An Overview of American Intelligence Until World War II
Espionage, counterintelligence, and covert action are embedded in U.S. history. From the time of the Revolutionary War through the present, these activities have helped protect our nation’s security.
During the Revolutionary War, America’s use of intelligence techniques was vital to the outcome of the struggle. The military forces of the British – the world’s reigning superpower at the time – were better-funded and better-organized than the Americans. But through the use of various clandestine techniques, the Continentals had a chance against the British.
General George Washington and patriots such as Benjamin Franklin and John Jay directed a broad range of clandestine operations that helped the colonies win independence. They ran networks of agents and double agents; employed deceptions against the British army; launched sabotage operations and paramilitary raids; used codes and ciphers; and disseminated propaganda and disinformation to influence foreign governments.
Drawing on the experience he gained as a general during the war, President Washington asked Congress for funds to support clandestine activities. Congress agreed, and established a secret fund specifically for this purpose, which represented more than 10 percent of the federal budget by Washington’s second term as President.
Presidents in the early Republic were actively involved in intelligence activities — especially covert actions. Thomas Jefferson drew from this secret fund to finance the United States' first covert attempt to topple a foreign government, one of the Barbary Pirate States, in 1804-05. It failed. From 1810 to 1812, James Madison used the fund to employ agents and clandestine paramilitary forces to influence Spain to relinquish territory in Florida.
The North and the South
In the Civil War, the Union and Confederacy extensively engaged in clandestine activities. They acquired intelligence from clandestine agents, military scouts, captured documents, intercepted mail, decoded telegrams, newspapers, and interrogations of prisoners and deserters. Neither side had a formal, national-level military intelligence service.
The North's principal spymasters were Allen Pinkerton and Lafayette Baker — who both proved most effective at counterespionage — and military officers George Sharpe and Grenville Dodge. The Confederacy had a loose array of secret services that collected intelligence and conducted sabotage and other covert actions.
Five of the war’s most celebrated agents were women — Rose Greenhow, Belle Boyd, and Nancy Hart for the South, and Pauline Cushman and Elizabeth van Lew for the North.
Northern and Southern agents in Europe engaged in propaganda and secret commercial activities. Overall, the North was more effective at espionage and counterintelligence, while the South had more success at covert action. The hard-won expertise and organization built up during the Civil War was soon demobilized and dispersed.
The United States' first formal permanent intelligence organizations were formed in the 1880s: the Office of Naval Intelligence and the Army's Military Intelligence Division. They posted attachés in several major European cities principally for open-source collection and observing military maneuvers.
When the Spanish-American War broke out in 1898, the attachés switched to espionage. They created informant rings and ran reconnaissance operations to learn about Spanish military intentions and capabilities — most importantly, the location of the Spanish Navy.
One U.S. military officer used well-placed sources he had recruited in the Western Union telegraph office in Havana to intercept communications between Madrid and Spanish commanders in Cuba. The U.S. Secret Service — in charge of domestic counterintelligence during the war — broke up a Spanish spy ring based in Montreal that planned to infiltrate the U.S. Army.
U.S. Intelligence Faces New Challenges During World War I
By 1914, the United States' ability to collect foreign intelligence had shrunk drastically because of budget cuts and reorganizations in the government. The State Department began small-scale collection against the Central Powers in 1916, but it was not until the United States declared war on Germany in 1917 that Army and Navy intelligence finally received more money and personnel. By then, it was too late to increase their intelligence output to aid the cause significantly.
The most significant advance for U.S. intelligence during the war was the establishment of a permanent communications intelligence agency in the Army — the forerunner of the National Security Agency. Meanwhile, the Secret Service and military counterintelligence aggressively thwarted numerous German covert actions inside the United States, including psychological warfare, political and economic operations, and dozens of acts of sabotage against British-owned firms and factories supplying munitions to Britain and Russia.
The Justice Department's Bureau of Investigation (forerunner of the FBI) took on a counterintelligence role in 1916, and Congress passed the first federal espionage law in 1917.
Breaking Codes and Busting Foreign Agents
Despite U.S. Secretary of State Henry Stimson's oft-quoted comment that "gentlemen do not read each other's mail," by 1941, the United States had built a world-class signals intelligence capability.
Between the wars, American intelligence officers concentrated on codebreaking and counterintelligence operations against Germany and Japan. The "Black Chamber" under Herbert Yardley, the Army's Signals Intelligence Service under William Friedman, and Navy cryptanalysts cracked Tokyo's diplomatic encryption systems. Working backward from intercepts, Friedman's team figured out what kind of cipher device the Japanese used — the "Purple" machine.
During the 1930s and early 1940s, the FBI launched an extremely effective counterintelligence attack on German and Japanese espionage and sabotage operations in the Western Hemisphere. U.S. operatives infiltrated many networks and arrested dozens of agents. The FBI had less success against Soviet efforts to penetrate U.S. government and economic institutions.
FDR Creates OSS
As America's entry into World War II seemed to draw closer in 1941, President Franklin Roosevelt created the country's first peacetime, civilian intelligence agency — the Office of the Coordinator of Information.
Soon after, however, the United States suffered its most costly intelligence disaster up to then when the Japanese bombed Pearl Harbor on December 7, 1941. That failure — a result of analytical misconceptions, collection gaps, bureaucratic confusion, and careful Japanese denial and deception measures — led to the establishment of a larger and more diversified intelligence agency in 1942: the Office of Strategic Services. The OSS is the forerunner of today’s Central Intelligence Agency.