CI Reader Volume 1 Chapter 3

Shortly after the Office of the Chief Special Agent in Washington was created in 1916, Joseph "Bill" Nye was appointed the first chief special agent. Nye, who also held the title of special assistant to the Secretary of State, reported directly to Secretary of State, Robert Lansing. The office worked out of two locations, Washington and New York, and operated on confidential funds from the Secretary's Office.

There was no formal reporting of the Office's activities and there was no listing of the Office in the Department's organization or telephone book. The size of the Office was never mentioned, but there were a handful of agents plus some "dollar-a-year" men who had volunteered their services-businessmen, lawyers and from other professions. They covered the entire United States in their operations, and some were sent overseas on special missions.

In 1916, as the United States entry in World War I loomed on the horizon, Secretary Lansing directed Nye to tap the telephones of the German embassy in Washington and report directly to him, daily. Who made the actual telephone tap installation was never mentioned but it was quite clear that the Office of the Chief Special Agent performed the monitoring operation.

One important result of the tap pertained to the Zimmerman Telegram. Nye was able to report in advance to the Secretary why the German am-bassador was going to call on him at 4 p.m. on January 31, 1917. At that meeting, the ambassador advised Lansing that the German government would launch unrestricted submarine warfare in the Atlantic the next day. Nearly four weeks later, President Woodrow Wilson addressed Congress, asking for a declaration of war.

Each morning at 8 the chief special agent placed on the Secretary's desk a memorandum summarizing information developed during the proceeding 24 hours. Many projects were apparently assigned or approved directly by the Secretary and were reported back only to him.

After World War I, the scope of the Office's special activities diminished greatly. Robert C. Bannerman replaced Nye in 1920. The dollar-a-year men departed, leaving a few agents working out of the New York office, with only the chief special agent left in Washington. In 1927 the chief special agent began reporting to the assistant secretary for administration, Wilbur Carr. However, he still retained his title of special assistant to the Secretary and did report directly to him on sensitive matters.

From 1920 to 1940, jurisdiction for investigation of passport and visa frauds was unclear. Neither Justice, the FBI nor Immigration claimed absolute authority. The Office began to do passport and visa fraud investigations, working with the U.S. attorneys in various cities to obtain prosecutions. In many of these cases, the passport aspect was incidental to a much larger problem-Soviet and German espionage. The investigation of passport frauds in New York led to the discovery of a Soviet intelligence network and succeeded in exposing for the first time the existence of such Soviet operations. In addition, a ring of professional gamblers who operated on the Atlanta run of most steamship lines was broken up through prosecutions on passport frauds.

The accomplishments through the turbulent years of 1920-1940 were carried out by a minimal staff of special agents; at times no more than six. In 1936, when Robert L. Bannerman entered on duty with the Office of the Chief Special Agent in New York City, the New York office had a special agent-in-charge and four special agents. The Washington office consisted of his father and four clerks; no agents were assigned there.

Some of the duties included passport and visa frauds; special inquiries on behalf of consular officers abroad; various inquiries on individuals and organizations of interest to the Department of State; liaison with all Federal agencies in New York, particularly Immigration and Customs; liaison with the police in New York and the Royal Canadian Mounted Police; arranging port courtesies for visiting foreigners; and providing protective arrangements in the U.S. for visiting heads of state.

All investigations were handled in person; none was conducted by correspondence. Each agent handled about 30 to 40 cases per month. For cases outside New York, the agents would share the travel.

It is understood that the attached memorandum deals only with the preliminary collection of information and investigations for the purpose of determining the importance of the information received. As soon as it appears that any laws have been violated or apparently violated the case would be turned over to the Department of Justice in the regular and orderly way.

The intent of the plan proposed is to keep this preliminary investigation free from delays and centralized in such a way as to keep the scattered threads together. It is also intended to keep the President accurately informed from day to day and the State Department constantly in touch with what is going on. The daily reports as summarized for the Counselor for the State Department should be forwarded in duplicate to the Secretary of the Treasury and the Attorney General.

