear Admiral Souers returned to civilian

life and his business interests. Souers informally nominated Lt. Gen. Hoyt

S. Vandenberg, US Army Air Forces, to follow him as DCI, knowing

that Vandenberg had the clout and the inclination to build CIG into a

position of real power in Washington. Nephew of the powerful Republi

can Senator, Arthur Vandenberg, the general had a distinguished war

record in the Army Air Forces and aspired to command the independent

United States Air Force that he hoped would soon be created. Although

Vandenberg saw his stint with CIG as a temporary detour in his military

career, he made the most of this opportunity to demonstrate his political

and administrative talents by setting aside parochial service interests and

working to expand the Groups power and responsibility.3 Under his

year-long directorship, CIG gained an independent budget and work

force, and won authority to collect and analyzeas well as collate.

intelligence.4 General Vandenberg also persuaded the White House that

°Troy, Donovan and the CiA, p. 346.

~ CIG sent its first Daily Summary to the President on 15 February 1946; see Central Intel

ligence Group, Daily Swnmar~ 15 February 1946, Document 10; Montague, Memorandum for

the Assistant Director, R&E J. Klahr Huddle], Conversation with Admiral Foskett regarding

the C.I.G. Daily and Weekly Summaries, 26 February 1947, Document 27. For a glimpse at

how the Daily Summary was written and edited in the early days, see Russell Jack Smith, The

Unknown CIA: My Three Decades with the Agency (Washington: Pergamon-Brasseys, 1989),

pp. 3 1-38.

12 For an example of Admiral Leahys patronage, see Darling, The Central Intelligence

Agency, pp. 200-201.

13 Phillip S. Meilinger, Hoyt S. Vandenberg: The Life of a General (Bloomington: Jndiana

University Press, 1989), p. 71.

4National Intelligence Authority, minutes of the NIAs 4th meeting, 17 July 1946, Docu

ment 13. CIG personnel numbered approximately 100 when Vandenberg became DCI in June

1946; six months later CIG had more than 1,800 people. Karalekas, History of the Central In

telligence Agency, pp. 24, 26.

xiv
dO in its present form was unworkable, and that a true central intelli

gence agency needed substantial bureaucratic independence and Congres

sional authorization.5

CIG grew as the Truman administration girded itself to contain the

Soviet Union in Europe. In July 1946, to evaluate the increasingly dis

turbing cables and reports flowing into CIG, General Vandenberg created

an Office of Research and Evaluation (which was soon renamed the

Office of Reports and Estimates ORE), at the State Departments insis

tence). Although its structure prevented it from .producing much more

than current intelligence (daily and weekly analyses of events as they

happen), ORE sent some short but timely analytical papers to policymak

ers.6 The first of these, Soviet Foreign and Military Policy (ORE 1),

was produced and informally coordinated in just four days in response to

an anxious request from the White House.7 ORE ls prediction that Mos

cow would be grasping and opportunistic echoed the long telegram

on Soviet policy and conduct that ChargØ dAffaires George Kennan had

sent from Moscow in February 1946, and seemed borne out by the accel

erating pace of events.8 Across Eastern Europe, CIG reported, Soviet

occupation authorities worked with brutal efficiency to subvert the elec

tions mandated by wartime agreements, imposing Communist-dominated

regimes while using diplomacy and subterfuge to confuse the West and

spur the pace of Western demobilization.19 When Britain in February

1947 announced its intention to withdraw from Greece, leaving the field

to Communist insurgents, the President announced his Truman Doc

trine to a joint session of Congress on 12 March. Going beyond the cri

ses in Greece and Turkey, President Truman depicted the Soviet advance

in lowering terms:

The peoples of a number of countries of the world have recently had totali

tarian regimes forced upon them against their will. The Government of the

United States has made frequent protests against intimidation, in violation

of the Yalta agreement, in Poland, Rumania, and Bulgaria.

~ George Elsey, Memorandum for the Record, 17 July 1946, Document 12.

16 Donald Edgar to the Executive to the Director Edwin K. Wright], An Adequacy Survey

of The Adequacy Survey of the CIG Daily and Weekly Summaries as it was Prepared by

OCD on 9 December 1946, 2 January 1947, Document 22.

~ Clifford to Leahy, 18 July 1946, Document 14. Clark Clifford and George

Elsey requested ORE 1 as they prepared a paper known today as the Clifford-Elsey Report.

The President had asked Clifford for an account of Soviet violations of wartime and postwar

agreements, and Cliffords assistant George Elsey used this request to organize a comprehen

sive review of Soviet-American relations. (Robert J. Donovan, Conflict and Crisis: The Presi

dency of Harry S. Truman, 1945-1 948 New York: W.W. Norton, 1977], p. 221.) 18 Office of Research and Evaluation, ORE 1, Soviet Foreign and Military Policy, 23 July

1946, Document 15. DCI Vandenberg soon afterward reiterated the message of ORE 1 in a let

ter to the President, saying that Moscow had recently stepped up its war of nerves with the

West but was not yet preparing to invade Western Europe; see Vandenberg, Memorandum for

the President, 24 August 1946, Document 18.

