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

96. Memorandum From the Director of the Strategic Services Unit, Department of War (Magruder) to the Assistant Secretary of War (McCloy)⁰

Washington, October 9, 1945.

SUBJECT

• Strategic Services Unit as of 1 October 1945

1. Introduction. At the time of issuance of the Executive Order of 20 September providing for the “Termination of the Office of Strategic Services and Disposition of its Functions” (attached as Exhibit 1),¹ OSS was proceeding with a program of orderly liquidation. This program was in operation to carry out the terms of a letter from the Director of Strategic Services to the Bureau of the Budget dated 25 August 1945 (attached as Exhibit 2).² In this letter the Director, Major General William J. Donovan, stated that he was proceeding with the liquidation of the agency (which he estimated would be completed by 1 January or 1 February 1946). He recited that he had reiterated on many occasions since November 1944 the necessity of setting up a permanent agency to take over the functions of OSS, and he attached a statement of principles governing the establishment of a centralized United States foreign intelligence service.

2. Organization of OSS. Attached as Exhibit 3³ is a chart of the organization of the Office of Strategic Services as it existed in general on 30 September 1945 and a copy of General Order No. 9, outlining the functions of the offices shown on the organization chart. A copy of OSS 155/11/D which designates OSS as an agency of the Joint Chiefs of Staff is attached as Exhibit 4.

3. Personnel. As of 30 September 1945, total personnel on duty with the Office of Strategic Services was 10, 390. Of these, 5,713 were overseas and 4,677 in this country. Personnel were distributed as follows:

Army	6,964
Navy	734
Civilian	2,692
Total	10,390

Exhibit 5 lists total personnel as of 30 September by Branch or office and by country. With the transfer to the Department of State of the Research and Analysis Branch (with which the Foreign Nationalities Branch had previously been merged), consisting of 1250 persons, the Presentation Branch, consisting of 82 persons, personnel remaining with the Strategic Services Unit of the War Department was 9,058 on 1 October 1945.

4. Finance. A 1945–46 budget of $20,000,000 had been approved by Congress. With the surrender of Japan the President recommended that this be reduced to a liquidation budget of $10,500,000 to last until 1 January 1946. In view of the Executive Order of 20 September, meetings have been held with officials of the Departments of State and War, and the Bureau of the Budget, and agreement reached by all to the following allotment of funds:

LIQUIDATING BUDGET

	Unvouchered .003	Vouchered .002	Vouchered .001	Total
Liquidation Budget, 1946	2,750,000	250,000	7,500,000	10,500,000
Less, Estimated Obligation 9/30/45	1,350,000	215,000	4,435,000	6,000,000
Bal. Remaining for Obligation	1,400,000	35,000	3,065,000	4,500,000
Recommended Reserve	460,000	—	1,000,000	1,460,000
Balance	940,000	35,000	2,065,000	3,040,000
Recommended Transfer to State Department	15,000 *28,000	35,000	311,000	389,000
Recommended Transfer to War Department	897,000	—	1,754,000	2,651,000
	940,000	35,000	2,065,000	3,040,000

5. Equipment and Supplies. Instructions have been issued to every Branch, Office and Mission of the Strategic Services Unit to prepare a physical inventory of all non-expendable property as of 1 October 1945, including property belonging to those Branches of OSS transferred to the Department of State. A copy of the cables sent to each mission of OSS is attached as Exhibit 6. These inventories are now in preparation, and will be completed by 30 October 1945.

6. Schools and Training Establishments. Liquidation of the OSS schools and training activities was well advanced prior to their transfer to the War Department. All schools overseas have been closed and the personnel have either been returned to this country or are en route home. Except for those below listed, all schools and training areas in the United States have either been closed or the properties are being processed for return to their owners by 1 November 1945.

a) “Area N” (Congressional Country Club), which is being used as the reallocation and rehabilitation center for personnel returning from overseas.

b) “Area W” (1917 Eye Street, Washington), which now houses the staff used for psychological assessment of personnel and the staff of the Advanced Intelligence School. Both staffs are engaged in completing studies based on their work.

