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The Hazards of Private Spy Operations

The Pond: Running Agents for State,


War, and the CIA
Mark Stout
Editors note: The career of John officer in Hungary. He had a
Frenchy Grombach has long secret second job with an espio-
been a mystery that apparently nage organization known to the
would never be solved, given the few who knew of it at all as The
secrecy of his actual work and the Pond. 2
exaggerations of his memoirs and
collaborators. Mark Stout has Sadly, most of the Ponds 13-year
labored valiantly in publicly


history is lost. This obscurity was
available sources and, with the intentional. When the Pond was
help of other historians, in per- created in early 1942, the United
Three successive sonal collections to outline States had very little experience
government agencies Grombachs activities. This arti- with intelligence, and the notion
found that having such cle presents his findings. In late of a spy agency which would be
an independent 2001, however, voluminous not only officially unacknowl-
intelligence operation records of Grombachs semi-pri- edged, but actually unknown,
vate intelligence organization appealed to some people in Wash-
was more trouble than were found in a barn in Virginia.
it was worth. ington. These people were
Those records are now at the CIA, repelled by the larger-than-life
which, after reviewing them for publicity hound William Dono-

lingering security concerns, will


transfer them to the National
Archives. Mr. Stout had access to
the newly discovered records
before he left the Agency in 2003. 1
van and his Oh So Social
intelligence agency. For a prece-
dent they looked instead to
foreign intelligence services such
as the British MI-6, which they
thought was more discreet and
I first saw Budapest in the sum- whose chief was never named in
mer of 1946. I came as a covert the press.
agent, a member of an American
intelligence organizationthere In accordance with this philoso-
then being no CIAwhich has phy, the Pond spent most of its
since ceased to exist. With this existence not as a government
sentence in A Short Course in the agency, but as a private sector
Secret War, foreign service officer organization, operating within
James McCargar began to de- real companies with names such
scribe his brief career as a case

2Christopher Felix, (pseud. for James Mc-


1 The author thanks Professor Christopher Cargar), A Short Course in the Secret War
Simpson (American University), James (Lanham, MD: Madison Books, 2001), 156.
McCargar, Michael Warner, and Hayden The book was first published in 1963. Mc-
Mark Stout is an analyst in the Peake for their kind assistance and en- Cargar added footnotes in a 1987 edition,
Institute for Defense Analyses. couragement in this project. Professor giving identifying information, although
He has served in the Directorate Simpson shared many documents from his highly incomplete, about the intelligence
of Intelligence in CIA. file on Grombach. organization in which he served.

Studies in Intelligence Vol. 48, No. 3 69


The Pond

as the Universal Service Corpo- anyway and spent five years on


ration. 3 This practice contributed active duty as a military police
substantially to obscurity and officer, including time in the Pan-
security. However, three succes- ama Canal Zone, where he was
sive government agencies found assistant provost marshal and
that having such an independent assistant G-2, his first involve-
intelligence operationand, ment with intelligence. 5
worse yet, one run by a pugna-
cious, conspiratorial ideologue Grombach left the regular army
was more trouble than it was in 1928 and joined the New York
worth, and the notion of having a National Guard. In 1929 he went
truly secret intelligence organiza- to work for a subsidiary of CBS
tion never did catch on in the and Paramount Publix, where he
United States. was so successful that he was
able to start several radio pro-
gram production companies of his
A Perpetual, A Far-Seeing own. 6 Grombach kept his hand in
Service the intelligence business, how-
ever, with a highly confidential
The true believer who headed the secret project in 1937 for the
Pond for its entire existence was State Department, and in 1940 Grombach as a West Point cadet.
born in 1901, a Frenchman, the he authored an article in Infan- US Military Academy Photograph
son of the French consul in New try Journal which discussed the
Orleans. At the age of 18, the role of radio in warfare and, in Armys G-2, and as a result
young John (or Jean) Grombach particular, described how innocu- Grombach soon was ordered to
renounced his claim to French cit- ous-sounding broadcasts could be Washington. 9
izenship and became an used to convey secret messages. 7
American when he went to West
For the first six months of 1942,
Point. There he was an athletic In 1941, with war looming,
Grombach was on part-time loan
star, but the day before gradua- Grombach was inducted back
to the Coordinator of Informa-
tion it was found that he had into the Army as a captain. 8 On
tion (COI), Col. William
eight more demerits than the eve of war, he was the morale
Donovans organization, which
allowed. The authorities decided officer of the 27th Infantry Divi-
would soon be renamed the Office
to give him a B.S. degree but sion, which had been formed
of Strategic Services (OSS). Dur-
deprive him of a commission. 4 from the New York National
Nonetheless, not long after grad- Guard. After Pearl Harbor, ing this time the War Depart-
uation he wangled a commission friends recommended him to the ment was getting a new intelli-
gence effort off the ground, one
tailor-made for Grombachs secre-
3 Julius Mader, Whos Who in CIA (Berlin, 5 Memorandum AcoS G-2, Governors Is-
DRG: Julius Mader, 1968); Grombach Dia- land, New York, Subject Grombach, John
ries, 1947 frontispiece, and 19 February V. 23 September 1958, Stevenson Papers. 9LaVarre to Miles, 8 December 1941 and
1947, Grombach Papers, USMA Library, 6 Outline of (Jean) John V. Grombach. Grombach to Bill [LaVarre], 31 January
Manuscript Collection. The 194655 dia- 7 Grombach to Brigadier General Stephen 1977; George S. Smith memorandum to
ries are in boxes 3 and 4. Fuqua, 19 November 1973, courtesy of Personnel Officer, G-2, Subject: Officer
4 Outline of (Jean) John V. Grombach, Christopher Simpson (hereafter Simpson Personnel, 24 January 1942. Grombachs
Charles G. Stevenson Papers, Box 6, Fold- file); Grombach, Captain John V., The In- assignment was made official in Ralph C.
er Grombach, US Military Academy (US- visible Weapon, Infantry Journal, July Smith memorandum to Adjutant General,
MA) Library, Manuscript Collection August 1940: 34044. Subject: Detail of Major John V. Grom-
(hereafter Stevenson Papers). 8 Outline of (Jean) John V. Grombach. bach, 16 February 1942, Simpson file.

