The Defence of the Realm

by Christopher Andrew

  The well-publicized Schultz, Grosse and Graves prosecutions must surely have assisted Kell’s campaign to gain War Office approval to recruit more staff for his diminutive Bureau. On 1 April 1912 he was allowed to recruit an additional officer, Captain (later Major) Reginald Drake (predictably nicknamed ‘Duck’), who, like Kell, had begun his career in a Staffordshire regiment.63 Drake listed a remarkable range of outdoor and sporting pursuits: ‘Recreations: Hunting, Shooting, Beagling, Skiing, Golf, Cricket, Hockey, Polo, Otter-hunting, Swimming, Tennis, Lawn Tennis, Racquets, Squash Racquets’.64 According to an enthusiastic later assessment of him by Kell’s wife, Drake was ‘a most able man and most successful sleuth, small hope for anyone who fell into his net’.65 He was probably selected by Kell partly because he spoke German (in addition to French, in which he had a first-class interpreter’s qualification, and Dutch).66 When Stanley Clarke left the Bureau late in 1912 to become deputy chief constable of Kent,67 Drake succeeded him as Kell’s chief counter-espionage investigator. In September 1912 Kell moved from the Temple to new headquarters a few hundred yards away on the third floor of Watergate House, York Buildings, Adelphi. Correspondence was forwarded from a cover address, Kelly’s Letter Bureau (‘Kelly’ was one of Kell’s aliases), in Shaftesbury Avenue.68

  In December 1912, in place of Clarke, Kell recruited Captain (later Brigadier Sir) Eric Holt-Wilson, an Old Harrovian instructor in military engineering at Woolwich Royal Military Academy. Like Drake, Holt-Wilson was a formidable all-round sportsman, a ‘champion revolver shot’ (to quote his own description) and later president of the Ski Club of Great Britain. He was also, according to Lady Kell’s unpublished memoirs, ‘a man of almost genius for intricate organisation’ and ‘an intensely loyal and devoted friend’. Holt-Wilson became Kell’s deputy during the war and remained in that position until he resigned after Kell was sacked in 1940.69 He owed his nickname ‘Holy Willy’ to the fact that he was the son of a rector and a devout Anglican. Holt-Wilson’s deep patriotism also had a quasi-religious dimension; he wrote in his diary that ‘all my life and all my strength were given to the finest cause on this earth – the ennoblement of all mankind by the example of the British race.’70 Like other pre-war recruits, Holt-Wilson took a career gamble in retiring from the army to join a bureau whose future was far from guaranteed. Before signing on, he wrote to ask Kell for:

  a brief guarantee of employment in writing which will hold me up in case anything unforeseen should befall you and a generation arose ‘which knew not Joseph’ [a biblical analogy]. I hope you don’t consider this over cautious on my part – but it is a big throw, to hurl one’s commission into the fire and trust to luck for the next move.71

  Late in 1912 Kell took a major new initiative. During the Schultz and Grosse cases he had, in effect, briefly used Duff and Salter as double agents by successfully channelling through them information and disinformation to German intelligence. Graves offered Kell a remarkable, but risky, opportunity to recruit him as a full-time double agent. On the day after his conviction Graves announced that he was willing to reveal the operations of German intelligence in Britain – but only to ‘an accredited and well informed Secret Service official of the War Office’. On 9 and 10 September, using the alias ‘Mr W. Robinson’, Kell met him in Barlinnie Prison, Glasgow. Graves produced a plausible mixture of accurate information, including names of some senior Nachrichten-Abteilung personnel, and fabrications, such as his claim that he had been instructed to prepare for the sabotage of the Forth Railway Bridge and identify non-German ‘undesirable persons to carry out terrorist attacks’. Wrongly convinced that Germany was engaged in military as well as naval espionage in Britain, Kell also took seriously Graves’s assertion that German intelligence had divided the whole of England into twenty-four districts, each under the supervision of a German intelligence officer. Graves further claimed that Germany had twenty-nine ‘principal agents’ in Britain and one in Ireland, each with his own identifying number (Graves being ‘27’). Kell arranged for Graves’s transfer from Barlinnie to Brixton and for his secret release on 18 December 1912. He then accepted employment by Kell’s Bureau under the cover name ‘Snell’ or ‘Schnell’ at £2 per week for an initial period of six months. An interwar MI5 assessment of the Graves case, though not passing judgement on Kell himself (unsurprisingly, since he remained director), criticized MO5 (by which it meant MO5(g), Kell’s Bureau) for having been so impressed by the information supplied by Graves and by his obvious ability that they ‘shut their eyes to his extraordinarily bad character’.72

