Part 2: Wedge From P.Harbor to 9/11 How the Secret War Between the FBI & CIA has Endangered National Security...Double Cross....American Gestapo?

WEDGE 

FROM PEARL HARBOR TO 9/11 HOW THE SECRET WAR BETWEEN THE FBI AND CIA HAS ENDANGERED 

NATIONAL SECURITY 

MARK RIEBLING

CHAPTER THREE 

DOUBLE CROSS 

AGENT TRICYCLE HAD SPENT December 7, 1941, getting a suntan. To arrange for receipt of a radio transmitter, he had left New York City by Pan Am Clipper on November 14, making Rio de Janeiro by the 18th, and giving the torn half of his business card to “Alfredo, ” the Abwehr’s top agent in Latin America. Alfredo had agreed to send a transmitter to Quebec, where Popov could pick it up. Popov was returning to America aboard the luxury cruiser S.S. Uruguay, which was just pulling out of Port of Spain, Trinidad, when the captain told the passengers about Pearl Harbor. Popov would recall feeling a pulse of pride. Despite his problems with the Bureau, he knew that American officials had possessed his Pearl Harbor questionnaire since August 19, which was almost five months’ warning. He was confident, he later said, that the United States had scored a great victory—and bitter when he learned the truth. 

As Popov arrived at Manhattan on December 15, 1941, FBI agents were ferried out in a tugboat and boarded the ship before it entered the harbor. Popov would record that he grilled the agents about their failure to use his Pearl Harbor intelligence; Bureau records have been censored on “national-security” grounds exactly at the point where such recriminations should have been documented. But when Popov told the agents that his Brazilian handler had given him more microdot queries, the Bureau’s reaction was plainly more electric than it had been in August, before America was at war. “This is vitally important, ” Hoover scrawled on the case summary. “Get copy of ‘dots’ so I may see them.” By year’s end, the FBI was finally playing Tricycle as a double agent, using him to disinform the Germans—an undertaking crucial to any eventual U.S. invasion of the Continent. But the Bureau’s approach to this deception game would only further alienate Popov and his British sponsors, causing a dramatic expansion of Donovan’s empire. 

Popov told the agents that the new dots were concealed in “butterfly trays”—souvenir serving platters with beautiful dead specimens preserved under clear enamel. Like most of the returning tourists on the Uruguay, Popov had brought home a few of the trays, and immediately after the boat docked, agents seized all of them on board. A Bureau technician removed the backs, studied the paper stuffing used to put pressure on the butterflies, and peered patiently through a hundred-power microscope. Dots were found in the wing of a butterfly in one of Popov’s trays, but none of the others yielded any. Thorough examination could not be done without removing each wing and cutting into the frames, but the attorney general refused a special FBI request to impound permanently the property of U.S. citizens. 

Still, Popov’s dots contained suggestive intelligence questionnaires. “In the U.S.A. a cartridge powder is manufactured which is practically smokeless and with a weak muzzle flash, ” one query noted. “Further details requested, color of the muzzle flash, color of the smoke. If possible the constituents of the powder.” Another dot held a seven-page list of interrogatories about U.S. atomic-bomb research—how the U.S. processed uranium ore, “to what degree of purity, the quantity they processed, and the amount they had in stock.” By answering these and other questions plausibly but incorrectly, the U.S. might deceive Hitler’s High Command about the state of U.S. weaponry and tactics. The FBI consulted G-2 for “feed” material, and in January 1942, after Popov’s radio set was transshipped to him from Brazil via Quebec, phony data were bleeped in code to Berlin. 

But though the messages purportedly came from Popov, the FBI did not let him know what they said. According to one British intelligence officer who handled his case, Tricycle “was not even taken to see the radio station which had been built for him, with the result that he was in danger of being caught out by a snap question from a genuine German agent in America or by a request to send a message at short notice. Soon the Germans were complaining that his reports lacked ‘meat, ’ and they began to suspect … that [Popov] was working under [Allied] control.” 

What had happened was that the FBI cut Tricycle out of his own operation, because they suspected that he might still be working for Berlin. If Popov was legitimate, the Bureau reasoned, and had really been sent to America by the Nazis to build a network, Berlin should have put him in touch with other agents. But after six months in country, Popov “had not uncovered the identities of any German espionage agents in the United States, ” as one FBI skeptic noted, and he had “been given the names of no contacts in this country by the Germans at Lisbon or Rio de Janeiro.” Were the Germans on to him? Was he playing a double game? SIS agent Sam Papich was assigned to keep a close watch on Popov, and microphones were again planted in his apartment. A year after his arrival in America, the FBI officially dumped Tricycle back to MI5, on the grounds that he was a “liar” and was “too expensive to justify his retention.” 

He returned to London and became the ward of the “XX” or “Double-Cross” Committee, a British interagency group that aimed to mislead the Reich about Allied war plans. With the storming of Italy in September 1943, the ring began to close around Hitler’s Reich, and the Allies started planning Operation Overlord, the invasion of France. The Double-Cross Committee used Popov to tell the Nazi High Command that American troops would slash at the pastoral region of Pas de Calais, not the cliffs of Normandy. 

But the predominantly American makeup of the invasion force created definite difficulties for the DoubleCross team. Though General Dwight Eisenhower had been sufficiently impressed by North African deceptions to authorize the manufacture of standardized, portable, prefabricated decoy equipment, G-2 initially showed little interest in strategic deception, and even less skill. During summer 1943, in Operation Cockade, the U.S. Army had aimed to relieve the Russian and Mediterranean fronts by pinning enemy forces in northwestern France; troops were maneuvered, misleading information was planted on agents, the coast was bombarded—but the Nazis never reinforced the region, and in fact some troops were actually moved from it. Because the fictional Cockade assault was “wildly out of proportion to the real forces available, ” as a G-2 report later concluded, the enemy analyzed Cockade as merely “a large-scale exercise from which he had nothing to fear.” Obviously, if the Americans were to help the cause rather than hamper it, the British would have to design a suitable American “Double-Cross” capacity within the U.S. intelligence community, just as they had worked to create a coordinator of information in 1941. 

COULD HOOVER’S FBI do the job? Despite the mangling of the Tricycle game, even Double-Cross critics like Montgomery Hyde had to admit that “as the war progressed, increasing numbers of [FBI] double agents were put into operation in the Western Hemisphere, ” mostly on British initiative, but nonetheless able to deceive the Germans about such matters as Allied ship movements. By 1943, it seemed, the lessons of earlier failures had been learned; the Bureau was effectively running Walter Koehler, a Dutch veteran of German World War I intelligence, doubled by the British, and sent by the Germans to rebuild the Sebold network where Tricycle had failed. Through Koehler, the FBI was sending the Germans radio messages which “undoubtedly played a useful part in the general scheme of enemy deception, ” according to Hyde, who also credited Hoover because he undertook to plant false data on the German Embassy in Washington. One such bum steer was the claim that, if Hitler used poison gas against Britain, Churchill would retaliate with “secret weapons, ” including “some kind of glass balls containing chemicals producing such terrific heat that they cannot be extinguished by any known means.” 

The “new” Hoover even shared some Koehler data with OSS. In December 1942, he relayed to Donovan extremely sensitive intelligence “obtained from a German espionage agent [Koehler] who has recently landed in the Western Hemisphere, ” including the identities of Nazi agents in the European Theater. Among these was “von Werthern, ” a native of German colonial Africa who was “reported to be very clever.” Operating out of Brussels, von Werthern employed four men for special service along the French coast, “equipped with 14-watt radio sets, ” who “in the event of an invasion … were to remain behind the lines and communicate information to Germany.” All four agents also moonlighted for a Vichy collaborationist assassination squad known as “Todt”(Death), which sought to liquidate OSS agents and DeGaullist partisans. The identities of such stay-behinds were especially prized because, as an official British government account later noted, they had ”‘submerged’ themselves in their communities over a period of four years and [had] civilian occupations, ” making them “difficult to uncover.” One of the Todt agents, known as “Ritter, ” would soon be of special interest to OSS, because he was stationed precisely at the dummy invasion site, Calais. If allowed to spy freely, Ritter could conceivably compromise the whole D-Day deception; if doubled by OSS, he would be in a unique position to deceive Berlin about Allied invasion plans; if killed, he would at least tell no tales. The FBI’s Koehler tips, then, could be immensely valuable to OSS soldier-spies like William C. Colby, who parachuted behind the lines to neutralize the pro-Nazi networks. 

But if Hoover had begun to live down his reputation as a policeman, he also proved more than capable of returning to his crime-busting ways. As an official British Government history noted, “the FBI continued to regard double agents primarily as instruments for catching other spies.” When the Abwehr sent Popov more money in 1942, the Bureau had tried to draw the courier into a trap, which could have indicated to the Germans that Tricycle was under Allied influence or suspicion. After Popov had showed SIS his new microdots, Hoover had ordered: “See that no more butterfly trays are allowed to enter U.S. at any port “—which could have told the Nazis their technique had been compromised, and caused them to adopt a new one, which the FBI could not monitor. Similarly, when the Bureau was let in on British analysis of deciphered German signals, Hoover passed the information to Brazilian police, who rounded up fiftyseven suspected German spies; the British feared that the Germans might deduce that their codes were compromised, and change them. A British intelligence official would later lament: “The trouble at this stage was that Americans handled some information with reckless disregard for consequences. By trumpeting successes, they tipped off the enemy.” 

In an attempt to restrain Hoover’s enthusiasm for prosecutions, the Double-Crossers lobbied Washington for creation of a “joint interservices committee.” The result was an Anglo-American board, the Joint Security Control, based in Washington, set up in January 1943. But the JSC “did not produce any meeting of the minds between the FBI and the British authorities on the subject of deception,” as one British authority ruefully recalled. 