70 Studies in Intelligence Vol. 48, No. 3


The Pond


. . . at the beginning of
1944, only those in the
War Department and
tive tendencies. The concerned unchanged for nearly 13 years. 13
agencies had earlier agreed that the State and the It started out under the real
secret intelligence (what we Presidents office, the cover of the Coverage and Indoc-
today call clandestine intelli- President himself, who trination Branch, to which
gence collection), would be the had to approve Grombach had already been
purview of COI. However, in assigned. By the end of the war it
operations knew it had become the Special Service
early 1942, the jealousies and
complaints of various agencies existed. Branch. At some point, certainly
coalesced into a serious move to by 1946, the Pond became the
dismember Donovans group. In
early March, the Joint Chiefs of
Staff adopted as their position a
proposal to abolish the COI and
distribute most of its parts

lease on life and was around for
the long haul. That month, Kro-
name generally used by the few
who knew anything at all about
the group. Grombach probably
selected this name as a diminu-
tive form of Lake which was the
among the JCS and the services. ners guidance was expanded: he cover term he used for the G-2. 14
Under this proposal, the fate of was now to establish a perpet-
the secret intelligence function ual, a far-seeing, a far-distant, From the very beginning, Grom-
would be decided in consulta- continuing secret intelligence bach split his time between
tions between the chiefs and the service. 11 In other words, Kro- Washington and the Ponds
State Department. 10 ner was to establish a long-term, offices in New York City. After
albeit secret rival to Donovans the war Grombach would estab-
The Armys G-2, Maj. Gen. agency. lish the Universal Service
George Strong, was one of those Corporation in New York, but it
most committed to disestablish- Kroner selected Grombach to is not clear if the Ponds wartime
ing the COI while he attempted head this new organization par- offices there were under commer-
to move in on Donovans turf by ticularly because [he] could take cial or official cover. In any event,
creating his own secret intelli- such instructions, that all of this the various security measures
gence service. More discreet than should be done under the terms worked well in the United States.
the COI, it was to operate of the highest secrecy. 12 With an Gen. Kroner testified after the
initial allocation from the War war that when I left the direc-
cooperatively with the State
Department of $150,000 for 1942, tion of that office at the
Department and undercut the
Grombach set to work establish- beginning of 1944, only those in
rationale for a COI clandestine
ing the organization and soon the War Department and the
collection unit. In the spring of
had in place a structure that State and the Presidents office,
1942, as the fate of COI hung in
would continue largely the President himself, who had to
the balance, Brig. Gen. Hayes
know by virtue of approving cer-
Kroner, the head of the War
tain operations, knew it
Departments Military Intelli- 11 National Security Act of 1947, Hearing
existed. 15 In Washington, the
gence Service, was given official before the Committee on Expenditures in Ponds day-to-day connection
approval and direction, almost the Executive Departments, 80th Con-
with the department was
certainly by his immediate supe- gress, First Session, on H.R. 2319, 27 June
1947 (Washington, DC: US Government through the Division of Foreign
rior, Gen. Strong, to establish a
Printing Office, 1982) (hereafter National
secret intelligence organization. Security Act), 54. The transcript of these
By October the OSS had a new closed hearings was lost until a copy was 13 Grombach Diaries, 9 August 1949.
found many years later in CIA files. It was 14 When CIA was formed, Grombach re-
declassified and published by the House ferred to it as Bay, another body of water
Bradley F. Smith, The Shadow Warriors:
10 Permanent Select Committee on Intelli- with which his little Pond later became af-
OSS and the Origins of the CIA (New York: gence. filiated.
Basic Books, 1983), 11719. 12 National Security Act, 54. 15 National Security Act, 54.

Studies in Intelligence Vol. 48, No. 3 71


The Pond


In 1942, with a Soviet
military intelligence
officer who had
Activity Correlation (FC), which, particular emphasis on commer-
during the war, fell under the defected in 1937, cial cover. Several companies
authority of Assistant Secretary [Grombach] identified provided cover for the Pond, but
Adolf Berle, the departments a list of Soviet agents the only identifiable one is N.V.
intelligence coordinator. The working in the OSS. Philips Gloeilampenfabrieken. A
director of naval intelligence Dutch company, Philips helped


later said that the Army never fund the Pond and otherwise
told the Navy about the Pond assisted its operations. 20 After
either. Pearl Harbor, the company had
approached the OSS and the War
We found out about it only by Department which allowed for- Department G-2 offering its help.
accident and against the eign service officers (FSOs) to It worked with both until, on
wishes of the Army. They serve as case officers. These 31 October 1942, Gen. Strong
never offered the Navy the FSOs had their own sources of wrote to Donovan demanding
services, never offered to make funds and did not have to tell the that the OSS cease all contact
it available to meet our needs chief of mission what they were with Philips, leaving them exclu-
not one single bit of infor- doing, although some did. They sively to G-2, that is to say, to
mation that was obtained by had remarkably little training Grombach. Despite the unhappi-
that Army agency ever came and a great deal of indepen- ness of his subordinates,
to the Navy. 16 dence. James McCargar Donovan acquiesced. Philips was
describes his arrival in 1946 at a good partner for the Pond and
the legation in Budapest, where a worth fighting for because it had
A few people at FBI headquar-
college friend was serving. Soon subsidiaries all over the world,
ters were also in on the secret, as
the friend was given a new post- including in occupied countries.
the Pond produced some reports
ing and asked McCargar if he In short, Philips offered access to
pertaining to domestic security.
would like to become the Ponds interesting places. 21
In early 1947, an FBI informer
happened to be in a Pond office in officer in Budapest. McCargar
New York and saw people typing accepted, and, without any spe-
what looked like intelligence cial training, he inherited a Fighting in the War
reports. The FBIs assistant spe- network of Hungarian assets. 19 Department
cial agent in charge was
suspicious and ordered further Despite the close relations with From his first months in the War
inquiry, unaware that the whole the State Department, Grom- Department, Grombach was con-
thing was well known to Mickey bach, ever secretive, placed stantly on the lookout for
Ladd, chief of the FBIs Domestic communist subversion, a propen-
Intelligence Division, an ally of sity that repeatedly created
18 For a reference to commercial cover ge-
Grombach. 17 friction with others. In 1942,
nerically, see Callison (OSS) memorandum
to Andrews, 28 November, 1944, National with Alexander Barmine, a
Overseas, the Pond had case Archives and Records Administration Soviet military intelligence
officers under various types of (NARA), RG 263, Troy Papers, Box 10, officer who had defected in 1937,
cover. 18 The Pond set itself apart Folder 1. See also Anthony Leviero, Ar-
mys World Intelligence Ring Reported
he identified a list of Soviet
from the OSS by reaching an Halted by New Agency, New York Times, agents working in the OSS. But
agreement with the State 21 May 1947: 1.
19 James McCargar, oral history interview,

