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A Brief History of the CIA: Part 2

Written by Jeff Drake
1 · 26 · 18

Compiled by Jeff Drake 1991

In my first article on the history of the CIA, we saw how the CIA was born amid a “cloud of controversy.” The late 40’s was a period of growing paranoia about the so-called “communist menace,” and alternatively, the fear of creating a US-based “Gestapo” by giving the newly born intelligence unit too much power and not enough oversight.” It didn’t take any time at all for politicians to realize the value of having a secret arm of the government to help stamp out communism. The first opportunity occurred in Italy. It appeared as if Italy was going to elect a communist government. This was totally unacceptable to our government, and so we started “interfering” with the upcoming election. Read on…

A book named, “Gli americani in Italia” (1976), by journalists Roberto Faenza and Marco Fini describes the “strong WWII precedents” for US covert actions in Italy i.e. the Counter Intelligence Corps activities which continued up to 1947, and the recruitment of the Italian Mafia via Italian-American links to help grease the skids for invading American forces. (Yes, the association between the CIA and the Mafia has very old roots.)

The CIA Director in 1948, a man by the name of Hillenkoetter (“Hilly”) had reservations over the legality of the Italian operations. He was concerned that the National Security Act did not give the CIA the right to launch operations without the advice or consent of the Senate. Truman, along with others, overruled him and the operation proceeded (an interesting precedent in itself).

James Jesus Angleton was Hilly’s man in Italy at the time, and part of a special operations group that had been placed there previously in 1947. By early 1948, Angleton was already subsidizing the center-right of Italian politics and “manipulating opinion through forgeries and other devices. He received help from anti-communist Italians and Americans like the ex-Communist Jay Lovestone, disburser of the AFL’s foreign assistance in Italy and elsewhere.” (Organized labor also has a history of collusion with the CIA.)

Because the Communists didn’t win the elections in Italy in 1948, the CIA operation was considered a success, although there may well have been other reasons for the Communists losing the election. For instance, overt propaganda made it very apparent who the Americans wanted to win by connecting a non-Communist win with the gain of the highly desired Marshall Plan foreign aid, a very nice incentive indeed.

The perceived ability, even if not quite real in the case of the 1948 Italian elections, to cause things to happen (or not happen) through the use of covert financing, was readily believed by the CIA to work miracles. Years later, William Colby would recall “that he had arrived in Italy in 1953 with ‘an unparalleled opportunity to demonstrate that secret aid could help our friends and frustrate our foes without the use of force or violence.'”

Even with the Italian success under their belt, there continued to be many who believed that the Communists were still on the move. There was a report in March, 1948, from air force intelligence that the Soviets were going to attack Scandinavia. The CIA dispelled it as a false rumor, but the scare unnerved a number of people. In February and March of the same year, Russian-backed Communists executed a coup in Czechoslovakia that also rattled a lot of people. Allen Dulles’ brother, John Foster Dulles, foreign policy advisor to the Republican presidential aspirant, Tom Dewey, proposed that the US create a “counter-cominform” that would fight Communism on both sides of the Iron Curtain, utilizing “underground movements” in the East. (Revealed on April 9th, 1948, in the Washington Post.)

On April 9th, the same day the Post revealed the planned “counter-cominform,” there was trouble in Bogota, Columbia. The Ninth International Conference of American States was being hosted in the Colombian capital. The main item on the agenda was the drafting of a charter for the proposed Organization of American States (OAS). The Latin American delegation was hoping to hear an announcement that the US was going to start a Marshall Plan for the Western Hemisphere, but the US delegation had other intentions. The US delegation aimed instead to strengthen the US policy of “containment” i.e., stopping the spread of communism. This definitely had the potential to be a point of contention between the two groups.

However, the looming conflict was interrupted when a street assassin killed Jorge Eliecar Gaitan, a Liberal Party opposition leader. His murder caused riots in the streets of Bogota, resulting in over twelve hundred deaths in and extensive damage to Capitalio, the location of the conference. This disturbance was felt all the way back in the US. People wanted to know why the CIA had not warned the American delegation of the impending riot so that precautions could have been taken. Dewey spoke on the radio of “a shameful example of unbelievable incompetence. We apparently had no idea what was going on in a country just 2 hours flying time from the Panama Canal.” Some were upset because of the timing of the riot and many believed that it was purposefully done by Communists to disrupt the conference.

