Memorandum for the Director of the
Strategic Services Unit

Subject: Transfer of OSS Personnel and Activities to the War Department and Creation of Strategic Services Unit

26 September 1945

By letter from the Deputy Chief of Staff dated today, you have been designated to represent the War Department in the transfer of those OSS activities which will come to the War Department in their continued operation. I shall recommend that the Secretary of War confirm this designation as requested by you.

These activities will become for the time being, as a matter of War Department organization, subject to the authority of my office and for convenience will be referred to as the Strategic Services Unit. This assignment of the OSS activities, so to be transferred to the War Department, is a method of carrying out the desires of the President, as indicated by representatives of the Bureau of the Budget, that these facilities of the OSS be examined over the next three months with a view to determining their appropriate disposition. Obviously this will demand close liaison with the Bureau of the Budget, the State Department and other agencies of the War Department, to surveying that the facilities and assets of OSS are preserved for any possible future usefulness to the country. However, any integration of its activities with those of other agencies of the War Department should proceed only after consultation with the Bureau of the Budget and State Department, in view of the desire of the President (expressed in his letter of 20 September to the Secretary of State) that the Secretary of State take the lead in surveying the whole field of intelligence operations during the next few months. Obviously the whole subject is one for careful and cooperative study and analysis of the functions now being performed by OSS.

In the meantime, the continuing operations of OSS must be performed in order to preserve them as a going operation. As you know the staff of my office is too small to exercise detailed supervision over an enterprise of the size of the OSS activities to be subject to your control. It is not desirable to increase that staff. Accordingly on matters of administration, I expect that you will conform, as fully as is practicable, with applicable War Department policies and regulations and will consult and coordinate your actions with the appropriate War Department agencies.

I am particularly anxious that you keep the Budget Fiscal and Accounting officers of the War Department fully advised of the activities of the Unit and arrange to obtain their assistance and guidance to the fullest practicable extent. In general, I expect you to keep not only my office, but also the Deputy Chief of Staff, advised of your plans and activities so that he may be in a position to furnish to the Secretary of War and to me advice and recommendations.

Major questions of policy should be discussed with my office. I am particularly anxious that my office be kept informed as to proposals for the disposition of particular substantial operations, facilities or assets of the present OSS organization. I think you should inaugurate a system of periodic written reports of progress and outlines of future plans, of which copies should be furnished to the Deputy Chief of Staff.

I desire that the status of the assets to be taken over by the War Department as of 1 October 1945 be carefully checked by the proper Budget and Fiscal Officers of the War Department, to the extent that they deem necessary, and as you know, instructions for such check, by inventory and otherwise, have been given.

If you require additional assignment of staff from the War Department, I expect that you will ask for the assignment of the necessary personnel and make direct arrangements with Deputy Chief of Staff for such assignment.

This memorandum is furnished for your information and guidance as an expression of my general views as to policy

John J. McCoy
Assistant Secretary of War

Memorandum for the Brig. Gen.
John Magruder, USA

War Department
Washington, DC
27 September 1945

By Executive Order dated September 20, 1945, the President terminated the Office of Strategic Services, effective 1 October 1945; transferred certain of its personnel, records, property and funds to the Department of State; and transferred the remaining functions, personnel, records, property and funds to War Department. You are hereby appointed as the representative of the Secretary of War and War Department to exercise, administer, and operate (with power of delegation and successive redelegation where appropriate) the functions, personnel, records and property which have been, or will be, transferred to the War Department and the Secretary of War under the Executive Order and to administer all funds allocated to you by the Budget Officer of the War Department, such operations to be known as Strategic Services Unit. Subject to the authority of and policies determined by the Assistant Secretary of War, and such persons as he may designate, you will continue the program of liquidation of those activities and personnel so transferred which are no longer necessary or desirable, and persevere as a unit such of these functions and facilities as are valuable for permanent peacetime purposes, or which may be required by Theater Commanders or occupational authorities to assist in the discharge of their responsibilities.

You will report to and receive instructions from the Assistant Secretary of War or such persons as he may designate. Subject to the authority of the Assistant Secretary of War or of the persons designated by him, you may have direct contact with any of the appropriate offices of the armed services or government departments as may be necessary for the proper performance of your duties.

I would appreciate your informing all of your personnel of the importance which I attach to the achievement of the objectives set forth in this memorandum.

/s/ Robert P. Patterson
Secretary of War

Contents of Memorandum Signed
by Gen. Magruder

26 November 1945

1. This memorandum is written to clarify a problem which has gradually developed over the last six months concerning the handling by representatives of SI and X-2 Branches of material dealing with foreign intelligence services. It is of sufficient importance to warrant this statement of policy which you will refer to the principal field representatives of SI Branch (in particular the Reporting Board) and X-2 Branch for their positive guidance.