Foreign Affairs Oral History Collection, 20 Grombach to Murphy, 17 February 1956,

16 National Security Act, 68. Georgetown University Library, 1995 Simpson file.
17 Mumford (FBI) memorandum to Ladd, (hereafter McCargar OH), 113; Grombach 21 Various documents in NARA RG 226,

23 April 1947, obtained through FOIA. Diaries, 27 June 1946. Entry 210, Box 359, folder 1.

72 Studies in Intelligence Vol. 48, No. 3


The Pond

1942 was a desperate time, and appear to be at a given McCloy asked McCormack to
the accusations of a mid-ranking moment. How one can elimi- review the US signals intelli-
Army ideologue did not cut much nate anything within a few gence system. The result so
ice in Washington. The accusa- days after its receipt is diffi- impressed McCloy that he had
tions brought only a reminder cult to understand. 24 McCormack commissioned in
that the Soviet Union was now 1942 as a colonel and got him
Americas ally. 22 The culprit in these elimina- assigned to the G-2. That McCor-
tions was Col. Alfred McCor- mack did not share Grombachs
Grombach stayed on the trail of mack, the G-2s Director of Intel- view of communists would have
subversion, however. As the war ligencein charge of what we been enough to antagonize the
progressed and the Pond began today call all-source intelligence head of the Pond, but McCor-
to collect intelligence from over- analysis, with whom Grombach macks appointment to colonel
seas, Grombach found, to his would feud throughout the war. 25 would also have been irksome to
dismay, that 80 percent or more Grombach pulled a fast one and Grombach, who by 1942 had
of his reports about the Soviet was able to track McCormacks labored 19 years on active duty
Union and communism were alleged misdeeds by striking a and in the National Guard with-
being eliminatednot used in deal with a sergeant who ran out achieving that rank. 27
intelligence analyses and not McCormacks incinerator. This
passed to consumers. 23 This was deal allowed Grombach to collect Late in the war, Grombach began
ideologically offensive to Grom- all the eliminated reports and see to work Project 1641, a study of
bach and ran contrary to his the comments that McCormack communist subversion in the US
philosophy of intelligence. As he and his staff had written on government. The resulting mono-
wrote later, while in the midst of them. 26 graphs included a detailed list
a similar dispute with the CIA: of reports eliminated by McCor-
McCormack earned great respect mack and his subordinates. It
Intelligence is the gathering from Secretary of War Stimson also named numerous alleged
of data on selected subjects and Army Chief of Staff Mar- communists, including two work-
without regard to correct- shal, but it is hard to imagine a ing for McCormack. Grombach
ness. Nor can intelligence be man more certain to draw Grom- turned the names over to the
limited to the subjects indi- bachs disdain. McCormack had FBI, which investigated them in
cated for investigation but been a partner in a prominent 1945. Other people named as
odds and ends of sometimes New York law firm alongside communists in Project 1641 were
unrelated data provide the John McCloy, who would became Alger Hiss, Carl Marzani (a com-
cement that binds the mosaic. assistant secretary of war. munist in the OSS who, shortly
It is therefore impossible to Shortly after Pearl Harbor, after being transferred to the
eliminate any material, no State Department in late 1945
matter how far-fetched it may would be convicted of having
24 Blind memorandum, October 14, 1952,
denied this fact under oath), and
Sokolsky Papers. The author of this memo
22 Grombach to Sokolsky, 28 May 1953, is not identified, but it is quite clearly writ-
John Stewart Service (a China
George E. Sokolsky Papers, Box 57, Folder ten in Grombachs style. hand later forced out of the State
Grombach, John, Hoover Institution Ar- 25 SRH 185, War Experience of Alfred Mc-

chives (hereafter Sokolsky papers). Cormack, excerpt in James L. Gilbert and


23 Grombach to Yeaton, 10 February 1977, John P. Finnegan, U.S. Army Signals In- 27 McCormack, Winthrop Laflin, The

Ivan D. Yeaton Papers, Box 5, Folder telligence in World War II: A Documentary State Department Loses the Lead in Na-
Grombach, Hoover Institution Archives History (Washington, DC: Center of Mili- tional Intelligence, 194546: A Case Study
(hereafter Yeaton Papers); LaVarre to tary History, US Army, 1993), 1189 and of Decision-Making and Influence in the
Patrick J. Hurley, 12/8/45, Patrick J. Hur- 1267. Federal Government, unpublished manu-
ley Papers, Box 98, Folder 6, University of 26 Grombach to Yeaton, 10 February 1977, script, March 1967, CIA Historical Intelli-
Oklahoma, Western History Collection. Yeaton Papers. gence Collection.

