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

70. Memorandum From the Director of the Bureau of the Budget (Smith) to the President’s Special Counsel (Rosenman)⁰

Washington, January 10, 1946.

Some time ago I asked Colonel McCormack, who used to be in Army Intelligence and who is now working on the intelligence problem for the State Department, to give me a memorandum concerning the subject. My staff regards him very highly.

The memorandum just came in today, and I have not at this moment read it. However, I am passing it on to you thinking that you might like to read it before the Saturday morning meeting.¹ Actually it was not written for this purpose, and because State is not to be represented I think it would not be wise for you to use it other than as background information.

I consider this whole subject of intelligence to be one of the most far-reaching problems of interdepartmental coordination that we currently face. My own gloomy opinion is that it will not be solved in an orderly fashion and that we will go through the usual two, three or more reorganization stages—God bless bureaucracy!

HDS

Attachment²

Washington, January 10, 1946.

Memorandum From the Secretary of State’s Special Assistant for Research and Intelligence (McCormack) to the Director of the Bureau of the Budget (Smith)

As I am going away for a few days I should like to leave this memorandum with you as expressing my thoughts on the pending problem of organizing government intelligence. It has been written in a hurry but I hope that it covers the main points.

There are several concepts of the “Central Intelligence Agency”:

(1) The “Central Evaluating Agency”: This is the conception of General Clarke of MIS, who thinks of a single place into which every paper of possible intelligence value comes and is read, circulated to those interested and “evaluated.” The nearest to such an organization that has ever existed is the Japanese intelligence unit of the Military Intelligence Service during the war. It consisted of almost a thousand people, and it served largely as an operating intelligence agency for the field commands. Almost literally it received, read, cataloged and filed every paper pertaining to the Japanese. Its work was supplemented by specialized work done by other agencies (e.g., the technical air intelligence done by the Navy at Anacostia; the work of the OSS on the long-term “JANIS” studies, etc.). Such an organization, working in peace-time, covering the whole world and serving the needs of the whole government, would be so large in size as to be wholly impracticable, even if desirable.

(2) The “Coordinator of Information”: This is the original concept of General Donovan—an agency that would receive the “processed” information and intelligence reports produced by all other agencies of the government and would put them together, coming out with a finished product called “strategic intelligence.” General Donovan found that it was almost impossible to fill such a role, partly because it was difficult to get the information from other agencies, partly because it was impossible to judge how good the information was without having a separate research organization to check it and a field organization to verify it, and to get additional information.

(3) The “Coordinator of Information Plus”: This is the role that the OSS attempted to fill during the war—a Coordinator of Information with his own intelligence collecting organization, plus a research staff to do the evaluating and produce the final studies. While the OSS accomplished a great deal during the war, it came nowhere near to filling the role that it desired, chiefly because of its remoteness from the operating units. Where, as with certain of the political divisions of the State Department, the OSS research organization found a good customer and got very close to the operating problems, the results were excellent. Where that condition did not prevail, the reports tended to be academic and unrelated to the real problems of the Government. Reports were frequently based upon less than all the available information, not because the information was withheld but because OSS tried to cover so large a field of intelligence that it could not maintain adequate machinery for getting all the available information.

(4) Interdepartmental Coordinating and Planning Mechanism: This is the underlying concept of the State Department’s proposed plan for coordination of intelligence, and I believe accords in general with the views of the Bureau of the Budget. It is based upon the following main premises:

a. This Government, in its numerous departments and agencies, has vast resources for the collection of information and the production of intelligence. In a period when there is strong pressure to reduce government expenditures, it is most important that all these resources be harnessed and used.

b. The way to use them is to distribute the intelligence function widely through the Government, giving to each specialized unit the job that it is best qualified to do, providing for cooperative undertakings on subjects of inter-departmental interest and setting up machinery that will insure the flow of intelligence to all those who need to have it.

c. While the importance of collecting more information is not under-estimated (including the importance of using unconventional methods where necessary), the critical process in intelligence is performed at the research desk. It consists of compiling the information, appraising it, putting it into usable form, checking its validity and informing the collecting units of what further information is needed. Adequate performance of the research function requires the use of experts, and they are to be found in those departments and agencies which have the operating or policy responsibilities in the particular field.

d. The great need in the Government today is not a super-intelligence agency but is the development of a Government-wide intelligence program that can be translated into specific operating plans, under which responsibilities will be clearly defined and allocated. Development of such a program and operating plans is not something that can be done at one fell swoop. It is a permanent job, because of changing needs and changing capabilities of Government agencies; and even without those factors it is a 2-year job.

e. A permanent programming and planning agency is needed for still another reason—to follow up the plans and insure that they are carried out.

Foreign intelligence is needed for two paramount purposes:

a. Conduct of foreign relations; and

b. Preparation for war.

One is the function of the State Department, the other of the Armed Services. Since 1940, when this Government began to do intelligence work on a major scale, the emphasis has been largely on the military side. The emphasis will continue to be on the military side in any agency that is dominated by the Armed Forces. The State Department plan imposes no obstacles to the development of military intelligence, but it is oriented toward expanding the non-military side of intelligence work.

