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Approved For Relea e 2005/02/10 :CIA-RDP78 STUDIES ~n INTELLIGENCE VOL. 10 NO. 1 WINTER 19b6 CENTRAL INTELLIGENCE AGENCY ' OFFICE OF TRAINING Approved For Release 2005/~/~~ETCIA-~78T031~Q~0~200040001-9 --- - d For Release 2005/02/10 :CIA-RDP78T03194A000200 All opinions expressed in the Studies are those of the authors. They do not necessarily represent the official views of the Central Intelligence Agency or any other component of the intelligence community. This material contains information affecting the National Defense of the United States within the meaning of the espionage laws Title 18, USC, Secs. 793 and 794, the transmission or revelation of which to an unauthorized person is prohibited by law. GROUP 1 Excluded from automatic downgrading and declassification STUDIES IN INTELLIGENCE EDITORIAL POLICY Articles for the Studies in Intelligence may be written on any theoretical, doctrinal, opera- tional, or historical aspect o f intelligence. The final responsibility for accepting or re- jecting; an article rests with the Editorial Board. The criterion for publication is whether or not, z'n the opinion o f the Board, the article makes a contribtction to the literature of in- telligence. EDITOR PHILIP K. EDWARDS EDITORIAL BOARD SHERMAN DENT, Chairman DONALD F. CFIAMBF,RLAIN JOHN H. RICHARDS~ON LAWRENCE II. HCAUSTON ALBERT D. WH]EELATI Additional members o f the Board are drawn from other CIA components. 25X1 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET SECRET Approved For Release 2005/02/10 :CIA-RDP78T03194A000200 40001-9 CONTENTS 25X1 CONTRIBUTIONS Contributions to the Studies or communications to the editors may come from any member of the intelligence community or, upon in- vitation, from persons outside. Manuscripts should be submitted directly to the Editor, Studies in Intelligence, Room 1D 27 Langley _ _ 7 a______~L _L..... DISTRIBUTION 25X1 For inclusion on the regular Studies distribution list call your office dissemination center or the responsible OCR desk, 0 For back issues and on other questions call the Office of the Editor, 25X1 143-5963. Page; The 1965 Studies in Intelligence Award ................. faces l~ Economic Intelligence in Defense Planning .... Clyde C. Wooten Challenges validity o f arms impact figures. SECRET ]~ Costing Nuclear Programs ..................... Alan B. Smith Two methods o f assessing foreign a (torts for military and peaceful uses. SECRET 23 On the Trail of the Alexandrovsk ............ Dwayne Anderson Footnote to the Cuban missile crisis. SECRET 3'~ The Mariner as Agent ........................ Art Haberstich Potential and hazards in running denied-area seamen back home. SF:eRET 45 Adversary Agent Radios ...................... James J. Fauth Crude and sophisticated samples o f Communist sets. SECRET 5~7 Alias George Wood ........................ Anthony Quibble Cou~?agenus agent almost thwarted by bureaucracy. CONFIDENTIAL Intelligence in Recent Public Literature ......... CONFIDENTIAL E.9 ........................ World Vf/ar II ................. 111. The cold' war 133 The Civil War ......................................... !35 17th and I8th centuries ................................ !a7 Classified Listing of Articles in Volume IX .................... 1~~3 All copies of each issue beginning Summer 1964 are numbered serially and subject to recall. 25X1 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET SECRET Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Argues that DoD pressure for fig- ures on Soviet military outlays and their economic impact has brought a spurious response. EC?NOMIC INTELLIGENCE IN DEFENSE PLANNING* Clyde C. Wooten 25X1 Thy 1965 STUDIES IN INTELLIGENCE AWARD In the last few years new requirements for intelligence data on costs of present and future Soviet forces and for analysis of the So~?~1~~~4A000200040001-9 Soviet Arms Strain Soviet Arms Strain Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 examine this question and a broader one implied by the new DoD requirements for economic intelligence: Given the kind of data avail- able to the economic analyst, what kind of response is it feasible for him to make? In order to comply with the DoD requests 1 it is necessary for intelligence to develop estimates of: 1. Current Soviet military expenditure allocations within the current GNP? 2. The cost of Soviet forces by mission, including with respect to advanced systems the current and future expenditures for both present and future systems (i.c., present operations and maintenance costs, current investment for present and future inventories, current R&D costs for future systems). 3. The Soviet GNP growth rate or some other measurement of economic capability to support defense expenditures, projected as far as the estimates to be tested are projected. Allocation o f Expenditures Th.e Soviet military budget is publicly aone-line item, a single figure for all military outlays each year. Its interpretation and break- down, ajob for economic intelligence, is not simplified by the Soviet praci:ice of hiding increments to it elsewhere, much as we hide the CIA budget. P'i~;ure 1 shows how this overtly budgeted amount has compared with actual expenditures as estimated by intelligence and with U.S. oblig;ational authority for defense spending. There is considerable uncertainty associated with the estimated Soviet expenditures, not only presE;nt and future but also past, as we shall see. But accepting these figures, we see they give little warrant for extrapolating into the future on the basis of trend. This is as we might expect; military budgets are a. product of compromise among contrary influences and subject to seemingly unpredictable fluctuations. We are therefore probably not justilied in relying on trend analysis as a technique for estimating future military expenditures and the economic limitations on them. A considerable amount of analytical ingenuity has been demon- strated in tracking down the hidden increments of the Soviet military budget. Data on industrial production have been analyzed to iden- ` Cited and discussed in greater detail in W. E. Seidel's "Intelligence for Defense Planning," Studies VIII 2, p. 19ff. o ao sl I I I I '50 -,The estimated expenditures are taken from "Soviet Defense Expenditures," CIA/RR MP 65-1, 2 June 1965. Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET SECRET Soviet Arms Strain Soviet Arms Strain Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 tify defense production, largely by a residual method, identifying components which are not defense programs in order to isolate what may be attributed to defense. There are a number of difficulties ~~ith the residuals approach, but the most important one is that the resulting figures give little insight into the mission breakdown of the military expenditures. Such a breakdown has been made an im- portant objective for economic intelligence, which therefore requires resort: to an extensive effort at synthesizing Soviet military costs, in particular costs of Soviet weapon systems. Soviet Costs Meaningful analysis of expenditures requires, first, data on prices and quantities, and second, relationships between these and other prices and quantities. Neither of these conditions is fulfilled by data directly available on Soviet military expenditures. First let us speak of Soviet prices. While it is an oversimplification to sa:y that prices in the Soviet Union are what someone says they are, they bear no regular rational internal relationship which could form a basis for extrapolation. Because the USSR is a controlled and rationed economy, prices are not a reflection of buyers' and sellers' independent choice in a free market. Ruble costs have no necessary relationship to real costs. The variations between the two have been indirectly and approximately expressed by intelligence (and elsewhere) in terms of divergent ruble-dollar relationships.2 It may be added that there is some divergence among estimates of these divergent relationships. We shall return to this matter; but for the moment it is necessary only to note that a ruble is not a ruble in the same sense that a dollar is a dollar. This circumstance poses the first of two difficulties in the costing of SoviE;t military forces. Because Soviet costs derived from Soviet prices and quantities are not a true reflection of real costs, it is quite hard to make simple comparisons between the costs of different elements of the Soviet forces (either investment costs or, even more difficult, total cost of operations, maintenance, research and develop- ment:, test and evaluation, etc.). Of course the difficulty is multiplied when one attempts to compare U.S. and Soviet military costs. But preciisely this kind of comparison has to be made in order to estimate e See, for example, the discussion in Alan B. Smith's "Costing Nuclear Programs" on p. 34 of this issue, especially footnote 7. the cost of Soviet elements in the first place. Here arises the second and more serious costing difficulty. Inasmuch as very little Soviet military cost data is directly available, it is necessary to synthesize the Soviet costs by estimating the cost- generating characteristics of the Soviet forces, assigning prices to~ individual elements, and summing the costs of the required numbers. The long and short of this is that intelligence cannot develop the coasts from economic data available from the Soviet Union. "All attempts; to calculate the costs of Soviet forces" have depended "upon basic: cost factors derived from U.S. data." a The costing is thus done primarily by analogy: a weapon system is costed as if it were produced in the United States by U.S. technology? and methods and with U.S. personnel. For the sake of comparability the U.S. systems closest to those of the Soviets are used and are: modified to allow for known differences. Where possible, Soviet: factors such as Soviet labor prices in rubles are used, though this; introduces non-homogeneous units, rubles and dollars. How good are these costs? Since the costing is by analogy wiith U.S. practice, it will be useful to inquire how goad U.S. costing is.. U.S. Costs The cost of advanced weapon systems has been increasing rapidly in the United States. Dr. Harold Brown has illustrated this point by comparing the fly-away cost of the World War II F6F, $9 per pour-d;, with that of the F4B, to be over $74 per pound.4 The reasons usually advanced for the increase are a greatly increased sophistication. in weapon system components and the increased cost of materials ands highly skilled labor. It is well known that there are other factors; wf shall mention three. The first is inherent in the way the business is done in the United! States, and more particularly in the defense industry. Suppose the;rE~ is a design competition for a new weapon system. Two or morf:, companies may carry out very extensive and expensive R&D efforts? often involving the same general technology. It is not unknown far such competitions to become quite protracted, with resubmissians a E. D. Brunner, Soviet Air Armaments and Their Costs, 1946-1961 (Santa Monica, California: The Rand Corporation, RM-3508-PR (Secret RD ), Ni(ap 1963), p. 1. ' Statement before a meeting of the Institute of Aeronautics and Astronautic:. in Washington, D.C., 22 September 1964. Approved For Release 2005/02/10 :CIA-RDP7~ETg~~~Q4A000200040001-9 SECRET Soviet Arms Strain SS tt AArr SS Approved For Release 2005/02/10 :CIA-RDP7$~~t~194i~00t~g~40001-9 required. Each competitor must demonstrate competence, in terms of personnel and facilities, to proceed with the contract after it is awarded. Only one company ultimately wins the contract. The loser or losers may be reimbursed under terms of the development contract for part of their expenses, in which case this adds to current R&D costs. More usually, the company absorbs the loss, expecting to make it up through profits on other defense contracts, so that the apparent costs of succeeding systems are increased. There are advantages to this ~,vay of doing business, but saving money is not one of them. A second factor is inefficiency in R&D. There is a dearth of data on this subject, for understandable reasons; companies are not likely to advertise their inefficiencies. But efficiency is likely to be of a different order when limitations on funds require heavy emphasis on economy and reliance on the ingenuity of project leadership and per- sonal~ incentives, as against the conventional U.S. R&D practices, with cost-plus contracting, emphasis on massive documentation, detailed control of lower echelons, etc. Recent research by Arnold C. Cooper 6 on the cost of civilian product development disclosed no investigations into relative efficiency among companies of different size, but on the basis of an "introductory ex- ploration" he hypothesized that "...large companies tend to spend substantially more to develop particular products than do small firms." In interviews with managers he found that most think a large com- pany "spends from 3 to 10 times as much as a small one to develop a particular product." In a case study of a small and a large firm developing a protective coating for similar products, the small one carried out a 12-month part-time project estimated to cast $1,400, while the larger's project lasted 38 months and ran $11,000 in direct costs. Cooper is careful to restrict his conclusions to R&D, avoiding any suggestion that small companies are more efficient in production activity. But it is the very large R&D costs in the U.S. missile and space field, rather more than production costs, that have created a view here that heavy expenditures are required for substantial prog- ress, especially in the light of competition with the USSR. Such R&D activities arc non-standard and difficult to control, thereby lending themselves to rat-hole expenditures and enterprises. `Arnold C. Cooper "R&D is More Efficient in Small Companies," Harvard business Review, May-June 1964, pp. 75-83. This article was drawn to my attention by Tom Glcnnan of the Rand Corporation. A third factor which pyramids costs is competition for labor and materials. 'I'hc missile and space industry in the United States has over the past few years been its own worst competitor for talent. When projects proliferate, new investment in facilities is required. In a competitive economy the pricing system is the mechanism :for gaining priority in personnel recruitment, capital investment, and resource allocation. Therefore unit costs are higher on priority projects. Implications for Analog Costing The relative tightness of the Soviet economy suggests that Soviet: R&D is not likely to share the rich man's results-count-more-than-the- money attitude. The Soviet design-team approach lends itself to :in- ternal communication and continuity in technology. It has been noted. by intelligence that Soviet design goals are usually more modest, less: prone to press the state-of-the-art, less likely to incorporate cost- multiplying modifications after series production has begun, than. in U.S. practice. Priority stems to be arranged through direct allocation of resources--men, facilities, material-rather than by price adjust- ment. There are, of course, disadvantages to this way of operating, but it seems economical in terms of costs on high priority programs. All this would suggest that we have a tenuous basis for analog costing. Before we turn to future weapon systems, a rather important: im- plication of analog costing of current forces needs to be made explicit. Costs developed by the analog method depend not only on what is costed (unit costs) but on how much is costed (systems costs). "1'lae reasonableness of the results depends, to a large extent, upon the validity of the order-of-battle estimates." ~ But the objective in cost- ing was to validate and set economic limits on the order of battle. If the validity of the cost estimates depends upon validity of the order of battle, how can the order of battle be validated by the cost estimates? 7 Let us now consider estimating future costs. The question of future technology is immediately raised. There is of course great intrinsic uncertainty in projecting technology into the future, whether in foreign s E. D. Brunner, op. cit., p. 1. ' The objection that costs so derived may be measured against economic capabilities will be met below. Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET SECRET SECRET Approt~~~4`~o~'~e~~~"005/02/10 :CIA-RDP78T~~~94i~0028b~40001-9 SECA:ET or domestic, military or civilian application. Charles J. Hitch, DoD Comptroller 1961-1965, has observed: . ..the most important thing to understand about R and D is the dominant role played by uncertainty.... Predictions by "experts" of the results or usefulness of particular R and D projects are highly unreliable. .. De- velopments almost always take longer and cost more than predicted (by factors of 2 to 50 ), .most fail in whole or in part In addition i:o technological uncertainty, Rand D shares with other kinds of time- consuming investment what is called environmental uncertainty-uncertainty :about the kind of new product that will be saleable or useful in the unknown environment of the future years in which it will be available e Tlie matter of military R&D and system cost prediction has received a considerable amount of study because of glaring mistakes in cost estimates associated with U.S. weapon system proposals. It has been found that estimates of total system costs made early in a development pro?;ram may be less than the estimate made when the system is ready to be introduced into the active inventory by a ratio of 1.5, 2, 3 or even ltigher. Studies indicate that a primary and overriding cause for underestimating U.S. weapon system costs has been the tendency to change performance characteristics or the configuration of systems after the cost estimates have been completed.? Iri the use of highly uncertain data for purposes of comparative analysis or evaluation, it is desirable that the uncertainties be of the same order or otherwise comparable. It may then be possible, in a very rough or crude way, to "factor out" such uncertainties on the basiis of their comparability. Perhaps enough has been said to suggest that: methods used in costing Soviet military forces may not yield the required comparability with U.S. costs. The estimated costs of Soviet forces so derived may thus not express the true cost relationships, either internally or with respect to those of U.S. forces, implied by the manner in which they are presented in intelligence estimates. This possibility may be enhanced by the problem of ruble-dollar conversion. Charles Hitch, The Character of Research and Development in a Competitive Economy (Santa Monica, California: The Rand Corporation, P-1297, 13 May 195~g ), p. 4. ?G. H. Fisher, A Discussion of Uncertainty in Cost Analysis, RM-3071-PR, The Rand Corporation, April 1962, p. 5 et passim. A study of 12 DoD weapon prol;rams made in DoD some time ago revealed that they were underbid by a factor of 3.4. Let us suppose that after some difficulty in arriving at a reliable cost estimate for a Soviet weapon system (and knowing that it is reliable), we have in hand such an estimate expressed in dollars (or partly in dollars). The next problem is to convert the dollars into rubles. Although there are a number of bad ways to do this, there is no completely satisfactory way. There is no single conversion factor by any method of calculation (except of course the Moscow- pegged exchange rate), and all methods of calculation have dffic:ul- ties.10 The way this has been done in costing Soviet forces, and indeed the most nearly satisfactory way, is to relate elements of the military costs to Soviet economic sectors for which ruble-dollar ratios have been established and to compute ruble costs by use of these ratios. The same problem in reverse cannot of course be avoided in inter- preting the economic meaning of the aggregated costs derived through conversion factors. If they are summed and related to costs calcula~:ecl for previous Soviet defense budgets, we run into the problems we have discussed in costing methodology, costing uncertainty, determi- nation of how and when costs are incurred,la real costs, eta It is quite dif&cult to draw simple, accurate, and useful inferences from comparing such costs, say costs of Soviet general-purpose forces with those of strategic offensive forces or with data on other economic sectors, not to mention U.S. costs of similar forces. Cost-E ff eetiveness Comparison Finally, there is a perplexing problem as to how to compare U.S. and Soviet forces in terms of costs and effectiveness by any system of analysis when their relative composition, sophistication of equip- ment, relative austerity, and requirements for support are so different. Secretary McNamara has inquired "whether the Soviet military eststb- 10 See Rush V. Greenslade, "Rubles vs. Dollars," Studies VI 1, p. 1-11, fo:r s~ succinct explanation of the problem of ruble-dollar relationships in connection with the comparison of U.S. and USSR GNPs. 11 The fact that in 1985 it was discovered that Airframe Plant No. 30 at Moscow Central Airfield had been producing MIG 21/FISHBED aircraft since about 1960? together with the fact that not enough information is available to establish a production rate, is illustrative of the degree to which distribution of costs, including distribution in time, must be based on assumptions. Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 ~~ SECRET SECRET li4 I 8 Sov et Ar s Strain Soviet Arms Strain SECRET SECF;ET Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 lishment has certain expenditure patterns which, as compared to our own, provide more military capability for the same cost." ra Intelligence has long remarked that the Soviets tolerate crude work- manship where technical excellence is not required. In the first Soviet-produced jet engine the turbine blades were well made but other workmanship was inferior by U.S. standards. In Soviet systems the instrumentation and auxiliary equipment also tend to be simpler than in the U.S. equivalents. Their space vehicles, although larger, are believed to be simpler than ours. Because they are larger they also avoid the costs of miniaturization and associated problems of qualiity control and reliability. It is well known that the Soviets have standards of austerity in military forces different from ours. Probably less well understood is that they also have different needs for supporting forces and facilities. As tlhe most obvious illustration of this, Soviet general-purpose forces are for the most part deployed in Soviet border areas or in proximity to the homeland, whereas a substantial portion of U.S. general-purpose forces are deployed at great distances from the continental United States. This implies substantial differences in support requirements of alll kinds. In short, the Soviet military problem is not symmetrical with. the U.S. military problem, and this asymmetry has implications beyond the costs of differing mixes of combat arms. These two differences-in standards of austerity and in require- ments for support forces and facilities-are in some degree comple- mentary, as suggested by Major General Deane, the senior U.S. mili- tary representative in Russia during much of World War II, in his description of a trip to the Soviet front after the Battle of Vilna: On the following day we were first driven to the headquarters of the Fifth Army, which was about fifteen miles west of Vilna. Colonel General Krylov was in command and he received us with his entire staff. It was certainly a far cry from the American conception of an Army headquarters. The entire staff consisted of fifteen to twenty officers who lived and worked in a few small trailers scattered through the woods. There was one huge hospital tent, well camouflaged, which served both as a conference room and as a headquarters mess. Some offices had stenographers at work, but most of them d:d not. We could not help but think of the enormous in- stallation and all the office space and facilities found at an American Army headquarters. It highlighted some very different concepts in our methods of operating. . "Memorandum 12 January 1~J63 to the joint Chiefs. Of course the Russian problem was considerably different from ours. l.n the matter of supply they had only one theater to consider as opposed i:o the many all over the world in which we were fighting. Their supplly lines were confined to an east and west rail and road net, whereas ours extended back across the ocean. To them a supply deficiency meant a few days' delay, whereas we had to wait for the availability of convoys. In the matter of personnel all Russia's manpower was close at hand, an,d her willingness to accept losses allowed the Red army to rely on sheer force of numbers rather than careful planning in order to achieve objecfiives with the least loss of life. In the matter of training Russia had the advantal;e of an agrarian population already hardened and for whom the rigors of battle were little more severe than the rigors of peace. Post Exchanges, United Service Organizations, doughnut wagons and other morale agencies which call for overhead were unheard of.1e This, from the Russian point of view, was a successful army which had accomplished everything necessary to win a great victory. 'Tlce Russians possibly still carry something of this image in their minds as they build new military capabilities in a new era. What this means in terms of combat capability has not been tested. Let us review what we have covered. We know that the Soviets have important resource allocation problems. Military expenditures can be made only at the sacrifice of other desiderata competing for the same resources. But the problem of measuring constraints o~n such expenditures, we have found, runs into a number of concep+tual and technical problems having to do with erratic trends in military budgets, inability to derive mission breakdown from Soviet budget figures, methodology of estimating costs, translation of costs :ini:o rubles, and forming judgments about them in the framework of the Soviet economy. It takes a certain optimism to expect intelligence to be able to cost weapon systems which cannot be described in detailed cost-generating terms, to do it by methods which have proved to be quite uncertain, to arrive at dollar costs and translate these into ruble costs without a satisfactory methodology, and to extrapolate all this, by any method, into an uncertain future-perhaps five or seven or ten years-and arrive at system and force costs which have any useful precision. C)r whose precision can be guessed. After the casts have been derived, they must be related to some- thing which serves as a gauge of the "strain" they engender in the economy or a measure of economic feasibility. They must be meas- Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET SECRET Soviet Arms Strain Soviet Arms Strain Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 ured against some such standard as GNP growth projected into the future;, or in terms of the sacrifice they would require in some other Soviet: objective, such as investment for GNP growth. The most impressive effort to date to assess the impact of future Soviet military expenditures has in fact adopted the latter standard. Let us now examine the attempt to make such assessments in practice. The 1'ntelligenee Effort The forces postulated in "Intelligence Assumptions for Planning" have been costed and found feasible and reasonable from an economic point of view. The forces listed in "Alternative Ten Year Projections of Soviet Military Forces," a group of documents produced by a CIA/ DIA Joint Analysis Group,' have been costed and described as feasible. The most impressive and comprehensive effort to date, how- ever, is the report "Soviet Defense Expenditures and Their Economic Impact Through 1970." 15 Inasmuch as this latter document is the first attempt to go beyond simply costing Soviet forces and declaring them feasible,1e it is important to scrutinize its rnethods rT and results. Its ultimate meas- urement of the cost of estimated future Soviet forces is in terms economic growth? Ini:uitively, there growth. How good is our understanding of can be no question that competing expenditure programs have an influence on economic growth, and growth on expenditure programs. How much is another matter. In 1964 the intelligence community, noting that "new extensions of Soviet eco- nomic assistance to 25 non-bloc countries ...fell to a low of $77 mil- lion in 1962 and did not exceed $200 million in 1963," declared, "This marked decline cannot, of course, be attributed solely to a resource squeeze within the USSR but has almost certainly been reinforced by the domestic competition for increasingly scarce resources and by the overall slowdown in Soviet economic growth ... Economic aid to '* 7'he establishment of this group was discussed by W. E. Seidel in his article "Intelligence for Defense Planning," loc. cit. 16 CIA/RR MR 64-1, dated December 1964. i? PJo forces otherwise estimated by the intelligence community as feasible have yet kieen declared infeasible on the basis of intelligence cost analysis. "Parts of the methodology are informally discussed by George Ecklund in his "Gums or Butter Problems of the Cold War," Studies IX 4, p. 1 ff. nonbloc countries is unlikely to recover the momentum of earlier years: ' But in 1965 it had to acknowledge that "the hiatus in Soviet exten- sion of economic aid to less developed countries of the Free World was ended as new credits rose [to] some $$00 million during; 1964. The rate of expenditure has been rising rapidly:' A;nd. the dour outlook for the Soviet economy of 1964, with "chronicP mis- management," "programs too ambitious for available resources,' and. an economy "too large, too cumbersomely managed, and too compl:e~: to change gears overnight" became rapidly more cheerful. Another example suggests the depth of our understanding of grov~th in the Soviet On January 10, 1964, the New York Times reported that "...the once impressive 6 percent annual economic; growth rate of the Soviet Union had slipped to 2.5 percent in the last two years ." This news became available through an unprece- dented CIA statement to the press following a succession of massive; grain purchases by the Soviet Union. It was greeted with satisfactiior- by the press but suffered a mixed reception among U.S. and British academic specialists on the Soviet economy. To quite a number of the specialists, the statement said both 'too much and too little. A central problem was the role played by Soviet agriculture in the economic downturn. Part of the commentary in- volved more arithmetic than economics. The agricultural sector ]has been counted as 25 to 33 percent of Soviet GNP, depending on the omission or inclusion of a land rent adjustment.1? With massive: crop failures resulting in a severe depression of so large a sector of the economy, one rnight expect the GNP to drop severely. Then it might rise even more dramatically with a good crop year. "What a very bad harvest can wreck," one observer remarked, "a quite moderate harvest can mend. If in 1964 agricultural production [in the So~~iea Union] equals that of 1961, and other things grow as they did ithis year, except that trade and light industry expand slightly along with 18 The quite large misestimate of China's economic growth during the "Great Leap Forward" period is well known. See, for example, B. B. Rebbechi, "F'ost- Mortem: The Chinese Economy;' in Studies VII 1, and Edward L. Allen, "Chines;e Growth Estimates Revisited," Studies VII 2. '? Stanley Cohn, "The Agriculhire Sector Weight in an National Product," The ASTE Bulletin, Winter 1964, p. in the U.S. GNP is only about 4.2 percent. Approved For Release 2005/02/10 :CIA-RDP78SECRE 4A000200040001-9 SECRET Index of Soviet C-rocs 13. The same sector SECRET Soviet Arms Strain ~~VV11pptt ,,qq~~r~7g }}q( SECRET Approved For Release 2005/02/10 :CIA-RDP78TU31~94A~O~L80040001-9 the increased agricultural supplies, the national income will rise by 7%." 20 It did rise, according to CIA, about six percent. The im- portant point-that the Soviet Union is faced with a problem of resource allocation-was obscured rather than illuminated by the 2.5 pert:ent growth figure.2t The general downward trend in the growth of the Soviet economy has been attributed largely to increased investment in military and space programs.22 Intelligence has taken note of the enormous costs of our own modern weapon system and space programs, which sharpest our appreciation of the economic constraints on the Soviets in simiilar endeavors. Thus the general intelligence judgment is that the Soviets are indeed faced with resource limitations and diffi- cult resource allocation choices. How much farther can intelligence go? Let us see how much farther it has gone in "Soviet Defense Expenditures and Their Economic Impact Through 1970." Quanti~~ication Two forces, a high and a low, along with the programs they imply, are costed on the basis of "a quantitative, physical description" con- tained in "NIEs and related documents." "However, because many of the official estimates were not expressed in sufficient detail or did not conform to the desired probability criteria, it was necessary to make a variety of assumptions in order to provide descriptions ade- quate ~.'or costing purposes." zs Y0 Pete:r Wiles, "CIA Bono-Reflections on the CIA's Statement of January 10, 1964, on the Soviet Economy:' The ASTE Bulletin, Winter, 1964. Y1 C f. Alec Nove, " 2 viz Per Cent and All That," Soviet Studies, July 1964, and Stanley H. Cohn, "Comment on `2Y/z Per Cent and All That,"' Soviet Studies, January 1965. ~' " .perhaps the single most important factor [contributing to the lag in Soviet productivity] is the demand of the defense program since 1958 for scarce resources and highly trained manpower." NIE 11-5-65. It is noteworthy that two US]:B agencies (one non-military) have joined in a footnote to the subsequent Note to Holders of NIE 11-5-65 and NIE 11-6-65 stating that Soviet defense spending uncertainties are "too great to support a judgment as to the general trend ol[ Soviet defense expenditures particularly in recent years:' ~g p. 5. It must be emphasized that the high and low forces are not repre- sented as limits or bounds in a mathematical sense. Yet the synthesized costs of these forces have been introduced into NIE 11-5-65 as the range of Soviet military expenditures, as we see below. Neither the systems costed nor the variety of assumptions used iti costing are described in the report. However, the basis for selection of systems is described as follows: If the judgment was that there was a probability of 75 percent that: a:n item would appear, it was included in both the high and the low "assump- tions." If, however, the probability was only 50 percent that an item would appear, it was included in the high side only, and if the probability of its appearance was less than 50 percent, it was omitted from both sides. Then a second judgment was made concerning the number of items that would be deployed. This second judgment was ranged to reflect a probability of 75 percent. The costs of the high forces and the low forces were arrived a.t "by simply summarizing the expenditures for all of the high force `assumptions' on the one hand and all the low force `assumptions' on the other." .Also, no attempt was made to take explicit account of uncertainties about the prices used in the costing exercise. This decision was governed by ;practical considerations, particularly by the desire not to obscure the effechs resulting from uncertainty as to physical posture by introducing ranges that reflect uncertainty as to cost or price. This decision should not be interpreted to imply a judgment that the range of uncertainty as to Soviet costs or pricers is sufficiently narrow that it can be ignored. ' This, on ono page, is all that is told the consumer about the forcers costed, the methods used, the reliability of the data, or the problems arising out of expressing costs in U.S. dollars and Soviet rubles. The remainder of the report is taken up with summarizing "expenditure implications" of the high and low forces, discussing the "potential impact of the expenditure series on the Soviet economy," and com- paring the "dollar equivalents of Soviet defense expenditures." We shall not try to summarize the 41 pages of text, tables, and charts. The following extract and the charts in Figure 2 are enough for an understanding of the general conclusions. A possible rate of growth of GNP consistent with the high assumption might average about 5 percent for the whole period; however, the rate for the period through 1967 might be confined to 4 percent per year. A rate of growth for GNP of 6 percent, however, would be consistent with the low assumption. 7'he empirical basis for these projections is not extensively. or rigorously developed as yet, and the Soviet economy may do either sig- nificantly better or worse than projected ~' 24 p. 17. These judgments were later introduced into NIE 11-5-65 without the qualification in the last sentence. Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 14 SECRET SECRET 15 SECRIET Soviet Arms Strain Soviet Arms Strain SECR.EIi Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 U-SSR: Comparison of Total Defense Expenditures for Low and High Assumptions of Military Forces, by Mission, 1961-70 LOW ASSUMPTIONS ~~ / EST IMAT ED AC TUAL EXPENDITU RES C RDTE&S* OMMAND & GENERAL S STRATEGIC ATTACK Pi'O RT STRATEG IC DEFENSE GENERAL PURPOSE HIGH ASSUMPTIONS RDT E & S ~''~ ESTIMAT / COMMAND & ED ACTUAL GENERAL-S EXPENDITU UPPORT RES ~ STRATEGIC ATTACK ~ STRATEGIC DEFENSE GENERAL PURPOSE %;Research, development, test, evaluation, & space programs The two charts in Figure 2, from the report in question, show t:he; implied costs of the two programs. The present writer has added they later estimated expenditures to each chart.2B It may be noticed than the implied costs of the forces with the high and the low assumpti.cros extend back before 1961; how far, one has no way of determining; from the charts. This is as one would expect, because the cost: implications of different future force levels do extend backwards iri time. There is a certain difficulty here, though. The cost implicatior.~ of the high assumption is as much as 22 percent higher than the low four years ago and becomes 45 percent higher in 1965. Now the; estimated actual expenditures curve falls between the high and low? assumptions, which seems reasonable. But logic demands that they estimated actual expenditures embrace both the high and low assuir.~p- tions in the present and past, as either of these assumed forces could. be the actual program at the time, according to the assumptions by which they were constituted. Thus the uncertainty in the estimate: of actual expenditures must be at least as large as the difference between the high and low assumptions,26 45 percent of the low in 1965. If this degree of uncertainty is accepted in the estimated expenditures which have been "straining" the economy in the past and present, what basis is there for assessing a future "strain"? Nevertheless, we find these judgments concerning the effects ion economic growth of different levels of defense expenditures appearing in NIE 11-5-65 without the qualifications (which themselves seem?d inadequate) that appeared in the study from which they were taken. Moreover, we note data on the absolute magnitude of military ex- penditures appearing without appropriate qualification. For exam- ple, NIE 11-5-65 gives for the 1964 expenditures a range from 15.0 to 19.9 billion rubles,27 but this range reflects only uncertainty about $ From "Soviet Defense Expenditures," CIA/RR MP 65-1, 2 June 1965. The data are the same as those in Figure 1. It is perhaps worth noting that this current estimate of Soviet military expenditures for recent years varies ec+n- siderably from previous estimates for the same years. ~ Not to takt; into account the further uncertainties in the costing of the high and low assumptions,'or in the high and low forces themselves. "These and other data concerning military expenditures since 1961, appearing in Table 4 on page 24 of the NIE, are taken from the study we have dust discussed. Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 16 SECRET SECRET 117 SECRET Soviet Arms Strain S vi t ,,qq SSt SECRET Approved For Release 2005/02/10 :CIA-RDP78~0~19~i~80D1~~'040001-9 the forces costed, not the costing uncertainties with which this essay is concerned. This fact is not noted in the estimate, nor does any expression of the tenuous nature of this expenditure data appear there. It is not surprising that misconceptions concerning the data arise. Summary o f Uncertainties In discussing the means by which intelligence seeks a quantified expression of Soviet economic limitations to produce advanced weap- ons, we have noticed a variety of uncertainties. It may be worth while to review them. Military budgets, representing a compromise among, contrary interests, show erratic trends. The U.S. budget has fluctuated to a very considerable extent and in an unpredictable patterrr. The Soviet budget has also fluctuated, we are quite un- certain. how much. Extrapolation does not seem a warranted method of estimating future budgets. Increments of the Soviet military budget are hidden, so that we have no "pie" to slice into mission forces or elements. The pie must be analytically created by costing assumed elements. Meaningful costs of modern Soviet weapon systems cannot be derived from Soviet economic data; most costs must be estimated by analogy with U.S. costs. The basis for analog costing appears uncertain, and the methods used may produce costs not representative of the real costs of Soviet forces, especially in the light of incomparable features of the respective forces. The method involves use of both rubles and dollars. These are not homogeneous units, and conversion from one to the other presents an anomaly which translates to uncertainty. Having arrived at dollar/ruble costs, there is difficulty relating these to some expression of straiin or economic limitation. Intelligence has enjoyed no particu- lar success in predicting GNP growth. Nevertheless it is in terms of limitations on GNP growth that intelligence has attempted to measure the impact of military programs. Use in Defense Planning It is to be assumed that economic intelligence data and judgments contained in National Intelligence Estimates, and costs of Soviet forces synthesized by intelligence at the military planner's request, are to be used in defense planning, the purpose for which they were re- quested. We should then not be surprised to find the following reasoning advanced in a certain sensitive military planning document of considerable importance: The United States and its NATO allies are spending about the same amount on general-purpose forces as are the Soviet Union and the Warsaw Pact forces.28 This fiscal equivalence is a basis for judging future necessities from a force planning point of view. If the spending is the same, the essential problem is to see to the more effective use pf the military resources, including more effective organization for employment, rather than adjusting expenditure levels to military needs otherwise determined. Comparative economic measurements involving Soviet and LT.S. military equipment and forces are appearing with increasing fre- quency in military planning documents. One finds statements like "replacement costs [of U.S. and Soviet equipment] ought to express the relative effectiveness of various aircraft," and charts relating to all kinds of forces with abscissas and ordinates labeled "Soviet costs" and "U.S. costs." In a study which combined and summarized extensive substudies undertaken by the three services at the request of the Department of Defense we find the following as a description of its focus: If the Soviets spend x dollars to create damage to the US and the US spends y dollars to limit damage, what is the percentage US population and industry surviving? ...This can be expressed in terms of exchange rates-the cost for the US to maintain a given "% surviving" per dollar of Soviet expenditure to overcome it.~' The current trend in the Department of llefense seems to be in the direction of increasing use of Soviet forces costing and more reliance on economic intelligence judgments. Indeed, this is a natural evolution in the use of systems analysis for defense planning. An objective of systems analysis is to explore or to refine successively a military problem so that marginal advantages in terms of sonic cost-effectiveness yardstick are identified and can form the basis of conclusions. Marginal utility, a concept familiar to any student of 4B The following statement is from an explanatory footnote in Memorandum to Holders of NIE 11-4-85 and NIE 11-5-65: ". [Since] the evidence is not adequate for an estimate of land armaments production [in the Soviet Union] within useful ranges of confidence, the production figures used for computing expenditures for such production were developed from assumed requirements in order to permit inclusion of expenditures for land armaments in the gross total," ~? "A Summary Study of Strategic Offensive and Defensive Forces of the US and USSR," Office of the Director of Defense Research and Engineering, 8 September 1984, p. 14 f. It should be noted that this study was distributed for information only. Nevertheless, data from it have been used as input t:o other weapon system studies. Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 18 SECRET SECRET 1.g Soviet Arms Strain Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 elementary economics, is thus a primary concern of the systems analyst. He is interested in the range of diminishing returns, and he seeks to determine where marginal advantages and points of indiffer- ence between the cost-effectiveness of alternatives should influence decision making. It is quite clear that important insights into military relationships and the tradeoff nature of various military measures may be derived throuigh using economic data in systems analysis. It seems equally clear that conclusions may, under some circumstances, be critically influe;need by inadequacies in the economic inputs. Even when find- ings ,are not sensitive to such inputs or even related to them, intuitive comparisons of economic capabilities can scarcely be avoided. In- deed, they are encouraged by the present circumstance in which data on Soviet military expenditures and costs of categories of Soviet forces appear in intelligence publications at the highest national level, often without the slightest qualification. Apart of the problem is the compartmentation of the intelligence from the planning function and a failure of communication between intelligence and the military planner with respect to the adequacy of the data. Bui: the basic trouble is not simply a matter of communication. Nor is the; difficulty of estimating Soviet defense expenditures and of understanding and measuring economic limitations wholly a matter of accessibility of data or competence in analysis. Some of it is due to the difficulty of the science of economics. Economic theory is not well developed-certainly not in a way to allow transfer of data from one economic frame of reference to another with rigor, or even to understand fully its meaning in one frame of reference. Otherwise how would it be possible for two such distinguished economists as Galbr;~.ith and Myrdal to draw opposing inferences concerning eco- nomic production in the United States from the same set of data? Von Neumann and Morgenstern, who have made an extensive effort to express basic economic relationships in mathematical form, have remarked: . we may also observe that part of the feeling of dissatisfaction with the mathematical treatment of economic theory derives largely from the fact thad frequently one is offered not proofs but mere assertions which are really no better than the same assertions given in literary form. Very frequently the proofs are lacking because a mathematical treatment has been attempted of fields which are so vast and so complicated that for a long time to come-until much more empirical knowledge is acquired-there is :hardly any reason at all to expect progress more mathematico.'? '0 John Von Neumann and Oskar Morgenstern, Theory of Games and Economic Behaninr (Princeton: Princeton University Press, 1953 ), p. 5. Approved For F~~~RET In the making of wine, more pressure on the mart may not improve the product. It may be that squeezing harder the available Soviet economic data, or the economic intelligence analyst, will not achieve the kind of product envisioned by the requester. In fact, it may not be too murh to say that the pressure has already been excess:ivc, judging from the product. At least it may be time to consider the matter. Some Recommendations It would seem that the expectations of Defense consumers concern- ing the usefulness of economic intelligence on the Soviet Union ir- force planning are quite high and the prospects of satisfying thE;se: expectations quite low. But, far from being informed that the pr~os~~ pects are low, the consumers are being provided data on costs of Soviet forces in NIEs and other intelligence products in a way that. can only create misapprehensions concerning its precision. It may be that some Defense consumers have already been extensively misled concerning the basis for intelligence-supplied data on Soviet military defense expenditures, judging by their statements quoted above and others making use of it. It has been included in weapon system studies in the Pentagon, and there is every indication that it will continue to be used in such studies and accepted at face value. It would be invidious to imply that those doing the economic intellli- gence analysis do not understand the limitations of the economic figures appearing in finished intelligence. Yet these are not suitably qualified when cited in estimates and studies, and no coherent, or- ganized statement of their limitations has Rather, when requirements for such data are voiced, intelligence uncomplainingly (and unqualifyingly) seeks to meet them. Why this is so cannot easily be understood outside the framework of a group of dubious proposi- tions about the relationship of intelligence to planning ensconced in the folklore of the business. But if this analysis of the nature and uses of economic intelligence on Soviet military forces is not com- pletely awry, it is clear that the intelligence consumer is ill served by the resulting products. ~` Moreover, there exists no study elaborating the methods by which such data are derived, so an independent evaluation of their precision could be made. E h ven t e ruble-dollar ratios employed have not been published. 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET Appro?vedtFor~elease 2005/02/10 :CIA-RDP78T03194A000200040001-9 Direct and analog methods o f deter- mining what foreign countries spend on atomic energy for military and peaeejrul uses. For intelligence, three conclusions suggest themselves. First, there appears to be an important need for a comprehensive statement about the precision of costing Soviet forces and the limitations of economic intelligence judgments made an the basis of such costing. This could take tine form of a published study on methodological problems in the production and use of economic intelligence and might include a detailed examination and assessment of the confidence limits of various categories of data. The importance of such a study suggests .that it might be published under the aegis of the USIB. Second, there should be a serious reconsideration of the utility of including costing data in National Estimates and allied documents. This is not to say that study of the problem of deriving a mission breakdown of Soviet defense expenditures precise enough to be useful should not be continued. But it is a serious question whether synthesized data for which there is no direct evidence should be certifif:d by inclusion in National Estimates and accorded the stature of national intelligence in planning. Thvrd, if such data is included in NIEs, it should be properly quali- fied, even if the qualification destroys or greatly reduces its utility to the Defense planner. Possibly it should also be cross-referenced to other papers which more extensively discuss and qualify it. It should be a rule of intelligence that information be set into a context that, at a minimum, accords the consumer an appreciation of its limits, of what is not meant as well as what is meant. There seems to be a principle analogous to Murphy's law in industry s2 which states that ii' intelligence can be misinterpreted, it will be. Of course these three conclusions imply a fourth. A concomitant study by the planners themselves of the uses of economic intelligence in deiEense planning in the light of problems associated with its pro- duction might be worth while. It might be found that Soviet defense expenditure data received by DoD from the intelligence community does not have the character anticipated when it was asked for-or the utility. It is in the spirit of systems analysis that there should be an evaluation of alternatives in analysis methods as well as in what is analyzed. It seems clear that there is a set of potential uses of economic intelligence in defense planning for which the presently produced data are not satisfactory. There may be a set of uses for which such data, produced in the form of assumptions, may prove satisfactory. In any case, the utility of presently produced economic intelligence should not be a matter of presumption. ~' Murphy's law: If a machine cnn be assembled wrong, it will be. How much has the Soviet Union, Communist China, or France spent on its nuclear program? What is the cost of the French gaseous diffusion plant at Pierrelatte or of the nuclear test site in French Polynesia? Is the allocation of funds for these installations proceed- ing on schedule? How much has West Germany spent on what facets of nuclear research and development? What would it cost India, Israel, or Japan to convert its present program for developing nuclear electric power facilities to production of nuclear weapons? The intelligence community is frequently called upon to supply answers to questions such as these for two primary reasons-to gauge the burden nuclear programs impose on the economies of the countries concerned, and to compare the sizes of different countries' programs. Attempts to measure the economic burden are usually related to the question whether cost is apt to deter a nation from undertaking or expanding a weapons program. Analysis for this purpose of the pattern of spending also reveals much concerning the nature a.nd probable rate of development of a program. Cost and rate-of-ex- penditure studies constitute a useful approach to these problems. Comparison of the size of different countries' nuclear programs is a less cogent reason for estimating costs, and cost comparisons of this kind must be interpreted with great caution. Comparison of probable capacities for production of nuclear materials is the direct and more appropriate way to get at the relative size of nuclear programs. Size can be measured in megawatts, quantities of plu- tonium or uranium-235, or numbers of weapons without involvement in complicated problems of monetary conversion. Conversion. re- quires extensive studies of materials, manpower, wages, and pro- ductivity in the nuclear industries of the countries compared, and the requisite data, as well as the tune, for these are usually lacking. Approved For Release 2005/02/10 :CIA-RDP7S$ETORET 4A000200040001-9 SECRET CC SECRET Nuclear Costs ~~~~,,~~`` Approved For Release 2005/02/10 :CIA-RDP78~~~~~AvUVZ00040001-9 There are two distinct approaches possible in estimating the cost of a foreign nuclear program. Both are quite useful if their limita- tions are kept in mind and they are not used to answer the wrong questions. One is the straightforward "documentary" method of examining data made available either by open sources in the country in question-official budgets, press releases, journal articles, parlia- mentary debates-or through clandestine procurement. This method is particularly well suited to gauging the burden the nuclear program places on the economy. The costs thus obtained, being stated in the country's own currency, can easily be measured against native yardsticks such as gross national product and national income to determine the share of national resources being devoted to the nuclear efforit. It is not well suited to comparing the size of the foreign program with that of the United States, because of the monetary conversion problem. And it is not always practicable: the required documentary data may not be available. The other method is to estimate by analogy, i.e., to start from what it would cost the United States to build and operate the facilities known to exist in the foreign country. This method, if carefully applied, provides a basis for comparing the size of the foreign nuclear program with that of the United States; it is not well suited to determining the burden imposed on the foreign economy. One of its obvious difficulties is imperfect knowledge of what is inside foreign plants protected by strict security measures. Photographic and other types of technical intelligence are useful in identifying the nature, and perhaps the capacities, of the plants, but estimates of their internal layout, equipment, and processes can at best be educated guesses. But these guesses must remain the basis for estimating cost by U.S. standards. Moreover, even an accurate figure for what it would cost for U.S. itechnicians, working at the present level of U.S. scientific and technical knowledge and with the resources of U.S. industry at their and industrial support. The problems are well illustrated in the caste of the French gaseous diffusion plant at Pierrelatte. The official French estimate of the cost of this plant is now 5,037 million francs ~ ($1,028 million at the current rate of exchange), and unofficial e:st:i- mates have placed it at 6,000 million or more a (about $1.2 billion ). This is about erne-half of the $2.3 billion the United States spent for three gaseous diffusion plants, each of them much larger than the Pierrelatte installation. It is true one should take into account the huge economies of scale achieved when the initial problems have been solved and unit si:ze,s are increased. This can be attempted by using the cost of early II.S. facilities roughly equivalent to Pierrelatte. In the late 1940s we puit $500-$600 million into such facilities; adjustment to present-day prices would bring this up to the neighborhood of $800-$900 million. So even with this adjustment Pierrelatte will cost from 25 to 50 percent: more than t:he analogous U.S. plant, not counting savings for the latter that ~~ould result from improvements in technology since the 1940s. It is evident that a price tag put on the Pierrelatte plant on the basis of what it would cost the United States to construct such a facility i:oday, at the present level of U.S. technology, would be so low as to be very misleading. Since gauging the burden on the economy is the principal reason for estimating costs, the analog method should be used only whc;n lack of documentary material makes it necessary. Failure to keep in mind the limitations and proper orientation of the two methods has sometimes led to confused interpretation and unfortunate com- parison of their results. When some documentary information is available but is an in- sufficient basis for an estimate, analogy may be used as a supplement. Facilities in the country under examination may resemble facilities of known cost in some other country. The known costs, adjusted for evident difference in size or conditions, provide at least something to go on in the absence of hard data. The effectiveness of this mixed command, to reproduce and operate the foreign facilities may have Doc. No. Nationale, Premiere Session Ordinaire de 1963-64, little relevance to the question of what It is Costing, in terms Of man- Ra ort F it N pp a au om de la Commission des Finances, .. ,sur le Projet de Loi hours and material, for foreign technicians to construct and operate de Finances pour 1964, Annexe No. 37, Rapport sur les Credits du Ministere des them in their own economies with quite a different level of knowledge Armees (Annexe au proces-verbal de la stance du 9 Octobre 1963), p. 40. 'L e Monde, 4 Dec 64, p. 2. Approved For Rg~.2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET SECRET Nuclear Costs e: ~~ C Approved For Release 2005/02/10 : C1A-RDP78T~~'~4A~~~200040001-9 SECRET method depends on the ratio of documentary information to analog derivatives and on the comparability of the analog countries in eco- nomic, scientific, and industrial development. Circumstances, how- ever, frequently make it the only practical means of estimating the burden imposed by a nuclear program. These different methods can be illustrated in their application to the nuclear programs of different countries. The iDocumentary Method: France Thc; French case will illustrate the documentary method and also highlight a number of problems encountered in analyzing the cost of nuclear programs-isolation of the military part of the costs, the allocation of joint costs essential to both military and peaceful uses, and i:he forecasting of probable future expenditures. Work was begun on the case soon after the first French nuclear test in February 1960, with the objective of gauging the burden the program imposed on the French economy. A wealth of scattered documentary material was found to be avail- able.3 Data painstakingly assembled from open sources, supple- mented by occasional documentary material clandestinely procured, have ;afforded a reasonably clear picture not only of total annual and cumullative costs but of the allocation of funds to different kinds of activities within the program, to various individual installations, and to capital investment and operating expenses. Summation of published historical data indicated that by the end of 19Ei4 France had expended some 19 billion francs ($3.9 billion at the official exchange rate '~) on its nuclear program since it began in 1946. The annual expenditures grew from about 5 million francs in 19916 (all in the budget of the Commissariat a 1'Energie Atomique 'Among the more important source materials were the annual reports of the Commissariat a 1'Energie Atomique (the French atomic energy commission) and of Electricitc de France (the nationalized power industry ), official press releases, budget data published in the Journal O fficiel de la Republique Frangaise, com- mittee reports contained in of&cial documents of the French National Assembly, press coverage of parliamentary debates on appropriations, and articles in numer- ous professional and trade journals. `On 1 January 1960 a new franc equal to 100 old francs was introduced. Cost data in old francs were converted to new francs at this rate. Dollar comparisons use the official exchange rate of 1 new franc=$0.2041. at that time) to more than 5 billion francs from all sources in :1964. The sources of funds for the whole period break down as follows: PERCENT CEA budget, loans from the Fund for Economic and Social Devel- opment, and income from sales of nuclear products ......... 52 Appropriations for "The Atom" in the Defense budget ......... 34 Investment by Electricity de France in nuclear power programs .. 8 Other: Operational expenses of EDF connected with nuclear power programs, budget allocations to international agencies, transfers from the Ministry of Public Works, and investment by private Only about 1 percent of this "estimate" of cumulative expenditure involved any estimation whatever. That amount was necessary ~to fill in gaps .in some series in the "other" category. The rest is simply a summation of published data. But the 19 billion figure must lie regarded as a conservative estimate because it does not include soiree expenditures for international cooperation, expenditures by the mili- tary services from their operating budgets, or more than a small fraction of the investment by private industry in new materials and equipment. We know that such expenditures have been made but have no adequate basis for quantifying them. The method by which the total expenditure was built up is illus- trated by Table 1, covering the period since 1960. The program has grown progressively more expensive as a result of its expanding siee, generally rising costs, and greater emphasis on military aspects. Table 1 Expenditures on the French Nuclear Brogram 1960-fi5 (millions of francs ) 1960 1961 1962 1963 1964 1965? Payments from CEA Fundsb ... 1,071 1,173 1,332 1,472 1,727 (2,186) Payments from Defense Budget ? ? 322 570 769 1,646 2,536 (3,135 ) Other ......... ............ 288 306 401 483 573 (600) Total ..................... 1,681 2,049 2,502 3,601 4,836 -_ (5,921) ' Appropriations in CEA and Defense budgets. "Other" funds carried at approximately the same rate as in 1964, with allowance for planned increase in expenditure by EDF indicated in Le Monde, 21-22 Feb 65, p. 10. ? 1960-64 CEA, Rapport Annuel, 1964, p. 180. 1965 Budget, Le Monde, 10 Nov 64, p. 10. Footnotes continued on Page 28. Approved For RSECRET2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET Approvec~'For ~2e~'ease 2005/02 1961)-81, 1984, Le Monde, 17 Jul 84, p. 9. 1962-63, State, Paris, Airgram A-3094, 6 Jun 83, pp. 10-11. Industries Atomigrees, 1/2 1963, p. 93. 196;i, Assemblee National, Rapport Fait au Nom de la Commission des Finances sur le Projet de Loi de Finances pour 1965, Annexe No. 37, Budget des Armes, Titre V-Arrnement, Equipment (Annexe au proc~s- verbal cle la stance du 13 octobre 1964), p. 10. ? ED:F investment from: Ambassade de France, Service de Presse et d'Inforrnation, N.Y., France and The Atom, Jun 82, p. 16; EDF Rapport d'Activl e, Comptes de Gestion, Exercise 1961, p. 11, Exercise 1962, p. 11, Exercise 1963, p. 13; and EDF Travaux d'Investissement, 1964, pp. 4-6. International Cooperation from: Ambassade de France, France and the Atom, p. 16; State, Paris, Dsp. 742, 15 Dec 1981; Industries Atomiques, 1/2 1963, p. 93; Le Monde, 26 Jan 1963, p. 22; ibid, 10-11 Nov 1963, p. 2; Journal O~iciel, 22 Dec 1963, p. 11516; The New York Times, 20 Dec 1963, p. 6; State, Outgoing Airgram CA-2313, 29 Aug 1962, pp. 7-8 of attach- ment; ;hate, Vienna, Airgram A-247, 23 Aug 1963, pp. 6-7 of enclosure; State, Vienna, Airgram A-570, 27 Nov 1963. Transfer from Ministry of Public Works: State, Paris, Dsp. 742, 15 Dec 1961. The small remaining portion of the "other" expenditures came from scattered references pertaining to expenditures by private industry. These annual costs were then related to the French gross national product at current market prices, as in Table 2, to provide an indicator (admittedly imperfect) of the burden on the economy. It was con- cluded that in spite of sharp increases in costs the nuclear program is well within the capabilities of the French economy. Table 2 Costs of French Nuclear Program Related to GNP 1960 1961 1962 1963 1964 1965 Gross National Product at Current Market Prices (millions of francs) ? ......... 29G,223 319,689 356,299 391,837 424,700 453,000 Total Expenditures on Nuclear Program (millions of francs) 1,681 2,049 2,502 3,601 4,836 5,921 Expenditures on Nu- clear Program as Percenit of GNP ... 0.6 0.6 0.7 0.9 1.1 1.3 `1960-63 Republique Fran~aise, Ministere des Finances et des Affaires Econorniques, Institut National de la Statistique et des Etudes Economiques, Annuailre Statistique de la France, 1964. Paris, Imprimerie Nationale, p. 479. 