Washington, D.C., United States

April, 1949

Since 1947 the Central Intelligence Agency, the United States' nascent intelligence service, had been experiencing considerable growing pains as it went about its business in the world of intelligence. The problems were numerous, and not simply organizational. Their principle foe, the Soviet MGB, had a head start in the decades. Soviet spies had evidently penetrated all over the West, as evidenced by the Gouzenko Affair and the developing mess with Alger Hiss across D.C. at the State Department. Congress was making noises about communist infiltration-- in fairness, a concern for Hoover and the FBI, but just more evidence of how far behind they were.

Director of Central Intelligence (DCI) Adm. Roscoe H. Hillenkoetter had come under scrutiny in recent months. The CIA was expected to keep Washington informed, and yet the Agency was caught flat-footed by Czechoslovak communists launching their coup of the government. The electoral victory of the PCF and the subsequent evolution of the PCF-SFIO government was another intelligence failure. Elsewhere, the collapse of the Kuomintang in China was unforeseen, as well, though fewer people cared about Asia than Europe.

At this moment there was a lot of hand-wringing over the state of the Executive Branch generally, and President Truman appointed his predecessor, Herbert Hoover, to chair a commission on reorganizing the Executive Branch. Hillenkoetter and the members of the NSC all agreed that the CIA had numerous problems. Together, they resolved to empanel a commission to investigate the CIA's processes and its efficacy as an intelligence-gathering entity.

Within this commission, but separate from it, were a trio of important advisors undertaking those examinations. William Harding Jackson, a lawyer and a former intelligence aid to Gen. Omar Bradley; Mathias Correa, an administrator and former District Attorney for the Southern District of New York; and Allen W. Dulles, who had spent much of the War in the service of the OSS and had direct experience in intelligence operations in the field.

Allen Dulles enjoyed prominence in this working group not only through his field experience but because he and his brother, John Foster Dulles, were at the time two of Governor Thomas E. Dewey's chief advisors on their areas of expertise. The popular perception late in 1948 was that Dewey would win, and as such, Dulles was considered a probable fixture in the incoming Administration in some capacity.

In January 1949, just before the Inauguration, the Dulles-Jackson-Correa working group submitted their report to the NSC and the DCI, Hillenkoetter. They were sharply critical of some functions of the CIA, beginning their report with the phrase:

The principal defect of the Central Intelligence Agency is that its direction, administrative organization and performance do not show sufficient appreciation of the Agency's assigned functions, particularly in the fields of intelligence coordination and the production of intelligence estimates. The result has been that the Central Intelligence Agency has tended to become just one more intelligence agency producing intelligence in competition with older established agencies of the Government departments.

In conjunction with the Eberstadt Report, which was delivered about two weeks after the Dulles-Jackson-Correa Report, the picture for the CIA was grim. Ferdinand Eberstadt, another advisor to the Hoover Commission, was a luminary of the American intelligence community. Between the Dulles-Jackson-Correa Report and the Eberstadt Report, the picture for the CIA was grim, and Admiral Hillenkoetter's future as DCI seemed more and more in question.

Between the two reports several important recommendations surfaced:

• The CIA should be the preeminent foreign intelligence service of the United States, no longer in competition with military intelligence as represented by the Office of Naval Intelligence and US Army Security Agency.

• The CIA should be reorganized to operate more efficiently, into departments with clearly-defined roles within the Agency.

• The CIA should create a department to consider intelligence estimates and staff it with subject matter experts.

• The DCI should be a civilian with a long term of office.

• Clandestine operations should be conducted by a single department of the CIA, with oversight by the NSC.

• The CIA budget should be secret to provide for operational freedom.

These recommendations in mind, in April of 1949 at a meeting of the National Security Council-- consisting then of Secretary of State John Foster Dulles, Secretary of Defense James Forrestal, Secretary of the Army Gordon Gray, Secretary of the Navy John L. Sullivan, Secretary of the Air Force W. Stewart Symington, and DCI Admiral Roscoe H. Hillenkoetter-- considered the question of the CIA.

It was decided in a National Security Council Intelligence Directive, signed by the President, that the Dulles Report would begin to be implemented. By 1950, the CIA would be reorganized into a more streamlined and efficient organization with clearly defined roles and responsibilities.

Admiral Hillenkoetter objected to some of these changes, but had little say in the matter as the DCI participated in the NSC as an observer, not a voting member. The Truman Squad-- Forrestal, Gray, Sullivan, and Symington-- held considerable sway over the NSC at the time, and the President was disposed towards their perspective given the failures of the CIA thus far. Dulles had personal reasons to support the recommendations of his younger brother, and like that Hillenkoetter found himself opposed unanimously.

Still, he slow-walked the changes. There were implementations enough that he could not be accused of subverting the order, but the progress was slowed. By April 1949, the most concrete change enacted was the creation of a unified Department of Operations, which handled all clandestine operations.