Cloak and Dollar: A History of American Secret Intelligence

Cloak and Dollar: A History of American Secret Intelligence

by Rhodri Jeffreys-Jones, Rhodri Jeffreys Jones

View All Available Formats & Editions

Rhodri Jeffreys-Jones, a leading expert on the history of American espionage, here offers a lively and sweeping history of American secret intelligence from the founding of the nation through the present day. Jeffreys-Jones chronicles the extraordinary expansion of American secret intelligence from the 1790s, when George Washington set aside a discretionary fund for


Rhodri Jeffreys-Jones, a leading expert on the history of American espionage, here offers a lively and sweeping history of American secret intelligence from the founding of the nation through the present day. Jeffreys-Jones chronicles the extraordinary expansion of American secret intelligence from the 1790s, when George Washington set aside a discretionary fund for covert operations, to the beginning of the twenty-first century, when United States intelligence expenditure exceeds Russia's total defense budget.

How did the American intelligence system evolve into such an enormous and costly bureaucracy? Jeffreys-Jones argues that hyperbolic claims and the impulse toward self-promotion have beset American intelligence organizations almost from the outset. Allan Pinkerton, whose nineteenth-century detective agency was the forerunner of modern intelligence bureaus, invented assassination plots and fomented anti-radical fears in order to demonstrate his own usefulness. Subsequent spymasters likewise invented or exaggerated a succession of menaces ranging from white slavery to Soviet espionage to digital encryption in order to build their intelligence agencies and, later, to defend their ever-expanding budgets. While American intelligence agencies have achieved some notable successes, Jeffreys-Jones argues, the intelligence community as a whole has suffered from a dangerous distortion of mission. By exaggerating threats such as Communist infiltration and Chinese espionage at the expense of other, more intractable problems-such as the narcotics trade and the danger of terrorist attack-intelligence agencies have misdirected resources and undermined their own objectivity.

Since the end of the Cold War, the aims of American secret intelligence have been unclear. Recent events have raised serious questions about effectiveness of foreign intelligence, and yet the CIA and other intelligence agencies are poised for even greater expansion under the current administration. Offering a lucid assessment of the origins and evolution of American secret intelligence, Jeffreys-Jones asks us to think also about the future direction of our intelligence agencies.

Editorial Reviews

Daniel Schorr
I have read many books on the CIA,but none more searching and still dispassionate. Nor would I have believed that a book of such towering scholarship could still be so lucid and exciting to read.
David P. Calleo
A sophisticated study that should challenge us to take a more serious view about how our democracy formulates its foreign policy.
New York Times Book Review
Publishers Weekly
Jeffreys-Jones, professor of American history at the University of Edinburgh, offers an anecdotal history of American intelligence from the era of George Washington to that of George W. Bush. This history is replete with provocative characters (Allan Pinkerton, J. Edgar Hoover) and covers a multitude of incidents, many notorious in their day, from the Zimmerman telegram of WWI to the Cuban missile crisis. The author sees all these people and events as connected by a single theme: a strain of hucksterism "smooth talk, hyperbole, deception" pervading U.S. intelligence efforts. For Jeffreys-Jones (The CIA and American Democracy), a leading authority on the history of American intelligence, the leaders of American intelligence have regularly "sheltered behind the veil of secrecy so vital to the promotion of false alarms and invented menaces." One example of this "con man" mentality is a tendency to reward failure. When intelligence agencies miss an important development, the upshot is a successful pitch for more money, more technology and more agents (this should sound familiar to post-9/11 ears). For Jeffreys-Jones, U.S. intelligence has chronically hyped its accomplishments and concealed its many failures, misleading the American people more often than it has baffled foreign enemies. The author's persistent invocation of the "con man" theme may actually do the book a disservice, opening the door to accusations of unfair exclusion of evidence contrary to the book's thesis. In fact, Jeffreys-Jones cites numerous instances of unobtrusive success by U.S. intelligence agencies, such as the breaking of Japanese codes in WWII. This account is more balanced in its content than the author's rhetoric might lead you to believe. (Apr.) Forecast: This is bound to feed into current discussions of the CIA's efficacy. Look for mention of it by policy commentators. Copyright 2002 Cahners Business Information.

Product Details

Yale University Press
Publication date:
Product dimensions:
6.13(w) x 9.25(h) x (d)

Read an Excerpt

Cloak and Dollar

By Rhodri Jeffreys-Jones

Yale University Press

Copyright © 2002 Rhodri Jeffreys-Jones.
All rights reserved.
ISBN: 0300074743

Chapter One

How big should the American secret intelligence budget be? That may seem a simple, even a crudely simple question, yet it opens a window to a more complex and vital debate.

