In the rubble of Berlin, Allen Dulles, the ranking OSS officer in Germany, had found a splendid and well-staffed mansion for his new headquarters in the summer of 1945. His favorite lieutenant, Richard Helms, began trying to spy on the Soviets.
"What you have to remember," Helms said half a century later, "is that in the beginning, we knew nothing. Our knowledge of what the other side was up to, their intentions, their capabilities, was nil, or next to it. If you came up with a telephone book or a map of an airfield, that was pretty hot stuff. We were in the dark about a lot of the world."
Helms had been happy to return to Berlin, where he had made his name as a twenty-three-year-old wire service reporter by interviewing Hitler at the 1936 Olympics. He was dumbstruck by the abolition of the OSS. At the outfit's operations center in Berlin, a commandeered sparkling-wine factory, the anger and alcohol flowed freely on the night the order from the president arrived. There would be no central headquarters for American intelligence as Dulles had envisioned. Only a skeleton crew would stay on overseas. Helms simply could not believe the mission could come to an end. He was encouraged a few days later when a message arrived from OSS headquarters in Washington, telling him to hold the fort.
"THE HOLY CAUSE OF CENTRAL INTELLIGENCE"
The message came from Donovan's deputy, Brigadier General John Magruder, a gentleman soldier who had been in the army since 1910. He adamantly believed that without an intelligence service, America's new supremacy in the world would be left to blind chance, or beholden to the British. On September 26, 1945, six days after President Truman signed away the OSS, General Magruder stalked down the endless corridors of the Pentagon. The moment was opportune: the secretary of war, Henry Stimson, had resigned that week, and Stimson had been dead-set against the idea of a CIA. "Seems to me most inadvisable," he had told Donovan a few months earlier. Now General Magruder seized the opening left by Stimson's departure.
He sat down with an old friend of Donovan's, the assistant secretary of war, John McCloy, one of the great movers and shakers of Washington. Together, the two men countermanded the president.
Magruder walked out of the Pentagon that day with an order from McCloy that said, "the continuing operations of OSS must be performed in order to preserve them." That piece of paper kept the hope for a Central Intelligence Agency alive. The spies would stay on duty, under a new name, the Strategic Services Unit, the SSU. McCloy then asked his good friend Robert A. Lovett, the assistant secretary for air war and a future secretary of defense, to set up a secret commission to plot the course for American intelligence--and to tell Harry Truman what had to be done. Magruder confidently informed his men that "the holy cause of central intelligence" would prevail.
Emboldened by the reprieve, Helms set to work in Berlin. He purged officers who had plunged into Berlin's black market, where everything and everyone was for sale--two dozen cartons of Camels, purchased for $12 at the American military PX, bought a 1939 Mercedes-Benz. He searched for German scientists and spies to ferret out to the West, with the aim of denying their skills to the Soviets and putting them to work for the United States. But these tasks soon took second place to the struggle to see the new enemy. By October, "it was very clear our primary target was going to be what the Russians were up to," remembered Tom Polgar, then a twenty-three-year-old officer at the Berlin base. The Soviets were seizing the railroads and co-opting the political parties of eastern Germany. At first the best the American spies could do was to try to track the movement of Soviet military transports to Berlin, giving the Pentagon a sense that someone was trying to keep an eye on the Red Army. Furious at Washington's retreat in the face of the Soviet advance, working against the resistance from the ranking American military men in Berlin, Helms and his men began trying to recruit German police and politicians to establish spy networks in the east. By November, "we were seeing the total takeover by the Russians of the East German system," said Peter Sichel, another twenty-three-year-old SSU officer in Berlin.
The Joint Chiefs of Staff and the forceful secretary of the navy, James V. Forrestal, now began to fear that the Soviets, like the Nazis before them, would move to seize all of Europe--and then push on to the eastern Mediterranean, the Persian Gulf, northern China, and Korea. One false move could lead to a confrontation no one could contain. And as the fear of a new war increased, the future leaders of American intelligence split into two rival camps.