  Graves did not, however, deceive the former Met sergeant Henry Fitzgerald, who joined the Bureau as a detective on 1 November 1912.73 Fitzgerald was deputed to accompany Graves on a tour of what he claimed were German spy haunts. Though Fitzgerald’s reports do not survive, an interwar MI5 summary of them notes that he ‘repeatedly drew attention to the barrenness of the results obtained and reported that Schnell [Graves] was trying to draw him with regard to the personality of W. Robinson’. In short, Fitzgerald ‘saw through him and reported on him somewhat ironically’. Graves’s next stratagem was to claim that at German intelligence headquarters in Berlin there was a book containing ‘the name, description, instructions, code, place and dates of employment of every German agent in this country’. Kell agreed to finance a trip by Graves to Berlin in late January 1913 to obtain a copy of the book.74 Once in Berlin, Graves wired for more money, which Kell duly supplied. Graves next made contact from a liner bound for New York to report that he was shadowing a senior German intelligence officer on board, who had a copy of the secret book. On 18 March, however, a cable from the consul general in New York reported that ‘Snell’ ‘had just left hospital after a murderous assault’ and had lost all the reports he had written.75 Kell responded to two further requests for money from Graves while he was in New York but, having finally grown suspicious, did not reply to a third. When questions were asked in the Commons about Graves’s earlier release from prison, MPs were incorrectly informed that he had been freed because of poor health. In 1914 Graves caused further embarrassment to both Kell’s Bureau and the Nachrichten-Abteilung by publishing newspaper articles and a book about his exploits as a secret agent.76

  The eccentric behaviour of the first four spies to be convicted after the foundation of the Secret Service Bureau – Helm, Schultz, Grosse and Graves – makes it easy to underestimate the actual, and still more the potential, threat from German naval espionage. The final cases which came to court before the outbreak of war make clear that the threat was real. The spy trial of Karl Hentschel and George Parrott in January 1913 was the most sensational so far. Hentschel, a former German merchant seaman, was another in the series of criminal adventurers (though with a less welldeveloped fantasy world than Graves) who were recruited by ‘N’. In 1908 he was sent to Britain, where he established himself as a language teacher first in Devonport, then in Sheerness. Many of his students were Royal Navy personnel, from whom he attempted to extract information. Hentschel married an English wife, Patricia Riley, and befriended the chief gunner on HMS Agamemnon, George Parrott. According to Steinhauer, ‘Hentschel then did something that even the most unscrupulous of spies would hesitate to do,’ and encouraged his wife to have an affair with Parrott. The liaison soon started to pay espionage dividends. Parrott smuggled from HMS Agamemnon four volumes of a classified Royal Navy report on gunnery progress. Kell’s Bureau later established that in 1910–11 Parrott had supplied ‘N’ with a total of twenty-three classified naval manuals.77

  In the spring of 1911, however, Hentschel broke contact with Parrott, apparently after quarrelling over Parrott’s affair with his wife and their respective shares of the money from Berlin. Hentschel was first detected by the Counter-Espionage Bureau as a result of intercepted correspondence to his wife late in 1911 while he was spending several months in Australia.78 The first evidence of Parrott’s continuing contact with German intelligence also emerged from intercepts at almost the same
time,79 though it was several more months before the Bureau discovered his earlier connection with Hentschel.80 Though Melville had earlier been reluctant to shadow suspects personally,81 in July 1912 he shadowed Parrott on a ferry to Ostend, where he met a man who was ‘evidently a German . . . Age about 35 to 40. Height 5ft 9 inches – hair and moustache medium dark. Dress light tweed jacket suit and straw hat. Typical German walk and style.’ Steinhauer later claimed that he had simultaneously been shadowing Melville but did not warn Parrott, perhaps for fear of making him reluctant to continue working as a German agent.82 Parrott was arrested on his return to England, but, because of unwillingness to use the intercept evidence in court, he was dismissed from the Royal Navy rather than put on trial.83

  Two other would-be naval spies detected by letter checks during 1912 were also not put on trial in order not to reveal intercept evidence in court. In February Frederick Ireland, a twenty-year-old stoker on HMS Foxhound, was persuaded by a German uncle, Otto Kruger,84 working as a Nachrichten-Abteilung agent, to offer his services to Steinhauer. The Security Service summary of the case notes that ‘Owing to the undesirability of producing certain evidence [Ireland] was dismissed the Navy without trial.’85 On 23 March 1912 a letter was intercepted in the post addressed to ‘Head, Intelligence Department, War Office, Germany’, signed ‘Walter J. Devlin’. ‘Devlin’, who offered his services as an agent, claimed to have served for seven and a half years in the Royal Navy and still to have access to various ships and naval barracks. He asked that his offer be acknowledged by placing a small ad in the Daily Mirror, reading, ‘Your Services will be useful, Devonport’ and giving an address for correspondence. The Counter-Espionage Bureau placed the small ad and, using the alias ‘A. Pfeiffer’, began corresponding with Devlin, who after a month gave his real name, John Hattrick, and his address in Plymouth. At a meeting with Pfeiffer on 16 May, Hattrick, who was a naval deserter, wrote out and signed an agreement undertaking to find out naval and military information as required by the German government. Next day, while inside Devonport dockyard, he was arrested on a charge of attempting to communicate information to a foreign power. He was later released (as had doubtless been intended from the outset) but warned that the case would go ahead if he had any further involvement in espionage.86