Unhappy with the FBI, the British turned to OSS. Donovan’s outfit had the jurisdictional right to operate in Europe, where most deceptions would be targeted and maintained, and Donovan himself was on better terms with British intelligence than Hoover. Perhaps most crucially, the British found Donovan’s officers much more “our type, ” especially since the contingent of Americans arriving in London for counterintelligence tutelage after April 1943 consisted largely of hard drinking, Anglophilic literary critics and historians from Yale. The guru of the group was poetry professor Norman Holmes Pearson, who struck the British as “hail-fellow well-met, and have you heard the latest one about the girl in the train?” Pearson could also be serious and smart enough, when it counted, and was suitably humble about the fact that he and his American academics were, in essence, going back to school. With the trust and cooperation of their transatlantic cousins, Pearson’s trainees became the core of a new counterintelligence component, effected by quiet British pressure on Donovan and formalized on June 15,1943. Appropriately enough, the American brainchild of Britain’s XX Committee was christened “X-2.” 

THE NEW UNIT was overseen in Washington by Donovan’s most trusted deputy, his former law clerk James R. Murphy, who had come to Washington in the summer of 1941, as he said, “to keep the knives out of [Donovan’s] back, ” and was now charged with sticking them into the backs of the enemy. That was to be done by literally destroying the effectiveness of German intelligence, by both offensive and defensive means. Defensively, X-2 would protect against hostile penetration and deception; offensively, it would penetrate and deceive. It would be both sword and shield. 

But both offensive and defensive functions had to be closely coordinated with the FBI, which kept its monopoly on operations in the Americas. X-2 documents of the period acknowledged, for instance, the importance of “FBI relations” for “the interchange of biographical data on individuals who are known to be or are suspected of working for the enemy, including pertinent and timely information on enemy agents moving back and forth between Eastern and Western Hemisphere.” Detection of enemy spies, and their possible recruitment into the D Day deception game, depended on the exchange of such information. 

Murphy therefore created a special section to handle FBI liaison. Effective December 1943, the section was headed by Horace Peters, a thirty-five-year-old Baltimore lawyer who had gone to Choate and Yale before working on watch lists and secret-writing cases for OSS. Peters began staying nights to review cables for material of potential interest to the FBI, and the Bureau reciprocated by sharing with Peters a mountain of pursuable leads. Mail openings in Bermuda revealed that a Colombian had been hired by the Nazis to spy on U.S. aeronautical production, and that the Vienna-born representative of a Swiss gun company had come to the U.S. to promote the manufacture and sale of 20mm cannon, but was associating with suspicious “pro-Nazi” persons. Thanks to FBI cooperation, such individuals could be used by X-2 to mislead Hitler about Allied invasion plans. The Bureau also serviced more exotic OSS requirements, such as the June 1944 request for pornographic pictures of Japanese women. Believing that “the Japs are sending obscene photographs of American girls through India and other such countries, in an effort to create the impression of lax morals on the part of Americans, ” OSS was “desirous of disseminating similar material with reference to Japanese girls, ” and wanted to know if the FBI had such items in its files. The Bureau discovered “35 or 40 photographs of this nature” in the Obscene File of its Crime Laboratory, and Hoover gave his handwritten “O.K.” for OSS to access the dirty pictures. Murphy could not have been completely insincere when he sent Hoover a special note “to express appreciation for the cooperation the Federal Bureau of Investigation has extended to the X-2 Branch of OSS during our first year of operation.” 

But despite the best efforts of Peters, there were problems. A key German operation was the smuggling of diamonds and platinum from the jungle mines of Brazil, via Lisbon, to Berlin; the Allies became aware of the traffic when the captain of a Brazilian ship discovered eight hundred grams of platinum and fifty grams of commercial diamonds in the false bottom of a Portuguese doctor’s stethoscope case. Interrogated by Portuguese police, the doctor confessed that many jewelers in Rio de Janeiro were working for the Nazis. The latest methods of concealment included false bottoms to boxes, double soles to socks, and “hollow soles and heels to footwear.”FBI agents had begun infiltrating the courier system and planting useless materials in place of strategic goods, while OSS toughs worked Lisbon’s docks. But Murphy’s deputy Thomas W. Dunn concluded in February 1944 that there was “no fixed policy regarding OSS participation in efforts against smuggling.” Dunn consulted U.S. blockade-enforcement officials to see if X2 coverage could be expanded into Hoover’s hemisphere, but was turned down flat: the Bureau was already doing a much better job than OSS, Dunn was told. When Dunn asked for a copy of one especially valued FBI smuggling report, “so that we might study its method, ” he was told OSS did not have a “legitimate need” for the information. Murphy never got the chance to remodel X-2’s reporting along the lines of the FBI. A British-proposed conference to coordinate diamond efforts never materialized, and smugglers slipped between jurisdictions for the duration of the war. 

In other cases, such as that of a man who was being cuckolded by young John F. Kennedy, Murphy would ask for help and get none at all. Shortly before Pearl Harbor, Hungarian-born film director Paul Fejos had set up something called the Viking Fund in New York, ostensibly to finance explorations in search of lost Inca cities in the Peruvian jungle. Murphy suspected such missions might be a cover for gathering intelligence for an Axis invasion of South America, or even for refueling German U-boats, especially given the unique characteristics of Fejos’ expeditionary yacht. Bought from Howard Hughes and donated to Fejos by Swedish gun manufacturer Axel Wenner-Gren, a known Nazi spy, it was the largest private boat in the world, featuring sophisticated radio gear and a battery of machine guns and rifles. Hoover meanwhile worried that Fejos’ wife, Danish journalist Inga Arvad, might be a German agent, and knew she had been intimate in 1941-42 with Ensign Kennedy, then assigned to Naval Intelligence. Fearing that Arvad might be trying to compromise Kennedy into revealing secrets—he was at the time handling naval intercepts for ONI—the Bureau had tapped the couple’s phones and bugged their rooms, which produced the terse note by a G-man in the surveillance log: “sounds of sexual intercourse.” Hoover’s investigation was still open in December 1944, when Murphy requested data on Fejos and the Viking Fund, only to find them “the subjects of a current investigation” by the FBI, who “for this reason … are unable to give us any information and request we do nothing in the matter.”

FBI anti-Nazi projects even threatened Donovan’s hegemony in Europe, where the Bureau reportedly plotted to kill the Führer. John Nichols, the son of Hoover’s close aide Louis Nichols, would later allege that “Mr. Hoover, my father, and a third man whose name I don’t know developed a plan to go behind German lines and assassinate Hitler. They actually presented this plan to the White House, and it got bucked to the State Department, and they got taken to task by Secretary of State Hull. What they had in mind was a three-man assassination team, and my father talked as though he and Mr. Hoover somehow hoped to take part themselves. My understanding is that this was no joke—they really did hope something would come of it.”

Nothing came of the Hitler plot, if there ever was one, but in 1943-44 the Bureau did begin increasing its work in the European theater, especially in Portugal. In June 1943, Murphy learned that agent Paul Darrow had arrived in Lisbon under cover as a flight radio operator on the Pan Am Clipper. Murphy regarded that occurrence as “most unsatisfactory and mysterious, ” and got the local chargé d’affaires to broker harshly a punitive arrangement under which FBI representatives could be stationed in Lisbon: “1. They are to conduct no positive, active FBI work in Lisbon; 2. Use no funds; 3. Set up no organization; 4. Engage only in Liaison work; 5. If their presence does not work out to our satisfaction, they are to leave that area.”

The settlement was about as lenient as the Treaty of Versailles, and as workable. The Bureau necessarily engaged in “positive, active” work—it had never been explained how they might restrict themselves to “negative, inactive work”—and its agents continued poking into OSS affairs overseas. One investigation embarrassed OSS by uncovering that fifteen hundred rolls of 35mm film, purchased by Donovan staffers from Eastman Kodak in the summer of 1942, had appeared on the black market in Lisbon. Another probe established that OSS financial attaché J. Ray Olivera was close to “a known German agent, ” Jacques Wolfgang. Though Olivera had been quietly dismissed, X-2 resented “the unusual nature of the questions asked by the Bureau,” feeling it could take care of its own. 

There also developed a general feeling that loud, open faced FBI agents did not really know how to move through the secret gardens of intelligence work, and that their presence might actually imperil D-Day deceptions. In October 1943, for instance, OSS Lisbon urgently cabled Peters with news that, “According to information given to a number of persons by the head man in Lisbon of the U.S. Federal Bureau of Investigation, Allied plans called for invasion in the vicinity of Trieste, after the surrender of the Italians, and the landing by United States forces would be made there during September, while invasion of the Netherlands and the north of France would be accomplished by English and French troops.”

Such open discussion of purported Allied war plans by an FBI agent could be read two ways, and both were bad. If the Bureau was trying to misinform the Nazis, they were doing it without coordinating with X-2’s efforts in that same sphere; their misinformation might be at odds with Murphy’s own delicately crafted fictions, and that might cause the Nazis to suspect deception. If, on the other hand, the FBI man was simply engaging in loose talk about what he believed were the Allies’ real intention, that was a breach of security even less forgivable. “With your permission,” Peters immediately wrote Murphy, “I would like to make this the basis of a verbal complaint to FBI (1) as a violation of the jurisdictional agreement, (2) indiscreetness on the part of the FBI which endangers and undermines the activities of the OSS in that area.”

THE COMPLAINT was made, and indiscretions lessened, but more potential deception-gaffes were created in the moonlit midnight of August 9, 1943, when two Nazi spies disembarked from a German trawler off Sāo Joāo da Barra, Brazil, paddled ashore in a rubber raft, buried radio gear in a sandpit, and were promptly arrested by local police. One of the agents, Marcus Baarn, was supposed to have settled in Rio to monitor ship departures; the other, Wilhelm Kopff, was to have set up a transmitter and safehouse network. The Bureau immediately began exploring “the possibilities of utilizing the captured spies] as double agents, ” as Hoover reported to Assistant Secretary of State Berle. If they could initially be made to “contact Germany in accordance with their prearranged schedules, ” and if news of their arrest could be kept from the Abwehr, they could be used to disinform Berlin.

