Beetle: The Life of General Walter Bedell Smith

2. Expecting the Worst

31  2  Expecting the Worst Director of Central Intelligence The Truman administration grew increasingly disenchanted with the struggles of the newly formed Central Intelligence Agency (CIA) to find its niche in the national security structure. In early 1948 the National Security Council (NSC) commissioned three intelligence veterans—Allen Dulles, William Jackson, and Matias Correa—and charged them with undertaking a thorough review and providing a blueprint for reform. The Dulles Report, submitted on 1 January 1949, criticized the CIA for becoming just another bureau “producing intelligence in competition with older established agencies” and called for the CIA’s evolution into “a semi-autonomous highly centralized agency with a broad variety of intelligence responsibilities.” The report pointed to the “inadequacies of direction” provided by the CIA’s current management.1 Truman knew just the man he wanted to drive the reorganization. Twice Truman offered Smith the job, but without any luck. Still recuperating in the hospital, Smith realized that taking over the foundering intelligence agency would tax what little reserves he had left. But in light of the CIA’s failure to anticipate the North Korean invasion of the south, Smith told Eisenhower he “could not refuse for a third time.” To a friend he candidly wrote, “I expect the worst and I am sure I won’t be disappointed.”2 Establishing the U.S. Intelligence Service When Truman became president, as he noted in his memoirs, one of his strongest convictions “was that the antiquated defense setup of the 32  BEETLE United States had to be reorganized quickly.”3 Even before deciding to form a centralized intelligence agency, Truman named a director of central intelligence (DCI). The first appointee was fellow Missourian RADM Sidney Souers, a reserve officer keen on returning to civilian life. Souers, who recognized he was merely occupying a desk, served for only six months but succeeded in establishing the organizational groundwork . The dashing Hoyt Vandenberg, wartime air force commander in Europe and nephew of a powerful Republican senator from Michigan, replaced Souers but served less than a year. Vandenberg set the wheels in motion for legislation that led to the formation of a central intelligence agency. Vandenberg collected remnants of the Office of Strategic Services and other intelligence units and established the Office of Special Operations (OSO), an agency for conducting espionage, counterespionage , and clandestine foreign intelligence operations. During Vandenberg’s tenure, his office acquired responsibility for intelligence work in Latin America from the Federal Bureau of Intelligence. Vandenberg left to head the newly independent U.S. Air Force. On 26 July 1947 Truman signed the National Security Act, establishing —along with the unified Department of Defense, the Joint Chiefs of Staff (JCS), the NSC, and the U.S. Air Force—the CIA. The New York Times reported, “one of the final steps before adjournment, largely overlooked in the avalanche of last minute legislation, was the stamp of approval Congress placed on the creation, for the first time in American history, of an effective world-wide American intelligence service of its own.”4 The act charged the CIA with coordinating interagency intelligence activities, primarily with the Departments of Defense and State; collecting, correlating, and evaluating overt and covert intelligence; and producing national estimates for the guidance of the president and policy makers. In addition, the agency would perform other duties and functions related to intelligence, as directed by the NSC. The legislation made the DCI the principal adviser to the president and the NSC on all foreign intelligence matters related to national security, and the DCI was responsible for safeguarding intelligence sources and methods. The DCI also chaired the Intelligence Advisory Committee (IAC), the coordinating body that established priorities among the Departments of Defense and State, the JCS, and the Atomic Energy Commission, whose representative sat on the committee. Another rear admiral, Roscoe Hillenkoetter, reluctantly succeeded Vandenberg in September 1947. Junior in rank to the brass in the JCS, and lacking self-confidence in his dealings with the State Department, Hillenkoetter proved to be a nonentity. As the Cold War deepened Expecting the Worst 33 in 1948 (following the coup in Prague and the Berlin crisis), the State Department wanted political and psychological warfare operations initiated against the Soviet Union and its allies. Kennan, as head of policy planning at State, pushed for a covert operations bureau inside the CIA but under State Department control during peacetime. Hillenkoetter restricted CIA activities to information gathering...