For George Orwell, there was nothing pro-American about Animal Farm. The CIA, however, had other ideas. Karl Cohen tells the remarkable story of how US intelligence secretly funded a landmark British movie

America's use of animated propaganda during the second world war is fairly well known, but propaganda made after the iron curtain went up is rarely seen or discussed. By the late 1940s, the CIA was spending tax dollars creating culture as a secret weapon to combat communism around the world. When Frances Stonor Saunders published Who Paid the Piper? The CIA and the Cultural Cold War, she mentioned a single animated film, John Halas and Joy Batchelor's Animal Farm, which was made in 1954.

The CIA's choice of George Orwell's Animal Farm to produce as an animated film almost makes sense. Almost, but not quite, because the book's ending shows both the pigs and humans joined together as corrupt and evil powers. To use Animal Farm for its purpose, as Stonor Saunders reveals, the CIA's Office of Policy Coordination, which directed covert government operations, had two members of their Psychological Warfare Workshop staff obtain the screen rights to the novel. Howard Hunt, who became infamous as a member of the Watergate break-in team, is identified as head of the operation. His contact in Hollywood was Carleton Alsop, brother of writer Joseph Alsop, who was working undercover at Paramount. Working with Alsop was Finis Farr, a writer living in Los Angeles.

It was Alsop and Farr who went to England to negotiate the rights to the property from Sonia Orwell. Mrs Orwell probably knew Farr as she moved in literary and artistic circles as an assistant to the editor of Horizon magazine. This is well documented in The Girl from the Fiction Department by Hilary Spurling. Mrs Orwell signed after Alsop and Farr agreed to arrange for her to meet her hero, Clark Gable. "As a measure of thanks", a CIA official named Joe Bryan made the arrangements for the meeting, according to The Paper Trail, edited by Jon Elliston.

Hunt selected Louis De Rochemont to be the film's producer at Paramount. Before the war, in 1935, De Rochemont had created The March of Time, a new form of screen journalism that combined the newsreel and documentary film into a 15- to 20-minute entertaining short that went behind the news to explain the significance of an event. The March of Time, sponsored by the Time-Life Company, was a popular monthly series for over a decade before ending in 1951.

Hunt probably chose De Rochemont because he had once worked for him on The March of Time series. De Rochemont had also worked on socially and politically sensitive films for many years. He produced the anti-Nazi spy film The House on 92nd Street (1945) and Lost Boundaries (1949), one of the first racially aware films (it is about a black doctor who passes for white until he is unmasked by the black community).

A recently published book, British Cinema and the Cold War: the State, Propaganda and the Consensus by Tony Shaw, suggests De Rochemont chose Halas and Batchelor to animate the film as production costs were lower in England and because he questioned the loyalty of some American animators. The House Un-American Activities Committee hearings on communists in the film industry began in earnest in 1951 (Disney testified at short-lived hearings that were held in 1947) and several people in the animation industry were blacklisted, careers were ruined or disrupted.

On the other hand, Vivien Halas, daughter of the film's co-directors John Halas and Joy Batchelor, suggests the real reason they got the contract is that Louis De Rochemont was a Navy buddy and good friend of screenwriters-producers Philip Stapp and Lothar Wolff. De Rochemont had worked with them in the Navy's film unit and Vivien's mother had worked closely with Stapp in 1949 on a Marshall Plan film produced by Halas and Batchelor, The Shoemaker and the Hatter. Eventually Stapp and Wolff would be hired to work on Animal Farm's script.

Although the decision on what firm to hire came at a bleak moment for some American animation companies (the film could have been produced in Los Angeles by a studio whose reputation was beyond reproach), I suspect Halas and Batchelor's reputation, personal friendships and budgetary restraints were important factors in the decision to award them the contract.

Animal Farm was the first animated feature produced in England. John Halas (1912-1995) was born in Budapest and had worked as an animator before moving to Paris. He moved to England and in 1940 formed Halas and Batchelor with Joy Batchelor (1914-1991), a British animator and scriptwriter. They were married a year later. During the war they were kept busy with training, propaganda and other forms of government-sponsored films.

The animation firm was awarded the contract to make the feature in November 1951 and it was completed in April 1954. It is logical to assume that before the contract was signed De Rochemont made it quite clear that the film would not be identical to the book and he may have had a rough script or other guidelines. Vivien says that during the production, the script went through several changes before it was finalised.