Studies in Intelligence Vol. 48, No. 3 73


The Pond

Grombach somehow
began to suspect the
British were opening
Department under pressure from Abwehr officers posted in Paris
Senator Joseph McCarthy). the pouches. and refugees from the east. In
Finally, the monographs called on the book, Grombach made a vari-
the inspector general to investi-
gate McCormack. 28 In the wake
of this incendiary project, Grom-
bach was called before his
superiors on 15 June 1945 and
ety of interesting claims about
the nature of Petiots informa-
tion. In 1942, for example, Petiot
reported a story he had heard
from a Polish patient that the
and investigated his allegations.
accused of discrediting an officer Soviet NKVD had massacred
In March 1946, just as McCor-
of the Military Intelligence Ser- 18,000 Polish officers in the
mack was facing enormous
vice to outsiders and of Katyn Forest. The Pond reported
opposition from the old guard of
unauthorized disclosures of clas- this to War Department head-
the Foreign Service, which
sified information. He denied quarters, where McCormack
opposed creation of an intelli-
both allegations. No investiga- suppressed it, in Grombachs
gence office independent of the
tion took place and that seemed view, because it showed the
regional offices, the committee
to be the end of the matter. Soviet Union in a negative light.
made public Grombachs charges,
Petiot also reportedly identified a
though without mentioning his
number of Abwehr agents who
It was not the end of the matter. name. McCormack entered a very
had been sent to the US, allow-
That fall, President Truman abol- public feud with the committees
ing the FBI to turn some of
ished the OSS and sent its chairman and resigned the next
them. 30
Research and Analysis Branch to month. 29
the State Department. He
intended having the State According to Grombach, in May
Department form the center of Pond Operations 1942, Petiot reported that the
the nations post-war intelli- Germans were producing mis-
gence establishment. Secretary of Most of the available informa- siles at Peenemunde; the
State Byrnes named Alfred tion on Pond operations during information, he asserted, allowed
McCormack to head up the World War II comes from Grom- other Pond assets to photograph
departments Interim Research bachs writings many years later, the site from Norwegian fishing
and Intelligence Service. Grom- particularly his book, The Great boats. During the war, informa-
bach passed to the House Liquidator, published in 1980. tion gleaned by the Ponds
Committee on Military Affairs The book recounts the story of networks in Norway and Sweden
the names of 15 G-2 officers who Marcel Petiot, a Parisian doctor was brought to the United States
had followed McCormack to the who was a Pond sourceand also in the diplomatic pouch from
State Department and whom he a serial killer, who was tried, con- Stockholm via London. On the
suspected of disloyalty. The com- victed, and guillotined in 1946. Stockholm to London leg, British
mittee talked with Grombach Petiot passed on gossip obtained couriers carried the pouches.
from his patients and contacts in Grombach somehow began to
Paris, who included German suspect the British were opening
28 Memo G-2 Personnel Security Branch, the pouches. He arranged to have
G-2, Subject: Grombach, John Valentine, an unopened pouch sent to the
1 June 1955, declassified, courtesy of 29 Grombach Diaries, notes for a letter to
FBI for analysis. The Bureau
Christopher Simpson; Memo Collins to As- Bill on the pages for 2025 April 1946;
sistant Chief of Staff for Intelligence, Sub- House Group to Drop Pro-Soviet Hear-
confirmed that it had been
ject: Grombach, John Valentine, ings, New York Times, 26 March 1946: 24; expertly opened and resealed.
30 September 1958; LaVarre to Patrick J. Denies Bureau Aides Have Pro-Soviet Bi-
Hurley, 12/8/45; John V. Grombach, The as, New York Times, 21 March 1946: 12.
Great Liquidator (New York: Zebra Books, House Group to Drop Pro-Soviet Hear- 30Grombach, The Great Liquidator, 1078
1980), 1089. ings, New York Times, 26 March 1946: 24. and 1167.

74 Studies in Intelligence Vol. 48, No. 3


The Pond


In a paper titled Post-
War Intelligence
Thereafter American couriers Aims, Grombachs that a total communist takeover
carried the pouches. 31 executive officer was inevitable, and he wanted to
create an underground network
argued that the Pond
Hungary was a major target of that would operate in a commu-
should live on. nist Hungary. He sought radios
Pond operations both during and
after the war. During the war the to keep in contact with the West
Pond had a network of sources in
the Hungarian government and
Hungarian army intelligence pro-
viding information from places
such as Berlin, Warsaw, and

a network of assets, but it was
heavily weighted toward the
when the time came. In May
1947, McCargar returned to
Washington for consultations,
first with the head of Foreign
Activity Correlation Division,
Budapest, including order of bat- Hungarian aristocracy. With the then with Grombach himself.
tle information provided by leftists firmly in control and sup- Grombach vetoed the provision of
Hungarian military attachs and ported by the occupying Soviet radios but was willing to enter-
Hungarian observers with the army, this was not satisfactory. 33 tain other forms of support. He
Wehrmacht. The Hungarian McCargar set out to expand the felt, however, that he lacked the
reporting flowed through Lisbon, network, which he was able to do authority to approve such activi-
a key hub of Pond activity. An by the fall of 1946. These sources ties, and he allowed McCargar to
FSO working with the Pond in reported on the infighting among brief Charles E. Bohlen, counse-
Lisbon, Edward S. Crocker, the parties of the left and on the lor at the department. Bohlen
served as a conduit between communists slow and inexorable nixed the idea, but he said he
Admiral Horthy, the leader of takeover. They were even able to would consider allowing McCar-
Hungary, and US officials in provide transcripts of Hungarian gar to exfiltrate Hungarian
Washington on the progress of cabinet meetings. 34 political leaders who had lost the
Horthys attempts to extricate his battle against communism and
country from the war. Grombach Some of McCargars sources were some of McCargars sources.
believed that several Pond opera- eager for tangible US support in When the communists finally
tions out of Lisbon were their struggles against the com- consolidated their power later
seriously sabotaged by Col. Sol- munists. One, a Socialist member that year, McCargar, working
borg, the controversial OSS of the communist-dominated with a Central Intelligence
representative there, who later Trade Union Council, believed Group officer posted in Vienna,
was military attach. Indeed, brought out 75 Hungarians. 35
Grombach thought he had very 32 Grombach to Fuqua, 19 November 1973,
good reason to believe [that Sol- Simpson file; Paraphrase of State Depart-
borg] was a deep buried foreign ment Cable 842 Lisbon to Secretary of Move to the State Department
secret agent. As a result, the State, Washington, 18 March 1944, NARA,
Pond moved some of its opera- RG 319, Entry 58, 270/7/26/06-7 Box 36,
Pursuant to the Ponds charter
tions out of Lisbon to Madrid and Folder 1; compare with Nicholas Horthy,
Admiral Nicholas Horthy: Memoirs, Anno- that it should be a a perpetual, a
Berne. 32 tated by Andrew L. Simon (Safety Harbor, far-seeing, a far-distant, continu-
FL: Simon Publications, 2000), 2537, at ing secret intelligence service, in
After the war, in early 1946, www.net.hu/corvinus/lib/horthy/hor- December 1943, Charles Steven-
thy.pdf.
McCargar became a Pond case 33 Felix, 17075; also, McCargar OH, 1134.
son, Grombach's executive officer,
officer in Hungary. He inherited 34 Their Man in Budapest: James McCar- had already laid out a plan of
gar and the 1947 Road to Freedom,
Hungarian Quarterly, XLII, No. 161
31 Grombach, The Great Liquidator, 116; (Spring 2001), published on 35 Felix, xii, 220, 262; authors interview

Grombach to Yeaton, February 25, 1977, http://www.hungary.com/hungq/ with McCargar, 19 January 2003, Wash-
Yeaton Papers. no161/038.html; Felix, 195200. ington, DC.

