German Clandestine Activities in South America in World War II

DOCID: 3525901
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at his own request, was redesignated from "General Line" to "Engineering (Le.,
cryptographic) Duty Only" on 12 September 1941. He was promoted to Captain on 1
December 1941. 45
The U.S. Coast Guard (1931-1941)
The Coast Guard Communications Intelligence Section was established in 1931 to
solve the illicit shortwave radio traffic exchanged between groups ofsmugglers and other
criminals violating the laws enforced by the six enforcement bureaus of the Treasury
Department. Through the monitoring of illegal radio networks during the time when
smuggling was at its height, Coast Guard intercept operators developed a specialized
technique which proved most effective in identifying and following illicit stations. 46
Until late 1935, 80 percent of the work done by the Cryptanalytic Unit had been
cryptanalytic in nature. After October of that year there was a heavy increase in
cryptographic duties when the Secretary of the Treasury tasked the Unit with creating a
Treasury Department cryptosystem. At that time, he also tasked the Unit with
cooperating with the Bureau of Customs and Narcotics to suppress the smuggling of
illegal drugs into the United States and with certain responsibilities in the field offoreign
exchange. 47
As a result of these tasks, the end of prohibition did not reduce to any appreciable
degree the duties of the Intelligence Division. The Division remained the assembly and
distribution agent for information of every kind pertaining to the phases of law
enforcement with which the entire Treasury Department was charged and in which State,
Justice, Commerce, and other departments ofthe government were interested. In spite of
this, its strength decreased by a third between March 1936 and March 1937 because of
budget restrictions brought on by the depression. In 1937 there were only five persons
left:
Mrs. Elizebeth S. Friedman, P-4, Cryptanalyst in Charge
Mr. Vernon E. Cooley, P-2. AssistantCryptanalyst
Mr. Robert E. Gordon, P-2. Assistant Cryptanalyst
Mr. RobertJ. Fenn, P-l,Junior Cryptanalyst
Mr. Charles H. Withers, CAF-3, Cryptographic Clerk
According to Lieutenant Frank E. Pollio, the Acting Chief of the Intelligence Division at
the time, similar organizations in the Army and Navy were composed of 12 to 25 persons
and were considered a necessary adjunct to national security. In the Treasury
Department, cryptanalytic personnel were necessary both for military security as it
pertained to the Coast Guard and for law enforcement as it pertained to the Department.
The strength of five was maintained through 1940. At the end of that year, two billets
were added to bring the strength up to seven: four professional grade cryptanalysts, one
IBM operator, and two typists. 48
After the establishment of the Money Stabilization Board under the Treasury
Department, the Cryptanalytic Unit provided this Board with information in connection
with foreign exchange control; and after 1938 it maintained a close watch for any clues in
radio traffic pointing to sudden changes in the international situation. In August 1939,
the Unit was transferred to the Communications Division of the Coast Guard, where it
operated in response to requests from the Intelligence Division and other Treasury
bureaus. 49
Smuggling on an organized basis had practically disappeared by 1939, and for several
months before the German invasion of Poland, the Coast Guard had been given
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