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CHAPTER
1 CONTINUED
German
Espionage Ring Captured
In January 1943, Kurt Frederick Ludwig and eight of his associates
were sentenced to terms of imprisonment ranging from five to 20
years after their convictions on charges of espionage in the United
States.
The case began when British Imperial Censorship at Bermuda intercepted
a letter destined for Spain. The writer of the letter signed it
as "Joe K." Laboratory tests of the letter found secret
writing on the reverse side that provided the identities and the
cargoes of ships leaving New York harbor for Great Britain. Subsequent
letters written by "Joe K." were intercepted. The return
address on all the letters was determined to be fictitious.
The FBI's investigation was going nowhere until March 18, 1941,
when two men attempted to cross a busy street near Times Square
in New York City. One, a middle-aged man wearing horn-rimmed glasses
and carrying a brown briefcase, carelessly stepped in front of a
taxi and was fatally injured. His companion, unconcerned over the
fate of his friend, grabbed the brown briefcase and swiftly disappeared
into the crowd.
The injured man was identified as Julio Lopez Lido. His body was
unclaimed for a time but the Spanish Consulate in New York finally
buried him. His companion, who ran from the scene of the accident,
called the hotel where the injured man was staying and asked that
his room be kept intact until further notice. In the meantime the
hotel management informed the local authorities, and they began
a check of the mysterious circumstances surrounding the traffic
accident.
Local officials discovered documents in the hotel room, which they
turned over to the FBI. The Bureau was able to determine that Lido
was actually Capt. Ulrich von der Osten, a Nazi army officer who
had entered the United States via Japan only a month prior to his
death. Capt. von der Osten was to direct the activities of a group
of spies in the United States.
The FBI was also able to identify the man who ran from the accident
scene as Kurt Frederick Ludwig. Ludwig continued von der Osten's
work by sending information to the Third Reich. Ludwig made a practice
of visiting the docks in New York Harbor and along the New Jersey
coast where, from his observations, he could report information
to Germany concerning the identities of ships and the nature of
their cargoes. He also visited various Army posts in the New York
area where he observed the strength of the armed forces, their identities,
the quality and quantity of their weapons, and any other details,
which he believed would be of interest and value to his superiors.
The FBI conducted surveillance on Ludwig to determine his contacts.
On one occasion during May 1941, he took an extended trip to Florida
accompanied by Lucy Boehmler, an 18-year-old girl of German origin,
who acted as his "secretary" and, as a matter of fact,
assisted him in preparing the secret messages to his superiors and
in maintaining detailed records covering his observations. On the
trip they passed through Army camps, aviation fields, and industrial
centers engaged in manufacturing wartime material.
When he arrived in Miami, Ludwig contacted Carl Herman Schroetter
who was waiting for the call, having been briefed by a Dr. Ottis
when Schroetter visited Germany two years before. It was through
Schroetter that Ludwig was able to report to Germany concerning
the progress being made constructing the naval air base near Miami.
Another of Ludwig's associates was Rene C. Froehlich, an enlisted
man in the US Army stationed at Governor's Island in New York Harbor.
Froehlich picked up Ludwig's mail when the latter was out of town.
Mrs. Helen Pauline Mayer had previously assisted Ludwig in gathering
information on aircraft construction from plants located on Long
Island. Her husband had returned to Germany via Japan and became
stranded there when Russia entered the war. Mrs. Mayer was preparing
to follow her husband to Japan when the FBI arrested her.
Hans Helmut Pagel and Frederick Edward Schlosser, two youths of
German origin and Nazi ideologies, assisted Ludwig in making observations
of various docks and military establishments in the New York area
and in mailing communications to the mail drops abroad. Karl Victor
Mueller also assisted in mailing letters.
Last, but not least, Maj. Paul Borchardt of the German Army helped
Ludwig prepare the secret writing messages. Borchardt served in
the German Army from 1914 to 1933, when he claimed he was discharged
because of his non-Aryan extraction. He entered the United States
as a refugee, claiming to have escaped from a German concentration
camp and aided by friends to escape the Third Reich. Borchardt held
lengthy conferences with Ludwig at Borchardt's residence. At the
time of his arrest, the FBI found secret writing materials in his
apartment.
During August 1941, Ludwig began a cross-country trek, surveilled
by the FBI. He traveled as a hunted man, forcing his car along country
roads through the Midwest at speeds of 90 miles-per-hour. Using
the back roads became a chore for Ludwig who, when he stopped at
a cabin in Yellowstone Park, decided to destroy any incriminating
evidence he had but was not successful. Proceeding to Missoula,
Montana, the next day he stored his automobile, shipped his entire
luggage except for the bare necessities to relatives on the East
Coast, and continued his journey by bus. A search of his car revealed
an expensive shortwave radio receiver.
In view of indications that Ludwig was thinking of departing the
United States when he reached the West Coast, the FBI at Cle Elum,
Washington, arrested him on August 23rd.
Ludwig and his associates were subsequently indicted in Federal
Court in New York City on charges of conspiracy to violate the Espionage
Statutes. Ludwig, Froehlich, and Borchardt were sentenced to 20
years each. Mayer, Mueller, and Pagel each received 15 years while
Schlosser received a sentence of 12 years, Schroetter received 10
years, and Lucy Boehmler was sentenced to five years.
Counterintelligence Operations
In line with his accepted responsibility for providing necessary
intelligence to the War Department and US Army, the Assistant Chief
of Staff (ACofS) G-2 had always been called upon to perform the
opposite mission of preventing our own military information from
falling into improper hands. This latter function naturally included
required staff supervision over all counter-measures taken to detect
espionage, sabotage, or subversion aimed at any part of the military
establishment. While the need for the Military Intelligence Division
(MID) to explore the foreign aspects of such matters was duly recognized
by higher authority, these same authorities kept insisting that
military personnel should not become implicated in domestic counterintelligence
unless the operations were plainly traceable either to the Army
itself or to industrial plants engaged in defense production. Nevertheless,
the Joint Army-Navy Board was permitted to prepare an extensive
plan for censoring international communications to and from the
United States in the event of war, and the departmental intelligence
officials participated actively in this significant security effort.25
The difficult problem of how best to protect personnel of the military
establishment from subversion or potential subversion likewise soon
came to the fore. Derived generally from a provision contained in
the so-called Hatch Act of 2 August 1939, making it illegal to employ
in any government capacity persons holding membership within a "political
party or organization which advocates the overthrow of our constitutional
form of government," the Army had adopted a firm policy of
excluding Communists and Communist sympathizers entirely from its
ranks. After passage of the Selective Training and Service Act on
16 September 1940, however, this policy needed careful reexamination
in light of enforced induction into the military service. Hence,
during June 1941, it was announced that pending a final determination
in each individual case, "persons strongly suspected of membership
in the Communist Party or who appeared to be consistent followers
of the Communist Party line" would not be assigned on sensitive
duty or granted an officer commission.26
At the same time, instructions were issued covering the proper processing
of discharges for subversive Civil Service personnel,27
while correspondence was initiated between the ACofS G-2 War Department
General Staff (WDGS) and key G-2s in the field about the possibility
of discharging subversive enlisted men under current Army regulations.28
With this then representing the general military security situation
just prior to Pearl Harbor, the sudden opening of the war found
the Counter Intelligence Branch of MID divided into six main sections
designed respectively to handle matters bearing upon Domestic Intelligence,
Investigations, Plant Intelligence, Safeguarding Military Information,
Special Assignments, and Corps of Military Police. It was not only
a separate and distinct element established directly under the ACofS
G-2 but also on the same level as the corresponding Intelligence
Branch.29 On the other hand, it
had recently lost several earlier functions through relinquishing
its public information duties to the newly organized Bureau of Public
Relations and transferring a number of operational activities to
the Office of the Provost Marshal General. Effective 1 January 1942,
it also witnessed the favorable consummation of a major counterintelligence
project for the US Army in the development of a Counter Intelligence
Corps (CIC) from the former Corps of Intelligence Police. The ACofS
G-2 could thus assume direct staff control over a suitable troop
means to uncover and investigate espionage, sabotage, or subversion
within the military establishment.
