OSO FROM JULY, 1946 TO DECEMBER 1946

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84-00499R000500110004-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 6
• Document Creation Date: December 16, 2016
• Document Release Date: December 28, 2004
• Sequence Number: 4
• Publication Date: May 8, 1952
• Content Type: SUMMARY

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lop SECY:=
EFH to ABD 8 ANY 1952
OSO FPQMMi JULY, 1916 TO DECF21IBER, 1946
In recapitulation, the prerequisite circumstances that lubri-
cated the birth of the Office of Special operations were:
8 Feb. '46: Provision in NIADir #2 of Central Intelligence
Services within the organization of CIG, for operational agencies la-
ter to be determined.
13 Near. 146: Submission of Fortier Report to DCI, fulfilling
assignment of CIGDir #1 to study and report on the assets available
in SSU, and based on a thorough interrogation of key SSU personnel
and spot inspections of its activities.
14 Mar. 146: Appointment of Fortier to additional duty of Act-
ing Chief of Operational Services.
2 Apr. ').6: Authorization by NIADir #44 for DCI to direct SSU
with the mission of absorption of its permanent activities by CIG or
other agency not later than 30 June '47.
4 Apr. t46: Appointment, by CIGDir #6, of Fortier as agent of
DCI to issue orders to SSU, and instructions that SS11 shall continue
absolutely essential activities and prepare for transition to an ap-
propriate group in the War Department or other agency.
23 May '46: Data for plan for world clandestine coverage called
for by oral order of Tharp, SSU; data assembled and SSU plan for per-
manent world coverage issued shortly thereafter, based on total or-
ganization of 3,000 persons.
17 June 'Li.6: Reorganization of SSU, by SSU General Orders #13,
establishing Foreign Security Reports office, by combining the SI and
Y-2 (counterespionage) branches inherited from CSS. This step had
been anticipated by Magruder before he left SSU in April, in an infor-
mal move, in which he placed personnel of these two branches in physi-
cal juxtaposition in each geographic and country area. This step in
turn anticipated the subsequent organization of OSO, creating the geo-
graphic breakdown of the world as OSO maintained it even after subse-
quent reorganization in December, ')6.
8 July 146: Direction of the DCI, by NIADir #5, to perform
(par. )a) "Conduct of all organized Federal espionage and counteres-
pionage operations outside the United States and its possessions for
the collection of foreign intelligence information required for the
national security."
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rapidly. Three days later, on 11 July 1)46, the office of Special
operation was activated by a memorandum addressed by Wright to "all
CIG personnel concerned." Its mission was to perform the functions
specified in par. ).a, III ADir #5. The same memorandum relieved Fortier
as Acting Chief of Operational Services and appointed Galloway as
ADSO, Goggins as DADSC, a~.d Douglas as "B" Deputy with the mission of
collecting intelligence information with the US. A separate memoran-
dum dated 3.2 July '146, assigned Quinn. as Executive to ADSO in addition
to his duties as Director of SSU. On 17 July Quinn addressed Penrose,
then Acting Chief of FSN), assigning him as "All Deputy, with the mis-
sion of clandestine collection outside the US; and DeBardeleben, then
Acting Deputy Chief of FSRO, assigning him as Chief of Control, with
the mission of conducting and controlling all dealings of the new of-
fice with other parts of CIA and other Government agencies and de-
partments, it being recognized from the start that OSO should operate
independently of the rest of CIG in many matters and deal directly
-with its clients and supporters because of its highly sensitive nature.
This completed the top staffing of the new office, and the next urgent
problems were (a) to effect the final incorporation of the residue of
SSU and (b) to staff the areas critically short of personnel, notably
the Latin American Branch and the domain of the "B" deputy. Formal
activation of OSC was effected as a part of the general reorganiza-
tion of CIG provided by CIGDir #14, dated 19 July '46.
Although Fortier bowed out at this time, he appears to have left
a very distinct mark on the young Office of Special Operations. For
one thing, his committee report was thorough in coverage and precise
in recommendations. For another, since he was officially charged with
giving orders to SSU in the name of CIG, he was in a position to im-
plement his ideas as they evolved without waiting for formal approval
from higher authority. The most significant points in the report,
from the standpoint of later developments were: a) CIG should take
up the slack and fill. the gaps in espionage, rather than assume an ex-
clusive portfolio. b) espionage activities wli.ch the Army and other
agencies were conducting should be under strong centralized coordina-
tion by CIG, but should not be eliminated. c) The bulk of remaining
SSU personnel should be taken into CIG, but on an individual basis
with security investigations for each.
The first two points may well have been central to the differ-
ence in view between ?ortier and Vandenberg. They represented a long,
but evolutionary rather than -revolutionary, step forward from the
Souers philosophy of coordination rather than operation, and may well
have been more realistic in. the setting of the time than the more ex-
treme position that emerged in NIADir #5. For one thing, they took
into account the administrative hurdles that still lay between the
existing SSU operations and a working espionage organization in CIG.
