Located west of New York City, Montclair, New Jersey had a population of approximately 40,000 in the late 1930s.  At the time, a group of  the citizens of  the New York  suburb,  troubled over potential fifth column activity in their community, formed an intelligence gathering organization to expose perceived subversive activities. The organization eventually became part of the official civil defense apparatus of the town and was referred to as the  Intelligence Division of the Montclair Security Council.

Colonel Dallas Townsend, a New York attorney and Montclair resident, served as the town's Commissioner of Public Safety and the members of the Intelligence Division reported to him. Official recognition was granted to the group by Townsend in the Fall of 1941, giving it work space in the Montclair Municipal Building, where it held regular monthly meetings. 

For purposes of their activities, the Intelligence Division partitioned Montclair into fifteen sections, each headed by a "key man."  Ten to fifteen "thoroughly trustworthy", "good substantial Americans" of unquestioned patriotism were assigned to, or recruited by, each of the key men.  They were from  "different levels of society and various social groups."  In this pyramidal structure, key men did not know the identity of other key men and the lower level informants only knew their own key man.  Members of the Intelligence Division were to report to the next most superior authority on activities they "construed as subversive or un-American in any way."  Correspondence from operatives was addressed to their key man in care of the office at municipal building.  Townsend, the top of the intelligence gathering pyramid, would then turn over information to the FBI if he thought it represented information sympathetic to the Nazi cause.

As of July, 1941, according to the Montclair Times, the intelligence division had been operating for over a year. The newspaper claimed it was remarkably successful in uncovering potential subversive activities and fascist sentiment. Although the FBI never reported back to the intelligence division as to the outcome of information passed to it, the newspaper credited the intelligence division with 43 reports to the FBI resulting "in several arrest and convictions."