Meanwhile, back in Bogota, as the riots raged, the charter of the OAS was approved. Yielding to the US request for more security rather than pushing for a new Marshall Plan, articles 24 and 25 of the charter gave America the right to intervene in the affairs of any American nation that might be threatened. In other words, this gave the US the right to intervene whenever a Latin American country might go Communist. Due to the charter’s ambiguity regarding this matter and a desire to maintain appearances, clandestine operations would still be considered more diplomatic than open intervention.

Although lack of intelligence about the riot was arguably not the fault of the CIA, Edward J. Devitt of Minnesota, a former intelligence officer himself, made a speech to the House wherein he recommended an eighteen-member joint watchdog committee for the CIA. The recommendation was turned down. (A pattern that would repeat itself over the years.)

While some pushed for tighter control of the CIA as a result of the Bogota incident, others made sure that the CIA’s covert operations were beefed up. A push was made by Stephen Spingarn, assistant general counsel in the Treasury Department and special assistant to President Truman, to extend the CIA’s psychological warfare tactics beyond propaganda, and over a much wider geographic area. This led to the creation of the Office of Policy Coordination. (An interesting and somewhat prophetic name for a department dedicated to covert operations.)

Truman had created the Office of Policy Coordination (OPC) for the purpose of clandestine operations and named former OSS man Frank G. Wisner Jr. to head it. Truman didn’t attempt to get approval for this move. He did it with National Security Council (NSC) Intelligence Directive NSC 10/2. This Act established a new covert branch within the CIA “in the interests of world peace and US national security.” It’s “covert operations” would have to be of a type for which “the US Government can plausibly disclaim any responsibility,” and could not involve “armed conflict by recognized military forces,” but their actions would include “propaganda; economic warfare; preventative direct action including sabotage, anti-sabotage, demolition, and evacuation measures; subversion against hostile states including assistance to underground resistance movements, guerillas and refugee liberation groups, and support of indigenous anti-communist elements in threatened countries of the free world.” This provided the OPC with both cover and support. Wisner reported directly to the Secretaries of State and Defense.

(Two years later, General Walter Bedell Smith became the CIA Director. He made a concerted effort to bring all intelligence elements under his control. Truman agreed to this merger and in January 1951, the OPC and the Office of Special Operations (also created in 1948 to do covert intelligence collection) were merged with the CIA, forming the Directorate of Plans, or “Clandestine Services.” Frank Wisner was appointed as General Smith’s deputy.)

Not included in the 1947 National Security Act which created the CIA, was language that would have given the CIA “covert and unvouchered funds.” This clause was withdrawn because it might “open up a can of worms,” and besides, as noted by Walter L. Pforzheimer (CIG’s legislative liaison officer), “we could come up with the house-keeping provisions later on.”

Right he was, because later in 1949 under the Central Intelligence Agency Act, the Director of Central Intelligence (DCI) would be granted the privilege of expending funds “without regard to the provisions of law and regulations relating to the expenditure of government funds; and for objects of confidential, extraordinary, or emergency nature, such expenditures to be accounted for solely on the certificate of the Director…” In other words, the Director of Central Intelligence was given a blank check. All he had to do is ask for the money, and justify his request by telling Congress that he needed it. (This fund would later be used not only for clandestine operations, but also to (illegally) pay for other government agency’s bills. For example, to pay for the Norwegian Air Defense when funds were low, and President Johnson’s Punta del Este fling with the Organization of American States (OAS), in order to avoid public scorn.)

Notice too, that the CIA was created with a National Security Act, which means that there was very little Congressional or public involvement in the final decision. In fact, Congress did not extensively debate the issue until 1949, and had actually voted against a congressional watchdog committee. “Only among the cognoscenti did an increasingly sophisticated, if deliberately secretive, discussion occur.”

Without the pressure of public opinion, defining proper democratic guidelines for the intelligence agency dropped lower on everyone’s priority list. The “Red Menace” was the primary issue on most people’s minds in the hallowed smoke-filled rooms of the White House; and it was this fear, along with a growing need to control the clandestine operations of certain private anti-communist groups, which led to a rapid expansion of the intelligence community.

