ECONOMIC INTELLIGENCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01143A000300100025-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: April 7, 1999
• Sequence Number: 25
• Publication Date: October 15, 1946
• Content Type: MEMO

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SUBJECT: Economic Intelligence
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15 October 1946
1. In a memorandum attached to letter of 30 August
1946, to the Acting Assistant Director, Office of Research and Evaluation.,
I outlined my concept of what should be the organization and functions
of the Functional Branch. (See copy attached.) Now in line with our
recent conversation I have set down briefly how I think the production
of economic intelligence might be organized if the Functional Branch is
to cover all aspects of the economic field in the degree of detail I
believe you contemplate. Notwithstanding my deep interest in economic
intelligence I hesitate to recommend an expansion of the original T/O
until need for the larger staff has been demonstrated. Approval of the
suggestions made in paragraph 14. would require an increase in the number
of top grade economic Consultants from three to six or seven. (See
comparison of T/O's.) For my own part, however, I would like to be
concerned with economic intelligence whichever plan is adopted for its
organization in the Functional Branch.
2. It is impossible to understand a nation's foreign policy or
estimate its military potential without accurate knowledge of its intern-
al economy and foreign economic relations. Even when not conspicuously
present, economic considerations are involved more frequently than not
in the conduct of international relations. Foreign policy develops
and is implemented primarily to assure one's own country's security and
facilitate economic intercourse between its citizens and foreigners.
To achieve real national security it is essential to evolve a stable well
integrated economy at home with free access to required materials from
abroad, build up the economic strength of probable allies and undermine
that of probable enemies. Most of the contact private citizens have with
foreigners in peacetime is concerned with trade, finance and economic
development. Any assessment of a nation's ability to wage war must be
based on availability of raw materials, size and diversity of industrial
plant, extent and efficiency of transport and communications, financial
position, both internal and external, amount and skill of labor force
and managerial ability. Success in large-scale modern warfare requires
efficient mobilization of all such national resources in support of
military forces in the field, coupled with resourcefulness in the conduct
of economic warfaret full economic collaboration with allies, effective
blockade, prevention of enemy access to needed materials, preclusive
buying, sequestration of enemy assets, trade with neutrals, etc.
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CONFIDENTIAL
3. Logical cases could be made out for organization of the field
of economic intelligence into several different combinations of divisions
depending-upon what aspects are to be stressed and the availability of
personnel. In my memorandum of 30 August 19b6, I suggested three major
divisions (a) Raw Materials and Basic Industries, (b) Transportation
and Communications and (c) Trade and Finance and Economic Controls,
Perhaps a three-way split of the field of economic intelligence should
hot be attempted.
a, If division (a) is considered to encompass too much for
one consultant and two assistants it could be separated into Natural
Resources (including the manufacture of primary products) and Industry,
except products of direct military application. The latter might com-
prise a third separate division or be included with Military Affairs,
Natural Resources would include minerals, fuels, agricultural products,
forestry products and fisheries. Industry could be split into basic
industries and end product manufactures. Products of direct military
application should be covered collectively as Armaments,
b. Transportation and Communications (division b) and the
equipment industries supporting them are often combined, but if the
T/0 permits they could be handled as separate divisions. Transportation
should include sea, both civil and naval; railroad, highway and inland
waterway; and air, both civil and military. Communications logically
divides into post, wire, and radio,
c. Though closely related in many respects Tradp and Finance
and Economic Controls (division c) probably encompass too large a
field of diverse specialties for one Consultant and one or two assistants.
Accordingly, it is proposed to have one Consultant cover foreign govern-
ment finance and economic controls exercised through fiscal policy while
a second Consultant would handle foreign trade and general economic
controls not strictly financial in character.
4. I believe the foregoing organization of economic intelligence
is practicable as subjects are grouped so as to minimize overlapping
between divisions, and divisions are set up so as to facilitate both
development and utilization of economic intelligence. This "division
of labor" or that outlined in my memorandum of 30 August 1946 should
provide the high order of economic intelligence required by CIG if the
Economic Consultants:
a. Are accepted by people with whom they associate professionally,
whether in or out of government, as competent in their respective fields;
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b. Are cognizant in general of all foreign economic activities
which engage the attention of the various agencies of the U. S. Govern-
ment, as well as those participated in by private U. S. citizens having
interests abroad;
c. Understand, as regards relevance to the national security,
the significance of foreign economic activities well enough to estimate
the effects of U. S. Government economic policy and action in all aspects
of international relations;
d. Have a comprehensive knowledge of economic information and
intelligence sources, particularly agencies of the U. S. Government,
banks, business firms, the press, educational institutions, research organiz-
ations and foreign origins, both official and private;
e. Furnish responsible officers of CIG with competent advice,
extend constructive aid to ORE Staffs, work harmoniously with the Regional
Branches so as to assist them on studies within regions and in turn
secure their cooperation in the preparation of inter-regional estimates
and surveys which require correlation and integration of materials from
two or more research branches.
f. Are able to develop economic intelligence by coordination
and direction of interdepartmental programs (in conjunction with ICAPS),
through instructions to U. S. representatives abroad (in conjunction with
OC&D), by consultation with experts, policy and operating officials in
and out of government, and by close following of trade and technical liter-
ature,
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Plans and Requirements Staff
Encl?
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