Though Baarn proved too unstable to be of value, the FBI got right to work with Kopff. The captured agent assisted in the coding of radio messages, but was not allowed to touch the transmission key, lest he manage to get off a warning signal to his masters. Though aware that the danger of detection was great under these circumstances—every radio operator had a unique tapping style—a stand-in studied and practiced Kopff’s touch, and the FBI felt the Germans would be fooled. But on Halloween, Kopff somehow managed to get the tapper to precede a message with the digraph “NR13, ” which according to Kopff’s codebook would have indicated “danger.” The Germans showed no further interest in Kopff, and in January 1944 the FBI shut down the game.

Once the case was “bad, ” however, Hoover apparently felt it could be shared with OSS. Naval and Military Intelligence had been kept current by special courier since August 16, but Donovan did not receive documentation until January 1944. Consequently, there was yet again a very real danger that information conveyed to the Nazis by the FBI in one part of the world would contradict that fed by OSS in another. 

That situation was particularly vexing to the British XX Committee, which had the unenviable job of trying to coordinate double-agent operations between two rival American agencies. “Difficulties arose from interdepartmental competition, not to mention jealousies,” recalled Double-Crosser Montgomery Hyde. “The FBI employed double agents (usually in conjunction with BSC). Donovan’s OSS employed more. Naturally each agency kept its operations secret from the other, with the result that the FBI would sometimes suspect and investigate an agent who turned out to be under the control of OSS.” 

To address the FBI-OSS difficulty, the Double-Cross Committee sent over a paper emphasizing need for total consistency in deception, and William Stephenson pressed the issue at a White House conference with FDR and Hoover. “The lie must be consistent, both with the truth, as the enemy knows it, and with all other lies that have been told him, ” the British kept saying. “The enemy’s efforts to estimate our capabilities and intentions are continuous—and so must be our deception.” That was why it was imperative that double-agent games “be coordinated and directed from a central point.”

It had been hoped that the JSC could coordinate things, but American counterintelligence was still cut down the middle, and there remained a troubling “deception gap.” Coupled with a general German suspiciousness about agent reports which might now be caused by the Bureau’s blowing Kopff and Baarn, that dissociation could mean that D-Day would be a disaster. At worst, it could mean that the Nazis would catch on to the game and read deception messages “backward, ” as if through a mirror, to deduce the Allies’ true plans. It could mean that hundreds of thousands of American soldiers, instead of achieving tactical surprise, would be slaughtered on the beaches of Normandy.

Just how perilously close the plan came to exposure would become clear only afterward, when it was learned that Hitler had suspected the truth—that Calais was the feint and Normandy the target—but had uncharacteristically given in to his staff. Who could say which piece of anomalous data from a poorly coordinated double-agent game might have caused Hitler’s advisers to side with him, or encouraged the Führer him self to back his hunch? An official Army postmortem acknowledged darkly that, despite the good result, the great deception had proceeded under “the complete independence of each service—and definitely suffered thereby.”

FORTUNATELY FOR THE ALLIES, the sheer scale of the D Day game—double agents, notional radio traffic, dummy landing craft displayed in harbors—overwhelmed the interagency gaps. On June 6, 1944, the Germans were totally taken in. Hitler’s high command was paralyzed by the existence of the “real” army, which they believed would invade any day at Pas de Calais, and unheedful of the Normandy landings, which they believed a diversion. When Donovan went ashore at Normandy, Allied strength was so superior that he was almost disappointed. 

Recently promoted to major general, Donovan had been trying to get in on the landing, but Eisenhower wouldn’t let him. He had to content himself with watching from an offshore cruiser, and not.until the third day did Donovan and his London station chief, David Bruce, get their boots wet in the surf. By then the Germans had been swept back, but Donovan said, “Well, we’ve got to go in and do something.” He “borrowed” a general’s command car, and drove with Bruce into an area where the Germans were still firing from the bushes. The old war hero desperately wanted to be shot at, to shoot back—to win one more medal, or perhaps to simply die a soldier’s death—but the fire from the bushes was soon suppressed, and Donovan went back to his boat.

For OSS detachments working with the Allied Expeditionary Force, however, there remained much to do by way of mopping up. Murphy was ordered to form a pool of case officers for doubling captured enemy agents on the Western front, ideally “for the establishment and maintenance of cover and deception channels.” This activity was concentrated in Rome and, after Charles de Gaulle led his Free French down the Champs Elysees on August 26, 1944, in Paris, where Murphy predicted that the enemy was “laying plans for post-hostility intelligence operations.” Because the “transfer of enemy funds for intelligence purposes” would be integral to any such underground, a watch list of pro-Nazi French was passed to the FBI.

That was an easy matter, for the Bureau had moved into Paris, but also a prickly one, because the Bureau was beginning to make trouble. Hoover wanted custody, for instance, of the I. G. Farben Company’s Paris director, notorious for trading with the Nazis, who was being held by X-2. Donovan refused to turn him over until so ordered by Eisenhower. In early January 1945, X-2 Paris cabled Murphy about three additional FBI men on their way to France, where they were supposedly to “observe Communist activities in Europe.” The cable warned of a definite extension of FBI duties abroad, but saw no chance of reining in such “renegade Americans” unless steps were initiated in Washington.

Donovan demurred, for at the time he was tangled up with Hoover over relations between U.S. and French intelligence. He had befriended André Dewavrin, de Gaulle’s intelligence chief, and in September 1944 invited him to the United States to receive the Distinguished Service Cross. General Eisenhower would have approved Donovan’s pro-forma request had not Hoover objected that Dewavrin was behind 1942’s “Duke Street Murder, ” the killing in a London basement of a suspected German spy. Eisenhower sided with Hoover; Dewavrin was miffed. Donovan tried a flanking maneuver, telling Secretary of State Cordell Hull it was “necessary for us to lay short and long range plans with Dewavrin and to cement for the future intelligence relationships which we have effectively developed over past months.” Hull acceded, on the condition that there be no publicity, and Dewavrin came to the U.S. with his staff. But Hoover struck again, warning Attorney General Francis Biddle “that Colonel Dewavrin  is in the United States to organize and set in operation a secret intelligence organization in behalf of the French Government … Foreign powers must not be permitted to become established on American soil and should be discouraged whenever possible from taking root any place in this Hemisphere … particularly when dealing with a government which is provisional in character and within which strange and ruthless forces are at work.” 

Biddle conveyed Hoover’s concerns to Roosevelt, and Dewavrin reception in the U.S. was chilly. Offended, the French spy chief blamed Donovan, who had been formally charged with arranging the visit. Returning to his “strange and ruthless” homeland, Dewavrin promptly ordered OSS out of Paris. Donovan fought the order, and was able to keep a ghost staff, but Franco-American intelligence relations would never fully recover from the insult to Dewavrin. Sixteen years later, a Soviet KGB defector would tell U.S. debriefers the Russians knew of that tension and exploited it; the postwar French spy service, SDECE, was regarded as the weakest link and point of penetration into the Western alliance, since its officers were so uniformly anti-American.

Given the general tension over FBI work in Europe, Murphy was in no mood to hear, in March 1945, that Hoover wanted to add still more agents in Paris, where they would “function strictly in a liaison capacity as do the Special Agents assigned to the other American establishments at London, Lisbon and Madrid.” Exasperated, Murphy listed X-2’s objections in a blistering memo to Donovan.

1). This is simply an extension of the program Mr. Hoover has been undertaking for a long time to establish an intelligence network in Europe, which I feel must be considered in that light. 

2). Mr. Hoover does not stick to facts when he says that the agents to be attached to the Embassy in Paris “will function strictly in a liaison capacity as do the Special Agents assigned to the other American establishments at London, Lisbon and Madrid.” The agents at those places do not confine themselves to liaison activities. 

3). I am interested in Mr. Hoover’s statement that “hardly an espionage case arises in the United States that does not have some phase of its activity located in France which necessitates inquiry if we are properly to complete the matter.” We have always made that same statement both in SI and CE work leading into South America but apparently Mr. Hoover feels that the argument applies only to FBI. 

4). The FBI already has three representatives in Paris, not attached to the Embassy. In many respects they duplicate the work of X-2. 

5). I recommend that we oppose any further appointments of FBI men to Embassy positions in Europe until our own relationships are clarified, at which time it may be entirely appropriate to have FBI men, but to have them keep strictly within their proper bounds. We have watched them encroach in London, Lisbon, Madrid and in Italy. These things, together with their announced intention and desire to get into the foreign field after the war, are beginning to present a problem upon which OSS should take a firm position.

Murphy was a prophet. The problem of FBI expansionism would pre-occupy Donovan over the coming year, and already the rival organizations were competing for leverage in the restructuring of U.S. intelligence that would surely come with postwar peace. The outcome of this struggle would be of no small import as America moved from defeating her present enemies, the Japanese and the Nazis, to containing her erstwhile allies, the Soviets.

CHAPTER FOUR 

AMERICAN GESTAPO? 

ON DECEMBER 7, 1941, FBI agent William Sullivan had been wearing earphones and was monitoring a meeting of Milwaukee communists, picked up by a hidden FBI microphone, when the gathering learned that Pearl Harbor had been bombed. Sullivan would later recall that the communists whooped with jubilation, calming only when their leader, Josephine Nordstrand, pronounced solemnly: “This is the greatest opportunity we’ve ever had. At last we’re in. The Japs did what we weren’t able to do, get America into the war. Now our job is to penetrate all the patriotic organizations. By doing that, we’re going to gain the respectability we’ve never had.” 

The Nordstrand prediction was soon fulfilled. Communists were accepted in war-relief organizations, in the regular Army, and of course in OSS. Respectability increased even more after 1943, when Stalin dissolved the Communist International (Comintern), which convinced many that the communists had given up their goal of world conquest. In fact, control of fronts and foreign communist parties was simply transferred to the International Department of the Central Committee of the Soviet Communist Party, but Westerners did not know this then. There was some awareness of subversion, but few saw the Soviets as an espionage threat. The U.S.-Soviet alliance seemed so vital to the vanquishing of Hitler that, when American officials were warned of communist spies by informants like Whittaker Chambers, or Soviet-intelligence defectors like Walter Krivitsky, the possibility was discounted or ignored.

