James Forrestal rose from an entry-level position to serve as President of Dillon, Read & Co. Inc. on Wall Street. Forrestal was nominated to be Undersecretary of the Navy by President Franklin D. Roosevelt in 1940 where he led the national push for industrial mobilization during World War II. He was named Secretary of the Navy in May 1944 (then a cabinet-level position) and became the first Secretary of the newly created Defense Department under Roosevelt’s successor, Harry S. Truman, after the passage of the National Security Act in 1947.
After Truman’s reelection, Truman forced Forrestal to resign on March 28, 1949. Forrestal was then essentially placed under house arrest at Bethesda Naval Hospital, where he was murdered in the early morning hours of May 22, 1949, shortly before his brother was expected to arrive to assist him in leaving the institution.
It was the National Security Act of 1947 that created the CIA—but the Agency’s powers were expanded dramatically a month after Forrestal’s assassination. The CIA Act of 1949 was passed by the House on March 7, 1949, by the Senate on May 27, 1949, reported and agreed to by the joint conference committee from June 2-7, and signed into law by President Truman on June 20, 1949. It authorized the CIA “to use confidential fiscal and administrative procedures” and exempted it from many of the usual limitations on the use of federal funds. The Act (Section 6) also exempted the CIA from having to disclose its “organization, functions, officials, titles, salaries, or numbers of personnel employed.” And it created a program called “PL-110” to handle defectors and other “essential aliens” outside normal immigration procedures, as well as give those persons cover stories and economic support.