The most pressing military security problem right after Pearl Harbor
was to achieve a satisfactory coordination of effort among the principal
governmental agencies involved. The declaration of martial law in
Hawaii, formation of Defense Commands on both coasts of the United
States, and imperative need to provide adequate protection for the
Panama Canal had altered security conditions so that the current
MID-ONI-FBI Delimitation Agreement was no longer strictly applicable.
Gen. Lee, the Acting ACofS G-2, therefore, took immediate steps
to ascertain J. Edgar Hoover's personal views regarding the effect
of martial law on FBI jurisdiction within the territory of Hawaii.
The FBI chief replied that he considered his agency was now relieved
of entire responsibility for conducting investigations of "espionage,
sabotage and all other national defense operations" therein.
He had already instructed the Special Agent in Charge in Honolulu
to make available to the appropriate military authorities all information,
data, and material at hand, while affording them the full benefit
of experience and observations gained before the war declaration.
Furthermore, this same Special Agent in Charge was not to start
any new investigations or carry out any additional investigative
work, which might be considered as impinging upon the national defense
field.30
Despite this indication of willing cooperation between the FBI
and military intelligence officials in Hawaii, there was still a
considerable amount of uncertainty and friction with reference to
the exact delineation of investigative responsibilities that should
hold among the numerous departmental counterintelligence groups
functioning throughout the Western Hemisphere. This was especially
true on the West Coast of the United States for security activities
taking place in the Western Command and Alaska.31
Finally, effective 9 February 1944, Gen. Raymond E. Lee, Adm. Theodore
Starr (Ping) Wilkinson, and Hoover executed a new Delimitation Agreement
to replace the previous one of 28 June 1940. Although this latest
agreement retained most of the basic features of its predecessor,
it also listed three different situations under which a national
security plan might be called upon to operate. These were during
a "Period of Martial Law," "Periods of Predominant
Military Interest Not Involving Martial Law" and "Periods
of Normal Conditions."32
Under this new agreement, where there was already martial law,
as in Hawaii, the Military Commander admittedly possessed complete
authority to coordinate all intelligence activities of governmental
agencies and assign missions to them within the limits of their
respective personnel and facilities. In areas prominent only as
potential theaters of operations, however, such as the West Coast
of the United States and Alaska, the Military Commander was now
limited to requesting information from the three participating agencies
"as he may desire and they may be able to furnish." Moreover,
during periods of normal conditions, MID would continue to perform
the following security missions:
1. Investigation and disposal of all cases in these categories
(espionage, counterespionage, subversion, and sabotage) in the military
establishment including civilian employ, military reserve, and military
control.
2. The investigation of cases in these categories involving civilians
in the Canal Zone, the Republic of Panama, the Philippine Islands,
and the Alaskan Peninsula and islands adjacent including Kodiak
Island, the Aleutian and Probilof Islands, and that part of the
Alaskan Peninsula, which is separated by a line drawn from Iliamna
Bay northwest to the town of old Iliamna and thence following the
south shore of Lake Iliamna to the Kvichak River to Kvichak Bay.
3. Informing the FBI and ONI of any other important developments.33
Meanwhile, there were other important develop-ments occurring in
connection with the overall military security effort. On 8 December
1941, the Secretary of War ordered into effect certain portions
of the existing Army-Navy Board plan for censoring international
communications, and, shortly thereafter, the President requested
Hoover to assume temporary charge of all national censorship operations.34
The approved plan called for the Army to exercise censorship control
over postal and landline communications under a civilian Director
of Censorship but the War Department was far from ready to accomplish
either of these difficult tasks except on a very small scale. Although
MID had recently taken several useful steps in preparing for possible
wartime censorship, its censorship section still consisted of only
two officers. Nevertheless, a Basic Field Manual 30-25 (Counterintelligence),
which presented detailed instructions for the initiation and conduct
of military censorship, was in troop hands,35
and a modified form of military censorship was operating successfully
for the American units stationed at bases leased from the British
in March 1941.
The Army commenced a token showing of postal censorship at a number
of selected post offices across the nation on 13 December 1941.
Shortly afterwards, upon passage of the First War Powers Act, the
President created an Office of Censorship and appointed Byron Price
to be its Director. The same Executive Order also formed a Censorship
Policy Board, composed of the Postmaster General (Chairman), Vice
President, Secretary of the Treasury, Attorney General, Secretary
of War, Secretary of the Navy, and the Directors of the Office of
Government Reports and the Office of Facts and Figures, to advise
Price on policy matters and provide for necessary coordination and
integration of censorship activities among all interested agencies
of the US Government.36
Several Army officers, especially trained in censorship
work, were then assigned to the Office of Censorship for full-time
duty, including Col. (later Maj. Gen.) W. Preston Corderman, who
was promptly designated by Price as Chief Postal Censor. MID, therefore,
soon became deeply embroiled in all phases of both the national
and military censorship efforts.
MID responsibilities relative to visa and passport control operations
were likewise expanding at a rapid rate. This important security
progress, based upon a Presidential Proclamation dated 14 November
1941, was being administered by the Department of State and required
War Department cooperation mainly in the form of detailing military
representatives to serve on a wide variety of working committees.
Theoretically most of the operational functions concerning this
program had already been transferred from MID to the Office of the
Provost Marshal General (PMG) but, because of shortages in personnel
and funds available for such purpose, orders were not issued to
implement the directed changes until 5 December 1941. Even then
it was estimated that the PMG offices of the corps areas would not
be ready to perform any travel control investigations for more than
three months.37 Thus, MID Military
Intelligence Service (MIS) not only continued to process all travel
control requests submitted to the War Department for clearance but
also participated fully in the numerous interagency committees connected
therewith.
The PMG was similarly occupied at this same time in taking over
several other domestic investigative functions from MID, such as
those pertaining to applications for civilian employment within
the military establishment or in industrial facilities working on
classified projects for the War Department. Since MID was the only
departmental agency authorized to contact the FBI regarding Army
security matters, it also remained actively involved. Besides, the
ACofS G-2 insisted on gaining complete control of counterintelligence
investigations showing any evidence of subversion or disloyalty
and still retaining the sole function of clearing all applicants
for Army commissions. With the CIC growing steadily and at CIC section
of the Counter Intelligence Group actually performing at CIC Headquarters,
MID was now able to direct the accomplishment of security investigations
of every type, even those of a most sensitive nature.
The War Department and Army reorganization of 9 March 1942, which
created the MIS and formed Headquarters Army Ground Forces (AGF),
Army Air Forces (AAF), and Services of Supply, Army Supply Forces
(SOS (ASF)), served to complicate the counterintelligence picture
in many different ways. It soon became clearly apparent that the
entire program stood in need of a thorough reexamination, especially
from the standpoint of command responsibility and coordination procedures.