2. It is to be understood that all information concerning foreign intelligence services falls within the exclusive jurisdiction of the X-2 Branch, regardless of source. Such information includes, but is not necessarily limited to, intelligence concerning individuals, structure, plans and operations of such services. This means that X-2 Branch has the sole responsibility for processing and disseminating intelligence of this character. All such information originating with SI will be given to X-2 in the field with only such preliminary processing as may be required for the protection of sources. The local representative of X-2 will determine what field distribution, if any, will be made. He will, of course, respect any requests by SI for special handling of reports originating with that Branch when the security of a source may be at stake. Counterespionage intelligence handed over to X-2 will be forwarded through X-2 channels to Washington for checking, supplementing, and for dissemination. SI will make no dissemination of such material unless specifically authorized by X-2.

3. The handling of counterespionage information in any other manner not only short-circuits the extensive machinery of central records, staff experience and counterespionage contacts which have been built up by X-2, but in many cases may result in the discrediting of counterespionage material, the blowing of penetration operations and agents, and the loss of operational value which such information may have X-2 field work.

4. It should be emphasized that this places upon X-2 Branch the active responsibility to present to SI in Washington and in the field, by proper briefing of field operatives or through the preparation and delivery of written material, all information concerning foreign intelligence systems and agents which is necessary for the planning and protection of SI operations and useful for their implementation. Information delivered to SI for such purposes will not be disseminated outside SI. If circumstances require, SI field personnel will be originally briefed by X-2 Washington prior to departure for the field, with the added expectation that secure arrangements for supplemental and emergency briefings by the X-2 field representative will be made.

5. In accordance with the basic directives of SSU, X-2 will continue to deliver to SI for processing and dissemination all intelligence collected by X-2 which is not counterespionage in nature. As to certain foreign organizations, political or economic in character, but also engaged in or furnishing a cover for subversive activities (for example the Falange, Anti-Fascist League, Communist Party and certain Refugee organizations) it is recognized that both SI and X-2 may have legitimate interests. Both Branches will collaborate closely in the preparation of reports and studies concerning such organizations. Dissemination will be special and limited when the X-2 field representative requests such handling for specific security reasons. The "Communist Party" as used here does not mean the Russian Intelligence System as such; the Russian Intelligence system is understood to be of X-2 interest in accordance with the provisions of paragraph 2 above. When items of positive intelligence are delivered to SI in the field or in Washington by a representative of X-2 Branch, his statement of the necessity of source protection will be honored and his instructions, if any, with regard to special dissemination will be followed. SI source protection will be similarly respected by X-2 as to any counterespionage information collected by SI.

Gen. Donovan's Letter to the Director
of the Bureau of Budget, Harold D. Smith

As our liquidation proceeds (Donovan states) it will become increasingly difficult to exercise our functions so that we have found it necessary to set up a liquidating committee with procedures and controls to provide for the gradual elimination of our services in step with orderly reduction of personnel.

It is our estimate, however, with the strictest economy of man-power and of funds the effectiveness of OSS as a War Agency will end as of January 1, or at latest February 1946, at which time liquidation should be completed. At that point I wish to return to private life. Therefore, in considering the disposition to be made of the assets created by OSS, I speak as a private citizen concerned with the future of his country.

In our government today there is no permanent agency to take over the functions which OSS will have then ceased to perform. These functions while carried on as incident to the war are in reality essential in the effective discharge by this nation of its responsibilities in the organization and maintenance of the peace.

Since last November I have pointed out the immediate necessity of setting up such an agency to take over valuable assets created by OSS. Among these assets was establishment for the first time in our nation's history of a foreign secret intelligence service which reported information as seen through American eyes. As an integral and inseparable part of this service there is a group of specialists to analyze and evaluate the material for presentation to those who determine national policy.

It is not easy to set up a modern intelligence system. It is more difficult to do so in time of peace than in time of war.

It is important therefore that it be done before the War Agency has disappeared so that profit may be made of its experience and "know how" in deciding how the new agency may best be conducted.

I have already submitted a plan for the establishment of centralized system. However, the discussion of that proposal indicated the need of an agreement upon certain fundamental principles before a detailed plan is formulated. If those concerned could agree upon the principles with which such a system should be established, acceptance of a common plan would be more easily achieved.

Accordingly, I attach a statement of principles, the soundness of which I believe has been established by study and by practical experience.

Principles–The Soundness of Which It is Believed Has Been Established by Our Own Experience And First-Hand Study of the Systems of Other Nations—Which Should Govern the Establishment of a Centralized United States Foreign Intelligence System. The formulation of a national policy both in its political and military aspects is influence and determined by knowledge (or ignorance) of the aims, capabilities, intentions, and policies of other nations.