~ Office of Reports and Estimates ORE], ORE 1/1, Revised Soviet Thctics in Internation

al Affairs, 6 January 1947, Document 23. Hereinafter, ORE reports will be cited only by title

and number.

xv
Democracy was threatened by a system that relies upon terror and

oppression, a controlled press and radio, fixed elections, and suppression

of personal freedoms. The President then stated the heart of his doctrine

of containment: I believe it must be the policy of the United States to

support free peoples who are resisting attempted subjugation by armed

minorities or by outside pressures. 20 Senator Arthur Vandenberg, now

president pro tern of the Senate, helped the President persuade the Repub

lican-controlled Congress to back this step. A few months later, in June

1947, Secretary of State George Marshall proposed his famous plan for

the reconstruction of the European economy. Moscow rejected the Mar

shall Plan, and its client states followed suit.21

All the while CIG had been expanding its capabilities. The Group gained

authority in August 1946 to analyze intelligence on foreign atomic weap

ons and development.22 More important, CIG in 1946 and early 1947

absorbed the War Departments Strategic: Services Unit, the remnants of

the old OSS foreign collection and counterespionage branches. In a sense,

this was like a mouse eating an elephant. SSU was much larger than

CIG, with dozens of overseas stations and its own procedures and files

running back to its wartime OSS origins; it was SSU that kept alive the

spirit of the old OSS and eventually bequeathed it to CIA. The acquisi

tion of SSU gave CIG the responsibility and capability to collect clandes

tine foreign intelligence independently of other departments and

services. In addition, General Vandenberg wrested the mission of gather

ing intelligence in Latin America away from FBI chief J. Edgar

Hoover.23 CIGs worldwide collection capability was based in the new

Office of Special Operations, Americas first, civilian clandestine ser

vice.24 When General Vandenberg returned to the Army Air Forces in

May 1947, his CIG had become an important source of information for

the President.

The rapid growth of one agency usually elicits an opposite (but not

always equal) resistance from officials and agencies that stand to lose

influence and resources to the expanding office. DCI Vandenberg met

this kind of resistance in meetings of the Intelligence Advisory Board

(JAB), a panel of uncertain authority comprising the chiefs of the depart

mental and service intelligence staffs, which had been created to help the

DCI coordinate intelligence. Vandenberg wanted the Director of Central

Intelligence to dominate the JAB as the executive agent of the National

20 in Donovan, Conflict and Crisis, p. 284.

21 Melvyn P. Leffler, A Preponderance of Power: National Security, the Truman Adminis

tmtion, and the Cold War (Stanford, CA: Stanford University Press, 1992), pp. 184-186.

22 Leahy to the President, 21 August 1946, Document 17.

23 Leahy to General Hoyt S.I Vandenberg, 12 August 1946, Document 16.

~ Vandenberg, Memorandum for the Assistant Director for Special Operations Donald

Gallowayl, Functions of the Office of Special Operations, 25 October 1946, Document 20.

xvi
Intelligence Authority and to be answerable through the NIA to the Presi

dent. Although the NIA approved his suggestion in February 1947, the

other members of the JAB balked at Vandenbergs broad interpretation of

his powers, and the generals successor as DCI felt the inevitable back

lash.25

To alternate DCIs from the Army and Navy, the White House in early

1947 looked for an admiral to succeed Vandenberg. On the advice of

James Forrestal, President Truman tapped Roscoe H. Hillenkoetter, who

had been a naval attachØ in Vichy and Paris and served as chief of intelli

gence for Admiral Niniitz in the Pacific war. A newly promoted rear

admiral, Hillenkoetter had neither Vandenbergs rank nor his aggressive

ness.26

Hillenkoetter took only a marginal role in the debate over the proposed

National Security Act of 1947 (indeed, former DCI Vandenberg contin

ued to testify before Congress on the CIA section of the bill even after

Hillenkoetter had become DCI).27 Along with transforming CIG into the

Central Intelligence Agency, the bill also proposed to form an indepen

dent Air Force, to place the armed services under a new Secretary of

Defense, and to create a National Security Council (NSC) to coordinate

defense and foreign policy. Although Congressional debates over the bill

focused on its unification of the military, some Congressmen worried

that the new CIA was a potential American Gestapo until General Van

denberg and other officials explained that the bills vague section on the

CIA gave the Agency no police or subpoena powers, or internal security

mission.28

The National Security Act won Congressional passage in July 1947, in a

vote that was Congresss first word on the executive branchs creation of

a peacetime foreign intelligence establishment (Congress had had virtu

ally no role in the origin and development of CIG).~ The Act recognized

and codified both President Trumans original January 1946 CIG directive

and General Vandenbergs bureaucratic victories, although for tactical

reasons the White House had kept the Acts section on the CIA as brief as

possible and postponed a full enumeration of the Directors powers.3°

25 National Intelligence Authority, minutes of the NIAs 9th meeting, 12 February 1947,

Document 26.

