The Deep State Emerges

by

       M. Richard Maxson

      The Office of Strategic Services was fore-runner to the current CIA and was established by a Presidential military order issued by President Roosevelt on June 13, 1942, to collect and analyze strategic information - including collecting intelligence by spying, performing acts of sabotage, waging propaganda war, organizing and coordinating anti-Nazi resistance groups in Europe, and providing military training for anti-Japanese guerrilla movements in Asia, among other things. The task was to achieve the objective by any means possible and those “other things” were often criminal.

      It began in the spring of 1942, $5 million in gold coins was sent to North Africa to finance secret operations. After the North African invasion, certain bankers who had been holding francs worth 100 million were suddenly worth 500 million. Large scale currency transactions were handled for the OSS by an underworld figure named Lemaigre Dubreuil, who was shot by unknown gunmen at his Casablanca home.

      At the beginning of 1943, the OSS had a $35 million budget, with 1651 employees, which increased tenfold the following year to 16,000. By the end of the war, there had assembled a force of more than 30,000 agents,spies, saboteurs, commandos, propagandists, research analysts, and support personnel operating in stations all over the world and sub-agents, many of whom were involved in looting, blackmail, and other money-making schemes with the blessings of the Western elite. Airplanes were often commandeered for mysterious flights to haul huge sums in gold, diamonds, paintings and other treasure. From the outset, the OSS had been dealing in large sums in gold. When Germany surrendered, the London office of OSS had ten million dollars on hand, deposited in Hambro's and Schroder's Banks. This money could not be "returned" to the U.S. Government without stating where it had come from. As proceeds from dealings in gold and jewels, an inquiry could provoke a Congressional investigation. The principals decided to hold it in abeyance for future operations in the new corporation.

      Soviet sympathizers and spies also worked in OSS offices in Washington and the field. Some were hired precisely because they were Communists. Having Communists in a sensitive area of the government did not sit well with the President so after the war ended, on September 20, 1945, President Truman signed Executive Order 9621, terminating the OSS. His Order became effective October 1, 1945. In the days following, the functions of the OSS were split between the Department of State and the Department of War.

      For the majority of their work the OSS was successful - very successful so why end it? After much lobbying and discussion in January 1946, President Truman created the Central Intelligence Group (CIG), which was the direct precursor to the CIA. The National Security Act of 1947 established the first permanent peacetime intelligence agency in the United States, the Central Intelligence Agency, which then took up OSS functions. The direct descendant of the paramilitary component of the OSS is the CIA Special Activities Division.

      The first Director of Central Intelligence, Rear Admiral Sidney W. Souers, USNR, who was sworn in on the following day. He served in that capacity for less than six months from January 23, 1946 – June 10, 1946. He was followed by U.S. Air Force general Hoyt Vandenberg who served less than a year from June 10, 1946 – May 1, 1947. Upon Vandenberg's return to the Air Force, President Truman persuaded a reluctant rear Admiral Roscoe Hillenkoetter to become Director of Central Intelligence (DCI), and run the Central Intelligence Group (September 1947). Under the National Security Act of 1947 he was nominated and confirmed by the U.S. Senate as DCI, now in charge of the newly established Central Intelligence Agency in December of 1947.

      Hillenkoetter expressed doubt that the same agency could be effective at both covert action and intelligence analysis and as it was legally set up – he was right. He presided over the CIA’s first major intelligence failure, the failure to predict the Soviet atomic bomb test on August 29, 1949. In the weeks following the test, but prior to the CIA’s detection of it, Hillenkoetter released the erronious September 20, 1949 National Intelligence Estimate (NIE) stating, “the earliest possible date by which the USSR might be expected to produce an atomic bomb is mid-1950 and the most probable date is mid-1953.”

      Hillenkoetter was called before the Joint Committee on Atomic Energy (JCAE) to explain how the CIA not only failed to predict the test, but also how they did not even detect it after it occurred. JCAE members were steaming that the CIA could be taken by such surprise. Hillenkoetter imprecisely replied that the CIA knew it would take the Soviets approximately five years to build the bomb, but the CIA misjudged when they started. The JCAE was not satisfied with Hillenkoetter’s answer, and his and the CIA’s reputation suffered among government heads in Washington, even though the press did not write about the CIA’s first Soviet intelligence failure.

      The second huge failure came a few months later when the U.S. government had no intelligence warning of North Korea's invasion on June 25, 1950 of South Korea. Two days prior to North Korea’s invasion of South Korea, Hillenkoetter went before Congress and testified that the CIA had good sources in Korea, implying that the CIA would be able to provide warning before any invasion. Following the invasion, the press suspected the administration was surprised by it, and wondered whether Hillenkoetter would be removed.

       Many at the CIA were embarrassed by the news reports, and by mid-August the rumors of Hillenkoetter’s removal were confirmed when President Truman announced that General Walter "Beetle" Smith would replace him as director. Smith served from October 7, 1950 to February 9, 1953 When Smith became the Director of Central Intelligence, the head of the Central Intelligence Agency (CIA) and other intelligence agencies in the United States he made a series of decisions that changed the direction of the agency. Smith reorganized the CIA, redefined its structure and its mission, and he gave it a new sense of purpose. He made the CIA the arm of government primarily responsible for covert operations. This was the jolt that woke the monster that runs our government today. In his autobiograhy Truman stated how later he came to be deeply suspicious of the CIA. He told Merle Miller, in the book - "Now, as nearly as I can make out, those fellows in the CIA don't just report on wars and the like, they go out and make their own.” He was so right.

Next Week: The Deep State takes over.