A great amount of information, some of it important, much of it trivial and a considerable part of it, misleading or absolutely untrue, is coming to various departments of the Government regarding the activities of people throughout the United States, who are alleged to be endangering the friendly relations of this Government with other governments by undertaking unneutral enterprises, some of which are criminal and some of which are merely indiscreet. Almost all of the acts reported, if true, require careful consideration from the viewpoint of our relations with other nations before this Government's action in the matter is determined.

The information may be divided roughly into information as to acts violating a law and for which the offenders can be prosecuted in the courts, and acts which are not technical violations of law but which are calculated to place the United States in the position of permitting violations of neutrality if they are not stopped. Under the latter may properly come certain acts of accredited representatives of foreign governments. Some of these matters can only be handled by confidential representatives to the accredited heads of the foreign governments involved that such acts are distasteful to our Government and must be discontinued.

There is another class of acts committed by citizens of the United States, either entirely on their own initiative or through influences which cannot be definitely traced and which can only be stopped by publicity, and in some cases the matters involved would be of such a delicate nature as to make it inadvisable even to call attention to them in an official way.

This information is at present coming to the Department of State, the War Department, the Navy Department, the United States Secret Service and the Department of Justice. Doubtless other Departments, such as Commerce, Post Office, and even Interior, receive or could gather information as well. It is seldom that information received is sufficiently definite even to warrant investigation and it is only by piecing together information from a number of sources that any practical lead can be obtained. At present there is no assurance that the various scattered scraps of information which when put together make a clear case will go to the same place. For instance, one item may be received by the Secret Service, the Navy may receive other information-all of which, when put side by side, makes a fairly clear case, but none of which when scattered through the different Departments seems of importance. It is evident that a single office where all this information must be instantly transmitted without red tape is absolutely necessary to an effective organization.

In view of the diplomatic questions involved it seems obvious that the receiving office should be under the Department of State. Otherwise grave errors may be made by well meaning but misdirected efforts. After this information has been received there are at present three ways in which it may be taken care of: The Department of Justice, the Secret Service and the Post Office Inspectors. The Department of Justice is charged with the gathering of evidence by which the Attorney General may proceed to prosecute for a definite crime; the Secret Service is charged with the protection of the President and the protection against counterfeiting and customs frauds; the Post Office Department is charged with watching for violations of the United States mail. None of these Departments is legally or by organization fitted to handle these matters alone and efficient cooperation without a central directing force with authority to supervise their operations and to assign them their respective work cannot be accomplished practically. There is the further objection that a case turned over by the State Department to any one of these investigating departments or bureaus is lost sight of and its daily developments are unknown for weeks and sometimes months.

That an Executive Order be issued placing all these matters under the authority of the Department of State, directing all Government officials and Departments to transmit immediately to the Department of State any information received along these lines and to collect at the request of that Department any information asked for. The Order should also direct that the Post Office Department, the Secret Service and the Department of Justice place their men when requested at the disposal of the Department of State for the purpose of investigating these matters.

It is suggested that the Department of State should assign the Counselor, as being able to decide the legal questions which sometimes arise, without waiting for reference, as the head of the system, acting, of course, always under the Secretary of State and, through him, under the President himself.

It is not thought that any additional force for the Department of State would be required beyond possibly a thoroughly trustworthy stenographer, and if the work is unusually heavy a filing clerk, as it will be absolutely necessary to maintain a card index and to keep each case separate and up to day.

From Robert Lansing

From Walter Hines Page

The receipt of this information has so greatly exercised the British Government that they have lost no time in communicating it to me to transmit to you, in order that our government may be able without delay to make such disposition as may be necessary in view of the threatened invasion of our territory.

Early in the war, the British Government obtained possession of a copy of the German cipher code used in the above message and have made it their business to obtain copies of Bernstorff's cipher telegrams to Mexico, amongst others, which are sent back to London and deciphered here. This accounts for their being able to decipher this telegram from the German Government to their representative in Mexico and also for the delay from January nineteenth until now in their receiving the information. This system has hitherto been a jealously guarded secret and is only divulged now to you by the British Government in view of the extraordinary circumstances and their friendly feeling towards the United States. They earnestly request that you will keep the source of your information and the British Government's method of obtaining it profoundly secret but they put no prohibition on the publication of Zimmermann's telegram itself.

