Spy vs. Spy Part One: The CIA is Formed

The 1941 attack by the Japanese on Pearl Harbor was one of the worst intelligence failures in history. Diplomatic negotiations with Japan had fallen apart in the weeks leading up to the raid. Cables from Tokyo to its embassies instructing them to destroy sensitive documents were intercepted and decoded. Submarines were spotted in the waters, and aircraft were picked up on radar on the morning of December 7. Despite all of these warnings, the attack came as a complete surprise to the United States. The reasons for this failure range from lack of information about Japanese military capabilities (U.S. experts didn't think Japanese planes had enough fuel capacity to reach Hawaii) to simple arrogance (military experts didn't believe Japan would risk U.S. retaliation). Overall, secrecy and rivalries between branches of the military prevented the coordination and sharing of information, which may have allowed commanders to to prepare for and defend against the imminent onslaught.
Although Pearl Harbor was not the only reason for the development of an intelligence service, it was a major factor, and in June of 1942 President Franklin D. Roosevelt issued an order to create the Office of Strategic Services (OSS), to collect, coordinate, and analyze intelligence. Modeled after the British Secret Intelligence Service (also known as MI6), the OSS helped the Allied war effort tremendously in the European theater by infiltrating Nazi Germany with spies, acts of sabotage, and training resistance groups. The OSS was responsible for collecting very useful information on German Military technology. They also recruited and trained resistance fighters against the Japanese in China and Burma.
After the WWII Allied victory, President Truman saw no need to continue OSS activities during peacetime, and officially dissolved it in September of 1945. As tensions with the Soviet Union began to rise, though, the need for a foreign intelligence service became more apparent. In January of 1946, he established the National Intelligence Authority (NIA), over the objections of the State Department, the military and the FBI, all of which wanted control of secret intelligence. The NIA was responsible for the oversight of the Central Intelligence Group (CIG). The CIG was in charge of analyzing and disseminating intelligence from different government agencies, but soon acquired the authority to research and collect intelligence on its own. However, it was still under the constraints of the military and the State Department. To allow the agency to act independently, Truman signed into law the National Security Act of 1947 (pictured above), dissolving the CIG and creating the Central Intelligence Agency (CIA). He appointed Roscoe Hillenkoetter as its first director, and one third of the new agency's personnel were recruited from the old OSS.
The National Security Act was intentionally vague in its description of CIA functions, which included all previous powers of the CIG but adding some advisory duties and "other functions" not specified in the act. Under the Central Intelligence Agency Act of 1949, the CIA became the first and only government agency with a classified budget, and the CIA Director became the only government employee permitted to spend government money without congressional oversight. A key development in the mission of the CIA came earlier, though, in December of 1947, when the National Security Council authorized the CIA to perform covert actions. In September of 1948, the Office of Policy Coordination was created, with Frank Wisner, former head of OSS operations in southern Europe, as its first director. This divided the CIA into two distinct wings, the Office of Special Operations (OSO), which focused on gathering intelligence, and the new Office of Policy Coordination (OPC), which took a more active role in things like propaganda and sabotage overseas.
According to then-classified document NSC 10/2, approved by Truman, covert operations were defined as "all activities....conducted or sponsored by this Government against hostile foreign states...or in support of friendly foreign states...but which are so planned and executed that any US Government responsibility for them is not evident... and that if uncovered the US Government can plausibly disclaim any responsibility for them." In essence, the OPC was authorized to perform almost any act of sabotage against an enemy state, so long as it preserved plausible deniability.
This policy, coupled with the unaccountable budget, opened the door for a wide variety of actions. The first of these was the support of the Christian Democratic Party against the Popular Democratic Front and the Italian Communist Party in the Italian Elections of 1948. In an effort to prevent Italy from falling to the Soviet "Sphere of Influence", the CIA gave about $1 million to selected candidates for their campaigns, published books and articles, sponsored radio broadcasts, and conducted a mass letter-writing campaign. The operation was successful, with the Christian Democrats winning 48% of the vote over the leftist coalition's combined 38%.
Over the course of the Cold War, the CIA would conduct operations ranging from relatively benign propaganda efforts to the overthrow of hostile governments. Some covert operations were a celebrated success, like the coup of Guatemala. Others, like the attempted Albanian subversion, were deadly failures. Still others, like the Iranian coup d'etat of 1953, were successful in the short term, but planted the seeds of dreadful consequences that would emerge decades later.
We will discuss many of the CIA's operations in future installments, because they heavily influenced one of the most important concepts of the Cold War battlefield: the avoidance of an all-out nuclear showdown between the United States and the USSR. The United States wanted to contain or push back the spread of communism, but did not wish to provoke a direct engagement with the Soviet Union. The USSR, for its part, was intent on global domination, but also did not want to provoke a third World War with the United States. The fear of nuclear annihilation on both sides led to the famous dynamic of the Cold War chessboard, consisting of espionage, propaganda, training and funding of resistance groups, economic warfare, paramilitary coups, and proxy wars, all designed to avoid a direct confrontation between the two superpowers.

*All of the above and more can be researched and verified on the Official CIA website.