7. Memorandum From the Director’s Assistant (Tamm) to the Director of the Federal Bureau of Investigation (Hoover)0

Pursuant to an appointment made through Bob Lynch, Mr. Lynch and I held a one-hour conference with Colonel Frank McCarthy, Assistant Secretary of State, on Wednesday morning, September 5th.

Colonel McCarthy was informed that you had instructed me to call upon him for the purpose of determining what the State Department position is with reference to the continuation of the SIS Service since you will shortly have to appear before the Appropriation Committee, and the Bureau of the Budget and the Appropriation Committee have indicated a desire to be informed as to the future course of operation which you contemplate for SIS. I pointed out to Colonel McCarthy that SIS was a service agency for the State Department and that your program or its future would depend entirely and completely upon what the Department of State desired done with this Unit. I traced the background of the organization of the SIS, pointing out that it was set up upon Presidential instruction issued by Mr. Roosevelt to Mr. Berle, outlined the functions of the Bureau, the establishment of the Legal Attachés, training and operation of undercover personnel, the Bureau’s radio stations, the daily conference with the Military and Naval Attachés and a representative of the Ambassador, the distribution of the information in Washington to the State Department and all other aspects of the SIS operation in as brief and specific form as was possible.

It was rather difficult to make a comprehensive statement to Colonel McCarthy because of his constant interruptions with questions as to what the Bureau thought of a “one-man” intelligence set-up reporting directly to the President, and similar questions which indicated that Colonel McCarthy was thoroughly familiar with the General Donovan plan. I outlined in detail to McCarthy the objections to the so-called “one-man” anonymous director of intelligence, pointing out that such an organization would be labeled as a Gestapo, that the President could not directly supervise such an organization, that such an organization would, despite the descriptive term “one-man” require a large administrative setup some place in Washington, which would become readily known, subject it to criticism, publicity, etc. McCarthy was argumentative about this point indicating that while the identity of the group could be known, just as the identity of OSS was known, no information need come out about what it was doing. I pointed out that under the restrictions of censorship [Page 28] and wartime necessity this might be true in wartime, but that it would never be true in peacetime and that such a group would be the target for Congressional criticism, hostile press representatives, etc. I pointed out that such an organization would be essentially a political one and that the effectiveness of the organization would be materially decreased by the probable turnover in the personnel following a change in administration. McCarthy stated that the OSS had done a most effective job in the occupied countries and that he had personal knowledge of this. I stated that I had no doubt but that OSS contained some capable, conscientious and sincere individuals but that it was one thing to operate on a touch and go basis during wartime feverish activity and quite another to operate on a long-term basis a world-wide intelligence service. I pointed out that such a service could be successful only in professional hands and that the success of the SIS operation was attested to by its accomplishments in the Latin American fields in the past five years. I told Colonel McCarthy that probably the best source of accurate information concerning the SIS operations would be the Ambassadors, such as Spurille Braden, Norweb and others, even including Messersmith, who had first-hand knowledge of the SIS operation.

I made it clear to Colonel McCarthy that you were not seeking the SIS operations for the Bureau but that you felt a world-wide intelligence service was an absolute necessity, that such a service should be in professional hands and that it should not operate on any basis of a divided jurisdiction upon a hemispheric basis. McCarthy stated that he thought the OSS organization could quite readily be amalgamated into a White House establishment in which the President would receive reports direct from its director. I pointed out that this was the so-called British system which had proved so basically unsuccessful that while the British Secret Service were basking in the self-generated light of their own brilliance, the German Intelligence Service was dispatching agents and saboteurs to the Western Hemisphere on a wholesale basis and that these agents were arriving without the knowledge or even suspicion of the much-touted British Intelligence Service. McCarthy indicated that his reports as to the efficiency of the British Intelligence Service were at considerable variance with the analysis which I made of the British Intelligence Service. I told him that probably the source of his information about British Intelligence had something to sell and that most certainly the Bureau was not trying to sell anything.

In the interest of brevity I am not setting forth all of the details of my conversation with McCarthy, although I covered the field of advantages of SIS operations, its success, etc. in detail and pointed out the objections not alone to the so-called “one-man” intelligence service but also the first General Donovan plan and the Army plan. The advantages of an extension of the SIS operations to a world-wide basis with the collaboration of [Page 29] Military and Naval Intelligence were pointed out, including the lack of necessity of securing enabling legislation, the fact that no appropriation would have to be specifically identified or ear-marked and the other advantages which we have heretofore discussed. I think, frankly, that the logic of our position ultimately crashed through any prejudices or previously conceived ideas which McCarthy had because after almost an hour of discussion, he stated that the Bureau’s presentation of the advantages and disadvantages of the various proposals opened up to him a new concept of the problem and new avenues of approach which had not theretofore occurred to him.

