As might be expected, records on foreign secret intelligence and clandestine intelligence collection are sparse. The small collection of documents printed in this section is concerned almost exclusively with two subjects: the transition from the Strategic Services Unit (SSU), the designation for the secret intelligence components of OSS after they were transferred to the War Department in the fall of 1945, to the Central Intelligence Group’s Office of Special Operations, and the controversy between the Central Intelligence Group and the Federal Bureau of Investigation over the latter’s handover of its intelligence functions in Latin America.

The period covered is roughly one year, from the fall of 1945 to the fall of 1946. There are only a few documents of later dates. By its very nature, secret intelligence collection probably generated relatively little paper (other than the resulting intelligence reports themselves), and much of this limited body of records was probably destroyed.

Because of the short deadline set in Executive Order 9621 (Document 14), both the State and War Departments had to move without much time for preparations to take over the OSS functions and resources allocated to them. In the case of the War Department, which inherited OSS’s operational (as distinct from research and analytical) functions, there were certain special problems. Before going out of existence, the OSS had begun liquidating the special operations and paramilitary functions that had been an integral part of its wartime mission, but some residual parts of the job remained to be completed by the SSU. Secret intelligence was a complex and more difficult problem. In this instance, the War Department had taken on a function that had an uncertain future, despite the importance many attached to it. At the time the Executive order was issued, the shape of the postwar national intelligence system was undecided, as the President’s September 20 letter to Secretary of State Byrnes (Document 15) made clear. It was to remain so well beyond that.

Among the many unresolved issues was whether and, if so, under what kind of organizational arrangements, the United States would undertake clandestine intelligence gathering in peacetime. Although General Donovan’s plan envisaged a continuation of clandestine intelligence collection by an OSS successor agency, there was no unanimity on the point. The Bureau of the Budget report of September 20, 1945, on intelligence (see the Supplement) regarded the continuation of secret [Page 231] intelligence collection in peacetime as a policy decision yet to be made. The Bureau was not necessarily opposed to secret intelligence but tended to regard it as far less important than research and analysis. Colonel McCormack’s position appears to have been much the same. The armed services seem to have been strongly in favor, although they were not necessarily in favor of the centralization of clandestine intelligence in a single agency. The FBI envisaged a worldwide intelligence gathering system modeled on its operations in Latin America during World War II.

The Strategic Services Unit (SSU) therefore was a holding operation intended to preserve, as far as possible, the clandestine intelligence capabilities developed in wartime until a decision could be reached on national intelligence policy in peacetime. Assistant Secretary of War John J. McCloy’s initial instructions to the SSU director, Brigadier General John Magruder (who had been Donovan’s deputy director of intelligence), directed him “to insure that the facilities and assets of OSS are preserved for any possible future use.” (Document 95)

Magruder said essentially the same to Assistant Secretary of War Lovett in a report on the future of U.S. intelligence activities. (Document 34) The Lovett Board in turn pressed the case for SSU as a trimmed-down nucleus for a future U.S. clandestine intelligence organization.

By January 1946, with the impasse over national intelligence organization broken, Magruder renewed and intensified his efforts. On January 15, he gave his immediate superior, Major General S. LeRoy Irwin, a summary of SSU’s assets, commenting that “at present the primary objective of SSU is to convert its unique assets into the foundation for clandestine peace-time intelligence procurement.” (See the Supplement) On February 4, he gave the same message, at greater length and in stronger terms, to Secretary of War Patterson and urged him to seek the appointment of a committee of the newly established National Intelligence Authority to study how best to use SSU’s resources in the new intelligence structure. (Document 102)

Again, in a memorandum of February 14, 1946, Magruder warned that in the absence “of specific directive permitting long-range plans and commitments” the SSU faced heavy attrition among key personnel and an impending budgetary crisis. Magruder also offered the SSU to the newly formed Central Intelligence Group in the hope that its operational, specialized, and administrative functions “could profitably be employed by the CIG until replaced by, or incorporated into, a permanent organization.” (Document 103)

There is no firm documentary evidence on the question, but it seems highly likely that Magruder’s urgings strongly influenced Admiral Souers’ decisions on dealing with the clandestine intelligence problem. On February 19, 1946, Souers signed CIG Directive No. 1, which appointed a committee to make a detailed study of the resources, facilities, and operating [Page 232] functions of the SSU that should be continued after its liquidation and their disposition. (Document 104) The committee, known as the Fortier Committee after its chairman, Colonel Louis J. Fortier, recommended essentially what Magruder had proposed: that the CIG take over the SSU, incorporate whatever parts would be useful in the new intelligence structure, and discard the rest. (Document 105)

By late March, a draft NIA directive embodying this basic approach had been discussed by the Intelligence Advisory Board, and on April 2, the National Intelligence Authority approved what became known as NIA Directive No. 4, “Policy on Liquidation of the Strategic Services Unit.” (Document 106) NIA Directive No. 4 was a major step toward the allocation of responsibility for foreign secret intelligence to the Central Intelligence Group. The formal charter and the grant of exclusive jurisdiction were still in the future; they would not come until the NIA approved National Intelligence Directive No. 5 on July 8, 1946 (Document 160). While leaving open the question of whether the functions and activities of the SSU should “be transferred to the Central Intelligence Group or other agencies in order that its useful assets may not be lost,” it authorized the Director of Central Intelligence to supervise the SSU’s liquidation, to make recommendations to the NIA on “the intelligence activities permanently required in the peace-time effort,” and to oversee the SSU’s interim operations until it was liquidated. Finally, the directive instructed the Director of SSU to “make available to the Director of Central Intelligence, upon his request, any facilities and services of SSU which may be useful” to the CIG.