26 After Souers had initially declined the job in late 1945, Forrestal had proposed then Cap

tain Hillenkoetter to be first DCI. Although Admiral Leahy admired Hillenkoetter, he drafted

Souers, who had a higher rank and better understood the debates and compromises that had

gone into the formation of CIG. Ludwell L. Montague, General Walter Bedell Smith as Director

of Central Intelligence (University Park: Pennsylvania State University Press, 1992), pp. 35-36.

27 Meilinger, Vandenberg, p. 77.

28 Darling, The Central Intelligence Agency, pp. 176-177.

29 National Security Act of 1947, 26 July 1947, Document 30.

3°Pfoi~heiiner, Memorandum for the Record, Proposed Legislation for C.I.G., 28 January

1947, Document 24; Elsey to Clifford, Central Intelligence Group, 14 March 1947, Document 29.

xvii
The Central Intelligence Group formally became the Central Intelligence

Agency on 18 September 1947, although Congress did not pass compre

hensive enabling legislation for the Agency until mid-1949.3

That the CIA continued to grow under Hillenkoetters directorship owed

more to the alarming world situation than to any empire building on his

part. Before the autumn of 1947-American concern over Soviet behavior

in Eastern Europe had been one of several forces behind the creation of

CIG and its successor, CIA, but the events of the winter of 1947-48

made this concern predominant in the development of the CIAs author

ity and capabilities. Massive Communist-run strikes in France and Italy

late in 1947, followed by the coup detat in Czechoslovakia in February

1948, suggested that Stalin might not give the Marshall Plan (which was

still hung up in Congress) time to rebuild the economies of Western

Europe. Officials in the Truman administration decided that America had

to fight fire with fire, matching the Soviets in propaganda and subterfuge.

Up to this time, however, no one had thought much about the nature and

implications of covert action. The very term was rarely used. Instead,

officials referred to separate components of what would later be collec

tively classed as covert operations. Morale operations or psychologi

cal warfare (essentially propaganda but embracing a variety of open and

clandestine methods of bringing a message home to a target group)

seemed to be something the State Department should do, at least in

peacetime. On the other hand, unconventional, paramilitary, and sabo

tage operations looked useful for wartime; any capability to perform them

seemed logically to belong to the military. What complicated the situation

still further was that the Soviet Union, while not at war with anyone, had

launched a political offensive apparently aimed at conquering peoples

and territories as completely as if by armed invasion. This was truly cold

war, and it confused the already murky issue of peacetime versus

wartime operations.

Truman administration officials responded to the ambiguous situation

with a creative ambiguity of their own. In NOvember 1947 the new

National Security Council briefly considered assigning the peacetime psy

chological warfare mission to the State Department, until dissuaded by

Secretary of State George Marshall, who insisted that such a role might

embarrass his Department and harm American diplomacy. State and the

military, however, still wanted a degree of control over psychological

~ Hillenkoetter to the National Intelligence Authorit~c National Security Act of 1947,

11 September 1947, Document 31; Central Intelligence Agency Act of 1949, 20 June 1949,

Document 53. The 1949 Act finally regularized the CIAs budget, which until then had been a

special working fund collected from the Departments of State, War, and Navy. The CIA Act

of 1949 also gave statutory sanction to the DCIs practice of spending unvouchered funds on

clandestine collection and operations.

xviii
operations. The fledgling CIA seemed the best place to put this capabil

ity; the Agency had a worldwide net of operatives (many of them OSS

veterans) trained in clandestine work, and it possessed unvouchered

funds, which meant there would be no immediate need to approach Con

gress for new appropriations.32 In December 1947 the National Security

Councilover the misgivings of DCI Hillenkoetterissued NSC 4-A.