1964 (Preliminary) State, Paris, Airgram A-1228, 2 Dec 1964. 1965-Estimate. 1 ~ :CIA-RDI~T>~~31`~4A000200040001-9 The Military Share Intelligence has been asked what portion of these French expendi-~ tares went for the development of nuclear weapons. The 19 billion total through 1964 includes, besides expenditures of a purely military character, funds spent on research for peaceful uses, on international cooperation, on electric power production, and on activities essential to both the military and non-military portions of the program. We start with the obviously military appropriations for "the atom" in the defense budget, which we have seen to be about 34 percent of the total, or about E;.5 billion francs. But this is not the entire mili-~ tary share. The CEA annual reports described the defense budget funds as intended "to cover the expenditures of a most immediate (or direct) military character." That this does not apply to all expenditures for the military nuclear program is confirmed by the fact that investments in facilities known to be exclusively military exceeded total appropriations for "the atom" as of the end of 1963. Then how much of the 12.5 billion francs from non-defense sources can appropriately be regarded as military? One can eliminate ap- proximately 2.5 billion expended for clearly non-military purposes. This figure includes funds for international cooperation in nuclear development and investment by Electricite de France in equipment for 'nuclear power stations. (Exclusion of the latter might be de- bated on the grounds that such stations could produce plutonium. ) The remaining 10 billion francs must be regarded as joint costs of military and non-military projects. Allocation of these funds to military and non-military categories was extremely difficult. A study was made of allocations to such categories as administration, research centers, exploration and mining, ore concentration plants, feed materials and fuel element fabrication facilities, the gaseous diffusion plant, and development of new reactors and chemical separation facilities. The allocations to specific func- tions were derived primarily from monetary and manpower data available in French documents. As in any attempt to allocate joint costs, a great deal depended on assumptions cancerrung each type of activity. In the end, it was considered that another 6 billion francs might properly be charged to military aspects. Adding this to the amounts from the defense budget gives a total of about 12.5 billion francs, approximately two-thirds of the total expenditure, associated with Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 28 SECRET SECRET 29 ~~II Nuclear Cosfs SECRET SECRET Approved Forl~2eleases2005/02/10 :CIA-RDP78T03194A000200040001-9 the military side of the nuclear program through 1964. This figure includes funds for both capital investment and operating expenses. Of the 12.5 billion francs spent on military aspects of the program since 1946, some 9.8 to 10.8 billion were spent during the period 1960-64, after the successful test in February 1960 spurred plans for the creation of a strategic nuclear force. Payments charged to de- fense budgets accounted for about 5.8 billion of this, as shown in Table 1, and the military share of joint costs during this period has been estimated at approximately 4 billion. The additional billion in the higher figure is designed to take care of expenditures from the regular operating budgets of the armed services that are asso- ciated with the development and testing of nuclear weapons but not identified as expenditures for "the atom:' The cost, for example, of army, naval, and air transport of personnel and equipment, the salaries and maintenance of military security details, and the cost of military participation in testing or in the development of weapons or propulsion systems cannot be quantified precisely but should be counted. Futn:re Expenditures Firture expenditures on nuclear programs have in general been estimated on the basis of the past trend in total annual expenditures, what is known of plans for investment in new facilities, estimates of their probable operating expenses, trends in operating expenses at existing facilities, and past relationships between capital invest- ment and operating expenses. Early in 1963 figures for future ex- penditures on the French nuclear program as a whole were derived by ]projecting the 1962 budget authorizations ? for the program at 6 A. Projet de Loi Programme Relative d Certains Equipments Militaires of 8 December 1960, which scheduled funds during the years 1960-64, has come to b~? called the "Program Law," or "First Program Law" now that a "Second Program Law," approved by the French Parliament late in 1964, provides for continuing the development of the strategic nuclear force during the years 1965-70. Intelligence estimates frequently compare the period of the first pro- gram law with the future. e A/Iuch of the work done during 1960-62 on the costs of the French program was based on authorizations rather than actual expenditures because data on expenditures then available did not permit a breakdown as to either source or allocation of funds. Inasmuch as unallocated authorizations are simply carried over to the next year, the lag in expenditures was not a serious handicap in measuring costs over a fairly long span of years. Since the middle of 1963, however, estimates have been based on expenditure data; even the estimates for earlier years have been recalculated on the basis of additional expendihirc data now available for those years. Approved For Release 2005/02/10 SECRET 33 percent increase per year; the average annual increase in au- thorizations from 1958 through 1962 had been about 35 percent. The: figures thus obtained were found to be roughly comparable to those; derived by adding up probable investment in planned projects andl probable increases in operating expenses. Now that what was future at the beginning of 1963 has become: past history, we have an interesting opportunity to compare these projections with what happened. We find that authorizations pro- jected for 1963 and 1964 fall in the range between the actual au- thorizations and the expenditures for those years, as indicated in the following tabulation (in billions of frances) 1963 1964 1965 1966 Actual authorization .... .. 4.5 ........ 5.7 5.6` b ro Projection (early 1.963) :.. . .......... 4 5.3 7 9.3 xp Actual a enditure ................ 3.6 4.8 .9` ` Preliminary. Based on budget data. ? Revised at beginning of 1964 as follows: 1965-6 billion; 1966-7 to 8 billion. The authorizations projected for 1965 and 19Ei6 will undoubtedly prove less accurate. Budget data indicate that expenditures in 1965 will probably be only about 5.9 billion francs, and in 1966 it appears they will be in the range of 6 to 7 billion francs. The margin of error on any forecast tends to increase as the projection moves farther into the future, and it was recognized from the outset that the projected levels of expenditure might not be achieved until later. They have, however, been useful as an approximation for the latter half of the decade. For the military part of the future nuclear program one begins with the 3,135 million francs appropriated in the 1965 defense budgc;t. To this, if it is assumed that the military share in joint costs will be as high in 1965 as the estimated annual average for 1960-64, can be added 800 million to give a total of 3,935 million francs. This estimate based on appropriations is probably conservative, because in recent years expenditures have tended to run higher than initial budgetary appropriations. Moreover, as the military program in- creases in size, the military share of the joint costs should really rise over the average of the past five years. Through 1967, from what is known of plans for investment and weapons development and past relationships between investment and operating expenses, the military expenditures should continue to rise. Completion of the Pierrelattc plaint and the test site in the Pacific CIA-RDP78T03194A000200040001-9 SECRET Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 SECRET Nuclear Cosfs =.~,~r Nuclear Costs StC.rtt ~ alone account for some 4.5 billion francs, according to authoritative French sources. Adding the heavy expenditures for weapons testing, construction of facilities for? production of lithium 6 and tritium, con- tinued development of a nuclear submarine propulsion system, com- pletion and operation of the plutonium separation plant at Cap de la Hague, and increased operational expenditures in general, it was estimated that the 3.9 billion figure for 1965 would increase to 4.9 billion in 1967, giving by interpolation some 4.4 billion francs for 1966. With the completion of a number of important facilities about 1967, annual expenditures on the military program could conceivably de- cline. It was estimated, however, considering the cost of operating the new facilities and further development of weapons and propulsion systems, that they are more likely to remain at a level o# about 4.9 billion francs per year through 1970. The sum of the annual amounts then gives a total of 27.9 billion francs, or at the official conversion rate about $5.7 billion, for the six-year period 1965-70. To this $S.7 billion, rounded to $6 billion, which has become the central figure of the intelligence community's estimate, was attached a margin of error of plus or minus $1 billion, or nearly 17 percent, a range which is considered sufficient for about 95 percent confidence. The lowex limit of $5 billion would assume very little increase in annual expenditure above the 1965 level. Some increase is almost certain. The upper limit of $7 billion allows for an excess of expendi- tures over authorizations in the Second Program Law, possible in- creases in the military share of the joint costs, and service expenditures that are connected with the nuclear program but not so identified in budget accounts. Analog Method: China The casts of the Communist Chinese nuclear program have been estimated entirely by analogy, because very little useful documentary information is available. Documentary materials and official public statements have helped to identify and describe some of the facilities, particularly some of the early research facilities, but have given no indication of cost. Most valuable in identifying and describing the nuclear installations has been Nationalist aerial photography. Once the Chinese installations are identified and described, they have been related to roughly comparable facilities in Western coun- tries as a means of estimating costs. For example, photographic evidence suggests that the Chinese reactor at Pao-t'ou is very similar to the G-1 at MarcouIe in France. Information released by the French CEA in 1960 indicated that the ?~riginal cost of the G-1 reactor was 8 billion (old) francs, approximate~'~ty $I6 million, so the one at Pao-t'ou was estimated to cost $15 to $~ mnlhon_ Estimating thus on the basis of rou~ly comparable Western facili- ties, it has been concluded that b~; late 3964 the Chinese Communists had invested at least $500 to $6G~~0 miI3ion in their nuclear program, including the substantial Soviet ~ ants for equipment and technical assistance prior to 1.960. If the ratio of capital investment to total expenditure is roughly similar to such ratios in some Western coun- tries, the total cost of the Chine:~e prt~~r-am through 1964 may have been about $1 billion. At a gTaess, ~e operating expenditures in 1964 could have run $50 to $ ~ 3 minion. These cost estimates, made on the basis of very sketchy information, are less precise than those on anv- other c?ountry's program. Moreover,. the dollar total is undoubtedly a_-~ inacequate measure of cost to the Chinese economy in terms of scsr-ee technical talent, materials, and industrial capacity. It is, howe~: er, L line with costs elsewhere in the world; our estimate of obviously an attempt to confuse the issue at the very time that a conference in the; Vatican was discussing the possibility of evacua?? tion.e This ball was bounced back and forth across the Atlantic for some time. On Washington's birthday, by coincidence, "Fritz" penned a hasty birthday card to Walter Schuepp with hearty greetings for "you and. Ernst." He apologized that some child had run a line of play typing down the side; it was the only card he had. The line of gibberish, deciphered from Kolbe's private code, was a flash warning that "Tolland of OWI in Ankara is discussing defection to Germany with -_ e X-2 memorandum 11 March 1944. This and other X-2 memoranda cited can be found under Central File 32858 Box 6. Approve CONrFIDEN7I~L 005/02/10 ..,:, k -RDC70>~T03D1 NAOAL0200040001-9 George Wood Approved For Release 2005/02/1 Consul. Wolff in Ankara." Although the card was unfortunately delayed in transit for over three weeks, and OWI, moreover, com- mented openly only that it had no employee named Yolland, this bit of ingenuity was apparently suc- cessful. Edgar H. Yolland, whom OWI Ankara had fired the preced- ing August, was given a German passport on 3 April but could never get an exit permit because of U.S. pressure on the Turks. Another envelope reached Walter Schuepp first, one enclosing a smaller envelope well sealed and marked "Please speed securely to Ernesto." Inside were four densely scribbled pages of letter and a small typed slip which suggested that a magnifying glass be used on the script, listed the personnel of the Abwehr station in Switzerland, and gave several other items of information perhaps chosen because they were heavy with names and num- ~~~~:- ~~, 3.;., ~.,~ - ~~ ,.......a. l bers. The letter proper, dated 6 ~ ~ ~~,~ ~ aye; knowledgement signals: on a post ~~~ ~+".a. ~.P ~ ~ ~ { ~ ~ %~ card about winter sports arefer- ~~ ~~!~~~ ~" ~~. ence to three ski jumps would mean ~)~t ,,/,y3'~..~ ~,~ ~~ receipt of both this and the Feb- "~' U ~}' '"f**'~~~ ruary letter as well as the birthday card; a boast that the writer is no lon er a be inner would mean that y '~~''`~ y~ . ~ ~_.~ ~ ~ ~ r~,?+~-.- , ~ ~ ` f' ~,. ~-~? ~~"""""~ ~ ~~ Georgge Wood CONFIDENTIAL IA-RDP78T03194A000200040001-9 he had deci hered the birthda ~~ ~ ~ ~ _"` ~`~'- ~`*'s'''~0'`'~ card; a remark on the fine weather '~.-YF ~ ~/~4 c, ~t?~.ti ~-,,-~.?,. ,~n,~,yv. would mean the reports were use- ~ ~'~drn ~,,H;, ~f~, ..,.,, r~,,~;,,;,,~~`~,~,, ful. The information which fol- ,-~~;,.,,,~ ~ ~~~~~. ,~ lowed was again cast in the form , , of a ?world survey by country. +~-'~~x>. , Kolbe :himself was impressed with its quantity, and perhaps the dif- ficulty of reading his semi-shorthand; he closed, "Poor fellow who has to read all that! I had real good opportunities, and I didn't waste any of them." For further communication he said he might be sending a friend or even two, or he might send a new or old garment or pair of shoes-"Please take them apart yourself!" He hoped to get there in person in April. Kolbe was presumably sent the acknowledgement signal meaning that his reports were very useful; but in Washington, at least, what with severely limited distribution, diluted source description or none at all, and the distortion of paraphrasing, one wonders whether they were. An OSS procedural notice dated 24 March 1944 says that the reports (except: those of counterintelligence import) are to be "dis- seminated with the explanation that they are unconfirmed and that we are desirous of .comment on their authenticity. Source will be concealed ...' Moreover, the only dissemination outside OSS (except to Special Branch MIS, which gave them no dissemination) was still to Berle in State, and that only after Special Branch evaluation. As for the counterintelligence items, one only hopes most of them were better handled than one in this 6 March letter that can be tracf;d through the cable files. Kolbe had typed, "Swedish Lt. Col. Count Bonte has assured the German Abwehr representative that agent Sehrott can go on working undisturbed." So on 22 March (at last) X-2 cables OSS Stockholm, "Does the following information have any significance to you? It has been reliably reported that a certain Swedish Lieutenant Colonel Bonte (possibly Bonde) has informed Abwehr that there should be no interference with an agent named Schrott," and Stockholm cables back that Bonde is head of Swedish counterintelligence but the report about him "is completely incom- prehensible to me." End of investigation, apparently. Breakthrough On Tuesday of :Holy Week, 11 April, Dulles cabled that "Wood" had arrived "with more than 200 highly valuable Easter eggs." (Washington cabled back, "What a bunny.") He also brought an oral report that ran to seven pages on subjects ranging from German speculation about the time and place of invasion (and Kolbe's own recommendations for it) to chrome ore shipments and oil production. On 20 April, while this ocean of information was still being cabled in (it took nearly three weeks), Washington raised for the last time the possibility that the whole thing was "some kind of a plant" in spite Approved For Release 2005/02/10 :;GSA-RDP78T03194A000200040001-9 CONFIDENTIAL. gl CONFIDENTIAL George Wood Approved For Release 2005/02/1 of the "increasingly significant character of the data, propor- tionately more damaging to German interests:' Dulles in reply reit- erated his conviction of the authenticity of the material, Kocherthaler's integrity, and Kolbe's bona fides, and pointed out that if some grand deception had been planned the last batch would. have been the time-'with the invasion imminent-to do it. The British had just completed an exhaustiv~> :purvey of all previous reports from Kolbe which concluded tba: only 4% of them were in- ' accurate, and they received the ~ latest with enthusiasm.10 But the real breakthrough of the C flril material was with Special Branch MIS in Washington, and what did it was telegrams from the German mili- tary a:nd air attaches in Tokyo, Generals Kretschmer and Gronau. They had been given an inspection tour all around the southern periphery of Japanese-held territory, and these were the reports of their observations. On 6 May, in a nine-page unsigned memoran- dum,l' the Special Branch explained why it had the responsibility for disseminating the Boston Series (cryptanalytic potential), why it had not disseminated any hitherto (stale, second-hand), and why it was disseminating these (authentic) ; and it graciously promised that "if further reports of the Boston Series prove to be of interest, they will be disseminated." They now went to a "top list" of eleven high officers in Washington. It had taken almost nine months of produc- tive penetration into the enemy's foreign ministry (from our view- point; of desperately dangerous activity from Kolbe's) to come so far as this. Kolbe had suggested that messages could be got to him through the personal columns of the London Times, which he always received a week after publication. In emergency they could be broadcast by the BI3C; the 10 p.m. and midnight newscasts were agreed upon, and the code salutation "Peter Peter." But when the need to send a mes- sage came, Dulles used another device. On 26 April Washington had cabled "particular felicitations for the Japanese data. The mili- tary people involved are most appreciative. Far Eastern in- formai;ion is the most highly desired next to any hot invasion ma- terial."' This priority was conveyed to Kolbe by a post card to the effect that a friend who kept a shop in Bern was having trouble pro- '? X-:: London War Diary II p. 94. "Filed under Wash-Drr-Int-11. Approved For Release 2005/02/10 CONFIDENTIAL Georgge Wood A-RDP78T03194A000200040001-9 curing certain Japanese goods which were much in demand and wondered if perhaps they were available in Germariy,1z Kolbe had said that Dr. Bur would arrive shortly and call on Kocherthaler, identifying himself as Dr. Jean. He was doing research on the use of color film for medi- cal purposes, and it would be easy for him to bring in undeveloped rolls of document negatives dis- guised among his own supply. Somehow this plan fell through, and it was another six months be- fore film became the tions medium. In the meantime Wood sent s:ix letters through the now standard Schuepp-Kocher- thaler channel, with slight varia- tions. He had, however, been told that documents proper were much more valuable than the gist of them yin ~ir ~tschz>~m K_ut: ,;tenden, Bu~l~'n- i^n ~l~s OrenCen dar Dtscnen B,~^., in d.'XricC, ^'n?vt.raten wldersL nnd:e babe. Bnlabnnow er~i- ~.~ =orl ei ?n, dtee sei r~ _ ~r r^rt.nm, ',tc yA'SensreC. note zu kelnemrZettpunkt 31e ?, 1;u1P. oer, re:trnnc-~t, in .len Kri sC peCon tiussl zutreEen. SnrA CO~ln nenr~ dies erstnunt ur Ker.ntnis, Bn1C? Gcsnniter sci??ien von llnterpnl- tun> ~~enr nerriosict uni Halt :Lie versi cn=ren- a.~s ri;r rne~i~, - J~3^erell> >o lane^ 1f,?~ Hri-"C`-1rC;, e.n for_ruv.r.n inchen Prcnt .,_.