Foreign Relations of the United States, 1945–1950, Emergence of the Intelligence Establishment

4. Memorandum From the Assistant Director for Administrative Management of the Bureau of the Budget (Stone) to the Director of the Bureau of the Budget (Smith)⁰

Washington, August 27, 1945.

SUBJECT

• Termination of the Office of Strategic Services and the Transfer of its Activities to the State and War Departments

This memorandum is for your use in discussing with Judge Rosenman and Mr. Snyder the question of the disposition of OSS and its activities.

The Problem

OSS was established by Military Order of June 13, 1942,¹ and was placed under the “jurisdiction” of the Joint Chiefs of Staff. Under the terms of this Order, OSS was directed to:

a. Collect and analyze such strategic information as may be required by the United States Joint Chiefs of Staff.

b. Plan and operate such special services as may be directed by the United States Joint Chiefs of Staff.

With the close of the war, the question arises as to the disposition of OSS as an agency and the continuation or termination of its activities.

Discussion

During the war OSS has engaged in two broad kinds of activities: (1) the production of intelligence, represented chiefly by the Research and Analysis Branch; and (2) activities of an operational nature known within OSS as Strategic Service Operation.

If our previous recommendation to the State Department for the establishment of an Office of Research and Intelligence is accepted, that Department will require a considerable group of trained analysts in the field of economic, political, and geographic intelligence. By general agreement, the Research and Analysis Branch of OSS has performed very creditably in these intelligence fields during the war and its personnel is available for transfer to the State Department. There is the advantage also of obtaining for State a going concern which can continue its work with a minimum of interruption and confusion. In fact, R&A has done a considerable amount of work for State during the war and many informal relationships now exist.

It is generally admitted that State lacks proper presentation facilities. This condition will be further aggravated if R&A should be transferred to State to become a part of its Office of Research and Intelligence. It seems to us that Presentation should also be transferred to State.

The remaining activities are not easily described but with a few exceptions are of a nature that will not be needed in peacetime. The main problems are the presentation of the records and experience gained, the completion of some of the OSS assignments overseas, and the orderly liquidation of its overseas activities. Problems also will arise with respect to the return and reassignment or separation of the civilian and military personnel involved. The War Department seems the proper agency to take care of this job. (This does not resolve the recent intelligence problem which requires further review.)²

Action Recommended

1. That you present a proposal to the Committee³ to transfer the Research and Analysis and Presentation Branches to the State Department and the remaining OSS activities to the War Department for salvage and liquidation. A tentative draft order for this purpose is attached.⁴ This order is not in final form and should be used for discussion purposes only.

2. If the decision of the Committee is favorable, clearances should be made with Acheson in State and McCloy in War as the receivers of the transferred activities. We are prepared to submit to State the necessary documents in the form of a draft departmental order and directives which will facilitate the reception of the transferred activities.

3. Prior to the issuance of the Order, clearances should be made with the Joint Chiefs of Staff and the Navy as interested parties.

D.C.S. ⁵

0. Source: National Archives and Records Administration, RG 51, Records of the Office of Management and Budget, Series 39.19, OSS Organization and Functions. No classification marking.
1. See Troy, Donovan and the CIA, p. 427.
2. This parenthetical sentence was added by hand, apparently Stone’s.
3. A “Reconversion Committee” consisting of John W. Snyder, Samuel I. Rosenman, and Harold Smith undertook the disposal of war agency functions. Bureau of the Budget officials, with Smith’s concurrence, had agreed that the research and analysis function of OSS should be transferred to the Department of State. See Document 3.
4. See the Supplement.
5. Printed from a copy that bears these typed initials.