The directive pointed to the vicious psychological efforts of the USSR,

its satellite countries and Communist groups and determined that CIA

was the logical agency to conduct

covert psychological operations designed to counteract Soviet and Sovietinspired activities which constitute a threat to world peace and security or

are designed to discredit and defeat the aims and activities of the United

States in its endeavors to promote world peace and security.33

NSC 4-A made the DCI alone responsible (and accountable to the NSC)

for psychological operations, leaving him wide discretion in selecting tar

gets and techniques ~

With the assignment of the covert psychological mission, CIA had

arrived as an important component of the Washington foreign policy

establishmentone that was soon exercising its new authority to run

operations in Europe. The Agency had its criticssuch as 1948 Republi

can presidential candidate Thomas Dewey, who attacked the CIA for not

warning of unrest in Colombia before Secretary of State Marshall

attended the April 1948 Bogota conference of the Organization of Ameri

can States. The CIA, however, also had strong defenders in Congress and

the executive branch. Indeed, informed opinion blamed the State Depart

ment, not the Agency, for ignoring CIAs warning about the potential for

riots in Bogota.35 The White House had not joined in the criticism of Hill

enkoetter over the riots; President Truman was getting a steady stream of

reports and analyses from CIA on issues ranging from the events in West

ern Europe to the proposed partition of Palestine.36 Even before the

Bogota incident, the new Special Procedures Branch (later Group) of the

Office of Special Operations began operations against the Communists in

32 Darling, The Central Intelligence Agency, pp. 253-262; Karalekas, History of the Cen

tral Intelligence Agency, pp. 40-4 1.

~ National Security Council, NSC 4-A, 17 December 1947, Document 35.

~ Darling, The Central Intelligence Agency, pp. 260-261.

~ Pforzheimer to Arthur H. Schwartz, 6 May 1948, Document 39.

36 See, for example, ORE 55, The Consequences of the Partition of Palestine, 28 Novem

ber 1947, Document 33; ORE 47/1, The Current Situation in Italy, 16 February 1948, Docu

ment 37.

xix
Europe.37 Although some of these anti-Soviet activities ultimately proved

futile, others worked as planned.

OSOs foray into covert action did not last long. While the CIA gained in

stature and influence as the Cold War deepened, DCI Hillenkoetters own

standing with the NSC and the other departments declined. Hillenkoet

ters slow and cautious use of his mandate to conduct covert action satis

fied neither State nor Defense. At State in the spring of 1948 Policy

Planning. Staff chief George Kennan argued that the US Government

needed a capability to conduct political warfare (psychological warfare

along with direct covert intervention in the political affairs of other

nations). Believing this role too important to be left to the CIA alone,

Kennan led the State Departments bid to win substantial control over

covert operations. State was backed by the military, which advocated an

independent, or at least more powerful, psychological warfare office.38

Hillenkoetter saw what was coming and did his best to resist it, complain

ing to former DCI Sidney Souers (whom the President had persuaded to

return to Washington to serve as NSC Executive Secretary) that CIA was

in danger of losing control over psychological warfare.39

The DCIs complaints tempered but did not prevent the NSC decision to

intrude on CIAs turf in a new directive, NSC 10/2, issued in June 1948

just as the Soviets clamped a blockade on West Berlin.40 The directive

technically expanded CIAs writ while actually infringing upon the Agen

cys freedom of action. It directed CIA to conduct covert rather than

merely psychological operations to include

propaganda, economic warfare; preventive direct action, including sabo

tage, anti-sabotage, demolition and evacuation measures; subversion

against hostile states, including assistance to underground resistance move

ments, guerrillas and refugee liberation groups, and support of indigenous

anti-Communist elements in threatened countries of the free world.4

At the same time, NSC 10/2 decreed that covert action would be run by a

new office administratively quartered in CIA but supervised by the State

Department and the military. In wartime the entire apparatus would shift

to the Joint Chiefs bailiwick and would conduct unconventional opera

tions against the enemy. The anomalous new unit, called the Office of

~ The Special Procedures Branch had been established in OSO at the end of 1947 in re

sponse to NSC 4-A. For more on OSOs covert action efforts, see Hillenkoetter, Memorandum

for the Assistant Director for Special Operations Galloway], Additional Functions of the Of

fice of Special Operations, 22 March 1948, Document 38.

38 Darling, The Central Intelligence Agency, pp. 263-268.

39Hillenkoetter, Memorandum for the Executive Secretar)c Psychological Operations,

11 May 48, Document 40; Hillenkoetter to J.S. Lay, 9 June 1948, Document 41.

~° For an early CIA analysis of the Berlin crisis, see ORE 41-48, Effect of Soviet Restric

tions on the US Position in Berlin, 14 June 1948, Document 42.

National Security Council, NSC 10/2, 18 June 48, Document 43.

xx
Policy Cpordination (OPC), began life in the summer of 1948 under the

directorship of Frank G. Wjsner, an OSS veteran who had been serving as

deputy to the Assistant Secretary of State for the Occupied Areas.42

As Assistant Director for Policy Coordination, Wisners mission was

broadperhaps too much so. NSC 10/2s phrase covert operations cov

ered activities ranging from propaganda to economic sabotage to war

planning. The vagueness of this mandate reflected its novelty, for Ameri

can officials had little experience with such methods and no body of doc

trine governing their use in peacetime. OPC never let indecision deter it,

however, and quickly threw itself into a wide variety of operations. The

affable but intense Wisner established a working relationship with DCI

Hillenkoetter, but for operational direction Wisner looked more to George

Kennan and the State Departments Policy Planning Staff. This was to be

expected, given Wisners connections at State and Kennans strong per

sonality and ideas. Kennan and States representative at OPC, Robert P.

