SPECIAL FUNDS BRANCH HISTORY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 00038955
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 89
• Document Creation Date: July 13, 2023
• Document Release Date: August 30, 2022
• Case Number: F-2020-01140
• Publication Date: April 10, 1946

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TO:
K0;2.:
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COPY
AVAILABLE
WAR DEPARTMENT
OFFICE OF THE ASSISTANT SECRETARY OF WAR
STRATEGIC SERVICES UNIT
25th & E STREETS, N.W.
WASHINGTON 25, D.C.
April 10, 1946
Peter Karlow
Secretariat
Robert hayden 1corn
Chief, Budget & Fiscal Division
5331E..;T: Sp,7Jcia1 FUndo 3r.-,rich distDry
In accordance with your recent repest there is
attached the Special Funds Hranch History.
I-lease advise me of what sections are to be used
for your purpose and return the attached to me.
,sent
Destrol on1/ -sit'n co
f tbe V
o iistorical Officer.
.
(1)
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13 August 1945
This manuscript, the History of Special tnds
Branch - Washington, was received 11 August 1945 from
Lieutenant Colonel John W. Williams, its author. fie 1-ta
no time to check or review it either for form or contet,
but simply file it for future reference.
onyers Read
OSS Historian
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OFFICE OF STRATEGIC SERVICES
WASHINGTON 2, D. C.
10 August 1945
!MORA IMUM
TO: Dr. Congress Read
Watery Branch
FROM: Lt. Col, John W. Williams
SUBJECT: Special Funds Branch Histo74 - Washington
1. It is with pleasure that I submit to the History Branch above
subject in time to meet the specified dead-line of 10 August 1945. Please
note that this History of the Special Funds Branch - OSS (now Special Funds
Division of the Finance Branch) covers the Washington Headquarters from
1 January 1942 to 30 June 194b, a period of three and one .half years. Like-
wise, please be advised that this History has been approved by Colonel W. L.
Rehm, former Chief Special Funds Branch, now Chief Finance Branch.
2. The History itself is in a loose leaf binder which is included,
with the attachments, in a brown manila envelope. TheAttachmants are too
lop&to_plip in the binder itself. As per our agreement, this History is to
be maintained intact, and eery security angle considered in connection with
As safekeeping. Much of_the_matedal shou1d_0244-1?Q_ALMI Ander the authority
ef the Directpr, thii-Feing especially..true..cf the coverage "Disbursing-Offiotr
Foreign Exchange commencing on page (34).
3. Due to the difficulty in assembling and putting together all of
the material which is included, it proved impossible to strike off a complete
copy of same. However, since it is our opinion that such a complete copy
should be available in our Special Funds Division Registry, it is hoped that
the History Branch can have such a copy completed an delivered to Roam 503,
South Building, attention: Lt. Col. Williams. Likewise, should it prove
possible to do so, a complete copy of the History completed by Lt. Col.
:Williams for NATOUSA (now MEDTO) for the year 1943, be struck off from the
manuscript returned herewith and also forwarded to the Special Funds Division
for its Registry. We have no copy at this time of either the Washington
History or the North African History which was completed at an earlier date.
Enc.-Histories (3)
Lt. Colonel, AUS.
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_IWOCrealmcgr,
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SPECIAL FUNDS BRANCH HISTORY
1 January 1942 - 30 June 1945
OFFICE OF STRATEGIC SEPVICES
Washington, D. C.
Lt. Colonel, AUS
31 JJLI atm"
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SPECIAL FUNDS BRANCH HISTCRY
SECTION I.
SECTION IL
-
a.
b.
OSS - Washinrton, D. C.
PAGE
CONTENTS
PREFACE
1
1
3
the Nature of Special Funds
Foreword
CHRONOLOGY
a.
Inception
4
b.
First Year - 1942
5
c.
Second Year - 1943
8
d.
Third Year - 1944
14
e.
Fourth Year - 1945 (6 Mo.)
20
SECTION III.
SPECIAL FUNDS BRANCH DEPARTMENTS
22
a.
Front afice OT-the Chief
23
b.
Disbursing Officer - Op. Branches
27
c.
Disbursing Officer - Int. Branches
28
d.
Disbursing Officer - Misc. Branches
34
e.
Disbursing Officer - Foreign Exchange
34
f.
Accounting and Auditing
'56
g.
Legal Advisor
63
h.
Personnel Officer
67
i.
Registry
67
j.
Field Liaison Officer
66
k.
Field Auditors
69
1.
New York Office
71
m.
San Francisco Office
72
SECTION IV.
FOREIGN THEATERS
74
a.
'turOpean
74
b.
Mediterranean
74
C.
Near East
75
d.
India-Burma
75
e.
China
76
f.
Istanbul
76
E.
Lisbon
76
h.
Madrid
77
i.
Bern
77
j-
Stockholm
77
SECTION V.
-
PERSONNEL
78
a
-.gh- ireiTt-on
78
b.
In the Field
80
SECTION VI.
-
CONCLUSION
82
a.
Attachments
84
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PREFACE
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SPECIAL FUNDS liRANCF HISTORY
OSS WASHINGTON, D. C.
SECTION -
General Statement
Pertaining To
The Usage of and Operations under
Special Funds
(a) The Nature of Special Funds
A. General.
Special or unvouchered funds are monies made available -
Congress to the Office of Strategic Services to be used for objects f
a confidential nature and for which no voucher is submitted to the
General Accounting Office.
B. The 1944-45 Appropriation Act.
"***For all expenses necessary to enable the Office of
Strategic Services to carry out its functions and activities, ***
$57,000,000 *** Provided, That :=_57,000,000 of this appropriation
may be expended without regard to the provisions of law and regula-
tions relating to the expenditure of Government funds or the employment
of persons in the government service, and .'.35,000,000 of such 07,000,00O
may be expended for objects of a confidential nature, such expenditures
to be accounted for solely on the certificate of the Director of the
Office of Strategic Services and every such certificate shall be deemed
a sufficient voucher for the amo-Int therein certified." /(National
Agencies Appropriation ?ill, 194E).
C. Jxectoris Certificate.
The followinr is an extract froT the certificate used on
vouchers, signed by the Director, and submitted to the Treasury Department
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to secure reimbursement for amounts disbursed from Special Funds.
"I certify that expenditures were actually made in
the amount on this voucher according to reports in this office
and that it would be prejudicial to the public interests to
disclose the name of the recipients the dates and the names of
the places in which the expenditures were made. The expenditures
were made incident to collecting and analyzing confidentiel
information and data bearing upon the national security o'ho
United States."
D. Purpose of Special Funds.
Special Funds are to be used only in such instances where
the use of vouchered funds would divulge secret or confidential inforo-
ation prejudicial to the public interest, and where the services or
materials necessary to the operations of OSS could not be purchased with
vouchered funds, or acquired from the military or other government
services, for security reasons.
E. General Order 0.
Section 27 of General Order 0, effective May 26, 1944,
states: "The Special Funds Branch shall be responsible to the Director
for the custody, use of and accounting for special funds."
F. Recapitulation.
The Appropriation Act makes the funds available and specifies
that the Director's certificate shall suffice in accounting for expenditures.
The first sentence of the Director's certificate states, in part, that
the voucher to the Treasury Department is based upon reports in the
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Office of Strategic Services. This refers to reports submitted by
disbursiTv, agents or officers covering the expenditure of Special Funds.
The justification for Special Funds is solely one of security.
That is, if ordinary government funds were used, confidential activities
of the Office of Strategic Services could not be accomplished or, if
accomplished, the results would be of little or no value.
eneralt..rder 0 revised is the latest order which stus the
respLneibility of the Special Funds Branch in connection with ial FJ.
FMEWORD
The shove is the transcription of Section I, of the so called "Spe1
Funds Mble" and covers in as brief a for: es is possible the method by whi
special funds are made available, the limitations imposed thereon and uses:e
which they can be put, and the certification used in accounting for same.
General Statement, or "?ible", from which the quotation is drawn, is includee'
in full at the end of this listory.
General Order revised, issued and effective 26 December 19443 re-
states in paragraph (1h) "Special Funds Eranch", as follows: "The Special
Franch shall be responsible to the Director forthe custody, use of and acco--,
for Special Funds". The same General Order in paragraph (14). "Board of Review",
outlines the duties of the Board, as follows:
"The Board of iieview shall advise the Director with
respect to the formulation of policies for, and the direction of,
all (SS finances both in 'ashinL7ton and in the Field. t shall
study, review and make recmlendations with respect to:
(1) All financiel controls, records and account'..ngs, as
moy deem necessary.
(2) All proposed expenditures of unvoachered OTS fAnds
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requiring the approval of the Director or Assistant
Director; and
(3) Such other matter pertaining to OS.:: finances as the
Director may approve.
The Board of Review shall consist of three members, to be assisted
by the General Counsel."
The object of this History is to trace the principal activities and
events of the Branch which march, like milestones, down the years from 71's
inception in January 1942 to the present date, July 1945. It thus embrf �s
a span of (3) crowded years and (6) months. It will endeavor to enumerate
these activities, show the growth and expansion, and bring out the highlights
as they developed in chronological sequence. It will confine itself principally
to the Branch Headquarters in Washington: only touching on the outside Theaters
and "Field" operations as they blend in, unavoidably, with the Home Office.
Complete, detailed history of the activities, successes, tribulations and
the Field Staffs themselves in all outside theaters in which we operate, have el-
ready been completed in some instances and in others are in the process of com-
pletion at this time. They can, of course, be included in one Special Funds
Branch volume with this Washington History should it be considered advisable
to do so. That decision is left to the Chief, History Branch as recommended
by the Director of the Office of Strategic Services.
(a) INCEPTION CHRONoLOGY SECTION II
Throughout the Spring and Summer of 1941 (Pearl Hai.bor year) the
machinery setting up the Office of the Coordinator of Information Mom which
OSS evolved) ground steadily on its way toward activation under the personal
direction of Colonel (now Major General) William J. Donovan. In that early
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stage his principal assistant was Mr. (now Colonel AC) D. K. E. Bruce. As
of 11 July 1941, C.C.I. became, by order, an official U. S. Government Agency,
and by the beginning of the year 1942 C.0.1. was an accepted fact, operating under
the cover of an information "assembly and distribution" plant, staffed almost
entirely by civilians and occupying the North, South and Administration and
temporary ,!ue Buildings located between B. Street and Constitution Avenue, 24th
and 25th Streets, N. W., in Washington. Its actual re,son for existence, and
direct intent and purpose, was that of intelligence, both actual and op donal,
but this was not in any way disclosed. On 13 June 1942 the Propaganda DeiErtmzut
of C.0.1, was transferred to the, then, new Office of Tar Information, and the
C.O.I. name changed to Office of Strategic Services.
Had original C.O.I. actually been the type of Goviernmen Bureau
professed to be, there would have been no necessity for the use of any but
vouchered money to be accounted for through the General Accountin7 Office by
the Fiscal and Finance Branch originally headed by Mr.cecilV;. Barnes. However,
for the bulk of these secret activities and operations for the execution of which
C.O.I. originally, and OSS eventually, was really organized, unvouchered or
"under cover" money had to be made available. For such funds no accounting was
necessary to the General Accounting Office, only to the Director and by him
to the Joint Chiefs of Staff under which body OSS operates and to whlm it is
directly responsible. The original grant of $3,108,568.90 in unvouchered funds
came from the Emergency Funds for the President, !':ational Defense. Yi.th this
grant was activated the Special Funds Branch of, at that time - C. O.1., now,
the Office of Strategic Services.
FIRST YEA?-1942
Mr. (now Colonel AUS) L. Rehm reported for duty to C.0.1. on
19 January 1942 o set up the Special Funds Branch. From that date until the
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present he has served, without break, as its Chief. On 9 March 1942
he obtained as his assistant Mrs. Evelyn K. Hall and on 11 March 1942 Mr.
(now Lt. Col, AUS) John W. Williams came to Washington as the third member
of the staff. At that time the Branch occupied (2) rooms on the ground floor
of Que Building and (1) safe and (1) file cabinet were its principal fixtures
(as it turned out, the (3) original members became "fixtures" likewise).
As the year of 1942 advanced and the activities of Specie' Fulda
Branch multiplied, the late Mt. Francis M. Barker, Yr. Rolfe Kingsley, 1
a secretary for Yrs. Hall were added to the department. Later, toward tLa
close of 1942, Mr. Emerson Bigelow reported in to handle the Foreign Exchanga
Division, also came Jr. (now Captain Ord.) Edward M. Lucas, Mt. D. M. amond,
Mr. Edward Fay and Yrs. Eve Caewell. An additional room adjoining the
original (2), and a r000 across the corridor were then added to the Special
Funds Branch suite. In October 1942 Mr. Williams and Mt. Kingsley were
loaned to the African Desk under SI and proceeded to West Africa for temporary
duty. The former returned to Washington at the end of the year but Mr.
aj
Kingsley, now a Lieut. in the Marine Corp� remained with the SI Branch on
duty in Monrovia. Mr. Barker was disconnected from the Special Funds Branch
to become Administrative Officer at approximately the same time. Yr. Dimond,
as an Agent Cashier, assumed the work of Clearance Officer for SO accounts,
and Mr. Lucas organized the Accounting and Auditing Department with Mrs. Caswall
in charge of the Bookkeeping Division under his direction. ,It is to be noted
that in the period of (1) year the Special Funds Branch had greatly increased
in personnel and the first sub-divisions of the Branch were established. How-
ever, it was not until the following year that any representatives for Special
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Funds went- out to the Field in the capacity of Special Funds Officers.
In those early days, operating under the cloak of C.0.1.; almost
the entire personnel of the two principal operational Brnches ie: SO and
SI, were paid from Special Funds. Likewise a sizeable proportion of the
general overhead and the purchase of equipment, were defrayed from the
unvouchered appropriation. It was believed essential for security reasons
that such be the case. As time passed, however, and the original Cffice of
the Coordinator of Information became the Office of Strategic Services, it was
decided that certain members of the personnel and other regular expenses ild
be safely transferred to vouchered funds. Close cooperation was established
with the Finance and Fiscal Branch and more and more of the financial burden
on Special Funds Was allocated to the vouchered department. Yaw sizeable
purchases which had already been contracted for under Special Funds were
taken over by the Finance Branch as "Confirming Orders".. In the late summer
of 1942 the Special Funds Branch materially assisted in the establishment
of the first trainin7 area located in raryland approximately (20) miles from
Washington and, at that time, known as "the Farm". This area VMS under the
direction of Dr. (now Lt. Col. AUS) Kenneth Faker. At the termination of the
year, area "E" was likewise established with Special Funds as a larger and more
elementary training location.
In the summer of 1942 an OSS Branch Office was established at 630
Fifth Avenue in New York City with an additional "under cover" office further
down town. It was decided to institute a telekrypton service between 7:asinf7ton
and :;ew York and the Special T'unds Irrnoh investicated this 1:ropositl,::n thorou ly
and was instrumental in havin.- the 'estern nion Telei:raph CompLny install the
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""Affil
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syetem. All special equipment end many articles of regular equipment as well,
bcth for the Home Office and for the Field, were at this time placed on a
prierity basis and often difficult to secure. The Special Funds French worked
very closely with the priority officer and was successful in obtaining needed
automobiles, a great number of safes of all varieties, special operational
reuirements, as well as regular office supplies, typeaTiters etc., through this
cooperation. It is readily understood that the war demand for all such
"impedamenta" far exceeded the available supply. From the above examples
it is to be noted that the drawing of checks and accountinc: for expenditures
were lut a very small part of the Special Funds Branch activities. Our principal
unvoeehered funds deposit, was placed with the Riffs !;etionel Lank In 1%shinften
in the name of P. L. 7?ehm; ro association with CS wes in any way ine,olved, -
and the aeere was, Rnd still is, true of the two additional leen-Ants whieh were
later established with the Bankers Trust Company and retional City Bank in
rew York. As additicnal Agent Cashiers to Yr. Rehm were appointed, similar accounts
were cpened in the names of these individuals. This same system has been adhered
to throhout. As the first year ended, the Branch wes well established and
operating on definite, clearly defined lines.
