As the Cold War intensified, so too did calls for an intelligence agency with more clearly delineated authority. This memo represents one of the first attempts by the State Department to consider what a permanently established intelligence agency might look like.

186. Memorandum From the Secretary of State's Special Assistant for Research and Intelligence
(Eddy) to Secretary of State Marshall 

Washington, February 15, 1947. 

//Source: National Archives and Records Administration, RG 59, Records of the Department of State, Decimal
File 1945-49, 101.61/2-1547. Top Secret. Marshall annotated this memorandum "Hold. G.C.M." 

Comment on the Central Intelligence Group 

A central agency for national intelligence under civilian control is needed continuously in time of peace in addition to intelligence services in the several Departments. Its functions should include the following: 

A. Interdepartmental intelligence required by interdepartmental agencies such as the Joint Chiefs of Staff, the
State-War-Navy Coordinating Committee, and other agencies and commissions of the national Government
whose responsibilities extend beyond the province of any one Department. 

B. Intelligence on matters which may be of secondary interest to any one Department, and which would,
therefore, otherwise be neglected, but which may be of prime interest for national policy. 

C. Under-cover intelligence and espionage abroad which should not compromise the official representatives of the United States of America. Espionage, which is certainly needed, and which involves the employment of
unofficial agents, both American and foreign, should be operated by an agency outside the Departments and with funds not subject to departmental accounting. 


The Central Intelligence Group (CIG), with the passage of requested legislation, should be able to perform the
valuable services described above since: 

A. The CIG operates under the National Intelligence Authority (NIA) which reports directly to the President.
The NIA is composed of the Secretary of State, as Chairman, the Secretary of War, the Secretary of the Navy,
and a personal representative of the President, thus representing a balance between civilian and military needs. 

B. The NIA, controlling as it does both its executive agency, the CIG, and through its individual members, the
intelligence services of the Departments represented, is well constituted to promote the efficient coordination of all national intelligence. 


The CIG has already made a good beginning and should be directed to confine itself to the following fields: 

A. Interdepartmental intelligence and other special assignments made by the NIA. 

B. Coordination of intelligence reports produced by the several Departments and by its own special operations to make the total available intelligence accessible to those who guide our national policy. 

C. Avoid entering the field of departmental intelligence where duplication would be wasteful. Only the Army and
the Navy are technically equipped to direct their operational intelligence services; and only the Department of
State, through its Foreign Service, attempts to cover the world with expert political and economic reports for its
daily political and economic operations. 

D. Operate an under-cover espionage service with freedom to use for this purpose special agents and special
funds. Of all the great nations of the world, the United States of America has lacked an efficient espionage
service which, in many critical parts of the world, is the only way to acquire indispensable information. 


The CIG budget. The present plans of the CIG contemplate a total budget of something less than $40,000,000.
for the fiscal year 1948. With the extent of CIG's operations at present unpredictable, it is not practicable to
verify or deny their need for such a sum, with the single exception, however, of the Office of Reports and
Estimates, for which it is believed a total personnel of 500 would be more than adequate, instead of the 852
requested. The budget appears to be a reasonable request on the understanding that it is a permissive maximum, to be used on projects expressly approved in each case by the NIA. 

It would seem the part of wisdom to publish only the administrative budget for the CIG and to have the funds
required for secret and special operations segregated in a special fund entrusted to the President, or, if that is
inadvisable, to the Secretary of State, with knowledge of that fund and an accounting of it confined to a very few Congressional leaders. 

William A. Eddy 

The Eddy memo provided an early signal of the administration's determination to press forward with what became the National Security Act of 1947, which established the Department of Defense, the National Security Council, and the CIA. Almost immediately, however, the question arose as to how these newly founded secret agency would perform its most delicate foreign operations--and for a republic committed to openness in government.

241. Memorandum From the General Counsel of the Central Intelligence Agency (Houston) to
Director of Central Intelligence Hillenkoetter 

Washington, September 25, 1947. 

//Source: Central Intelligence Agency Historical Files, HS/HC-805, Item 12. Secret. Attached to a brief
transmittal note from Houston to Hillenkoetter summarizing the contents. See the Supplement. 

CIA Authority to Perform Propaganda and Commando Type Functions 

1. A review of the National Security Act reveals two provisions which might be construed as authority for CIA
to engage in black propaganda or the type of activity known during the war as S.O., which included ranger and
commando raids, behind-the-lines sabotage, and support of guerrilla warfare. Section 102 (d) (4) provides that it shall be the duty of the Agency to perform for the benefit of existing intelligence agencies such additional
services of common concern as the National Security Council determines can be more efficiently accomplished centrally. Section 102 (d) (5) provides that the Agency shall perform such other functions and duties related to intelligence affecting the national security as the NSC may direct. Taken out of context and without knowledge of its history, these Sections could bear almost unlimited interpretation, provided the service performed could be shown to be of benefit to an intelligence agency or related to national intelligence. 