One believed in the slow and patient gathering of secret intelligence through espionage. The other believed in secret warfare--taking the battle to the enemy through covert action. Espionage seeks to know the world. That was Richard Helms. Covert action seeks to change the world. That would be Frank Wisner.
Wisner was the charming son of land-rich Mississippi gentry, a dashing corporate lawyer in a tailored military uniform. In September 1944 he had flown into Bucharest, Romania, as the new OSS station chief. The Red Army and a small American military mission had seized control in the capital, and Wisner's orders were to keep an eye on the Russians. He was in his glory, conspiring with the young King Michael, plotting the rescue of downed Allied airmen, and requisitioning the thirty-room mansion of a Bucharest beer baron. Under its sparkling chandeliers, Russian officers mingled with the Americans, toasting one another with Champagne. Wisner was thrilled--he was one of the first OSS men to bend an elbow with the Russians--and he proudly reported to headquarters that he had made a successful liaison with the Soviet intelligence service.
He had been an American spy for less than a year. The Russians had been at the game for more than two centuries. They already had well-placed agents within the OSS and they quickly infiltrated Wisner's inner circle of Romanian allies and agents. By midwinter, they took control of the capital, herded tens of thousands of Romanians who had German bloodlines into railroad cars, and shipped them eastward to enslavement or death. Wisner watched twenty-seven boxcars filled with human cargo rolling out of Romania. The memory haunted him all his life.
He was a deeply shaken man when he arrived at OSS headquarters in Germany, where he and Helms became uneasy allies. They flew to Washington together in December 1945, and as they talked during the eighteen-hour journey, they realized they had no idea whether the United States would have a clandestine service after they landed.
"AN APPARENTLY BASTARD ORGANIZATION"
In Washington, the battle over the future of American intelligence was growing fierce. The Joint Chiefs of Staff fought for a service firmly under their control. The army and the navy demanded their own. J. Edgar Hoover wanted the FBI to conduct worldwide espionage. The State Department sought dominion. Even the postmaster general weighed in.
General Magruder defined the problem: "Clandestine intelligence operations involve a constant breaking of all the rules," he wrote. "To put it baldly, such operations are necessarily extra-legal and sometimes illegal." He argued, convincingly, that the Pentagon and the State Department could not risk running those missions. A new clandestine service would have to take charge.
But almost no one was left to fill its ranks. "The intelligence collection effort more or less came to a standstill," said Colonel Bill Quinn, General Magruder's executive officer at the Strategic Services Unit. Five of every six OSS veterans had gone back to their old lives. They saw what was left of American intelligence as "transparently jerry-built and transient," Helms said, "an apparently bastard organization with an unpredictable life expectancy." Their number fell by nearly 10,000 in three months, down to 1,967 by the end of 1945. The London, Paris, Rome, Vienna, Madrid, Lisbon, and Stockholm stations lost almost all their officers. Fifteen out of twenty-three Asian outposts closed. On the fourth anniversary of Pearl Harbor, convinced that Truman had run American intelligence off the rails, Allen Dulles returned to his desk at Sullivan and Cromwell, the New York law firm where his brother John Foster Dulles was a partner. Frank Wisner followed his lead and went back to his own New York law firm, Carter, Ledyard.
The remaining intelligence analysts were dispatched to form a new research bureau at the State Department. They were treated like displaced persons. "I don't suppose there had ever been or could ever be a sadder or more tormented period of my life," wrote Sherman Kent, later a founding father of CIA's directorate of intelligence. The most talented soon left in despair, back to their universities and newspapers. No replacements appeared. There would be no coherent intelligence reporting in the American government for many years to come.
President Truman had relied on his budget director, Harold D. Smith, to oversee the orderly dismantling of the American war machine. But demobilization was turning into disintegration. Smith warned the president on the day he dismembered the OSS that the United States was at risk of returning to the state of innocence that had prevailed before Pearl Harbor. He feared that American intelligence had become "royally bitched up." At a hastily convened White House meeting on January 9, 1946, Admiral William D. Leahy, Truman's crusty military chief of staff, bluntly told the president that "intelligence had been handled in a disgraceful way."