As the war drew to a close, General George Patton wanted to push past Berlin to Moscow, but Americans were tired of international conflict, and hoped the Soviets were, too. Eisenhower’s chief of staff, Walter Bedell Smith, attended a Soviet-American friendship dinner at the Waldorf Astoria, exchanged toasts with a Soviet diplomat educated at the University of Michigan, and came away believing the Russians might not be so bad. Even if they returned to their old ways after the war, which appeared unlikely, the successful crusade in Western Europe, and the awesome superiority soon demonstrated with the detonation of two atomic bombs, seemed to show that America was invincible. Life magazine editorialized about “The American Century, ” and one OSS man would remember that “The mood was one of a problem definitely solved, and of power.”

Donovan’s men had picked up ominous hints of Soviet intentions in early 1944—Yugoslavia was being practically overrun by Stalin’s operatives, and communist guerrillas in northern Italy were not being disbanded, as the Soviets had promised—but there was little willingness in Washington to hear what such OSS agents had to say. The clandestine operator’s perspective was completely different from that of the desk analyst, who knew communism only intellectually. Field operators were face to face with the Soviets, saw them trying to entice, coerce, or blackmail White Russians to return to the Soviet Union, knew the ruthlessness that accompanied their actions, the almost inhuman disregard for what was going to happen to people they were putting on railroad cars to Siberia. But there was no way that that kind of knowledge could be captured in typescript for someone in Washington, who read reports and looked at maps, and saw only oppressed peasants trying to shuck the yoke of imperialism in faraway lands. 

By fall 1944, however, a lurking sense of unease about possible Soviet designs on Europe, coupled with a consensus that there must be no more Pearl Harbors, had begun to spur discussion about the postwar need for a permanent U.S. intelligence system. The debate assumed great urgency around Christmas, when the Nazis counterattacked with total surprise and nearly routed the Allies in the dark forests of the Ardennes. Donovan’s area experts had predicted the attack, to be known as the Battle of the Bulge, but military intelligence had disagreed, and the joint chiefs could not pass the president any coherent assessment. No one wanted such a state of affairs to continue once Hitler was vanquished, when America would have to contend with Stalin. Everyone, even Donovan and Hoover, agreed that intelligence collection and analysis had to be centralized. The rub came over how.

ON HALLOWEEN 1944, FDR requested Donovan to draw up a proposal “for an intelligence service for the postwar period, which would be in over-all supervision of all agencies of the Gov’t, as to intelligence matters.” Three weeks later, Donovan recommended creating a Central Intelligence Agency, or “CIA, ” to coordinate and collect intelligence. CIA would also have the rather vague authority to perform “other functions and duties relating to intelligence as the President from time to time may direct.” But his new CIA, Donovan insisted, “would not conflict with or limit necessary intelligence functions” performed by “other agencies.”

Those other agencies were not so sure. A copy of the proposal had come into Hoover’s hands by late December 1944, and he promptly ordered his assistants to catalogue “its objectionable features as well as errors of omission.” These negatives were presented by FBI Assistant Director Edward Tamm at “a series of conferences with gentlemen not too friendly with OSS, ” as one of Donovan’s deputies told him. OSS tried to get minutes of the meetings, but could report to Donovan only that “such harsh things were said, apparently about you by Tamm, that it was decided that no one outside the committee should have them.” 

Tamm had in fact collected considerable evidence of Donovan’s failings. Though Wild Bill’s partisans later claimed OSS was “perhaps the most modern and efficient secret intelligence agency the world has ever known, ” Bureau files recorded that 85 percent of Donovan’s reports were “re-hashes of British intelligence, ” and that the British themselves were disenchanted with their former favorite. During a Donovan trip to London in early 1945, the FBI’s London legat reported that “General Donovan … did not desire to see ‘any damned British.’ I do not know the reason for his attitude … but apparently there is some friction between him and the British Intelligence Service.” That friction was certainly not unwelcome news to Hoover, considering that it had been Tory interventionism which had put Donovan in power. Donovan had also alienated other important backers, such as Navy Secretary Frank Knox; an FBI informant reported that Donovan was “a constant cause of embarrassment” to Knox, “due to the fact that Donovan used the Secretary’s name all over Washington, with all sorts of people, with respect to subject matters the Secretary has no knowledge of…. The less that Donovan is seen around the Secretary’s office, the happier everybody is, as he has such an apparently unstable personality that there is no way of predicting what he will ask for or do next.” An FBI War Department source summed up the anti-OSS mood by saying: “Donovan’s past sins are catching up with him.” 

Sensing Donovan’s weakness, Hoover moved boldly to push a plan of his own. Rumors of an FBI proposal were swirling at least as early as November 1944, and by December Hoover had sent one to Attorney General Biddle. Hoover conceded that OSS had met the wartime need for “an evaluation and analysis unit, ” but contended that peace required a group “established, controlled and operating at the security level and by professional security-minded and trained people”—a clear gibe at Donovan’s notoriously lax security procedures. The Bureau allowed that “there should be a worldwide intelligence organization, ” but conceived of it as essentially a confederation of existing components—with the exception of the OSS, which would be abolished. Donovan’s stations in Europe and the Far East would be taken over by Hoover, who would retain his own networks in Latin America. The prized OSS “evaluation and analysis” function would not be turned over to a separate agency, but centralized through interagency powwows “not dominated by any one group.”

Tamm presented Hoover’s plan to the military’s Joint Intelligence Committee on December 22, outlining the Bureau’s SIS work in Latin America and suggesting that it become the backbone of a postwar foreign-espionage service. Tamm’s audience was disposed to accept his message; General George V. Strong of G-2 interrupted several times to compare his experiences with OSS and the FBI, each time belittling Donovan’s efforts. When one Donovan defender observed that his evaluation-andanalysis unit was a good one, Tamm pointed out that the majority of the people in that unit were from private industry, and that it would be “practically impossible to keep people of this caliber on the salary that would be paid them as Government employees in the postwar period.”

Donovan was meanwhile trying to drum up anti Bureau sentiment among his own set of minor Washington kingmakers, and in fact had been fighting the very idea of a Hoover plan even before it came into being. In October 1944, Donovan emissaries to the Bureau of the Budget were preemptively bad-mouthing the idea that postwar spying should be “tied up with and under the control of a ‘domestic police’ outfit such as [the] FBI, or any … FBI dominated operation.” OSS Deputy Director for Intelligence John Magruder expressed his concern to Julius C. Holmes, assistant secretary of state for administration, “that a national crime detective agency such as the FBI was branching out into international intelligence activities, ” which was “not only opposed to our ideas of the conduct of government but incidentally was very vulnerable politically in the United States.” During this sounding-out phase, Donovan avoided confronting Hoover openly; he did not want to open fire before all his cannons were rolled into place, and even refused to sign letters to Hoover, ghosted by Murphy, which seemed unduly hostile in tone. Yet even as Donovan moved quietly to spike the FBI plan, his enemies upped the ante by taking the whole dispute public in a very nasty way.

On the morning of February 9, 1945, Donovan picked up the Washington Times-Herald from his Georgetown doorstep to read the front-page headline: “Donovan Proposes Super Spy System for Postwar New Deal. Would Take over FBI.” Someone had leaked the complete text of Donovan’s CIA plan, which reporter Walter Trohan warned would “pry into the lives of citizens at home, ” “supersede all existing Federal police and intelligence units, ” siphon “secret funds for spy work along the lines of bribing and luxury living described in the novels of E. Phillips Oppenheim, ” and “employ the FBI on some tasks and charge the G-men not to report to J. Edgar Hoover.”

Donovan telephoned Colonel Ole Doering, his executive assistant. In a soft voice, he said, “Ole, I want you to find out who did this and report to me.”

Doering drove over to “the Kremlin” and traced dissemination of the five known copies of Donovan’s CIA plan. By nine o’clock that morning, when Donovan arrived at work, Doering had the answer. He said that J. Edgar Hoover had “personally handed the memorandum to Trohan.” It would be said by Donovan’s people that their boss had “marked” copies of the memo with tiny textual differences, and that the unique alterations in Hoover’s copy turned up in Trohan’s article. A Top Secret CIA internal history would note flatly in 1972 that “J. Edgar Hoover, Director of the Federal Bureau of Investigation, is believed to have been responsible for this breach of security, his purpose having been to prevent the creation of a central intelligence agency based on the OSS.” Declassified Bureau files would later confirm only that as of March 12,1945, Hoover’s personal copy of the Donovan plan was missing: “An extensive search was conducted by the Records Section in the effort to locate the copy designated for the Director. This search was made with negative results.”

In Congress, the leak created immediate and bipartisan protest against Donovan’s proposal. That very day, Senator Edwin F. Johnson (D-Colorado) declared that he did not “want any superduper Gestapo” Representative Clare Hoffman (R-Michigan), denounced the plan as “another New Deal move right along the Hitler line.” President Roosevelt telephoned Donovan late in the afternoon and said regretfully that, in the current climate, there was no way to go on with the plan. They would have to “shove the entire thing under the rug for as long as the shock waves reverberate.”

Two months passed. The Allied armies vaulted across the Ruhr, into Germany’s wrecked industrial heart. Donovan traveled to Paris and checked into a suite at the Ritz hotel formerly favored by Hermann Goering. He would see that OSS had its role to play in Europe after the inevitable armistice, and when he returned to Washington, he would revive his plan. Roosevelt had asked him only the previous week to reconvene the chiefs of the various intelligence agencies to discuss the matter, and on April 6 Donovan had submitted a revised proposal. The OSS director faded to sleep on the night of April 12, feeling that his peacetime dream for a CIA seemed assured, that he had nothing to worry about as long as President Roosevelt supported him. 

The next morning, Donovan was shaving when a young aide banged at the door. There was an urgent OSS message from Washington. President Roosevelt had suffered a massive cerebral hemorrhage while sitting for a portrait and had died. Donovan spent the rest of the day on the edge of his bed, deeply depressed. When someone asked him, “What will happen now to OSS?, ” Wild Bill said, “I’m afraid it’s the end.”