In addition, a few students are completing Oriental language courses at the University of Pennsylvania under contract arrangements between the University and OSS.

7. Missions Outside Continental USA. As of 30 September 1945 OSS had the following missions abroad:

a) Great Britain: Headquarters are in London. Attached for purposes of administration to USFET. Included within the mission are sub-missions for Norway and Denmark.

In addition to its direct intelligence functions, an important function of SI is to maintain close relations with British SIS. A principal concern of X–2 is the interrogation of SS, Abwehr and PSNA personnel. R&A is supplying dossiers containing integrated files of evidence collected in London to the Office of U.S. Chief of Counsel for the Prosecution of Axis Criminality (OSS).

b) France: Headquarters are in Paris. Attached for purposes of administration to USFET. Included within the mission are sub-missions for Holland and Belgium.

Intelligence is collected by the Nice Mission, by personal contacts, by liaison with the Basque refugee groups, and through other sources. In addition, SI maintains a productive exchange of information with DGER for all types of intelligence, including Safe Haven intelligence. X-2 activities have been materially curtailed by reductions in personnel, but field units continue operating in Bordeaux, Metz, Marseille, Nice, and Brussels; close contact is maintained with the Embassy in Paris and the US Consulates in Brussels and Marseille. R&A was engaged in servicing USFET, US Group CC, the CCC, and maintained liaison with the Army Engineers at Versailles. Weekly meetings are held with representatives of the Embassy, the Military and Naval Attachés, and USIS.

c) MedTO: Headquarters are in Rome. The mission is responsible to the Commanding General AFHQ. One X–2 and two R&A men are attached to the American Group of ACC in Bucharest. Also, two members of R&A are attached to the US Embassy in Belgrade, and one to the US Legation in Sofia.

Preparatory to establishing new clandestine networks, OSS terminated the activities of its SI Branch in Italy prior to 30 September. On that date there remained a counter-espionage program, a medical intelligence program, an intelligence Photographic Documentation Project, and an active R&S research program with offices at Milan and Rome.

d) Germany: Headquarters are in Biebrich in the American Zone. This is an autonomous mission responsible to Lt. General Clay through the Intelligence Officer of the US Group CC. Included within the mission is a sub-mission for Czechoslovakia, with headquarters in Prague.

Major activities are carried out by SI, X–2, R&A. SI is occupied principally with production units located in Berlin, Bremen, Heidelberg, Kassel, Munich, and Nuremberg. Units also operated in the British Zone and in Eastern Germany. X–2 has as its primary objective the penetration of German society and economy. R&A furnished information and material to US Group CC, CCC, and the Finance Branch, G–5, USFET.

e) Austria: Headquarters are in Vienna. Responsible through C–2 to the Commanding General, USFA. Detachments are maintained at Salzburg and Zell-am-See, and a small intelligence team in the Trieste area.

This mission provides secret, economic and political intelligence and counter-intelligence to the US Command. Intelligence coverage includes the French and Russian Zones. A number of special studies and analyses of industrial and economic conditions to aid USFA in determining occupational policies in Four Power Council have been prepared. The Commanding Officer of the mission has devoted a part of his time to acting as interpreter to the CG, USFA, in the Four Power Conference.

f) METO: Headquarters are in Cairo. Responsible to the Commanding General, AMET. Included within the mission are sub-missions in Istanbul and Athens. In addition, there is maintained an open office in Casablanca, and operatives in Addis Ababa, Tunis, Tangier, and Algiers, who report directly to Washington. Although the unit in Greece is technically under the jurisdiction of AFHQ, by informal arrangement it is serviced from Cairo.