The copies of this and other telegrams were not obtained in Washington but were bought in Mexico.

I have thanked Balfour for the service his Government has rendered us and suggest that a private official message of thanks from our Government to him would be beneficial.

I am informed that this information has not yet been given to the Japanese Government but I think it not unlikely that when it reaches them they may make a public statement on it in order to clear up their position regarding the United States and prove their good faith to their allies.

President Woodrow Wilson discussing his dilemma at the time of the Zimmerman Telegram:

The first federal domestic counterintelligence program originated shortly before the United States entered World War I in 1917. The initial threat perceived by federal officials was the activity of German agents, including sabotage and espionage directed at the United States in the period before America entered the war. Although the neutrality laws were on the books, no federal statue made espionage or sabotage a crime. Attorney General Thomas W. Gregory proposed such legislation in 1916, but Congress took no action before American entry into the war. Nonetheless, the Executive Branch went ahead with development of a domestic security intelligence capability.

Several federal agencies expanded their operations. The Secret Service, which was established in the Treasury Department to investigate counterfeiting in 1865, had served as the main civilian intelligence agency during the Spanish American War. With $50,000 in War Department funds, the Secret Service had organized an emergency auxiliary force to track down Spanish spies, placed hundreds of civilians under surveillance, and asked the Army to arrest a number of alleged spies.⁹⁰ After the assassination of President William McKinley by an anarchist in 1901, the Secret Service was authorized to protect the President. Its agents were also assigned to the Justice Department as investigators until 1908 when Congress forbade the practice. In 1915 Secretary of State William Jennings Bryan decided that German diplomats should be investigated for possible espionage and he requested and received President Woodrow Wilson's permission to use the Secret Service.⁹¹

The military had performed extensive security intelligence functions during the Civil War, although operations were largely delegated to commanders in the field. When the military discontinued its surveillance programs after the War of Northern Aggression, as the South refers to the Civil War, Allan Pinkerton, who had worked for the War Department under President Abraham Lincoln founded a private detective agency. The Pinkerton agency and other private detective forces served both government and private employers in later years, frequently to spy upon labor organizing activities.⁹² In the year immediately before American entry into World War I, military intelligence lacked the resources to engage in intelligence operations. Therefore, preparation for war rested largely with the Secret Service, and it main competitor, the Justice Department's Bureau of Investigation.

In 1885 the Executive Office Building, then known as the
State, War and Navy Building in Washington, D.C.,
was the first home of Army Intellegince.
PHOTO

The Justice Department's investigative authority stemmed from an appropriation statue first enacted in 1871, allowing the Attorney General to expend funds for "the detection and prosecution of crimes against the United States."⁹³ The Attorney General initially employed several permanent investigators and supplemented them with either private detectives or Secret Service agents. When Congress prohibited such use of Secret Service personnel in 1908, Attorney General Charles J. Bonaparte issued an order authorizing creation of the Bureau of Investigation. There was no formal Congressional authorization for the Bureau, but once it was established, its appropriations were regularly approved by Congress. Members of the House Appropriations Committee debated with Attorney General Bonaparte over the need for safeguards against abuse by the new Bureau. Bonaparte emphasized, "The Attorney General knows or ought to know, at all times what they are doing." Some Congressmen thought more limits were needed, but nothing was done to circumscribe the Bureau's powers.⁹⁴