~.. nndcrt: ~) Stn~tsFt'~s. ~l ch_z r Bes: N~.:3^4St ~inhaln 7t s, ~~-=In^:? Gn`_t in uni 5e- ? zz~. Pr~,n. wrapped in a survey of the world situation, so these letters contained a higher proportion of verbatim texts, either copied (mostly in script, some typed) or clipped from the originals, with his notations on the back and in the margins. Resistance and Reporting The first of these letters, dated 10 May, was brought directly to Kocherthaler by former Consul General Mackeben, now a private busi- nessman. He is more or less of our leaning, Kolbe wrote, it's a ques- tion of taking the last step. He doesn't know what's in the letter but: is willing to bring back a package. If you're pleased with my work. send Nescafe and cigarettes. I'll smoke them myself, so let there lie something in them. The package will not be subject to inspection at "That the card was actually sent at this time is not certain; Wood's subsequent communications do not particularly reflect the priority. The Special Branch memorandum of 6 May said that procurement of the Tokyo attaches' reports had been in response to an earlier request for Far East material; but if this were the case Dulles would not have been likely to cable them in only after almost all the European material had been sent, more than tyro weeks after receivir7G them. ~RDP78T03194A000200040001-9 CONFIDENTIAIL CONFIDENTIAL George Wood Approved For Release 2005/02/1 the border. If you don't want any more material send a pair of shears. He said the Swiss in Berlin were refusing him further visas and asked whether D&M Co. could help and to let him know. Maybe he could get to Stockholm or Madrid. Or could they use the Unter- Ehnheim contact, sending someone with the password "Strasburg goose liver"? He declared his resistance circle was making progress, but it was frantic work. "In a few days I may have another chance to send a letter. I'll use it even if, like this, it's in the wee hours of the morning and after an air raid. Excuse the uneven style ... I'm so busy I don't know what I'm doing. A frightful life. Even my girl friend of many years complains that I don't have time to bother with her; yet I'm very fond of her." Fatigue apparently sharpened his impatience with the lack of evident results from his work: transmitting details on the wolfram smuggling still going on from Spain, he wrote, "When are you going to wake up?" A reply was drafted, to constitute the "something" in the cigarettes, suggesting that if he used the excuse of having to see his father-in-law, a Dr. Schoop, in Liirich to further his divorce they might be able to help with the Swiss visa. But on 20 May, before it was dis- patched, Kocherthaler got a telegram: "PLEASE NO CIGARETTES. GEORG." In the next letter, 27 June, Kolbe apologized for any dis- quie1t the telegram may have caused: "But it looked really dangerous. These haven't been nice days for me. Now suspicion seems to have been dissipated." He again suggested a message in the Times or over the :BBC. Then after the 20 July attempt, "... Dr. Sauerbruch has riskily-but, it seems and I hope, successfully-interceded on behalf of the condemned former Counselor Kiep. Heads are rolling for fair here novel Von Mum has been executed. Gordeler is to be ar- rested at once; I'll try to warn him. Sauerbruch thinks we're all done for and that's especially true for him and me. Perhaps he's right." In. August, inmingled with copies of Foreign Office telegrams, he wroi:e, "I am keeping my resistance movement alive, in spite of 20 July. The thing now is to improvise, not organize.... This is the way I figure it. The Russians will drive to the Oder. At that time the Amc;ricans will land parachute troops in Berlin.... On the critical day I'll be in position with from 30 to 100 men. Can't I get by radio Approved For Release 2005/02/10 Georgge Wood A-RDP78T03194A000200040001-9 advance word on when and where? Peter, Peter, say on the 9 p.m. cast? I am the only one who knows my plan in detail; I haven't let anyone in on the secret." When he finally got to Bern again, Dulles and Mayer urged him to give up his participation in resistance schemes. He had just barely missed attending a meeting of the conspirators before 20 July where a list had foolishly been made of those present which afterwards fell into the hands of the Gestapo. What he was doing for the Allies, Dulles told him, was far more important than anything he could personally accomplish directly against Hitler. New Departures For four weeks before 20 September Kolbe was not in Berlin but at OKW headquarters in Rastenburg replacing a sick man in Ritter's representation there. Although this was a good listening post, he was anxious to get back to Berlin where he had means to get information out and the possibility of hearing from D&M Co. The way he man- aged it was to feign stomach trouble and go without eating long enough to convince the doctor. As soon as he got back he started a letter, expecting to have someone to take it to Switzerland the next day, but that fell through. Finally on 4 October he finished and dis- patched it, transmitting a comparatively small rrumber of hard docu- ments but an unusually rich load of grapevine information and, as innovation, 35 undeveloped images of documents on One of the more intriguing pieces of undocumented information he had nevertheless got first hand. At headquarters he had talked to Kleist, director of the East Ministry, whose personal appearance he described in some detail. Kleist had been sent in the first half of September by Ritibentrop, perhaps at Hitler's behest, to Stockholm to get into touch with the Russians about ending the fighting. The Russians there refiised to see him, but efforts were still being made, at present through the German embassy there. An unworthy memorandum in the files gives us a glimpse of haw Kolbe's product was still being treated in Washington. Dated 27 October 1944, it is from one OSS headquarters lieutenant to a second 18 This letter, in both original script and typed transcript, is not in Dulles' private files but :in archives Wash-Dir-Int-11, folder 3, along with the absurd discussion about dissemination cited below. DP78T03194A000200040001-9 CONFIDENTIAL CONFIDENTIAL George Wood George Wood CONFIDENTIAL Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 living the views of a third, who did liaison with Special Branch MIS, about some of the October reports: ftcport ~42Fi regarding German negotiations with Russia is, according to the MIS, of great importance if it is true. The report is not, however, corrobo- rated by any documentary evidence, and MIS is inclined to doubt its credi- t~ility, in view of the fact that the Germans are known to have told Japanese not to make overtures on their behalf to the Russians. Because of these doubts of MIS, the report has had no distribution other than to Mr. I3erlc. MIS world not, however, object to having it sent to t e President or Mr. Bull, if the General should consider it sufflciently interesting. Kolbe was anxious for assurance that the man who developed his films would be both technically careful and secure. He also wanted fo know how they turned otit. Word could be sent by his colleague 1'ohle who had brought this letter (as well as the one in August) or by Hans Vogel, who was on a courier run and would be at the Hotel Jura the night of 12-13 October. Perhaps he himself, he wrote, could be more useful now in Bern; if so, they should give Pohle or Vogel a message, or send a letter by them, recommending reconciliation with his wife, and he would sneak across the border. When Vogel arrived, he brought film with shots of 56 more docu- ments. Some of the pictures were somewhat blurred, but instructions were sent enabling Kolbe to correct this trouble, and in early Novem- ber pictures of more than 100 documents arrived in good shape. Photography now became the regular medium of communication, sent out v~~ith Kolbe's unwitting colleagues-except in late January 1945, when he managed to come himself, and early April, when he came fur the last time-under some such cover as a watch to be repaired. The photography was done in Adolphe Jung's third-floor office at the Universitatsklinik, and Jung provided a description of the process, and of Kolbe himself, in an account written after the war: . He had a horror of militarism and uniforms. He was judie_ious, deliberate, and prudent, although overflowing with ideas and energy . Eie was very much aware of all the dangers. Manic perhaps he was at times, but that was his temperament. He was endowed with a lively imagination which enabled him to see, as though revealed in a flash of lightning, the right solution or the right reply in the most difficult situations. . 't'here was a period when we saw each other every day, morning or night, and yet no one ever knew of our intimacy beyond the relationship of patient to physician. In the air raid shelter we would pass each oti~ier without speaking. . Approve~~Frll ~~ 2005/02/10 :..CIA-R@gTYF~DENT4A 000200040001-9 He would hr~n~r with him the most important of the documents. S'o~.i can easily imagim, the great risks he ran. An accident could happen o,2 Berlin's blacked old streets. Or an alert could force him to take shelter, brief case bu.lgil~g with documents, in some cellar somewhere. If he wen:' hrlrt the brief case would be opened, his pockets searched .. . Inside the co is rete protection of the Klinik building we worked over the documents unt11 late at night Sometimes he vvould start photographing; them right away fastening them with clips on a piece of cardboard well ex- posed to the da}Tight or under several electric lamps. He had an excellent little camera which took 2x2 cm. frames with great precision. I did aln J! could to help hi, n. liZ?t .oc Skopl/t dl. E~rnllyfurta~;~ r_P.q~ Ia Dieko~laa 1st engeDllrn arch d?r 3Lfohnc ~ .??. Y. Haod.aDlldun~g nwtfonal?r Lz?1.+? fa tra f.ea -~-.. D?~r:ff?n, w?r.n wnc.*. t.1 ~?r D.n don ?In:..~ ea Qrappea anc}: kw le ?inh?l tl i^,L?r 7.w rmmu?':?-. trO1d?ai lq. ~?1a 111``?a?SnD.flnd.D'tohantKD?rri,11 of t NSlI. Ip QaT Oat?rfvtltttris ^ohlld?rt? ?r a1r ht??1.{?at ?q. "" ?t~a ~i? tol`U Itilltl.riaoh? Irp as d?a lreataD?eh nltNn e?1 .? fptlp. Y1? Dand?nD?kHapfung as oh? Sut? lor4ddlt tt? 7a1'.tq.. ?ee ^oatar~bl? 1t~tk 1ft~duroD eeu tsa D~runantr+? tlwh. ?raDD?a a?1 ggut ?orb?r?1 t?t...) duroh d1? eon e?+ Gstuslu L 1Qok?a d?a r?Sad?^ er6ealeiefLtd'[.dQrgru;p.n, Gb.tit?DOrt d?~hD; ?h~=i? pe~uanoRl....aUa..wi.inee r~?Y .. ~Y Y1tta dalYtl?a d.q?n HShatoD ??1 +oDl D?gnSna?t Ia t1it1Q.ORa1?rlgk?SL?a and d?a aD?ug d?? ?ry;.t i?un ?a 7,r?o >~~ 1Y daa Dead ?ar?rDaad?a. DI? C?to1t. la 0?t DO.a1 ?n ~tN !saruhl~ua` err a?(?W George Wood Approved For Release 2005/02/10 When he had to leave he entrusted to me the documents not yet photo- graphed. I had only an old secretary equipped with lock and key. I usually put the papers in an envelope marked "manuscript for the Journal of Medicine" and kept them there. At night when the sirens screamed I went down to the shelter with a brief case containing my own important papers and these documents. Some- times, though, I had to leave them up there. Often, too, I had to stay in the shelter, busy with the wounded and sick, after the alert was over. I pictured to myself bomb damage to my office and the firemen collecting all the books and papers to save them. What would happen if I were hurt? What if some day they searched the o$ice while I was out? After a raid we often-he and his fiane~e and I-looked out at the fires raging all around and marvelled that our building once again had not been touched. When would it be? In March 1945 he came to the Klinik one last time. He had been assigned a trip to Switzerland ...and he was going to stay there. All night long we photographed documents. Everything that could still be of im- portance to the U.S. embassy we pinned up in front of the camera. lie was tired and nervous. He left us knowing that soon Berlin would be literally wiped out His fiance wept. I was upset myself. He promised that he would have D. send a plane for us as soon as possible... . The question of when the building would be hit had now been answered. Kolbe brought out a letter to mail for Jung: . We are trying to keep on with our work, but what di$cultyl . Two weeks ago a large bomb made a direct hit on the Klinik. It tumbled the four upper floors into the basement There were wounded and dead. All the work now has to be done on the ground floor or in the cellar. On a stormy night recently a tall chimney that was still standing in the middle of the ruins fell, and huge pieces of masonry coming through the ceiling demolished all the equipment in the first-aid room. The electric power and telephone wires are all cut... . Earlier, on 6 February, after transmitting the great quantity of hot material Kolbe had brought out, mostly on film, in the last days of January, Dulles cabled Washington concerning an impression he had got during ayear's-end visit he had made there-that the "antagonism" of L'~issell at G-2 and the "mysterious methods" of Berle resulted in Kolbe's reports' being treated as museum pieces without getting full operational value from them. Why were they still handled through X-2 channels? Why shouldn't Joe Grew, for example, be given those on the Far East? Why not take military action to prevent the reprovi- sioni:ng of certain enemy ports by methods described in one of them? Apparently as a result of this inquiry, Washington began on 14 February to cable appropriate reports to OSS Chungking "for Wede- ApprovedCF~r ~~I~;~~A~005/02/10 Geor a Wood '~~2DP78T0~194A000200040001-9 CONFIDENTh~L meyer personally." That they were valued in the China theater be- came evident when, because their great bulk soon overcrowded the OSS cable facilities, Washington asked on 21 March for guidance c+n how to cut down on them: Chungking replied that "technical xe- ports"-there had been for example an exchange of German data on the characteristics of different rocket fuels against information an a Japanese method for high-frequency-induction hardening of metal-- could come by fast pouch, but all the rest should continue to be cabled. Thus in one theater, at least, a year and half after the begin- ning and within a month or two of the end, Kolbe's heroic efforts bore some fruit. Last Exit With Berlin in smoking chaos, Ritter asked Kolbe to take his mistres;; and baby to a safe place in the south. They chose the Ottobeureri monastery near Memmingen where Kolbe's friend Prelate Schreiber was; his nephew was the prior. On 18 March Kolbe left Berlin with. his charges in Ritter's Mercedes, but because there was no gasoline the car had to be towed by acharcoal-burnin SS t k g ruc that Ritter managed to wangle. The trip took three days. After a few days at Ottobeuren he took a train to Weiler, east of Bregenz, to see his friend Mackeben, who had once played unwitting courier for him; he had a mountain cabin there.14 Mackeben had been in touch with officers of the General Staff's Fremde Heere Ost i5 who had a project to turn over its voluminous (three to four freight cars full) files on Russia to the Americans. It was agreed that Mackeben should find a safe hiding place thereabouts for this material and get word to Kocherthaler when it had been received. Then Kolbe left by train for Lustenau on the border. Ile had some difficulty getting across because his pass gave him the option of exiting from Friedrichshafen and such options were no longer permitted; but he talked his way through. Since Dulles was at this time much preoccupied with the negotia- tions that led to the surrender of the German forces in Italy, Kocher~- --__ 11 Edward P. Morgan's fictionalized but generally faithful account of the Wood case in True magazine for July 1950, "The Spy the Nazis Missed," for which he used Mayer and Kolbe himself as sources, says that the wife of a doctor at the Universitatsklinik also rode in the Mercedes from Berlin and now accompanied Kolbe as far as Weiler. "In particular with a Dr. Schellenbcrg (not Walter), said to be its director. TR~~NFIDEN9 q 000200040001-9 Approved ~~~,~~I~~&005/02/10;: CONFIDENTIAL. thaler debriefed Kolbe for him and in general helped make him useful in this period of Gotterdammerung. Besides the 98 photographs and some hard documents he brought, he had in his head a lot of useful information-the new location of Hitler's headquarters ninety miles north of $erlin, what was being done to prepare the Alpine redoubt, Ribbentrop's last desperate peace feelers, the state of the Foreign Office, recent movements of the Nazi leaders, the quality of the Volkssturm, the chaos in German industry and transportation. He prepared a list of all Foreign Office personnel, categorizing the reli- ability of each He got current information out of Gexmany from a dissident member of the Bern legation. He tried to get Minister Kocher to come over with the whole legation, and failed. In ].Vlay, after the surrender, he was sent back over the border to find leads to where the Nazi bigwigs were hiding and to what hap- pened with the Fremde Heere Ost files; Mackeben had not been heard from. But French forces had overrun the Weiler axea, arrested Mack- eben, and presumably found the files; and no big Nazi fish were found. With Prelate Schreiber, Kolbe made recommendations about ways to control the countryside. But all this was anticlimax now; his great task, worked at with high purpose and dangerous exhilaration, was done. INTELLIGENCE IN RECENT PUBLIC LITERATURE THE SECRET' WAR AGAINST HITLER. By Fabian von Schla- brendorff. (New York: Pitman. 1965. 438 pp. $7.50. ) This is a significant addition to the voluminous literature on the plot against Hitler which culminated in the abortive coup of 20 July 1944. The author was one of the few conspirators who survived the ensuing Gestapo action, and the most gripping chapters of his book deal with his arrest, torture, and liberation. As an American prisoner of war he then came into contact with Allen Dulles' German specialist Gera von Gaevernitz, who pexsuaded him to write his first brief account of the conspiracy and helped him published it.~ Later he was in touch with William J. Donovan in connection with the Nuremberg trials and. evidently shared Donovan's views on their impropriety and inefficacy? Schlabrendorff's foremost aim in writing this volume was to refute the persistent assertions-explicitly those of William L. Shirer in The Rise and Fall of the Third Reich-that Hitler was the logical cone sequence of Germany history and character and that Germans revoltec! against him only when he began to lose the war. The Secret War against Hitler is therefore of primary interest to the student of history; it sheds little light on the conspiratorial techniques employed by the; resistance, A chapter dealing with the "Rote Kapelle" is of signifi- cance principally for its eloquent comments on the differences in moti- vation and ethical concept between the Communist net and the 20 July group. Another entitled "The Shield of the Resistance" pays warm tribute to Admiral Canaris and others in key security posts who were witting of the conspiracy and used their positions to advance or protect it. Thus the reader will encounter in the pages of this book a number of well-known figures from the annals of secret operations, but he will be viewing them primarily in an ideological and moral light rather than in the more Familiar professional one. ' In 1948, under the title U~iziere edition as They Almost Killed Hitler. CONFIDENTIAL CO~~~~~~11~~~~ Approved For Release 2005/0 A-RDP78TII3'f9~~00200040001-9 MAaz~nv 1cm;r,sExcrn gegen 1?litler, translated in the American MORI/HRP PAGES 91-92 Recent Books: World War II Approved For Release 2005/02/10 THE SECRETS OF D-DAY. By Gilles Perrault. Translated from the French (Paris: Fayard, 1964) by Len Ortzen. (London: Arthur Barker. 1965. 238 pp. 25/-. ) M. Perrault has taken most of the well-known intelligence memoirs of World War II-from Remy, Collier, and Montagu to Pinto, from Schellenberg to Giskes and Moyzisch-added his own unstinted imagination, whipped all together into a frothy tutti-frutti, and poured the mix into a D-Day mold evidently emulating Cornelius Ryan but unencumbered by bibliography, source credits, or index. The result is too fanciful to be history, too confusing for good fiction. A point possibly intriguing to intelligence professionals is its offhand conclu- sion i:hat British intelligence deliberately sacrificed the North Pole agents, the Prosper net, and others in order to plant misinformation about the time and place set for the invasion, but that "the sacrifice was r-ot in vain. .. .it's sometimes necessary in business to write off five thousand francs in order to save half a million." THE RAPE OF ART. By David Roxan and Ken Wanstall. (New Yark: Coward-McCann. 1964. 195 pp. $5. ) Thiis is the story of Hitler's project to make a cultural center of his home town of Linz, the machinery set up to collect art treasures for it from all over Europe, and the postwar recovery and restitution of these? Intelligence angles are limited to brief mentions of a French resistance penetration into the machinery's Paris headquarters and of the C)SS Art Looting Investigation Unit. PETER JACKRELL THE SPY WITHOUT A COUNTRY. By H. K. Ronblom. Trans- lated by ~oan Bulman from the original Swedish (Wennerstrom Spionen; Stockholm, 1964 ). (New York: Coward-McCann. 1965. 222 pp. $4.50. ) Putting its primary effort into a psychological study of Stig Wern- nerstrom, the Swedish air force colonel who was a Soviet agent iri Moscow, Washington, and Stockholm for fifteen years, this case history serves to point up the skill of Soviet intelligence in exploiting the inveterate weaknesses of a man-weaknesses in this case hardly noticed by those in regular association, both professional and personal;, with him. The title of the American edition was aptly chosen to reflect the aut:hor's emphasis on one of these weaknesses, a curious: deficiency in emotional ties to his own country. Along with this "undeveloped patriotic sense," the Soviets played on the Swede's need for recognition and appreciation, a quality which he had evidenced as early as while in his teens. That need for recognition was partly responsible for his attraction to espionage's financial rewards, but it was fully exploited only through the "sales psychology" of his principal Soviet case officer, General Pyotr Pavlovich Lemonov, whom he was to call-tellingly-the best friend he ever had. Realizing that Wennerstrom was not material for ideological conversion, Lemonov astutely led him to think he could play an important international role in redressing the balance of power between NATO and the USSR and so fiirthexing the cause of peace. His early assignments were thus directed exclusively against the United States and its allies, and the only information required about Sweden `Nas assurance of its continued neutrality; what patriot- ism he had was not put to the test until he was in very deep. Even when he came with some reluctance to the point of selling his own country's :military secrets, it was not so much patriotism that: bothered him as a fetish for "correctness" as he saw it; and this quality served him in good stead. His outwardly correct behavior carried a law-abiding connotation, and to those who knew him it was in- credible that so properly behaved a man could be a traitor to his country. Another facet of his psychological makeup, says Ronblom, was reflected in his acting, in spite of his gregariousness, as a lone wolf. He met people easily on a social basis but did not develop real A roved F r ~~~~~~eeaaSS 22005/02/10 : ClA-R 00200040001-9 pp CO~IFIDENTIpAC ..;:: ~~~~I~'~QL 93 MORI/HRP PAGES 93-94 CONFIDENTIAL Recent Books: Cold War Approved For Release 2005/02/10 friendships. "For all his skill, he could not get further than superficial contacts." But many contacts he did have. His clandestine operations were made technically easy by his legiti- mate ]liaison with Soviet diplomatic personnel and his broad access to classified materials. He could photograph these without any elabo- rate security precautions at home. Eventually, of course, his luck ran oust. Arrested in June 1963 and tried for gross espionage in behalf of the Soviet Union, the 57-year-old colonel was given a life sentence, the severest possible under Swedish law. Then author, a family acquaintance of the Wennerstroms and a popu- lar journalist, editor, and writer until his recent death, prepared for the foreign editions of his book a preface not carried in the original, wherein he evaluates his source material, the most important of which consisted of the final interrogations of Wennerstriim himself. He ap- pears, to have dealt judiciously with the material available to him. Although he remarks that Wennerstrom's seeming lack of imagination inclines one to accept his statements as reliable, he repeatedly refers throughout his text to the lack of confirmation for many of these. In particular, he discounts Wennerstrom's insinuations that he began his espionage as a double agent working for the Americans as well as the Soviets, regarding this as a distortion designed by the colonel to put himsc;lf into a more correct position consonant with that of a balancer of international power. SPY WIFE. By Barbara Powers with W. W. Diehl. (New York: Pyramid Books. 