    Those who think that U.S. intelligence spending is about right or too low offer a variety of justifications. There is the pragmatic argument that a big country with big responsibilities needs a big intelligence budget. Then there is the justification by historical precedent. Former CIA official George A. Carver, Jr., claimed the 1990 intelligence budget was only about 8 percent of the total military expenditure of around $300 billion. Stating that President Washington had in 1792 spent 12 percent of the entire federal budget on intelligence, he described the sum as "an enormous bargain." Certain non-American observers have made a similar point about the modest overall cost of U.S. national defense. The sums may seem enormous, they argue, but they need to be put in perspective. The cost of America's military activities in the late 1990s was less than 4 percent of the gross national product. American hegemony, according to British journalist Martin Walker, can "no longer be described as burdensome." So, the argument runs: if you can afford military and intelligence dominance, you might as well pay for it.

    A variety of arguments also emerges on the dissent side. Some critics have offered international instead of historical comparisons: according to the Washington Post, the 2000 intelligence budget of $30 billion was not merely larger than that of Russian intelligence, but larger than all Russian military expenditures combined. Other comparisons seem to confirm the exceptional size of the American intelligence budget. In 1993, the Western European Union decided to enter the most expensive area of intelligence activity; satellite surveillance, and planned a system costing $10 billion. But by the early twenty-first century, it had trimmed this amount to less than $1.5 billion, and the project was still not off the drawing board. The European Union was the only entity in the world that could compete with America in terms of wealth, yet its intelligence expenditure did not begin to compare with that of the superpower across the Atlantic.

    Critics of the size of the U.S. intelligence community have not confined their complaints to its cost. They have blamed it for the indiscriminate gathering of too much information and the neglect of analysis. Thinking is hard work, and with money at hand it has been too tempting to gather more information instead. According to this line of dissent, emphasis on information gathering has resulted in mediocrity. Critics have also found problematic the subordination of national security to bureaucratic ambition as a consideration affecting the collection and analysis of evidence. Another criticism has been that an overamplitude of intelligence resources has led to adventurism. With money no object after 1945, reckless covert operators across the globe made America's name mud, played into the hands of the nation's enemies, and even prolonged the Cold War they were meant to bring to a successful conclusion. Finally, some critics hold that American insistence on an intelligence monopoly has created the impression that the U.S. government is concealing the truth by withholding from others the means of independent investigation. The concealment of the truth from its allies has undermined efforts at international intelligence cooperation—contrary to the spirit of the republic that played such a key role in creating the United Nations. The U.S. intelligence monopoly has furthermore resulted in the American people being kept in the dark about alternative viewpoints—giving rise to both just and unfounded suspicions concerning the intelligence community's propensity to distort and exaggerate threats to national security.

    The reasons for these perceptions of intelligence profligacy and its consequences invite explanation. One explanation stems from the biases of the critics. These range from the personal ambitions of reforming crusaders to the dewy-eyed idealism of some internationalists. Such biases have, from time to time, produced exaggerated attacks on exaggeration.

    Other explanations stem, however, from the nature and causes of the perceived phenomenon, bloated intelligence. One such cause is the well-known tendency of all bureaucracies to grow in a self-perpetuating and self-propagating manner. Federal government in general has expanded inexorably throughout U.S. history, and at an increasing rate since the 1930s—the growth of the intelligence community may be seen within that context. The obsession with secrecy in American government has assisted the process, by creating a fertile climate for those bent on empire-building by stealth. The process has been aided and abetted by the populist tradition in American politics, which has yielded a breed of politician to whom dry facts are no stumbling block, and for whom an unchallenged intelligence community is a potentially useful ally.

    But, while the foregoing arguments must carry some weight, this book argues that there is a further, special reason why secret intelligence has tended to run amok with taxpayers' money. That reason is the emergence, within intelligence circles, of the confidence man.

    The confidence man and the tools of his trade—smooth talk, hyperbole, deception—have been in evidence in most cultures, most of the time. In the first half-century of its existence, the United States was no exception. Even so straightforward an exercise as the exploration of the West could lend itself to charges of deception—in the 1856 campaign, for example, Republican presidential candidate John Charles Frémont was damaged by charges that he had exaggerated his prowess as an explorer and soldier at the time of the acquisition of California.