;e) 2ND YhAR-1943
Sizeable further increase in personnel, greatly accelerated tempo in
activities as a whole, and the establishment of the first overseas bases for the
Frnea highlighted the year of 1943. OSS expanded very rapidly and Special Funds,
as 6n essential "service" organinatien for all operations, necessarily expanded
vith t.
rew :SS Branches veee added to the original SO and SI and
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Foreign Theaters, small at first and then suddenly greatly enlarged, came
into existence outside the continental limits of the United States. *Ed
With the establishment of each new Branch and each new Field post, came
increased demand and added responsibility on the Special Funds staff. To
the initial appropriation of approximately $3,100,000.00 granted for 1942-44
WAS added a second allocation in the amount of $9,734,511.07 for 1942-45.
This likewise came from the Emergency Fund for the President; and trAsht
the total amount available for Special Funds to slightly less than tti len
million dollars.
Early in January the late Mr. Charles J. Lennihan and Mt. R. George
White joined the staff. Additional secretaries and clerk stenographers were
secured for the various Special Funds departments, and enlisted men were
attached to the Accounting and Auditing end the Foreign Exchange staffs. In
March out to London flew Major (now Lt. Colonel) Robert H. Alcorn to act as
both Executive and Special Funds Officer for ETO. He was the first official
representative of the Branch to take over a Field post. Close behind him
want Mr. Edward Fay (now an Army Captain) to Gibralter to act as guardian
and custodian of the large gold reserve held on The Rock to meet OSS require-
ments. Later in the summer the then 2nd Lt. Fay whc was commissioned over-
seas, flaw the thousands of Louis dilate to Cairo and to Algiers and he him-
self then transferred to England. In April Major (now Lt. Colonel) John W.
Williams left by sea convoy for North Africa in charge of a detail of (28)
enlisted men for Services Branch. The following month, in May, Lt. (jg) J.
Holt Green (now missing in action in the }likens) left Washington for Cairo.
Thus, in the course of the first (6) months of 1943, Special Funds Branch
Offices were established and operating in (3) important theaters, is: ETO
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London, VEDTO (then NATOUSA) - Algiers, and NET� (then YETO) - Cairo, under
Alcorn, Williams and Green, with a special representative, Fay, sitting on
his gold on the British Rock, gating wistfully seaward.
Spacial Funds Branch Saga WAS thus already in the making. In the Fall,
October to be exact, 2nd Lt. David C. Crockett was sent out to help Major
Williams in Algiers since the Major's original assistant, Lt. (jg) Henry R.
North, USNR, had been transferred shortly after his arrival to the SO Branch
for special duty in the Bay of Naples. In November Lt. Green likes. ea was
transferred to more advanced duty and in his place Mr. Thomas F. Ble was
appointed Special Funds Officer in Cairo for the Middle (nee Near) Eat
Theater. In October yr. Gardner McPherson WAS dispatched to Lisbon, cleurd
by State Department as a clerk attached to the U.S. EMbassy, end in DaceMber
Yr. Iver Olsen, under Treasury cover, went out for Special Funds to Stockholm.
By the close of the year, all of these Field Stations had enlarged their
staffs by either assistants sent out from Washington or secured through
transfers in the Theaters themselves.
Before the establishment of these official Special Funds units in
foreign lands, and at other Beiges still not represented by a Special Funds
officer, either the C. O. in the theater, or a qualified individual, WAX
entrusted with the funds, disbursed same, and maintained as complete records
and accountings as was possible under the circumstances. At that time it
Was generally necessary for all those going out of the country to take either
a email, or very eiteable, amount of Special Funds with them. Numerous
individual advances, scattered to the four corners of the earth, were the
inevitable result. When additional cash was needed "outside" it was generally
transferred via the State Department. As the various Field Bases enlarged
in personnel and in operations, the desired control and accountings for
Special Funds became increasingly more difficult and complicated. In con-
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sequence, trained, official Special Funds Branch Officers and assistants
were dispatched from Washington to all theaters as rapidly as proved possible.
Due to the increase in Financial activities in the Eew York office, Yr. F. Y.
Merrill assumed the duties of Special Funds Officer at 630 Fifth Avenue in
April of 1943.
rProbably the most important individucl development which occurred in
Washington in 1943 as far as the Special Funds Branch is concerned, was the
activities of the Foreign exchange Department. Throughout thoce (12) ,onths
the demand for large supplies of the currency of our Mies, of neute count/is
and of our enemies, was a constant one. Mr. Emerson Figelow, whose reponsility
it was as Head of the Department, was especially far sighted in this conneci.cm
and astute in his forecast of future values and requirenents.
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During that year the
greatest demand was in the Eediterranean Theater where Army operations were
proceeding very rapidly, but ETO and the Middle East were likewise in U marketr
The YEDTO history for 1943 discusses this subject from the Field angle E d it
will be covered later in this Special Funds Branch Washington History with th,1
notes on the Foreign Exchange Department.
i
Another important development of the year was the tackling of the
extremely confused and mora16influencing problem of civilian per diems and living
and quarters allowances in the Field. The situation which Major Williams found
to exist in North Africa resulted in his reporting the matter to Washington
and requesting that a final and official decision be arrived at. Begun, then,
in the summer of 1943, the entire subject was cleared up in the following
year with the issuance of General Order 75-7 (and Supp. I) effective 20 August
1944 which stated that living and quarters allowances for all places as established
by Bureau of the Budget, circular A-8,would be accepted as standard for the Office
of Strategic Services civilian personnel and its regulations adhered to in
every case. Only on recommendation by the Board of Review And approval by
the Director, can exceptions be made to the A-8 figures. Primarily, the reason
for the early confusion and misconception of this per diem matter was the
sending of civilians to the Field from Washington on authorized allowances
averaging 4.7.00 per day, not realizing that in almost all cases these individuals
would be quartered ,and fed in their theaters without cost to them. l'uch spar:
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hurriedly crossed many mess tables before the final, and sound/solution
wts reached to the almost universal satisfaction of all concerned. It
vas likewise before the close of 1943 that the first decision wag reached
to endeavor to use vouchered funds whenever possible in the Field as well
as in Washington. Until that time, for security reasons, it was considered
necessary to defray all expenses from Special Funds for all overhead,
including rentals, salaries, equipment, etc. as well as for agent; pvcente
and for actual operations. This matterjdiscussed in Algiers with Co )(!el
Charles Venderielne by Major Williams, WAS called to the attention of
Director and on his recommendation referred to Washington for consideratiol
and action. It also reached its culmination in 1944 when large Field expel-Lees
were transferred to vouohered funds and, eventuallyimany of these charged te
Reverse Lend Lease (Rgciprocal Aid) whenever it was possible to do so. By
the end of 1944 the Finance Branch likewise had its representatives in aleort
all theaters, and worked in close cooperation with the Special Funds Officers
in handling the (2) separate types of funds made available to OSS. An
appreciable saving to the unvouchered appropriation has now resulted.
These two subjeots, fel the per diem or living and quarters allownces
matter, and the vouchered funds versus Special Funds question, are likewise
covered in greater detail in the MEDTO History for 1943 which is in the
hands of the History Branch. Although the final decision had to be reached
in Washington, these are both essentially Field problems and therefore need
be only touched upon lightly in this Washington History.
The new officers and enlisted men required fcr the various Theater
positions were secured with the assistance of the Personnel Procurement
Branch in some cases but, especially in connection with the officers, the
Special Funds Funds Branch arranged for their
transfer to CS from Any FinsAce.
1E
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Colonel Rehm personally went to the Army O.C.S. School at Winstonp.Salem, and
later to Fort Benjamin Harrison, to interview and select those young Lts. of the
desired calibre for our Branch. Colonel Morton, Army Finance Officer, was most
cooperative and an exceptionally high class group of men were secured by this
means. For the training of these officers and men it proved necessary to
establish a "school" under the direction of Captain Lucas in the Special Funds
Branch, Washington. Under the direct guidance of S/Sgt. Vernon Turner, these
men were thyroughly indoctrinated in all Special Funds Branch activitie and
procedures as well as in the systems used in accounting, bookkeeping, . rthly
reports etc. :t is Gratifying to note that, with very few exceptions, the
Special Funds Branch personnel in all theaters have been very highly cammenCel
and in numerous instances have been selected to handle other positions, such
0
as Executive Officer, Security Ofticer or Services Officer, in addition to
their regulir Special Funds Branch work. As a result of this exceptional
ability on the part of certain of these officers, several were transferred in
the Field and thus lost to this Branch, and in other cases, the SSO re-2ueste
that they remain in their theaters even after our Branch activities would he
permitted their transfer to a new post.
(d) 3RD YEAR-1944
As mentioned in the 1943 coverage, 1944 saw the final settlement
of such problems as the living and quarters allowance and the transfer of
numerous accounts, both in 1:ashington and in the Field, from Special Funds
to voJ.chered funds. The Board of Review was established and commenced
operations with Lt. Colonel 12harles Senrs as Mairman and Captain JI:lius
ILL
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Morgan U.S.W.R. and Mt. R. H. I. Goddard on the staff. Likewise the
year was blessed (at least in the majority of oases) with many new
General Orders pertaining to Special Funds operations. These will be
discussed in the summary of this history and included as additions.
Additional new Branch Field Offices were set up in 1944 and some /
changes in the theateils Special Funds Chiefs ware effected. In Jaf-Jmary
Mt. James McMillan want to Madrid under State Department cover, siAler
to that approved for Mr. MacPherson in Lisbon. Captain Joseph D. C% 1
U.S.M.C.R. flew to SEAC (Southeast Asia Cow?iAand) in March to set up his
Headquarters in Kandy while in the following month, April, Cammander
Joseph F. Lents, U.S.N.R., moved out to Calcutta, and later to New Delhi,
to act as Chief of the Branch in the, at that time, C & IB Theater. To
Istanbul in July was sent Army Captain John C. Young, in civilian clothes,
to handle the finances in Turkey under the direction and control of the
Cairo Office, while in Cairo itself,
took over as Chief for Mr. Thomas F.
a new assignment. At this same time
ferred from Cairo to Athens to be in
in December, 2nd Lt. Nick J. Steichen
Bland who returned to Washington for
2nd Lt. William Peratino was trans.
charge of Special Funds operations
in Greeco on a teoporary assignment. Ensign Gunnar Mykland U.S.N.R.,
under the C & IB Theater of Commander Liete, in November became the'Special
Funds Head in Kunming, the first Headquarters for the Branch to be estab-
lished in China.
The only other new office opened in that year, was established
by Lt. (jg) William Mackintosh U.S.N.R., who was sent to the San Francisco
Headquarters. We then had two U. S. bases in operation besides here in
the Capit81, one being in New York and the other in California. In
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addition to the Chiefs appointed to the outside theaters, the majority
of the Field staffs were augmented in all theaters by extra Officers, enlisted
personnel to serve as assistants, and clerk stenographers to handle bookkeeping,
correspondence, filing; etc. MEDTO,ETO and FETO, all were sent many additional
personnel during the year.
Just as our Field Offices were on the steady increase, so, necessarily,
was likewise the case in Washington. This required additional room and the
Branch, from its original location, was moved on four separate occasiw In
1943 it was transferred from the first floor of Que Building to the seccad
floor, and later up to the South Bvilding. In 1944 it moved again, this time
to the North Building, while early in 1945 it proved necessary to again pack
up and this last change was back again to the South Building, where it is
now located in a suite of (12) rooms of assorted Sizes on the 3rd floor. Eech
of these moves resulted in alded space, sufficient for the moment, but required
a complete new floor plan arrangement, the physical transfer of all equipment,
and the installation of new telephones, buzzers, etc. They proved to be man-
sized undertakings in every case but were completed with little interference
to operations and in fast time.
Accomeanied by Colonel S. C. Missal, Chief OSS Surgeon, Colonel
W. L. Rehm left Washington late in July on an extended inspection tour by air
of all Special Funds Branch installations. He proceeded first to ETO and after
a brief stay in London picked up Lt. Col. Robert Alccrn and flew on to Lisbon
for consultation with Mr. Gardner MacPherson and likewise with Yr. James MCillan
who came down from Madrid to meet him. Their business finished in Portugal, thc
Colonel and Lt. Col. Alcorn went on to North Africa and thence to Ttaly where
all YEDTO bases were visited.
.e
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Leaving Alcorn at Caserta, Colonel Rehm's next stop VAS Cairo and from there
on to India with stops at New Delhi, Calcutta and at 101 (Ka:Ara). He
next "hopped the hump" to Kunming and on his return from China proceeded
to Ceylon and visited the SEAC Headquarters at Kandy. His job finished,
Colonel Rehm made the long flight across the Indian Ocean to Australia,
the South Pacific air route to the Territory of nawaii, on to San Ffancileo
and, at long last, across the continent to Washington. Gone, in all,
approximately (3 1/2) months, Colonel Rehm was one of the comparativd1
few individuals who have circumnavigated the globe entirely by air ro
During the period of his absence from Washington on this most important
and successful inspection trip, Mr. R. H. I. Goddard served as Acting Chief
of the Special Funds Branch, besides giving a part of his time to the
Board of Review.
For the fiscal year ending June SO, 1944 Congress appropriated
S21,000,000. for Special Funds, OSS, of which the net allocation or
apportionment was 04,960,000. This was the first time that the unvouchered
funds were granted by Congress direct, having formerly, as previously noted,
come from the Emergency Fund for the President, National Defense. The
$21,000.000. appropriation for Special Funds was not, of course, the
oSS 110.4t
total appropriation for a1ldnitit.1943-44. An additional amount WAS granted
for vouohered funds expenditures, to be cleared in the usual manner through
the General Accounting Office in Washington. Under the existing regulations,
vouchered funds can avail themselves of, and be reimbursed by, Special
Funds, but the opposite is not the case. In other words, Special Funds
cam neither borrow from, or be reimbursed by, cash appropriated for the
vouchered funds accounts.
-e
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rIn order to make as completely uniform as possible all the book-
keeping and reporting systems used in the various theaters, Captain Lucas
with the assistance of Lt. Geer, "sweat out" a new formula to be used in all
Fields and conform to the Washington system. This was forwarded to all Special
Funds Chiefs with a letter of full instructions. It is as simplified and
fool-proof as possible and was only completed after a great deal of effort.
At this time it has become the standard for all Branches everywhere. Likewise in
1944, the need for Traveling Auditors for the Special Funds Branch war r!coieed
and a drag-net put out to locate and secure competent officers or civii as
to take on this work. The following year saw these men off to cover the
Mediterranean and European Theaters and also the Far East.
The Special Funds Branch files became necessarily so voluminous
in size and complicated from the standpoint of efficient handling that a
registry for all material, with its own staff, was found to be essential and
was set up in March under the direction of Mrs. Dorothy King in a separate
room adjacent tc the front office.
It immediately proved its value and bore
out the belief that a master file Was indispensable. Before this, many files
were kept by the individual departments and certain records, in many cases,
were at times herd to locate.
Men the 7th Army under General Patch invaded Southern France
in October 1944, 2nd Lt. Peter Sichel, from the Algiers staff, accom-
panied the OSS unit as Special Funds Officer, taking with him Sgt.