All major powers except the United States have had for a long time past permanent world-wide intelligence services, reporting directly to the highest echelons of their governments. Prior to the present war, the United States had no foreign secret intelligence service. It never has had and does not now have a coordinated intelligence system.

The defects and dangers of this situation have been generally recognized. Adherence to the following would remedy this defect in peace as well as war so that American policy could be based upon information obtained through its own sources on foreign intentions, capabilities, and developments as seen and interpreted by Americans.

1. That each department of Government should have its own intelligence bureau for the collection and processing of such informational material as it finds necessary in the actual performance of its functions and duties. Such a bureau should be under the sole control of the department head and should not be encroached upon or impaired by the functions granted any other governmental intelligence agency.

Because secret intelligence covers all fields and because of possible embarrassment, no executive department should be permitted to engage in secret intelligence but in a proper case call upon the central agency for service.

2. That in addition to the intelligence unit for each department there should be established a national centralized foreign intelligence agency which should have the authority:

A. To serve all departments of the Government.

B. To procure and obtain political, economic, psychological, sociological, military and other information which may bear upon the national interest and which has been collected by the different Governmental departments or agencies

C. To collect when necessary supplemental information either at its own instance or at the request of any Governmental departments or agencies.

D. To integrate, analyze, process, and disseminate, to authorized Governmental agencies and officials, intelligence in the form of strategic interpretive studies.

3. That such an agency should be prohibited from carrying on clandestine activities within the United States and should be forbidden the exercise of any police functions at home or abroad.

4. That since the nature of its work requires it to have status, it should be independent of any department of the government (since it is obliged to serve all and must be free of the natural bias of an operating department). It should be under a director, appointed by the President, and be administered under Presidential direction, or in the event of a General Manager being appointed, should be established in the Executive Office of the President, under his direction.

5. That subject to the approval of the President or the General Manager the policy of such a service should be determined by the Director with the advice and assistance of a Board on which the Secretaries of State, War, Navy, and Treasury should be represented.

6. That this agency, as the sole agency for secret intelligence, should be authorized, in the foreign field only, to carry on services such as espionage, counterespionage, and those special operations (including morale and psychological) designed to anticipate and counter any attempted penetration and subversion of our national security by enemy action.

7. That such a service have an independent budget granted directly by the Congress.

8. That such a service should have its own system of codes and should be furnished facilities by departments of Government proper and necessary for the performance of its duties.

9. That such a service should include in its staff specialties (within Governmental departments, civil and military, and in private life) professionally trained in analysis of information and possessing a high degree of linguistic, regional, or functional competence, to analyze, coordinate and evaluate incoming information, to make special intelligence reports, and to provide guidance for the collecting branches of the agency.

10. That in time of war or unlimited national emergency, all programs of such agency in areas of actual and projected military operations shall be coordinated with military plans, and shall be subject to the approval of the Joint Chiefs of Staff, or if there be consolidation of the armed services, under the supreme commander. Parts of such programs which are to be executed in the theater of military operations shall be subject to control of the military commander.

Executive Directive of 22 January 1946
Addressed to the Secretaries of State,
War, and Navy

1. It is my desire, and I hereby direct, that all Federal foreign intelligence activities be planned, developed, and coordinated so as to assure the most effective accomplishment of the intelligence mission related to the national security. I hereby designate you, together with another person to be named by me as my personal representative, as the National Intelligence Authority to accomplish this purpose.

2. Within the limits of available appropriations, you shall each from time to time assign persons and facilities from your respective departments, which persons shall collectively form a Central Intelligence Group and shall, under the direction of a Director of Central Intelligence, assist the National Intelligence Authority. The Director of Central Intelligence shall be designated by me, shall be responsible to the National Intelligence Authority, and shall sit as a non-voting member thereof.

3. Subject to the existing laws and to the directions and control of the National Intelligence Authority, the Director of Central Intelligence shall:

a. Accomplish the correlation and evaluation of intelligence relating to the national security, and the appropriate dissemination within the Government of the resulting strategic and national policy intelligence. In so doing, full use shall be made of the staff and facilities of the intelligence agencies of your Departments.

b. Plan for the coordination of such of the activities of the intelligence agencies of your Departments as relate to the national security and recommend to the National Intelligence Authority the establishment of such over-all policies and objectives as will assure the most effective accomplishment of the national intelligence mission.

c. Perform, for the benefit of said intelligence agencies, such services of common concern as the National Intelligence Authority determines can be more efficiently accomplished centrally.

d. Perform such other functions and duties related to intelligence affecting the national security as the President and the National Intelligence Authority may from time to time direct.

