It had been a little over four months since the New York Times had broken the story of Operation Paperclip, and the negative attention to the program had not subsided. Then, on March 9, 1947, journalist Drew Pearson reported the most outrageous news story about Operation Paperclip to date. According to Pearson, the U.S. Army had offered Farben executive Karl Krauch a Paperclip contract while he was incarcerated at Nuremberg. Krauch was the lead defendant in the upcoming war crimes trial. He had served as G?ring’s plenipotentiary for chemical production and had advocated for the use of nerve agents against the Allies. Krauch was the man who galvanized his fellow German industrialists to mobilize resources to help the Nazis go to war.
Drew Pearson’s column, “Washington Merry-Go-Round,” was widely read and highly influential, and the report about Krauch caused such a scandal that General Eisenhower, the U.S. Army chief of staff, demanded to know what was going on with Operation Paperclip. The man who briefed Eisenhower was chief of military intelligence Stephen J. Chamberlin. After what was reported to be a twenty-minute meeting, General Eisenhower remained in support of the Paperclip program. For the military chiefs inside the JIOA, the problems with the public’s perception of Paperclip were almost universally blamed on the State Department. Dean Rusk, who worked in the office of the assistant secretary of war, summed up JIOA’s attitude toward the State Department in a memorandum the day after the Eisenhower briefing. “The public relations people are feeling mounting pressure on the German scientist business.… Our position is inherently weak because the State Department finds this whole program difficult to support.”
The JIOA decided it was time to get rid of Samuel Klaus. Director Thomas Ford wrote General Stephen Chamberlin saying that Klaus was “obnoxiously difficult” and needed to be removed. Within the week, Klaus was transferred from the visa section of the State Department to the Office of the Legal Adviser. He no longer had any say over the policies and procedures regarding Operation Paperclip. It remains a mystery if Klaus had anything to do with the public’s perception of the program, but in years to come, and as McCarthyism expanded, Klaus would be accused of having leaked negative stories about the German scientist program to the press. But even with Klaus banished from the program, for the first time since Paperclip’s inception in the spring of 1945, the entire operation was now in danger of collapse. Assistant Secretary of War Howard Petersen worried with colleagues that the War Department would be buried in scandals involving Nazi scientists. Petersen predicted that the whole program would be shut down in a matter of months.
Instead the opposite happened. With the signing of the National Security Act by President Truman, on July 26, 1947, America’s armed services and intelligence agencies were restructured. The War Department was reconstituted into the Department of Defense, the State-War-Navy Coordinating Committee became the National Security Council, and the Central Intelligence Agency was born.
A new age was dawning for the controversial Paperclip program. On the one hand, it struggled to hold up a false face of scientific prowess behind which lay a tawdry group of amoral war opportunists, many of whom were linked to war crimes. But just as von Braun admitted to New Yorker writer Daniel Lang that what he really cared most about was seeing “how the golden cow could be milked most successfully,” the newly created CIA saw the Paperclip scientists in similar quid pro quo terms. There was advantage to be had in using men who had everything to lose and were, at the same time, uniquely focused on personal gain.
In Operation Paperclip the CIA found a perfect partner in its quest for scientific intelligence. And it was in the CIA that Operation Paperclip found its strongest supporting partner yet.