Poyant as assistant. At this same time several new bases were established
in itr.ly and Special Fnn1s personnel were located in Bari, le-indis,
Siena and i-jorence, besides at the Caserta heeduarters. Additionvi
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officers and non were sent out to Captain Crockett for this purpose and
likewise (5) officers were shipped to Lt. Col. Alcorn for future operations
in France. The Special Funds operations on the coast of North Africa were
closed out before the end of the year. All activities and the bank account
in Algiers were consummated, the Tunis base was transferred under the
jurisdiction of Cairo, while Oran and Casajlanca were disassociated from
NEDTO and commenced reporting direct to Washington. However, the si-Ary.icu
4v
activities increased and Sgt. Joseph George, in from Istanbul, was lo )d
to SI by Special Funds to handle these books and keep the financial records
under control.
The year 1944 unquestionably found OSS at the peak of its activitica
and the Special Funds Branch "hit the heights" with it. The orders were
for full speed ahead for all Branches as the Allies closed in on Germany
for the kill which was, at long last, in actual view. ETO and MEDTO had
very large staffs at the ond of the year while FETO, both China and India-
Burma, 'was expanding rapidly. Special Funds activities were of considerable
magnitude in these (3) theaters and also, although to a more limited degree,
the same was the case with Cairo and the numerous bases in the neutral
countries. The New York and San Francisco Offices, likewise, were more
active than had previously been the casereince, of course, the Fumwean
war officially ended on 8 May the following year, it is doubtful if OSS can
ever experience a year of greater activity than featured 1944. In the
Washington Office it was a full (6) day week, every week, with only the
briefest of vacations taken by Special Funds Branch personnel.
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(e)
4Th YEAR-1945 _( MO. PERIOD)
T're appropriation from Congress of Special Funds for the year
ending 30 June 1945 was 4;'p35,000,000 of which $14,000,000 later was with-
drawn. Of this balance of :21,000,000 the apportionment requested was
319,000,000 and the actual net allocalion was ,?15,996,356.00. As of
this date, 30 June 1945, the new appropriation for Special Funds by Congress
for the year which lies ahead and will terminate as of 30 June 1946 is .;,!10,000,000
a very sizeable reduction from the two previous appropriations. But, the
House Committee points out, the German war is ended, V-E Day has come
4. i
gone and our operations in the Pacific will not, in the opinion of Congress,
be as extensive as were those in Europe. So a condensing of our physical
coverage, a very sizeable reduction in percannel, and a more strict control
over Special Funds in general must, unavoidably, be the case. Just what
the OSS picture will look like on 1 July 1946, is difficult to forecast
at this time; the sands must run their course through the glass.
During the first (6) months of 1945 additional Special Funds
personnel were sent to China and to India-Burma but no new members were
needed in !EDTO and just one individual, Mr. Ned E. Ball, was sent to
ETO. However, some changes were made in the neutral countries. Yr.
Bland, formerly of Cairo, went to Bern to relieve Yr. YacPherson who
had taken over the work in Switzerland on a temporary basis. Mr.
MacPherson returned to his home base Lisbon, then moved to ETO to
prepare for his new position as head of th(: Special Funds unit assigned
to ermany. Since 1942 the funds in 1-ern had been handled by !:!/-. Dyer
who had teen an acting Special Funds ?ranch Cfficer along with his
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other duties. Mr. Paul Harris assistant to Mr. MacPherson, took over
as Chief in Lisbon. Mr. Ivor Olsen, after a trip to the States, returned
to Stockholm to carry on until a Special Funds Officer could be sent
out to relieve him. Captain Young stayed on in Istanbul and Mr. McMillan
remained at his Madrid post.
In addition to Mr. Merrill, Agent Cashier in the New York Office,
there were (5) Agent Cashiers in Washington in 1945. Colonel W. L. Rth,n,
Chief Finance Branch, Mr. D. M. Dimond, Chief Special Funds Division,
Emerson Bigelow, head of the Foreign Exchange Department, Mr. R. G.
for SI, and Mr. D. R. Hartshorne for Communications, Security, etc. Mr.
Dimond handled SO, MO, etc. These Agent Cashiers processed their vouchers
through the Treasury, maintained bank accounts in their individual names,
and transferred funds to the various theaters for all Field requirements,
as well as handling the regular United States expenses under their
jurisdiction. Through their hands and bank accounts passed the millions
of dollars made available to, and used by, the Special Funds Branch of
OSS.
Under date of 11 May 1945 was issued General Order 0 Supp. 38.
-t
This established a Finance Branch under the jurisdiction of the Deputy
Director-Administrative Services. This combined the original Special
Funds Branch and Finance Branch under one control. Colonel 1AI'. L. Rehm
was appointed Chief of the new Finance Branch and he in turn, with Mr.
Louis Ream, designated Yr. Dimond as Chief for the Special Funds Division
Lb J.4
and Lt. Kenneth Woodring;as Chief -of the Fiscal Division which he had headed
when it was called the Finance Branch. The original Special Funds Branch
had been placed under the direction of Services then, in 1944, became
an independent Branch in which capacity it remained until the new Finence
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Branch was established by the General Order in May.
This amalgamation necessitated the appointments of a Field Chief
to head both Special Funds Division and the Fiscal Division in all Theaters.
The appointment was left to the SSO in each case when a base had such repre-
sentation; in other cases the appointment was made by Washington. In the
majority of cases a former Special Funds Branch Officer was placed in Charge
since the Special Funds operations in the Field usually exceeded those of the
Fiscal Division and maintained a considerably larger staff. The combine of
these two monetary departments appears to be Csound move and should result
in more close cooperation under a single head than was formerly the case.
SPECIAL FUNDS ERLNCH DEPARTMTS SECTION III
Yher_ the new Finance Branch was established there existed under
the foriaer Special Funds Branch, now Special Funds Division, the following
units or departments:
1. Front Office of the Chief, l'inance Branch.
2. Disbursing Officer - Operational Branches.
3. Disbursing Officer - Intelligence Branches.
4. Disbursing Officer - Miscellaneous Branches.
5. Disbursing Officer - Foreign Exchange.
6. Accounting and Auditing.
(a) Payroll Section
(b) Accounting Section
7. Legal Advisor
8. Personnel Officer
9. Registry
10. Field Liaison Officer
11. Field Auditors
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(NOTE - A complete roster of the entire staff in each of the above Departments
as of 30 June 1915 will be found later in this History under "Personnel"
heading).
All Departments will be covered individually and as far as it is
possible to do so, the material used will be in the form submitted by the
Department Head or by his assistants. In this manner, the point cf view and
departmental angle should be better and more thoroughly covered and more
personally expressed then could otherwise be the case, Where the data
supplied to the Historian "in the rough" so to speak, and not in a finished
form, then an effort will be made to compile said data in a readable form.
In those cases where exact quotations are used in the following Department
write-ups, quotation marks will be used and the name of the Department Historian
will be given.
(a) FRONT OFFICE OF THE CHIEF
"When I reported for duty 19 January 1942, D. K. E. Bruce (now Colonel)
was just starting S.I. and Lt. Col. Robert Solborg, S.O. Both were to be
secret organizations, hence would require "unvouchered" money. I was to handle
the "unvouchered" money for both S.I. and S.O.
"Having come into the organization through Col. Bruce, I was, for
several years, identified more closely with S.I. and wart more familiar with
its development. From the beginning, it was understood by every one that S.I.
was to be a "seeret" oeonization, and according to ths way older governments
had developed intelligence, "secrecy" was all important. We were at War, the
enemy, Germany, had developed a large espionage system, which would try to knor
about this development to follow it or destroy it, hence "secrecy" was absolutely
� necessary. Everything that was done at the beginning was considered and initiated
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11
with "secrecy" or "security" in mind.
nAll procedures established in Special Funds had "security" as first
consideration. It was only by means of this "unvouchered" money that the members
of the organization could be kept off government payrolls, and expenditures
made, which could not be or should not be described in rec-ular government vouchers.
V
It.was all important that secret agents be not identified with this orecAizatier.
As a consequence, it was understood at the beginning that the only mone� ised
by S.1. and S.O. was to be "unvouchered".
"At my arrival, Lester Armoar appeared the same morning. Taller Boeth
had been with C.O.I. for a short while but I did not see him until later on.
.".rs. Clara Clements RS Frucets secretary completed the S.I. oreenization.
" Lt. Col. Solborg in S.O. had Frank Canfield and !,liss Waters as his
staff. P,oth organizations grew quickly from this time on.
appointment as Agent Cashier, was arranged by Cecil itar&es, then
Chief, leudget and Finance. 1 obtained ny bond from the lartford Accident,
Indemnity Company. The Treasury approved my appointment, and eq'on receiving
my first check, opened a personal account with the Riggs National bank. Sub-
sequently, I opened similar accounts with the Bankers Trust Company of NEW York
and the National City Bank of New York,
"Me accounting system 1 started followed instructions received from
the Treasury Department.
This was a simple set of accounts, designed, I belieec,
for unvouchered money, recording each procedure from the initiation of a voucher,
to the cashing of e Treasury check allowin: for expenditures, or an expense
account, and advances to subordinate ar,ent-cashiers.
security, : opened
two other looks in which were entA:red all transactions with "agents". i'otaie
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from the "agent" journal were transferred to the main set of books which
made possible a record without divulging the names of the agents. For
security, pseudonymous for agents were used for some time, until this
procedure became too complicated. This accounting system proved inadequate
in a short time, as our transactions grew and became more complicated and
the successive improvements in the accounting system, with the help of
James D. Miller, will be recounted in this history.
" Soon after starting my work, 1 learned of tAllace P. Phillip
and subsequently met him. Phillips, I understood, had started a smaL
intelligence organization for the Navy, at least he was using some .Navy
Funds. Eventually it was decided that all of Phillip's work be turned
over to Colonel Bruce to become a part of S.I. This was done and I was
given the names of Phillips' agents, together with the contracts. I was
also given the money Phillips had on hand when he finally left, which was
more than enough to settle accounts with his agents, which took some time
to do, all cases not being settled as of that dete.
" An office in New York for S.I. was established by Men Dulles
early in February of 1942. I advanced Dulles :,,r,1:,,-7TY).7v)
in Uarch, George Bowden was made a subordinate agent-cashier. In March Vaal
R. Falsey opened another small office from which he recruited agents for
S.I. As he had small expenditures, I too made him a subordinate agent-cashier.
In February I was authorized to make money available to Foreign Nationalities
so I appointed F. F. Bowman subordinate agent-cashier.
" For S.O., I originally made Major Garland E. Williams subordinate
agent-cabsier and later when Colonel Goodfellow succeeded Colonel Solborg,
Miss Ellen Dockery assumed this responsibility. by April of 1942 both
S.I. and S.O. were expanding their organizations rapidly. I continued handling
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all of S.I. payments myself, leaving all of the S.O. transactions to Miss
Dockery until D. Y. Dimond joined Special Funds to be Agent-Cashier for
all of the Operational Branches.
"In February 1942, Ellery Huntington joined C.O.I. to start the
Security Department for S.I. and S.O. Kenneth Baker in March began organizing
the first agents-, school near Clinton, Maryland. All of these operations
required money, all were secret activities, so could only use unvoucher
money. Agents were being employed as well as staff members for Washine'
"All of these activities developed problems concerning which ne
had had any experience. Even to discuss them with people outside of S.I. or
S.O. WRS unwise because the individuals or activities were not to be known.
As a consequence, we used our best judgment assuming that our first respon-
sibility was to assure General Donovan that the money entrusted tome was
spent for the proper activities of C.O.I. Sometimes particularly difficult
problems arose.
"Some of the first agents sent out by S.I. went under State Department
'cover". It wes also necessary for S.I. to use in many countries the commun-
ication facilities of the State Department. For agents under "State" cover
we devised various methods of salary maxim payments in order not to disclose
these men as C.O.I. To reimburse the State Department for cable charges, Yr.
V. E. deCourcy, Assistant to G. Howland Shaw, asked me to make a special
deposit with them out of which these C.O.I. charges could be defrayed. This
deposit I established and replenished several times.
"For each new step that the organizati,n took, it seemed that we could
never handle the financial and accounting details as we would have wised.
instance, the first missions to Portugal and S7a1n presented a number of
problems. Beth countries.being neutral, it was not easy to get ¢s in, and
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not easy to finance them once they were in. After all agents had become
established and I realized the money being spent was larger than I had anti-
cipated I wanted to send someone to act as the financial man. I was told,
however, that it was so difficult finding "covers" for men that we could
not afford one for a man to act solely as a Special Funds representative.
'The first mission to North Africa, following the invasion, was
undertaken with so much uncertainty as to the number of personnel that would
be accepted, we had to give money to all of the Officers, none of whofa
nted
that responsibility. Then, as it happened, our work and organization ,elopod
so fast that, without a surplus of Officers to draw from, I found it difZicult
to keep up with the demands for Special Funds personnel."
The above statement covering the activation of the original Special
Funds Branch and its growth was prepared for the History by Colonel 74 L. Relvm,
present Chief, Finance Branch, and original Chief, Special Funds. Throughout
the entire period of Colonel Rehmts direction of the Branch Mrs. Evelyn K. Hall
has served as Chief Assistant and proved herself indispensable to the Front
Office. It is to be noted that Colonel Rehm puts particular emphasis on the
"security" angle in connection with the large part it played in all of the
Branch operations. This was especially true during the first two years of
C.O.I. and C.S.S. activities. Practically no development or contemplated
mission was originally instigated which did not b.elong, without qualification,
in the "secret" category. Thus unvouchered, or Special Funds, formed the
platform, or base, upon which the growth and development of the Bureau rested
during a large part of the period covered by Colonel Rehm in his statement.
(b) DISBURSING OFFICER-OPERATIONAL BRANCHES
This Department is under the control of Mr. D. M. Dimond who, in
May 1945, was likewise appointed by Colonel Rehm 58 Chief of the Special Funds
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Division, Yinance Branch. Mr. 14mond thus occupies the same position for
unvouchered funds as does Lt. Woodring, USNR for the Fiscal Division or
vouchered funds.
On October 5, 1942, Mr. Dimond reported for duty with OSS and on
27 December 1943 Mr. Roger Simpson was transferred from the War Department
to OSS to act as his assistant. On 27 November 1944 Mr. Roby Reai replaced
rr. Simpson since the latter was transferred to the MO Branch. Irise Ferne
Losby is the clerk-steno for this Department.
As Agent Cashier for the SSO group (operations) Mr. Dimondts ,partmant
is responsible for all Special Funds operations for the following Branches:
Secret Operations
Moral Operations
Maritime Unit
Operational Group
Special Projects
Field Experimental Unit
Besides the usual activities in connection with the SSO group,
Mr. Dimond has also been in charge of the special Thai operations in the
Far East Theater.
(c) DISEURSIR3 OFFICER-INTELLIGENCE BRANCHES
The following is quoted from statement presented by Yr. G. White,
lieed of above Department:
"I reported for duty with the Special Funds Branch OSS on 2 January
1943. After two weeks at Area "E" I returned and was given the job of
determining the amount of salary paid to employees on the Special Funds
payroll during the calendar year 1942, so that Internal Revenue Bureau fors
1099 could te prepared for each employee. This proved difficult as the 1942
salary payments were not posted to individuals pay cards and it was
necessary
to
compute the amount received by each employee by referring to payroll data cars,
payrolls, etc.
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"Beginning in 1943 individual cards were prepared for each employee
showing the salary, E.O.D. date, and all pertinent information. On the reverse
side of these cards each salary payment was posted, showing the gross, over-
time, total salary, tax withheld, amount withheld for purchase of war bonds,
etc. It the end of the year it was simple to compute the total saleav paid
and the total income tax withheld by adding the amount pobt,ed in the r.:p rop-
riate column.
