Foreign Relations of the United States, 1945–1950, Emergence of the Intelligence Establishment

11. Memorandum From Arnold Miles of the Bureau of the Budget Staff to the Assistant Director for Administrative Management of the Bureau of the Budget (Stone)⁰

Washington, September 19, 1945.

Problem

The need to decide what funds should be allotted to the FBI for the continuation of their secret activities abroad, requires a consideration of the following:

1. Should the Secret Intelligence Service organized by the FBI in the Western Hemisphere be continued?

2. Should it be extended into Europe?

3. Does the FBI have any foreign role, or, in a broader sense, what are our needs for the special category of security or counter intelligence?

Facts Bearing on the Problem

The Secret Intelligence Service in the Western Hemisphere was officially set up by the FBI as a result of action by the President immediately following Pearl Harbor, which confirmed steps already taken (the FBI had begun to conduct secret activities in South and Central America prior to this). This action had been recommended to the President by the Interdepartmental Intelligence Committee composed of G–2, ONI and FBI. Initial approval by the Interdepartmental Intelligence Committee followed discussions of the need to expand coverage in the security intelligence (counter intelligence) field. Almost from the beginning, however, the minutes of the Interdepartmental Intelligence Committee reflected discontent on the part of the G–2 and ONI representatives toward the expansion of the SIS into reporting of intelligence on a broad scale.

The SIS, however, has been highly useful especially in connection with the desire to ferret out Nazi, and to some extent Japanese, infiltration into the Western Hemisphere. Annually, at budget time, the program has been strongly endorsed by those officials in the State Department directly concerned with the use of FBI material (visa and passport control, safehaven, alien exclusion and internment, etc.).

Other than the initial decision by the President immediately following Pearl Harbor, however, the broad policy question involved in the maintenance of an operation of this character in neutral and friendly territories has never been thoroughly discussed. It should be pointed out though, that there is no instance known to us, in which the SIS has caused any official embarrassment with the countries involved.

Discussion

It is important that any decision which will be made in regard to the FBI be consistent with a program for the Government as a whole on which the Bureau has been working.

The Bureau has advocated the creation of two separate systems of operation in the field of intelligence, one dealing with foreign intelligence in a broad means including economic, political and other basic forms of intelligence; the other dealing with security intelligence and security programs to the countering of unfriendly, or hostile activities of individuals, groups or movements.

These plans for the Government as a whole envision two top authoritative groups under the leadership of the State Department to coordinate operations in these two respective fields. One top group concerned with the coordination of operations in the whole field of basic intelligence would consist of the Secretaries of War, Navy, State, and Commerce. The other, concerned with the coordination of internal security and security intelligence operations would consist of the Secretaries of War, Navy, State, Treasury and Justice.

A foreign role for the FBI . Such security intelligence cannot be secured from domestic operations alone.

The postwar period will see a number of security operations which will be continued, and which should be serviced by the best and most efficient intelligence available:

1. The desire to include security checks in the process of issuing visas and passports will continue. This need will be serviced in one way or another. Similarly other operations such as the investigation of personnel employed in our important Foreign Service, and the furnishing of background information on individuals involved in business and international finance or other matters in which the State Department and Commerce Department will be involved, will require ready reference to this type of information. In spite of the obvious advantage of maintaining all available information of this type to service such needs in one place, this has been impossible to achieve under the present divided and competitive pattern.

2. In addition to the continuance of a considerable security intelligence operation, there is the need to continue security planning. Just as Byron Price pointed out, in connection with Censorship planning, that a small group would be needed to continue a nucleus operation, it will be necessary to maintain a skeleton operation in this whole field.

3. A further need for the continuance of services similar to those rendered by the FBI is that of assisting such agencies as the State Department, in insuring the maximum amount of security with respect to communications, records, personnel, etc. This last need is quite acute. Our Foreign Service has been notoriously loose. This has given top officers in the State Department considerable concern. Some provision to take care of this problem will undoubtedly be made in the State Department unless it can secure the service elsewhere.

4. Further a need exists for inclusion in the embassies abroad of such technicians to represent those Governmental operations which center in the FBI and to be concerned with normal police and Surete liaison on such questions as extradition and international crime in general.