A new basis War Department directive, therefore, on the subject
of "Counterintelligence Activities," was prepared and
issued to the major commands during June 1942. This directive not
only announced that the MIS "will supervise all counterintelligence
activities of the War Department" but also cautioned field
commanders they would be held responsible for "counterintelligence
coverage within their commands" to include taking the following
measure:
Establishment of a Counter Subversive system; transmission of information
emanating from this source; preliminary investigation of complaints
or suspicion of subversive activities; safeguarding of information
which, if released, would be detrimental to the war effort; and
reference of cases arising within these categories to Counter Intelligence
Corps representatives for investigation.38
Under these new conditions the departmental intelligence authorities
could continue to claim a high degree of direct control over counterintelligence
activities at certain fixed stations within the zone of interior,
such as schools, training commands, supply establishments, etc.,
but this was no longer true for the more flexible ground tactical
or air commands. Commanders of the latter elements were thus instructed
to forward prompt security reports to MIS simultaneously through
both the intelligence and command channels of communications. Likewise,
with reference to the extent of counterintelligence operations that
should be carried out by the Headquarters of AGF, AAF, SOS (ASF),
and major overseas commands, the War Department directive declared,
as follows:
d. The Commanding Generals of the Ground Forces, Air Forces and
Services of Supply may establish and maintain a counterintelligence
staff organization for the purpose of a liaison between their
respective headquarters and the War Department Military Intelligence
Service, and for such staff counterintelligence field inspections
and other special operations as the Commanding Generals of the
Ground Forces, Air Forces and Services of Supply may direct.
e. Beyond the territorial limits of the United States commanders
of Theaters of Operation, Base Commands, Defense Commands, Departments
and units of any type not under the control of the foregoing commanders
are responsible for counterintelligence security coverage within
their units, and will prescribe methods of operations. They will
keep the Military Intelligence Service, War Department, fully
informed of conditions arising within their commands.39
In June 1942, the MIS Counterintelligence Group consisted of four
main subgroups representing Administration, Domestic Intelligence,
Safeguarding Military Information and Operations, with each of these
subgroups divided into several functional branches or sections.
According to the newly imposed concept, although the ACofS G-2 remained
charged with "policies concerning" military security matters,
he was not supposed to exercise any direct supervision over the
Counterintelligence Group of MIS. This proved to be a most impracticable
arrangement because the principal officers of that group were not
only members of policymaking security committees but also acted
regularly as departmental liaison and coordinating authorities with
other counterintelligence agencies of the government. Hence, Gen.
George Veazey Strong simply ignored the existing instructions and
chose to maintain a close personal relationship with all key MIS
officers occupied in security matters. Officially, however, an additional
echelon of command had now been placed between the ACofS G-2 and
his Counterintelligence Group in the person of the Chief, MIS.
Besides accomplishing customary administrative tasks for the Group
Chief and functioning as an office of record, the Administrative
Branch of the Counterintelligence Group had been given a number
of special assignments not normal to operations of the other three
branches. Personnel of this branch were thus often utilized by the
Group Chief to assist in the preparation of counterintelligence
summaries or estimates.40
There were also several different sections or branches loosely
grouped together under the broad designation of Domestic Intelligence
for performing the following assigned tasks:
1. Subversive Agents Section_to maintain a card index file on subversive
agents and thereby keep MIS abreast of the latest developments within
that particular field over which FBI had primary jurisdiction.
2. Research and Summary Section_to act as the official intermediary
between MIS and other governmental agencies in determining the amount
or kind of security information that should be furnished to each.
3. Counterintelligence Corps Section_to execute special security
missions for the combat arms of the Army.
4. Visa and Passport Branch_to provide information from MIS files
for guiding the State Department in the issuance of visas, passports,
exit permits, and other related travel instruments.
5. Investigative Review Section_to study reports of security investigations
and submit recommen-dations regarding the final disposition of subversive
or potentially subversive individuals under War Department control.
6. Evaluation Branch_to present, either periodically or upon specific
request, summaries and estimates of the counterintelligence situation,
including such matters as fifth-column activities and racial anta-gonism
within the United States or its possessions.
7. Plant Intelligence Branch_to prepare studies on counterintelligence
matters in connection with American war industry and additionally,
to process alien personnel security questionnaires and pass upon
requests for permission to visit important war production plants.41
Likewise, four main subordinate branches were currently assembled
under the general heading of Safeguarding Military Information,
as follows:
1. Censorship Branch_to prevent the passage of any military information
of value to the enemy and evaluate intercepted information for appropriate
dissemination.
2. Safeguarding Military Information Branch_to establish policies
and procedures designed to prohibit the enemy from obtaining information
about our own forces.
3. Security Branch_to supervise the security of military information
through physical means and educate all personnel in the importance
of this special aspect of information protection.
4. Communications Branch_to handle matters bearing upon clandestine
radio stations, interception measures, radio countermeasures, technical
facilities for monitoring, development of security devices, Aircraft
Warning Service, and identification or recognition methods.42
As its name implies, the Operations (later Investigation) Branch
of the Counterintelligence Group was primarily concerned with the
actual conduct of security investigations. It not only executed,
directed, and coordinated all investigations of such type falling
under the jurisdiction of MIS but also received reports of similar
investigations performed in the field by Corps Area and Department
counterintelligence personnel. During the first seven months of
1942, due to the rapid Army expansion and consequent tremendous
increase in the military security progress, the workload of this
branch doubled in total size. On 30 July 1942, therefore, the Group
Chief found it necessary to submit an urgent plea to the Chief,
MIS, for 100 additional clerks and stenographers. In justifying
this extraordinary request, he called attention to the following
investigative chores that were now facing his Operations Branch:
a. High priority request to clear 300 officers, enlisted men
and civilian employees for duty in OPD.
b. Chief Signal Officer forwarding approximately 1000 names per
week for clearance to attend Radar Schools.
c. Army Air Force forwarding at least 1000 names per week for
clearance to receive training on classified equipment, such as
the bombsight.
d. AGO forwarding the names of all newly appointed officers,
graduates of Officer's Training Schools and others at a rate of
approximately 12,000 per month. With 25,000 names of newly commissioned
officers still awaiting clearance, the branch is accumulating
an average of five new cases for every one it completes.43
By early 1943, it had become manifest that the MID (MIS) counterintelligence
effort was in prompt need of a major overhaul and readjustment.
The matter remained extremely complicated, however, because of the
continuing indefinite status of MIS in relation to MID, as well
as persistent pressures from higher authority for the departmental
agency to relinquish all domestic intelligence activities and confine
its counterintelligence functions strictly to policy supervision.
This type of pressure had already taken the form of a detailed survey
made by Bureau of the Budget management personnel covering MIS operations
with particular reference to domestic intelligence and safeguarding
military information.44 The study had resulted in a number
of conclusions and recommendations pointing toward the desirability
of combining certain operational counterintelligence duties within
MIS and transferring several others to outside agencies.
The Chief of the Counterintelligence Group, MIS, not only registered
a substantial exception to most of these Bureau of the Budget recommendations
but also noted that they seemed to be "based almost entirely
on consideration of procedures and economy and overlooked the principles
and techniques of intelligence."45
Notwithstanding, on 26 November 1942, the Deputy Chief of Staff
forwarded a memorandum to the ACofS G-2 and PMG instructing them
jointly as follows:
1. PMG to discontinue the use of MIS files in making future loyalty
checks and deal directly with the FBI. Similarly, PMG is now authorized
to receive any investigative reports from FBI that might assist
in discovering plant subversives.
2. MIS to rely entirely on FBI summaries, special reports and personal
contacts to satisfy that portion of the counterintelligence function
previously obtained from individual FBI investigative reports.
3. MIS to discontinue the receipt and filing of all FBI investigative
reports unless they fall under the following classification:
a. Reports of subversive activities outside the United States.
b. Reports of subversive activities implicating a member of the
military forces, a person just entering the military forces or
an employee of the War Department.
4. Plant Intelligence Branch of the Counter-intelligence Group
to be abolished.