"The matter of security in reporting the amounts of salaries paid
to employees paid from Special Funds Was taken up with the Internal Revenue
Bureau and permission was granted by said Bureau to disregard the provision::
on the income tax law requiring that such payments be reported on certain
forms prescribed for such purpose, but that a record would be kept in this
Iranch so that after the war it would be possible to furnish the Internal
Revenue Bureau with such information. It was agreed that we would prepare
an Internal Revenue Bureau Information Form 1099 in duplicate indicating
the employer as "U. S. Government" showing the total salary paid to eech
employee. One copy of this form was to be attached to the income tax return
of the employee and one copy was retained in our files for the inspection
of the Internal Revenue Bureau, if and when such inspection was requested.
Tc date they have not been inspected. The income tax returns then could,
if the employee wished, be filed in Colonel Rehm's office in a sealed
envelope. These envelopes would then be delivered to a designated individual
in the Internal :::evenue Bureau who would be the only person that would know
of the connection with OSS.
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" The above method of having- income tax returns filed in Colonel Rehm's
office was not used in 1943 and 1944 as it was not deemed necessary to preserve
security. Also the withholdine tax went into effect in 1943 and it was decided
that a record of the amount of tax withheld would have to be filed with the
Internal Revenue Bureau so that the employees would he properly credit l.
Accordingly it was decided, with the approval of the Security ef.:icer
the Internal Revenue Bureau, to file information returns, form W-2, w the
Internal Revenue Bureau covering each employee, showing the total salary paid
and total tax withheld, but would indicate the employer as U. S. Government,
These forms were filed with 1!r. Perry Sherwood an official of the Internal
Revenue Bureau who was the only person in the Bureau who knew they covered
OSS employees. The tax withheld was paid out to the Internal Revenue Burean
in accordance with the regulations of the Internal Revenue Bureau.
"r, Charles J. Lennihan Jr. entered on duty with the Special Funds
l'rench a few (Jaye after I did and we attended Area "F," together. Lennihan
was appointed an Agent Cashier by the Director and Colonel Rehm made him
responsible for payments in connection with the Intelligence Branches, which
at that time consisted of SI, R & A and Foreign nationalities. SI was the enly
one of these three Branches at that time that used Special Funds to any great
degree. Yr. Lennihan asked Colonel Rehm if I could work with him as an
assistant and Colonel 2elur, gave his consent so that I became familiar with the
LII
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work of financing the Intelligence Branches from the beginning of my connections
with OSS.
" Since the job as Mr. Lennihan's Assistant did not take up all of my
time, Colonel Rehm asked me to assist Captain Lucas in preparing monthly
statements. In the summer of 1943 after the departure of Major Williams for
Algiers, Lt. (jg) Holt Green for Cairo and Captain Alcorn for London, cal as
Special Funds Officers, Colonel Rehm asked me to act as liaison with there
Officers and any others to be sent out. Beginning in the Spring of 194 11
the Branches began sending people to the Field and before long we found that
in Order to keep the payroll records straight, with regard to overseas payment-,
etc., it would be necessary to devise some form to be completed by the employe
before leaving for his foreign aesignment showing the disposition of his salary
payments, living allowance or per diem, amount of travel advance, etc. This
"need" resulted in the overseas data sheet, which is still in use. A copy of
this sheet after it is completed by the employee is sont to M-Le S;)eoial z'ands
Officer f-)7.- '113 In.ry7qaU.1 in making salary payments.
" At this time the question of the amount of per diem or living allowance
to be paid was very troublesome. There were no regulations to be followed and
often the desk man in the Branch, who usually did the recruiting, would contract
with the prospective employee to pay him a certain per diem. Some employees
were promised a $7.00 per diem, sOme $10.00, and some other amounts. It soon
became evident that an overall policy would have to be estRblished, tut it
was not until 1 July 1944, after the establishment of the Board of Rf=view, tnt
a policy regarding per diems and living allowances was definitely established
for employees paid from Special Funds. The confusion meanwhile was very grent.
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For instance; in Algiers the Strategic Services Officer, Colonel Glavin,
ordered no per diems would be paid after 31 January 1944. You can imagine the
outcry from employees who had been promised $7.00 per diem; London paid $6000
to all the male employees and paid the women a living allowance based on Bureau
of the Budget Circular A-8, the same as vouchered funds employees; this resulted
in some male employees paid from Special Funds receiving less living allowance
then they would have under standard government regulations and others
more. Cairo paid living allowances in accordance with Bureau of the Budget
Circular A-8, which in some cases was less than the employee had been promisd
by his desk Head; Madrid paid various amounts and often paid all living expensea
to an employee who was also receiving per diem from the Washington ::,ffice.
are still trying to straighten out tangles resulting from the lack of a definite
per diem policy. Since General Order 75-7 was issued on 16 August 1944, all
per diems and living allowances both in the case of Special Funds employees end
Vouchered Funds employees are to be paid in accordance with standard government
regulations.
"Mr. Lennihan's health was not good and he was away in the Spring of
1943'for two weeks and in August he Was advised by his Doctor to go away the
entire month of September. At this time Colonel Rehm Was abroad and Mr.
Goddard WES Acting Chief of Special Funds Branch, At Mr. Lennihan's suggestion
Mr. Goddard asked me if I would be willing to become an Agent Cashier so that
I could take over Mr. Lennihan's work. I reluctantly agreed and have been ar.
Agent Cashier ever since and have made a majority of the payments fcr the
Intelligence Branches since that time. Beginning in the Sprini! of 1944 r.
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Lennihan�spent most of his time on special projects such as P.V., George Office,
C.R. #1, etc. which were not being followed very closely by anyone at that time.
He received orders direct from General Donovan on these matters and made a
number of trips to New York in connection therewith. As a result I carried
the load on the day to day payments. I also took care of the correspondence
with the Special Funds Officers in the Field in connection, with salary matters,
etc., and up until Yr. Hartshorne's appointment I IXXX talked with al) -erscms
going abroad paid from Special Funds, other than personnel going out i SC), YO
and other Branches handled by Mr. uimond. Yr. Lennihan always signed the reyrell
checks for the Intelligence branches until he left for good when this job we
taken over by Yr. Hartshorne. Hr. Lennihan left the end of August, 1944, to
go on leave for a month and never returned to active duty for more than a week
at a time after that date. He was hospitalized in October 1944 and died in the
Spring of 1945.
"During the time I was employed in the Special Funds Branch, Lenfrom
1 January 1943 to date, we have made great strides in tightening controls,
securing better accountings for advances etc. When I first became an Agent
Cashier there were no orders to follow with regard to proper approvals for
payments, the type of expenditures allowed, etc. Gradually orders evolved
such as General Order #14 and the orders written ty the board of Review which
now define practically all types of payments allowed from 'Special Funds. It
is much easier and more economical to operate, in my opinion, since we Lave
%XIX these orders to follow."
Mr. Tihite's Department services the following Branches:
S.I. X-2
C, D.
R&A
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(d) DISBURSING OFFICER-MISCELLANEOUS BRANCHES
�
Mr. Douglas R. Hartshorne, who handles this Department, came to OSS
3 July 1944 so has been with the Special Funds Branch for just one year at
this time. The Branches which come under his jurisdiction, and whose financial
affairs he handles, are as follows:
(0)
Communications
Field Photo
OSS Theater Office
Medical Services
Presentation
R&D
Special Relations
Soon after Mr. Hartshornesf
Registry
Schools & Training
Security Office
Services
Procurement and Supply
Reproduction
Civilian Personnel
arrival Colonel Rehm departed on an
extended air tour to inspect all Field Offices and Mr. R. H. I. Goddard
became acting Chief for the Branch. Consequently, Mr. Hartshorne took over
the duties originally assigned to Mr. Goddard. In October 1944, Yr. Charles
Lennihan being unwell, he likewise took over the signing of the payroll for
SI, X-2, CD and R&A and still performs that function. Men it was decided that
OSS would be represented at the San Francisco Conference in April 1945, .1t12
Finance operations as far as Special Funds were concerned, were placed under
Mr. Hartshornest jurisdiction.
DISBURSING OFFICER-FOREIGN EXCHANGE
-
Due to the fact that the Chief of the Department, Mr. Emerson Bigelow,
was absent from his office because of illness soon after he commenced work on
this part of the History, the coverage for Foreign Exchange is not as complete
as would otherwise have been the case, However, the data that follows was
finished either by Mr. Bigelow himself or by his first assistant 2nd Lt. John
Schaefer. The material submitted by Lt. Schaefer has been carefully read and
edited, however, by Mr. Bigelow. So much could be written on the Foreign YAchenge
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.5;.)
subject that, if all were to be included, it would actually be a complete
History in itself. However, it is believed that the following coverage supplied
by Mr. Bigelow and his Lt. will serve to 'present as complete A picture vex of
the operations under this Department as is possible under the limited time and
space available.
ce
The Foreign Exchange Division of the Special Funds Branch of OSS ves
activated when its Chief, Mr. Emerson Bigelow, reported for duty on 1' Auguet
1942. Because of Mr. Bigelow's experience along similar lines in We: e Tar I
and more expecially on account of his more recent work with certain 7nite1
States Government Agencies and Departments, he was assigned the task of
organizing the Foreign Exchange Department. fle had spent approximately
twenty years between World War I and World War II in foreign exchange activities,
a part of this time in South America, and upon his assignment to OSS it be-
came his duty to not only transfer that portion of the secret United States
funds abroad which were necessary to maintain OSS intelligence and other
special operations but also to provide for certain extra foreign balances
in certain areas in such a manner as not to, so far as possible, disclose tlIc
fact that the United States Government had sizeable cash deposits in these
areas.
The following was submitted by Lt. Schaefer:
"The first to enter the Foreign Exchange Department of Special Funds
to aid its Chief, Mr. Emerson Bigelow, was Yrs. Alice B. Sw?,eney who began
on 12 October 1942, coming to OSS from the Department of the intirior.
duties were first as general assistant, secretary, and receptionist for r.
Bigelow, but as time went on and the Department grew she assumed many impfdrtNnt
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� 4t)
responsibilities. Mrs. Sweeney took charge of Mr. Bigelow's Agent Cashier
bank account, having charge of receipts and disbursements, initiating and
preparing necessary requisitions for reimbursement of funds, and
maintaining
ledgers required by the U. S. Treasury in connection therewith. Mrs. Sweeney
handled the buying and selling of more than (60) foreign
personnel and maintains the necessary records as well as
inventory of the various currencies of this office. Mts.
and paraphrases various intercept material for forwarding
currencies to OSS
having charge of the
Sweeney also briefs
to other departments
of the government. She is familiar with all transaotions of the office, and
in Mr. Bigelows absence has acted for him.
"Mr. Bigelow and Mrs. Sweeney carried the work of the Department
from October 1942 until 25 January 1944 when Pvt. John H. Schaefer entered the
Department from the QMC at Camp Lee, Virginia. Pvt. Schaefer was given the
tasks of handling Mr. Bigelow's files, the accounting for funds sent to
and between foreign offices, the maintaining of the gold records, preparing
the"WLR Report", the assisting in the purchases and sales of foreign
currency and the records thereof, maintaining current rates on some (80)
foreign currencies and gold coins, the preparing of a special report of the
distribution of foreign currencies and the value of each in all OSS offices
for Colonel Rehm and General Donovan, and the accounting for special trans-
actions identified as "F", "Kappa", and "Seal". On 28 October 1944 Pvt.
Schaefer left Special Funds to attend the Army Air Force Officers Candidate
School, at San Antonio, Texas, and returned on 1 March 1945. Subsequent
to 1 March 1945 Lt. Schaefervas charged with the establishing and maintaining of
workinr rates of foreign currencies and gold coins, assisting Mr. Bigelow in
special matters, and assuming responsibility in Mr. Bigelarwl absence.
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"On 10 August 1944, Mr. John J. Haggerty joined the Department, coming
here from the Navy Department. Mr. Haggerty took over the duties of maintaining
the Department's files and the accounting of the transfers of foreign currencies
to and between foreign offices, and later the secret recording of "gift" and
"slush" currencies. Mr. Haggerty assistedin the buying and selling of foreign
currency to OSS personnel.
"Cpl. Robert McIntosh was transferred to the Department on 7,5 Octoter
1945 from the Fourth Air Force Headquarters Detachment in San Fran.:
California. Cpl. McIntosh prepares the "WLR Report" and keeps a subetantiating
ledger for the report, maintains gold records, compiles a photographic
manual of foreign currencies together with identifying notes and intelliceAce,
reading and processing intercepts to be sent to other departments of the
government, and sends to the Schools & Training Branch such photographs,
notes end other material useful to the training program of that Branch.
Cpl. McIntosh also wraps and seals packages of currency and gold for shipment
abroad.
GOLD "Early in 1942 it Was foreseen that a large supply of gold would be
necessary for OSS operations. Mr. Emerson Bigelow and Colonel Ff. L. Rehm
consulted the Treasury and were advised that the Treasury was fully cognizant
of the value of gold "for purposes vital to the war effort and in connection
with certain operations for which other forms of payment would be inadequate."
"The cooperative attitude of the Treasury was enthisiastically
received by the Director, and Special Funds immediately startecl to secure a
sizeable stockpile of foreign gold coins. The sources were as varied as the
types of coins sought.
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� :93
Special Funds representatives aboard had been instructed previously in U. S.
regulations pertaining to U. S. minted gold.
"The initial purchase o
1:
7'r purchases of mixed French pieces, and English Sovereigns quickly
followed. By 1 January 1943 we had purchased gold coins to the approximate
value of t800,000.
Later some of this gold was sent to Col. Williams at Algiers
and some to Lt. Bolt Green, then at Cairo, for use throughout the Mediterranean
theater. With this on hand, Special Funds Officers were able to secure sizeable
stockpiles of almost
to produce a readily
all operations which
perform for him.
every useable Mediterraniean currency and thus were alale
acceptable coin or currency for use of agents and teams for
we might be called upon by the :ommanding Officer to
.�
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["Gold purchases continued from that time until by 1 June 1945 we had
----
secured gold coins of all types having a total value of almost two million
dollars. Our pieces of gold ranged in value from ;":,3..43 for the smallest to
$33.e6 for the largest -- the U. S. Double Eagle,
were purposely acquired for their difference in value and acceptability any-
where in the world.
These different mintages
We had accomplished our job in Europe wit}: an
expenditure of less than $500,000 worth of gold and had on hand for furt',r
operations approximately $1,500,000 in gold including French, English, l .ian,
Sw3ss, Belgian, Austrian, German, Dutch and American.
We also acquired some toles which have been always acceptable for use in the
"The tola is a unit of gold in wide use throughout the Far East. It
is a 3/6 oz. disc which has no distinguishing marks except the "chop" mark of
the private dealer or goldsmith who assays it. It is made in discs of (1)
or (5) toles, or a long bar of (10) tolas. The convenience of this type of
gold for OSS operations is apparent and a working supply was secured in
January, 1945.
made in bars of approximately (5) oz. each and were a-pout the size and shape
of a domino sugar loaf.
furnished a unit of small size and weight,
but of high value, and could easily be transported and were readily accepted
anywhere.
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"The following foreign currencies have been handled by the Spoc3,1 Funds
Division:
1.
