ON JANUARY 5, 1945, as the Allies counterattacked in the Battle of the Bulge and prepared for new advances in the Philippines, an intelligence memorandum in Washington noted the receipt of new "information from Vatican sources." The information, code-named "Vessel" for security, was transmitted from Caserta by the representative of the Office of Stategic Services, the World War II organization that after the war became the Central Intelligence Agency.

Quantities poured in during the next few weeks. It seemed to open the doors of the most secret chambers of the Curia. So good was it that OSS sent it to the president, Franklin D. Roosevelt, himself. On January 11, for example, he received a report about a conversation between Pope Pius XII and the cardinal who headed his Congregation for the Propagation of the Faith concerning the possibility of mediating a peace between the Allies and Japan. Four days later another report dealt with Japan's proposed terms. Yet another, purportedly from the apostolic delegate in Japan, said that "The Japanese have recently put into service a new battleship armed with 9 of the largest naval guns in the world. This warship is commanded by Rear Admiral Yanuchi, a Catholic."

OSS prudently sought to test the accuracy of Vessel. Since some of it dealt with the activities of Myron Taylor, Roosevelt's personal envoy to the pope, an official asked him to confirm or deny the information. Taylor said that his talks with the Holy Father were a matter of sacred trust and so he could not help. An attempt to check with the White House brought an oblique reply from Roosevelt's private secretary -- perhaps because the president wanted to see how OSS would handle itself in the matter.

This secretiveness seems to have persuaded the high OSS officials dealing with the matter that Vessel was "highly reliable" and "authentic." But others did not share that view. A high Army staff officer telegraphed the chief of staff that the material was a "cover plan" that was part of "continuing Japanese attempts to cause conflict among the United Nations." A middle-level OSS official expressed "grave doubt" as to the validity of Vessel. Then word came from an OSS officer in Italy that "several other governments have access to this source." Finally, when Vessel reported that Taylor had met with the Japanese ambassador to the Holy See, a check found that no such meeting had ever taken place.

OSS was than faced with explaining to the president and other officials that the information it had provided them as authentic had turned out to be fraudulent. This it did as gracefully as it could, but embarrassment must certainly have permeated the higher ranks of the agency.

In Italy, its countertelligence pursued the case for a few months to see where Vessel really came from. One official, James Jesus Angleton, later famous as the CIA's chief of counterespionage, thought that the Italians were behind it to ferret out foreign intelligence personnel. Other evidence suggested that the Japanese representative to the Vatican gave the information -- for reasons not made clear -- to an impoverished German nobleman attached to the Holy See, who tricked it out with the papal paraphernalia and sold it to half a dozen intelligence agencies.