4. No police, law enforcement or internal security functions shall be exercised under this directive.

5. Such intelligence received by the intelligence agencies of your departments as may be designated by the National Intelligence Authority shall be freely available to the Director of Central Intelligence for correlation, evaluation, or dissemination. To the extent approved by the National Intelligence Authority, the operations of said intelligence agencies shall be open to inspection by the Director of Central Intelligence in connection with planning functions.

6. The existing intelligence agencies of your departments shall continue to collect, evaluate, correlate, and disseminate departmental intelligence.

7. The Director of Central Intelligence shall be advised by an Intelligence Advisory Board consisting of the heads (or their representatives) of the principal military and civilian intelligence agencies of the government having functions related to national security, as determined by the Director of Central Intelligence.

8. Within the scope of existing law and presidential directives, other departments and agencies of the executive branch of the Federal Government shall furnish such intelligence information relating to the national security as is in their possession, and as the Director of Central Intelligence may from time to time request pursuant to regulations of the National Intelligence Authority.

9. Nothing herein shall be construed to authorize the making of investigations inside the continental United States and its possessions, except as provided by law and presidential directives.

10. In the conduct of their activities the National Intelligence Authority and the Director of Central Intelligence shall be responsible for fully protecting intelligence sources and methods.

NIA Directive No. 1, Dated 8 February 1946:
Policies and Procedures Governing the
Central Intelligence Group

Pursuant to the attached letter from the President, dated 22 January 1946, designating the undersigned as the National Intelligence Authority, you are hereby directed to perform your mission, as Director of Central Intelligence, in accordance with the following policies and procedures:

1. The Central Intelligence Group shall be considered, organized and operated as a cooperative, interdepartmental activity, with adequate and equitable participation by the State, War and Navy Departments and, as recommended by you and approved by us other Federal departments and agencies. The Army Air Forces will be represented on a basis similar to that of the Army and the Navy.

2. The Central Intelligence Group will furnish strategic and national policy intelligence to the President and the State, War and Navy Departments, and, as appropriate, to the State-War-Navy Coordinating Committee, the Joint Chiefs of Staff, and other governmental departments and agencies having strategic and policy functions related to the national security.

3. The composition of the Intelligence Advisory Board will be flexible and will depend, in each instance, upon the subject matter under consideration. The Special Assistant to the Secretary of State in charge of Research and Intelligence, the Assistant Chief of Staff G-2, WDGS, the Chief of Naval Intelligence and the Assistant Chief of Air Staff, Intelligence (or their representatives will be permanent members). You will invite the head (or his representative) of any other intelligence agency having functions related to the national security to sit as a member on all matters within the province of his agency.

All recommendations, prior to submission to this Authority, will be referred to the Board for concurrence or comment. Any recommendation which you and the Intelligence Advisory Board approve unanimously and have the existing authority to execute may be put into effect without action by this Authority. If any member of the Board does not concur, you will submit to this Authority the basis for his non-concurrence at the same time that you submit your recommendation.

4. Recommendations approved by this Authority will, where applicable, govern the intelligence activities of the separate departments represented herein. The members of the Intelligence Advisory Board will each be responsible for ensuring that approved recommendations are executed within their respective departments.

5. You will submit to this Authority as soon as practicable a proposal for the organization of the Central Intelligence Group and an estimate of the personnel and funds required from each department by this Group for the balance of this fiscal year and for the next fiscal year. Each year thereafter prior to the preparation of departmental budgets, you will submit a similar estimate for the following fiscal year. As approved by this Authority and within the limits of available appropriations, the necessary funds and personnel will be made available to you by arrangements between you and the appropriate department through its members on the Intelligence Advisory Board. You may determine the qualifications of personnel and the adequacy of individual candidates. Personnel assigned to you will be under your operational administrative control, subject only to necessary personnel procedures in each department.

6. The Central Intelligence Group will utilize all available intelligence in producing strategic and national policy intelligence. All intelligence reports prepared by the Central Intelligence Group will note any substantial dissent by a participating intelligence agency.

7. As required in the performance of your authorized mission, there will be made available to you or your authorized representatives all necessary facilities, intelligence and information in the possession of our respective departments. Arrangements to carry out this will be made with members of the Intelligence Advisory Board. Conversely, all facilities of the Central Intelligence Group and all intelligence prepared by it will be made available to us and, through arrangements agreed between you and the members of the Intelligence Advisory board, subject to any authorized restrictions, to our respective departments.

8. The operations of the intelligence agencies of our departments will be open to inspection by you or your authorized representatives in connection with your planning functions, under arrangements agreed to between you and the respective members of the Intelligence Advisory Board.

9. You are authorized to request of other Federal departments and agencies any information or assistance required by you in the performance of your authorized mission.