Studies in Intelligence Vol. 48, No. 3 75


The Pond


By early 1947,
the Pond was under
serious pressure.
action for the post-war period. In Before any attempt was made to
a paper titled Post-War Intelli- close the Pond, however, its
gence Aims, he argued that the
Pond should live on. Stevenson
believed that G-2 would have to
pay close attention to Germany
and Japan to prevent them from
group chiefs came to Vanden-
berg and said they would like to
work for the CIG. Vandenberg
took this under advisement,
though it is doubtful that he con-
again trying to conquer the sidered it very seriously. Not long
Shortly after the war ended,
world. He did not mention the thereafter, a CIG operative was
Stevensons plan, indeed the
Soviet Union, but he clearly had in a bar, apparently in France,
Ponds very existence, was chal- and overheard several people
it in mind when he argued that lenged. In 1946, Director of
the intelligence system should talking about intelligence opera-
Central Intelligence Hoyt Van- tions. After they left, the CIG
also be on the lookout for other denberg started to consolidate operative approached the bar-
nations that may seek world power in the CIG. He consulted tender, who provided the names
domination through revolution
the secretary of war and con- and addresses of the Pond offic-
or conquest.
vinced him that the CIG should ers. The incident was reported to
be a more robust organization Vandenberg. Given this horrible
In order to do all this, it would be and in particular that clandes- lack of discretion, Vandenberg
necessary to maintain a secret, tine collection should be cen- told Congress, he was certainly
independent, and exclusive sys- tralized there. Confident now not able to incorporate the Pond
tem for the clandestine collection that the National Intelligence into the CIG. 38
of intelligence. This system Authority (NIA)the real deci-
should not be the OSS, Steven- sion making authoritywould do By early 1947, the Pond was
son thought, though he admitted under serious pressure. Grom-
the right thing, Vandenberg took
that the Pond was infinitesi- bach wrote in his diary in
the matter to the Intelligence
mal by comparison, and its work February [CIG] on tailout to
Advisory Board (IAB), which con- get me. 39 He was right. In April
had proceeded slowly, not just sisted of the intelligence chiefs of
because of the lack of resources, Vandenberg and Adm. Roscoe
the services, the State Depart- Hillenkoetter (Vandenburgs
but also because an efficient ment, and the FBI. The G-2, Gen. soon-to-be successor) signed a
secret intelligence system cannot Chamberlin, opposed centraliza- joint letter to the G-2 that its
be built overnight. However, this
tion of clandestine collection, but, secret intelligence operations
methodical approach was now
with the secretary of war hold- should be discontinued with the
beginning to show results and
ing the opposite view, he had no least practicable delay. 40 The
hopefully these results would
room to maneuver. In late June, Pond was so desperate that for
allow G-2 to be chosen as the the first time it publicly revealed
the IAB unanimously agreed that
post-war secret intelligence its existence, leaking word to the
centralization should take place,
agency. Significantly, Stevenson New York Times that the NIA
and the next month the NIA
suggested that if G-2 were not had compelled the War Depart-
agreed. 37
allowed to do this, then State ment to liquidate its world-wide
Department should receive the secret intelligence network.
nod. 36 37 National Security Act, 6 and 46; C. Tho-
mas Thorne Jr., et al., eds., Foreign Rela-
tions of the United States, 1945-1950: 38 National Security Act, 8.
36Lt. Col. C. G. Stevenson memorandum, Emergence of the Intelligence Establish- 39 Grombach Diaries, 19 February 1947.
Post-War Intelligence Aims, NARA RG ment, (Washington, DC: United States 40 NARA RG 263, Entry DCI Documents,

59, Entry 1491, Box 1, Folder Post War Government Printing Office, 1996), 369 Box 6, Folder 500 Regarding Diary Rear
Intelligence Plans. 92. Admiral R.H. Hillenkoetter.

76 Studies in Intelligence Vol. 48, No. 3


The Pond


By the fall of 1950, the
bloom was definitely
off the rose in
Despite its important contribu- certain government agency had
tion, the Pond was being Grombachs been funding its operations, but
supplant[ed] by the new CIG. relationship with the the money was drying up. He
Its dissolution was said to be dif- State Department. offered to work for the Army
ficult and expensive. 41 again, for $20,000 a month, add-

In the end Grombach and his


allies lost the battle, and the
CIGs exclusive authority over
clandestine operations, which it