HARRY TRUMAN GAVE Donovan hell. That was Truman’s way with everyone, but the habit was exaggerated in Wild Bill’s case because, as James Murphy would recall, “Truman didn’t like Donovan and Donovan didn’t like Truman. Period.” William Colby considered it common knowledge that his boss and the new president didn’t get on, but postulated less personal reasons. “Truman considered him an empire-builder. And let’s face it, Truman was a Democrat, and Donovan was a Republican. And you know, if Donovan came home with a brilliant record, he could become a real candidate. So I think the worry was in Truman’s mind that he could become a political threat.”

Truman’s mind was also poisoned by Harold Smith, director of the Bureau of the Budget. A young man who belonged to no political clique, Smith was essentially an “outsider” like Truman, and so could be unswervingly loyal to him. It was to Smith that Truman turned for counsel on the future of American intelligence—or, rather, it was Smith who compelled the president’s attention in late April 1945 to a “tug of war” between the various agencies competing for postwar primacy.

Smith’s bias was bared when he selected, for Truman’s first briefing on the problem, not a panel of service chiefs or a roomful of experts, but the man who happened to be J. Edgar Hoover’s immediate boss. On the very day FDR died, Hoover had briefed Attorney General Biddle on “the weakness in and objections to the plan as proposed by General Donovan, ” and on May 1 Biddle conveyed the Bureau’s anxieties directly to the new president. Biddle noted that the FBI was “working highly satisfactorily” in South America, and urged that, “following the war, intelligence coverage should be arranged, but that it should not be the Donovan plan.”

Donovan had meanwhile been trying to see the new president, but did not succeed until May 14, when Truman consented to sit with him for fifteen minutes. It was the only private meeting they would ever have, and it was a disaster. As Donovan recalled, Truman said: “The OSS belongs to a nation at war. It can have no place in an America at peace. I am completely opposed to international spying on the part of the United States. It is un-American.” Donovan begged to differ, but Truman was icily quiet. Donovan showed him a memo by Roosevelt, dated a week before his death, which asked that Donovan convene various agencies to discuss implementation of the CIA plan; Truman ignored it. When Donovan left, it seemed pretty clear to him that OSS would be dissolved with the surrender of Japan, and that his proposed CIA would not be created, unless Truman could be dissuaded from thinking of it as an “American Gestapo.”

Donovan determined to do that by improving the public image of OSS. Taking a cue from Hoover’s own genius, Donovan engineered a massive public-relations campaign. A number of journalists who had been recruited into OSS were ordered to interview the most heroic among their colleagues and churn out “now it can be told” adventures. A Madison Avenue advertising man was brought in to oversee the whole enterprise, and a massive blitz upon the American imagination was secretly scheduled for summer’s end. “Capital Ax Falling on Priceless Secret Spy System!” cried the Chicago Daily News just after Labor Day, and so the barrage began. Where Hoover’s campaign had drawn heavily on conservative, isolationist, small-government, anti-FDR newspapers, Donovan relied on organs of exactly the opposite stripe. The New York Times praised Donovan’s postwar plan, and the Washington Post publicized the dubious figure of “4000 stranded fliers rescued by an OSS underground railway.” Comic books showed dashing OSS operatives in derring-do adventures behind enemy lines. OSS parachutists like Tom Braden, who returned from their secret war expecting to hear the usual jibes about “Oh So Social, ” suddenly found themselves figures of glamour. The hyperbole was shamelessly purple: OSS was “an organization as revolutionary in our military life as the atomic bomb, ” and was “perhaps the most modern and efficient secret intelligence agency the world has ever known.” Moral of the stories: “Only a permanent central bureau of intelligence—based on the lessons that these men of the OSS have taught us, free from politics and interdepartmental jealousies , alert as a seismograph to every global tremor—can insure our future security.”  

But Donovan overkilled the issue. OSS officer Corey Ford, who played a large role in hyping the agency, later conceded that Donovan’s opponents “seized the opportunity to charge that Wild Bill was indulging in vainglorious publicity.” When Hoover saw an article stating that Donovan “gave us for the first time in American history a really coordinated intelligence service, ” he scrawled: “He [the journalist] must be on Donovan’s payroll, ” and that was the general reaction. Columnist Drew Pearson warned readers not to believe the tall tales of daring, which had come to the public’s notice only because “little Gremlins in Donovan’s entourage were playing with matches.” The PR campaign riled Truman, and Smith’s attitude only hardened as he realized that public pressure might foreclose options for dealing with Donovan as he and the president saw fit.

Donovan’s last hope for victory was a strategic retreat. “I wish to return to civilian life, ” he wrote Smith. “Therefore, considering the disposition to be made of the assets of OSS, I speak as a private citizen concerned only with the security of his country.” This might have made him seem a bit more noble, but Donovan’s deputies feared that his withdrawal was a “fatal concession, ” since the dream of CIA was denied its principal architect and advocate. On or about September 13, Truman ordered OSS abolished.

The only problem was, no one had the heart or courage to tell Wild Bill. The president refused to do it, and Smith fished around for a week without finding any takers. Finally, a week later, he ghosted a letter for Truman. Effective October, Donovan’s prized Research and Analysis Unit would be awarded to the State Department, and his foreign operations, including X-2, transferred to the Army. Though the coming diaspora was explained in clinical detail, Donovan was told to regard that not as an end, but as “the beginning of the development of a coordinated system of foreign intelligence.” The death of his own creation was hardly what Donovan had fought to attain, but he was supposed to take consolation in the fact that “the peacetime intelligence services of the Government are being erected on the facilities and resources mobilized through the Office of Strategic Services during the war.” The letter was a cold, dishonest piece of work, carried over to Donovan by Smith’s assistant Donald Stone. Donovan took the news, Stone later said, “with a kind of stoic grace,” giving no outward indication of the personal hurt he must have felt about the way in which he was informed.

Stone never told him, and Donovan never knew, that at the same time his termination letter had been put for signature on the president’s desk, Smith had also placed there a plan for a new foreign spy service. This was the plan for a “peacetime” organization which the letter to Donovan said would be his true legacy, “erected on the facilities and resources” of OSS—the outcome which, the letter proclaimed, he should take credit for, and view with pride. 

It was the FBI plan.

J. EDGAR HOOVER’S long-standing hostility to communism lent a certain credibility to the idea that he was the one to lead American intelligence against the new threat. Though posthumous attacks on his reputation, and his own anti-intellectualism, would all but obscure his role in twentieth century American intellectual history, Hoover was the philosophical god-father of American anticommunism, contributing two key points to its doctrine when writing up his legal brief against Bolshevism as a twenty- four-year-old clerk in 1919. One, ideas mattered, and certain violent actions would necessarily result from Lenin’s theories. Two, there was a conspiracy; the international movement was supported and guided by Moscow. Knowing communism from its earliest days, he never moderated his views during World War II. “Of course we have to kill the Nazis, ” he would say, “but you mark my words, a year later—two years later—we’re going to be fighting the Communists. They’re a great ally today, we have paper for Russia drives, we have this, that, and the next thing, but they’re going to be our next enemy. We won’t have peace."

By September 20, 1945, when his proposal was put on the president’s desk, those who had been listening to Hoover had reason to believe he was right. There was open disagreement among the war’s victors over the spoils; the Soviets clearly had their own ideas about what U.S. newspapers were politely calling “the question of freedom in Eastern Europe, ” and had yet to lift the military government in North Korea, which they occupied. Mao Tse-tung’s communists were suddenly so strong in China that the nationalist government of Chiang Kai-shek had to accept them as equals in a coalition government, which history taught could only go the way of Alexander Kerensky’s partnership with the Bolsheviks in 1918. In late August, an American woman had confessed to being a courier for Soviet spies within a dozen departments of the federal government. On September 5, Igor Gouzenko, a cipher clerk at the Soviet Embassy in Ottawa, Canada, defected and described Soviet plots to steal atomic secrets. It was in this darkening atmosphere that Truman, having disbanded OSS, immediately cast about for some new means to counter the Soviets.

The proposal that landed on the president’s desk on September 20, though rewritten by Smith, nevertheless retained the most salient features of Hoover’s plan. Centralization was needed, but not “extreme centralization” or “the creation of a single superintelligence organization not connected with any of the departments, ” as under the Donovan plan. Rather, coordination could be accomplished by confederating extant components through interagency pow-wows or, at most, a “small” central staff. Collection of foreign intelligence could be done through the Department of State, which had no assets of its own, but could draw, conveniently enough, upon FBI legations attached to its embassies.

Whatever their true qualifications for foreign service, no one could doubt the anticommunism of the Bureau, and loyalty concerns alone recommended it over former OSS personnel now at Army and State. In the new postwar order, Donovan’s policy of tolerating communists suddenly seemed a stupid thing, and cast doubt upon any work done by ex-OSS personnel reconstituted in the Army’s new Strategic Services Unit (SSU). The situation was so bad that no one could deny it anymore, as Donovan had done. When SSU obtained information on the armaments of Soviet warships, Naval Intelligence refused to accept it, saying SSU, with its former Donovan officers, was so “riddled with communists” that the material was “probably a deception.”

Cleaning out the stables therefore became the first priority of SSU’s chief. Colonel William Quinn was Regular Army, respected by OSS veterans as “a tough, open-faced man who radiated a bustling confidence”—a worthy torch-holder, pronounced Allen Dulles, of “the Donovan spirit, ” but trying to exorcise the Donovan ghosts.

“I took a helluva beating, ” Quinn would later say. “The FBI did not want a central intelligence agency. They kept pounding about breaking the SSU up, and give the assets to the Navy, and so forth … The theme was, Quinn is clean, but he harbored Communists. And that the OSS suffered because of the looseness of its nature; it even had criminals, lock pickers, and counterfeiters. Which we did … We had this general exodus, and an awful lot of principals were deserting their agents. We were trying to stem the tide of this disintegration of intelligence collection.” 

So in early October 1945, Quinn went to see Hoover. 

“Mr. Hoover, I’m just an Army man, ” Quinn would recall saying. “I’m not used to all this intrigue and stuff like that. But I hear all these rumors that the place is loaded with communists. You know what everybody in this town is saying about my unit. I would like you to vet every one of my twenty-five hundred principals—both criminally and subversively. Will you help me?”