Joyce, pushed OPC to undertake large-scale, continuing covert opera

tions even before the Office could establish procedures and hire the

required personnel.43

With OPC now in .the game, the CIA,s espionage-oriented Office of Spe

cial Operations largely bowed out of covert action, a field it had only

recently entered. Yet there was immediate tension between the two

offices, which never truly worked as a team. Wisners well-funded OPC

was soon competing with OSO for the services of the same agents and

groups in the field and squabbling with it at Headquarters. The sense of

competition was heightened by professional and even social distinctions

between officers of the two offices. Many OSO officers who had served

in OSS and stuck with the intelligence business through lean times in

SSU and CIG considered the new OPC hands amateurs and novices. OPC

was awash in funds and, expanding rapidly, however, and Wisners new

officers were often better paid than their veteran OSO counterparts. Each

Office tended to discount the importance of the others work: OSO people

disdained OPC activists as cowboys;while many in OPC viewed their

mission asrriore important than the espionage of OSOs plodding case

42 Darling, The Central Intelligence Agency, pp. 262-273; Karalekas, History of the Cen

tral Intelligence Agency, pp. 41-42.

~ Frank G. Wisner, Memorandum for the Director of Central Intelligence, OPC Projects,

29 October 1948, Document 47; Hillenkoetter, Memorandum for the Record, 4 August 1948,

Document 44; Lawrence R. Houston, Memorandum for the Director, Responsibility and Con

trolfor OPC, 19 October 1948, Document 46. Joyce was a Foreign Service officer who had

also served in OSS inthe war, and in OSO until 1947.

xxi
officers. The OSO-OPC rivalry soon prompted CIA officials to consider

a merger.~

The disconnect between OPC and OSO was only one manifestation of the

CIAs internal disorganization under DCI Hillenkoettera situation that

an NSC study group report made painfully obvious in early 1949. Secre

tary of Defense Forrestal had selected three New York lawyersAllen

Dulles, William Jackson, and Matthias Correa, all of whom had intelli

gence experienceto survey the Agency and report to the NSC on its

workings. Their survey was hardly disinterested. Allen Dulles, the panels

chairman, was a Republican supporter of Thomas Deweys 1948 presi

dential bid who believed that CIA should be headed by a civilian.45

Indeed, Dulles was one of many OSS veterans who believed along with

General Donovan that the nation had to have a peacetime secret service

that looked a lot like OSS. By late 1948 the CIA had gradually acquired

the powers and responsibilities wielded by OSS in World War II, and now

Dulles apparently believed that CIA, having become a new OSS, had to

be cured of some of the problems that had affected its predecessor. To no

ones surprise, the Dulles-Jackson-Correa survey criticized Admiral Hill

enkoetter and recommended sweeping reforms. OPC and OSO should be

merged. The DCI should wield more authority to coordinate intelligence,

as General Vandenberg had proposed. The Office of Reports and Esti

mates (ORE), which had focused on briefing the President and only infor

mally coordinated its analysis with other departments, should be divided

into a current intelligence section and a small staff of experts to write

truly national intelligence estimates. The NSC adopted these recommen

dations almost in toto in a new directive, NSC 50, given to DCI Hillen

koetter in July 1 949 46

Confronted by such criticism and the daunting task of implementing the

reforms required by NSC 50, Hillenkoetter temporized while waiting for

the White House to appoint his successor. President Truman, however,

postponed this step for a year. Hillenkoetter had done nothing egregiously

wrong, and he had kept open the CIAs lines to the Oval Office and the

NSC. The real problem, however, was finding Hillenkoetters replace

ment. According to Sidney Souers, the President was loath to appoint

anyone recommended by his new Secretary of Defense, Louis Johnson,

~ Wisner, Memorandum for the Director of Central Intelligence, Observations upon the

report of the Dulles-Jackson-Correa report to the National Security Council, 14 February

1949, Document 49; C. Offie to ADPC, Conversation with Messrs. 115, 16 April

1950, 24 April 1950, Document 59; Lyman B. Kirkpatrick, Memorandum for the Deputy Di

rector of Central Intelligence, Problems of OSO, 8 June 1951, Document 68.

~ Montague, General Walter Bedell Smith as Director of Central Intelligence, p. 42.