By 1916 Attorney General Gregory had expanded the Bureau's personnel from 100 to 300 agents, primarily to investigate possible violations of the neutrality laws. The Attorney General objected to the Secret Service's investigations of activities which did not involve actual violations of federal laws. However, when President Wilson and Secretary of State Robert Lansing expressed continued interest in such investigations, Attorney General Gregory went to Congress for an amendment to the Justice Department's appropriations statute which would allow the Bureau to do what the Secret Service had already begun doing. With the agreement of the State Department, the statute was revised to permit the Attorney General to appoint officials not only to detect federal crimes, but also "to conduct such other investigations regarding official matters under the control of the Department of Justice or the Department of State, as may be directed by the Attorney General." This amendment to the appropriations statute was intended to be an indirect form of authorization for investigations by the Bureau of the Investigation, although a State Department request was seen as a prerequisite for such inquiries.⁹⁵

Under the direction of A. Bruce Bielaski, the Bureau concentrated at first on investigations of potential enemy aliens in the United States. According to the authorative history of the Justice Department:

The Bureau of Investigation made an index of aliens under suspicion. At the end of March 1917, just before the entrance of the United States into the war, the chief of the Bureau submitted a list of five classes of persons. One class, ninety-eight in number, should be arrested immediately on declaration of war. One hundred and forty should be required to give bond. Five hundred and seventy-four were strongly suspected. Five hundred and eighty-nine had not been fully cleared of suspicion. Three hundred and sixty-seven had been cleared of specific offenses. Others, after investigation, had been eliminated from the lists.⁹⁶ Theoretically, the threat of dangerous aliens was the responsibility of the Immigration Bureau in the Labor Department. As early as 1903 Congress had enacted legislation requiring the deportation within three years of entry of persons holding anarchist beliefs or advocating "the overthrow by force or violence of the Government of the United States."⁹⁷ In early 1917 the immigration laws were amended to eliminate the three year limit and require deportation of any alien "found advocating or teaching the unlawful destruction of property...or the overthrow by force or violence of the Government of the United States."⁹⁸ Nevertheless the Immigration Bureau lacked the men, ability, and time to conduct the kind of investigations contemplated by the statute.⁹⁹

As the United States entered World War I, domestic security investigations were the province of two competing civilian agencies-the Secret Service and the Bureau of Investigation-soon to be joined by military intelligence and an extensive private intelligence network called the American Protective League.

The American Protective League
The American Protective League (APL) was a voluntary association of patriotic citizens acting through local branches which were established in cities and counties throughout the country to operate under the control of a National Board of Directors. The league was formally created on 22 March 1917, two weeks before the American declaration of war, and, on that same date, became designated as an auxiliary to the Bureau of Investigation of the Department of Justice.¹⁰⁰ The orginal idea for such an organization had been conceived by A.M. Briggs of Chicago, who then continued to function as Chairman of the National Board of Directors. The two other members of this national triumverate were Victor Elting and Charles Daniel Frey. The league itself was ultimately composed of some 250,000 male citizens, representing "every commercial, industrial, professional, social and economic level in American life."¹⁰¹ Moreover, its members were provided with credentials in the form of a membership card and badge showing that the holder was connected with the Department of Justice.¹⁰² These cards were actually issued in certain circumstances by the military intelligence division.

Although strongly supported during its entire career by Attorney General Thomas W. Gregory, the APL was never free from violent criticism. In June 1917, for example, Secretary of the Treasury William G. McAdoo, who was always on the alert to prevent any unauthorized use of the words "secret service" by an agency other than his own Secret Service of the United States, not only wrote to Gregory to register a complaint¹⁰³ but also to President Wilson himself in order to lodge a general protest against the whole organization. For the President, McAdoo even chose to compare the APL with the Sons of Liberty of the American Revolution "through which many injustices and abuses resulted."¹⁰⁴ This historical comparison by McAdoo is neither cogent nor valid. A more fitting description of the prejudicial side of the APL would be the New York Bar Association Report of 1919 which discussed vigilante associations in World War I:

Beyond any question, the APL did provide the military security officials of the War Department with a tremendous amount of invaluable assistance in the conduct of their many difficult investigative chores. It was found convenient during November 1917, therefore, after the headquarters of the league moved from Chicago to Washington, to commission Charles Daniel Frey, one of the three national directors, as an Army captain. While still remaining a league official, he was then assigned to the departmental military intelligence agency for the express purpose of processing all cases requiring APL action. This task soon assumed such proportions that a regular APL liaison group was established and, in April 1918, made a separate subsection of MI.3. The civilian chief of this new group was Urban A. Lavery, who continued to act in that role until September 1918, when he was replaced by Captain John T. Evans. By the time of the Armistice, the APL subsection was using the services of 39 clerks, stenographers and typists.