1965. 188 pp. $.60. ) This paperback, by the ex-wife of U-2 pilot Francis Gary Powers, is a somewhat polished and expanded version of eight articles which originally appeared (25 August-13 October 1963) in the Chicago weekly newspaper The National Insider. The Insider devotes its columns largely to sensationalism, scandal, and pornography, and Mrs. Powers' articles, ghosted for her by W. W. Diehl, did their best to fill these requirements. The collection is unworthy of notice. WALTER PFORZHEIMER MORI/HRP PAGE 94 94 INTELLIGENCE AND SECURITY. Volume 10, number 4 of Civii`. War History, edited by Robert R. Dykstra. (University of Iowa,. December 1964. 119 pp. $1.50. ) At one time or another almost every aspect of the American Civil War has been romanticized, and not least the intelligence aspect. By the end of the 19th century a score or more of "spy" memoirs had. been published. These highly readable but also highly unreliable stories are the subject of a study by Curtis Carroll Davis in this issue that Civil War History devotes exclusively to intelligence and security. Filled with handsome heroes, captivating heroines, and an occasional young woman astride a white horse, "a voluptuous bosom partially, but not immodestly, exposed," they are social documents, he concludes, rather than dependable accounts of espionage activity. These same first-hand narratives lead directly to an article by Edwin C. Fishel, "Mythology of the Civil War." Mr. Fishel points out that intelligence as we know it did not exist during the Civil War. Espio- nage, the collection, processing, and dissemination of information, and security operations were carried on, but always on a limited scale. Drawing material from afull-length study he is preparing of such ac- tivities and their effect on military operations, he explodes some of the false beliefs that have accrued about intelligence in the Civil War. His is the most cogent of the articles for those whose interest is intel- ligence and the most fruitful for those whose interests lie in Civil War history. Quoting an 1863 letter that uses a surprisingly modern scatologism in grumbling about the neglect of "spy and topog duty," Ari Hoogen- boom in a brief article points to deficiences in the maps used by the commanders and to prewar disdain for topographic analysis. Ile seems to forget that the Confederacy did not exist prior to 1861 anal therefore could have no background in topographic intelligence. Al- most from its inception it was engaged in a life struggle, so that e~x- pediency, not the development of long-range plans, was its guiding motivation. The Union, on the other hand, had never seen fit to engage in systematic mapping of the potential enemy states, whether for economic, political, sociological, or military purposes. Had it done so, the results would have been available equally to both sides, just A roved Fo el 005/02/10 :CIA-RD 0200040001-9 pp COIF D~fA ^..._.... I 95 MORI/HRP PAGES 95-96 Recenf Books: Civil War Approved For Release 2005/02/10 as many officers of both North and South had been schooled at West Point. The remaining articles of the issue, although they are all related to intelligence and security, would be of more interest to avid buffs con- cerned with the minutiae of the Civil War than to intelligence officers gener;~lly. THE SECRET DIPLOMACY OF THE HABSBURGS, 1598-1625. By Charles Howard Carter. (New York: Columbia University Press. 1964. 321 pp. $7.50.) J This learned, careful, and accomplished work undertakes to reviev~ Spanish Habsburg policy-making and the influence of intelligence on decisions made ley Spain and the Spanish Netherlands during thc~ quarter century of relative military quiescence and intense diplomatic; activity that led into the Thirty Years' War. It concentrates on the diplomatic interplay in London and the intelligence sent from there; to Madrid and Brussels. Although it faithfully carries out this task;, it disappoints any expectation aroused by headings like "About Spies: and Such," "The Informational Base of Foreign Policy," "Intelligence from England,'?' "A Renaissance Spymaster," and "Spanish Espionage Put to the Test" either that it should give intimate glimpses into the practice of espionage in those days or that it should add historical .perspective to the ultimate question for intelligence, its application to policy. For one thing, it takes about half the book to set the complicated stage-for an era when dynastic maneuvering had hopelessly scram- bled the ethnic map of Europe and the pervasive Catholic-Protestant conflict was contorted by unending secular considerations-and intro- duce the characters. Of the policy makers among these the one that stands out best, because of the author's interest and the nature of the source material, is James I, but his policy and decisions are not central to the play. Then the intelligence selected for detailed examination is the reporting done by Madrid's envoy, Gondomar, and Brussels', Van Male. But Gondomar was ahigh-level operator who made a friend of King James and got his information for the asking from the horse's mouth; and though Van Male was a true spy-master we do not see the spies at work but only the finished Weeka, as it were, that he sent home. Professor Carter focuses on the reporting that covered secret negotia- tions with two diplomatic task forces sent to London in 1621, when the peace, such as it was, had begun to break down. The first was from Louis XIII of France, seeking a marriage alliance and English help in an attack on the Habsburgs' line of communication over the Alps in exchange for French help in restoring the Palatinate to James' MORI/HRP PAGES 97-98 97 ApprovedCF~r ~~~~~A~005/02/10 :CIA-RD~Ra~~4~1NTIA000200040001-9 CONFIDENTIAL Recent Books: Olden Times Approved For Release 2005/02/10 son-ire-law Frederick V. Gondomar got from James and Val Male from his spies full and prompt information on these proposals and the nega- tive English response, and this enabled the Habsburgs to temporize with the English in pre-existing negotiations for a marriage alliance with them until they had concluded one with the French and so secured their communications at the expense of French freedom to act against James' protegees the Huguenots. And all this during Madrid's upset over the illness and death of Philip III and the acces- sion of his teen-age son. The second mission extraordinary, a little later but overlapping, was from the United (Dutch) Provinces, rebels against the Habsburg archdukes in Brussels, who wanted English help in an attack they were determined to launch against the Netherlands before its armies could get through subduing the Palatinate and redeploy to attack them. Van Male misinformed Brussels that the Dutch were anxiously asking James' good offices to get a renewal of their truce with the areh~dukes that was about to expire, and on the basis of these reports Brussels sent the Dutch a proposal for peace by capitulation which only enraged them and united all factions in support of war. The exploration is an interesting ane, but the conclusion "ventured" at its end, that men must base their foreign policy decisions on in- forrriation they know or believe to be true, one might have granted at the outset. And the author's further suggestion that the quality of the information is more important than that of the men needs better definition and more proof than Madrid's successful performance at a time of interregnum. ED. C. IGNELL THE MOST EXTRAORDINARY ADVENTURES OF MAJOR ROB- ERT STOBO. By Robert C. Alberts. (Boston: Houghton Miflin. 1965. 423 pp. $6.95. ) Held as a hostage at Fort Duquesne in 1754 at the outset of the French and Indian War, the 27-year-old Stobo, then a captain in the Provincial Virginia Regiment, sketched a very detailed and accurate map of the fort, added instructions on how to capture it, urged that it be done, signed this and another letter with his true name, and dis- patched them by Indian couriers to colonial authorities at what is now Cumberland, Maryland. Of course the drama was played out: a year later the French got hold of the signed map when they seized the possessions of the fallen Recent Books: Olden Times -RDP78T03194A000200040001-9 General Braddock after his unsuccessful attempt to take Duquesne. Stobo was tried, convicted of high treason, and sentenced to be; hanged; he did not know the sentence was suspended. He escaped twice and was twice recaptured; on the third attempt he successfully led a party of nine, including a couple and their three children, on a hazardous 350-mile flight down the St. Lawrence from Quebec. A free man again, he now joined up with General Wolfe, who found his intelligence channels in Quebec of (according to some) decisive: importance in the successful siege of the city in 1759. After a trium- phal return to Williamsburg and Petersburg, and finding life there: rather dull, Stobo went back to Canada and was on hand, under General Jeffrey Amherst, for the surrender of Montreal-the fall oi' New France. In 1762 he suffered a severe skull fracture during the Battle of Havana, and in 1770---at a military dead end, with business troubles, drinking to excess, and still suffering from his head wound-- he shot himself. Stobo's life, full of intelligence, escape, and other adventure as it was, may not seern to merit 423 pages for the telling of it, but author Alberts has given it larger meaning by setting it against the back- ground of the historical geography of Williamsburg-Pittsburg-Quebec- Louisbourg and Boston and by weaving it into the story of the colonial push into the Ohio valley and the momentous struggle between Britain and France for control of the New World. Eighteen photographs, 8 maps, a very full index, and a complete bibliography make this a finished and useful, as well as a most readable, book. SPY FOR LIBERTY: The Adventurous Life of Beaumarchais, Play- wright and Secret Agent for the American Revolution. By Ariane Ruskin. (New York: Pantheon Books. 1965. 178 pp. $3.75. ) This book for young readers is worth noting to remind intelligence officers that there are better biographies of the versatile Frenchman whose clandestine activities rank him with Lafayette as a friend in need to the cause of American independence. Both Georges Lemaitre's Beaumarchais (1949) and Cynthia Cox's The Real Figaro (1962) capture the spirit of Pierre-Augustine Caron de Beaumarchais (1732-1799), who excelled as watchmaker, musician, playwright, pamphleteer, businessman, and secret agent. Elizabeth S. Kite's Beaumarchais and the War of American Independence, by MORI/HRP PAGES 98-99 Approved For Release 2005/02/10 :CIA-RDI~~~~~9N4f4~00200040001-9 r-~wiGmGw-Tie~ ~~`.. 98 MORI/HRP PAGES 99-100 99 CONFIDENTIAL Recent Books: Olden Times Approved For Release 2005/02/10: G comparison, is more a compilation of documentary material, has less style, and, published in 1918, is less readily obtainable than the other two volumes, which are available in almost any library. Most people know Beaumarchais as the author of The Barber of Seville and The Marriage o f Figaro, but few are familiar with the fictitious company, Roderique Hortalez et Cie, he set up with the help of ithe French and Spanish governments as a means of sending guns, muskets, gunpowder, clothes, blankets, and shoes to the rebellious Americans before France declared war on Britain in 1778. Lemaitre gives a more complete account than Cox of the organization, operation, accomplishments, and especially the problems of this proprietary, which Beaumarchais conceived and directed with considerably more selllessness than one normally expects in international intrigue. THOMAS F. TsoY NUMBER 7: Alexander Hamilton's Secret Attempt to Control Amer- ican Foreign Policy. By Julian P. Boyd. (Princeton: Princeton University Press. 1964. 166 pp. $4. ) l3ere the distinguished editor of the comprehensive edition of Thomas Jefferson's works takes time out to present the comprehensive case against Hamilton as in effect a British agent. His charge, the main elements of which have long been known to historians, is that Hamilton, "No. 7" of 23 informants of British Major George Beckwith, did, through "covert consultations" with Beckwith and in order to "control American foreign policy," deceive President Washington, un- de~?cut Secretary of State Jefferson, and libel the President's representa- tive in London, Gouverneur Morris. His specific charge is that two documents written by Hamilton to Washington are "palpable and demonstrable misrepresentations of a gross nature touching upon mat- ters of the highest public import." ~~ulian Boyd's supporting argumentation is not easily followed, be- cause this is an exercise in what he calls "editorial scholarship." IIc has subjected the two documents, along with 21 other papers, to "col- lation, comparison, and investigation" in order to establish their au- thc;nticity. IIe has necessarily done this against an exhaustively de- tailed background covering a year (1789-90) of American involve- ment with Britain, France, and Spain over war debts, frontier posts, the; Mississippi, Nootka Sound, and the threat of war. The exercise MORI/HRP PAGES 100-102 Recent Books: Olden Times CONFIDENTIAL '-RDP78T03194A000200040001-9 has entailed the most rigorous reasoning about the actions, motives, and personalities of the participants and a weighing of possibilities and probabilities as explanations of words and events. Nor is the volume completely convincing, though the author holin ......... Rita T. Kronenhitter F ~7 antastic aperatioris against the Russian revolrrtinnariea? and then again;~t Germans. CONFIDENTIAL Intelligence in Recent Public Literature ....... _ (1oNFIDr:.NTIAL World War 17 Contemporur~~ h~uCes ...... . Bibliography: Recent Soviet Books and Articles _ . On Soviet spies ~rnrl related ma6ter~s. UNCr.ASSxFn~.n IA-RDP78T03194A000200040001-9 SECRET 73 77 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Approved For Release 2005/02 Postwar interregnum as conflicting plans for central intelligence are shaken down into a presidential rlireetive. THE BIRTH OF CENTRAL INTELLIGENCE Arthur B. Darling 1 TE[E STUDIES IN INTELLIGENCE AWARD An annual award of $500 is offered for the most significant contribu- tion to the literature of intelligence submitted for publication in the Studies. The prize may be divided if the two or more best articles submitted are judged to be of equal merit, or it may be withheld if no article is deemed suf&ciently outstanding. Except as may be otherwise announced from year to year, articles on any subject within the range of the Studies' purview, as defined in its masthead, will be considered for the award. They will be judged primarily on substantive originality and soundness, secondarily on literary qualities. Members of the Studies editorial board and staff are of course excluded from the competition. Awards are normally announced in the first issue (Winter) of each volume for articles published during the preceding calendar year. The editorial board will welcome readers' nominations for awards, but re- serves to itself exclusive competence in the decision. Approved For Release 2005/0 There was more than economy in mind as Director of the Budget Harold Smith corresponded with General Wm. J. Donovan in August 1.945 about liquidating the Office of Strategic Services. On the same day Smith advised the General that agencies with no peacetime activi- ties had to go, Donovan expounded once more in a letter to him the principles which should govern a centralized U.S. foreign intelli- gence system. Donovan believed those principles were already at work in the OSS. But since it was to be abandoned, another agency should be set up immediately to take over its valuable assets and aid the nation in "the organization and maintenance of the peace." The newly unveiled atomic bomb naturally dominated the thinking of the time, and some argued that it made the need for a permanent system of national intelligence peremptory, Gregory Bateson, far example, writing to Donovan from OSS headquarters in the India- I3urma theater, forecast that the bomb would shift the balance of warlike and peaceful methods of international pressure. It would be powerless, he said, against subversive practices, guerrilla tactics, social and economic manipulation, diplomatic forces, and propaganda either black or white. The nations would therefore resort to those indirect methods of warfare. The importance of the kind of work the Foreign Economic Administration, the Office of War Information, and the Office of Strategic Services had been doing would thus be infinitely greater than it had ever been. The country could not rely upon the Army and Navy alone for defense. There should be a third agency to combine the functions and employ the weapons of clandestine operations, economic controls, and psychological pressures in the new ' Adapted from a history of the CIA to 1950 completed by the author in 1953. For a preceding portion, devoted principally to the OSS, see Studies VIII 3, p. 55 ff. CONFIDENTIAL CONFIDENTIAL Central Intelligence Approved For Release 2005/02/ warfare. But Bateson thought, acid he would not be alone, that this third agency should be under the Department of State. Donovan's Principles Two ;assets of the OSS were clear, wrote Donovan to Smith. For the first time in its history this country had a secret intelligence service gathering information abroad and reporting directly to a central office in Washington. Inseparable from this service, a group of specialists were analyzing and evaluating the information for those who should determine the nation's policies. These two cardinal purposes, secret collection abroad and expert appraisal at home, Donovan backed up with the familiar points in his plan. Each department would have its own intelligence service to meet its own needs; its materials would be made available to the central agency. This agency would serve all of the departments with supplemental information obtained either by its own collectors or from other services. It would supply its strategic interpretive studies to authorized agencies and officials. The :agency should have no clandestine activities within the United States nor any police functions either at home or abroad. In time of war it would be subject to the Joint Chiefs of Staff. But it should be independent of any department since it was to serve all. It should have an independent budget. It should be administered by a single of&cer appointed by the President and under his direction. The President might designate a general manager to act as his inter- mediary, but the agency should be established in the Executive Oflicc of the ]?resident. That was the only concession Donovan would make to the critics who feared a director of central intelligence answerable only to the President. Subji?ct to the approval of the President, or the general manager, the director should determine the policy of the agency with the "ad- vice acid assistance" of a board representing the Secretaries of State, War, the Navy, and 110W Donovan added the Treasury. He still insisted that this board should be only a vehicle of advice, not of authari,ty. This requirement was certain to keep alive the opposition which his proposal had met in the military services throughout the previous year. But to General Donovan the principle of individual responsibility was as indispensable as the work of experts in research and analysis and the maintenance of covert services abroad. None of the three principles should be subject to his pet abomination, compromise. Approved For Release 2005/0 IA-RDP78Tg~1 ~4e~1~` ~0~1~0040001-9 Bureau o f the Budget Proposals General Donovan's "all-inclusive" program had met doubts among; officials of the Bureau of the Budget as early as 1941. Now in 1945, an September 20, a BoB paper traced the history of intelligence in this country and proposed a different kind of organization to replace the OSS. It commended the OSS for blazing new trails and raising the level of competence in the whole system of intelligence but dis- missed it as a wartime agency which should not be superimposed on the normal structure of government. The principal operations cf intelligence must be at the point where decisions were made, that is in the individual departments. As these were responsible for the decisions and actions, they should produce the intelligence upon which the decisions were based. Moreover, the Donovan plan did not recognize the leading role of the State Department as a "staff agency of the President." Here, it would seem, was the main point of the BoB paper. It conceded the necessity for coordinating the intelligence opera- tions of the several departments and supplying intelligence reports to the President and others who had decisions to make with regard to national policy; national policy invariably cuts across some depart- mental lines. But this could be done by a small independent central staff which could rely on the product of research and analysis in the departments. It should not engage in original research but rather harmonize the intelligence from the departments, reconciling any conflicts among them. Until the President saw fit to have such a small staff in his awn office, the Department of State could provicle the facilities. The details of the organization proposed in the BaB paper should not detain us; they were significant chiefly for the support they gave to the organization then taking shape in the State Department. But it is noteworthy that the proposal embodied an unrealistically sharp distinctior- between security intelligence and counterespionage