World War I and the Emergence of America's Intelligence Network

Sabotage: Black Tom Explosion, 30 July 1916

For most of its early history, the U.S. government had no intelligence or counter-intelligence organizations. When threatened, the U.S. temporized and then disbanded its ad hoc capabilities at the conclusion of hostilities.

The Anarchist threat in the early 20th century finally spurred the U.S. government to action. Attorney General Charles Bonaparte created the Bureau of Investigation in 1908 (the predecessor of today’s FBI), largely to counter this threat that was viewed as originating from overseas. Thus the FBI, from its origins, was primarily a counter-intelligence/vice law enforcement organization.

World War I

With the outbreak of World War I, the German General Intelligence Staff immediately targeted the neutral U.S. with a focus on sabotaging, preventing, or disrupting shipment of war materials to Germany’s enemies. Starting in 1914, their agents sabotaged U.S. munitions and chemical plants and planted bombs on munitions ships crossing the Atlantic Ocean, causing fires and sinkings. The Germans also undertook biological warfare by infecting mules and horses being shipped to the war in Europe. The massive 30 July 1916 explosion on Black Tom Island in New York harbor off Jersey City, which killed two, injured hundreds, and blew out windows in Manhattan across the Hudson River, was caused by German agents and led to the passage of the Espionage Act of 1917. No individuals were arrested for the Black Tom Island sabotage.

Post World War I 

In 1919, Anarchists sent letter bombs to 36 Americans, including Attorney General A. Mitchell Palmer. One Italian Anarchist accidentally blew himself up on the doorstep of Palmer’s Washington, DC, home. The Department of Justice misunderstood the difference between an anarchist and a communist. [See Sulick (2012) for the history of how counter-intelligence was handled by John Jay’s Committee on Detecting and Defeating Conspiracies during the Revolutionary War, the exploits of Pinkerton and Baker during the Civil War, and during the Spanish-American War.] Communist activity was growing in the U.S. as a response to the 1917 communist revolution in Russia. In this environment, Congress passed an amendment to the Espionage Law (the Sedition Act of 1918), which made it a crime to advocate the overthrow of the U.S. if you were an alien, punishable by deportation, but not a crime if you were a U.S. citizen. Arrests could be made without warrants. In January 1920, Palmer directed the Bureau of Investigation along with local police to detain over 10,000 people, with 3,000 of those arrested. Using the Sedition Act, 556 foreigners were deported to Europe. 

Initially this action was supported by the public and the media. Palmer became a leading candidate for president. In 1920, however, he predicted communist riots, which did not materialize. Legal experts and the media began criticizing Palmer and the Bureau’s alleged heavy-handed methods, which led to congressional hearings in 1921. This led to a public rebuke of counter-intelligence activities, which were viewed by some as persecution of individuals’ political beliefs.

U.S. government efficacy to investigate political beliefs has been, and continues to be, a contentious issue. It boils down to the question “does belief lead to action?” and if it does, should the government investigate belief to prevent action that could damage the state?

When J. Edgar Hoover was appointed director of the Bureau of Investigation in 1924, he directed that the Bureau only investigate violations of law. With this decision, the U.S. discontinued all counter-intelligence activities. Some local police departments established intelligence squads to continue to investigate communist organizations and individuals in their cities. Also in 1924, the first Soviet military intelligence (Army Staff Second Directorate, renamed GRU in 1926) officers arrived in the U.S., establishing an illegal residency. In 1928, the first Joint State Political Directorate (OGPU)  illegals  arrived. Since the US had no active counter-intelligence organization, it was unaware of the presence of these intelligence collectors. Over the next two decades, the Soviets grew multiple espionage networks in the U.S. in conjunction with domestic communist  movements. They were involved in recruiting and/or handling individuals who volunteered to be espionage agents—most of whom were ideologically sympathetic members of the Communist Party of the U.S. and, in the Depression Era, believers of Soviet propaganda.

With the rise of the Nazis in 1933, there was a growth of pro-Nazi sympathy for the German-American Bund. President Franklin Roosevelt directed the FBI to begin investigating the Bund in 1938, and Congress provided special funding to jump start this counter-intelligence effort. By 1939, the president directed the FBI—along with U.S. Army Intelligence (MI) and the U.S. Navy Office of Naval Intelligence (ONI)—to undertake responsibility for counter-intelligence, counter-espionage, and subversive investigations in the U.S.

Source:  "Espionage Against America," by David Major and Peter C. Oleson, The Intelligencer: Journal of U.S. Intelligence Studies