National Directors, American Protective League (l-r) Charles Frey,
Albert Briggs, Victor Elting. American Protective League Publication
PHOTO

Counterintelligence In World War I

Shortly after the declaration of war, Congress considerably strengthened the legal basis for federal investigations by enacting the Espionage Act of 1917, the Selective Service and Training Act, and other statutes designed to use criminal sanctions to assist the war effort. But Congress did not clarify the jurisdiction of the various civilian and military intelligence agencies. The Secretary of War established a Military Intelligence Section under Colonel Ralph Van Deman, who immediately began training intelligence officers and organizing civilian volunteers to protect defense plants. By the end of 1917 the MIS had branch offices throughout the United States to conduct investigations of military personnel and civilians working for the War Department. MIS agents cooperated with British intelligence in Mexico, with their joint efforts leading to the arrest of a German espionage agent during the war.¹⁰⁶

A major expansion of federal intelligence activity took place with the formation of the American Protective League, which worked directly with the Bureau of Investigation and military intelligence. A recent FBI study recounts how the added burdens of wartime work led to the creation of the League:

To respond to the problem, Attorney General Thomas W. Gregory and then Bureau Chief A. Bruce Bielaski, conceived what they felt might suffice to answer the problem. The American Protective League (APL) composed of well-meaning private individuals, was formed as a citizen's auxiliary to "assist" the Bureau of Investigation. In addition to the authorized auxiliary, ad hoc groups too it upon themselves to "investigate" what they felt were un-American activities. Though the intentions of both groups were undoubtedly patriotic and in some instances beneficial, the overall result was the denial of constitutional safeguards and administrative confusion. To see the problem, one need only to consider the mass deprivation of rights incident to the deserter and selective service violator raids in New York and New Jersey in 1918, wherein 35 agents assisted by 2,000 APL operatives, 2,350 military personnel, and several hundred police rounded up some 50,000 men without warrants of sufficient probable cause for arrest. Of the 50,000 arrestees, approximately 1,500 were inducted into the military service and 15,000 were referred to draft boards.¹⁰⁷

The FBI study also cites the recollection of an Agent of the Bureau of Investigation during World War I regarding the duplication of effort:

How did we function with relation to other agencies, both federal and state? In answering this query, I might say that while our relationship with the Army and Navy Departments was extremely cordial at all times, nevertheless there was at all times an enormous overlapping of investigative activities among the various agencies charged with winning the war. There were probably seven or eight such active organizations operating at full force during the war days and it was not an uncommon experience for an Agent of this Bureau to call upon an individual in the course of his investigation, to find out that six or seven other government agencies had been around to interview the party about the same matter.¹⁰⁸

The Secret Service opposed the utilization of American Protective League volunteers and recommended, through Treasury Secretary McAdoo, establishment of a centralized body to coordinate domestic intelligence work. The Treasury Department's proposal was rejected in early 1918, because of the objections of Colonel Van Deman, Bureau Chief Bielaski, and the Attorney General's Special Assistant for war matters, John Lord O'Brien. Thereafter the role of the Secret Service in intelligence operations diminished in importance.¹⁰⁹