~ National Security Council, NSC 50, 1 July 1949, Document 54; Hillenkoette~ Memoran

dum for CIA Assistant Directors, Approval by the NSC of Much of the Dulles Report, 12

July 1949, Document 55.

xxi
whom he despised. At the same time, the recently appointed Secretary of

State, Dean Acheson, felt it inappropriate to offer any names of his own

without a specific request from the White House.47 Meanwhile, the

Agency continued to drift. Only Frank Wisners energetic but loosely

organized OPC was laying ambitious plans at this point; the Office was

fairly brimming with ideas for exploiting the Tito-Stalin dispute and

using counterpart funds from the Marshall Plan to strengthen leftwing

but anti-Communist leaders and intellectuals in Western Europe.48

Events in Asia soon forced theCIA to reform. By the end of 1949 China

had fallen to the Communists and Stalin had his own atomic bomb.49 In

April 1950 the National Security Council issued NSC 68, which reexam

ined Americas strategic objectives in the dim light of the Cold War and

painted the global battle between freedom and tyranny in apocalyptic

terms:

The assault on free institutions is world-wide now, and in the context of

the present polarization of power a defeat of free institutions anywhere is

a defeat everywhere.

Frustrating the Kremlins designs meant shifting from the defensive to

a vigorous political offensive against the Soviet Union. ~° NSC 68

spurred OPC to new efforts as soon as the draft directive was circulated

in April l950.~ It nevertheless took Communist North Koreas invasion

of its southern neighbor in June 1950 to energize Washington, prompt

widespread assent to NSC 68, and provoke major changes at CIA. With

America again at war and the threat of a wider, perhaps worldwide,

conflict apparently looming, OPCs budget expanded dramatically and

its focus shifted from essentially defensive psychological operations to

active economic, political, and even military actions. CIAs failure to

provide better warning of the Korean invasion made it impossible for

the White House to delay Admiral Hillenkoetters replacement any

41 According to Admiral Souers, in thePresidents 1948 campaign someone had promised

Louis Johnson his choice of Cabinet posts in return for taking the apparently thankless post of

campaign finance chairman. Appalled by this deal, Truman nonetheless felt bound by it when

Johnson insisted on becoming Secretary of Defense in the place of the ailing James Forrestal.

Montague, General Walter Bedell Smith as Director of Central Intelligence, pp. 47, 53-54;

Henhoeffer and Hanrahan, Notes on the Early DCIs, p. 32.

48 See, for example, Finance Division to Executive, OPC Wisner], CIA Responsibility

and Accountability for ECA Counterpart Funds Expended by OPC, 17 October 1949, Docu

ment 57.

~ ORE 29-49, Prospects for Soviet Control of a Communist China, 15 April 1949, Docu

ment 52; ORE 32-50, The Effect of the Soviet Possession of Atomic Bombs on the Security

of the Us,, 9 June 1950, Document 60.

~° National Security Council, NSC 68, 14 April 1950, Foreign Relations of the United

States, 1950, I: 240, 263, 282. George Kennans successor at State as Director for Policy Plan

ning, Paul Nitze, was the principal drafter of NSC 68.

51 C. V. H. Charles V. Hulick] Memorandum for the Record, Policy Guidance, 19 April

1950, Document 58.

xxiii
longer.52 Even before the invasion, President Truman had decided

apparently on the advice of his aide Averell Harrimanthat Lt. Gen.

Walter Bedell Smith, US Army, would be the next Director of Central

Intelligence. Smith did not want the job at first, but after war broke out he

finally accepted the appointment. Confirmed by. the Senate in late August,

his prolonged convalescence from st~rgety prevented him from taking

office until October.53

Although Smith had little experience in intelligence, he had been well

briefed and arrived at CIA with the determination and mandate to reshape

the organization and make it work as a team. He had been General Eisen

howers chief of staff during the war and had afterward succeeded Averell

Harriman as Ambassador to Moscow, spending three years in Russia

observing.the Soviets at close hand. Taking NSC 50 as his blueprint,

Smith brought William Jackson aboard as Deputy Director of Central

Intelligence to carry, out almost all of the NSCs recommendations.54

Small in stature but possessed of a keen intellect and a sharp tongue (his

temper was only worsened by lingering side effects of his recent opera

tion), Smith ruled the Agency with an iron hand, impatiently hazing even

his most senior lieutenants but inspiring a strong sense of loyalty and

drive in virtually everyone who worked with him.

One of Smiths first steps was to break up the drifting Office of Reports

and Estimates into three new offices, one for estimates, one for current

intelligence, the last for reports.55 His new Office of National Estimates

(ONE) was a small group of scholars and senior officials exempted from

potentially distracting administrative duties and directed to concentrate

on writing estimates that could win governmentwide assent. The new

DCI also transformed the ORE reporting section into the more efficient

Office of Current Intelligence, which soon began publishing a new Cur

rent Intelligence Bulletin in the place of the old Daily Summary. The

remainder of ORE became the Office of Reseai~ch and Reports (ORR).

