Created: 12/19/1944

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comment should be numbered to correspond with number in Toine should be drawn across sheet under each comment. Officer Designations should be used in To column.

Each Officer should Initial (check mark Insufficient) before further routi Action desired or action taken should be indicated in Contents column-Routing sheet should always be returned to Registry. For Officer Designations see separate sheet.





Whitney H. Shopardson

FBQMi Frank T. Ryan

SUBJECTi Problems Confronting our Spanish Mission

With further reference to ay memorandum of Deoenbernlsoed before you the make-up of the personnelrepresenting us inish to elaborate in more detail the aspoots of several problems confronting us as regards our operations there.

The extent to whioh the flow of intelligence information from Spain has deoreaaed amy be illustrated by oiting the number of pouoh reports received in Sovember20. They are divided as followsI






Frenchmilitary (Maquis) 1



Furthermore, wo bare reoeivod only one Intelligence report by oable slnoe Octobernd only flvs sinoe September 7.

Aside froa tho voluminous battle order reporting done on German positions In franco prior to the invasion whiohigh in Junoouoh reports andable reports, the real reason for the falling off of reports from Spain almost to the vanishing point dates back to the ratification of the Madrid Agrooment inhioh apooifloally exoludes dlreot intelligence in Spain as per the following ol&uaei

"So far asdlreot iotelligenoe froa Spain Is oonoernod, SI operations will oovor only suoh intelligence as may be requested

or agreed to by tho Ambassador and tho Military and Havalr bo required by tho'Joint Chiefe of Staff with the concurrence of tha Stato Department."

Aa wo know, tho Ambassador has always boon unsympathetic to tha operations of OSS .In and from Spain, whioh may explain why he never once, to my knowledge, requested on his own Initiative information to be gathered through OSS sources; The one possible exception to his refusal" to accept; the servloee of SI in Spain was the Wolfreai reporting donerom hie post In La Cor una, whloh reporting was done under the ol'ose supervision and oooperation of the Embassy's Commercial Attaohe.

Theish to emphasise in the passage quoted above is that it was responsible for the Initiative for Spanishpassing out of our hands' into*the bands of Mr. Hayes who, in turn, simply defaulted on his prerogative, leaving our Spanish Mission "high and dry" for assignments.

'"Our'present Spanish SI' set-up, as outlined ln my letter ofherefore. Is tsaUgous to the proverbial "next before the horao". We have an offloe staffode olerk,microfilm expert,inance officer, but there are no messages to oode, no reports to miorofilm, and no ogonts to pay. What we need first and foremost ln Spain are agents. But there is no need In having agents unless wo have authority for them to organise for the penetration of tho spheres of our lute rest, namely, politioal, military, econonlo, social, eto. This wo oennot do under the present Madrid Agreement*

Wow that Ambassador Hayes has rosined, it would be an ideal time to oonaider drastloally revising our policy of operating in Spain to tho oxtent of sorapptng this Agreement, for under Its limitations we simply oannot operate (for reasons refer to my memorandum of. Tbo first thing whioh should be done, therefore, would be torank disouaslon with the new Ambassador, Mr. Armour, reminding him of the value and usefulnessecret Intelligence servloe in Spain, enlisting his endorsement of the collection of information through our aouroes.on'mllltary, politioal, eoonomlo, and soolal matters within Spain. Havinghis agreement In prlnoiple we ahould then oonoentrate on recruiting for sending to Spain private oover representativesvery


In number but well oho seaSpanish ohains to penetrate Into intereet.

for the purpose of organising the various spheres of our

before going aheadlan of this kind, the prinolple of how Spain oould be best covered by secret intelll-gonoe oust be deoided. Jhere ssene torevalent belief here in OSS that intslligSDa* operations in Spain should be based not in Madrid but ln Lisbon and Southern Franoe. .The proponents of this system seen to ae to bs ooofusing "oomBuoloetioae', with It is my opinion that the only way that intelligence oan be gathered in Spain Is by having operators ln Spain, not in Lisbon. They, likewise, should be dirsotsd froa Spain. If, for oertain reasons, it is considered advisable to route tbe inforaation gathered by. these operators to Lisbon for transmission to Washington there oould ba no valid objection torocedure. ooanunioations" problem ond not en "operations" problem. If Ambassador Armour la going to be sympathetic andin support of our activities in Spain (at the same time keeping himself aloof fron the aotual operations themselves) thea there is no reason why the transmissions oould not oontinue to take plaoe from the Embassy in Madrid.

urope that is seething with intrigue andumber of plots being hatohed in connection with Spain fron various elements including Mooarohlets, Socialists, Separatists and Conssunists, the Amor loan Government should wsll know by now from sad experience the vital inportanoe of being informed on the plans, preparations, aad personnel of thaaa movements. It seems to ae that intimate knowledge of the activities of the Communists in Spain should be of major interest to the State Department. Tho Communist pattern presently taking shape in Greeoe, Italy, and the Balkan oountriee, in faot all over Europe, should make it imperative that no atone should be left unturned to keep abreast of their day to day This oan best be accomplished in the oase of Spain byinto their ranks agents of our own ohoosing.

The Comxunlstio issue may some dayecisive one for the State Department. elieve it the duty of an intelligence organisation suoh as ours to look ahead as far as possible andfuture events by having them well oovered in advonoe of their happening.

We know, of oourse,the value that seoret intelligence "ill play in Spain in tracking down projects ooming under tho headine of Safe Haven.

. . stability, of the Spanish ourrenoy may be questioned anddevaluation of the peoetaatter of time. If, forTreasury had advance notioe of the date and extent ofno doubt oould make oapital use of suoh Information. Evenforeign governmente oftentime* reeort to variousin order to stimulate their flow of export, over and abovederived from devaluation, thereby olroumventins; our

Another aspeot of importance of Spain for intelligence purpoBos has to do with South America where the politloal and eoomomlo happeningsis the two cannot be minimised.

I, likewise, believe it would be of prime interest for our Government to be informed of any secret understandings or oom-mitmente ba they in the military, political or economic fields which the British or French Governments now or in the future may have with Spain. o not believe we should automatically assume that we are boiug kept au oourant" by our Allies as to their policy towards other regions and countries of Europe. Rather is it up to this country to install its own ohooking system throughout the world so that we will not be oompletely dependent on informationus by our Allied frlenda.

all of the foregoing, however, can only be aocoepliehed by organized, clandestine methodsroper compilation to be made of unknown or purposely hidden facts upon whioh our Government may take appropriate action consistent with our national Interest.

In discussing our affairs with Mr. Armour, it would be woll to inform him that he will undoubtedly hear some points of oritioiam of our organisation, not only from Mr. Hayes but aleo from tho present Counselor, Walton Buttorworth,m reliably informed, is not. too keen about ua, and is particularly antagonistic to Argus. hink it advisable to discuss this Embassy viewpoint with him quite frankly so that when he arrlvos in Madrid he will not be greeted withthat he had not previously been informed about.

In conclusion, my one plea and hope Is that it will be possible to either void entirely the Madrid Agreement or modify It to the important extent of permitting us to organise within Spain for the collection of seoret intelligence on military, politloal, social, and economic subjeots, for withoutlearance it ie farcial even to keep the skeleton group we presently have over there.

. *c

F. T.


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