During World War I the threat to the nation's security and the war effort was perceived by both government and private intelligence agencies as extending far beyond activities of enemy agents. Criticism of the war, opposition to the draft, expression of pro-German or pacifist sympathies, and militant labor organizing efforts were all considered dangerous and targeted for investigation and often prosecution under federal or state statutes. The federal Espionage Act forbade making false statements with intent to interfere with the success of military, attempting to cause insubordination, and obstructing recruitment of troops.¹¹⁰ With little guidance from the Attorney General, the United States Attorneys across the country brought nearly 2,000 prosecutions under the Espionage Act for disloyal utterances.¹¹¹ Not until the last month of the war did Attorney General Gregory require federal prosecutors to obtain approval from Washington before bringing Espionage Act prosecutions. John Lord O'Brien, the Attorney General's Special Assistant, recalled "the immense pressure brought to bear throughout the war upon the Department of Justice in all parts of the country for indiscriminate prosecution demanded in behalf of a policy of wholesale repression and restraint of public opinion."¹¹²

In addition to providing information for Espionage Act prosecutions, intelligence operations laid the foundation for the arrest, of which some 2,300 were turned over to military authorities for internment and the remainder released or placed on parole.¹¹³

War Department General Order

26 August 1918
This order reestablished the Military Intelligence Division (MID), General Staff when it re-formed the General Staff into four divisions designated: Operations; Military Intelligence; Purchase, Storage and Traffic; and Plans. Appointed to head the reestablished MID was Col. Marlborough Churchill. The functional assignment then given to the new Division was:

Gen. Marlborough Churchill
PHOTO

This division shall have cognizance and control of military intelligence, both positive and negative, and shall be in charge of an officer designated as the director of military intelligence, who will be an assistant to the Chief of Staff. He is also the chief military censor. The duties of this division are to maintain estimates revised daily of the military situation, the economic situation, and of such other matters as the Chief of Staff may direct, and to collect, collate, and disseminate military intelligence. It will cooperate with the intelligence section of the general staffs of allied counties in commection with military intelligence; prepare instructions in military intelligence work for the use of our forces; supervise the training of personnel for intelligence work; organize, direct, and coordinate the intelligence service; supervise the duties of military attaches; communicate direct with department intelligence officers and intelligence officers at posts, camps, and stations; and with commands in the field in matters relating to military intelligence; obtain, reproduce and issue maps; translate foreign documents; disburse and account for intelligence funds; cooperate with the censorship board and with intelligence agencies of other departments.

The term "negative" intelligence fell into gradual disgrace following World War I and was replaced by "counterintelligence."

From Albert Sidney Burleson

Dear Mr. President:
(Washington) November 30, 1918

I am this moment in receipt of your letter of date November 27th in which you express the opinion that the mail censorship is no longer performing a necessary function. I thoroughly concur in the view expressed and shall accept your letter as a direction to me to bring same to an end.

On the same day you wrote me I received a letter from Mr. Swagar Sherley, Chairman of the Committee on Appropriations, advising me that "it is the purpose of the Committee on Appropriations of the House of Representatives to begin hearings next Monday with the view of returning to the Treasury such appropriations and the cancellation of such authorizations, or parts thereof, granted in connection with the prosecution of the war, as no longer may be required under present conditions" and requesting me to take immediate steps to furnish him "the available information" upon which the Committee could base action looking to the accomplishment of its purpose. I will make known to the Chairman of the Committee on Appropriations the action which has been take in connection with mail censorship and also advise him that I have reduced the clerical force used in connection with the enforcement of Espionage and Trading with the Enemy Acts in so far as they relate to the Postal Establishment to the lowest possible basis. These are the only activities carrying appropriations which have been imposed on the Post Office Department during the progress of the war.

Faithfully yours,

A.S. Burleson

From Newton Diehl Baker

Dear Mr. President:
Washington, December 27, 1918

It is suggested that in view of the armistice, it would be advisable to modify the Executive Order of September 26, 1918, concerning the censorship of submarine cables, telegraph and telephone lines as far as it affects the telegraphic and telephonic censorship.

The pressure of military necessity is removed, and the activities of German agents in Mexico are no longer of a sort to require so elaborate and expensive an organization for their observation or control.

CONTINUE CHAPTER 3

From Robert Lansing

From Walter Hines Page

Counterintelligence: Pre-World War I

Counterintelligence In World War I

War Department General Order

From Albert Sidney Burleson

From Newton Diehl Baker