5. Present relationships between G-2 and FBI to remain unchanged,
except for the direct PMG-FBI communication as described.46
In compliance with this terse directive, Gen. Strong ordered immediate
abolishment of the Plant Intelligence Branch and assigned its residual
research functions to the Evaluation Branch. Since the ramifications
of the rest of the directive were so far reaching and even threatened
to compromise the terms of the current MID-ONI-FBI Delimitation's
Agreement, which was originally based on an Executive Order, he
felt further constrained to inform the Deputy Chief of Staff along
the following lines:
With reference to paragraph 3 of your directive, it is to
be noted that an exact and literal compliance will include discontinuance
and filing of all FBI investigative reports now received from FBI
on the following subjects:
a. Espionage.
b. Counter Espionage.
c. Counter Intelligence.
d. Sabotage.
e. The activities of registered foreign agents and non-registered
foreign agents.
f. Unethical conduct of military attaches or other accredited
foreign personnel.
g. Subversive activities occurring on military reservations in
which military personnel are not implicated.
h. Subversive activities involving destruction of War Department
property by sabotage or other means.
i. Subversive activities resulting in interference with transportation
of raw materials or the production and distribution of war material.
j. Subversive acts committed by civilians outside the military
establishment that may affect adversely members of the military
establishment.
k. Activities of individuals suspected of propaganda influencing
military personnel under military control.
l. Investigative reports of a similar nature pertaining to subversive
activities within the United States but not implicating members
of the Army or employees of the War Department.47
While Gen. Strong may have been inclined to overstate his case
in this particular protest, it does seem plainly apparent that the
departmental administrative authorities had not thought the matter
out to a proper conclusion before issuing their 26 November 1942
directive. That they were really more interested in saving personnel
spaces than in giving careful consideration to the difficult functional
problems of the ACofS G-2 also becomes evident in view of the following
inadequate reply he received from them on 2 December:
2. This directive will not be interpreted to authorize the
continuation of present practices, which involve the scrutinizing,
and filing of a vast number of FBI individual investigative reports.
3. Questions on the procedure to be followed in transferring
the files can be answered by referring to the contents of the MIS
study prepared by the Bureau of the Budget and forwarded to G-2
under date of October 17, 1942.48
The irony is that at the very time the Deputy Chief of Staff's
Office was trying so determinedly to reduce MID (MIS) domestic counterintelligence
activities, the agency was gathering added responsibilities within
the same field from other sources. For example, during May 1942,
the Deputy Chief of Staff, acting for the Secretary of War, authorized
the ACofS G-2 to form a Special Information Branch in MIS to monitor
telephone conversations taking place at all War Department buildings.
This not only called for the installation of a considerable amount
of special switchboard equipment but also required a force of 10
officers, 53 enlisted women, and one civilian in order to perform
the monitor duty. With a total of 12,000 lines made available to
them for surveillance, these personnel were soon averaging about
3,000 such missions per day and submitting as many as 4,550 reports
for a single month of activity.49
Other instances of this marked trend toward MID (MIS) acquiring
further counterintelligence responsibilities were:
1. In May 1942, there were four interdepartmental primary committees
and five review committees operating under the Visa Division of
the State Department, with MID (MIS) represented on each. Since
plans were being made to require all American seamen traveling to
and from foreign ports to hold valid passports, the Passport Division
of the Department of State appointed a new interdepart-mental committee
for the purpose of processing such applications. This meant the
assignment of one more MID (MIS) officer on travel control duty.
Likewise, when a Maritime Labor Committee composed of the Secretary
of State, Attorney General, and War Shipping Administrator became
gravely disturbed over the alien seamen situation, especially in
regard to their immigration status, jumping ship, deportation, etc.,50
it led to the creation of another inter-departmental committee charged
with "considering problems incident to the entry into the United
States of all aliens and citizens brought by neutral or chartered
vessels." Lemuel Schofield was designated by the Attorney General
to function as chairman and coordinator for this committee, with
Lt. Col. G.D. Dorroh, Chief of the Visa and Passport Branch of the
Counterintelligence Branch, and MIS named by the Secretary of War
to represent the War Department on it.51
2. Effective 2 June 1942, because of the ever-increasing demands
for trained censorship officers, the ACofS G-2 was granted permission
to establish a Censorship School at Fort Washington, Maryland, under
the direction of the Counterintelligence Group, MIS. It was then
estimated that a minimum of fifteen additional officers would be
needed for operating this new facility.52
3. During August 1942, when the US and Japanese Governments entered
into an exchange agreement to repatriate certain interned nationals,
it became necessary for MID (MIS) to join with the State Department,
ONI, and FBI in screening all personnel slates pertaining thereto.53
4. On 13 November 1942, the function of deter-mining what war production
information should be released to various governmental or non-govern-mental
agencies, as well as maintaining uniform security standards for
information of that nature, was transferred from the Bureau of Public
Relations (BPR) to MIS. A "Committee for Protection of Information"
had been performing this counterintelligence task in the BPR since
11 July 1942.54
It must not be presumed from the continuing drive by higher authority
to reduce the MID (MIS) domestic security effort that the Counterintelligence
Group was engaged solely in operational-type activities. As a matter
of fact, one of the most difficult features of the entire affair
lay in attempting to separate its so-called general staff functions
from those that were considered to be operational. For example,
the Evaluation Branch of the Counterintelligence Group was a true
research unit and directly involved in the production of military
intelligence both for departmental and Army use. Having been charged
with maintaining "a comprehensive picture of the total subversive
situation prevailing in the United States and territories wherein
American troops are stationed," it not only prepared studies
on subversive elements but also disseminated finished intelligence
bearing upon that subject in the form of numerous reports, bulletins,
and summaries. To assist in accomplishing this mission, the branch
established close liaison with corresponding units in "ONI,
FBI, Office of National Censorship, Department of Justice, Internal
Revenue and Department of State" and constantly sought to acquire
an intimate knowledge of the following "subversive or potentially
subversive groups":
1. Nazi
2. Communist
3. Fascist
4. Japanese
5. Falange
6. Hungarian
7. Ukranian
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8. White Russian
9. Vichy France
10. Korean
11. Bulgarian
12. Syrian
13. Domestic Fascist
14. Negro55
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With MID (MIS) already in the process of being gradually divested
of its domestic intelligence function, there was a natural and parallel
expansion of ASF operations within the same field.56
When ASF (SOS) was first created in March 1942, the ACofS G-2 still
retained direct control over military intelligence activities throughout
the US Army, so there appeared little need for an intelligence unit
at Headquarters, ASF, except for a small group capable of handling
local security matters. By April 1943, however, it was obvious that
some sort of a central G-2 agency would be required to satisfy ASF
responsibilities in connection with PMG, Service Command, and National
Guard Bureau domestic intelligence activities, as well as to take
positive steps in meeting the growing demand for better coordination
of the technical intelligence effort. Effective 20 April 1943, therefore,
the Commanding General announced the establishment of a Security
and Intelligence Division in Headquarters, ASF, and designated Col.