2. Thus, black propaganda, primarily designed for subversion, confusion, and political effect, can be shown
incidentally to benefit positive intelligence as a means of checking reliability of informants, effectiveness of
penetration, and so forth. Even certain forms of S.O. work could be held to benefit intelligence by establishment of W/T teams in accessible areas and by opening penetration points in confusion following sabotage or riot. In our opinion, however, either activity would be an unwarranted extension of the functions authorized in Sections 102 (d) (4) and (5). This is based on our understanding of the intent of Congress at the time these provisions were enacted. 

3. A review of debates indicates that Congress was primarily interested in an agency for coordinating intelligence and originally did not propose any overseas collection activities for CIA. The strong move to provide specifically for such collection overseas was defeated, and, as a compromise, Sections 102 (d) (4) and (5) were enacted, which permitted the National Security Council to determine the extent of the collection work to be performed by CIA. We do not believe that there was any thought in the minds of Congress that the Central Intelligence Agency under this authority would take positive action for subversion and sabotage. A bitter debate at about the same time on the State Department's Foreign Broadcast Service tends to confirm our opinion. Further confirmation is found in the brief and off-the-record hearings on appropriations for CIA. 

4. Aside from the discussions of normal departmental expenses for CIA as a whole, approval was given to the
unvouchered funds requested by the Director of Central Intelligence mainly for the specific purposes of
conducting clandestine intelligence operations outside the United States. We believe that there was no intent to use either the vouchered or unvouchered funds for M.O. or S.O. work. Either of these activities would require
establishment of a new branch of office, employment of considerable personnel, the procurement of huge
quantities of all types of goods and materials, and large sums for expenses of administrative support and
incidentals. We believe this would be an authorized use of the funds made available to CIA. It is our conclusion, therefore, that neither M.O. nor S.O. should be undertaken by CIA without previously informing Congress and obtaining its approval of the functions and the expenditure of funds for those purposes. 

5. There is, however, one function now being properly performed by CIA which is so closely related to the
matters discussed above as to be mentioned in connection therewith. An important by-product of the clandestine intelligence function is the acquisition of extensive information on plans in Western Europe for establishment of resistance movements in the event of further extension of Communist control. These plans include training of agents and W/T's, organizing groups, providing outside contacts, and every other form of resistance. It is on such groups that M.O. and, particularly, S.O. would depend for most efficient function. 

6. It is felt that this body of information might be the basis for consideration by the National Security Council, or
a sub-committee thereof, in order to form a basic policy of cooperation with planned or actual resistance
movements and to assign the implementation of such policy to the proper agency or body. If such implementation were then assigned to CIA, it would, we feel, still be necessary to go to Congress for authority and funds. 

Lawrence R. Houston/1/ 

/1/Printed from a copy that bears this typed signature. 


Draft Directive to Director of Central Intelligence Hillenkoetter 

Washington, undated. 

/5/Top Secret. Paragraph 3 of this draft was dropped in the final version and replaced by a paragraph that made the Director of Central Intelligence responsible for ensuring that psychological warfare operations were
consistent with U.S. foreign policy. See the attachment to Document 257. 

1. The National Security Council, taking cognizance of the vicious psychological efforts of the USSR, its satellite countries and Communist groups to discredit and defeat the aims and activities of the United States and other western powers, has determined that, in the interests of world peace and U.S. national security, the foreign information activities of the U.S. Government must be supplemented by covert psychological operations. 

2. The similarity of operational methods involved in covert psychological and intelligence activities and the need to ensure their secrecy and obviate costly duplication renders the Central Intelligence Agency the logical agencyto conduct such operations. Hence, under authority of Section 102 (d) (5) of the National Security Act of 1947,the National Security Council directs the Director of Central Intelligence to initiate and conduct, within the limit of available funds, covert psychological operations designed to counteract Soviet and Soviet-inspired activities which constitute a threat to world peace and security or are designed to discredit and defeat the United States in its endeavors to promote world peace and security. 

3. In order to insure that such psychological operations are in a manner consistent with U.S. foreign policy, overt foreign information activities, and diplomatic and military operations and intentions abroad, the Director of Central Intelligence is charged with: 

a. Obtaining approval of all policy directives and major plans for such operations by a panel to be designated by the National Security Council. 

b. Coordination of operations with the senior U.S. diplomatic and military representatives in each area which will be directly affected by such operations. 

4. Nothing contained herein shall be construed to require the Central Intelligence Agency to disclose operational details concerning its secret techniques, sources or contacts. 

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