The War Scare of '48

by David "Mane Raptor" Joyce

Article Type: Military History
Article Date: April 26, 2002

War Scare of '48

Agents parachute into Carpathian mountains

One night in September of 1949, an unmarked C-47 took off from American–occupied West Germany and headed East. Piloted by two Czech born veterans of the Battle of Britain, the plane carried a cargo of two Ukrainian nationals, their suitcases, gear, and parachutes.

As the plane flew on, American radio interceptors listened to Soviet radar stations reporting back to their control centers the position of the plane, it’s speed and altitude. But the Soviets seemed to be taking no action. When the plane reached its drop zone in the Carpathian mountains, the copilot signaled his passengers who then jumped into the dark night. The plane circled and headed back to its base in the West. Thus began the CIA’s first deep penetration of the Soviet Union, an operation that would hopefully provide Washington with an early warning of “the” pending attack.

For in early 1948, senior policy makers in the nation’s capital became convinced that Stalin would attack Western Europe and attack it soon. Now it was up to the newly created CIA to provide a warning. There would be no repeat of Pearl Harbor this time.

How the “War Scare of '48” came about, the covert operations involved, and the subsequent ramifications for Cold War history is the story to be told.

Oh, what a difference a year makes. At some point during his 4-day voyage back to Germany in early July of 1946, Reinhard Gehlen, ex-Wehrmacht General who had led Hitler’s Russian military espionage effort, must have reflected on the changes. A year ago he was stuck in an American POW camp, now he was working with those same Americans. Working also towards his dream of someday heading the intelligence operations for a future German government. He had made an agreement fairly close to that which he had proposed at that first meeting in September of 1945. The Americans were just getting the Central Intelligence Group (CIG) set up and while that was going ahead, and since the American’s still was not too trusting, he was under the control of the U. S. Army’s Counter Intelligence Corp (CIC). His information would be shared between the Army and the CIG, but the raw data he produced would be analyzed and presented to policy makers by both groups. It was a bureaucratic tangle that would snarl soon.

But for now, armed with $3.5 million US Dollars as seed money, he had to produce results to please his new bosses. In order to do that he had to overcome two major hurtles, logistics and organization. Where to work and how to staff? Gehlen cast about for a location for his headquarters. The ideal location would have easy and explainable access for his American partners and have the room to house a staff to carry out the tasks of intelligence collection, analysis and agent recruitment securely. In the war torn West Germany, what better place for a group of ex-Nazi spies to set up shop than the U. S. Army POW Interment Camp at Oberursel?

“…what better place for a group of ex-Nazi spies to set up shop than the U. S. Army POW Interment Camp at Oberursel?”

It would do for a start. The small cluster of huts, surrounded by barbed wire, and slightly apart from the main compound, allowed American personnel to be seen coming and going. It protected the work being done there from prying eyes and it provided ready access for Gehlen to a valuable source of possible recruits, the POW’s and displaced persons being held by the Americans.

Working with his CIC handlers, he and his growing staff combed the POW lists and had selected individuals with whom they had worked in the Third Reich to help fill the ranks. Those selected were asked if they wanted to get back in the “game”. If the individual agreed, then they were officially declared released from POW status and sent to Oberursel. As his organization grew, Gehlen still had to prove his organization’s worth

The Three Fronts

The Organization worked on three fronts. First returning Germans and Eastern Europe refugees were interrogated for any information concerning Soviet military strength and disposition. Ex-Soviet POWs were of particular interest. From one the Americans learned that the Soviets were actively mining uranium in the Urals via a souvenir rock he had brought back from his POW camp where he had worked in the mine. Another worked as a janitor for a group of German rocket scientists in Russian captivity and was able to supply information about the location and the work being done.

Gehlen’s second front involved reviving his agents from before the war. In the chaos that was Germany and Eastern Europe getting the wake-up call to an agent he had not had contact with for a year or more was not easy. A letter, a notice in the newspaper, or a message left at a dead drop was the usual method of contact. But mail delivery was slow and how could you even be sure the agent would ever get the message. Plus there was the problem of being sure that the agent had not been turned by the Soviets. Thus Gehlen decided to revive only those agents that had been most loyal in the past and to, as much as possible, have the contact be made in person via one of his newly hired agents. Some of the lengths these agents went to make contact with the “sleepers” were extraordinary.

“Some of the lengths these agents went to make contact with the ‘sleepers’ were extraordinary…”

In once case, a sleeper agent that Gehlen wanted to revive was already working for the Soviet occupying forces in East Germany. But security surrounding him was tight. The Russians would not let him outside his work place without an escort and did not meet with outsiders. Gehlen’s agent composed a recruitment letter with the expected revival code and instructions for making contact. He placed the letter inside a small metal cylinder and had that cylinder stuffed inside a goose slated for the sleeper agent’s dinner. The recruitment pitch was successful and he later became one of Gehlen’s best sources inside the East German military establishment.