10. You will be responsible for furnishing, from the personnel of the Central Intelligence Group, a Secretariat for this Authority, with the functions of preparing an agenda, reviewing and circulating papers for consideration, attending all meetings, keeping and publishing minutes, initiating and reviewing the implementation of decisions, and performing other necessary secretarial services.

NIA Directive No. 4, Policy on Liquidation
of the Strategic Services Unit

2 April 1946

Pursuant to paragraph 1 of the letter from the President dated 22 January 1946 which designed this Authority as responsible for planning, developing and coordinating the Federal foreign intelligence activities so as to assure the most effective accomplishment of the intelligence mission related to the national security, the following policies and procedures relating to the liquidation of the Strategic Services Unit (SSU) are announced:

1. The national interest demands that the complete liquidation of SSU shall not be accomplished until it is determined which of its functions and activities are required for the permanent Federal foreign intelligence program, and should therefore be transferred to the Central Intelligence Group or other agencies in order that its useful assets may not be lost. Such determination and transfers shall be made and the liquidation of the remainder of SSU shall be completed as promptly as possible and prior to 1 July 1947. The Direct or Central Intelligence shall issue the necessary directives to effect the liquidation. He will make recommendations to this Authority as to the intelligence activities permanently required in the peace-time effort.

2. During the period of liquidation the SSU should be administered and operated so as to service, to the extent practicable, the intelligence agencies subject to our coordination. The Director of Central Intelligence shall issue the necessary directives to the Director of SSU required to accomplish this mission. In addition, the Director of SSU will make available to the Director of Central Intelligence, upon his request, any facilities and services of SSU which may be useful in the performance of an authorized function of the Central Intelligence Group.

3. The Director of Central Intelligence will be responsible for determining which funds, personnel and facilities of SSU are required for the performance of an authorized function of the Central Intelligence group. Such funds, personnel and facilities of SSU will then be transferred to an appropriate War Department unit. The Director of Central Intelligence will be responsible for making the necessary administrative arrangements and for issuing the necessary directives to the Director of SSU.

4. The War Department will take the necessary budgetary action to carry out this program.

5. The War Department shall retain the right to determine what portion of the War Department funds, personnel and facilities can be made available to SSU by the War Department.

CIG Directive No. 6, "Liquidation of Strategic
Services Unit" (Top Secret)

8 April 1946

Effectively immediately, you are directed to continue the liquidation of the Strategic Services Unit (SSU) as ordered in paragraph 3 of the Executive Order dated 20 September 1945, subject: "Termination of the Office of Strategic Services and Disposition of Its Functions." The liquidation will be completed not later than 30 June 1947.

The liquidation of SSU will be coordinated with the development of the permanent peace-time intelligence program. You will carry out the liquidation in accordance with the instructions of the Director of Central Intelligence or his designated representative. The Director or his representative will deal directly with you. He will have such staff as he requires working with SSU.

During the period of liquidation you will administer and operate the SSU as so to service, within your capabilities, the intelligence agencies subject to coordination by the National Intelligence Authority in accordance with directives provided by the Director of Central Intelligence or his designated representative. In addition, you will make available, within your capabilities, to the Director of Central Intelligence, upon his request, any facilities and services of the SSU which may be useful in the performance of an authorized function of the Central Intelligence Group.

Enclosure "B"
Pursuant to the provisions of NIA Directive No.4, dated 2 April 1946, it is hereby directed that you administer and operate the Strategic Services Unit, War Department, in accordance with the initial policies set forth herein:

1. Operations.

a. Until otherwise directed, you will continue such operations services and liaisons considered absolutely essential to:

(1) US Armies abroad,

(2) The United States sections of Allied Control Commissions,

(3) Diplomatic missions,

(4) Departmental agencies in the United States now being served.

b. You will perform such collecting missions, distribution, and other intelligence services as may be ordered from time to time by my representative.

c. Nothing contained in sub-paragraph 1-a will be construed as an authority for any expansion of the functions and facilities now operating, nor will additional personnel be assigned to duty outside the continental limits of the United States without the approval of my senior representative.

2. Administration.

a. You will continue the orderly liquidation of the Strategic Services Unit.

b. You will furnish the administrative support to operations indicated in paragraph 1.

c. You will furnish such administrative support to the Central Intelligence Group as may be called for by my representative.

d. You will provide the necessary adminis-trative facilities to effect the transition of personnel, funds, and communications, records, services, and facilities, with the necessary means of maintenance, from SSU to an appropriate group in the War Department or to other appropriate agencies, as subsequently determined.