James M. Roamer to be its director. Shortly thereafter, the name
of this new staff unit was shortened to the Intelligence Division,
and it became organized into a Technical Intelligence Branch, Counter
Intelligence Branch, and Security Control Group.57
Even though the Director of Intelligence, ASF, was now being held
responsible by his own commander for "military intelligence
in the Army Service Forces," MID (MIS) continued to exercise
a considerable degree of direct staff supervision over intelligence
operations within the service commands, as well as the CIC personnel
assigned there. Col. Leslie R. Forney, the newly designated Chief
of the Counterintelligence Group, MIS,58 however, had
embarked upon a program aimed at curtailing several activities which
he felt were either a duplication or might better be decentralized
to some other agency of the military establishment. For example,
arrangements were soon completed to transfer a highly trained group
of CIC officers and enlisted men to the Manhattan Project without
reserving any MID (MIS) control over them, and, early in July 1943,
all operational security functions that would normally be executed
by a service command for the Washington, D.C. area were shifted
from MIS to Headquarters, Military District of Washington.59
The politically involved question of controlling subversive or
potentially subversive personnel, notably Communist Party members
and consistent followers of the Communist Party line, kept plaguing
the department security officials.60 A fixed policy in
this regard had been announced on 19 May 1942, which not only emphasized
the practice of assigning suspect enlisted men to elements other
than the Army Air Forces, Signal Corps, Chemical Warfare Service,
Armored Force, Tank Destroyer Command, or Airborne Command but also
formed special units within the service commands for transferring
"potentially more dangerous individuals" and giving them
duties "with no opportunity of effective subversion."61
Likewise, in bending every possible effort to keep disloyal personnel
from holding commissions as officers, the following instructions
were issued:
When careful and complete investigation has established that
a commissioned officer, whether on active duty or not, is so lacking
in loyalty, character, integrity or discretion that for him to
continue to hold a commission in the Army of the United States
is considered a detriment to the National war effort, recommendation
for his discharge will be forwarded immediately to the War Department.62
The list of elements to which potential subversives could not be
assigned was shortly extended to include the Amphibious Corps, Ports
of Embarkation, Staging Areas, Officer Candidate Schools, and any
unit or organization alerted for foreign service or service in Alaska.
The problem of preventing Communists from gaining admittance to
the Officer Candidate Schools, however, continued to pose serious
difficulties because under the current system commissions were being
granted at these schools automatically to all graduates and without
any prior reference to MID (MIS) for a security check.63
Moreover, with the Party line having undergone a convenient switch
to provide for full cooperation with the Allied war effort right
after the German invasion of Russia, more and more Communists and
fellow travelers were seeking to qualify for entrance into such
schools. As a matter of fact, strict application of the adopted
policy of segregating potential subversives had already been softened
somewhat, even for noncommissioned officers, in an avowed attempt
to conserve manpower.64
Outside pressures were now rapidly building up in all directions
with reference to this sensitive subject. It was argued, for example,
that the segregation policy had merely tended to relieve Communists
from the hazards of combat duty and even encouraged the dissemination
of Communist doctrine throughout the country.65 Although
the Chief of Counterintelligence Group, MIS, still held that every
effort should be made to minimize the number of Communists receiving
commissions, he believed officers of such type who were already
commissioned should "no longer be discharged except in aggravated
cases."66 On the other hand, early in April 1943,
the ACofS G-2 forwarded a SECRET directive through intelligence
channels to the major commands reiterating among other things that
persons proved to be, or suspected of being, Communists or adherents
to the Communist Party line would not be permitted to attend or
to remain in Officer Candidate School.67
Despite the fact that the recipients of this new letter were cautioned
to exercise extreme care in preserving its security and greatest
discretion in carrying out its provisions, the Communist Party launched
an immediate and violent propaganda campaign against Army counterintelligence
procedures. Spearheaded by the Veterans of the Abraham Lincoln Brigade
organization, this campaign took the form of heavy attacks in the
so-called liberal press along with a flood of critical letters addressed
to the White House, Cabinet, Congress, and high officials of the
War Department.68 Accordingly, some 40 cases concerning
individuals of alleged subversive connections who had either been
removed from Officer Candidate Schools or failed to receive a commission
upon graduation, were resubmitted to the Secretary of War's Personnel
Board for the stated purpose of determining whether or not any injustice
had occurred. These cases were also subject to final review by the
Office of the Deputy Chief of Staff, acting in consultation with
the Assistant Secretary of War. While the Personnel Board, under
the chairmanship of former Chief of Staff Gen. Malin Craig, sustained
all but one of these earlier actions, the final reviewing authority
confirmed only 25 of them.69 In registering an emphatic
dissent from a recent request for reconsideration forwarded to his
Board by the Office of the Assistant Secretary of War, which recommended
that three Communists should be granted Army commissions, Gen. Craig
seems to have summed up the entire matter in most expressive terms,
as follows:
This is one of a number of cases of individuals who have been denied
commissions because of Communistic ideas, affiliations, or leanings.
For twenty years or more the policy of the War Depart-ment, in time
of peace, has been to prevent men of this character serving in the
Armed Forces. Since the war they have been allowed to fight for
the country through induction or enlistment. While they should be
allowed to fight for the country that is not, of itself, any reason
why they should be commissioned. It is a well-known fact that men
of this type cannot be trusted in many such respects, in spite of
what they may profess at any particular time. They will deny Communistic
affiliations when it suits their purpose, or even refrain from such
affiliations when it suits their purpose or the orders of their
leaders, thus advancing the general cause. This unreliability, if
nothing else, is sufficient cause for excluding them from commissions
in the officers' corps of the Army. It is further unwise to introduce
into the Armed Forces as commissioned officers, men who are tainted
with political ideas which are abhorrent to the vast majority of
the citizens of the United States, whose whole-hearted allegiance
to the United States is at least questionable, and whose methods
are such as to resort to insidious and undercover operations to
gain their ends.70
With the military security effort now coming under increased criticism
from all sides, the Deputy Chief of Staff, on 16 July 1943, directed
the Inspector General, Maj. Gen. Virgil L. Peterson, to conduct
a thorough investigation of the situation and make appropriate recommendations
on:
The existing organization, scope of activities, and operating procedures
of the Directors of Intelligence of the Service Commands and their
offices, including military personnel allocated by the Service Commands
for such duty, counter intelligence corps police attached to the
Service Commands by G-2, civilian employees allotted by the Service
Commands, and civilian employees made available by allocation of
funds by G-2; the relationship between the Military Intelligence
Division, War Department General Staff (Counterintelligence Branch)
and the officers of the Directors of Intelligence of the Service
Commands.71
Additional oral instructions were likewise given him on 11 August
and 7 September 1943, for extending his investigation so as to cover:
The investigative functions of the Provost Marshal General at Service
Commands and the possible duplication and overlapping of the investigative
functions with those made by the intelligence personnel allotted
to the Service Commands; the C/S System; and the correlation of
intelligence of the Service Commands, those of the Army Air Force
units and installations and Army Ground Force, and the Military
Intelligence Division, G-2, WDGS.72
In making this directed counterintelligence study, Gen. Peterson
concentrated upon examining the Investigation and Review, Situation,
and CIC Branches of MID (MIS) in order to ascertain their strength,
organization, and command relationships with security personnel
stationed at the service commands.73 He found that the
Investigation and Review Branch currently consisted of 29 non-CIC
officers and 30 civilians. Similarly, the CIC Branch, now located
at Baltimore but still furnishing a number of key personnel for
the CIC Advanced Training School in Chicago, was composed of 64
CIC officers and 31 civilians. There were also 368 officers, 2,598
enlisted men, and 770 civilians engaged in intelligence activities
within the service commands, the majority of them being carried
as War Department overhead. In Peterson's opinion, MID (MIS) was
exercising a close control over most of these personnel in the performance
of their assigned military security duties.74
The Inspector General remained especially critical of the fact
that such centralized direction of the counterintelligence effort
within the zone of interior was in direct violation of basis command
principles for the US Army. He also felt that the countersubversive
detection system as called for under TM 30-205 infringed upon these
same command principles, so the existing organization should be
turned over to the individual commanders for use at their own discretion.
Furthermore, he considered that both the PMG and CIC were conducting
many unnecessary and unproductive security investigations and including
too much nonfactual data under their final investigative reports.