Hoover leaned back in his chair. “Colonel, this is beautiful, ” he said, and seemed to mean it. “It’s unbelievably refreshing to me. The Donovan days are over. You know, I fought him in South America primarily, and wherever in the world. A hard-headed Irishman. And to have you as his successor come to me for help is just taking all the steam out of my hatred.” 

After their meeting, Hoover assigned an FBI liaison officer, John Doherty, to work with SSU’s Jason R. Paige, Jr., at the old OSS buildings where SSU was quartered. That amounted to “a real penetration, ” Quinn said, “but he was very nice about it.” Doherty said the FBI already had records of seven communists in OSS who had been kept by Donovan over Hoover’s protests. One had already left the organization; Quinn had the other six fired. The Bureau began vetting fingerprints, photographs, backgrounds of others. Five weeks later, Hoover was back in touch.

“Colonel Quinn, ” he said, “I have some good news and maybe a little bad. You are not riddled with Commies, that’s the good news. You do have a girl working in logistics who has been dating what we call a fellow traveler who is a very close friend of one of the diplomats in the Soviet embassy.” The girl was let go. When Quinn took a satchel of Soviet Baltic Fleet plans to ONI, they were accepted. SSU was back in the club. Quinn didn’t care what anyone said about Hoover—all this had gone on while Truman was pondering the proposal that would expand the Bureau’s foreign intelligence role, and it was hardly in Hoover’s interest to strengthen a rival agency, but that was what he had done. “I never forgot his patriotism, ” Quinn would say with emotion almost a half century later. “He helped me when I asked for the help.”

Truman was less inclined to ask for J. Edgar Hoover’s assistance, however. Since April 1945, the president had contacted the FBI director only “very sparingly, ” according to Hoover’s assistant Cartha “Deke” DeLoach. Truman did not have to worry, as he did with Donovan, about Hoover’s political ambitions or loyalty; Hoover had no party affiliation, and no real politics but to serve whoever was over him and to defend his Bureau and his country against apparent enemies. Like Wild Bill, though, J. Edgar was a living legend, and that did not make him especially welcome in the post-FDR White House. The FBI director’s eminence might make it politically impossible to dismiss him, but Truman would be wary about enhancing his power. As early as May 1945, the president had fretted about the FBI’s “postwar proportions.” He told Smith he had been “doing some thinking” about an information service for international relations, rather than any investigating group. Though he was not dead against a Bureau-based intelligence service, he wished Smith to ponder the wisdom, “from the standpoint of good neighbor relations, about our having the FBI in South America.” What was more, Truman indicated that he had some knowledge of the work the Bureau did at home, and that he apparently did not approve of some of it. Smith, though secretly a Hoover backer, was enough of a yes-man to agree that it “was not altogether appropriate to be spending Federal funds merely to satisfy curiosity concerning the sex life of Washington bureaucrats and members of Congress.” Truman put more of a point on it by adding that he did not want to put Hoover in charge of a “Gestapo.”

Perhaps it was only fair that Hoover should be haunted by the charges that he had apparently used, via Walter Trohan, to destroy Donovan’s plan, but there was more to it than the transfer of a journalist’s smears. There were Hoover’s domestic snoopings for Roosevelt, which included the monitoring of his political opponents and chronicling the extramarital adventures of First Lady Eleanor; there was the tincture of illegal surveillance which Donovan had pinned on Hoover back in 1924, when the director had been forced to admit that his “subversives index” was technically against the law. Hoover had given American anticommunism its basic tenets, but he had also contributed the extralegal ethos that would become its Achilles’ heel.

There were also complaints about the overall quality of the Bureau’s spy work. William Sullivan encountered a diplomat in Mexico City who said, “You know, you should stop having your men send in material from Nicaragua because we have better material sent in by our own men. Further, much of your material is inaccurate.” Undersecretary of State Julius Holmes felt that SIS agents in South America had “consistently showed the results of their training for criminal detection, and the pursuit of an individual, rather than the obtaining of information.” And policy specialists, led by George Kennan, grumbled that Hoover’s “cop mentality” had poked out America’s secret eyes in Moscow before they had even been allowed to open.

The incident in question had begun after Donovan had returned from a Christmas 1944 visit to Russia and proposed exchanging intelligence representatives with the Soviets. Donovan’s contingent would be stationed in the Russian capital, and Stalin’s NKVD officers would be registered in Washington. The stated purpose was coordination of anti-Nazi operations, but it was also hoped that American agents would stay in Moscow after the war. As Ambassador W. Averell Harriman pointed out, the American embassy had “unsuccessfully attempted for the last two and a half years to penetrate sources of Soviet information and to get on a basis of mutual confidence and exchange. Here, for the first time, we will have penetrated one intelligence branch of the Soviet government and, if pursued, I am satisfied this will be opening the door to far greater intimacy in other branches.” Of course, such an exchange would also increase Soviet spy resources in the United States. But the Soviets already had agents in-country, and at least the new ones would be identified when they came over. Having some agents on their turf, as opposed to none, would definitely create a more equal situation. 

Hoover, who would have to watch any new Soviets in the U.S., couldn’t have disagreed more. In February 1945, he alerted Harry Hopkins, FDR’s close adviser, to “a highly dangerous and most undesirable procedure to establish in the United States a unit of the Russian Secret Service, which has admittedly for its purpose the penetration into the official secrets of various government agencies.” The history of the NKVD in Great Britain and other countries showed clearly that the Soviets were after Western secrets. Why, then, should the Soviet spy agency be allowed to function in the United States “without any appropriate restraint upon its activities”?

Hopkins referred the matter to the Joint Chiefs of Staff, who decided that Donovan should be given a chance to defend his plan. Since Wild Bill himself was out of the country, OSS Colonel John H. F. Haskell made the case. After hearing Haskell out, a JCS planning committee found “no reason” for disapproving the exchange. But Hoover went around the planners to the attorney general and the Navy’s Admiral William Leahy, and together they persuaded the president to table the plan. As Hoover proudly scribbled on an FBI memo recounting the episode: “I personally protested to Pres. Roosevelt about the plan (It was one of Bill Donovan’s brain children) and the President took my side.”

By late 1945, however, Truman desperately needed to gauge Stalin’s intentions, and so sought the very Moscow presence Hoover had happily torpedoed. Disenchanted with Hoover’s narrow stance on the Moscow issue, disliking him personally, and disinclined to create an FBI “Gestapo, ” Truman rejected any expansion of SIS, as called for under the September 20 plan. Instead, he urged Budget Director Smith to cut FBI personnel to prewar levels, and cast about for “an entirely different solution.”

What that might be, the president could not say. Perhaps even he did not know, for in late September he took the strange step of telephoning Donovan, who was then returning to the practice of antitrust law in New York. In this conversation, Donovan had argued against any Hoover-directed organization and recommended Quinn for SSU director; Truman had followed his advice. Donovan had also lobbied successfully to place a young OSS-SSU lawyer, Lawrence R. Houston, on yet another committee considering plans for the centralization of intelligence. By year’s end Houston was shuttling between committee meetings in Washington and private strategy-breakfasts with Donovan at New York’s Metropolitan Club, and it was Houston, more than anyone else, who successfully bucked Hoover and saved Wild Bill’s dream of a CIA. 

Pressured by the president to come up with a workable plan, and disarmed by Houston’s youth and easy charm where they had distrusted the ambitious Donovan, the service chiefs gave in. They were heartened by Houston’s insistence that the new unit would (a) have no separate field-collection assets, and (b) would rely only on Quinn’s personnel, which the military controlled. As for the Bureau, the new authority would have no police or law enforcement powers, and no duties whatsoever within the United States; Hoover could even keep his agents in Latin America. It was the kind of artful compromise of which Donovan had been constitutionally incapable.

Hoover fought it still. As his old allies, the military chiefs, deserted the anti-Central Intelligence coalition, Hoover reversed himself and got behind the idea of a single, stand-alone foreign-intelligence authority—but proposed that it be the Bureau. Forwarded to Truman on October 22 by Attorney General Tom Clark, Hoover’s revised “Plan for U.S. Secret Worldwide Intelligence Coverage” made two intriguing arguments.

The first was that “it is not possible to separate the gathering of intelligence from police functions, in view of the numerous criminal statutes, such as those relating to espionage and sabotage, which must be enforced by police action though directly relating to intelligence.” In other words, since spies were criminals, spy-catching could not be divorced from police work, as it would be under the Houston-Donovan plan.

Second, whereas the Central Intelligence proposal would divide intelligence coverage along geographical lines, Hoover objected that this was unfeasible—in essence, because it would be like cutting a man down the middle. “Foreign and domestic intelligence are inseparable and constitute one field of operation, ” Hoover warned. “The German-American Bund and the Italian Fascist organization in the United States originated and were directed from abroad. The communist movement originated in Russia but operates in the United States. To follow these organizations access must be had to their origin and headquarters in foreign countries as well as to their activities in the United States. Every major espionage service has operated on a worldwide basis except that of Britain, which has had a separate organization for domestic and foreign intelligence. But Britain is in the process at present of consolidating the two services based on their experiences through the war period. In order to cope with the activities of various subversive agents in the United States with speed and dispatch, it is entirely evident that their activities must be followed throughout the various countries by one intelligence agency of the United States government. Valuable time, as well as efficiency and effectiveness, is lost if one agency covers their activities in Europe, another in Latin America, and another in the United States.”

Wise words, but they never had a chance. By mid-November, an interagency board had accepted the Donovan-Houston idea that intelligence should be divorced from police power—otherwise, there might be a Gestapo. Again, the FBI chief was checked by the very charge he had used to derail Donovan’s proposal. 

Truman was meanwhile growing impatient. He began yelling at his advisers: “I want someone to tell me what’s going on around the world! Damn it, there are people coming in from all over the place, different agencies, different interests, telling me different things.” The president had been following a congressional inquiry into the failure to be warned on December 7, 1941, and lamented to his young aide, Clark Clifford: “If we had some central repository for information, and somebody to look at it and fit all the pieces together, there never would have been a Pearl Harbor.” In the first week of 1946, haunted by fears that Stalin might launch a Pearl Harbor type attack on Paris or Berlin, Truman ordered his interagency intelligence board to implement a refined version of Donovan’s Central Intelligence plan.