on the one hand and the positive intelligence obtained from collect- ing information on the other. It would have the two functions kept apart under the jurisdictions of two separate interdepartmental com- mittees which would devise plans and coordinate the work of the several departments in the two fields. The nucleus of both com- mittees was to be the Assistant Secretaries of State, War, and the Navy. When these sat as the Intelligence Coordinating Committee, the Assistant Secretary of Commerce would attend. When they were CONFIDENTIAL CONFIDENTIAL Central Intelligence Approved For Release 2005/02/ the Security Coordinating Committee, the additional members would be the Assistant Secretary of the Treasury and the Assistant Attorney General. The ideas of the Bureau of the Budget won the attention of Presi- dent Truman. On the same day, September 20, he directed Secretary Byrnes of the Department of State to take the lead in developing the program for a comprehensive and coordinated system of foreign intelligence. The Secretary should form an interdepartmental group to make plans for the President's approval. The goal was "complete coverage of the foreign intelligence field" and control of operations to meet with "maximum effectiveness" the needs of "the individual agencies and the Government as a whole:' At the same time, in ?spite of Donovan's protests to Rosenman, the President's Special Counsel, and to Budget Director Smith, President 'Truman signed the executive order breaking up the Office of Strategic Services. The personnel and facilities of the Research and Analysis and the Presentation Branches went to the Department of State. These, the President had agreed with Secretary Byrnes, would provide resources to aid the State Department in developing foreign policy. The War Department received the rest, chiefly assets for secret intelli- gence and counterespionage and for the covert action operations which were to be ended as soon as possible. These were incorpo- rated into a Strategic Services Unit under Brigadier General John Magruder, who had been Donovan's Deputy for Intelligence. By October 26, 1945, an organization which at its peak had had some X3,000 persons, exclusive of agents and other foreign nationals in special capacities, had been reduced to fewer than 8,000. All of these measures were in line with the purposes of the Bureau of the Budget. losition of the Joint Chiefs Much was happening in the few days around the fall equinox of 1945. The Joint Chiefs of Staff revived, with few changes, their January plan for a National Intelligence Authority.2 But instead of the original stipulation that tha new central intelligence agency should have an independent budget, they now proposed that funds should be supplied by the participating departments in amounts and pro- portions to be agreed upon. This was because the Independent Approved For Release 2005/02 4 CONFIDENTIAL Central Intelligence CONFIDENTIAL IA-RDP78T03194A000200040001-9 Offices Appropriation Act for 1945 had made it impossible without further legislation to give the central intelligence authority a separate budget. Under its terms, moreover, no part of any appropriation could be expended by any agency which had been in existence for more than a year without specific authorization. from Congress. The plan was submitted to the Secretaries of War and the Navy by Admiral Leahy for the Joint Chiefs of Staff on September 19. Leahy asked that the Secretaries forward it to the President. Ten days later Secretaries Patterson and Forrestal sent it to the Secretary of State. In view of the executive order terminating the Office of Strategic Services and President Truman's letter to Secretary Byrnes of the same date asking him to "take the lead," they presumed that Byrnes would want to transmit the recommendations to the President:. Going its thus roundabout way from the President's own Chief of Staff and back to him, this communication joined again the familiar issue between the parties of greatest interest. If there had to be a central intelligence agency, the armed services were trying to make sure that it would develop according to their ideas. Ranking officers in both Army and Navy did not want a central agency, but they liked even less to think that a civilian instrument, whether the OSS or the Department of State, would control the intelligence system of the nation. The Joint Chiefs' plan took note of General Donovan's principles forwarded on August 25 to the Bureau of the Budget. They recog- nized the desirability of coordinating intelligence, conducting activi- ties of common concern in one agency, and synthesizing departmental intelligence on the strategic and national level. But their thinking in September had not advanced much beyond the conclusions the Joint Strategic Survey Committee had reached in January. Donavan wanted to "overcentralize" the intelligence service. He would p1acE; it at so high a level in the government that it would control the departmental intelligence agencies. The central intelligence organi~? zation ought to be responsible to the heads of the departments. The Joint Chiefs of Staff favored a federal rather than national principle for the permanent system of intelligence to replace the OSS. Conditions now, however, created more urgency than there had been in January. Though hostilities were ended, the atomic mush- room darkened the future. President Truman had been through .the Potsdam Conference where friction with F~ussia over Poland, Austria, Germany, :rnd the Far East had become dangerous. The -R ONFIDENT A 000200040001-9 5 CONFIDENTIAL Central Intelligence Approved For Release 2005/02/ Joint Chiefs of Staff had come to feel that an efficient intelligence service had become indispensable. It was now "entirely possible that failure to provide such a system might bring national disaster." Committees were at work for both the Army and the Navy to reconcile their differences and find common ground if they could for a single Department of Defense, and with it a central intelligence service. Meanwhile a member of the Department of State specially assigned to the task went ahead to build upon ideas in the Department and the suggestions of the Bureau of the Budget. State L-epartment Plan During the fall of 1944 considerable thought had been given to establishing an Office of Foreign Intelligence in the State Department. The geographic and functional divisions did not provide a central repository where policy makers could find accumulated knowledge on subjects involving the work of several divisions. Nor was there any place in the Department for coordination with other agencies of the government. The proposed Office of Foreign Intelligence was expected to fill these needs with a planning staff and divisions of research in political, economic, geographic, social, scientific, and other matters. Now a year later the Department contemplated not only a new internal organization but extending its jurisdiction as it "took the lead" in developing the intelligence program for all federal agencies. A Special Assistant for Research and Intelligence was to gather together the functions of collection, evaluation, and dissemination of informa- tion regarding foreign nations which heretofore. had been spread among several geographic offices in the Department. There were to be two new offices under his direction, one for intelligence and the other for counterintelligence. As the OSS Research and Analysis and Presentation Branches came over, their functions, personnel, records, and property were to be absorbed according to the Department's wishes. Any remainder would be abandoned. The other departments and agencies of the government, as well as State's own field offices, would then be ex- pected to send their intelligence to the Special Assistant's organiza- tion for correlation and synthesis. The similarity between these ideas and the suggestions of the Bureau of the Budget is obvious. President Truman's letter to Secretary Byrnes enlarged the oppor- tunity to press this plan. The Special Assistant, Mr. Alfred Mc- Cormack, came from the Army, where he had been Director of the Approved For Release 2005/0 6 CONFIDENTIAL Cenfral Intelligence CONFIDENTIAL IA-RDP78T03194A000200040001-9 Military Intelligence Service. I-Ie brought into the Department Ludwell L. Montague and James S. Lay, who had also had military careers as secretaries of the Joint Intelligence Committee of the Joint Chiefs of Staff; both men had helped formulate the JIC plan for central intelligence. McCormack entered with enthusiasm and con- viction upon the work of taking over the whole business of correlat- ing and evaluating intelligence for the makers of policy in the federal government. He was certain to arouse opposition in the Army and Navy. Secretary Forrestal, seeking to develop a central intelligence agency in connection with the closer integration of the Army, Navy, and Air Force which he so earnestly desired, thought of having the heads of the several intelligence agencies to dinner to discuss the matter and perhaps remove some of their differences; and a memorandum from Thomas B. Inglis, Acting Chief of Naval Intelligence, on Octo- ber 10, 1945, warned him of what he might expect: Mr. McCormack v~~ithin the past ten days had declined General Magruder's proposal for an informal interim committee; until Secretary Byrnes "took the lead" as directed by the President, he preferred to conduct liaison directly with G-2, MIS, and ONI. Mr. J. Edgar Hoover was not in favor of a national intelligence agency. There probably would be "veiled antagonism" too, said Inglis, among some of the other guests. (From one of them, G-2 General Clayton Bissell, to judge from the record of his participation in the historic meeting of the Joint In- telligence Committee on December 22, 1944,3 it is doubtful that the antagonism would I,e veiled.) Inglis suggested that Magruder, as head of the Strategic Services Unit, might be included in the dinner party. "It would be an interesting, but perhaps somewhat uncon- genial, meeting." ? By November, the. departments were clearly heading into a col- lision. Forrestal wrote to Patterson on October 13 that they should push the Joint Chiefs' plans vigorously at the White House. The three secretaries, Byrnes, Patterson, and Forrestal, met on October 16 and agreed in principle that any central intelligence organization should report to them rather than to the President; at least this prin- ciple of Donovan's was thus removed from the controversy. But Inglis observed on October 18 that whatever Byrnes might say about coordination, McCormack was not keeping the Navy in touch with e Studies VIII 3, p. 82. IA-CRDP78T03194A000200040001-9 ONFInFNTIeI Approvec~IFor Rle~ease 2005/02/ his planning. In the War Department, Patterson authorized a special committee to study the problem under the chairmanship of Robert A. Lovett, Assistant Secretary for Air. In the next meeting of the secretaries, on November 14, Forrestal asked that they devote their discussion to the proposed central intelli- gence agency. Byrnes suggested they endeavor to "integrate and reconcile" the several plans. Lovett, whom Patterson had brought to give his views, stated that the plan of the Bureau of the Budget appeared to fail in three respects: its coordination would be very loose; it provided for multiple collecting agencies, which were bad in clandestine intelligence; and it treated the problem as though the secretaries themselves were going to operate the agency, an im- possibility in practice. Lovett advocated the plan of the Joint Chiefs to give the secretaries authority over a director and an agency under his administration. Byrnes too did not like the idea of the interdepartmental governing commiittees in the Bureau's plan, nor the emphasis upon research and analysis. The scheme seemed to him too big and elaborate. With- out other comment for the record, he concluded that they all favored a central agency. He proposed an interdepartmental working com- mittee to get at the problem as quickly as possible before the existing intelligence structure disintegrated further. The funds for some units, notably the SSU, were available only until the first of January. The secretaries agreed to form such a committee. At the close of the meeting Secretary Patterson inquired if anyone knew of a good man to be Director of Intelligence, and Lovett said the only name he had heard mentioned was Allen Dulles. Compromise Effort The working committee met on November 19. Its members for the St:zte Department were Alfred McCormack and Donald S. Russell; for the Army, Robert A. Lovett and Brigadier General George Brownell; and for the Navy, Rear Admiral Sidney Souers and Majar Matthias Correa, special adviser to Secretary Forrestal. If Secretary Byrnes' acceptance of a central agency had meant agreement to negotiate on some basis other than the BoB plan, McCormack did not so interpret it. He insisted that the President's letter of Sep- tember 20 had directed Secretary Byrnes to take the lead not only in developing an interdepartmental intelligence program but also in putting that program into operation. Approved For Release 2005/02 Central Intelli enc CONFIDENTIAL CIA-RDP78T03194R~00~00040001-9 The plan which McCormack was going to send to the President provided that the Executive Secretary of the authority coordinating the departmental intelligence services should be named by the Secre- tary of State and should be an employee in the State Department. Instead of having a central agency produce the national intelligence estimates for policy makers, McCormack would assign that responsi- bility to the Department's Estimates Staff under the Special Assistant for Research and Intelligence, that is McCormack himself. The representatives for the Army and Navy argued in response that the director of the central agency should be named by the President and made responsible to the Secretaries of State, War, and the Navy and representatives of the Joint Chiefs of Staff. This agency would produce the national intelligence estimates. As neither side would yielcl, there was nothing to do but ask the secretaries which concept should prevail. Perhaps anticipating an unfavorable decision from above, Mc- Cormack reworked his plan in December and gave considerable ground in the hope of making it acceptable. The armed services were to have representatives throughout the proposed intelligence organization, including the Estimates Staff, although the commanding positions were reserved for the Department of State. The two gov- erning committees proposed by the Bureau of the Budget for intelli- gence and security were reduced to a merely advisory capacity. In their stead McCormack now accepted, on December 3, a single National Intelligence Authority as advocated by the military services; but in his plan the Authority would consist of the Secretary of State., as chairman, and the Secretaries of War and the Navy. Heads of other departments and agencies might be invited by the Secretary of State to sit in on some meetings, and representatives of the Treas-~ ury and the FBI would attend to discuss matters of security. There would be no representative from the Joint Chiefs of Staff; the armed services would already have atwo-to-ane vote in the Authority. The Department of State should retain the "leadership and final responsi- bility." The Executive Secretary would still be appointed by the Secretary of State and be a State Department employee, but he would be responsible to the Authority as a whole. The Secretaries of War and the Navy voting together could even remove him. Moreover, on December 15 McCormack accepted from the War Department a provision that would prevent the Executive Secretary from proposing CONFIDENTIAL 9 Central Intelligence Approved For Release 2005/02/ any operating plan to the Authority until it had been submitted to the appropriate advisory- board and the opinion of any dissenting member of that board attached to it: There were to be a host of coordinating committees covering, as in the proposal of 1944 for the Department's Office of Foreign In- telligence, politics, economics, geography, science and technology, biographical records, military affairs, and other divisions of subject matter. In all these, with obvious exceptions like military intelli- gence, the Department of State was to have the chairmanship. Finally, i:oward the end of the discussions, McCormack conceded that there might be a director of operations under the Executive Secretary to handle secret intelligence and security matters if the Authority should decide that this could be done more effectively in a central organization than by the departments. How :such a complicated setup would actually function in practice was not made clear in McCormack's proposal. In fairness to him, one must say that he had little time to elaborate upon his ideas, for at about this point the Secretaries of State, War, and the Navy reached agreement to ask the President to adopt the Joint Chiefs' plan, practically as it had been revised in September. Studies of the Armed Services Secretary Forrestal had appointed Ferdinand Eberstadt in June to make a special study of the proposed merger of the War and Navy Departments. The Eberstadt report, published now on October 22, held that the national security would not be improved by unifying the Army and Navy under a single head. One civilian secretary could not administer successfully the resulting huge and complex structure. There were benefits to be had from parallel, competitive, and sometimes conflicting efforts. On the other hand, better coordi- nation vas required to meet the increased international commitments, both political and military, which were being assumed under the charter of the United Nations, the Act of Chapultepec far inter- American defense, and military occupation of Germany and Japan and in the face of uncertain repercussions from the scientific and engineering advances made during the war. The report called for the organization of the military forces into three coordinate departments-Army, Navy, Air-and their close association with the Department of State in a National Security Coun- cil. There should be established also a central intelligence agency Central Intelliggence IA-RDP78T03194A000200040001-9 to supply the "authoritative information on conditions and develop- ments in the outside world" without which the National Security Council could not fulfill its role nor the military services perform their duty to the nation. Mr. Eberstadt had named the then Captain Souers a committee of one to write a section on military intelligence for the report. As Assistant Director of Naval Intelligence in charge of plans, Captain Souers had helped in the work of the Joint Intelligence Committee of the Joint Chiefs of Staff and had attended the meeting on Decem- ber 22, 1944, when debate over the "services" and "civilian" plans had led to their consolidation in January. Since then lie had been actively concerned with General Magruder and others in both Army and Navy ~vho wished to establish a permanent central intelligence system. Souers had opposed the Donovan plan because he felt that the direc- tor of central intelligence should serve not only the President but also the members of his cabinet who were responsible for the national security. Now in the Eberstadt report he also opposed the Mc- Cormack plan because it would put the intelligence system under the domination of a single department. He reviewed precedents fora national intelligence system and dwelt particularly on the success of the Joint Intelligence Committee, working through its subcommittees and with benefit of its Joint In- telligence Collection Agencies, in producing strategic intelligence by the collaborative efforts of not only the military intelligence agencies but the AAF Weather Service Division, the offices of the Chief of Engineers and the Surgeon General, the Coast and Geodetic Survey, the Hydrographic Office, the Joint Meteorological Committee, the Board of Geographical Names, and the OSS. But even under the stimulus of war the interchange of information among these agencies had been neither free nor complete, and upon return to peace such collaboration as there had been would practically cease to exist. Moreover, strategic intelligence involves more than military and naval information; it requires knowledge of economic, social, and political forces that are not so readily ascertainable in swift reconnaissance as in deliberate research by appropriate civilian agencies. For these reasons the Joint Intelligence Committee could not be considered a permanent organization. It might 1>e reorganized to include permanent representation from all agencies concerned with intelligence, but then it would cease to be merely the instrument of the Joint Chiefs of Staff. The conclusion was that while each depart- A~DP78T03194A000200040001-9 ONFm~-.irini Approvedd-For ~e~f~~~s~e2005/02/1 ment should maintain its own intelligence service, each should par- ticipate in a joint central intelligence organization. This should co- ordinate all intelligence relating to national'security, maintain activities of common concern which should not be reduplicated in the depart- ments, and synthesize departmental intelligence on the strategic and national policy level. Souers also recommended that courses of in- struction be given to indoctrinate officers with the importance of intelligence to our national security. , Thc~ Army's committee appointed on October 22 under the chair- manship of Assistant Secretary Lovett gathered testimony by means of a questionnaire and written reports within the War Department. There were formal interviews with persons specially qualified: General Bissell; William H. Jackson, who had reported on the British system; Kingman Douglass, who had represented the Army Air Forces at the Air Ministry in London; Lieutenant General Stanley D. Embick, member of the Joint Strategic Survey Committee; David K. E. Bruce, who ]had been prominent in OSS; and Alfred McCormack from tl~c State Department. The opinions of most of these witnesses can be fairly surmised. Of pair?ticular interest, in view of his participation in the Intelligence Survey Group of the National Security Council in 1948 and his sub- sequent appointment as Deputy Director of Central Intelligence under General Walter B. Smith, are those held at this time by William II. Jac:kson.