Derived from these several conclusions, therefore, he recommended
a number of fundamental changes in counterintelligence procedures
for the zone of interior, which were all promptly approved by the
Deputy Chief of Staff without any prior reference to the ACofS G-2.75
On 14 December 1943, new War Department orders on basic counterintelligence
functions within the zone of interior were issued, as follows:
1. The ACofS G-2, WDGS, will continue to exercise general staff
supervision over counterintelligence policies and activities throughout
the military establishment.
2. Subject to the above and such other exceptions as may be made
by appropriate WD authority, all functions and activities of the
CIC within the zone of interior will become the responsibility of
the Commanding General, ASF.
3. Investigative functions hitherto executed separately by the
CIC and PMG will be consolidated into a single staff agency under
each service command.
4. All CIC personnel attached or stationed in service commands
but performing ASF activities, other than those selected by the
ACofS G-2, WDGS, for advanced training or overseas duty, will be
transferred from the CIC and assigned to the service command.
5. Civilian personnel presently assigned to MID (MIS) but located
in service commands and performing ASF activities, will be transferred
to the service command.
6. Military and civilian personnel of the Counterintelligence Group,
MID (MIS), as mutually agreed upon between the ACofS G-2 and CG,
ASF, will be transferred to the ASF.76
Under the new counterintelligence situation, CIC personnel could
now be utilized, with certain specific exceptions, only in theaters
of operations. Notwithstanding, the ACofS was still held responsible
for coordinating the procurement and shipment of CIC units for CIC
duty and the administration of CIC specialized training to be conducted
at Camp Ritchie, Maryland.77 His means for accomplishing
these retained functions had been effectively removed, however,
through the complete abolishment of CIC Headquarters, which was
in reality the CIC Section of the MIS Counterintelligence Branch
and CIC Staging Area at Fort Holabird, Baltimore, Maryland.78
To make matters worse, the existing military security system was
badly upset not only by the sudden decision of TM 30-205 countersubversive
instructions but also under an utterly impractical provision of
the approved IG study directing that, within available time and
manpower limits, "all reports and attached memoranda of investigation
made by the Counter-intelligence Corps be reviewed, pertinent, verified
information be extracted, and the original and copies be recalled
by the War Department and destroyed."79
The departmental intelligence agency was also soon shorn of its
traditional military censorship functions. Despite the fact that
censorship operations were providing it with a sizable amount of
useful information, the agency remained actively involved in the
procurement, training, and assignment of censorship officers for
the US Army. By May 1943, it had become feasible to establish an
"Officer Pool for Censorship Personnel" and thus give
the total censorship program a sorely needed degree of flexibility.
Nevertheless, effective 21 March 1944, higher authority ordered
the transfer of this officer pool to ASF, as well as the related
function of handling censorship supplies. For the time being, MID
(MIS) was still permitted to receive information directly obtainable
from censorship sources for assistance in producing intelligence
but, on 25 July 1944, even this responsibility was shifted to ASF,
along with all duties pertaining to the procurement, training, assignment,
and supply of CIC personnel.
Prior to the imposed MID reorganization during the summer of 1944,
therefore, which sought to form a truly separate MIS under a new
ACofS G-2 (Gen. Bissell), the departmental intelligence agency had
already lost most of its military security functions. With MID limited
solely to the execution of general staff type duties, the theory
was that the ACofS G-2 could now perform his basic counterintelligence
mission acting through a single security specialist within the G-2
Policy Staff. Hence, effective 3 June 1944, the Counterintelligence
Group, MIS, was abolished and Col. Forney, plus two officer assistants
and two clerks, became Group III (Security) Policy Staff, MID.80
For a brief period after this, there was a small Security Branch,
MIS, placed under the Supervisor of Source Control to accomplish
certain representation and liaison tasks;81 but, on 24
July 1944, when the final transfer of all counterintelligence functions
to ASF was announced, the ACofS G-2 decided to move this group back
into MID. Major considerations calling for such action at that particular
time were then given, as follows:
a. Uncertainty as to the permanence of the decentralization that
had been effected.
b. Need of an agency to handle unusual and important security
matters which could not be handled at a lower level.
c. Need for an agency to perform a small number of security functions
that had not been decentralized or transferred to other MIS branches
on or before 24 July 1944.82
Thus, even though Gen. Bissell had himself served on the War Department
committee charged with reorganizing MID (MIS), it did not take him
long as ACofS G-2 to realize that some sort of a counterintelligence
unit would be essential to the proper functioning of the departmental
intelligence agency regardless of views expressed by higher authority.
While the new Security Branch, MID, never included more than three
officers and always worked in close conjunction with the G-2 Policy
Staff, it promptly inherited a number of more or less operational
security tasks along the following lines:
a. Assisting the ACofS G-2 in security matters of great delicacy,
such as; investigating serious leaks of highly classified information,
supervising from a security standpoint the movements of very important
persons, handling the initial security aspects of Japanese balloon
incidents, interviewing the captured German agents (Gimpel and
Colepaugh), and maintaining liaison with the FBI relative to secret
intelligence operations.
b. Screening reports of security violations discovered by the
MID (MIS) telephone monitoring service and forwarding them to
appropriate action agencies, normally Joint Security Control.
c. Establishing and enforcing a revitalized internal security
system within MID (MIS) itself.
d. Determining whether or not War Department approval should
be granted to requests for using technical methods of surveillance
in certain investigative cases, as required by official orders.
These methods might include the interception of mail while under
military control or the use of mechanical overhearing devices
at military reservations.
e. Serving as G-2 members on the OWI Security Advisory Board
and the Secretary of War's Review Board, with the first named
board having been formed to advise federal agencies other than
the War and Navy Departments about security problems and the latter
to review appeals submitted by War Department civilian employees
discharged under Public Law 808, 77th Congress, for reasons of
national security.
f. Processing miscellaneous counter-intelligence matters, for
example, individual loyalty cases referred to the ACofS G-2, clearing
requests from the Census Bureau for authority to conduct surveys
in areas of military interest and answering questions concerning
the release of military information through the BPR.83
The need for having a small group of counterintelli-gence specialists
readily available in MID was well illustrated by the sudden demand
to dispose of so-called Japanese balloon incidents from the military
security standpoint. In an effort to bolster homefront morale following
the Doolittle air raid on Tokyo, the Japanese authorities had hit
upon the idea of floating free balloons laden with high explosive
and incendiary bombs against American territory. The original plan
was to launch these balloons from submarines stationed offshore
but, when this proved to be impracticable, they were released from
Japan itself. Some 9,000 balloons were eventually launched, with
only a small percentage of them ever reaching the North American
continent. They were first reported during November 1944 and naturally
caused a considerable amount of speculation within intelligence
circles as to their exact purpose. One popular theory was that they
might be germ carriers in an opening of bacteriological warfare
but another was they were being used to introduce Japanese agents
into this country.84
Following a hasty series of interdepartmental consultations, it
was decided that the first step in combating these Japanese missiles
should be to request a voluntary censorship of all public news media.
This would serve to deny the Japanese any accurate evaluation of
their balloon capabilities and minimize whatever propaganda value
might accrue to them from the project. The Western Defense Command
was then given the mission of taking appropriate defensive measures
and collecting information on all located balloons. The FBI also
carried out extensive investigations, while various scientific agencies
of the government joined in examining the balloons to determine
their technical characteristics. During December 1944, Maj. Ray
V. Jones and 2nd Lt. Charles H. Allison of the Scientific Branch,
MIS, were ordered to devote their entire effort toward reporting
on the balloon situation, and it was not long before a total of
seven officers and two clerks were fully occupied in this same type
of work.85
There were several narrow escapes from publicity leaks, occasioned
mainly by items appearing in small local newspapers, but on the
whole the voluntary censorship policy turned out to be notably successful.