3. Command Liaison.

Colonel Louis J. Fortier, USA, Assistant Director and Acting Chief of Operational Services, CIG, is designated as my senior representative. Further directives and orders will be issued to you by me or by my senior representative. You will keep my senior representative informed of the progress of the mission outlined herein. Captain Thomas F. Cullen, USNR, will be his deputy.

Appraisal of Operations of OSS and SSU

(1) Introductory Comment

As has been explained, the work of OSS included sabotage, organization of resistance groups, black propaganda against the enemy, and other para-military and subversive operations, as well as various special services for the Joint Chief's of Staff and the theater commanders. The appraisal herein set forth, however, is confined to the work of the intelligence branches—SI (Secret Intelligence, X-2 counterespionage and Research and Analysis.)

(2) General Statement

During the war just ended, OSS accomplished the following:

(i) It established, for the first time in American history, an organized network of secret agents who operated behind enemy lines, and who penetrated enemy installations in neutral countries, in order to obtain vital intelligence. These agent networks were established in Europe. North Africa, the Near and Middle East, and the Far East.

(ii) It established, for the first time in American history, an organized system of counterespionage which penetrated and neutralized enemy espionage organizations, operating for these purposes in Europe, North Africa, the Near and Middle East, and the Far East.

(iii) It organized the resources of American scholarship to supplement, and integrate into comprehensive studies, the intelligence procured from the various channels and sources available to the national government.

3. Shortcomings

The work of OSS during the war was handicapped by defects in organization, personnel and orientation. Fundamentally, all of these defects derived from the same source: the fact that the United States had no centrally controlled and comprehensive espionage system in being when the war broke out, and no experience in the development and direction of any such system. As in so many other aspects of the war establishment, the nation had to improvise. There were few other phases of the war, however, in which the nation so completely lacked a nucleus around which to build a body of experience upon which to draw as in the field of espionage and counterespionage. As a result:

(a) The personnel of OSS, recruited and brought together in haste under the stress of the emergency, tended to be uneven in quality. Functions which were well-conceived were performed unequally at different points by different people. Unsatisfactory personnel were steadily weeded out, and the highest quality personnel steadily moved into positions of primary control and responsibility. But the effects of haste and improvisation were felt to the end. This could only have been avoided by a careful and orderly preparation for the job during the years of peace.

(b) During the early period of fumbling in the development of the proper relationship of OSS to the War Department, the Navy Department and the State Department, certain of the efforts of OSS tended to be misplaced, in the sense that they were not properly related to the needs and plans of military and political authorities, and was impeded by the failure of OSS adequately to indoctrinate its personnel with respect to the relationship of OSS to Army and Navy.

(4) Appraisal of over-all operations of government intelligence agencies:

(a) Introductory Comment. The OSS and SSU are in no position to offer an appraisal of the performance of other intelligence agencies of the United States during the war. The appraisal herein set forth, therefore, is confined to an appreciation of defects in the inter-relationships among the intelligence agencies or the Government which became manifest in the course of the practical experience of the OSS.

(b) Elements of Duplication and Lack of Coordination. The effectiveness of OSS espionage and counterespionage was seriously handicapped by a failure to receive adequate direction from the military and political authorities as to the categories of information particularly needed. Where, as in the case of U.S. 3rd and 7th Armies and the China Theater under General Wedemeyer, and in the cases of the American Legations in Switzerland and Sweden, intimate relations were established between OSS and the Army command or diplomatic authorities, and where systematic and intelligence direction of activities existed operations were unusually effective.

A full and free interchange of intelligence among the various intelligence-collecting agencies of the Government—e.g., the War Department, the Navy Department, the State Department, the Navy Department and the State Department, FEA and OSS—was never achieved or even closely approxi-mated. Without an effective mechanism for such interchange, gaps in information at key points and wasteful duplication of effort were inevitable.

There was inadequate team-work in intelligence collection on the American side, and no effective mechanism for an all-American flow and coordinated evaluation of intelligence. For example, certain data obtained through War Department G-2 Special Branch activities, which were vital to certain OSS espionage and counterespionage work, were never made available to OSS by G-2. This failure in collaboration was ironically underscored by the fact that much information of the same type was made available to OSS by British sources. Similarly, certain prisoner-of-war interrogation data which would have facilitated the espionage and counterespionage work of OSS was denied to OSS. Again, data collected by OSS (and by French, Polish, Dutch and other Allied intelligence agencies who made such data available to both OSS and British agencies) sometimes reached the higher echelons of combined command only through British channels as British reports. In China, the intelligence activities of the U.S. Ground Army, the 14th Air Force the Naval Task Group for China, the U.S. Embassy and OSS were for a long time at cross purposes. In the Pacific, the clandestine services of OSS were not permitted to operate. This impeded the mutual support of American intelligence in the Pacific, created a serious void in American knowledge of the Japanese espionage system.