Grombachs relationship with the
State Department. Despite a
brief hope during the summer
ing that if the Army wasnt
interested, perhaps it could rec-
ommend to DCI Walter Bedell
Smith, that CIA pick up the con-
tract. The Army took Grombachs
had not yet really exercised, was offer seriously but in January
that the department might
transferred to the new CIA, backed off after consulting with
increase its annual funding to
which had every intention of J. Raymond Ylitalo, assistant
half a million dollars, Grombach
exercising it. Nonetheless, in late chief of the departments Secu-
had a serious dispute with the R
1947 or early 1948 the Pond rity Division, which by this time
Area, as INR was called at the
somehow found a new sponsor, had inherited the Pond liaison
time. 44 In September 1950, he
the State Department, which role. Asked to evaluate the
entered a diatribe into his diary
secretly funded the organization, Ponds material Ylitalo
that he had been accused of some
though at only $100,000 per year, responded that in all frankness
sort of malfeasance; he railed at
a pittance compared with the [he] could describe it in only one
what he described as a hoax,
$600,000 the War Department word, crap. 46
frame-up, or communist plot, and
had pumped into the project in
he warned the R Area against
its last year there. 42
starting [the] whole business
without proper proof or evi- The CIA Takes Over
The Pond was controversial at
the State Department, at least dence. He told his diary that he
among the few people who knew would deny everything, and he Though it is not clear whether
about it. According to McCargar laid out two possible outcomes: the Army recommended Grom-
it was the subject of some burn- that the Pond would wrap up its bach to DCI Walter Bedell Smith
ing discussions at the top levels operations over a six-month or not, Grombach was soon prop-
of the Department, which was period and that the CIA would be ositioning the CIA, and State was
rumored to be having trouble informed, apparently of the soon preparing to hand off the
hiding the Ponds budget within Ponds continued existence. In Pond to a new sponsor, one from
its own. Christian Ravndal, the the latter case, however, he whom it had until recently been
director general of the foreign warned that we cannot be hiding the Ponds very existence.
service, at one point asked responsible for blown fuses, Smith asked his deputy, Allen
McCargar to brief a skeptical arrests, compromise, serious Dulles, to consider the Ponds
Norman Armour, assistant secre- embarrassments to [the] State work and make a recommenda-
tary for political affairs, on the [Department] nor any means or tion. Dulles turned the task over
merits of the Pond. 43 necessary actions we may have to to Lyman Kirkpatrick, who ulti-
take to protect ourselves [and] mately recommended hiring the
By the fall of 1950, the bloom our people. 45 group, a recommendation he
was definitely off the rose in would later regret. 47 The two
That same month, Grombach
approached the G-2 noting that a
41 Leviero. 46 Director, Plans, Programs and Security

42 Grombach Diaries, 29 June 1948 and memorandum to Assistant Chief of Staff


9 August 1949. 44 Grombach Diaries, 9 July 1950. for Intelligence (US Army), 5 September
43 McCargar OH, 1523. 45 Grombach Diaries, 8 September 1950. 1958, Simpson file.

Studies in Intelligence Vol. 48, No. 3 77


The Pond


The fear of Grombach
and his associates that
CIA sought to discover
sides turned to Adolf Berle, who tion of a stream of reporting
by then had left the State and take over their indicating that a particular Uru-
Department to practice law. 48 In sources was not as guayan official was a communist.
late March 1951, Dulles, Kirk- paranoid as CIA sent back comments such as
patrick, Grombach, his deputy, conjecture based on sources evi-
and a State Department officer
Kirkpatrick suggested. dent bias against [the official]
initialed an agreement in Berles who, according to the weight of
office. 49

Grombachs relationship with


CIA was rocky from the start. It
must have been difficult for

In fact, the first CIA liaison
officer with the Pond was a
evidence here, is definitely anti-
Communistic. Ultimately, CIA
instructed the Pond to stop
[these] reports until source sends
some proof. Grombach saw this
Grombach to subordinate him- former McCormack subordi- as not only more CIA incompe-
self to someone he found as nate. 52 For example, Grombach tence and softness but also
loathsome as Allen Dulles, who clashed with the CIA over the protection of a man he believed to
in 1947 had testified before Con- ideological reliability of Otto be a recruited CIA asset. In
gress in favor of centralizing John, the head of Germanys Grombachs telling, the man was
clandestine collection in the CIA, internal security service. With later publicly revealed to be a
directly opposing Grombachs tes- grim satisfaction Grombach later communist. 54
timony at the same hearing. noted that John defected (appar-
Grombach, while admitting that entlythe circumstances remain Grombach was also irked that
Dulles had significant intelli- murky to this day) to East Ger- the CIA repeatedly urged him to
gence experience, thought the many shortly after meeting in name the Ponds sources. Lyman
Gestapo had covered him like a Washington with Allen Dulles. 53 Kirkpatrick later wrote that the
tent when he was the OSS man Pond tended to change source
in Switzerland. 50 In private cor- A similar case involved Pond col- descriptions on the rather para-
respondence Grombach lection from South America. In noid grounds that we would be
complained bitterly about the September 1951, the Pond able to discover the real source if
egomania of a really very stupid started a collection effort in Uru- they provided identical descrip-
and morally dishonest tho [sic] guay and Argentina centered on tions on each report from that
allegedly religious family: the a tested reliable European diplo- source. This behavior only
Dulles. 51 mat with extensive intelligence increased the Agencys desire to
experience whom Grombach find out who they really were. 55
Grombach again was angered by called DAHL. To Grombachs From the Ponds point of view
the wholesale elimination of annoyance CIA eliminated this was an unacceptable
many Pond reports, the same much of the reporting from demand. Not only would it break
concern he had had about Alfred DAHLs network. Particularly faith with their sources, but it
McCormack during World War II. irksome was the Agencys rejec- would also destroy the organiza-
tions usefulness as a secret
intelligence collecting agency and
47 Lyman B. Kirkpatrick, The Real CIA 52 The Otto John Case, Unpublished

(New York: The Macmillan Company, manuscript, Simpson file. This undated,
independent check. Moreover,
1968), 150. unsigned manuscript was clearly written even if sources were divulged,
48 Adolf Berle Diaries, 28 September 1948, by Grombach or a close associate; internal
University of Maryland Library. evidence puts it at late 1954; McCormack
49 Berle Diaries, 22 March 1951. to May, 16 March 1946, NARA, RG 59, En- 54 Memorandum Concerning Handling of

50 Grombach to Sokolsky, 22 July 1954, try 1561, 250/62/04/03, Folder Col. Mc- Our Counter-Intelligence Reports from
Sokolsky Papers. Cormack vs. Congressman A. May. Uruguay, 11 August 1952, appended to
51 Grombach to Sokolsky, 6 November 53 The Otto John Case, including Appen- The Otto John Case.
1956, Sokolsky Papers. dices A and B. 55 Kirkpatrick, 150.