The news gradually did get around, however, so more positive countermeasures
were indicated. A "word of mouth" campaign was adopted,
based upon British methods recently devised to educate the public
about the V-1 bomb without furnishing the Germans any specific information
pertaining to landing areas or bomb damage. This supplementary system
remained sufficient until six members of a single family were killed
while tampering with an unexploded bomb they had stumbled across
in the Pacific Northwest, an event which forced the War Department
to release a carefully guarded statement on the subject. Finally,
when the Japanese discontinued launching their balloons in April
1945, the matter was slowly allowed to fade from the national scene,
with no serious security breach having ever occurred.86
Gen. Bissell replaced Gen. Strong as the ACofS G-2 on 21 February
1944, just in time to become actively involved in the mounting dispute
over the status of Communists and fellow travelers within the US
Army, especially whether or not they ought to hold officer commissions.
Accordingly, two months later, he addressed a memorandum to the
Deputy Chief of Staff which not only recommended continuance of
the policy to exclude these personnel from sensitive duty assignment
and attendance at Officer Candidate Schools but also asked for the
discharge under existing Army regulations of officers "who
are proven to be members of the Communist Party or to have consistently
followed the party line or otherwise indicated they have submitted
themselves to the discipline of the Party."87
Nothing came of this initial attempt to classify Communists and
fellow travelers specifically as disaffected personnel but embarrassing
questions in the matter kept pouring into MID from other military
security agencies.88 It was thus deemed advisable to
submit a more detailed memorandum on the subject to the Chief of
Staff in the hope of securing more suitable authority for controlling
them. This new memorandum, as originally drafted, took note of the
fact that a decision was made on 11 May 1944 by the Assistant Secretary
of War in rejecting the removal of a veteran of the Abraham Lincoln
Brigade from Officer Candidate School directly contradicted an 8
March 1944 decision in a practically parallel case.89
Since MID had recently found that 81 officers, five WAC officers,
1,181 enlisted men, and 49 enlisted women were "so thoroughly
imbued with the principles of Communism as to constitute a danger
to security," it appeared necessary to clarify their future
military status. The belief was that enlisted men of such character
should be retained in the service and given combat duty but the
officers eliminated. It was recognized, however, that the latter
step might not be expedient at this particular time.90
Before signing this proposed communication to the Chief of Staff,
Gen. Bissell chose to discuss it personally with McCloy. As a result,
Col. Forney received further instructions to prepare a detailed
staff study on Communists in the Army, which would seek a definite
answer to the problem but recommend what was right rather than expedient.
When this had been duly accomplished to Gen. Bissell's satisfaction,
the study was sent to McCloy for added comment prior to its consideration
by the Chief of Staff. The Assistant Secretary of War then wrote
a lengthy memorandum for that purpose but, on 10 June 1944, returned
all the papers to the ACofS G-2 expressing a desire to talk over
the matter again after Gen. Bissell had read his contemplated remarks.
Shortly thereafter, the ACofS G-2 conferred with Col. Forney about
the study and made the following points:
a. The staff study was accurate and the action recommended was
justified.
b. It was inexpedient to raise the question at the present time
due to the possibility of offending Russia and thus bringing about
action on the part of that country unfavorable to the war effort.
c. It was inexpedient to risk publicity on this question in an
election year.
d. There could be no retraction officially of the War Department's
long standing attitude toward communism.
e. That some means had to be found to settle the question in
the field that would not embarrass the War Department.91
In view of these conflicting factors as mentioned by the ACofS
G-2, Col. Forney suggested that the staff study should be quietly
dropped and informal steps taken to prevent at least for the time
being any Communist cases arising in the field which might embarrass
the War Department.92 With Gen. Bissell approving this
course of action, Col. Forney then proceeded to contact the principal
intelligence officers of the three major commands and orally explained
the newly adopted policy to them. Although this informal system
did work out fairly well for a few months, by the latter part of
November 1944, it was plainly apparent that the lower echelons were
again becoming restive at the lack of support being provided by
the War Department in their Communist security cases.93
On 23 November 1944, therefore, Gen. Bissell decided to reopen the
question with McCloy and to recommend the issuance of official orders
for maintaining a "desired status in this matter."94
McCloy agreed that it was now practicable to publish formal instructions
to the Army on the subject of Communists but he remained dissatisfied
with some of the wording contained in the letter submitted by the
ACofS G-2 to accomplish this purpose. He wished to assure that the
basic consideration for taking any security action was not the propriety
of the individual's opinions but his loyalty to the United States,
including a willingness to accept combat duty.95 Hence,
despite Gen. Bissell's forceful argument that the War Department
should conform to a decision of the Attorney General and regard
Communism per se as constituting disaffection,96 the
instructions which were finally issued to the Army on 30 December
1944, consisted mainly of the following statement written word for
word by McCloy himself:
The basic consideration is not the propriety of the individual's
opinions, but his loyalty to the United States. Membership in, or
strict adherence to the doctrines of, the Communist Party organization
is evidence that the individual is subject to influences that may
tend to divide his loyalty. However, many good soldiers are subject
to conflicting influences. Such influences must be appraised in
the light of the individual's entire record. No action will be taken
under the reference letter that is predicated on membership is or
adherence to the doctrines of the Communist Party unless there is
a specific finding that the individual involved has a loyalty to
the Communist Party as an organization which overrides his loyalty
to the United States. No such finding should be based on the mere
fact that the individual's views on various social questions have
been the same as the views that the Communist Party may have advanced.
Except in clear cases, no action should be taken against persons
who are being trained for combat assignments and have demonstrated
a high degree of ability to serve the United States in that manner,
including a willingness to accept combat duty.97
The order specifying this more liberal War Department attitude
toward Communists and fellow travelers in the US Army was classified
SECRET but it soon leaked to the press. During the national uproar
which followed, the entire matter came under close scrutiny by a
House Committee on Military Affairs authorized to study progress
of the war effort. On 22 February 1945, Maj. Gen. James A. Ulio,
the Adjutant General, acknowledged existence of the new policy in
a letter addressed to Representative George A. Dondero of Michigan.
He claimed, however, that known or suspected Communist personnel
had not proved to be any source of difficulty and were loyally supporting
the war effort, so there seemed little justification for not using
their services to the utmost of individual capacities.98
Both the Assistant Secretary of War and ACofS G-2 subsequently appeared
before this same Congressional Committee in defending the position
taken by the War Department. Although a preliminary report of the
Committee as published early in July 1945 was extremely critical
of that position, no important change occurred in it for the rest
of the wartime period.99
Thus, at the war's end, the ACofS G-2 not only had been deliberately
divested of all his operational counterintelligence functions but
also was no longer able to control the basis terms of Army security
policies. Moreover, because the departmental military intelligence
agency was unfavorably organized to collect, evaluate, and disseminate
domestic intelligence information, he could not properly execute
his inherent mission of keeping the Chief of Staff fully informed
on Army security matters. With it becoming increasingly clear to
most of the departmental intelligence authorities that no effective
dividing line could now be drawn between their foreign and domestic
counterintelligence responsibilities, this imposed handicap held
especially serious implications for the future.
Nevertheless, it must be granted that a definite need had been
shown early in the war for decentralizing the departmental counterintelligence
effort within the zone of interior and permitting other staff groups
or field agencies to undertake as many operational security tasks
as possible. Neither could there be any convincing argument advanced
against the generally accepted thesis that each individual commander
should remain free to provide for the military security of his own
command. The national security clearance program had rapidly developed
into such a cumbersome and complicated process that the departmental
intelligence officials could never hope to keep up with it under
a system of centralized control. They were soon bogged down, therefore,
in a bewildering array of individual security clearance procedures
to the extent that they could seldom find time for performing counterintelligence
duties of a more fundamental nature.