For another, they provided an atmosphere of compromise in moving in
on the strong vested interests of the Array in espionage. It is not
insignificant that, while these vested interests were attacked fron-
tally by N'I-kDir #5 this attack roved a ,,~~ aa t ve
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the Army underground underground, and nearly six years were to pass
before the conflict was actually resolved. It can never be proved
either way,, but it is at least arguable that if CIG had not bitten
off so much more than it could chew so early, it would have come to
enjoy the confidence of its sister IAC Agencies sooner.
from their departmental funds, and turned over to CIG the money to
pay salaries to its on employees. The first SSU personr:.el to be
absorbed were from the Personnel Branch, and on their transfer in
September, they in turn were put to work to expedite the transfer of
their fellows.
The third point was apparently nowhere disputed, but its effect
was to add to the time required to effect the full absorption of SSU
assets. Before the end of July, strong pressure was being exerted to
get SSU personnel transferred to CIG as rapidly as possible. There
were two major obstacles. One was the need for funds to support a
payroll. The other was the lack of personnel to perform the arduous
personnel job of investigating the incoming employees from SSU both
as to professional qualifications and security. On 29 July 'L.6, Gal-
loway set up target dates by which all selected FSRO personnel should
be taken into CIG by 15 Au;ust. On 31 July, Col. William C. Harris,
Exectutive for Personnel and Administration, replied tI.at this would
be impossible because the CI_G personnel organization was not equipped
to handle such a load. He added that 30 days were required for the
necessary Civil Service Commission processing, and recommended target
dates of 10 October for absorption of US personnel, 20 October for
undercover agents and 30 October for foreign stations. Galloway re-
plied the next day; that US personnel would have to be absorbed sooner,
and by 10 September at the very latest. Meanwhile, efforts were be-
ing pressed to work out afinarncial arrangement, and in September the
cabinet members represented on the NIA got together, made up a pool
OSS had reached a peak strength of 12,995 in December 144, shrunk
to 10,479 by the time of its liquidation in October '4.5,- Of this to-
ta1, 1,350 went to the State Department, leaving 9,129 in SSU when it
was established. By 1 March 146, the total strength of SSU had been
reduced to 2,083. Further attrition continued through the Spring,
Summer, and Fall. It is estimated that 800 SSU personnel were finally
taken into CIG. Of this number, 171 were in the operating echelons
of FSR.O, constituting the nucleus of OSO. This number corresponds al-
most exactly with the total strength of FSRO, exclusive of casuals,
as established in June '46. The balance were made up from Personnel,
Finance, Communications, Inspection & Security and Services. The
actual dates of transfer were spread from September '46 to January
'17, the FSRO contingent transferring in October.
09(3 started functioning along the unchanged lines inherited from
SSU. The FSR0 reorganization in SSU established a pattern which re-
mained virtually unchanged until 6 June ')7, when the office was re-
organized under SODir #18. Not only were the geographic branches the
same, but the brarch chiefs included uchh o znel
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of OSO as Helms, Horton, Kitchell, Lloyd George, and Boulton, and, in
the Dissemination Branch, later Information Control Staff, Houck. The
organization included, though of nominal and caretaker proportions for
some time, the Special Projects Division, which provided a vestige of
continuity when OPC was created one and a half years later. Documen-
tary material of value, in addition to diaries, histories, and opera-
tional records and manuals, included notably a CE file of some L1.00,000
individual cards, which provided the nucleus of OSO's CE registry.
Overseas operations actually in being were confined to Germany, China
and Southeast Asia. On the whole, the projected world-widd foreign
espionage service had to be started virtually from scratch, the more
so as the inheritance had been built up with very different targets,
and the transfer to the USSR as the primary target was to prove slow
and halting for some years to come. In fact, more gran three years
were to pass before this primary target was to receive the requisite
attention and support, although it was the subject of countless dis-
cussions and committee meetings. Nevertheless, the USSR was the sub-
ject of the first new unit established in OSD which does not appear
in the FSRO organization. This was at first called Special Division -
Soviet (SPD-S) and had the very limited mission of providing guidance
to the operating divisions in the fields of International Communism
and Soviet Intelligence. Two factors bearing on recruitment at this
time aggravated the failure to build any organization directed against
the USSR. One was the intention, at that time, of including exploita-
tion of domestic sources in the US as part of the OSO mission, under
Deputy B. The other was the precipitate withdrawal of the FBI from
Latin America, once the decision that that agency should withdraw
from the foreign field was made final. These two factors led Gallo-
way on 29 July 'I.6 to write Wright, who in turn transmitted the memo-
randum to Harris, urging speed in personnel procurement and noting
that "The most urgent problems at the moment are procurement for the
Latin American activities and Staff B."