Colonel McCarthy stated that he had reviewed recently a memorandum on the SIS operations1 which Mr. Clark had given to Mr. Byrnes and that he had referred this memorandum to the State Department specialist in intelligence matters, Mr. Fred Lyon, for review and recommendation as to the position which the State Department should take in this situation. McCarthy stated that he would be largely influenced by the position which Fred Lyon would take upon the various proposals and that he probably would, upon the basis of Lyon’s experience in the State Department, see eye to eye with him. He stated that he was most anxious, therefore, to have me go over the entire picture with Fred Lyon in order that Fred Lyon might have the advantage of the Bureau’s viewpoint before he submitted his, Lyon’s, statement as to the position which the State Department should take. McCarthy indicated that he would probably support Lyon in his major premises in attempting to reach a decision from Byrnes as to the program to be followed. I told Colonel McCarthy that the Bureau’s experience and dealings with Lyon had been always on a satisfactory basis and that I would in accord with his suggestion be glad to talk to Fred Lyon. McCarthy stated that upon the basis of the statements and explanations which I made to him it was possible that the views of the State Department and the FBI might not be so divergent but that they might be readily reconciled and a completely satisfactory program worked out.

You will recall that Lyon was out of his office when I attempted to see him, but he called at my office at five o’clock last evening. I outlined exactly what had transpired, as set forth above, to Fred Lyon, pointing out to him that I was discussing the matter with him in accord with Colonel McCarthy’s request. At one point in my discussion with Lyon I told him that I had advised Colonel McCarthy of the establishment and operation of the Bureau’s radio stations “with or without the knowledge and consent of the various Latin American Governments” since in an [Page 30] intelligence organization there was a need for a channel of fast secret communication. I told Lyon that I pointed out that on two occasions, namely in Ecuador and Paraguay, during revolutions the Bureau’s radio system had been the only channel of communication between the Embassy and the State Department in Washington. Lyon expressed considerable surprise that I had told McCarthy of this and stated that in a discussion on Wednesday afternoon (subsequent to my discussion with McCarthy) he, Lyon, had told McCarthy of this radio network of the Bureau’s and McCarthy expressed considerable surprise, indicating that he did not know the Bureau operated such a radio system.

Fred Lyon stated further that he was very much surprised and a little confused as to McCarthy suggesting to me that I discuss this situation with Lyon prior to Lyon submitting his recommendations to McCarthy because Lyon had prepared a memorandum containing his views, which as you know were parallel to the Bureau’s views, and submitted it to McCarthy on Tuesday evening, September 4th,2 that is, the afternoon before I talked to McCarthy. Lyon stated that he understood that McCarthy had on Tuesday evening relayed this memorandum on to Secretary of State Byrnes prior to Byrnes’ departure for London. Lyon of course did not know whether McCarthy had submitted to Byrnes anything in addition to Lyon’s memorandum or whether he had expressed his own views as being in accord with or contrary to his views.

Fred Lyon further advised that on Wednesday afternoon McCarthy had sent for him, had referred to the fact that I had talked to McCarthy and stated that since Lyon was “pro-FBI”, McCarthy wondered whether Lyon would be willing to testify in favor of the Bureau’s appropriation. Lyon stated that he did not think it was necessary for anyone other than Bureau representatives to testify for the Bureau’s appropriation, pointing out that all that was normally necessary was for the State Department to indicate to the Bureau of the Budget that the State Department approved in general terms the nature and extent of the Bureau’s operations outside the United States. McCarthy indicated to Lyon, however, that it might be necessary for Lyon to testify with reference to the Bureau’s appropriation. Fred Lyon indicated that he would keep us advised of any additional developments in this matter.

  1. Source: National Archives and Records Administration, RG 263, Records of the Central Intelligence Agency, Troy Papers, FBI Documents. No classification marking.
  2. Reference may be to a copy of a paper entitled “Accomplishments of the Special Intelligence Service,” September 3, attached to a memorandum from Tamm to Hoover of the same date. (Ibid.) See the Supplement.
  3. Not found.