Truman saw he had created a snafu and decided to set it straight. He summoned the deputy director of naval intelligence, Rear Admiral Sidney W. Souers. A reservist, Souers was a Democratic Party stalwart from Missouri, a wealthy businessman who made his money in life insurance and Piggly Wiggly shops, the nation's first self-service supermarkets. He had served on a postwar commission studying the future of intelligence created by Secretary of the Navy James Forrestal, but his sights were set on nothing grander than a swift return to Saint Louis.
Souers discovered to his dismay that the president was going to make him the first director of central intelligence. Admiral Leahy recorded the moment of the investiture in his office diary for January 24, 1946: "At lunch today in the White House, with only members of the Staff present, RAdm Sidney Souers and I were presented with black cloaks, black hats, and wooden daggers" by Truman. The president then knighted Souers as chief of the "Cloak and Dagger Group of Snoopers" and "Director of Centralized Snooping." This vaudeville act placed the flabbergasted reservist in command of the misbegotten and short-lived organization called the Central Intelligence Group. Souers was now in charge of nearly two thousand intelligence officers and support staff who controlled files and dossiers on some 400,000 individuals. Many of them had no idea what they were doing, or what they were supposed to do. Someone asked Souers after his swearing-in what he wanted to do. "I want to go home," he said.
Like every director of central intelligence who followed him, he was given great responsibility without equivalent authority. He had no direction from the White House. The trouble was that no one really knew what the president wanted--least of all the president himself. Truman said he only needed a daily intelligence digest, to keep from having to read a two-foot stack of cables every morning. It seemed to the charter members of the Central Intelligence Group that it was the only aspect of their work he ever considered.
Others saw the mission very differently. General Magruder maintained that there was a tacit understanding at the White House that the Central Intelligence Group would operate a clandestine service. If so, not a word of it appeared on paper. The president never spoke of it, so almost no one else in the government recognized the new group's legitimacy. The Pentagon and the State Department refused to talk to Souers and his people. The army, the navy, and the FBI treated them with the deepest disdain. Souers lasted barely a hundred days as director, though he stayed on to serve the president as an adviser. He left behind only one note of consequence, a top secret memo with the following plea: "There is an urgent need to develop the highest possible quality of intelligence on the USSR in the shortest possible time."
The only American insights on the Kremlin in those days came from the newly appointed American ambassador in Moscow, the future director of central intelligence, General Walter Bedell Smith, and his ranking Russia hand, George Kennan.
"WHAT DOES THE SOVIET UNION WANT?"
Bedell Smith was a shopkeeper's son from Indiana who rose from buck private to general without the polish of West Point or a college degree. As Eisenhower's chief of staff in World War II, he had thought through every battle in North Africa and Europe. His fellow officers respected and feared him; he was Ike's unsmiling hatchet man. He worked himself beyond exhaustion. After receiving blood transfusions for a bleeding ulcer when he collapsed at the end of a late dinner with Eisenhower and Winston Churchill, he argued his way out of a British hospital and back to his commander's tent. He had broken bread with Russian military officers, sitting down for awkward dinners at Allied headquarters in Algiers to plan joint operations against the Nazis. He had personally accepted the Nazi surrender that ended the war in Europe, staring down with contempt at the German command in the battered little red schoolhouse in Rheims, France, that served as the American military's forward headquarters. On V-E Day, May 8, 1945, he had met for a few fleeting minutes in Rheims with Allen Dulles and Richard Helms. Dulles, cursed by gout, hobbling on a crutch, had come to see Eisenhower and win his approval for the creation of an all-powerful American intelligence center in Berlin. Ike had no time for Dulles that morning--a bad omen.
Bedell Smith arrived in Moscow in March 1946 to be schooled by George Kennan, the charge d'affaires at the American embassy. Kennan had spent many years in Russia, many dark hours trying to decipher Joseph Stalin. The Red Army had seized almost half of Europe in the war, a prize taken at the terrible price of twenty million Russian dead. Its forces had liberated nations from the Nazis, but now the shadow of the Kremlin was falling over more than 100 million people beyond Russia's borders. Kennan foresaw that the Soviets would hold their conquests by brute strength. He had warned the White House to prepare for a showdown.