The 1949 Central Intelligence Agency Act “set the seal of congressional approval on the CIA, a seal that remained unbroken until December 1971, when Congress cut off the Agency’s funding for the operations in Laos and Cambodia. The 1949 law allowed the CIA a seal of office, training for CIA officers (for example, in labor and scientific organizations) and the ability to ignore immigration laws limiting the recruitment of up to one hundred defectors per year.”

After the passing of the 1949 law, CIA personnel rose from 302, with a budget of $4,700,000 in 1949, to 2,812 people and a budget of $82,000,000 in 1952. Much of this money was spent on propaganda, such as the creation of Radio Free Europe and Radio Liberty. Together with the openly funded and supported (by the State Department) Voice of America, they blasted the “truth” into Eastern Europe for years. Also made easier due to almost unlimited funding was the expansion of non-propagandist overt programs. For instance, the Agency started buying air transport facilities.

Civil Air Transport (CAT) was the first of the new CIA “proprietaries.”[1] CAT had been formed after the fall of Japan and had at first been quite successful in troubled China. But it’s financial backers, General Claire L. Chennault and former Roosevelt advisor Thomas G. Corcoran, panicked at the thought of a Chairman Mao victory. They appealed to the US Government to allocate funds so that the airline could be militarized quickly if it needed to. They wanted to be able to assist the Nationalist forces, reverse the threat of Communism (and the “domino” theory); and of course, bail out their business which was no longer doing well financially.

“Hilly,” Wisner and others approved the support. CAT operated for the CIA from October 10, 1949. The “business deal” was formalized under liberal Delaware laws in 1950, when the holding company, Airdale Corporation was formed. (CIA proprietaries have since sometimes been referred to as “Delaware companies.”) Air America and Southern Air Transport were later incorporated as CIA proprietaries. In fact, the air transport proprietaries had the potential to become quite large, so the CIA had to agree that the CIA air proprietaries would not compete with private airlines or fall into the hands of “uncontrolled purchasers.” The end result of their airline purchasing was that the CIA had one of the absolutely necessary prerequisites for paramilitary operations – airpower. (In fact, at the height of the Vietnam conflict, the CIA actually operated the world’s largest airline conglomerate.)

It should be clear by now that from the very beginning, although the original (stated for public consumption) mission of the CIA was to “coordinate the intelligence-collection programs of the various government departments and agencies and to produce reports and studies required by the national leadership in conducting the affairs of US foreign policy…”[2] the real, and secret, mission of the CIA was to carry out covert US foreign policy.[3] 

Very early events in the 1950’s show the pattern e.g. the Central Intelligence Agency was involved in the overthrow of the Albanian government in 1950, and the overthrow of the Shah of Iran in 1952.[4] This type of foreign intervention had nothing to do with gathering intelligence and everything to do with foreign policy, the purpose of which the American public was not apprised. Even today, our government spoon-feeds us hearts and flowers, flag-waving self-righteousness and high-moral standards concerning our international political positions, but in the harsh light of reality, this “front” does not hold up to scrutiny.

The trail mapped within this series of articles about the history of the CIA is one of covert intervention. It starts in Washington, D.C. in the mid 1940’s, led to Italy in 1948, and from there to: China, Greece, the Philippines, Korea, Albania, Eastern Europe, Germany and Iran. All this in a span of just a few years (1948 to 1953). Each of these is no doubt of historical importance, and I will, in later articles, cover them in some detail. However, I think more can be learned about the purposes and intent of the CIA by focusing on certain foreign incursions of the Agency, such as Guatemala in 1954.

Next: A Brief History of the CIA: Part 3 (The CIA in Guatemala)


[1]The name “proprietaries” is used to describe the private businesses that are actually owned by the CIA.

[2]National Security Act of 1947.

[3]The actual policies of our government pertaining to foreign countries, not those that are stated for public consumption.

[4]Marchetti & Marks,  The CIA and the Cult of Intelligence and Jeffreys-Jones, Rhodri. The CIA & American Democracy, Yale University Press, New Haven and London., 1989.

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Jeff Drake

Retired IT consultant, world-traveler, hobby photographer, and philosopher.