Hearing of Truman’s order, Hoover went to the White House and argued against it. The Bureau was operating smoothly overseas, it would be easier to expand it than to start a new organization, and anyhow it was impossible to divide foreign and domestic intelligence work. But he was turned down flat, and when he persisted in arguing the point, the president said, “You’re getting out of bounds.”

So it came to pass that on January 24, 1946, Truman gave a reception at the White House, presented guests with black cloaks and paper daggers, and announced the creation of a new intelligence service. Under a National Intelligence Authority (NIA), made up of the secretaries of State, War, and Navy and the chief of staff to the president, there would be a Central Intelligence Group (CIG). It would “collect, coordinate, and analyze” all foreign intelligence for the president, but would have no “police, subpoena, law-enforcement powers, or internal security functions.” In all but a few important respects, it was the agency envisioned in Donovan’s plan.

Alas, one of those respects was that CIG was merely a centrally confederated intelligence Group, as opposed to the autonomous Agency Donovan had wanted, and that was a distinction with some difference. Houston had got agreement on most of the language that had been in Donovan’s original proposal, but the consensus had come with a price. Winning over the military chiefs had required chopping at the authority of the new agency until it was a body less head. Former Donovan officers in SSU became the active arm of CIG, but technically the personnel and money were contributed by Army, Navy, and State. Real control belonged not to the director of central intelligence, but to those who pulled the purse strings, the military members of the NIA. “The authority over the money was very doubtful, ” as Houston later admitted, and CIG’s new director was certainly not the man to claim it.

Wanting a trustworthy nobody—somebody he and the NIA could easily dominate—Truman appointed as America’s first official director of central intelligence Sidney W. Souers. A Missouri businessman and Truman campaign contributor, Souers had served briefly in Naval Intelligence after running the Piggly Wiggly grocery chain. He projected little personal authority, and had little real authority except his high-sounding title. He also had little interest in the job. He had agreed to take it only for six months, until Truman could find somebody better. Not long after he was appointed, SSU European-operations man Tom Braden went to see the new director in his office. “So, what do you want to do?” Braden asked him. Souers looked up from behind Donovan’s old desk and chuckled sadly. “I want to go home.”

Souers was only too eager to make concessions to the Bureau. The FBI director was made a member of CIG’s Intelligence Advisory Board, and was even allowed to seat a man on Souers’ planning staff; these moves gave the Bureau genuine beachheads in Central Intelligence. Hoover soon quit the board when he realized his ideas weren’t welcomed, and after his man on the planning staff was bested by military members, the order came down in blue ink: “Get out of this thing now. It will not work.” But Souers made other overtures to Hoover. As the DCI surveyed his unhappy domain, it seemed to him only logical that the old OSS remnant, X-2, should be handed over to the Bureau. After all, that would eliminate coordination problems and, finally, unite both foreign and domestic counterintelligence in a single organization.

Sensing their possible transfer to the Bureau, X-2 personnel inveighed against it. One senior officer protested to his bosses that “a separation of foreign counterintelligence from foreign positive [SI] intelligence operations would be disastrous to the latter and hampering to the former…. Any diversity of agency interests would militate against the success of a coordination which is essential. It is no exaggeration to say that if the X-2 function were to be divorced from positive intelligence work, the SI [foreign-intelligence] office would be forced to establish its own X-2 operations. Out of such an unfortunate situation would arise additional governmental duplication and the possibility of a dangerous conflict of American counterintelligence services. Either represents a consummation to be abhorred.” 

Souers, never a man to push an issue, quickly backed down. X-2 would stay in CIG. But Souers still thought Hoover could do a good job in the foreign spy field. Indeed, at lunch one day, he even asked Hoover whether he would be interested in absorbing CIG itself, en masse, when he, Souers, retired.

Hoover played coy. He was a shrewd enough bureaucrat to keep his Bureau out of anything in which he wouldn’t have total control, let alone no control, as in CIG. The National Intelligence Authority, which was supposed to exercise control, could hardly agree with itself, and CIG’s field components were operating without any relation to each other, like the independent joints of a poorly worked marionette. One of CIG’s most promising covert-action specialists, Frank Wisner, quit in a paroxysm of rage after he hired and trained two hundred agents to bicycle into East Germany and report on the Russian occupation, but couldn’t get approval to buy them bicycles. Two-thirds of CIG’s ex-OSS officers followed Wisner and returned to private life; Wild Bill’s old assets were being lost, it was said, “like shit through a goose.” Donovan began giving speeches, denouncing the warped incarnation of his Central Intelligence dream as “a good debating society but a poor administering instrument.” Finally, just before he stepped down in June 1946, Souers got up the nerve to ask the NIA for a Central Intelligence budget of his own, but he was refused.

FORTUNATELY FOR CIG, and much to the chagrin of Hoover, Souers’ successor was a man who loved a fight. A fearless test pilot before the war, commander of the Ninth Air Force, which had covered France for D-Day, and most recently intelligence chief for the War Department, Lieutenant General Hoyt Vandenberg was one of World War II’s “fly-boys, ” a handsomely dimpled hotshot who seemed born to wear a white scarf and brown leather jacket. He also had a reputation as a “chopper of dead wood, ” and after replacing Souers on June 10, he proposed a dramatic expansion of Central Intelligence, which would entail a brazen takeover of J. Edgar Hoover’s turf.

It happened in a curious way. To help chop the “dead wood,” Vandenberg had brought in a staff of Pentagon colonels, and those who witnessed the blitz would recall with awe how they simply took over from any who “did not measure up.” The new team closeted themselves in a back room and, without consulting anyone, drew up plans for a self-sufficient CIG. There was a wasteful duplication of effort where the president wanted coordination, and, if necessary, they would coordinate the other intelligence agencies right out of existence.

Some bystanders wondered whether Donovan had been coaching the new director, and certainly Vandenberg’s proposal would redefine Central Intelligence in a way that was positively Donovanesque. To discharge its “vital responsibilities, ” CIG “should not be required to rely upon evaluated intelligence from the various departments.” Rather, “funds, personnel, and facilities” formerly belonging to OSS and currently being run by State, Navy, and War should be “integrated into the Central Intelligence Group.” Such expansionism initially caused turmoil within the National Intelligence Authority, but Vandenberg’s colonels had some influence on their military colleagues, and it was also clear that Truman was behind Vandenberg and wanted change. On July 6, the plan was approved. CIG still lacked its own budget, but the strings were loosened, and Central Intelligence was given a right to conduct “all organized Federal espionage and counterespionage abroad.” That language entitled CIG to reclaim former OSS officers in the Army’s SSU, which was to be renamed the Office of Special Operations (OSO).

Vandenberg thought it also entitled CIG to do certain things domestically, like debrief businessmen who traveled overseas. Hoover consented to that, but at a price. CIG-FBI interface on domestic and other matters should be accomplished through one officer, not two; otherwise, there would be only more “confusion, duplication of effort and intolerable conditions to the detriment of the national well-being.” Since most contacts would occur domestically, the liaison officer should be a G-man. Vandenberg reluctantly consented, and for the next fifty years, the position of liaison officer would be held exclusively by agents of the FBI.

Hoover had little time to savor his victory, however, for in summer 1946 CIG tried to absorb the Bureau’s operations in Latin America. This was the bureaucratic equivalent of a declaration of war. Donovan had trespassed in Mexico, but no one had ever questioned the Bureau’s right to run its own collection and counterespionage operations south of the Rio Grande—let alone tried to steal them outright. And what a prize those Latin American networks would be. “That was a damn good setup, all the way down there, ” SIS man Sam Papich would later say. They had undercover operations, microphone surveillances, the works. And now it would all be taken away?

“Hoover fought it quite hard, ” Lawrence Houston would recall. But Vandenberg walked right into it, determined to personally present his case to Hoover. As director of central intelligence, he could not do his job if the FBI director was doing the same work. One was likely to expose the other. Either Vandenberg or Hoover should withdraw from the field. Since the National Intelligence Authority had decided that CIG should do all foreign intelligence, the FBI should give way. Logic, however, could not soothe a ruptured pride, and William Sullivan would remember that after Truman sided with Vandenberg, Hoover sent “a stream of admirals, generals, congressmen, and senators to the White House to try to change Truman’s mind.” But it was a losing fight, because it was obvious where, in the overall intelligence structure, Latin American coverage should go. Had not Hoover himself argued, only eight months before, that enemy agents “must be followed throughout the various countries by one intelligence agency of the United States government”? That “valuable time, as well as efficiency and effectiveness, is lost if one agency covers their activities in Europe, another in Latin America”? The FBI director was irate, but Truman wouldn’t budge, and the Bureau was ordered to shut down SIS.

Hoover complied with a vengeance. He removed all personnel, equipment, and records from the Dominican Republic and Costa Rica by mid-August 1946, and soon thereafter from Haiti, El Salvador, Honduras, and Brazil. Central Intelligence protested that there would be nothing left to take over when its officers arrived on the scene. “Hoover pursued a scorched earth policy, ” recalled Richard Helms, who then worked in CIG’s OSO. “He cleaned out all the files, wouldn’t allow his agents to talk to the new CIA people about sources. We got nothing worth having. He just cleaned the place out and went home in a sulk.” A hurried NIA meeting on August 7 produced a letter to the attorney general, asking him to keep Bureau personnel in place until CIG could assume control. Hoover slowed his withdrawals, but insisted that CIG should not employ ex-SIS agents.

He lost on that one, too. There was a secret war going on with the Soviets, and it was no time to tear down and rebuild a functioning structure just for the sake of bureaucratic pettiness. The new Western Hemisphere Division of Central Intelligence thus assumed a special character, having been almost entirely “made by the FBI.”

The decision was left up to individual officers, of course—no one had to join CIG who didn’t want to—and a few agents, like Sam Papich, did stay with the Bureau. “My life was the Bureau, plain and simple, ” Papich would say. “The fellowship and the camaraderie, and whatnot. And I met some of the characters in Central Intelligence —this changed in later years, but at the time I didn’t like them at all. They just weren’t my type; I thought some of them were probably communists. I didn’t know what the hell Vandenberg would do with me, anyway. It wasn’t very difficult for me to decide.” 