A few days before Bedell Smith landed in Moscow, Kennan unleashed the most famous cable in the history of American diplomacy, the "long telegram," an eight-thousand-word portrait of Soviet paranoia. Kennan's readers--at first a few, in time millions--all seemed to seize on a single line: the Soviets were impervious to the logic of reason but highly sensitive to "the logic of force." In short order, Kennan would gain fame as the greatest Kremlinologist in the American government. "We had accustomed ourselves, through our wartime experience, to having a great enemy before us," Kennan reflected many years later. "The enemy must always be a center. He must be totally evil."
Bedell Smith called Kennan "the best possible tutor a newly arrived chief of mission could have had."
On a cold, starry night in April 1946, Bedell Smith rode a limousine flying the American flag into the fortress of the Kremlin. At the gates, Soviet intelligence officers checked his identity. His car passed the ancient Russian cathedrals and the huge broken bell at the foot of a tall tower within the Kremlin's walls. Saluting soldiers in high black leather boots and red-striped breeches ushered him inside. He had come alone. They took him down a long corridor, through tall double doors padded with dark green quilted leather. Finally, in a high-ceilinged conference room, the general met the generalissimo.
Bedell Smith had a double-barreled question for Stalin: "What does the Soviet Union want, and how far is Russia going to go?"
Stalin stared into the distance, puffing on a cigarette and doodling lopsided hearts and question marks with a red pencil. He denied designs on any other nation. He denounced Winston Churchill's warning, delivered in a speech a few weeks earlier in Missouri, about the iron curtain that had fallen across Europe.
Stalin said Russia knew its enemies.
"Is it possible that you really believe that the United States and Great Britain are united in an alliance to thwart Russia?" Bedell Smith asked.
"Da," said Stalin.
The general repeated: "How far is Russia going to go?"
Stalin looked right at him and said: "We're not going to go much further."
How much further? No one knew. What was the mission of American intelligence in the face of the new Soviet threat? No one was sure.
"AN APPRENTICE JUGGLER"
On June 10, 1946, General Hoyt Vandenberg became the second director of central intelligence. A handsome pilot who had led Eisenhower's tactical air war in Europe, he now ran a fly-by-night outfit based in a cluster of undistinguished masonry buildings at the far end of Foggy Bottom, atop a small bluff overlooking the Potomac. His command post stood at 2430 E Street, the old headquarters of the OSS, surrounded by an abandoned gasworks, a turreted brewery, and a roller-skating rink.
Vandenberg lacked three essential tools: money, power, and people. The Central Intelligence Group stood outside the law, in the judgment of Lawrence Houston, general counsel for Central Intelligence from 1946 to 1972. The president could not legally create a federal agency out of thin air. Without the consent of Congress, Central Intelligence could not legally spend money. No money meant no power.
Vandenberg set out to get the United States back into the intelligence business. He created a new Office of Special Operations to conduct spying and subversion overseas and wrangled $15 million under the table from a handful of congressmen to carry out those missions. He wanted to know everything about the Soviet forces in Eastern and Central Europe--their movements, their capabilities, their intentions--and he ordered Richard Helms to deliver in a hurry. Helms, in charge of espionage in Germany, Austria, Switzerland, Poland, Czechoslovakia, and Hungary, with 228 overseas personnel on his roster, said he felt like "an apprentice juggler trying to keep an inflated beach ball, an open milk bottle and a loaded machine gun in the air." All over Europe, "a legion of political exiles, former intelligence officers, ex-agents and sundry entrepreneurs were turning themselves into intelligence moguls, brokering the sale of fabricated-to-order information." The more his spies spent buying intelligence, the less valuable it became. "If there are more graphic illustrations of throwing money at a problem that hasn't been thought through, none comes to mind," he wrote. What passed for intelligence on the Soviets and their satellites was a patchwork of frauds produced by talented liars.