    However, in America's first half-century the practice of secret intelligence was relatively restrained. George Washington deceived mainly the enemy, not the American people. Likewise, while Frémont's search for California gold could be likened to an intelligence operation and while he did resort to hyperbole, he did not directly apply intelligence resources to the deception of the electorate. Furthermore, the scale of President Washington's intelligence expenditures was not to be matched for a century and more, and there was no significant intelligence bureaucracy in the pre-Civil War era. It is only since the middle of the nineteenth century that the character of American espionage has taken on a hyperbolic-expansionist hue.

    American espionage has since the 1850s become progressively more commercial, more bureaucratic, and more populist. The wiles of the intelligence confidence man have been directed not just at foreign foes but at American citizens as well. The American public has been importuned to believe in a variety of menaces and crises that were by no means always what they seemed to be. They have ranged from Confederate assassination plots to Western land fraud, from white slavery to communism, from German sabotage to Chinese espionage, from crack cocaine scares to digital encryption. Although the American spy is not solely responsible for raising these alarms, he has played a leading part in their creation.

    Repeated attacks on the intelligence confidence man only confirm the increasing prominence of his role. Since the outbreak of the Civil War, there have been consistent efforts to deflate his claims. In 1862, with the war at its height, Allan Pinkerton was dismissed from Abraham Lincoln's intelligence service for exaggerating enemy strength. In an attempt to reingratiate himself with the president, Pinkerton warned of an assassination plot. General George B. McClellan dismissed the warning as mere "conspiracy nonsense." Half a century later, FBI chief Stanley W. Finch insisted that no daughter, wife, or mother was safe from "white slavery" gangs seeking to kidnap victims and force them into prostitution. There were immediate complaints that he was just trying to drum up anti-vice trade for the bureau: as the FBI critic Fred Cook noted, "Chief Finch was a master at painting the Menace." In a similar vein, historian David Kahn took to task the 1920s codebreaker H. O. Yardley. No slouch in touting his own talents, Yardley once claimed of the card game that ruined him financially, "I have constantly won at poker all my life." Kahn dryly noted the codebreaker's "potent salesmanship."

    World War II and the Cold War presented new opportunities to the intelligence confidence man—and to his critics. In 1941, the British director of naval intelligence, Rear Admiral John Godfrey, noted that in all branches of U.S. intelligence there was a "predilection for sensationalism"; for example, the War Department's estimate of German reserve air strength was 250 percent higher than that of the British. Cold War intelligence leaders were as interested in propagandizing the American people as the communist opposition, and they regarded themselves as having developed appropriate skills. CIA director William Colby explained that intelligence had "become a modern enterprise with many of the attributes of journalism." Fifteen years later the Cold War was over, and European communism had collapsed. The CIA took a generous slice of the credit: Colby's successor Robert Gates referred to the outcome as "the greatest of American triumphs." Potentially, the end of the Cold War meant that the CIA had shed a menace. But the confidence man once again set to work. He deftly detached the CIA from the history of the Cold War, and suggested the agency was ideally suited to take on a proliferating array of new, noncommunist menaces.

    The increasingly brash and expansionist nature of espionage since the 1850s reflected broader changes in society—the rise of capitalist boosterism, the expansion of the federal government with commensurate opportunities for clandestine employment, and the emergence of the mass-appeal imperative in an ever more democratic society. The post-1850 culture of the confidence man was both reflected in, and promoted by, literature. In 1857, Herman Melville popularized the concept in his novel The Confidence-Man, a satire on social mores during the era in which Allan Pinkerton put espionage on a professional basis. Some of Melville's observations could have served as a primer for the 1950s CIA. For example, the CIA's Big Lie technique relied on the principle behind the novelist's fictional "World's Charity" scam—if you are going to tell a lie, tell the truth most of the time, and then make it a big one.

    The phenomenon of the "confidence man," or "con man," has continued to attract considerable attention, meandering Mississippi-like through American culture via Mark Twain's Huckleberry Finn (1884) and David Maurer's The Big Con (1940) to more recent works like George Roy Hill's The Sting (1973). It draws sustenance from an even broader cultural stream, the cult of the salesman. For while it may be true that not every salesman is a confidence man, every confidence man is in some way selling something, and the selling culture and its critics have been part of the milieu of American intelligence history.

    The image of the salesman has often been negative. The carpetbaggers who arrived in the stricken South after the Civil War seemed to many local white people to be the epitome of soulless exploitation. The South was not alone in this opinion—Mark Twain wrote devastatingly of the selling culture in The Gilded Age (1873). The subject reappeared in the darkest of hues in 1947, the year of the CIA's creation, with the publication of Arthur Miller's play Death of a Salesman. Yet, critical though these writers may have been, they implicitly recognized that they were attacking a big target—the broad-grinned salesman, pitchman for the American way. The best-known American intelligence leaders have been salesmen, and they have found ready customers in a land where selling is accepted as a vital component of the free market economy.