The desire for and practice of cooperation among various intelligence agencies of the Government on the working levels tended often to be impeded and sometimes stopped because of misunderstanding or disagreements at top levels.

Owing to the lack of a central coordinating body, there were gaps and duplications in the dissemination of intelligence.

There was no central mechanism for pooling and comprehensively developing the various bits and pieces of intelligence collected by the various intelligence procurement agencies of the Government.

(c) Additional Comment On Over-All Intelli-gence organization of the U.S. Government. From the standpoint of OSS in its relationship to the combined commands it seemed that the United States military services placed inadequate emphasis, as compared with our Allies, upon the role, position and importance of army and naval intelligence and counterintelligence officers.

(5) Counterespionage

In the field of counterespionage OSS made a number of notable contributions both singly and in cooperation with Allied services. Through its neutral country stations it was instrumental in bringing about the defection of important enemy intelligence service personnel, and exploiting the defection of important enemy intelligence service personnel, and exploiting these defections for the demoralization and neutralization of the enemy service. Thus an important series of defections in Turkey was followed by a sweeping reorganization of German espionage, culminating in the complete incorporation of the military secret intelligence service (Abwehr) into that of the Nazi Party (RSHA) with resulting friction and loss of efficiency. Neutral country stations also contributed vital information leading to the identification, apprehension, and controlled exploitation of German agents with radio sets left behind in Normandy before the invasion. The field units of OSS counterespionage branch (SCI) set up and operated a considerable number of penetration and deception agents. The former were successful in enticing enemy agents into our control, either as parachutists for line crossers, bringing with them considerable sums of money. By satisfying the enemy with a sufficient amount of true or partly true information, they discouraged him from sending in additional agents who might have operated without coming under our control. The role of OSS-controlled enemy agents with radio sets in assisting the implementation of deception programs has been commended by the competent agencies. It has been learned from interrogations of German intelligence personnel that not one of the OSS controlled agents was ever suspected by the Germans. On the contrary, their information appears to have been believed implicitly, to such an extent that in at least seven cases they were rewarded by the enemy with an Iron Cross.

OSS SCI units operating with T Forces at 6th and 12th Army Groups, seized large quantities of counterespionage material, which was forwarded through Army Documents channel to the Counter Intelligence War Room, London. The head of the War Room estimated that one such T Force operation, concluded in three days, netted identifying information on more than 20,000 German intelligence personnel. This virtually doubled the information on German intelligence personnel which had been made available through all previous Allied counterespionage operations during the war.

The counterespionage branch of OSS has brought together in Washington comprehensive files on the espionage systems of foreign nations, including some 400,000 carded dossiers on individuals known to be, or suspected of being, connected with such activities.

NIA Directive No. 5, Dated 8 July 1946,
Functions of the Director of Central Intelligence

Pursuant to the President's letter of 22 January 1946 designating this Authority as responsible for planning, developing and coordinating all Federal foreign intelligence activities so as to ensure the most effective accomplishment of the intelligence mission related to the national security, the functions of the Director of Central Intelligence are hereby redefined as follows, subject to the provisions of said letter:

1. Paragraph 3 of the President's letter of 22 January 1946 defined the functions of the Director of Central Intelligence as follows:

3. Subject to the existing law, and to the direction and control of the National Intelligence Authority, the Director of Central Intelligence shall:

a. Accomplish the correlation and evaluation of intelligence relating to the national security, and the appropriate dissemination within the Government of the resulting strategic and national policy intelligence. In so doing, full use shall be made of the staff and facilities of the intelligence agencies of your departments.

b. Plan for the coordination of such of the activities of the Intelligence agencies of your departments as relate to the national security and recommend to the National Intelligence Authority the establishment of such overall policies and objectives as will assure the most effective accomplishment of the national intelligence mission.

c. Perform, for the benefit of said intelligence agencies, such services of common concern as the National Intelligence Authority may from time to time direct.

d. Perform such other functions and duties related to intelligence affecting the National Intelligence Authority may from time to time direct.

2. In performing the functions specified in paragraph 3-a of the President's letter, the Director of Central Intelligence is hereby authorized to undertake such research and analysis as may be necessary to determine what functions in the fields of national security intelligence are not being presently performed or are not being adequately performed. Based upon these determinations, the Director of Central Intelligence may centralize such research and analysis activities as may, in his opinion and that of the appropriate member or members of the Intelligence Advisory Board, be more efficiently or effectively accomplished centrally.

3. In addition to the functions specified in paragraph 3-b of the President's letter and in accordance with paragraph 4 of NIA. Directive No. 1, the Director of Central Intelligence is hereby authorized and directed to act for this Authority in coordinating all Federal foreign intelligence activities related to the national security to ensure that the over-all policies and objectives established by this authority are properly implemented and executed.