Helms later determined that at least half the information on the Soviet Union and Eastern Europe in the CIA's files was pure falsehood. His stations in Berlin and Vienna had become factories of fake intelligence. Few of his officers or analysts could sift fact from fiction. It was an ever present problem: more than half a century later, the CIA confronted the same sort of fabrication as it sought to uncover Iraq's weapons of mass destruction.
From the first day Vandenberg took office, he was shaken by terrifying reports from overseas. His daily bulletins generated heat but little light. It was impossible to determine whether the warnings were true, but they went up the chain of command regardless. Flash: a drunken Soviet officer boasted that Russia would strike without warning. Flash: the commander of Soviet forces in the Balkans was toasting the coming fall of Istanbul. Flash: Stalin was prepared to invade Turkey, encircle the Black Sea, and take the Mediterranean and the Middle East. The Pentagon determined that the best way to blunt a Soviet advance was to cut the Red Army's supply lines in Romania. Senior staff members under the Joint Chiefs started drawing up battle plans.
They told Vandenberg to prepare the first covert operation of the cold war. In an attempt to carry out that order, Vandenberg changed the mission of the Central Intelligence Group. On July 17, 1946, he sent two of his aides to see Truman's White House counsel, Clark Clifford. They argued that "the original concept of the Central Intelligence Group should now be altered" to make it an "operating agency." Without any legal authority, it became one. On that same day, Vandenberg personally asked Secretary of War Robert Patterson and Secretary of State James Byrnes to slip him an additional $10 million in secret funds to finance the work of "intelligence agents all over the world." They did.
Vandenberg's Office of Special Operations set out to create an underground resistance force in Romania. Frank Wisner had left behind a network of agents in Bucharest desperate to work with Americans but deeply infiltrated by Soviet intelligence. Charles W. Hostler, the first station chief in Bucharest for the Office of Special Operations, found himself surrounded by "conspiracy, intrigue, nastiness, double-dealing, dishonesty, occasional murder and assassination" among fascists, communists, monarchists, industrialists, anarchists, moderates, intellectuals, and idealists--"a social and political environment for which young American officers were poorly prepared."
Vandenberg ordered Lieutenant Ira C. Hamilton and Major Thomas R. Hall, based at the tiny American military mission in Bucharest, to organize Romania's National Peasant Party into a resistance force. Major Hall, who had been an OSS officer in the Balkans, spoke some Romanian. Lieutenant Hamilton spoke none. His guide was the one important agent Wisner had recruited two years before: Theodore Manacatide, who had been a sergeant on the intelligence staff of the Romanian army and now worked at the American military mission, translator by day and spy by night. Manacatide took Hamilton and Hall to meet the National Peasant Party leaders. The Americans offered the clandestine support of the United States--guns, money, and intelligence. On October 5, working with the new Central Intelligence station in occupied Vienna, the Americans smuggled the former foreign minister of Romania and five other members of the would-be liberation army into Austria, sedating them, stuffing them in mail sacks, and flying them to safe harbor.
It took Soviet intelligence and the Romanian secret police only a few weeks to sniff out the spies. The Americans and their chief agent ran for their lives as communist security forces crushed the mainstream Romanian resistance. The Peasant Party's leaders were charged with treason and imprisoned. Manacatide, Hamilton, and Hall were convicted in absentia at a public trial after witnesses swore that they had represented themselves as agents of a new American intelligence service.
Frank Wisner opened The New York Times on November 20, 1946, and read a short article on page ten reporting that his old agent Manacatide, "formerly employed by the United States Mission," had been sentenced to life imprisonment, "on the grounds that he accompanied a Lieutenant Hamilton of the American Military Mission to a National Peasant congress." By winter's end, nearly every one of the Romanians who had worked for Wisner during the war was jailed or killed; his personal secretary had committed suicide. A brutal dictatorship took control of Romania, its rise to power hastened by the failure of American covert action.
Wisner left his law firm and went to Washington, securing a post at the State Department, where he oversaw the occupied zones of Berlin, Vienna, Tokyo, Seoul, and Trieste. He had greater ambitions. He was convinced that the United States had to learn to fight in a new way, with the same skills and the same secrecy as its enemy.