Angolare
2. Baht or Tical
3. Iraq Dinar
4. Serbian Dinar
5. Old Yugoslavian Dinar
6. Yugoslavian F.D. Dinar
7, Chinese National Dollar
8. Central Reserve Bank (China)
Dollar
9, Drachma
10, Escudo
11. Guine Escudo
120 YozaMbique Escudo
13. Altanian Franc
14. Belgian Franc
15. Belgian Congo Franc
16. French Franc
17. Supplemental French Franc
18. Algerian Franc
19. French Equatorial Franc
20. Morocco Franc
21. Tunisian Franc
22. French West African Franc
23. Swiss Franc
24. Netherlands Guilders
25, Netherlands E. Ind. Guilders
26. Norwegian Kroner
27. Swedish Kroner
28. Yuma
29. Lei
30. Peng�
31, Lev
32. Lire
33.,A/6 Lire
34. Milreis
35. Peseta
36. Philippine Peso
37. Piaster
38. Australian Pound
39. British Military Authority Pound
40. British West African Pound
41. British East African Pound
42, Egyptian Pound
43. Gibraltar Pound
44. Irish Pound
45. Malta Pound
46. Palestine Pound
47. Union of South Africa Pound
48. British Pound
49. Syrian Pound
50. iarkish Pound
51. Reichmark
52. Allied Military Mark
53. Rials
54. Chervonetz (Rubles)
55. Burma Rupee
56. British Military Administration
Burma Rupee
57. Jap Burma Militsly Rupeee
55. Ceylon Rupee
59. Indian Rupee
60. Zloty
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"Information was constantly being gathered on the following additional
foreign currencies for dissemination to the
Brancha
field and for Schools and Training
1.
Feleral Reserve Bank
11.
Japanese Straits Settlements
(of China) Dollar
Lollar
2.
Hong Kong Dollar
12.
Aruba Guilder
3.
Straits Settlements Dollar
13.
Curacao Guilder
4.
Military Yen (Jap)
14.
Y. G. Guilder
5,
Imperial Yen (Jap)
15,
Danish Kroner
6.
Philippine Military Peso (Jap)
16.
Russian Occupatioaal Pengo
7.
Supplemental Military Yen (USA)
17.
Cyprus Pound
8.
Macao Dollar
18.
New Zealand Pound
9.
Malay States Dollar
19.
Hong Kong Military 'al � (Jtp)
10.
Malay States Military Dollar
20.
Singapore Military iolh,r (Jap)
(Jap)
21,
Korea Yen (Jap)
Samples of the first seven listed
above
are held in our office.
On all of the above (81) currencies intelligence is maintained for
the following:
1. Dollar Exchange Rates
2. Exchange Rates of one foreign currency to other foreign currenairs.
3. Exchange rates in terms of gold or silver.
4. Black Market rates in all principle centers.
5. Counterfeiting activities (if any) of these currencies, location
of activities, and by whom done.
6. Legality of currencies.
7. Locality in which currencies are used.
8. Acceptal,Ality of currencies.
9. Restrictions placed on importation, exportation, and use of
foreign currencies.
The following is submitted by Mr. Bigelow himself for this History:
"All funds sent abroad fell into two categories - (a) work funds
(b) task funds. Work funds were those used to pay salaries and to maintain
individuals who were ostensibly engaged in open above-board legitimate busincszzes
(unless a man so engaged were openly paid, his "cover" would soon become suspect,
because he would appear to have no source
of pay,)
Task funds were those used
(often by the same individual) for the obtaining of confidential informatio,
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bribes, and other secret operational purposes.
In the early days the transmittal or local procurement of work funds
presented no problems. In fact, operations for this purpose were openly con-
ducted in order, if possible, to direct suspicion away from our surreptitious
activities. However with each agent in need of more and more funds as time
went on, even these open transfers of capital became difficult because of
certain local government regulations. For example - in one neutral eeintry
an alien could receive from abroad funds to an annual total of only i )00
without a special license having to be obtained from the local cover: elat,
In another neutral country there were no limits on capital transfers but -tt,
amounts which could be withdrawn weekly in cash from the banks were strictl
limited.
"The obtaining of task funds on the other hand presented a two-fold
problem. All countries in Europe, belligerent and neutral alike, had imposed
censorship on communications and had promulgated regulations on capital move-
ments. Under these regulations, in most countries all banks within the country
were required to report to the governnent any sizeable or unusual bank trans-
actions, particularly cable transfers of money from outside of the country and
more perticularly when done for the benefit of a resident alien. During the
initial period when our overseas staff was small
eeeese.--7-eee
[,:--F-
......
ye were reduced virtually to the buying of actual
currency notes and shipping these notes into the countries involved
[....-,....,..,
The secret movements of money into any country to be
later used for secret purposes, and not for the purchase of goods for export,
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- 44 -
is never easy, particularly during war periods. Our problem involved (a) the
quiet circumvention of the regulations of each country without arousing the
suspicions of the banks, which we kner were under orders to inform their res-
pective governments, and (b) to do this if possible, wlthout having the enemy
learn about it. We had been inrormed tve.t the enemy had sent agents into all
neutral countries to spy out black market and other under-cover financial
operations. These agents had been especially trained and had, in many cases,
actually been placed in responsible positions by the enemy in some banks w'n
the result that the danger of informatien reaching the enemy through thes eained
agents was ever-present.
"It was at this time that currency notes apeeared to us to be our
best medium, but the exclusive use of currency notes in turn ree not too
simpl( and raised many questions. Where were we to got currency notes in
amounts adequate for our needs? Where were we to safekeep them since we were
short of safes and since in many cases the Embassies aeC Legations did not
serve our purposes? Whom were we to use as middle men for the local procurement
of these notes? What steps could we teke to protect ourselves against using
notes the /embers of which had previously been taken and recorded by the enemy?
(In certain capitol cities we learned that this practice was being carried on
on a very wide scale: Eow were we to guard against having counterfeits foisted
upon our personnel many of whom had not known the currency notes sufficiently
well to detect counterfeits? In view of ell this it will be seen that much
planning and training of personnel had to be done. We are informed that not
a single one of the currency notes which we acquired in Lisbon\throuzn many devioer
-
channels was ever traced back by the enemy to the United States Government or to
the American Legation - let alone to OSS. We are pleased to record that these
precautions paid off. With a further view of protectin our aeents we did not
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40 -
repeat a.successful operation too often nor did we, longer than was necessary,
rely upon any single pipe line for our flow of funds. As soon e, the initial
funds had been successfully put at the disposal of our agents, meal_ were studied
to keep the agent in funds currently through multiple operations, for xample -
in one country at one time we channeled money into this country through seven
distinct types of operations.
"While the original few had gone abroad with currency in their pockets
they soon found that this currency was inadequate. Tie learned that the two most
active markets for the obtaining of currency notes were Lisbon, Portugs.
Switzerland. 1 To these two centers we remitted funds in amounts over and rbovQ
our current or projected local needs and thereby accumulated stockpiles of 1ecf-1
currencies which could in turn be used to acquire other currencies through eithe:.
bank channels (where this was permitted) or through the black markets.1
"After the successful occupation of North Africa and after the directive
placing OSS under the command of the Joint Chiefs of Staff, we found ourselves toing
asked by the Commanding Officer in this theater to perform several services, which
called for the expenditures not only of additional funds but of different kinds of
currencies. It became necessary therefore for us to set up a system whereby OUT
Algiers Office, for example, might call upon our Lisbon Office for the purchase
of, let us say, Italian Lira, not locally obtainable in Algiers. All of these
inter-office requests were cleared (when time permitted) through Washington,
because Washington had to keep each office supplied with sufficient local funds
to enable it to successfully to respond to the demands which might be made
upon it by some other office. This in turn called for increased remittances
xy0cand enlarged bookkeeping system of over-all control.
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ftu
thon,7n Bli oun1 jr�frt: 'rt +ion. , (:,i neilto rt-.-
.�
t7'1: nre, tnir�
'v t,ert in :-ren:: � re3entel,
ti rf � ir,4-.1.�,12.� 1; ! � tro:Ible,. Horevc. '.urre; t it iou Toverlen 4 of funAn I y r:.;� :z
comytr-intly clo,tke�-1 forFE-0-.1"."' onc 3 in r.';11 I r''h `i�h,-re �:t tI -
time,io recedent to follo-A ni nc ly aeo.e
settinf7, � of brmt; 1-.��;.1nhe�- ii e redlIcLion of tliosr i�:tn
renci-F of the countrie9 r�ocrl develo,c.,1 into inlividual
ca ital tr�an.F�fr h�i to he "t- ,:ob.4q r
roney it-.out, covntr-,.� un,-�er sic o n,tions it- never
ov r the i-rnort,noe of ne con :A reerce of the o th�_.
nt 7 tir, r.th�!^ .�'� �
Urv.IV:FttLdinv 0! VIP '17-0t::I^C Of ,Cr.",y Of i.t. r- '1: 71-0
f�-...cire7 t} oi ict r;--,e,-h of OL�:: #1nri their -ro,--rer,.�iveiy sucees1u..1 so no. irr:
e�-,nnot hr t'71.! ly --.---;�reefc.lte:I. The fo-ee..! n re=-1.a:h.iv into thre�? - �
to 1-7: the en
) :S1_1103
c) Neutral
"NC, FT":11 r rt of t - 71-r-ter nlan of WorrIri do^iin-Iti en 7:as th,.- cro�.ti rn
of foreicr. biarce Ic. cert,...in key ocuntrie5. their tranifers
r� triCF te eter rher: -14 "ht ueel !�riv�...nt�
ilislasc,- f�.:1 of' the 71 . ic�� S�ibOt 1:1114"... :����
���,n-1�� F :10�� 71710 ) 1�011 ir ,Pnt 1.( '
�-:!� nr.'.1. � rn.- ���
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ore!:)arstionsz, is n fact r:ell re.-o7ni-",ed but it in o'tn lost sight
of by rian::. The Lctu:,1 rioth.o lc of aequirin: cal1tdf, it tr%nsferr. to err--
tan runt, of neceity, he ku;it tne lnd
Govern:,ents of those countries and cert..-.1W. tho 1-entF, of the r.o
e'er ki because if ordinary av:111-011P b�tnk. tr'tnsl'er oh-nnfl. we-e :� r
tr%nFtcrF of c%nit..1 rcull bcco-lc- OhvinaF -ric�r
to bever%1 U. Gov.-rn ent 1,-eneis and pe-:,:rt-le-nt,
en-7n.7ed in ferretinJ out thP ecsumul!:tio!Ie'-it I in count r,..
was est%blished to en :r.7E in secret intellien-c nn other Frrei:13
it bec-..-ne ObViC1:!': tht t.he atte.n� to 1�.:.:_rn of 0. :.-)1 vl.am throu::
funa- t) ther -fore , �-� th rob-Le-^. !In.'"
FF.cret!.:: to fie.�.r.ra- its :\ C in
:urreotitiotn- Gcr-nial finanei'd o the r.':1,-"rly - ni their in..c�nuit..�
1 rrC r'14 rwth:1, c � hi:
i1 s 177. t . rc..,f �,',u ",-;th his
for7"-r fF.Fc'eir.ics to currert l'E or is of th,-.F.f. UUJ.tiCrn 711.. ".."
7-1-'1' to hi- i% the runns PrncI. Tnc .cr,ortinT Bo.,rd within ,
fiee of rer.:=orrhip (both an ('nble) ani co.mv-ctions wrre
ov,r to YOrei7r. YYCh%n'E= 41ic
"ort ;.rt. I ionF.
1hr F,:yr-!...n 1�Ychtive vdvivirn cf
Z 1FC: rr�p-rt:-.. in -.7 C;.01
n ccfcr--1- rfeh%r-!:-.1 b) h- -
t,rv*. te, f�.:11 ,ry� � ,
,!/1 ft c�-ft%'.
� r '
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(-Art �-i-t %�.-�e�sur.tin ecrt hE+, h rt. 1"1:1T in 1L eriy�rs ,
fcr o: r ic: ��
C t 'eirrrt r..." of his ,.fitisr.t.f. This .71. I .t�or the : tr.(
ion of' -tt run:s br�-�.nor � in:- itself rever :1.71 �,cr.rir�r�A'
vii .: ititt1. of or cur retie-los- �. 1. of irit I,
el, : c.: :.r r$ -2or '+i e 1.��`5
t WF..5 t:ref th..t. IfI thi cert� ir j.
r.,I 5 v sccuri t����� the curl' neirs conic be bou,Tht or, ,r(
loas�is: r. -thr, An-rr-1+-11,,f- ourrCnoir /1i to 1 ''i.
r-,TE,-;..m tYC !, c idyl; io:. ; 1�1.n in
�.+:1
r�r'.; l� to it � t.(-� .� � 1:� r:
ts �i, t:- c�-st, th z�F: 0-,rr�(�:.47.-ik 5 , F01Arne., ictin :.ot.,--;� vni.(�:
in tbrn, co:-L'. riFithy fixf d t , rr. c 107:
1-7������:- ts fr- tent ot..rt �-�.� er,r1.�� iFzt �!. ot011T-:�cnr''.( ir rert�:4.1. r.o
/ � 4r r�-.1 , � , �
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.,r,
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to 7r.:� : rwri rt: re rzr:-�':-
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to its ,
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� 4 r "
.1�
r�
�w:
) 4 � �-� i�it C
"Aftt r suoces�,fui occul,;,tion cf Aorth aht:, thC vu of
j1(j: ttt contin(-nt, our t...,-j(-1%; Office (tic!: un zi C. 0. of a(
'A :
r tie rurri-J-rnork., -
c: _:fric%n contirEnt. in.4.rewct-1 7., new 1%otor into lflL neea f�2r
lorc-L-n lor 0o, For no :-0(.,14,:r Fr-/ 11 -r'
ni nt in Nr,:-`.!-: Eiri c th.11 tLey ro2hei trr hip.h conc.nc.
tn* britiO1 t cl;tLin funds with which to set u.�
mg, ch%int, of 1nte11i!-7ence in S.cin. Ye fcund oursclvc!;, thproforc, not on-iy
callEd up(n to supl,ly the direct, 11,eds of 0E6 hut utny an Ii oih.r nEels
fra.1 the cir.71,..n1:- of our
FTC.'
Ij
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01 0: � '1' t 1 Di�
1)�: co..) 'Let'; i t..011t :z11 1 Oil � ,1'1, '.7s1 in �
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t A ,
i � � 1
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et 11 7.: .t 1.'' ���sl. tfl.+ it 1
T.:"1 �.-
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'I-71'1, ;11 7�1' r.:
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t ,
.:.;�.:..-
-
or i F
4;Ta
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tAff.
".�inotn�:- iv i r�i %.1tho1 ivy! thc: 7�urenr ifl
,�,1 fore i ario, curr."nr.-s ni.7111, bk- tni.'tin
sin?�- v.i.t.no-,it it In, ri�al vcrlc. of 'exchan o, In( -21.e.r,i�..
iin --- branch v- -. not br� re' �1. .
.-rt-ncr i :to -t..nia n o Lir, ion�
by Col . 1.01-1 to t'ar School' aril nr.r 7.1.. pi P107 t 001.1
1-1r1 "itt
ti-: bricr in
-
t.).,o, � -oin.-
nril ..� bot as. 1:14- i:� nt � "rAll .
!CC'. 1,11 " 1(.1 � ;:r. ,tcrri t tury)s
II
t"t- It .1 of 1!' ;!:
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b3
"L 1..1' the occu:y..tion et' NG1-01 ,f U.:- ut (iirf etly
-11-� Joint of tJ I 8n1 ....lc: 01 VI- e-rsonrni of to, v. ri.�
nilit I ; the V.� r ent, t .4y han-ile)
sr:crt.t 1 wins EU lei then by OS$ sn I the theFe fuhcis ,ii
riot .r000ri:: z..ccora:diihwri vnieh would rfive, in , .1, not
on:" tr,t ir ro ani mis:71onr-ibtlt thei/ 0 e
�rir) err:on oin into ei neutr�i3 count*, his cover !, , to
e.-.ithe-r at. ki C1.:rk or an ,ttaehe..! to the ;itat,e Ler . rt.:.ent, or ;.i.s a �
to S0'' ol h.r Government n.:�ez.e:.� or erivqte Amerie,,r, c0).,re,i � I 1-i.r. .f
o. us_n-hi. tsk Iun�is � orl,. .1 h� �
-rr in-st , t 14_ .7 pr:rii-vs.' 4 -al, or tO unls as : .