The production employed about 80 animators. In Halas's book The Technique of Film Animation, 1959, he states that the film's target audience was adults rather than children and that they needed to simplify the plot. Vivien Halas adds that the film wasn't shown in Paris until the 1990s as it was considered too anti-communist. When it finally premiered in Paris about 1993, the mayor of Aubervilliers (a suburb of Paris) "introduced it as a tribute to communism! My father said no, this is not communist or anti-communist. It is a fable for all time. It is anti-totalitarian and it has a humanist message." In a letter to the animation historian Giannalberto Bendazzi in 1981, Joy Batchelor told him they wanted to make a film about freedom.

Besides having Philip Stapp and Lothar Wolff working on the script with Joy Batchelor, De Rochemont had another friend from their days in the Navy's film unit working on the project. Borden Mace became president of the company set up to produce Animal Farm by De Rochemont, his mentor. Mace told Vivien in an interview in 2002 that De Rochemont had the ultimate say about script changes. While it isn't clear who suggested the ending used, it was certainly what the CIA needed. To meet the CIA's objectives, the ending was changed to show that only the pigs had become totally corrupt. The film ends with other animals mounting a successful revolt against their rulers. There is no mention of the humans in the film's conclusion.

Vivien recalls, "The changes came about as the film evolved. There were at least nine versions of the script and heated discussions about the end. My mother especially felt it was wrong to change the ending." She has a tape recording of her father saying that the ending they used offers a glimmer of hope for the future. In an interview on British television in 1980, he defended the ending as being necessary to give the audience hope for the future. "You can not send home millions in the audience being puzzled."

While the film was in production, Fredric Warburg, the book's publisher, visited the studio several times and viewed the work-in-progress. Saunders thinks he may have suggested that old Major, "the prophet of the Revolution, should be given the voice and appearance of Winston Churchill". More importantly, she reveals earlier in her book that Warburg had dealings with the British intelligence group MI6. He fronted for them by taking their cheques, depositing them and then writing personal checks that he gave to Encounter, an anti-communist liberal literary publication. He may or may not have been a "consultant", helping to ensure that the film would be a successful propaganda tool.

Howard Beckerman (animator and author of Animation, the Complete Story) comments: "Halas and Batchelor had to compete in the world market with Disney, so a few cartoon gags were introduced into the film to lighten its heaviness, and I believe that whatever the CIA's influence might have been, the choice for an upbeat ending came out of the animator's wish to succeed with the audience. There were movies of the period like the live film, My Son John (1952), which attacked the menace of communism head-on in a contrived and obvious fashion, so I guess anything is possible. If Orwell had lived longer, I suspect he would have vetoed any effort to translate his work into such a film."

The film did well at the box office and the reviews were favourable, but some critics suggested people should read the book to learn what was left out. The film was later distributed around the world by the United States Information Agency (USIA) through its overseas libraries. It has also been suggested that the film and book were excellent propaganda in Arab nations "in view of the fact that both pigs and dogs are unclean animals to Muslims" - according to an Egyptian embassy official quoted in the Guardian.

When asked if Vivien's parents were aware of the CIA's involvement with the project she said, "I don't believe that my parents were aware of any CIA involvement at the time. Frances reminded me that, in the early 1950s, the CIA was not regarded with the same scorn as today." By the 1980s her parents had heard rumours concerning the CIA's involvement. She says, "My father dismissed the idea, but my mother felt annoyed."

Thanks to Saunders's research we now know that Orwell's 1984 was made into a live-action feature with funds from the CIA. Work on the British production began in 1954, and, as with the animated Animal Farm, the ending was changed. We also know that the British government saw Orwell's work as useful for propaganda purposes: in March 1998 the Public Record Office declassified documents revealing that the government funded a newspaper comic strip in the early 1950s based on Animal Farm. It ran in several countries including Brazil, Burma, Eritrea, India, Mexico, Thailand and Venezuela.

On a few occasions the CIA's failures have been disclosed to us by the news media, but their successes are almost never made public. No matter how you feel about their meddling with feature films, it appears their involvement in the making of Animal Farm was a successful covert operation and it was kept a secret from the public for almost 50 years.

· This is an edited version of an article that originally appeared in Animation World Magazine. © AWN Inc, 2003. A collectors edition DVD of Animal Farm will be released in June by Universal Pictures Video.