The period of transition extended roughly from the Wright memo-
randum of 3.1 July 'L6 to 25October '46, when tle DCI addressed a
memorandum to ADSO subject: Functions of GSO. This repeated the
language of NIADir 5 exactly t'he Mission of the Office of Special
Operations is the conduct, under the direct supervision of the direc-
tor, of all organized Federal espionage and counterespionage opera-
tions outside the United Slates and its possessions for tle collection
of foreign intelligence information required for the national secur-
ity", adding that "Such espionage and counterespionage may involve
semi-overt and semi-covert activities for the full performance of the
mission." Significant items in this memorandum were: a) (DSO will
carry out no research and evaluation functions other than those per-
taining to counterespionage information and to grading of Source and
reliability, b) CrRE will carefully screen the information collected
and render a periodic report indicating the intelligence value of in-
formation obtained in each area of operations as a basis for grading
future intelligence information to be collected by OSO. c) OSO is
authorized to receive di_reQctl om d j3 requests
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for specific action or the collection of specific information, such
direct contact will be made through the Office of Control, OSJ, and
0SG will maintain direct liaison with departments and agencies of the
Federal Government on secret operational matters. d) USc will be
responsible! for the collection, processing, and distribution of fore-
ign counterespionage intelligence information and will be the reposi-
tory for such information. e) Major support services for OSO will
be provided, by the Special. Projects Division, Personnel and Adminis-
tration Branch, Executive Staff, CIG, under the operational direction
of ADSO.
This memorandum was followed on L December 14,.6 by SCDir V. which
provided the first organizational chart for OSO subsequent to that in-
herited from SSU. There was little change in the arrangement of the
principal subordinate units of the office. The service and support
facilities integral to OLD were grouped under the Executive. However,
the double-hat arrangement indicated by item e) in the preceding para-
graph actually reflected a transitional stage in the placement of these
service and. support facilities. This was the beginning of the adminis-
trative cc opli_cation which remains unresolved up to the present time
and is duplicated today by O'Gara's double hat and his divided allegi-
ance to DDA and DDP. The two conflicting theories, that logistic and
administrative support could be effective only if it came from agency-
wide facilities, and that such support could be effective and secure
only if it came from ciities integrally within the operating office,
were already being actively argued. When the support facilties of SSU
were transferred to CIA, they were placed under the Executive, CIG.
Gradually, as evolving logic dictated, they were phased back into O SD,
some, such as Communication, intact, others, such as Confidential
Funds, by fission within the Comptrollers s staff. However, it was not
until 6 June t47, under SODir #18, that the process of returning these
units to 040 was complete, and there has been a continuing ebb and
flow of the degree of autonomy of OSO support facilities ever since.
Another perennial problem which made an early appearance at this time
is reflected in the provision of reports divisions within the geographi-
cal branches, with the mission of grading, editing, reproducing and
distributing the intelligence information collected overseas. This
was primarily a decentralization of the function and sciie personnel of
the old Dissemination Branch, later the Information Control Staff.
However, it also awoke at least a quasi-evaluating interest in the
operating branches and, depending upon the point of view of the in-
dividual reports officer, opened the door to withholding and altering
information. in conformity with the vested interests and previous posi-
tions taken. by the branch. The only other significant new elements in
this organizational chart was the first recognition of the need for cer-
tain elements organized on a functional basis according to subject mat-
ter. In this field were set up a Fiscal Intelligence Division and T.ech-
nblogical Division, to guide the geographical divisions and process
their product in the respective fields of fiscal and monetary intelli-
gence and technological intelligence.
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Another arrangement during the summer of 'L6 was agreement with
the State Department under which diplomatic cover was provided for
CIG representatives abroad. This was put in effect by a letter from
the Secretary of State to the chiefs of all foreign missions, dated
26 December 'I6. This letter was sugar coated, whether by CIG in get-
ting the agreement with State, or by State in an effort to make it
acceptable to its various ambassadors and ministers, is not indicated.
However, the important thing was that the instructions sent out by the
State Department did pro ride the cover required by CIG. Throughout
the State Department letter, the term "security intelligence" is used
and emphasis is placed upon the function of making file checks on ap-
plicants for visas and passports. Thus the impression is given that
the CIG personnel who were given appointments in the Foreign Service
Staff Corps and assigned to foreign missions will be to a major extent
engaged in the clerical unction of performing police-file name checks
for the State Department. It is also specified that the CIG personnel
will serve under the State Department Chief of Mission "for all pur-
poses of administration and discipline," and that the Chief of Mission
may require the GIG personnel to reveal to him all information ob-
tained, including information about sources and even the identity of
sources. `.[he letter also refers to other duties to be assigned CIG
personnel by CIG, stating that such duties will be explained to the
Chief of Mission orally by the GIG appointee on his reporting for
duty. Copies of this State Department letter were forwarded to CIG
personnel abroad on 29 January 147 as an enclosure to General opera-
tional InstructionsNo. 3. These instructions constituted a long
exegesis of the State Department text, noting particularly that this
text by no means told the whole story, and that the particular arrange-
ments in each foreign mission would have to be individually worked out.
In sum total, while the CIG personnel received the diplomatic cover
required as well as such support as use of the diplomatic pouch and
provision of office space and facilities, they were left with the con-
siderable burden of negotiating the details of their on position in
the mission as being responsible to GIG superiors at home, while be-
ing under the authority of the State Department Chief of Mission with
whom they were negotiating.
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