41, 4 r r
in ....y-J-nt of id:, tieoreticea nrio. t..sk luncAt, as tno��
VC hi .1`11 SU Li '-1 him from the secret fund:- to earrx out e1''.7.ctively
ren1 INerk. 1.00 uiero'i trelin.m.-r,ite- v11�.1...;
y e ir 1.�.hch Ttiei r ?c.�-; -1- work
0: th, Ex.i.m cn' tn..'
el ;�.1.- cher-d.-A :1:o clet-n ra.lucori ty
�
ilk.cim-Itr,:sse. into istits7.1 the tion 01 tne fort.1.-ue.:�� In
it rr.:i t.ri it, not pro: 1*-Ly tr �.
anJ iieriol of .10.7.. thre,.., -
11-: � of tr � 1,71*- 7-t711 :70ii " "ro-S "Inc' � �..r IA. e
!it i to b�o.J. b�117..m.���:- in riir,�iin 'i
tn,�
1.�.r �1�0�0.11 ri ���1;-1 � r-r
ay. t�-� 1,11 re,!u�-t (7) CU.!. � . C':� yLI 11.�
e r 01* �-ot 1hr L:nr.��f r of t10 Ong-
. .r
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t.71;.n
o'' 1...v;o1ish cr. t7tP
m�-�it int �r 't I UV' me:.nin� o_ 13.� re.rn no. ir,a1 ;..r�i cro...;:n,,
an 7.y..:7�
to Pnt �r n 1.-.3.1.31 more ,, in obi relic: , no.:-
-r t.- Unit- �-�-,7tat� vitn nCe th-in :;,..!50...) J. Sudo '
,�� tf,c- Gov7--rn;1.--nt I:3 nouncPc tnat .out I bk- to
:.���.=jc n It more than 1:P . t. thP !-;:�rno 11IP r���:1
to 17,!' 11..) Atnd ot�At�'F their jjr j LO r )j 1)4J Uri,' 0: 'tie
� for tri-571-� re :u2.-.1,i,-.�nr7 v,�.--� that a - �-r.:7,)r) wou h- vA; to VC101K.XX hc.-ottatP
7.t b-Ar.k in oer to re-I�-ni- fui,7-1,-� ori in �.1
1 � � =7.t . ail of the b incstIt eeen ,o�-,rnoeni tnis
-!. 17�.r. It
of � ���e-111., : tc., 17t11..
t�.� .t o-f -Ouch en P.:huh r7�1 �oit -; ro�.1 niF b�
�.z.i cil.,Ln7ei 1 rem to tin. ifl�-s. it itas trio otvioa: :July oi
��� .1 Fur. i�-�to1=PP� o,
i � 1.�!', Chr1z-, to t�-.0,-;4-� .�cin
it 7. ne r.lo! t of troy, stirrt...tr.i.ow, an . cl:_n:.=�: tinP
.1. � i .1 o.-�: r . t were oi.� c�rricd on in cash, ensive
t ..1, c�n,- aim by tht ,ectivc forP3 :n 7Jc-s.-=��:n-1-.nt �, 1.0 trace. tin: move-
ueual rietnot7:c of :.mrkin..; re-corcin.; erini numb-rs .rid
S:9 *tiro I note���'? -rp ;p inoui�-eAi in hn-, nourri
� 1.7i� men,=.irPs.
',do, �
req.,
erscnrici Yene
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t.
� -- ...,.,..41--..�-.-t-�
rrv. 1.rar-ricr,ns ?. re pronc to 1,c-1 irve thr.t Fur, fir: nciz 1 � Prat,icn,
rnon ty.ric.1 r cory�tf..nt source 01 ft-Lrf'%1,1r.71+, nn, rn
nthPr hnro tnr yc� oi bein,- r t,n ritit the cc , e 1 nclirc C.
to rer,aro, ni,'Lly tn.:- rork ti-ot can 1.Ne dont: in tr::cin � Ifinanci�..1
VYL1:tlicE it to that V-.11- ect..use the oi.r.,rnti on! of the Fni i-7n
inn ci thc Futo.t, ctrri on
c'' r.,:-ri,nt 3 � ,ort� . :.:' : '11 r; � 4.- .1 4_ (7' tril F
-l� o 1tr �-r-r. tin -)r.c �-nt. -hn inn 1!
for(' t.brc.-.A or rho v.� F1.1. with ur, ''n ''.''r -vrr lort 1-Dc-. No cv,r 1.1�:-. 1,
r .,�-vf,(A.rfy rn,- 7 c-c' 3 Uc' fri,r.dy -hi
ta.Cft blVd..i(.12 it-I.:OW, jF
C0.11) It iF "F;: b: ".�� ITi!I.Ori!"-Irl of thin Hist- ci�
Fri ,nch - si"in 'ton, th!:t excf-slinnt. /dr-1:w e 01 the uif) co"! I
;-i1 1 .cr.-.6 tt.F Chief of "Olt- 1.xcnrin:-( alvi i i t:. .! �
�1.; rt ye7..rr., is ore cr-,t( the E,.bovt teu l.y ...r.
r.no It. en :�-r. Tc it. co � ti v rucc, ! -!(.11E. r: cr:
r ,
or 1tn,�11:' in vi:
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(f) ACCOUNTING AD AUDITING
'Tactically since the inception of the Special Funds Branch the
functions of the Accounting and t.uditing Department have been under the
supervision of Captain E. M. Lucas, its Chief. The original books and
records handled by Colonel Rehm were turned over to this officer in 1942
and the expansion and development of the Department remained under Captain
Lucas/ direction throughout the years to follow. The two sections of the
Accounting and Auditing Department, ie: (a) Payroll Section and (b) Acco ;Irv,
Section, are likewise his responsibility. A brief but thorough resum, sup-
plied by Captain Lucas himself for this History, follows:
"On 17 September, 1942, Colonel Rehm employed E. Y. Lucas as an
assistant to him to perform such functions as he might assign. The first
assignment consisted of taking charge of a secret journal and ledger into
which all payments made to agents were recorded. This jpurnal formed a basic
part of the accounting records as totals were transcribed from this journal
into the Standard Set of Accounts established by Colonel Rehm, on instructions
from the Treasury Department. Y,11 items posted in the journal were reposted
to an account in the secret ledger. This ledger formed The first set of acounts.
It is important to note that all advances were charged to expenses at the time
of issuance, so that the ledger was primarily an internal control for determinin:
that all such advances were accounted for. The entire set of accounts as main-
tained was a single entry system and as accountings were received they were
credited to the respective accounts, but not charged to an expense category.
"In approximately !:ovember, 1942, Colonel Pehn employed - Dimond,
who tool: over the accounts of the Eranch, nc only as disursinc r,7nt
cashier, but also RS to recordint7 of the acconts of indi7iduals associated
with tY.at :ranch.
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" In approximately December, 1942, Colone Rehm employed C. 0. Lennihan,
Jr., who became the disbursing oe:ent cashier for the SI Branch and subsequently
all Intelligeace Branches. Yr. Lennihan did not take over the maintenance of
the accounts into a separate unit such as Yr. Dimond had done, but continued
the aceountine practice as set up by Colonel Rehm.
" It is interesting to note that at the time that the organizatiee
VAS formed each agent was given a code name and all reference to hin u he
financial records was by that code name. The key to the code was mainte Aed
in the personal safe of Cclonel Rehn. It was an excellent attempt at main-
taininc, security but from a practical point ov view soon beceme absclutely workable, as as the number of agents increased and as domestic personnel began
to take on the rol!_of agents.
" In the Spring of 1943 Colonel Rehm was requested to keep his accouets
by projects which had been specifically approved by the Director. ft the
same time it became impractical to continue the division of the payments to
agents from other types of secret expenditures. Therefore, the special agents
journal was eliminated on 30 June, 1943, and posting of agents accounts was
carried directly to the agents ledger pages from the agent cashier disbursirg
records. The agents ledger was then broken down into the various projects to
which the agents were assigned. E. Y. Lucas (who had been corrunissioned a 2nd
Lieutenant on 13 November, 1942, and assigned to OSS) continued to keep the
agents project ledger and Yrs. Eve Cam-ell continued to keep the agent casler
records end the payroll records.
--
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"About this time some of the larger projects developed into the
large �SS Theater Vissions, such es London, !Ilgiers, end Cairo, and Special
I?ranch dispatched officers to each of these locations to handle Special
Funds. These Special Funds Lfficers then reported lack to V;ashThgtcn, where
the expenses were recorded on the project ledger. This recording- became a
tremendous job because the Specie Funds :Slicers teck credit for advances
which they had made tc local personnel, necessitatin: the V,ashington
charging the advances to the individwals advanced the funds and followi the
advances until they were accounted for. The unworka-rleness of this system
became anparent in December, 1943, and so in the S]rinfz cf 1944 Washington
devised a simple accounting proced..lre which it pouched to all the field off;
except Cairo, which had already set up a satisfactory system of accounts.
Under this system the Special Funds Cfficers were requested to set up a
balanced account for each currency in which it deal, and report to tashin0
in the form of balance sheets monthly showing:
Cash on hand beginning
Advances beginning
Transfers in
Conversion credits
Total
Cash on hand en...7', of period
Advances end of period
Transfers out
Expenses
Conversion debits
Equr-1 to total
This method kept the responsibility for advances in the hands of the Special
Funds Wicer abroad and his total accountability Was kept on the project
ledger in Washington.
" During the Spring of 1944 it became evident that the method cf acco,nt-
inj for funds was satisfactory to show that accow ig w%s made, but did nct,
indicate the expenditures in relation to dAlc=rE. Likewst it developed thLt
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it was unwise to separate the books into two separate sections between Yr.
Dimond and the other agent cashiers. Colonel Rehm requested Captain Lucas
to take charge of all bookkeeping and accountinc; on 1 July 1944. Captain Lucas
requested and received the assignment of Lt. B. O. 3eegto the accounting
section. A completely new double entry system of accounts was devised with
all entries tied into the books by numbered voucher. The advances previousl
made and outstandinc were carried forward into the new books ns of the date.
All accountability of the field offices was transcribed into dollars
rate, as close to cost as possible to ascertain, and eerried forward i.the:3e
books. The accountin; system was set up so that all expense charges would 1.,
charged to the expenses of the branches by Government classification for
domestic and foreign account. The agent cashier ledger accounts were broken
down to show receipts and disbursements as applied to the respective approprie-
tions. S/Sgt. Vernon Turner was immediately placed in charge of the foreign
accounts with Sgt. Arthur Todd to assist him. All reports received from the
field offices were transcribed to dollars and the accountability carried for-
ward mcnthly. The payroll section was expanded an 'ere. Caswell Was placed in
charge.
"About this time the General Counsel advised Sz .cial Funds that the
Comptroller General, in an informal ruling, had declared that all dollars
expended for the purchase of foreign exchange could be considered expended
for the purchase of commodity. Therefore, ell dollars held abroad es of
1 July 1944, were credited to the 1944 appropriation and charged to te l94-{
appropriation, hut all foreizn currency was considered in the lii t. of a
commodit:: with no adjust%ent between sppropriatlons. :n disi.osition of forei�-.!
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�
currency during fiscal year 1945 have been considered as a miscellaneous
receipt.
"The accounting system sent to the field in the Spring of 1944 continued
in effect throughout the fiscal year 1945. However, it became apparent that
this system should be revised because (1) the rates cf various currencies
were beinF carried at varying amounts in different theaters, (2) advs%ces
repaid in dollars invariably raised questions as to the rate to be ed, (3)
expenses were charged on the books at rates considerably below the of: ial
rates. After discussion with Mr. Bigelow, it was decided to stabilize all
foreign currency rates to the dollar on a basis as close to the official
rate or rates set by the Army or Treasury as possible. Vdth this revision
rates in mind .a revised accounting system was devised in. May, 1945, and sent
to all Special Funds Officers, for application 1 July, 1945. This method
contemflates the use of a one, currency system. Copy No. lE of the procedure
attached for your information.
The Accounting Section has endeavored to cooperate closely with the
agent cashiers in the capacity of a service unit, handlirn: all disbursements
and accountings, duly approved by the agent cashiers."
ACCO1:NTIN3 AND AUDITING
(A PayrZIA Section
r.rs. Eve C. Jones (formerly lrs. Caswell), as Tiead of the Payroll
Section which comes under the Accounting and Auditing 'Lepartment, has
outlined the activities under her jurisdiction Pnd given a brief descript;cn
of the gro4r7.h of her sections, as follows:
"Te first payrcll compiled by 6pecial nds u�ne;1 cnverin
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0
employees paid from unvouchered funds was prepared by the Special Funds
Officer, Colonel W. L. Rehm (then a civilian) in February, 1942 with the
names of (35) employees appearing thereon. As one views that first simple
payroll of two sheets of pad paper and compares it with the present comp1ie5t d
sheets nuMberins (50) per month, it is difficult to believe that only thcee
years have elapsed. Since that time, overtime has been introduced, w:i .olding
tax is deducted with additional deductions for War Savings Bonds, over4. 's
payments and insurance premiums.
In April of that year Kr. Franc151!. Barker joined Celonel Rehmts
Staff and the June 1942 payroll appears in his handwriting with 101 employeE
listed. In May 1942 Mrs. Eve Caswell was added to the Staff and from Septeaor
of 1942 to the present day, the Special Funds payroll has been administered
by her with E. complement of assistants ranging in number from one in the sue!
of 1943 to three at the present time. The number of employees paid from
Special Funds continued to increase monthly from (1E7) in September 1942 when
she prepared her first payroll to (442) in July 1943 when the first monthly
personnel report was compiled. The peak was reached in August 1944 with a
total of (1131) employees listed on the payroll for that month. The number
has decreased since that time due to transfers to civil service as well as to
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terminations resulting from the cessation of hostilities on the European
continent and the 30 June 1945 payroll listed (870) employees paid from
Special Funds."
ACCOUNTING AND AUDITING
Vi�ko counting S eb-ti
--------___
The following report was prepared by Sgt. Arthur Todd covering
the handling of this Section from 1 January 1944 to 30 June 1945. S/St.
Vernon Turar, originally Head of the Accounting Section, WAS transf(' )d
to the Field Auditors Department in May 1945 and went overseas on his xbt
assignment. Sgt. Todd then took over this Section.
"The Accounting Section was divided into two parts as of January
1, 1944. SAC... Vernon Turner WAS in charge of reconciling all Field Office
reports in the European and North African Theaters. Sgt. Arthur Todd WAS in
charge ofthe Far East Theater. Our duties were to reconcile all reports from
the start of operations in the Field, and to determine the accountability of
each Field Office as of 30 June 1944.
"As of 1 July 1944 a set of Master Control Books were installed
consolidating all Field Office accounting into one unit. SAgt. Turner
VAS placed in charge of this unit with Sgt. Todd and Mrs. Newland as his
assistants. Additional personnel was added as the volume of work increased
as follows: September, Cpl, Louis Kalloneok, November, S/Sgt. Joseph George,
February, 1945, T/Sgt. Oswald Connell.
"The monthly reports received from each Field Office are submitted
in all typos of Foreign currency. In reconciling these reports they must
be reconverted to a U. S. dollar equivalent. Then all transfers of account-
ability between Washington and or other Field Offices must be made or com-
pleted. The expenses of each Field Office are recorded by Branch and Object
classification, and all miscellaneous receipts are recorded for future pay
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"
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mant to the U. S. Treasury.