For the comments of the Central Intelligence Agency’s first historian, who interviewed many of the participants in the formation of the national intelligence system, on the process of SSU liquidation, see Arthur P. Darling, The Central Intelligence Agency, page 99.

Under the arrangements thus established, the CIG and SSU organizations were partly merged, with some SSU personnel simultaneously holding assignments in the CIG while the process of selecting who and what were to be transferred to the CIG went on. By early June 1946, General Vandenberg had taken over as Director of Central Intelligence and the process seems to have been accelerated. Vandenberg quickly established an Office of Special Operations to run the new clandestine service and named a director brought over from the Army. By mid-September, the process had advanced far enough that Vandenberg formally notified the Secretary of State that the SSU would cease operations the following month and that “the Special Operations Office of the Central Intelligence Group will assume responsibility for the conduct of espionage and counter-espionage operations in the field.” (Document 128)

In the meantime, NIA Directive No. 5 of July 8, 1946, gave the Director of Central Intelligence a mandate to conduct “all organized Federal [Page 233] espionage and counter-espionage operations outside the United States and its possessions for the collection of foreign intelligence information required for the national security.” NIA Directive No. 5 was a milestone for the CIG and was particularly important to Vandenberg, because it marked out an area of common concern that at least on paper was exclusively within the province of the Director of Central Intelligence. In practice, it was not an uncontested monopoly. The quarrel with the Army over its insistence that it be allowed to conduct clandestine intelligence operations (an issue on which very few documents were found) was to drag on for at least another year and even figured in the debate over the National Security Act of 1947.

The CIG’s only other rival in the clandestine intelligence area was the Federal Bureau of Investigation, although the FBI appears never to have challenged the CIG for authority in the foreign intelligence field. In 1945, the FBI had been an active participant in the debate on the postwar national intelligence structure, and had actively pressed its plan for a “world-wide intelligence system.” The FBI appears to have been sidelined early in the competition, however, in part because the Bureau of the Budget was not sympathetic to Hoover’s overseas intelligence plan but more importantly, because President Truman was strongly opposed to any overseas intelligence responsibility for the FBI.

The FBI had some strong defenders in the Department of State, however. Spruille Braden, Assistant Secretary of State for Inter-American Affairs, was one of them. He interjected the issue into the Department of State’s debate over Colonel McCormack’s plan for a national intelligence organization, urging that the Department support the FBI’s continued presence in Latin America.

In mid-1946, when Vandenberg was in the midst of setting up the Office of Special Operations, dissolving the SSU, and getting the IAB and NIA to approve NIA Directive No. 5, the FBI was still responsible for clandestine intelligence collection in Latin America (since the SSU had inherited no capability in this area from the OSS). The subsequent difficulties between the CIG and the FBI, however, were concerned not so much with the latter’s presence in Latin America as with how and when it would depart from the region.

In May 1946, Hoover wrote in the margins of a report by one of his subordinates, describing a planning meeting at CIG to discuss clandestine intelligence: “The most I will agree to now is to stay in the Western Hem. for one year. I am more & more certain that this is a project we must get out of.” (Document 111)

By the following month, Hoover was planning to close down his Western Hemisphere operations even more quickly than that. On June 25, 1946, Hoover wrote to Vandenberg, commenting on the draft of what was to become National Intelligence Authority Directive No. 5 and concluding [Page 234] that “If this Directive is approved, it would appear to me that there would be no reason why the Federal Bureau of Investigation should not withdraw as rapidly as possible from Central and South America. I would appreciate it very much if you would advise me as to whether or not you concur in this interpretation by me.” (Text quoted in a memorandum from Ladd to Hoover, July 22, 1946; see the Supplement. The letter itself has not been found but the text as given in the memorandum appears to be complete.) Hoover repeated the statement in a second letter to Vandenberg a week later. (Letter from Hoover to Vandenberg, July 2, 1946; see the Supplement)

In the ensuing exchange of correspondence, Hoover and Vandenberg quickly found themselves at odds over the withdrawal issue, with Vandenberg arguing that an orderly changeover required the FBI to remain in Latin America for most of the fiscal year (then just begun) and Hoover continuing to insist on a quick departure, and making preparations to carry it out. (Document 113 and letters in the Supplement)

In response to growing Department of State concerns about the FBI’s plans for a rapid withdrawal from Latin America, Acting Secretary Acheson requested a special meeting of the National Intelligence Authority to try to slow down the process. At an August 7 meeting, the NIA agreed to send a letter to the Attorney General, asking him to direct the FBI to keep its intelligence personnel in Latin America until the CIG could arrange for an orderly replacement. (Documents 118 and 120) As a precaution, the NIA principals also instructed their executive secretary to prepare a standby letter for the President’s signature, addressed to the Attorney General and in effect directing him to order Hoover to negotiate a timetable acceptable to the CIG. The second letter was to be used, presumably, if the NIA’s own request failed. (Documents 119 and 122) Apparently it was never sent.

Within a few days, the Attorney General had spent almost 2 hours discussing the issue with the President, and Admiral Leahy had become the middle man in the negotiation between the FBI and the CIG. (Documents 123 and 124) The upshot was that Leahy informed Vandenberg on August 12 that the Attorney General and the President wished the changeover expedited and expressed his own belief that this “can be accomplished at a much earlier date than as at present scheduled and that it should be done.” (Document 125) This appears to have closed the book on the controversy and within a few months the FBI’s intelligence gathering role in the Western Hemisphere had come to an end.