78 Studies in Intelligence Vol. 48, No. 3


The Pond


Grombach knew his
situation was
untenable, and he
CIAs concept and approach are Pond to stop forwarding its
so violently monopolistic and did not enjoy reports to the Bureau. Grombach
competitive that it uses dishon- working for Dulles. did not comply, arguing privately
est, unethical, and ridiculous that this was not a case of turn-
means to eliminate reports, dis-
cover and sabotage operations
and attempt to discover and take
over systems, nets and source in
the field. 56

mined that one of the Ponds
networks was feeding directed
ing over [to the FBI] government
classified informationbut of
giving information reaching us,
as a private organization from
our private sources in the field, to
information and that many of the the organization responsible for
The fear of Grombach and his Ponds other sources were paper the internal security of the
associates that CIA sought to mills. 58 It may have been a CIA United States. Accordingly, in
discover and take over their investigation of DAHL that led to April 1953 behind CIAs back, the
sources was not as paranoid as the end of that operation; by the Pond sent a memorandum to the
Kirkpatrick suggested. From the fall of 1953 Grombach was com- FBI warning it of an impending
end of World War II to the early plaining to his diary about CIA-sponsored visit by Otto John
1950s, the CIA and other West- falsehoods about DAHL and to Washington in order that
ern intelligence agencies faced a blaming the CIA station chief for action might be taken to prevent
major problem with paper the fact that DAHL could never him from seeing US classified
mills. These were small private be sent back to Montevideo information. 60
intelligence organizations that because he was irrevocabl[y]
sold reports from unnamed but absolutely burned. 59 By January 1953 Grombach
well-placed sources behind the feared that the Agency might not
Iron Curtain. The CIA had to Grombach also clashed with the renew its annual contract, which
exercise some quality control, CIA over the Ponds relationship was up in August. His inclina-
and it found that rather than with the FBI. Since 1942, the tion was to appeal to DCI Smith,
investigating the substance of Pond had given the FBI copies of with whom he had a generally
each report it was often more all of its reports that dealt with positive relationship. However,
fruitful to investigate the opera- counterintelligence. The CIA Smiths health was failing, and
tional mechanism which had reaffirmed this practice in 1951, Grombach decided to wait until a
produced it. The Agencys modus when it signed its contract with successor was named and try to
operandi was to buy a few Grombach. However, in April work with a new, more vigorous
reports from the middleman and 1952, the Pond sent to CIA and DCI. 61 A new DCI did take over
if the material seemed interest- FBI a report about a French offi- on 26 February 1953. Unfortu-
ing, to try to identify his sources cial who had recently met in nately for Grombach, it was Allen
so their bona fides and access Washington with senior Ameri- Dulles, who continued to be con-
could be assessed directly. This cans. This official had been cerned about the quality of the
would entail extensive investiga- spreading around Paris the Ponds reporting and the identity
tion, perhaps even wiretaps and details of his conversations, of its sources. Grombach, for his
physical surveillance. 57 By the including DCI Smiths frank com- part, continued his annoying
time CIA ended its relationship ments about the US Intelligence habit of reporting derogatory
with Grombach it had deter- Community. Angered by this information on CIA personnel or
indiscretion, CIA ordered the

56The Otto John Case. 60 The Otto John Case, including

57Richard Helms, A Look Over My Shoul- 58 Kirkpatrick, 153. Annexes G and J.


der (New York: Random House, 2003), 92 59 Grombach Diaries, 14 September 1953 61 Grombach to Sokolsky, 20 January 1953,

99. and 14 October 1953. Sokolsky Papers.

Studies in Intelligence Vol. 48, No. 3 79


The Pond


The Agency had good
reason to be angered,
because that summer
on foreigners he suspected were Strangely, however, he went on,
CIA assets. Senator McCarthy McCarthy[s] approach I have
turned his sights on it. always turned down but if this
Grombach knew his situation goes in [I] will definitely do so
was untenable, and he did not
enjoy working for Dulles. So he
turned to a like-minded individ-
ual on Capitol Hill, Senator
Joseph McCarthy. Though Grom-

Agency had good reason to be
angered, because that summer
[sic] to protect myself. 66 The
indirect contacts went on, how-
ever. In December 1953,
Grombach sent Sokolsky a mem-
orandum containing a long list of
bachs appointment books show complaints about wartime com-
Senator McCarthy turned his
that he had regular direct con- munist influence in the G-2,
sights on it. In July, he called
tact with a few members of focusing particularly on Alfred
Allen Dulles to Capitol Hill and
Congress and sporadic contacts McCormack and his subordi-
gave him a list of 12 alleged secu-
with several others, there is no nates. A Sokolsky assistant wrote
rity risks working for the CIA.
evidence that McCarthy was one on it attached is a copy for Roy,
Dulles brought the list back to
of them, at least until 1954. a probable reference to Roy
Headquarters and told Lyman
What Grombach did have were Cohn. 67 Four months later, Grom-
Kirkpatrick to investigate. As
connections to McCarthy associ- bach discussed the president, the
Kirkpatrick studied McCarthys
ates, including a close Pond, McCarthy, and Project
list and the allegations made
relationshipfeaturing frequent 1641 with Jack Clements, editor
about the people on it, he experi-
leaks of Pond materialswith of the conservative American
enced a sense of dj vu. We
columnist George Sokolsky, a Mercury. Project 1641 was poten-
went back and checked the files
confidant of both McCarthy and tially a hot topic at the time
and sure enough some of the
his right-hand man, Roy Cohn. 62 because the Army-McCarthy
phrases were identical to so-
In January 1953, Grombach hearings were then underway. 68
called dirty-linen reports that
wrote to Sokolsky: If my con-
the [Pond] had fed to us about
tract as consultant in my During the McCarthy-CIA fight,
our own people, and some of the
extracurricular field winds up as Dulles organized a group to keep
names were identical with those
of August 15, 1953, I would like tabs on McCarthys activities and
that the [Pond] regarded as sinis-
to place my experience, contacts to feed the senator disinforma-
ter. 65 Kirkpatrick concluded that
and abilities, and perhaps my tion. James Angleton and James
Grombach was feeding McCarthy.
organization, at the disposal of McCargar, who by this time was
CongressPerhaps you can very out of government, were lunch-
The precise truth remains murky,
cautiously and delicately discuss ing one day, when Angleton
but the evidence suggests that
the availability of an anony- mentioned that he knew of the
McCarthy or his staff may have
mous partybeing available on others work with the Pond in
sought a face-to-face meeting
a part-time basis. 63 Hungary. Angleton described his
with Grombach to which the lat-
concerns about Grombach and
ter was reluctant to agree. In
These blandishments soon came asked McCargar to meet with
mid-October 1953, Grombach
to the attention of the CIA, which Grombach from time to time and
wrote in his diary that some
was very displeased. 64 The report back. But Angleton
unspecified dispute must be
wanted something more. He
solved because at stake were the
62 Grombach to Sokolsky, 13 August 1954,
Pond itself, his personal reputa-
Sokolsky Papers, Box 57, Folder Grom- tion, and the security of the CIA. 66 Grombach Diaries, 14 October 1953.
bach, John. 67 Blind memorandum, December 1953,
63 Grombach to Sokolsky, January 20, Sokolsky Papers, Box 57, Folder Grom-
1953, Sokolsky Papers, Box 57, Folder 64 Grombach Diaries, 10 May 1953. bach, John.
Grombach, John. 65 Kirkpatrick, 1512. 68 Grombach Diaries, 23 April 1954.