    Size is not the only characteristic of American espionage that draws on the U.S. cultural context. Another is a sense of continuity. This may seem surprising, as some prominent intelligence advocates have deplored the absence of continuity, a deficiency that has led, in their view, to amnesia about lessons learned in the past. It became part of the propaganda of the intelligence expansionists to say that this had been dangerous, and to argue that lack of intelligence preparedness led to America being caught unawares at Pearl Harbor. But such intelligence advocates have been preoccupied with institutional continuity and blind to tradition. To illustrate the tradition by means of just one case, that master of fictional deceit and sleight of hand Edgar Allan Poe had a certain appeal: both the codebreaker H. O. Yardley and the covert operator Edward Lansdale admired Poe's The Purloined Letter. Memory does not depend on institutions alone.

    Traditions affecting intelligence do not need to inhere in the craft itself. To take a notable example, American nationalism has played into the hands of intelligence promoters. Consciousness of nationhood and espousal of self-determination are powerful threads in U.S. foreign policy. Ever since America's own war of independence, U.S. citizens have been keen to help other societies to throw off the yoke of imperialism. The presence in America of immigrants from so many different lands has not only bolstered that aspiration but given the United States the potential means to arrive at informed analysis and offer clandestine support. As one senior CIA veteran noted in May 2000, America had a "competitive advantage" in being "a nation of nations."

    Support of nationalism worldwide meant more business for American intelligence. The boosters of intelligence exploited this potential in developing a Cold War philosophy of anti-communist nation-building. However, as the phrase implies, the nationalisms supported were not always spontaneous and indigenous. Too often, they stemmed from American clandestine support for not very democratic rulers. America's Cold War refusal to accept unwelcome election results further undermined international sympathy for the idea that the United States stood for self-determination. Finally, America had to face the music when, after the Cold War, micro-nationalism ran riot, destabilizing the Balkans and other parts of the world. America's clandestine operators were unabashed. Having contributed to the problem, they now claimed they were needed to solve it. Nationalism has been a traditional tool in the hands of the intelligence confidence man, and a dangerous one.

    There has been another dark side to American nationalism. At its best, it has been liberal and tolerant. But it can also be introverted, and a cause of nativism. In intelligence history, this has manifested itself in the mistreatment of minorities. Ironically, the real American natives were among the early targets of white nativism. Fighting the French as a British officer in 1758, George Washington greatly admired the reconnaissance skills of the native American but never trusted him enough to give him autonomy: "I always send out some white people with the Indians." In more recent times, examples have been numerous, not the least notorious being the persecution of black American leaders by FBI chief J. Edgar Hoover.

    It is true that such racism did not always mar American intelligence operations. For example, Allan Pinkerton hired both blacks and women to spy for the Union during the Civil War. However, there was a long-running tendency for WORM, white old rich men drawn from the Ivy League colleges, to monopolize leadership positions. This held true for the State Department intelligence organization U-1 (1915-1927), World War II's Office of Strategic Services (OSS), as well as the CIA. Only in the last decade of the twentieth century did the intelligence community start lowering the barriers against women and gays, and even then the prejudice against Chinese Americans remained.

    The confidence man thrives in the world of those half-truths upon which chauvinism feeds. Once the Cold War was over, there seemed to be an opportunity for international intelligence cooperation, especially through the United Nations (U.N.). Potentially, that meant fewer jobs and less money for the Good Ole Boys in charge of U.S. intelligence. So patriotism proved, as in Samuel Johnson's day, to be the scoundrel's "last refuge." Superpatriots fanned French, Japanese, and Chinese intelligence efforts against the United States into a new menace. They attacked the United Nations and the notion of U.N. intelligence.


Excerpted from Cloak and Dollar by Rhodri Jeffreys-Jones. Copyright © 2002 by Rhodri Jeffreys-Jones. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

What People are saying about this

Daniel Schorr
I have read many books on the CIA, but none more searching and still dispassionate. Nor would I have believed that a book of such towering scholarship could still be so lucid and exciting to read.
David P. Calleo
A sophisticated study that should challenge us to take a more serious view about how our democracy formulates its foreign policy.
(— David P. Calleo, New York Times Book Review)

Meet the Author

Customer Reviews

Average Review:

Write a Review

and post it to your social network


Most Helpful Customer Reviews

See all customer reviews >