52 CIA did not provide adequate tactical warning of the North Korean attack in 1950, al

though in early 1949 it had predicted, that the planned withdrawal of US forces from Korea in

the spring of 1949 would probably in time be followed by an invasion; see ORE 3. 49, Con

sequences of US Troop Withdrawal From Korea in Spring, 1949, 28 February 1949, Docu

ment 51. .

. .

~ Smith had suffered for years from ulcers, and his doctors finally resolved the condition

by removing much of his stomach in the summer of 1950. Montague, General Walter Bedell

Smith as Director of Central Intelligence, pp. 55-56.

~ Smith initially did not want to merge OSO and OPC, according to Ludwell Montague;

General Walter Bedell Smith as Director of Central Intelligence, p. 219. For an example of the

briefing papers seen by the general, see Houston to Walter B. Smith, 29 August 1950, Docu

ment 63,

~ ORE had always had trouble winning cooperation from other offices and agencies. See,

for example, Ludwell L. Montague to Vandenberg, Procurement of Key Personnel for ORE,

24 September 1946, Document 19; Chief, D/Pub R. Jack Smith] to AD/ORE Theodore

Babbitt], Contents of the Daily Summary, 21 September 1950, Document 62.

xxiv
At Smiths direction, Frank Wisner informed the Departments of State

and Defense that OPC would henceforth be subject to the DCI as a regu

lar office of the CIA.56 This step, combined with a geographic-area divi

sion system of organization and a more exacting process for reviewing

proposed operationsboth of which had been instituted in the summer

of 1950allowed Wisner to ensure that OPCs rapid expansion over the

next two years never got completely out of hand.

Allen Dulles joined the Agency in early 1951 as its first Deputy Director

for Plans, charged with supervising OSO and OPC. With Dulles aboard,

the idea of merging the two offices steadily gained ground, despite the

qualms of DCI Smith and some officers in OSO.57

The war in Asia created an enormous demand for analysis and new covert

operations.58 In response, CIAs budget and work force grew almost expo

nentially, to the point that Agency and Congressional officials were

forced to find new ways to hide allocations for the Agency in published

reports on the budget.59 The new covert operations themselves were

becoming more sophisticated and daring: some even used American vol

untary organizations such as the National Student Association as (some

times unwitting) agents of influence with foreign anti-Communist leaders

and groups.6°

In just three years, covert action had become the most expensive and

bureaucratically prominent of CIAs missions.6~ The growing predomi

nance of the covert action mission even began to affect the Agencys

intelligence product. For example, Frank Wisners Special Assistant for

Latin America, J. C. King, bypassed the Office of Current Intelligence

and the Office of National Estimates to send to the White House his own

56 Wisner, Memorandum for Director of Central Intelligence, Interpretation of NSC 10/2

and Related Matters, 12 October 1950, Document 64.

~ Smith wanted to maintain a clear distinction between clandestine collection and covert

action, according to Montague, and also hoped the Joint Chiefs of Staff would take over OPCs

large guerrilla operations in East Asia. Dulles, on the other hand, was joined in his advocacy

of an OSO-OPC merger by ADPC Frank Wisner and ADSO Willard Wyman, although more

than a few OSO officers looked on OPC as an upstart and did not want to meige with it. Mon

tague; General Walter Bedell Smith as Director of Central Intelligence, pp. 2 19-226.

58 For examples of CIA analysis of the Korean war, see Smith, Memorandum for the Presi

dent, 12 October 1950, Document 65; ME 12, Consequences of the Early Employment of

Chinese Nationalist Forces in Korea, December 1950, Document 66.

~ Pforzheimer, Memorandum for the Record, CIA Appropriations, 25 October 1951,

Document 74.

~° Milton W. Buffington to CSP Lewis S. Thompson], United States National Student As

sociation, 17 February 1951, Document 67; Wisner to Deputy Assistant Director for Policy

Coordination, Reported Crisis in the American Committee for Cultural Freedom, 7 April

1952, Document 77.

61 Much of the Agencys growth took place in OPC. In 1949 the Office had 302 people and

a budget of approximately $4.7 million. In 1952 it employed 2,812 (plus 3,142 overseas con

tract personnel) and its budget was $82 million. Karalekas, History of the Central Intelligence

Agency, p. 43.

xxv
estimate of the deteriorating situation in Guatemala.62 DCI Smith com

plained more than once that covert action, particularly in support of the

Korean war effort, was distracting the Agency from the gathering and

analysis of intelligence; at one staff meeting he caustically wondered

aloud whether CIA would continue as an intelligence agency or become

the administrations cold war department. 63 He asked the NSC for a

ruling on the proper scope and magnitude of CIA operations, and in

October 1951 the Council responded with NSC 10/5, which endorsed the

Agencys anti-Communist campaign and further expanded its authority

over guerrilla operations. Smith reluctantly went along with NSC 10/5

and the proposed merger of OPC and OSO, which took place 1 August

1952.~ Indeed, under DCI Smith the major functions of the Agency were

consolidated in three directorates: plans, intelligence, and administration.