The third front was recruitment of new agents. His main source was the millions of homeless that roamed Germany and Eastern Europe at this time. These individuals were willing to work for a variety of reasons. For some the reason was money, for others it was ideology, but whatever the reason Gehlen was able to recruit a large number of East Europeans to work in East Germany and many other Eastern European countries and report back to his organization.

Uneasy Future in Europe

By December 1946, the size of the Gehlen Organization required it move to a small-secluded cluster of buildings in the town of Pullach, just outside Munich. It was an estate with a historic past. Just after the war it had been home to the Anglo-American Civil Censorship Division, but it had been originally built as an estate for Rudolf Hess and later served as a reserve Wehrmacht Headquarters after Hess’s flight to England. And the move was made just in time, for Gehlen was about to get busy.

Ever since the February 1945 Yalta Conference, tensions between Moscow and Washington had been on the increase and so had the pressure on America’s intelligence community. All during the fall and winter of 1946, Truman was prodding the newly created CIG to produce the reliable intelligence on the Soviet Union as soon as possible. The problem for CIG Director Hoyt Vandenberg was that America’s best source, Gehlen, was just beginning to supply information and what information was available was being closely held by the Army. Departmental fractionalization, the Army, the Navy, and the State Department’s division and bureaucratic infighting over intelligence information was still entrenched in Washington. In reality, all the creation of the CIG did was to give lip service to the idea of a centralized intelligence agency.

By the end of 1946, Stalin had solidified his hold over Eastern Europe. In Western Europe, communist-led labor movements, politically strengthened by the central role that they had played in the OSS and SOE backed wartime resistance movements, were stirring and flexing their political muscle in many countries, most notably France. And it appeared that Italian Communists could win control in the upcoming elections. Washington was becoming distinctly uneasy about the future in Europe.

Then in the first months of 1947, a large-scale communist insurrection and guerrilla movement surfaced in Greece and Stalin began making territorial demands of Turkey and Iran that were, for some, reminiscent of pre-war Hitler.

“Then in the first months of 1947, a large-scale communist insurrection and guerrilla movement surfaced in Greece and Stalin began making territorial demands of Turkey and Iran that were, for some, reminiscent of pre-war Hitler”

The CIA is born

In response to these events, on March 12 1947, President Harry Truman, speaking to a joint session of Congress announced the “Truman Doctrine”. In that speech Truman stated, “I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressure.” This marked a turning point in the Cold War. No longer would America just protest Soviet actions, now it would take action too. Truman’s call to arms had several direct results, the most famous of which is the Marshall Plan. But it also helped to spur on passage of the National Security Act of 1947, the “Birth Certificate” of the CIA.

Through the Marshall Plan, America would now supply military aid to Greece and Turkey, and offer food, goods, loans and other direct support to help put Western Europe back on its feet. Western Europe welcomed the aid, the Soviet Union and its Eastern Europe satellites rejected it. And the newly minted CIA would handle a massive increase in the need for intelligence on the Soviet Union and Eastern Europe. America needed more information about its once friend, foe. And that would come from its main source, the Gehlen Organization

But Gehlen had a problem, money—and the Army was being stingy. Most of his seed money had long since gone. It was expensive running a spy network, not only did agents have to be paid but his staff did too. With the U. S. Army paying some of the costs but for other expenses he needed a ready source of untraceable cash. What better place to get that in war torn Germany than the black market. Gehlen scrapped up some funds and did some investing in coca. The result: By 1947, black market hot chocolate was funding the Gehlen Organization.

“By 1947, black market hot chocolate was funding the Gehlen Organization”

And his organization had work to do. The Army wanted more information on Soviet military movements and dispositions. Gehlen established a network of agents in East Germany first, soon followed by Poland, and Czechoslovakia. Their targets were airfields, military bases and barracks. Gehlen’s agents throughout Eastern European noted the details of Soviet strength and reported them back to Pullach. All during 1947, Gehlen’s reports on Soviet troop and tank movements were sent directly to Washington and it soon became apparent that size of Russia’s occupation forces were far in excess of what was needed.

By the beginning of 1948, the Gehlen Organization began to get copies of messages between Moscow and the leaders of the various Communist parties throughout Western Europe ordering sabotage in the ports of Bremen, Hamburg and other Northern European ports and labor strikes and work stoppages in the rest of Western Europe. These actions threatened, and in some cases did, halt the arrival of Marshall Plan food aid to Europe. Then, in February 1948, the socialist Benes government of Czechoslovakia was overthrown by a hard-line communist coup. By early March the stage was set for a panic in Washington. And Washington’s bureaucratic intelligence tangle would be partly to blame.