My objections to the War Department plan may be summarized as follows:

a. The War Department wants a new, separate and “independent” agency (though their “independent” director would be subject to so many controls by the military that his independence would be nonexistent). I feel that a new, separate agency will have difficulty getting money from Congress, or by means of departmental contributions of funds; and it will be in competition with existing intelligence agencies for funds, personnel and assignments. I favor a scheme that will reduce competition to a minimum.

b. If we are going to do secret intelligence, we should not advertise the fact, nor should we set up an agency with pretentious titles. I think the term “Central Intelligence Agency” is both misleading and dangerous. That is why I favor a “Secretariat” functioning under the proposed Authority, instead of a Central Intelligence Agency, and an unpretentious title for the executive head of it.

c. The War Department plan conceives of a single solution to the intelligence problem. It is not that simple, and many different solutions are necessary in a well conceived Government-wide program. The point is further discussed below.

d. The War Department conceives that there is some virtue in a central agency as such. To my mind, a sound program would attempt to build up the existing intelligence units to maximum efficiency and would allocate to the central agency only those functions which clearly can be performed better by a central organization.

It is my conception that if a planning agency is set up it will find three possible solutions for each intelligence responsibility:

a. To transfer it to the central agency;

b. To create an interdepartmental unit, outside of the central agency, to do the job (e.g., a joint Army and Navy unit to do air intelligence); and

c. Allocation of the responsibility, on behalf of the whole Government, to a single intelligence agency.

There are certain responsibilities that can be discharged best by one agency, on behalf of the whole Government, because of the expertness of that agency in the particular field. The following are random illustrations:

a. Foreign pictures to Navy, which now does the main job;

b. Map coverage; other than topographic, to State Department (Army Map Service does only topographic maps);

c. Polar meteorology to Air Forces;

d. Foreign population statistics to Bureau of Census;

e. Financial statistics to Federal Reserve Board;

f. World trade statistics to Department of Commerce;

g. Foreign labor developments to Labor;

h. Foreign mineral resources to Bureau of Mines;

i. Supervision of public opinion testing (possibly) to Department of Agriculture.

There are various joint operations which, in my opinion would gain nothing from being under a central agency, but which might well be put into joint units directed by one department. (We had many of these in the war, with personnel from two or more agencies, physically located in, and supervised by, one of the agencies). The weekly reporting of foreign events (largely political events) now done by State, G–2 and ONI, might well be put into an interdepartmental unit, with personnel drawn from the three departments, but under the supervision of the department of primary interest, vis., State.

The various aspects of geographical intelligence call for interdepartmental units. Topographic intelligence, now supervised by the Joint Topographical Subcommittee of the JIC, is in effect directed by G–2 and the work is mainly done by G–2. Ports and harbors should be a joint enterprise of the Navy, the Maritime Commission and the Army Engineers. I cannot see that anything would be gained by putting it under the operating direction of a central agency.

In all these cases a central planning and programming organization would be of great benefit. It could do the job of “selling” intelligence. It could perform the kind of coordination that is required in a situation such as the foreign census figures. When the Bureau of Census is queried as to why it cannot recast its population figures to meet the Army’s needs for computations of military manpower, it could no longer say that the Bureau of the Budget had refused to allow it the necessary positions. The planner in the central agency would go to Mr. Harold Smith and say: “Do you want this job done well by 6 people in the Census Bureau or done badly by 50 people in the Armed Services?”; and the answer would be obvious.

The Army makes two points very strongly, vis., (a) that a central agency is necessary to conduct secret intelligence and (b) that there must be some organization to do the “final strategic and national policy intelligence.”

I doubt the validity of either of these arguments. I agree that “secret” intelligence, in the sense in which it is done by the British Secret Intelligence Service, should be done by a single agency. But in no Government, including the British Government, is there the kind of exclusive franchise that the War Department is talking about. In fact, the most important “secret” intelligence is done so secretly that nobody knows who does it. In this respect I think that the War Department’s thinking is stereotyped and unimaginative.

The State Department has not opposed putting secret intelligence under a central agency, but it would oppose it if the central agency were directly under the President, because such operations might compromise the President.

On the matter of the “strategic” intelligence which the Service Departments think of as something that is dished up to the President, there are obvious dangers in putting such a responsibility in a non-Departmental person. It is my view that, apart from the strictly military aspects for which it is necessary to rely on the Armed Forces, “strategic intelligence” is by definition a function of the Department of Government which is responsible for foreign affairs.

It may be that the State Department is not now equipped to discharge the function. It may also be that the unit which discharges it should be interdepartmental, with adequate Army and Navy representation. But the State Department’s weaknesses are not a good reason for refusing to strengthen it by giving it its appropriate functions in foreign intelligence and the means with which to discharge them.

One further point as to the collection of intelligence in the field. There the chief coordinating responsibility is now vested in the representatives of the State Department abroad, who have administrative supervision of the Service Attaches and of the various civilian attaches (Commercial, Agricultural, Labor, Petroleum, etc.). The counter-espionage organization of OSS (now under the War Department) operates outside of the theaters under State Department cover. That is, the X–2 personnel are carried (openly) as members of the Ambassador’s staff. The same is increasingly true of the SI personnel in countries not under military occupation.

That coordinating role calls for somewhat the same type of coordination at the seat of Government.

Alfred McCormack ³

0. Source: Truman Library, Papers of Samuel I. Rosenman, Subject File—OSS, 1946. Confidential.
1. January 12.
2. Confidential.
3. Printed from a copy that bears this typed signature.