These three directorates, along with a fourth created in the 1 960s, today

are the main pillars of the Agencys institutional structure.65

The military and diplomatic quagmire in Korea had its effects on the Tru

man administration as well as on CIA. After Truman sacked Gen. Doug

las MacArthur in April 1951, the Korean frontline stabilized and both

sides dug in for a static war of attrition. To the end of his administration,

there was almost no good news from Korea for the President. Trumans

popularity sagged as casualties mounted, the peace talks dragged on, and

Republican Senator Joseph McCarthy savaged the administration for

being soft on Communism. Truman more than once considered using

atomic bombs to break the Korean stalemate.~ DCI Smith felt some of

the weight on Trumans shoulders when he briefed the President on Fri

day mornings. The President usually wanted to talk about Korea, using

the generals comments on the course of the fighting to assess the advice

he received from the Pentagon. Smith prepared carefully for these meet

ings, keeping abreast of CIA activities but working even harder to make

his battle maps more precise than JCS Chairman Omar Bradleys.67

By the time the Truman administration (and DCI Smith) prepared to

leave office in late 1952, the CIA was a very different institution from

what it had been only a few years earlier. The world itself was changing.

62E~n,~ Memorandum for Rear Admiral Robert L. Dennison, Estimate of Situation in

Guatemala, 14 January 1952, Document 76.

63 DCI staff meeting minutes, 22 October 1951 (Document 72) and 27 October 1952 (Doc

ument 80). ~ National Security Council, NSC 10/5, 23 October 1951, Document 73; Smith to CIA

Deputy Directors, Organization of CIA Clandestine Services, 15 July 1952, Document 79.

65 In 1973 the Directorate of Plans was renamed the Directorate of Operations. The Direc

torate of Administration was known as the Directorate of Support from 1955 to 1973, and as

the Directorate of Management and Services (1973-74). The fourth directorateScience and

Technologywas created in 1962 (although for its first year it was called the Directorate of

Research). 66 McCullough, Truman (New York: Simon & Schuster, 1992), pp. 872-873.

67 Montague, General Walter Bedell Smith as Director of Central Intelligence, pp. 232-233.

xxvi
Reinvigorated by the Marshall Plan and American security guarantees,

Western Europe appeared much less vulnerable to internal subversion.68

Joseph Stalin was dying. The Cold War itself had reached its first pause,

as the stalemate in Korea dragged on and the Soviets pondered how they

could exploit the rising calls for national liberation among the Wests

aging colonial empires.69 The CIAs own focus, especially in the field of

covert action, was already shifting to the Third World as well.

When President Truman came to the Agency to say farewell and thanks

in late November 1952, he told the assembled CIA men and women that

the United States now had an intelligence agency that was not inferior to

any in the world. The CIA was vital to the presidency, Truman

declared, because America had been forced to take up the burden of

world leadership that it should have assumed after the First World War:

We are at the top, and the leader of the free worldsomething that we did

not anticipate, something that we did not want, but something that has been

forced on us. . . .

It is our duty, under Heaven, to continue that leadership

in the manner that will prevent a third world warwhich would mean the

end of civilization.

President Truman explained that President-elect Dwight D. Eisenhower

would soon be making decisions daily that would affect millions of peo

ple. As he assumed the most powe~ful office in the history of the world,

he would need the stream of intelligence that the Central Intelligence

Agency sent daily to the Presidents desk.7°

With President Eisenhowers inauguration in January 1953, the CIA

entered a new phase. Now the Agency would have its first civilian Direc

torAllen Dulles, who had unprecedented access to the White House

and to the Secretary of State, his brother John Foster Dulles. As the

Agency focused on Communism as the main disruptive element in world

affairs, anti-Communist covert action attained an importance among the

CIAs missions that it would not again approach until the 1980s. Dulless

long tenure of almost nine years as Director had its own, far-reaching

effects on CIA, but the decisions reached during the Truman administra

tion and the changes imposed by DCI Smith circumscribed the scope of

later directors actions. It is worth understanding that experience as CIA,

in a new postwar period, faces hard choices on many of the issues that

were first debated and decided in the Truman administration more than 40

years ago.

68 For a CIA view of Western Europe, see DCI staff meeting minutes, 21 November 1951,

Document 75. Also see Special Estimate 13, Probable Developments in the V.brld Situation

Through Mid-1953, 24 September 1951, Document 71.

69 Special Estimate 9, Probable Immediate Developments in the Far East Following a Fail

ure in the Cease-Fire Negotiations in Korea, August 1951, Document 70.

70 See President Trumans farewell speech to CIA, 21 November 1952, Document 81.

xxvii