But many other G-men did cross over. Their adventures abroad had already attracted them to foreign intelligence work, and there were opportunities to better themselves financially by “going over.” Later it was whispered that a lot of ex-Bureau people had joined CIG partly for the purpose of “penetrating” it and were secretly reporting back through channels to Hoover. It was an unprovable charge, which FBI agents would quickly dismiss, but which CIG officers were rather more inclined to contemplate. 

After all, could that kind of behavior be beyond a man who had ordered his Latin American stations to burn their files rather than turn them over to Central Intelligence? The NIA might have mandated that Hoover keep his personnel in place for Vandenberg, but nothing had been said about all that priceless information. The first CIG officer posted to Central America arrived to find only a row of empty safes and a pair of rubber gloves in what had been an SIS darkroom. CIG officials complained to newspaper reporters that their men “arrived in the morning to find the FBI files burned and the FBI agents booked for departure that afternoon.” The excuse given was that the Bureau could not be sure whether Central Intelligence was properly “security-conscious.”

Was it envy, or was it prudence? Sam Papich, the last SIS man in all of South America, thought Hoover’s worries were well founded. “I was glad to be going back to the States, but I worried about the security of people we had been running as agents. I asked some of those people: ‘Do you want to be turned over to another outfit?’ No way! They were scared.” Papich was especially concerned about the fate of a recruitment he himself had made, a European—“the greatest ever, you could write a book on him.” As far as the agent was concerned, his work for Papich was a contribution to the war effort; he wasn’t a snitch, he was an agent, and insisted on being treated like one; and that’s how Papich treated him. But who were these people coming in to claim him, and what would they do with him? The agent didn’t know, nor did Papich, nor did Hoover. Therefore the FBI did not turn over everything, and people on the other side of it got mad. Eventually Papich was able to transfer the agent to an exFBI man and old friend, but such trust and continuity was not always there, and in general Papich would remember that period of time as “crummy and cold.” He added: “To turn over everything we had built—it broke my heart.”

The situation did settle down, and perhaps Hoover took some consolation in the fact that he was allowed to keep offices in Mexico City, Ottawa, London, Paris, and Rome. Hoover promised Vandenberg that the legal attachés who remained at those offices had been instructed to handle only the “international aspects” of domestic cases, and that they had been specifically told not to go “operational” or run informants. According to Sullivan, however, Hoover secretly instructed the Mexico City office to be operational, to run informants, to develop foreign intelligence—“to operate completely in violation of our charter.” The FBI and CIG would each investigate communism in Mexico, “and the American taxpayer would pay for the duplication.”

Still, though Hoover had fought it at the time, Papich believed that his boss was probably consoled afterward by a sort of “loser’s relief.” From what he knew and what he later learned, Papich didn’t think the director, who had never been outside the country himself, was ever really comfortable with the Bureau’s foreign work. Proud, maybe, of what had been done against the Nazis in Brazil and elsewhere during the war, but not fully confident. The Bureau could not verify the overseas overtime filed by unsupervised agents, and it was not easy to keep track of unvouchered funds used by SIS men undercover. Controls were in place, but Papich didn’t think such rigid procedures would have been practical after the war, certainly not against an enemy as subtle and sinister as the Soviets. Hoover had resisted the SIS takeover as best he could, simply because that was the kind of man he was; it was not within him to give up turf easily. But once he was beaten, Papich never heard him complain.

Nevertheless, the men of Central Intelligence were convinced that Hoover would bear them an eternal grudge for the Latin American coup. In a matter of months, a whole chunk of Hoover’s turf had just been chopped off, and it would have been against human nature, let alone Hoover’s, for him to have not known some lingering bitterness. It became an article of faith among the Central Intelligence crowd that “J. Edgar Hoover didn’t like losing the responsibility, ” that “he resented the fact that he was obliged to give up his operations in Latin America to the Agency after World War Two.” Young CIG officers posted to Latin America were told by superiors that “J. Edgar is never going to forgive us for taking over his territory.” Valid or not, that perception would eventually become as important, as powerful, and as damaging as any fact.

ON JUNE 13, 1946, three days after Vandenberg became director of central intelligence, Lawrence Houston had informed him that in a few months, CIG would be technically illegal. In the same spirit of anti-FDR backlash that would lead to the no-third-term rule, Congress had stipulated that no agency set up by the Executive Branch could survive for more than one year without congressional approval. Vandenberg soon put Houston to work on draft legislation, and Houston came up with a charter that was pretty much Donovan’s plan for a CIA. Truman’s new counsel, Clark Clifford, then brought into the process a group of generals who were working on a reorganizational bill of their own. It was agreed that CIA could piggyback on the behemoth military establishment, and the Agency was formally proposed when Truman sent the National Security Act to Congress on February 27, 1947.

But Hoover had his allies on the Hill. Congressman Fred E. Busbey (R-Illinois) said he worried about Central Intelligence “going into the records and books of the FBI, ” and Congressman Walter H. Judd (R-Minnesota) introduced an amendment that would prevent CIA “from being allowed to go in and inspect J. Edgar Hoover’s activities and work.” Otherwise, the Agency might find out “who their agents are, what and where their nets are, how they operate, and thus destroy their effectiveness.” The Judd Amendment was carried, but Republicans on the House Un-American Activities Committee still believed the bill did not go far enough to protect the Bureau. Vandenberg began to wonder whether the whole issue of protecting the Bureau was manufactured by Hoover’s defenders simply to stall the legislation and spur its sponsors to cutting out the troublesome CIA provision.

If that was the plan, it was doomed to failure. Pressure on Congress to pass a high-sounding National Security Act intensified as Stalin declared that the Soviet Union was commencing a program of massive rearmament. George Kennan declared that until and unless America could meet the Soviets with a strong military posture and covert political or guerrilla actions, “There is really no action we can take in Eastern Europe but to state our case.” Donovan found an appreciative audience when he argued, in a Life magazine piece, that America desperately needed “central intelligence appropriate to our position as the world’s greatest power, ” and though Hoover wrote on a Bureau summary of the article, “My, my, Col. [sic] Bill knows all the answers but few of the facts, ” the FBI could do little to stop the “Donovan idea” except, through congressmen like Judd, to state its case. After fruitless attempts at filibuster by Hoover’s allies, the National Security Act was passed, and on September 18, 1947, CIA was born.

The FBI’s defenders had succeeded, however, in limiting the new agency’s powers. When it came to matters that touched on Hoover’s jurisdiction, Central Intelligence authority had been sharply pruned by two provisos designed to protect the Bureau.

First, the FBI was not obligated to share anything with CIA except data “essential to national security”—and this only “upon the written request of the Director of Central Intelligence.” This language, added by Judd, was resented by CIA men like Ray Cline as “a concession to J. Edgar Hoover’s independence and fanatic protection of his files.” Why should the Bureau, alone among other intelligence agencies, require a written request? And why should Hoover be the sole arbiter of what he should have to share? How workable would such a process be? If another Dusko Popov came over and was being run by the FBI, would his information be withheld unless requested in writing, and unless Hoover deemed it “essential to the national security”? If he were not obligated in the first place to inform CIA on matters of mutual concern, how would CIA even know about Tricycle’s existence, and how would it even know to ask, specifically, for his information? Based on past experiences, could Hoover really be trusted to furnish Tricycle’s information by servicing general requests, such as Donovan’s October 1941 plea for intelligence on “the Pacific situation”? 

Second, CIA’s charter stipulated that “the Agency shall have no police, subpoena, law-enforcement powers, or other internal-security functions.” Houston added that language, he would later say, because the FBI asked him to. No one at CIA really wanted powers of subpoena and arrest, but the “internal security” prohibition was problematic. Did it mean that CIA could not coordinate or collect foreign intelligence in the U.S.? Could CIA officers debrief a Dusko Popov in New York? And if a CIA overseas employee or agent came to the United States representing a foreign government, CIA lawyer Scott Breckinridge would find himself wondering, “How should he be handled? He remained a foreign intelligence source, peculiarly within CIA’s jurisdictional authorization. Yet he could present a security problem, especially if assigned to the diplomatic installation of an unfriendly nation.”

These kinds of problems would have to be handled by ad hoc “arrangements between the FBI and CIA, ” presumably to be worked out by Bureau liaison officers. But as Breckinridge observed, there were “no established ground rules.” Nor could there be: the “internal security” clause was really another attempt to cut the man down the middle, to delineate between domestic and foreign counterespionage, which could only mean the creation of new twilight zones.

There was, however, an “out.” The director of central intelligence had been granted certain executive powers. At his sole discretion, he could take any actions he deemed necessary “for protecting intelligence sources and methods from unauthorized disclosure.” This clause provided a pair of operational baggy pants, in which husky ambition had room to move around. CIA also had the right “to perform such other functions and duties related to intelligence affecting the national security as the National Security Council may from time to time direct.” That was Donovan language, verbatim from his 1944 proposal to Roosevelt, and, depending on what the council authorized, it would give the Agency great scope. 

But if the executive powers granted CIA’s director gave him a certain flexibility, the elastic nature of the legislative language allowed actions which in themselves could create more problems for FBI-CIA relations than they would solve. Looking back on it years later, Breckinridge called the “other functions” provision a “banana-peel clause, ” and that assessment could just as easily stand for the whole foreign-domestic division, for the lot of fuzzy executive privileges which allowed its breach, even for the National Security Act itself. But that characterization and insight would not come until forty years later, when the shawl of secrecy had been yanked away to reveal the bruises—assassination plots, a divisive “molehunt, ” surveillance of antiwar dissidents. Only then would it be evident how badly and how often CIA, the FBI, and the country had slipped and fallen.

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https://exploringrealhistory.blogspot.com/2020/05/part-3-wedge-how-secret-war-between-fbi.html
BOOK TWO 
AMERICA’S JAMES BOND 
SHAKEDOWN CRUISE 

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