~ Under the new threat of the atomic bomb, Jackson said, and in the light of the lessons of Pearl Harbor, there was an urgent necessity for "i:mposing intelligence responsibilities on the military services within the scope of their missions" and for "compelling the coordina- tion oaf intelligence functions under one national intelligence system." (These ideas of imposition and compulsion, voiced at a time when Congress was about to investigate the Pearl Harbor disaster, would be sublimated in 1948 to a call for "leadership" in the central agency and "cooperation" on the part of the departmental services.) Author- ity over the system should be vested in the Department of Defense if it vrere created or in the National Security Council if the Eberstadt proposal were adopted. But he moved the central agency even farther down the scale of responsibility and away from Donovan's ' Tal:en from a memorandum of the following November 14 to Secretary I'or- restal. The testimony proper before the Lovett Committee was not available to the author. Approved For Release 2005/ ~ 2 CONFIDENTIAL C~1FiDENTIA L principle than the Joint Chiefs of Staff had. Its "ac~~ diz'ection' would be in a directorate consisting of the chiefs of Bence ur the Army, Navy, and Air Forces, a representative of t~ State lle- partment, and, when their interests in national secrm-iLu~ were in~- volved, other departments such as the Treasur and sti y Ju ce Thu;; something like the eventual IAC would have super~2sioffi over the director of the central intelligence agency, who wou_id >be reduced': to an office manager. Jackson, moreover, would not allow the central agc~rc~- to engage in clandestine collection. That function, and foreign counterintelli- gence, would be reserved to the Department of State,. uz~ the p~._ tieipation of officers assigned from the military services. But radio interception could be given to the central agency, an a iii might do its own overt collection of economic and scientific int~:i1?i`ence. General Magruder, out of his experience, probably z-~c?re the most realistic contribution to the Committee. His proposa` =c~i?lo~~ed the lines of the Donovan plan but accepted the concept oii authority proposed by the Joint Chiefs, that the national intell~=n~-.e dh-ector should be responsible to the Secretaries of State, War, Lnd the Navy as a group, Every safeguard was required to keep the central organi- zation from becoming the instrument of policy of a sin~'_,_ c-rent. 1t should be completely denied any policy-making fii=,c~i~n to pre- serve its objectivity. Magruder came down hard on practical points: t=~c- Traditional mutual aloofness of the departments which would maI~ cooperation difficult; the professional hazards and delicacy of clans=t~-`;~ opera- tions, which the regular departments, whether War, ~ti-,_ or State, could therefore not afford to house; the central agen~-ti_-'~ ~d for the authority to require the departments to pass to it th~.~ intelligence products, which they would not do~"on a voluntary Ic ~i", the im- portance of leaving no ground upon which the agency c~=.,d be used ~ a political tool by the party in power; the regi-rir~-,-mot for an Independent budget granted without detailed congress-r;a1 inqu~, Into the expenditures. The finished re o t f h p r o t e Lovett Committee noted. ~ !.~agruder mod, that there was jealousy and mistrust among the ~-w-3artmental intelligence services and also that the lack of experience` ~ielligence Dllicers in both military services contributed to the ~htation; no serious effort had been made to treat int=_ _~~ cos a -RDP78T03194A000200040001-9 - CONFIDENTIAL Cenfral nfelli ence Approved ~or Rgelease 2005/02/1 career. There must be a national intelligence organization, manned by permanent personnel of the highest caliber and trained as special- ists in the components of modern intelligence. This could not be approached through the uncoordinated activity of the departmental units naw engaged in "haphazard demobilization." The Committee unanimously concluded that it was more nearly in agreement with the proposal of the Joint Chiefs than with any other suggested plan. It therefore recommended the creation of a National Intelligence Authority over a central intelligence agency, whose director, to insure continuity, should be appointed for a term of at le~,nios 57 z~ag~, James Burke i ;..'rank A. Whitmire and Edward G. Correll 25 Ileconstructin;, ? mishap in the munned-flight hrogr?m. Si~:cfi~?r The Watchdog C~~~nrnittec (~nestion John S. Warner ~~31 history, issuer, l~ros~ects. Sr:c~;i~:?r Communications t ~ the Editors Missile crasis r,~~~rin; hotel penetration. S~CR~T The Chinese ,as A~r~~ut _ Robert M. l,eviness 47 Some striking ?Irrrr?cterirtics and their implic?tions. S-~:c~cr?r Paris Okhrana 18~-; ~ 1905 _ Rita 'T. Kroncnhitter :_i,i Founding and first dec?des o f the 'I's?rs cl?ndestine conn- Gerrevolutionawl Meld stab-nn. CoNrmr:rr-rrnL Notes on the Wennrrstrom Case _ _ Alexander Mull f7 I'echnic,?l h~oi~-ln in his testimony. CONFID]GNTlAL Concerning hspion,it;c and Social Courtesy I~ST 77 Word to the a v.vrr from the h'rench security service. OrFr- cinr. Use. Ori r Military lntelligenc ~~? 1861.-63: Part I Edwin C. Fishel 81 What the reco-?r1., sho~.c fnr llee first c?m~aigns-from M?- nctissas to Frrxhrricksburg. Or-ricrnL Usr: ONLY lntclligencc in Rcct~E~t Public Liicraturc. Or'rrcani. Usr: Orrr.Y Contemprn?crry pruhlerns Wr~rlrl W?r II Miscellany 9'.7 100 IOG 25X1 SECRET Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Approved For Release 2005/02/10 :CIA-RDP78T03194A000200040001-9 Approved For Release 2005/02/ Ilow t:ntelligerace, l~a.?. monitored the Soviet r~ro~rr~r~c for lunar ctnd planetarc~ rrrnhr?.,?. S t? BEN YEARS TO LUNA 9 James Burke 'CIIE STUDIES IN INTELLIGENCE AWARD An armual award of $500 is offered for the most significant contribu- tion to the litcrahare of intelligence submitted for publication in the Studies. The prize may be divided if the two ur more best articles submitted are judged to he of equal merit, or it may he withheld if uo article is deemed sufficiently outstanding. h;xcrpt as may be otherwise announced from year to year, articles on any sabject within the range of the Studies' purview, as defined in its masthead, will be considered for the award. 'They will be judged t~rimarily on substantive, originality and soundness, secondarily on literary qualities. Men-fibers of the Studies editorial board and staff are of course excluded from the competition. Awards are normally announced in the first issue (Winter) of each volume for articles published during the preceding calendar year. The cditr>rial board will welcome readers' nominations for awards, but rc- ecrvcs to itself exchisivc competence in the decision. Approved For Release 2005/ On the evening ~.f 3 February 1966 a Soviet spacecraft landed on the moon and began sending radio signals back to earth. 'T'his histori~? achievement was the culmination of a long, hard effort stubbornly pursued by the IJS`ATs over a period of years in 1`he face of repcatecl mission failures. O u purpose here is to tell the story of how intelli- gence kept track o~~ ?hat effort through the collection and analysis of telemetric and other information. This collection and analysis has required widespread contributions from the intelligence c~~>mmunity, usually as a sideline to assigned tasks in support of natior al security objectives. Agencies of the Depart- ment of Defense, including NSA, Norad, the communications and support agencies, DiA, and particularly the Defense Special Missile and Astronautics Cc~1t~~r, have joined with CIA's Office of Eliot and Foreign Missile and `;pace Analysis Center in the creation of an integrated system. `~cveral CIA and NSA contractors have snpplicd essential system analyses. Special credit is due i:o the operators in the field, who, work~ns! often under far from ideal conditions, have done a precise and dcrnanding job with steadily increasing skill. 'the Intelligence F'roch~et When the first radio signals from the moon arrived on earth, our collection systems were ready: we had kept track of the mission all the way from liftoff tc~ arrival, and four stations were listening for the landed spacecrafts signal. Recordings from these stations were converted into a set of lunar panorama pictures (Figure 1) which were better than any rf~leased by the Soviets. Th~.ese pictures were of great scientific i:nterest and, having been proved genuine, consti- tuted apowerful stinnalant for the U.S. lunar program: they gave the first proof that the- moon's surface is hard enough to support a spacecraft. MORI/HRP PAGES 1-24 CIASRDRE 8T03194A000200040001-9 SEECRET Luna 9 Luna 9 Approved For Release 2005/0 ~ CIA-RDP78T03194A000200040001-9 SECRET 1~ i~:u~ti?: I . Samples a} Yanorarnir I.nnar hacsimile Images Yro~lnct her heavy vehicle lifted off, and again the third stage failed. Tl:cr~c flights signaled the beginning of a huge new program. Since 19tS0 the Soviets have launched nearly forty of the heavy rockets, incPuding double or triple shots at every Mars and Venus opportunity ?;everal attempted launchings of high-apogee communication satellites. and over a dozen attempted missions to the moon. The calendar of lunar and planetary attempts is shown in Figure 3. During the same tin:c period, by way of comparison, the United States tried nineteen dog ~I' space missions-five test shots, two missions each to Mars and Venus. and ten to the moon, cuYminating in the marvellously successiful Surveyor soft landing on 2 June 196F. U.S. payloads were in the 5i1t!- to 2100-pound class; the Soviet spacecraft weighed 1400 to 3400 l a~nnds. The U.S. program suffered from fre- quent revision of its scic~itific objectives, and its early lunar mission failures resulted .in pul he criticism and long schedule delays. But because the reliability c f U.S. flight equipment increased faster than the Soviet, sornc U.S, nissions yielded high-duality data sooner than their- Soviet competitors ColZeetion and Prediction "I'hrou~;h I96I When the first Soviet It ;i3M tests hc~gan in 1957, it was necessary for us to expand upon the radar and telemetry collection techniques that we had evolved i~~ previous years to monitor the testing of shorter-range missiles. `~'ctrtunately U.S. access to some of thu coun- tries bordering the Soviet Union was assured, and fortunately the Soviets elected to use thc~ proven, simple telemetry systems that they had already devclope~d. As a result, when the first Mars shots were launched in 1960, our n~ulerstanding of the SS-6 and its subsystems was fairly far advanced:' From the very slow ;cceeleration recorded in their telemetry we could calculate immediatc(v that the two October 1960 vehicles were by far the most heavily loaded ever launched. On the 14 October Sight an unusually good early intercept covering booster separation proved that the SS-6~ i~ ,c parallel-staged rocket, with four large boosters attached aroun iy rather than behind, a central sustainer 'See David S. 13randwein, "I:acmetry Analysis," in Studies V[II 4, p. 2l it. CIA-RDP78T03194A000200040001-9 SECRET PLANETARY PIROGRAM 1961 ~ 1962 LUNAR PROGRAM Luna 9 Approved For Release 2005/02 Mars 1 Olaunch failure ?Launch success, mission ~-Mission success } Zond 2 1964 1965- 1966 1967 PLANETARY '?ROGRAM LUNAR PROGRAM ~~ Luna 5 6 78 9 10 SOVIET LtJNAR AND PLANETARY LAUNCHINGS SINCE 1960. CURVES SLOW ENERGY REQUIRED TO REACH PLANETS (M--MARS, V--VENUS) DURING EACH LAUNCH "WINDOW". PAYLOAD POTENTIAL fS GREATEST ON MIMMUM ENERGY DAY. Approved For Release 2005/02/ SECRET Luna 9 SECRET CIA-RDP78T03194A000200040001-9 stage. On both flil;hts the third-stage telemetry showed that the propellant pumps started up but failed to attain stabilized operation at full speed. How did we knoti~~ that these were Mars shots? Our knowledge. would have been only suspicion but for a peculiarity of Soviet practice. From the beginnin~~s of their respective programs the United State; and the USSR haws manifested a gross difference in launch opera Lions philosophy. t'vt Cape Kennedy, large rockets are placed upon their launch pads weeks or even months beforehand and arc sub- jected to elaborate ne tub*h-Precision 85-foot antenna, with appropriate receivers and ~tuta-E~rocessiug equipment, to be ready late in 1965. Later it wars Approved For Release 2005 SECRET decided to add a L50-f ,cst antenna of lower surface quality but simpler construction, which crnld become operational late in 1964. Soviet Planetary Shr~ts iat 196'2 All doubts about So~~ic~t intentions toward the planets vanished with the massive assault or Venus and Mars in 1962. Three flights were launched for each plauc~ : 25 August, 1 September, and 12 September for Venus, and 24 t~ctolx;r, I November, and 4 November for Mars. All six attained earth c,~ bit, but only one, the middle one to Mars, ejected intro its interplan+ tart' course. The flights followed one another so closely that there r?rnst have been little time even for diagnosing the failures, let alone Irving to correct them. The lone spacecraft tc~ depart from earth was labeled Mars I, and nothing was said abon' t Fee failures, even though they were promptly announced in the; U.. >. press. Pictures of the Mars 1 spacecraft t~ r a n~H: 6. Mars 1 Spacecraft. CIA-RDP78T03194A000200040001-9 SECRET Approved For Release 200 Luna 9 10 : CIi4~npD g78T03194A000200040001-9 enabled us to tell so~nc, things about tlae intended trajectory: the launch time was corrrx~t for an 80-hour transfer to the moon, with arrival along a directi m nearly perpendicular to the lunar axis and the rays of the sun ([~'iy;ure 8). We soon saw that this choice of trajectory offered excrllcnt conditions for either a lunar orbiter or a landing mission.. F'c ar an orbiter over the lunar poles, the arrival conditions thus selectsllection net were beginning to function. By tracking the vehicle right after ejection from parking orbit, speeding the results to the [Turfed States, and rapidly calculating the trajectory with the aid >f ~~,arg~e computers, we were beginning to be able with only a slight time lag to tell the deep-space sites where to look for the probe. 1lcoc the least of our achievements in this period was the successful integration of sensors and facilities belonging to three or four of the soveral U.S. agencies collecting intelligence. Plot only were we able to track signals from the spacecraft; we also began to intercept the command signals going up to it from the Soviet ground station in the Crimea-in the frequency region men- tioned by the Soviet visitors to f adrell Bank in 1961. But we still were not able to maintain enough coverage to confirm the execution of mid-course rnancuvers and other en-route activities described by the Savicts, and we could not ascertain the exact intended mission (ll~,r-hy? impact? soft larder?) of either flight. In contrast to their open description of the planetary instruments on Mars 1, the Soviets l; ivc us no help on Zond i and Zond 2. Perhaps the success of tlu' t1.S. Mariner flights to Venus (Aug.-Dec. 62) and Mars (Nov. 64- ~nly 65) was an embarrassment to them. nu-t1,~t Y~:,~,~~ i,~ less [n accordance ~~~itlz the trajectory constraints described above, the Soviets launched lunar probes on 12 March and 10 April 1965. Tlie lust achieved parking orbit but failed to eject and was labeled "Cosmos 6U"; tlic second did not go into orbit. The first Asmara antenna w;:ls now in operation, having been trucked in pieces into the Ethiopian mountains and assembled near the city on the high ~~c?a~ral plateau. In the absence of Soviet targets we exercised it and the PSftL station against the U.S. lunar probes Ranger 8 and 9 with fairly good results. tin 9 May, about at the end of the proper season, Luna 5 was snccessfull?y launched. 'I'hrce and a half days later, after 'lass an- ~uttnu;ements that amid-course maneuver had been made and that Ch.' spacecraft carried, "for the first time, elements of a system" for soR lan8ing, it smashed into the southeastern portion of the moon's Sea of Clouds (I?ignrc 9). The Soviets almost admitted the failure: Approved FSE RR~~ase 2005 Ficonic !J. Ixn~~act Locations of Soviet I,nnar I'rohes. they said that much h u; been learned, but the system needed further "elaboration." Luna 5 gave t]hc Asmara station its Iirst real chance to perform. The station intercepted both of the two spacecraft signals several times during the miss ion, and both Asmara and Jodrell Bank were Listening during the final approach to the moon. The telemetry data were like those from Luna 4, with minor changes, and their meaning remained obscure. '1'lu Dopl>ler fi-cduency shift of the signal was measured, rather imps rlectly on this first attempt, and gave. no evi- dence of any retrorocket dect~leration. On the basis of pre v~~ms performance this woul~ have been the end of the lunar effort ~ n,t it the following winter. During the summer months the moon ~~~ould he far south on the arrival dates, making tracking difficult ,md ~~I,ccing the critical ejection operation ocrt of range of ship coverage lint this time the Soviets decided to ignore 2,~ ,0 : CIp,~,~,,~~~Pp778T03194A000200040001-9 "SEC-KET SECRET Approved For~l`~a~e 2005/02/0,;;: CIA-RD~/~T~3194A000200040001-9 SECRET t}~e constraints. In what had evidently been planned months before as an all-out effort to gain a lunar landing success ahead of the United ~iatcs, they kept z-ight on firing away after the end of the favorable season. t)n 8 J'nne they launched Lana 6, which failed at mid-course. Ac- cording to 'l'ass, the engine powering the mid-course maneuver failed to stint off, causing a Inner miss of 100,000 miles. Using the knowl- edge. of the trajectory obtained from our tracking system, we were able to s~~how that such a large miss would require a speed change of i:housands of feet per second, and this was possible only if the spacecraft used at mid-course the propellant supply carried for the main retromaneuver at the moon. On 18 July 1965 Goad 3 was launched. Almost certainly this was the second of the anticipated 1964 Mars pair, of which only one foot off during the November opportunity. By holdv~g this shot and f:nuiching it later as a test, the Soviets showed increased prudence relative to their previous prodigal expenditure of planetary vehicles. flint 'Cond. 3 was not jest adeep-space test. By a clever choice of launch time, its trajectory carried it past the sunlit side of the n-loon and it photographed most of the far-side area left unexplored by .Lunik 3 (Figure IO). 1"ass said that the pictures would be played back from greater and greater distances as a communication test. VVe did. not intercept any of these transmissions because we did Riot have a good fix on the trajectory so as to tell our deep-space :-uttenna5 where to look. This Hight demonstrated the crucial impor- t,uice of early and accurate ir,acking after ejection. 't'he load ~3 photos s~howcd that t}~~c Soviets were continuing to develop and use the concept for photo transmission pioneered by Lunik 3 and tested on a larger- scale in the earth satellites, Cosmos 4, 1, 9, and 13.' The concept is basically different from the slow-scan television technidue used by the U.S. Ranger moon probes. The Soviet method consists of taking a photo, processing the exposed film on board the spacecraft, and then scanning the resulting h?ansparency with a living spot generated by a cathode ray tube. A photomuliiplicr detects the intensity modulation of the spot by the picture shading, ~md the resulting signal modulates the telemetry transmitter. Since talc scan speed can he varied over a wide range, the method permits slowing down the information 3-cadout rate to compensate for the. narrow bandwidth oI~ the communication link, severely limited in SECRET Approved For Release 2005/0 Fu.caus ]o. 7.on~1 :3 Photo of ~~'~?stc~n+ Port of Ntoon's Far Side. deep space probes. Such a system is eery well suited to timer map- ping from an orb~tei., and a systerrt using the same principles is being developed for the '1.5. lunar orbiter program, scheduIcd to begin flight tests in 1966.' On 4 October 19(io t, anniversary of Sputnik I and Lunik 3, the Soviets launched l,i~n.~ 7, again o~~crri~ling t}x~ir own trajectory and tracking constraints. lpparen(ly th>ion on its first pass after ejection. Approved For Release 2005/0 SECRET Luna 9 /10:CIA-RDP78T03194A000200040001-9 On 1 11'ebruary the mid-course maneuver was executed, and we recorded telemetry throughout this phase. 'The lloppler shifit showed clearly why ~n the engine fired to place the spacecraft on a lunar-impact trajectory. On 2 February the spacecraft cruised quietly toward t:he moon, holding only short periods of communica- tion with earth Can 3 February, about an hour before landing, i1~ was oriented far the retr-omancuver. Asmara, Jodrell Bank, the Royal Radar Establishment, and NRL were listening. At 1844:09.f'i GMT the retrorocket ignited and our Doppler count showed a rapid slowing down. At 1844:54.5 the main retro shut off, leaving the spacecraft desccndincr slowly toward the lunar surface. At 1845:0~'i the signal went off the air. The next four minutes must have been tense ones in the USSK; they certainly were ut the U.S. sites. Then, at 1849:45 GMT', ,~ i~'ebniary 1966, came the long-awaited message from the surface of the moon. The signals from the landed capsule included telemetry mode; previously heard en mute and also a new mode that was immediately recognized as a phoinlacsimile transmission similar to those used for wirephoto service oi~~ earth. On both sides of the Atlantic facsimile machines were hastily modified to accept the signal format, and poor pictures were ~luickly produced. Newspaper publication oi~ some of the picturer: ~~btained at Jodrell Bank brought on an amusin~~; episode: the Savietr, processing the pictures at their owu pace, were. scooped and compl lined about it. Later processing ~~I the recorded signals by special photo-reproduc- ing equipment broi,glrt out much more detail and showed that the facsimile system had yielded excellent imagery of the lunar surface.' Additional pictures v~~cre transmitted on the nights of ~l, 5, and ~'~ February. In addiaicm to showing the changing angle of sunlight, these pictures reve:dcd that the capsule moved from ,its initial in- clined orientation tee Mme ~i~ith more tilt, as if the ground supporting it were giving way slightly. '1'hc pichires were, of course, of enormous scientific interest, and papers describing the Jodrell .Bank results were promptly published. S/O/RUGM/H-22-G(i {Secret). See ?Obscivations ~?( the Russian Moon Yrobe Luna 9," by 1. (:. Davies and others, and "The Moon Jinni Lana ~" by G. l~'ieklcr and utLcrs, Nature, Vol. 209 No. 5026, 26 I'eb. GG. More recently these n~sults ^nd Soviet rek:;ises have been analysed in an "Appreciation of the I nun 9 Pictures,~? by h:n~;cne M. Shocnuik