The fulfillment of these operational requirements does not necessarily involve a decision as to whether secret or clandestine operations will be permitted. The activities listed above can be, if necessary, conducted completely in the open, although with greatly diminished effectiveness. In any event the job will only be properly done if utilization is made of the skills, records and domestic organization available in the FBI.

There is thus a need for security attachés abroad. The assignment of a security attaché within a mission should conform to the pattern now in effect for the assignment of technical personnel from other Government agencies. Security attachés should be completely coordinated within the mission abroad. Their channel of communication should be through State Department facilities.

Secret activities. It is important to distinguish the two types of questions involved in the problem; one involving the continuance of secret and clandestine operations, the other involving the role of the FBI in general in the foreign field. To lump these questions into one would be to make the same mistake that has been fostered by General Donovan’s insistence on lumping the question of the need for and role of a central agency with that of the continuance of secret intelligence.

The question of whether the FBI will continue a secret intelligence service, particularly one which will extend into Europe, should be viewed in the same light as we are viewing the question of a secret intelligence service for the Government as a whole. In other words, the high policy question as to whether this country should engage in any clandestine intelligence activities or not is still an open one.

Until such time as a decision is made on this point, the FBI should not be permitted to extend any secret activities into Europe. (A few personnel now in Europe on an individual case-by-case basis can be considered as coming outside this memo.) Further, it is recommended that should the FBI ever be assigned a role involving the use of secret or clandestine methods, that;

1. This role should be part of and carefully integrated with a broader secret intelligence service operating for the Government as a whole.

2. The FBI’s operations should be confined to security intelligence.

The conclusion that continuation of secret intelligence activities in the postwar period is still an open question does not dispose of the problem of deciding what to do about the SIS which now actually exists in South America.

Liquidation or curtailment of this service should be viewed as a special problem. In a considerable number of instances, personnel involved cannot be abruptly withdrawn. In addition, it is undoubtedly true that for the balance of this fiscal year at least, the service will continue to be useful to programs now underway in the State Department. In South and Central America will be focused the principal remaining effort of the Nazis to maintain some cohesion and to conserve whatever they can for possible future rebirth. Our programs, particularly those under the general heading of Safehaven are designed to prevent this. Normal, open, Foreign Service reporting will not be sufficient to ferret out the kind of intelligence needed by the Safehaven programs under the complex arrangements that will have been made for cover. The detection and preventions of this type of planned infiltration will continue to require covert methods.

Funds should, therefore, be granted to continue the Service on a curtailing basis for the balance of this fiscal year with the proviso, however, that it should be subject to such directives as may subsequently be issued by any interdepartmental machinery created by the President in this field.

Recommendations

1. That sufficient funds be allotted FBI to continue the SIS in the Western Hemisphere on a curtailing basis for the balance of the present fiscal year.

2. That a proviso be entered that the SIS in the Western Hemisphere will be subject to continuous review and to such directives as may subsequently be issued by the State Department or by any interdepartmental coordinating group organized in the field of security and security intelligence.

3. That the question of the extension of the SIS into other areas than the Western Hemisphere be postponed until:

a. A decision is made as a matter of high policy that this country will engage in secret or clandestine intelligence operations in the postwar period.

b. Interdepartmental machinery for planning the precise way in which the FBI in a role limited to security intelligence can integrate its operations with those of a secret intelligence operation for the Government as a whole covering the whole intelligence field.

4. That a plan for the assignment of security attachés as required by the State Department in areas other than South America be discussed with State and FBI with the proviso that:

a. The appointment of security attaches under an agreed upon plan consistent with Governmental policy in the assignment of technical personnel abroad.

b. The security attaches will not engage in any clandestine or secret operations except as authorized on a case-by-case basis by the Chief of Mission pending the development of a Government-wide plan of operation in this field.

c. That the security attaché be an integral part of the mission and his channel of communication be to the State Department.

A.M. ¹

0. Source: National Archives and Records Administration, RG 51, Records of the Office of Management and Budget, Director’s File, Series 39.27, Intelligence. No classification marking.
1. Printed from a copy that bears these typed initials.