Bitter with disappointment but not willing to give up, Colonel House called together in Paris, France, a group of his most dedicated young intellectuals–among them, John Foster and Allen Dulles, Christian A. Herter, and Tasker H. Bliss–and arranged a dinner meeting with a group of like-minded Englishmen at the Majestic Hotel, Paris, on May 19, 1919. The group formally agreed to form an organization "for the study of international affairs."
The American group came home from Paris and formed The Council on Foreign Relations, which was incorporated in 1921.
The purpose of the Council on Foreign Relations was to create (and condition the American people to accept) what House called a "positive" foreign policy for America–to replace the traditional "negative" foreign policy which had kept America out of the endless turmoil of old-world politics and had permitted the American people to develop their great nation in freedom and independence from the rest of the world.
The Council did not amount to a great deal until 1927, when the Rockefeller family (through the various Rockefeller Foundations and Funds) began to pour money into it. Before long, the Carnegie Foundations (and later the Ford Foundation) began to finance the Council.
In 1929, the Council (largely with Rockefeller gifts) acquired its present headquarters property: The Harold Pratt House, 58 East 68th Street, New York City.
In 1939, the Council began taking over the U.S. State Department.
Shortly after the start of World War II, in September, 1939, Hamilton Fish Armstrong and Walter H. Mallory, of the Council on Foreign Relations, visited the State Department to offer the services of the Council. It was agreed that the Council would do research and make recommendations for the State Department, without formal assignment or responsibility. The Council formed groups to work in four general fields–Security and Armaments Problems, Economic and Financial Problems, Political Problems, and Territorial Problems.
The Rockefeller Foundation agreed to finance, through grants, the operation of this plan.
In February, 1941, the Council on Foreign Relations' relationship with the State Department changed. The State Department created the Division of Special Research, which was divided into Economic, Security, Political, Territorial sections. Leo Pasvolsky, of the Council, was appointed Director of this Division. Within a very short time, members of the Council on Foreign Relations dominated this new Division in the State Department.
During 1942, the State Department set up the Advisory Committee on Postwar Foreign Policy. Secretary of State Cordell Hull was Chairman. The following members of the Council on Foreign Relations were on this Committee: Under Secretary of State Sumner Welles (Vice-Chairman), Dr. Leo Pasvolsky (Executive Officer); Hamilton Fish Armstrong, Isaiah Bowman, Benjamin V. Cohen, Norman H. Davis, and James T. Shotwell.