"In addition to maintaining this master control of Field Office
books, we keep the accumulated cost of Projects, the book of outstanding
advances and prepare the Financial Statement of Special Funds for the
Director."
LEGAL ADVISOR
_
Mr. A. W. Asmuth, Jr., Chief of the Legal Department, has hi, ialf
prepared for this History the following article:
"Special Funds is serviced on legal matter by the Office of the
General Counsel. In early 1944 Mr. A. William Asmuth, Jr. of the Legal DiNt6lon
(the forerunner of the present General Counsels Office) was given a desk in
Special Funds Branch. Mr. Asmuth had been recruited by Lt. (then Ensign) Jes
B. Donovan, Chief Legal Division, in the Fall of 190 and reported for duty
at OSS on 30 October 1943. He is a member of the Bar of the State of Wiscoesin,
ad_mitted to practice in 1941 following his graduation from Law School. After
practicing law in Milwaukee as an associate in a law firm, he served with the
Office of Scientific Research and Development in Washington for approximately
one year prior to joining OSS.
"It was intended that, after a period of general indoctrination
in the Legal Division of OSS, Mt. Asmuth would devote the major share of his
attention to Legal matters of Special Funds Branch and would serve as an
officer and legal advisor for several "dummy" corporations which were then
about to be organised. Shortly after Mt. Asmuthst arrival at OSS, Lt.
Donovan WAS assigned to temporary duty at Princeton University. During the
six weeks absence of Lt. lionovan, Mt. Asmuth was required to spend his time
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on the general legal affairs of the Agency and his assignment to Special
Funds was necessarily delayed until early 1944.
c: "Mr. Asmuths1 duties have consisted of (a) the drafting of legal
instruments involving payment from Special Funds, such as agents' agreements,
leases for secret training areas, special confidential contracts, releases,
assignments, powers of attorney, employment contracts, notices of termir tion,
affidavits, certifications, trust agreements, bills of sale, and other ley'
instruments, (b) formulating procedures for handling, and processing, de-, '
e
and disability eases of Special Funds agents and employees, (c) handling cei-tein
of the affairs of "cover" corporations, such as preparing the minutes of stock-
holders' and direotors' meetings, securing tax exemptions, reviewing contracts
and leases as to legal form, etc. (d) maintaining liaison with other government
departments on legal matters pertaining to Special Funds Branch, including
the Treasury Department, United States Employees Compensation Commission,
Bureau of the Budget, State Department, War Department, Department of the
Interior, and others, and (e) advising on such legal matters as are referred
to him by the personnel of Special Funds Branch. In addition to these duties,
Mr. Asmuth series as Secretary and a member or the OSS Medical Board, Secretary
of the Training Board, Chairman of the Efficiency Rating Committee, and legal
advisor, in the absence of the General Counsel, to the Board of Review.
"Since it is the established policy of the Agency to adhere as closely
as is practicable in the expenditures of Special Funds to laws and regulations
covering the expenditure of ordinary vouchered funds, Mr. Asmuth isfrequently
called upon to interpret and construe statutes, regulations, opinions of the
Attorney General, decisions of the Comptroller general, etc. Such opinions arc
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advisory aid for the guidance of those who make the final policy and adminis-
trative determinations. For example, it is provided by an OSS General Order
that the Living and Quarters Allowances established by Budget Circular A-8
shall be paid to all civilian personnel of OSS, except agents. Hence, the
provisions of the circular are applied by administrative action to all non-
agent personnel paid from Special Funds. Questions as to whether an employee
qualifies as having "dependente" within the meaning of Budget Circular A-8
may be referred to Mr. Aemuth for legal opinion.
"Procedures for processing death and disability cases of personna.;
paid from Special Funds have been worked out by Yr. Asmuth with the United
States Employees Compensation Commission. These arrangements permit the
filing of claims of secret personnel without jeopardizing security. In
addition, a plan was concluded with the War Agencies Employees Proteotive
Association whereby life insurance is made available to personnel on the
Special Funds payroll who are performing duties overseas including agents
on missions behind enemy lines (at no increase in premium rates). This is
considered to be one of the most unusual life insurance arrangements ever
entered into.
"Legal questions arising out of operations in overseas theaters are
occasionally referred to Special Funds, Washington, for decision (and then
in turn referred to the General Counsel or Mr. Asmuth). These matters are,
of course, primarily the responsibility of the Theater Counsel. Ur. Asmuth
is not on the distribution list of cables or overseas reports, and hence is
necessarily confined to handling those matters which are specifically brought
to his attention.
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"Captain John S. Warner was assigned to OSS on 15 December 1944,
at which time he was a 1st Lt. He had served seven months overseas as a
pilot of a Flying Fortress and had completed 35 combat missions over
Europe prior to his return to the United States. Captain Warner is a member
of the Bar of the District of ColleMbia. Since his aseignment to the General
Counsel's Office of OSS he has served as a general assistant to Yr. Aeereth.
"Because of a lack of stenographic personnel, Mr. Asmuth was
required to function in Special Funds Branch without services of a seer ry
until February 8, 1914 when Mrs. Frank Meenahan reported for duty. Mrs.
Yeenahan left the Agency on 5 August 1944, and Miss Marianne Clarke reported
as Mr. Asmuth's secretary on 23 August 1914. The services performed by Mr.
Asmuth and Captain Warner involve a large &mount of paper work, and the lack
of adequate stenographic assistance has been a severe handicap."
The invaluable assistance given to the Branch by the tireless A. W.
Asmuth cannot be over emphasized. With the help of Captain Warner, an almost
incessant series of Special Funds problems which required a legal scanning
or "Bar" interpretation, were referred to his Department for action, - and
received it.
Realizing the definite value of having subordinate Legal Advisors
in the principal outside theaters as well, competent young lawyers were dis-
patched from Washington under W. Asmuths' direction. Being in a position to
answer and handle many legal questions "in the Field", these representatives
of the General Counsel's Office, saved valuable time and accomplished much
towards standardizing and properly interpretating OS procedures and directives.
With the activation of the Legal Advisors Department, much responsibility
was transferred from the shoulders of other Branch eereeatives to those of A. W.
Asmuth.
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_
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01
(I)
(h) PERSC.1:NFL CIFICER
This position was oricinally occupied by Lt. Col. Vlilliams in
addition to his duties as Field Liaison Officer but in February 1945 a
separate Personnel Department was established with 2nd Lt. Eugene Steuert,
just returned from 0.C.S. as Chief. In rarch 194F Sgt. Stephen hostick was
appointed assistant to Lt. Steuert.
This department is responsible for all personnel matters pertan:
to the Special Funds Division, Washington Office, including the procure
of additional personnel, transfers, furloui-Y and leaves, promotions etc.
lesides handlin-: the usual personnel matters, L. Steuert is likewise in
chari7e ii policies issued by the %Eir Agencies E-:ployees Protective
Association for :ASS civilians either in the Field or to be assigne(i to duty
outside the continental limits of the United States. Cver (300) of these
iolicies have teen written. The Personnel : part..ent also is in charge c�f
all petty cus, keepnc an adequate supply avaflaUe and honorin all military
and .7overrx.ent checks for ,:SS individuals. The ant kept on tani averages
l.5,000 per day and as much as /10.000 over pay days.
1-.31S=
In Larc. 194:: it was considered not only advisatle, but necessary,
that a se7rarw:e 7eistry be established in the special Funds lirrInch in order
t'.at copies of all correspondence, - cables, lette:s and air dispatches, t:otl:
incomin: anr1 Dutgoing, as well as col.ies cf.all:7eneral Administrat:H^
�:1.1etins and i:ranch mi_�.t. 1-e exlert.ly filed in a separete file
fore this ws ,h)nr!, the records in most uses were kept in the ildivH:r.1
cr,bineis of ti,t v-ri-ur departments and c-nse"luently often difficult, or rim
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impossible, to locate quickly. Only the rather cumbersome chrono file
contained any sort of a semi-complete roster and this was, for ready reference,
anythiAg but edequate.
Yrs. Dorothy King, competently trained, set up the new Registry in
its own room with (1) assistant. From a small beginning, the Department
ex ended rapidly and an efficient system was installed. As of 30 June 1945
th le-partment had a staff of (3) file clerks and its (6) large cabinet-safes,
wit combination locks, contained several thousand separate files with all
c.respondence and documents inserted in chronological form under the proper
clessificetion. These cabinets contained complete files for the Tashington
e....11earters and all Branches, also files for each outside theater, individual
personnel files, those for special activities, contracts ete., with the
ii ear cross-references.
Unciueetionably, the Registry played a very large part in the
effictent ceperating of the Special Funds Branch from its inception to the
present date. After it was once established and functioning, it proved
,ifficult to cemprehend how it had been possible to handle the complicated
branch activities before its organization.
FIEL LiAISO:; uFFICER (AND HISTORIAN)
This position was established by Colonel Rehm with the appointment
of' L. Col. J,-.hn rdlliamE in the capacity of F.L.O. in March 1944. Col.
'llieens bed just returned from Rorth Africa where he had served as the first
Chief for Special Funds Branch in that theater with -Headquarters in Algiers.
It Akr believei that an .efficer appreciative of Field conditions and with
persenal experience with the difficulties often encountered "outside", could
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do much to coordinate and expedite theater activities with the Washington
Feadquarters.
All correspondence, both incoming and outzoine, between Washington
and Special Funds Branch advance bases was routed via Col. Williams desk.
was his duty to see that prompt and efficient action resulted in connection
with all Field requests, requirements and problems. In other words, oe 'is
shoulders, rested the responsibility of making sure that all advance be- : got
"action" at this end. The procurement, training and clearing to Ports of
Emberkation of new personnel for the Field likewise came under his direction
and in the same connection, it was his responsibility to forecast future
Field personnel requirements. On the first of each month Col. Williams
dispatched a report on all Special Funds Branch activities, both in Washington
and in outside bastes, to all theaters. This included pertinent general inform-
ation as well and was intended to keep all Special Funds Branch personnel
cognizant of all developments and activities.
At the request of Colonel Rehm, the Field Liaison Officer completed
the History of the Branch operations in EEDTO for the first year of operations
in North Africa and in Italy, and he was also designated Historian for this
Washington History. His first assistant was Yrs. T. A'Hearn who was succeeded
by Miss Claire Crook in January 1945. Likewise, until he was transferred to
the San Francisco Office for the Conference, 2nd Lt. eogeF Gartner handled
a part of the Travel Sponsor work for Col. Williams.
(k) FIELD AUDITORS
ee
For some time prior to the establishment of this Department, it
was felt that competent officers and men, preferably C.P.A.'s, should be
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available to :o cut from the Lmnch headquarters in T:eshinitoa to complete
official audits of the Special Funds books in the varicus theaters. These
men to be a part of the continenttil T.C. and sent to the Field on temporary
duty. In this wey no theater Table of Crganization would in any way be in-
volved.
Sccurinc a staff with the necessary qualifications for this imj ent,
specialized work, proved difficult. Several possibilities were located
their transfer to CSS was requested, but for one reascn or another they could
not be made available. At the time no one could be spared from Headcivarters
who could competently handle the work, end none of the outside bases were 7!yi
a position to release a trained auditor for this travelirk-; position.
Early in 1945, two separate requirements necessitating the prompt
fe.-mation of the Field Auditing Department, and the appointment of at least
a temporary staff, were received. One was a cable from the SSC in the China
Theater asking for an auditor for the Kunninc accounts as soon as possible.
The other, which cF:rie in the Spring, was the infonaation that :.a-Tyrc was
shortly to close down and the resultinc necessity of auditin:, the Caserta
books before the Special Funds Branch personnel could le released, was an
immediate requirement.
At last a qualified 2n Lt., Erederck- ilichards, was secured from
Army iinance and immediately started training for the auditor position in
Firis,, to proceed first to China, then to Tndit-rria. ach to ;,ashi:1:tcn
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from NETO came 2nd Lt. William Peratino, an expert in Special Funds Branch
operations as a result of long experience in both Cairo and in Athens. To
act as assistant to Lt. Peratino, S/Sgt. Vernon Turner was relieved from duty
as Head of the Accounting Section in Washington and these two men proceeded
by air to Italy to start the work in Caserta, then to proceed to London for
the ETO jobland finally to tackle the four bases in the neutral countriee.
Since no other qualified EM could be transferred from the Accounting Section,
an application was made through PPB for an assistant for Lt. Richards 'so.
This would give the Far East a team of (2) an officer and an EM 1ikewis3,
similar to the team sent out to the European Theater.
As of 30 June 1945, therefore, the Field Auditors Dpartment Was
definitely activated, and it Was believed that the staff of four men, divided
intc two separate teams, would prove sufficient to handle this important worl:.
(1) THE NEri YORK OFFICE
The following data in regerd to the Special Funds Prench set-up
at the OS Kew York Headquarters at 630 Fifth Avenue, is quoted from a memo-
randum dated 18 June 1945 from Mr. E. K. Merrill:
"I assumed the positicn of Special Funds Officer for the New York
Office on 30 March 1943. During the whole time that I have handled this
work, I ilave been assisted by Miss Alice Conway, as secretary. There have
teen no others assigned to this office.
The duties of this office have, of course, been mainly those of
carryinc out the New York end of financial transactions for Seeciel Funds
Office, V.ashinton, and attending to the peyments of Special Funds reuired
to meet pay-rents of payrolls, ccnsultants1 fees and certein projects incident
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�
to the operations of the OSS New York office. The former included the
procurement of foreign currencies and credits through banks, business corp-
orations and individuals, in accordance with instructions from Special Funds,
Washington. In addition to acting as agent cashier fcr the direct expenditures
of money, there have been - from time to time - certain projects established
which required their own bank accounts, for which funds were advanced from
my agent cashier account to the accounts of a subordinate agent cashier or
others directly in charge of such projects.
Other miscellaneous assignments arose from the fact that it was
convenient to handle details in certain dealings in New York, rather than in
Washington, - and this office Was requested to act in numerous capacities
to facilitate matters of business for the Washington office. These properly
belong in the records of the tashinr,ton office, rather than of this one."
(0 THE SAN FRANCISCO OFFICE
With the expansion of OSS operations in the Pacific Theater, Special
Funds activities in California were considerably increased in 1944. Besides
the headquarters located in San Francisco, likewise was maintained an office
in Los Angeles and extensive training areas on Catalina Island. Almost all
personnel being processed for FETO attended school on the Island and those
who proceeded to the Far East by sea transportation were ordered to a POE
on the test Coast. Originally, the bulk of the overhead for CSS in California
was defrayed from Special Funds but et this time a Dart has been transferred
to vouchered accounts and it :Is now contemplated that all, or almost all,
of our Vest Coast expenses will be handled by the Fiscal Division and s.
Special Funds representative no longer required in that area.
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The Special Funds 3ranch operations were such in the Fall of 1944
that it was considered advisable to have our own officer in charge. Con-
sequently, in September of that year, Lt. (jg) WilliaR Yackintosh, USNR, pro-
ceeded from Washington to California and opened a Special Funds T,ranch Head-
quarters located at 406 !ontgomery Street, San Francisco. Funds, as re:.juired,
were advanced by rr. Hartshorr to Colonel Connely who in turn made same
available to Lt. Mackintosh. The Lt. was responsible for the maintainin,
of all accounts and records in connection with all money expended from our
?ranch in both the Los Al-n;eles and San Francisco Areas.
Since a comparatively large detail from OSS was dispatched to
California for special operations duri/v, the United Nations Conference in May
1945, it was considered advisable to send an assistant to aid Lt. Y.ackintosho
Consequently, 2nd Lt. roger ',3artner flew to the West Coast before the Con-
ference opened and handled conference expenses for a period of an.roximately
three months.