General Panic

General Lucius Clay

General Lucius Clay was Commander-in–Chief of the European Command. In that position he direct access to the reports that Gehlen was producing. Clay tended to skip over the analysis part and go straight to the raw data. What he read that first week in March made him fire off an urgent, top-secret message to Army General Staff saying that he felt there was a good chance that the Soviets would attack with “dramatic suddenness”. When that message reached the General Staff and the already nervious policy makers in Washington, the result was near hysteria. American armed forces were placed on alert around the world and our European Allies, Britain and France were told that a Soviet attack could happen at any moment.

While the Generals and top policy makers in Washington waited for the first shots to be fired, Admiral Roscoe Hillenkoetter, the first Director of the CIA was not so quick to panic.

Admiral Roscoe Hillenkoetter

Hillenkoetter had been appointed by President Truman to head the CIA when it was created in July of 1947. The agency had inherited the CIG personnel and duties and was receiving some of the Gehlen data, but Hillenkoetter did not have the rank to deal effectively with the military services. From his first day as CIA Director, he had offered the Army his agency’s resources in an effort to coordinate intelligence operations targeting the Soviet Union and the Eastern Bloc. The offer was turned down flat. Clay himself had dismissed Hillenkoetter’s offer by saying “I do not want any intelligence, no matter how good, unless it is produced by a staff under my control”. Hillenkoetter would only get what Gehlen intelligence the Army would deem fit.

Hillenkoetter did, however, have his own sources. The newly born CIA inherited a number of CIG agents in Europe. Most of these were ex-OSS vets who had found the intelligence game exciting and didn’t want to stop playing. They had hung on thru the Washington alphabet soup shuffle of the OSS to CIG to CIA. The future CIA Counter Intelligence Chief James Angleton was in Italy, future CIA Director Richard Helms was in Germany and former OSS veteran Phillip Horton was in France. The information this group and others were gathering, along with what Hillenkoetter was getting from Gehlen via the Army, was poured over by another group of ex OSS experts. Their view of events was that the Russians were stirring, but were in no condition to start a major war, at least not yet. Hillenkoetter’s panel also recommended an increase in surveillance and some covert actions to counter the Soviet moves into the politics of Western Europe.

The recommendations for increased covert action led to $10 million USD being funneled from the CIA to rightwing newspapers and political candidates to help win the propaganda war and thus the elections. In France, money and wartime connections with the criminal world were used to put a stop to a strike in Marseilles that had halted the arrival of food aid. Similar methods were used in Northern Germany to stop the dockyard sabotage occurring there. And throughout Western Europe, the CIA used false news stories, “black” radio, and financial assistance to publications to fight the communist movements.

“…the CIA used false news stories, ‘black’ radio, and financial assistance to publications to fight the communist movements”

Within a few weeks of Clay's message, it became apparent to those in Washington that Clay had jumped the gun. Stalin was upping the ante in the Cold War, but an actual shooting war in Europe was not about to happen right away. So the “War Scare of '48” abated somewhat, but it had lasting effects.

Intelligence Ignorant

There was an awaking in Washington as to just how intelligence ignorant America was when it came to the Soviet Union. The Air Forces had no target list, no maps, and no plans for waging Atomic War on Russia. Also there was a perceived need to vigorously oppose Stalin’s moves in Europe. We had to start fighting fire with fire, was the feeling. And it was also apparent that better analysis and filtering of the raw intelligence data being collected via the Gehlen Organization was needed before it was sent on to Washington and the military.

So shortly after the March War Scare, control of Gehlen’s Organization was moved from CIC to the CIA. For Gehlen it was the solution to his money problem. The year old CIA was now much more willing to support his growing expenses. The "War Scare of '48" had also resulted in Washington's stronger support for this bureaucratic infant and new duties for it to perform overseas.

And in the CIA’s view, the Gehlen Organization was now going to play an important role in fighting Soviet expansion into Europe. Not only would it help fulfill the task of ferreting out information on the Soviet military, it would also be useful in a change in direction. The CIA would continue as before, via Gehlen’s Organization, to use individuals and dissident groups to gather data, but now it would begin to use those assets to bring about political unrest and hopefully, bring down Stalin’s Iron Curtain.

The September 1949 airdrop of the two Ukrainian dissidents into the Carpathian Mountains was the just beginning. What the “War Scare of '48” led to, and the price that was paid in blood and treasury, next time.




This article is part of a series of articles on post WWII covert ops:

• Part 1: To the Victor go the Spoils
  How former Nazi, Reinhard Gehlen, helped form the CIA
  
  
• Part 2: The War Scare of '48
  How an over-reacting US General helped reverse the US's lack of intel on postwar Soviet expansion.

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