4. Pursuant to paragraph 3-c of the President's letter, the Director of Central Intelligence is hereby directed to perform the following services of common concern which this authority has determined can be more efficiently accomplished centrally:

a. Conduct of all organized Federal espionage and counterespionage operations outside the United States and its possessions for the collection of foreign intelligence information required for the national security.

b. Conduct all Federal monitoring of press and propaganda broadcasts of foreign powers required for the collection of intelligence information related to the national security.

5. To the extent of available appropriations and within the limits of their capabilities, as determined by the respective Departments, the State, War and Navy Departments will make available to the Director of Central Intelligence, upon his request, the funds, personnel, facilities and other assistance required for the performance of the functions authorized herein. At the earliest practicable date, the Director of Central

Intelligence will submit for approval by this authority any supplemental budget required to perform the functions authorized herein, in addition to the appropriations which can be made available for this purpose by the State, War and Navy Departments.

6. Where the performance of functions authorized herein requires the liquidation, transfer or integration of funds, personnel or facilities for existing activities of the State, War and Navy Departments, the liquidation, transfer or integration will be accomplished at the earliest practicable date as agreed to by the Director of Central Intelligence and the official responsible for such activities so as to involve a minimum of interruption in the performance of these functions.

House Report No. 2734 of 17 December 1946

A Report on the System Currently Employed in the Collection, Evaluation, and Dissemination of Intelligence Affecting the War Potential of the United States.

Recommendations:

1. That the National Intelligence Authority, established on 22 January 1946, by Presidential Directive, be authorized by act of Congress (This is designed to give the new authority a firmer base).

2. That the National Intelligence Authority shall consist of the Secretaries of State, War, and Navy, or deputies for intelligence. (The Secretaries obviously are too busy to give this highly important subject the attention it deserves.)

3. That the Central Intelligence Group receive its appropriations direct from the Congress. (At present the Group receives its appropriations as grants from the State Department, War Department, and Navy Department, an unwieldy and sometimes awkward procedure).

4. That the Central Intelligence Group have complete control over its personnel. (At present the Group receives drafts from the Department of State, War, and Navy).

5. That the Director of the Central Intelligence Group be a civilian appointed for a preliminary term of two years and a permanent term of ten years, at a salary of at least $12,000 a year. (A civilian would be less subject to the control of criticisms of any military establishment, less likely to have ambitions in another direction, would be more in keeping with American tradition, would be more symbolic of the politico-military nature of the problem posed by intelligence in peacetime; furthermore, there is nothing to keep a qualified Army or Navy officer from accepting the post in civilian clothes, and there is every desire, by setting the tenure of office at ten years and making the salary substantial, to make the post attractive to one who has learned intelligence through the Army, Navy, or Foreign Service of the State Department. Continuity of service is recognized as very important).

6. That the Director of the Central Intelligence Group be appointed by the President by and with the consent of the Senate.

7. That the Director of Central Intelligence shall

(a) accomplish the correlation and evaluation of intelligence relating to the national security, and the appropriate dissemination within the Government of the resulting strategic and national policy intelligence, and in so doing making full use of the staff and facilities of the intelligence agencies already existing in the various Government departments;

(b) plan for the coordination of such of the activities of the intelligence agencies of the various Governments as relate to the national security and recommend to the National Intelligence Authority the establishment of such overall policies and objectives as will assure the most effective accomplishment of the national intelligence mission;

(c) perform, for the benefit of said intelligence agencies such services of common concern related directly to coordination, correlation, evaluation, and dissemination as the National Intelligence Authority shall determine can be more efficiently accomplished centrally;

(d) perform such other similar functions and duties related to intelligence affecting the national security as the Congress and the National Intelligence Authority may from time to time direct. It is specifically understood that the Director of Central Intelligence shall not undertake operations for the collection of intelligence. (This paragraph is intended to enable the Central Intelligence Group to concentrate on the analysis and evaluation of high-level intelligence for the President and others who have to determine national policy. One should not remove any intelligence from the agencies where day-to-day policies and decisions have to be made; the collection and basic analysis in each field of intelligence should be assigned to the agency having primary responsibility in that field.)

8. That paragraphs 2,4,5,6,7,8,9, and 10 of the Presidential Directive of January 22, 1946, relating to the establishment of a National Intelligence Authority be enacted into law, with such revisions in wording as may seem necessary. (The President's directive was carefully prepared and had at the tine of its publication, the support of the interested agencies).

9. That the Army be requested sympathetically to examine further the question of the establishment of an Intelligence Corps for the training, development and assignment of especially qualified officers.

CONTINUE CHAPTER 3