Lt. rackintosh came to Viashinton for a consultation in
June and it was then decided that West Coast expenses could be almost
completely transferred to the Fiscal Division. Upon his return to San
Francisco, Lt. i;artner was transferred back to Washinton and the Special
Funds Franch :Ifice in California is now in the process of bein closed
down.
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FOREIGN THEATERS
SECTION IV
As of 30 June 1945 the Finance Branch maintained a Headquarters
and a staff in (1D) foreign locations and likewise in New York and in San
Francisco. These staffs varied in size from a single individual to those
maintaining several Officers and a large number of enlisted personnel and
civilians. Also, in some instances/a single Headquarters handled the ter-
ritory in which it was located, but in other cases there were many sulce.� riate
bases and advance posts. The Foreign Theaters were as follows:
(a)
(a)
= 0
(e)
China
(I)
Bern
(h)
aLITO
(0
Istanbul
(j)
Stockholm
(c)
NFTO
(g)
Lisbon
(k)
New York
(d)
IF
(h)
radrid
(1)
San Francisco
EUROPEAN THEATER OPERATIONS (ETO)
This WAS the
Funds. Lt. Colonel
since inception and
first outside Headquarters established for Si:ecial
Robert H. Alcorn has acted as Chief for the Franch
now has a staff of (4) officers (4) enlisted personnel,
(2) male civilians and (1) civilian secretary. Included in the enlisted
personnel are (2) Ws. Headquarters is at the London office known as
"Main" with an advance Headquarters in Paris known as "Forward". The
ETO theater comprises all of England and France and atsto. handles finance
4*1
Branch operations in Luxembourg, Holland, Belgit7Ur;rway, as well as
the pew stations to be established in Germany and in Austria.
(b) MEDITERRANEAN THEATEE OF OPERATIONS (MENU)
Lt. Ccl. John W. Williams established the Franch for this theater
in Algiers/the then Allied Force Headquarters fcr North Africa. :pon his
return to Wnshington Captain Crockett took over as Chief and as of 30 Jun
1945 was still actint-, in that capacity. The staff under Captain Crockett
tilL 4
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included (6) officers, (2) enlisted men and (7) civilians, The original
North African bases located in Casa Blanca, Oran and Tunis were transferred
directly under Washington after the Headquarters was moved from Algiers
to Caserta, Italy. At its height the bases and staffs handled by the
Special Funds Branch of the 2677th Regiment OSS (Prov) included not only
all of North Africa but likewise Sardinia and Corsica, Sicily and all
Italy. Some operations in the Balkans and in Yugoslavia were also nnder
its control. Besides the Headquarters in Caserta there were (6) se ate
posts where finances were taken care of in various parts of the Ital la
Peninsula.
(c) NEAR EAST THEATER OF OPERATIONS (NETO)
With Headquarters in Cairo the original Special Funds Officer in
charge was Lt. (ig) Holt Green, USNR, now missing in operations. Lt. Grecn
was succeeded by Mr. Thomas F. Bland and later by Lt. Nick J. Steichen, the
present Chief. NETO for a time controlled operations in Bari on the Adriatic
coast of Italy, later transferred to Caserta. Cairo also handled all Greek
operations through the advance base in Athens and the Istanbul base in
Turkey also came under the jurisdiction of the Headquarters in Egypt.
Including the Greek and Turkey zones, the perscnnel for NETO in addition
to Lt. Steichen comprised (1) officer, (2) enlisted men and (4) civilians.
(d) INDIA-BURMA THEATER (IBT)
This theater was originally a part of C & ID (including China)
and, together with South East Asia Command (SEAC), was under the Far East
Theater of operations. The original Chief for C & IB Was Commander Joseph
Leete USNR, but when the theater was divided into a China Theater and an ;ndia-
Burma Theater, with SEAC coming under ID, Lt. (jg) Gunnar Mykland took
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over the China Headquarters and Captain Emmett D. Echols replaced both
6SP4
Commander LeeteA in IB and Captain Joseph Croll USMC, in SEAC, All oper-
ations in India and in Burma as well as those which formerly came under
SEAC in Ceylon were on ie 30th of June under Captain Echols. Original
Headquarters for IB under Commander Leete was in Calcutta and later in
New Delhi. The final Headquarters, under Captain Echols, was establiF.hed
in Kandy, Ceylon. The staff under the Captain included (6) officer, '9)
enlisted men and (4) civilians. Besides the Headquarters in Kandy as
as (6) advance posts were handled by the Special Funds Headquarters. AmoLJ
these was 101 located in Nazira, Assam which is at a later date to be
transferred to the China Theater.
(e) CHINA THEATER
As stated in the above IB coverage, this theater was originally
a part of India-Burma. After the separation Lt. (j) Gunnar .,,ykland
Wee in charge of operations with Headquarters in Kunming. The present
Chief, Lt. Charles N. Davis, took over when Lt. Mykland returned to
Washington. Besides the Headquarters in Kunming the Branch was repre-
sented in Chungking, and, as of 30 June 1945, at (4) advance posts.
Besides the Lt., the staff consisted of (2) officers and (3) enlisted
men.
(f) ISTANBa
As noted under (c) above, Istanbul operates through Cairo and is
controlled by NETO. The staff in Istanbul consists of the Special Unds
Chief, Captain John C. Young and one Sgt.
(g) LISBON
Mr. Gardner F. MacPherson acted as Chief for Special Runde in
LUL
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Portugal with (1; civilian assistant. On or about the date of the termination
of this history ie: 30 June 1945, Mr. MacPherson transferred to Finance
operations in Germany and his assistant, Yr. Harris, assumed the position.
As in other neutral countries Headquarters, the Lisbon staff was connected
with, and operated under the cover of, State Departr:.,nt.
(h) mApalp
Lr. James L!cMillan served as Chief for the Special Funds :rw in
this station with (1) civilian assistant. Madrid handled all operation:
in Spain and worked in close liaison with Lisbon.
(1)
The Speciel Funds Branch activities were originally handled in
Bern by No. 227, a Treasury representative, who was replaced in 1945 by
i':-.01%P.S F. i-land, formerly of Ciro. The Herta Headquarters operated
in close conjunction with both rTc, (London and Paris), MEDT1/4::, (Caserta) and
with Madrid and Lisbon.
(j) STOCKHOLM
Mr. Iver C. Olsen of United States Treasury acted as Special /'Unds
reprtsentative for Sweden with (1) civilian assistant. Shortly before the
close of this History, Mr. Richard Huber, formerly of SI, proceeded to
Stockholm to brine all accounts u t date. (It is to he noted 'fere as
referred to earlier in this work, that we had on the Rack of .;ibraltar on
a te;:.por.ary assinment Lt. Ed Fay in charge cf te old reserve. !Aso,
KltboA,Th the Branch was not officially represente-f. in Tani:lers, Special
Funds operations were likewise carried on there,.
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PERSONNEL SECTION V
(a) WASHINGTON
As of 30 June 1945 the personnel of the Special Funds Division
(formerly the Special Funds Branch) of the new Finance Branch at the
Washington Headquarters was as follows
1. Front Office of the Chief, Finance Branch
Colonel W. L. Rehm (Chief)
Evelyn K. Hall (Admin. Officer)
Ruth Danahoo (Clerk-Steno)
2. Disbursing Officer-Operational Branches
D. /!. Dimond (Chief, Special �,lands division)
Roby C. Reid (Assistant)
Ferne L. Losby (Clerk-Steno)
3. Disbursing Officer-Foreign Exchange
F. Y. Bigelow (In Charge)
Lt. John H. Schaefer (Assistant)
Cpl. Robert ncIntosh (Assistant)
John J. Haggerty (Assistant)
Alice P. Sweeney (Clerk-Steno)
4. Disbursing Officer-Intelligence Branches
R. G. White (In Charge)
Vladimar S. Olive (Assistant)
Winifred Robertson' (Clerk-Steno)
5. Disbursing Officer-nisc. Branches
D. R. Hartshorne (In Charge)
6. Accounting and Auditing Department
Captain E. .7.1. Lucas (In Charge)
Lt. F. Geer (Assistant)
Virginia Lester (Clerk-Steno)
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6 - (a) Accounting Section
Sgt. Arthur Todd (in charge)
Sgt. Joseph George
Sgt. Ozliald Connell
Cpl. Louis Kalloneck
Katherine King
Evelyn Newland
Elsie Holtgreve
6 - (b) Payroll Section
Eve Caswell Jones (in charge)
Marie F. Welcome
Dorothy Gumpper
7ir;inia Buckley
7 Pegistrx
Jean McIntosh (in charge)
Aurelia F. DeLozier
Lenore Longest
8
Legal Deartment
A.W.Asmuth Jr. (in charge)
Capt. John S. Warner (issistant)
-arianne Fe Clarke (clerk-steno)
9 Personnel Officer
Lt. Eugene A. Steuert
Sgt. Stephen Kostiok (Assistant)
10 Field Liaison Officer
Lt. Col. John I% Williams
Claire F. Crook (Clerk-steno)
11 Field Auditors
Lt. Frederick Richards - FETO
Lt. rilliam Peratino - ETO
Sgt Vernon Turner (Assistant)
TTAL iERSONNEL WAS= N - (42)
As OrT�Jun
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(b) :!: _THF FIELD
LO:iDiDN - ET�
Lt. Col. Robert H. Alcorn
1st Lt. Clinton Webb
7:r. Ned L. Ball
Li. :Hoke S. McDomld
� Anna D. Howell
S/Szt. Ralph Roberts, Jr.
-NAC r/.3 Celia Kent
/R'S
Captain Gerard J. Hodkinson
1st Lt. Robert E. Sprincsteen
7.-AC St. Doris Verntz
31.1\ :...ANY
...ardner V. MacPherson
1st Lt. P. L. F. Sid-Lel
-
nand R. Foyant
CASERTA - MEDTO
Captain David C. 1.rcckett
Lt. (j:*) R. Lee Ccvinj,ton
2n4 Lt. Thomas
:Ass Lars Oc .:a1lcwer!
-iss Patricia :'almsted
Mrs. Lorraine H. white
.� 1reta ulson
:iss Evelyn N. Veit!.
S1E:A
Gene Sorisi
:PI Anlio Alscev.;eh
2rptain !_n-thn: J. :eCic-o
:nd Lt. c%-la!to
- NETO
1st Lt. Nicholas J. Steichen
Cpl. illiam Gasperow
� ilorence C. Larscn
::iss Evelyn H.: Giovanetti
Miss Pachel ShuL;ars
iss Telpi Rose
ISTLNP71.
Carytain John C. Yol.av,
TAgt. Paul Weetherill
126M1NG - China
1st Lt- C1�-yles
St.Rc-�lert 2. S-2r2dp:-
CH"jN,S,LIN,-;
_
/
.1../Sct. Earle F. Hiatt
C.2.I1HKIAN1
1st Lt. Lndrew ::. 721%es
2nd Lt. :;raff
SZE'Jlr.
TiSzt. Lloyd Davis
-
IF
Captain Emmett *D. He,-,21s
1st LI-. :'. :-.:atchford
2nd L. jeor6e !are2
St. rt� Dr0.:E.
aa.rles � Jefts, jr.
� T:leDnor
� Lira Len.lett
fir
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SO. WEST BURMA
lat. Lt. Donald S. Packer
Cpl. Robert J. Shaw
101 - FAZIRA-ASSAM
Ma
or Gcorge D. Gorin
Sgt a W. O. Schieffelin
Sgt. Y. G. Black
TA Vincent P. Gallagher
MYITKYINA
T/Sgt. Edward S. H. Pendergast
BRAM�
2nd Lt. Luther E. Julian
CALCUTTA
let Lt. Frank MRngeng
Cpl. Raford C. Price
Mr. Samuel Jacob
Miss Helen Valorius
LISBON
Paul T. Harris
MADRID
_-__-_-
Yr. James H. McMillan
William C. Bryant
STOCKHOLM
Mr. Iver C. Olsen
(Richard Huber)
Miss Mary P. Thompson
����
BERN
Mr. Thomas F. Bland
SAN FRANCISCO
Lt. (jg) William C. Mackint,-'
NEW YORK
Mr.- E. K. Merrill
Miss A. Conway
RESERVE POOL
(Personnel ialfiialaRE-Kiad Returnees)
Commander Joseph Leete
Lt. Donald Soliday
Captain Joseph Croll, USMCR
2nd Lt. Roger W. Gartner
M/Sgt. Robert F. Vogel
Arline Knapp
TOTAL PERSONNEL - IN THE FIELD - (75)
----- As of June 30, INS
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CONCLUSION SECTIN V;
During the entire period covered in this History, from the inception
of the Special Funds Branch in January 1942 through to this date of termination
30 June 1945, the Special Funds Branch has endeavored to operate as an efficient
"service" unit for all Branches of OSS both in Washington and in each outside
theater of operations. It has maintained close liaison with the Director and
the Secretariat, with the Chiefs of each and every Branch and likewise with
the vouchered funds personnel. Because of the type and scope of operations
both in this country and abroad for which unvouchered funds were necessary, it
likewise proved essential for the Branch to maintain close alliance with many
other government bureaus. This Was of ccurse especially the case in regard to
the United States Treasury and the United States Department of State. Liaison
has been maintained throughout with high officials of these (2) government
bureaus and just as we required and obtained their cooperation and s,:pport,
so likewise did the Special Funds Branch offer them every possible aid
whenever requested. The same was true, only to a slightly leseer extent,
in regard to the War Department, Navy Department, USCC, OWI and other bureaus.
The Treasury, of course, supplied the necessary funds against vouchers
drawn by the Agent Cashiers and %MIX its representatives worked with the
Special Funds personnel in outside theaters as well as in Washington. Its
officialSworked in complete harmony with Ifto:17:1')=tment Heads and Chiefs in
the Field in regard to necessary
regulations, clearances, transfers and
foreign currency purchaser. The State Department permitted its use as Mina
"cover" fcr Special Funds Iranch personnel in neutral countries, furnished
the necessary official passports for civilian travel and throuh its .7-Mbassy
and Consulates worked in close cooperation with all operations. The Army, and
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on occasions the Navy, transmitted millions of Special Funds dollars to
all parts of the world for unvouchered money operations and their paymasters
were closely allied with the SpeciF1 rsunds Iranch Chiefs in all Theaters.
The other government bureaus with which en allegiance was maintained, aided
the Brnch in special cases and were, in t'irn, given assistance when and
where desired.
As sttted earlier in this Eistory, individual histories cove � g
all outside theaters have either been completed or, it is presuned, hh
teen requested and are in the rorhs". These Theater Coverages, in con-
uncticn vi-ft this report cn the ':.psh-ton headquarters, should, it is
telieve2, give as complete a report as is possille on Special l'unds Pranch
ectivities arA operations. :ere endeth the first lesson; the second must
le read ty, and is in the laps of, future Gods.
For the Chief, iinance "franch
Lt. Colonel, AUS
-Lel 71 1'1-01 194E
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(a) ATTACI-U.TNTS
1. General Statement Pertaining To The Usage of and Operations under
2. Schedule of Unvouchered Funds - Fiscal Year 1942 through 1945.
3. renorandum - Subject -- Budget 1946.
4. General Orders - 37 (Supp. 2) - 51 - 73 - 79 - 9 (Supp. 36) and
General Orders series 75 - 1 through 13.
5. Foreign Currency 7;orkinr Rates (Accounting and Auditing Department).
6. Uniform Accountint:, Procedure with Sample Books (Accounting and
Auditin::� Department).
7. Copy of memorandum from Bigelow to Rehm with paraphrase of telegram
�C.d.
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