This mission serves the AMET military commander by aiding and cooperating with OIC in supplying intelligence for the protection of ATC. It also supplies secret political and economic and counter-espionage intelligence to the State Department representatives, R&A, and the Army and Navy Liquidation Commission. It provides C–2, AMET, and the Military and Naval Attachés with military intelligence as well as economic and political material.

g) China: Headquarters are in Chungking and Kinming, with field house at Hsian and Chihkiang. It is expected that headquarters will be moved to Shanghai in the near future.

China Theater Headquarters directed on 22 August that the OSS intelligence organization and network continue at full strength for an estimated 90 to 120 days to gather intelligence of value to that Headquarters during the reoccupation period. A [illegible text—secondary?] objective of the program in China is to lay the groundwork for a long-term post-war intelligence net. A special unit has been set up, under the strictest possible security, to draw up a plan for the reorganization of this net.

Intelligence reported as of 30 September covered the China Theater from Manchuria to French Indo-China. Intelligence missions were located at Mukden, Chenhsien, Peiping, Suchang, Tientsin, Changsha, Hongyang, Kuezui, Tsingtao, Hsian, Taiyuan, Shanghai, Taihoku in Formosa, Hankow, Canton, Nanking, Kien, Nanchang, Hongkong, Hangchow, Fort Bayard, Hanoi, and Vientiane.

Intelligence was disseminated to G–2 of the Army Commands in China Theater, the Navy Group and the State Department representative.

h) India-Burma: Major installations are maintained at Kandy, Calcutta, Rangoon, and New Delhi, with supply and training sub-bases at Comanbo, Trincomalee and Galle on Ceylon. Small missions are located in Singapore, Bangkok, Saigon and Batavia. These teams were established for the purpose of gathering current and long range strategic intelligence. Administrative and supply functions are centered at Kandy and Calcutta.

Information gathered in the Theater is furnished directly to the Ceylon and New Delhi headquarters of the US Theater Commander and to the State Department representative who serves as the US Theater Commander’s political advisor. Counter-intelligence is coordinated with the British CICB, and R&A at New Delhi maintains contact with FEA and the American Mission.

i) Hawaii: This office was established as an outpost of R&A and for liaison purposes. It has now ceased operation and is in the process of liquidation.

8. Activities in Connection with War Crimes. In his capacity as “Chief of US Counsel for the Prosecution of Axis Criminality”, Mr. Justice Jackson enlisted the aid of several branches of OSS; namely, Office of the General Counsel, and the R&A, SI, X–2, Presentation, Field Photographic, and Reproduction Branches (Exhibit 7). The Office of the General Counsel was designated as a central office to coordinate and correlate these activities, to analyze and screen evidentiary material, including that received from other agencies such as MIS and OID and to recruit prosecution lawyers.

Since the initiation of this project, a great volume of evidentiary documents and studies, including films, movies, graphic and pictorial exhibits, briefs, interrogations and affidavits have been collected from many sources and sent overseas to London, Paris and Nuremburg, where they are further processed for the trials. The personnel now actively engaged in War Crimes work in Washington and in ETO are numerically as follows:

Office of General Counsel,	Washington ETO	10 37
Research & Analysis, ETO	ETO	8
Presentation	ETO	8
Field Photographic,	Washington ETO	21 26
Reproduction	ETO	4
SI	ETO	12
X–2	Washington ETO	1 7
Total		138

The above does not include the large number of SSU personnel devoting part time to War Crime work or related activities, nor does it include the group of British nationals employed full time on this project by SSU.

9. A report showing the reorganization of the Strategic Services Unit and objectives with respect to partial liquidation and future activities will follow.

John Magruder ⁴

Brig. Gen.

0. Source: Central Intelligence Agency Historical Files, HS/HC–265. No classification marking.
1. Document 14.
2. Enclosure 1 to Document 3.
3. Exhibits 3–7 were not found.
4. To be transferred to State Dept. as .022 Funds.
4. Printed from a copy that bears this typed signature.