80 Studies in Intelligence Vol. 48, No. 3


The Pond


Finally, in 1954
the CIA decided that it
arranged to provide McCargar had had enough of Assessing the Pond
with false information, suppos- Grombachs scheming
edly acquired in France, which and questionable The record of the Pond appears to
would appear derogatory to CIA. be largely one of failure and
Angleton hoped Grombach would
products.
impermanence. Grombach was a
pass the materials to McCarthy,


strong proponent of a truly
who would use them. They could secret, unacknowledged espio-
then be discredited, embarrass- nage organization and created
ing the senator and hopefully the Pond along those lines. How-
throwing him off the CIA. In ever, that strategy never caught
order to provide a pretext for out with Grombach. He con- on as the US Intelligence Com-
giving this information to Grom- fronted him about the contacts munity took shape. In 1946, at
bach, McCargar was to hint that with McCarthy. After a bit of least one senior officer of the
he wanted back in the intelli- blustering and blowing, Grom- Strategic Services Unit (the only
gence game. bach admitted that he had given component to survive the dissolu-
information to McCarthy and tion of OSS after the war)
McCargar met several times with that it was not only his right to proposed precisely such a set-up,
Grombach. As he related it years do so, but also his responsibility. but the suggestion was rejected.
later, Grombach was absolutely He went on to say that he had The Pond would not have been a
furious at the CIA for a variety proposed to Senator McCarthy good candidate to fill the role in
of reasons and he kept threaten- any event. 73 Even in 1946 few in
that his entire organization work
ing to go to McCarthy. And he Washington knew of the exist-
for the Senator in doing nothing
did. Two or three times McCar- ence of the group, which was still
but investigating employees of
gar successfully passed the very small and with few or
the United States govern-
phony reports. Between report- unknown successes and a leader
ment. 70 Grombachs diary
ing on Grombach and who had created numerous
misinforming Grombach, McCar- indicates that shortly thereafter
he met with McCarthy, but no enemies.
gars mission was deemed so
successful that Angleton help was forthcoming from the
arranged a meeting with Dulles senator. 71 The story of the Pond demon-
at Dulles home on Wisconsin strates the importance of
Avenue. There, the DCI was collection as an official function
Not long after, on New Years
extravagant in his praise, youve of the US government wherever
Day 1955, all Pond operations,
saved the Republic, he told possible. The Pond joins a long
came to an end, save two that list of intelligence organizations
McCargar. 69 CIA continued briefly. Grombach over the past 60 yearsthe
tried to find new sponsors and paper mills of the early Cold War,
Finally, in 1954, the CIA decided suggested that if the security and
that it had had enough of Grom- the Gehlen organization in its
existence of the Pond were pro- early years, and more recently
bachs scheming and
tected, it could be used as an the Iraqi National Congress are
questionable products and would
emergency wartime intelligence
not renew the Pond contract
system. He found no takers. The
when it ended on 15 August. 72 Grombach Diaries, frontispiece, 1955;
Kirkpatrick decided to have it last two operations ended on 30
John Bakeless, draft Grombach obituary,
April and with them ended the
and The Otto John Case, Simpson file.
Ponds idiosyncratic existence. 72 73 Warner, Michael, Prolonged Suspense:

69 Authors interview with McCargar and The Fortier Board and the Transformation
Burton Hersh, The Old Boys: The Ameri- of the Office of Strategic Services, The
can Elite and the Origins of the CIA (New 70 Kirkpatrick, 1523. Journal of Intelligence History, Summer
York: Charles Scribners Sons, 1992), 327. 71 Grombach Diaries, 27 July 1954. 2002: 72.

Studies in Intelligence Vol. 48, No. 3 81


The Pond


The story of the Pond
demonstrates the
importance of
all candidates for inclusion on talo, Lyman Kirkpatrick, and
this listthat have been able to collection as an official Allen Dulles suggest that the
peddle tainted intelligence function of the US answer is no. However, the avail-
because their operations were government wherever able record provides no real way
insufficiently transparent in possible. of checking their assertions;
Washington. As was the case almost no Pond reporting is
with many of the others, the
Ponds independence allowed it to
play one American agency off
against another, in this case par-
ticularly the FBI and the CIA.

Such independent organizations
would be justified, indeed would
available, and the file on Pond
operations is comparably thin. It
would be analytically dangerous
to allow our assessment of the
Pond to depend primarily on the
The Ponds exclusive ownership be indispensable, if they were the assertions of its enemies.
of its product meant that Grom- only ones capable of providing Accordingly, the question of the
bach could disseminate to the useful information or other intel- Ponds contributions to the his-
FBI or other agencies informa- ligence benefits. Did the Pond tory and development of US
tion that the CIA might have meet that test? The words and intelligence must remain open,
been able to determine was bad. actions of such men as Ray Yli- just a crack.

In 1967, the superintendent of the US Military Academy (left) and the Comman-
dant of Cadets from 1919-23 (second from left) awarded Grombach the diploma orig-
inally denied him. On the right stands Charles Stevenson, Grombachs executive
officer during WWII. Grombach died in 1982.
US Military Academy photograph.

82 Studies in Intelligence Vol. 48, No. 3