<< International Boundaries as of March 1939. OSS missions and bases as of 30 September 1945. Boundary Representations are not necessarily authoritative.
Any appraisal of the Office of Strategic Services must begin with the fact that the best intelligence available to British and American commanders came from intercepted and deciphered Axis messages. Without ULTRA and MAGIC, the war might have been lost. OSS shared in only a small portion of this intelligence bounty, chiefly because the Army and Navy (backed by the JCS) refused to give General Donovan a role in procuring or analyzing enemy signals. There was, however, an important exception to this ban. OSS’s counterintelligence branch, X-2, made good use of German ULTRA intelligence and by the end of the war had established itself as a formidable practitioner of clandestine operations.
William Donovan created the X-2 Branch in early 1943 to provide British intelligence services with a liaison office in OSS for sharing ULTRA. Using ULTRA intercepts, the British security services had captured every German agent in the United Kingdom; some agents were even “doubled” to send a steady flow of plausible but bogus reports to Berlin. British intelligence wanted American help in this campaign, but London insisted that the Americans imitate British security practices to protect the vital ULTRA secret from unauthorized disclosures (even to other OSS personnel). X-2 was the Branch that resulted from this deal; it had its own overseas stations and communications channels and operated in partnership with the British foreign and domestic intelligence services.
Headed by attorney James Murphy, X-2 swiftly became an elite within an elite. Its officers possessed the secret keys to many wartime intelligence puzzles and could veto operations proposed by SO and SI without having to explain their reasons for doing so. In consequence, X-2 was able to attract some of the best talent in OSS, but it also earned a reputation for aloofness that the other OSS Branches resented. James J. Angleton, X-2 station chief in Rome for the last year of the war, proved a model of an innovative, activist counterintelligence officer whose contributions exceeded his job description. He cultivated Italian liaison contacts (hitherto shunned as former enemies by the other Allied agencies), reported on political machinations in Rome, and devised ways to make ULTRA information usable by US Army counterintelligence officers who were not cleared to see the actual intercepts.
X-2 did well in Europe, but OSS headquarters in Washington might have profited from more counterintelligence scrutiny. OSS had a dismal security reputation. Established agencies like the FBI and G-2 believed that Donovan’s oddball outfit, built as it was from scratch with not a few corners cut in the hiring of its staff, had to be riddled with subversives and spies. This rap was not wholly fair; OSS headquarters was not in fact penetrated by Axis agents, and its field security (at least in Europe) was adequate. Nevertheless, X-2 hunted the agents of Axis—not Allied—services. Soviet sympathizers and even spies worked in OSS offices in Washington and the field. Some were hired precisely because they were Communists; Donovan wanted their help in dealing with partisan groups in Nazi-occupied Europe. Others who were not Communists, such as Donovan’s aide Duncan C. Lee, R&A labor economist Donald Wheeler, MO Indonesia expert Jane Foster Zlatowski, and R&A Latin America specialist Maurice Halperin, nevertheless passed information to Moscow. OSS operations in China, moreover, were badly penetrated by Communist agents working as clerical and housekeeping staff, or training in OSS camps for operational missions.