The principal trouble lay not so much in recognizing that a difficult
functional problem did exist but more in the various courses of
action which were adopted by higher authority to meet it. Since
outside influences and personnel economy considerations were often
allowed to carry an overriding weight in reaching major decisions
on military security matters, it became practically impossible to
develop an effectual system for protecting the Army from harmful
subversion. Besides, back of the enforced curtailment of departmental
counterintelligence operations as dictated by many self-appointed
experts holding no detailed intelligence background, lurked the
readily perceptible outline of a Communist inspired drive aimed
at eliminating all MID (MIS) activity within the domestic intelligence
field regardless of consequences. The combined result was a departmental
agency inadequately equipped to fulfill its essential counterintelligence
responsibilities during most of World War II. With well-organized
subversive elements representing both an actual and potential danger
to ultimate military success, this was certainly not the proper
time to reduce MID (MIS) capabilities for exposing or blocking them,
yet that is exactly what did take place.
FBI Wartime Operations
A review of FBI intelligence work during World War II would not
be complete without brief mention of several other activities. In
1940, President Roosevelt authorized the FBI with the approval of
the Attorney General to conduct electronic surveillance of "persons
suspected of subversive activities against the Government of the
United States, including suspected spies."100 The
Federal Communications Commission denied the FBI access before the
war to international communications on the grounds that such intercepts
violated the Federal Communications Act of 1934.101 However,
military intelligence had secretly formed a Signals Intelligence
Service to intercept international radio communi-cations, and Naval
intelligence arranged with RCA to get copies of Japanese cable traffic
to and from Hawaii, although other cable companies used by the Japanese
refused to violate the statute against interception before Pearl
Harbor.102 Moreover, the FBI developed "champering"
or surreptitious mail opening techniques, and the practice of surreptitious
entry was used by the FBI in black bag operations.103
Several basic internal memoranda and agreements spelled out the
policies governing the relationships between FBI and military intelligence
in this period. The military concentrated more heavily on what it
perceived as potential threats to the Armed Forces, while the FBI
developed a wider and more sophisticated approach to the gathering
of intelligence about "subversive activities" generally.
An example of the Army's policy was an intelligence plan approved
in 1936 for the Sixth Corps Area, which covered Illinois, Michigan,
and Wisconsin. It called for the collection and indexing of the
names of several thousand groups, ranging from the American Civilian
Liberties Union to pacifist student groups alleged to be Communist-dominated.
Sources of information were to be the Justice Department, the Treasury
Department, the Post Office Department, local state police, and
private intelligence bureaus employed by businessmen to keep track
of organized labor.104 The joint FBI-military intelligence
plan prepared in 1938 stated that the Office of Naval Intelligence
and the Military Intelligence Division (G-2) were concerned with
"subversive activities that undermine the loyalty and efficiency"
of the Army and Navy personnel or civilians involved in military
construction and maintenance. Since ONI and MID lacked trained investigators,
they relied before the war on the FBI "to conduct investigative
activity in strictly civilian matters of a domestic character."
The three agencies exchanged information of interest to one another,
both in the field and at headquarters in Washington.105
The FBI, ONI, and MID entered into a Delimitation Agreement in
June 1940 pursuant to the authority of President Roosevelt's 1939
directives. As revised in February 1942, the Agreement covered "investigation
of all activities coming under the categories of espionage, counterespionage,
subversion, and sabotage." It provided that the FBI would be
responsible for all investigations "involving civilians in
the United States" and for keeping ONI and MID informed on
"important developments
including the names of individuals
definitely known to be connected with subversive activities."106
As a result of this Agreement and prior cooperation, military intelligence
could compile extensive files on civilians from the information
disseminated to it by the FBI. For example, in May 1939 the MID
transmitted a request from the Ninth Corps Area on the West Coast
for the names and locations of "alien and disloyal American
sabotage and espionage organizations" planning to take advantage
of wartime hardships to overthrow the Government, "citizens
opposed to our participation in war and conducting antiwar pro-paganda,"
and potential enemy nationals who should be interned in case of
an "international emergency."107
Moreover, despite the FBI-military agreement, the Counter Intelligence
Corps of the Army (CIC) gradually undertook wider investigation
of civilian "subversive activity" as part of a preventive
security program, which used voluntary informants and investigators
to collection information.108
The FBI developed a substantial foreign intelligence operation
in Latin America during the war. On June 24, 1940, President Roosevelt
issued a directive assigning foreign intelligence responsibilities
in the Western Hemisphere to a Special Intelligence Service (SIS)
of the FBI. SIS furnished the State Department, the military, and
other governmental agencies with intelligence regarding "financial,
economic, political, and subversive activities detrimental to the
security of the United States." SIS assisted several Latin
American countries "in training police and organizing antiespionage
and antisabotage defenses." When another foreign intelligence
agency, the Office of Strategic Services (OSS), was established
in 1941, it sought to enter the Latin American field until President
Roosevelt made clear that jurisdiction belonged to SIS.109
There was constant friction throughout the war between the FBI
and the OSS. Despite the President's order, OSS operatives went
to Latin America. Within the United States, OSS officers are reported
to have secretly entered the Spanish Embassy in Washington to photograph
documents. The FBI Director apparently learned of the operation,
but instead of registering a protest he waited until OSS returned
a second time and then had FBI cars outside turn on their sirens.
When OSS protested to the White House, the President's aides reportedly
ordered the embassy project turned over to the FBI.110
A similar incident occurred in 1945 when OSS security officers illegally
entered the offices of Amerasia magazine in search of confidential
Government documents.111 This illegal entry made it impossible
for the Justice Department to prosecute vigorously on the basis
of the subsequent FBI investigation, for fear of exposing the "taint,"
which started the inquiry.
Director Hoover's most serious conflict with OSS involved a weighing
of the respective needs of foreign intelligence and internal security.
In 1944, the head of OSS, William Donovan, negotiated an agreement
with the Soviet Union for an exchange of missions between OSS and
the NKVD (the Soviet intelligence and secret police organization).
Both the American military representative in Moscow and Ambassador
W. Averell Harriman hoped the exchange would improve Soviet-American
relations.112 When Hoover learned of the plan, he warned
Presidential aide Harry Hopkins of the potential danger of espionage
if the NKVD were "officially authorized to operate in the United
States where quite obviously it will be able to function without
any appropriate restraint upon its activities." The Director
also advised Attorney General Biddle that secret NKVD agents were
already "attempting to obtain highly confidential information
concerning War Department secrets." Thus, the exchange of intelligence
missions was blocked.113 The FBI was also greatly concerned
about the OSS policy of employing American Communists to work with
the anti-Nazi underground in Europe, although OSS did dismiss some
persons suspected of having links with Soviet intelligence.114
The FBI was not withdrawn from the foreign intelligence field until
1946. At the end of the war President Truman abolished the Office
of Strategic Services and dispersed its functions to the War and
State Departments. The FBI proposed expanding its wartime Western
Hemisphere intelligence systems to a worldwide basis, with the Army
and Navy handling matters of importance to the military. Instead,
the President formed a National Intelligence Authority with representatives
of the State, War, and Navy Departments to direct the foreign intelligence
activities of a Central Intelligence Group. The Central Intelligence
Group was authorized to conduct all foreign espionage and counterespionage
operations in June 1946. Director Hoover immediately terminated
the operations of the FBI's Special Intelligence Service, and in
some countries SIS officers destroyed their files rather than transfer
them to the new agency.115
CONTINUE
CHAPTER 1
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