Spies have been an important part of military efforts dating all the way back to the American Revolutionary War. However, as the United States moved into the twentieth century, the Army, Navy, and State Department all had their own spies gathering intelligence, but they did not communicate with one another.
Instead, there was a bit of competition between the three groups. In 1909, the Federal Bureau of Investigation was created focusing on counterespionage, adding to the mess as the U.S. went into World War I.
President Roosevelt saw that coordination was needed to keep information flowing at the beginning of World War II. General William "Wild Bill" Donovan was chosen to lead the newly formed Office of the Coordinator of Information.
Donovan was a war hero from WWI who had many medals, including the Medal of Honor. In 1941, he had a thriving law practice as a government service lawyer.
Not Soon Enough
Unfortunately, the office was created too late and failed to gather intelligence that could have likely prevented the Pearl Harbor attacks. Donovan had the name changed to the Office of Strategic Services on June 13, 1942, and the division now reported to the Joint Chiefs of Staff instead of the White House.
During WWII, the division grew to have multiple branches and departments, including "Intelligence Services" and "Strategic Services Operations." They had X-2, Secret Intelligence, and Research Analysis offices.
SI recruited foreign agents, X-2 focused on counterespionage, and R&A worked through the information brought in. Many departments and processes were modeled after Britain's SIS and SOE.
The OSS was not free of interagency rivalries. However, the biggest rivalry was between the FBI and the OSS. The FBI could operate in South America, but the OSS did not have jurisdiction, despite growing Nazi sympathy.
But the FBI was not very successful with its operations, and Hoover focused more on arrests than creating useful double agents.
The Army and Navy also kept OSS out of certain areas, especially General MacArthur, who restricted them from areas he commanded. But not all of the military was against the OSS. Generals Eisenhower and Patton saw the usefulness of the organization.
The OSS and the SIS often worked together, but SI often outbid SIS for information which led to issues. After the OSS was disbanded in 1947, the CIA was created.