  Parrott’s intercepted correspondence revealed that, unlike Ireland and Hattrick, he remained in touch with German intelligence after he had been caught red-handed.87 On 18 October he travelled to Hamburg to meet his case officer, ‘Richard’, who handed him the then considerable sum of £500. While there, Parrott was extensively debriefed by gunnery, torpedo, naval engineering and intelligence experts, and agreed to continue work as an agent. He was arrested on his return home, found guilty in January 1913 of breaking the Official Secrets Act and sentenced by Mr Justice Darling to four years’ hard labour. Darling told Parrott he had been ‘entrapped by a woman’, and promised to try ‘to procure some remission’ if Parrott revealed all he knew to ‘the authorities’.88

  Parrott’s recruiter, Karl Hentschel, and his wife, meanwhile, had disappeared to Australia, but, after their marriage (perhaps unsurprisingly) broke up, they returned separately to Britain in September 1913. On his return Hentschel offered to provide information about German intelligence on condition of immunity from prosecution and paid employment by the British secret service. Melville interviewed Hentschel and paid him £100 for his information.89 Soon afterwards, having tried and failed to mend his marriage, Hentschel presented himself at Chatham police station, announced that he was a German spy and asked to be arrested. The Chatham police declined his request, but the following day Hentschel tried again at the Old Jewry police station in the City of London. ‘I wish to give myself up for being a German spy,’ Hentschel declared. ‘You may think I am mad, but that is not so. I have had trouble with my wife; and have decided in consequence to confess what I have been doing since I have been in England.’ This time he was questioned, arrested and brought before the Westminster police court on a charge of conspiracy with ex-Gunner Parrott ‘to disclose naval secrets’. Hentschel’s protestations of guilt caused Kell some embarrassment. It was acknowledged in court that Kell’s organization (identified only as a department unconnected with the police ‘especially charged to deal with matters of that kind’) had paid Hentschel for ‘confidential information’ incriminating Parrott and had promised him immunity from prosecution provided he kept his own role secret. However, counsel for the Crown suggested disingenuously that, being a foreigner, the defendant might not have understood that ‘if he made any communication in an open or public manner avowing his own participation in crime’, his immunity from prosecution would lapse. The Attorney General had therefore thought it right to offer no evidence and allow the charges to be withdrawn. But Hentschel was warned in no uncertain manner not to cause Kell any future embarrassment: ‘If the defendant should, under any circumstances whatever, henceforth make any open or public repetition of his own complicity in crime the authorities would hold themselves perfectly free to prosecute.’90

  The last two German spies convicted before the war were, in very different ways, as unreliable as their predecessors. The first was Wilhelm Klauer, alias Klare. Klauer had arrived in England as a kitchen porter in 1902 but, after a period as a dentist’s assistant, set himself up as a dentist in Portsmouth, where he supplemented his meagre fees from pulling teeth by living off the immoral earnings of his prostitute wife. Late in 1912 Klauer wrote to the German Admiralty offering to supply naval intelligence. Steinhauer was sent to visit Klauer and, by his own account, came to the accurate conclusion that he was a fraud who believed, probably from reading Le Queux’s novels, that vast sums were to be made from espionage. Against Steinhauer’s recommendation, the German Admiralty decided none the less to see if Klauer could obtain a secret report book on torpedo trials. Klauer had so little idea how to lay hands on the book that he sought the help of a German-Jewish hairdresser and chiropodist, Levi Rosenthal. Klauer told Rosenthal that it would be worth £100 to have the report book ‘long enough for it to go to Germany and back’. And that, he said, was only the beginning; there were ‘hundreds’ more pounds where the first hundred came from. Without telling Klauer, Rosenthal went to the police. From then on he acted under control, eventually introducing Klauer to a dockyard official who supplied him with a confidential document, thus providing evidence for prosecution. In March 1913 Klauer was sentenced to five years’ hard labour amid applause from a crowded courtroom.91

  The last German spy convicted before the outbreak of war was also probably the most successful. Frederick Adolphus Schroeder, alias Gould, had been born in Germany of an English mother and German father, and after service in the German army had settled in England. Following the failure of various business ventures, he began dabbling in part-time espionage early in the twentieth century. By 1906 he was on the books of the Nachrichten-Abteilung as an ‘observer’ (Beobachter) of Sheerness and Chatham.92 His most productive period, however, began in 1908 when he became licensee of the Queen Charlotte public house in Rochester, frequented by naval personnel from Chatham. In Steinhauer’s professional opinion, Schroeder:

  was not a man whom anyone would take for a spy. Had you met him in the street you would have turned round to look at him and said to yourself: ‘What a finelooking fellow!’ Broad-shouldered, bearded, nature – plus twelve years in the German Army – had given him a big, athletic frame and a pleasant, cheery manner.93

  In May 1912, on Steinhauer’s recommendation, Schroeder was given a formal contract by ‘N’ and a regular salary of £15 a month. The two men became close friends. One undated letter from Steinhauer (probably among those intercepted by Kell’s Bureau) concludes: ‘You are always welcome to us. My children are always asking when Uncle Gould is coming.’ From June 1912, Schroeder sent regular fortnightly reports to Berlin, mostly via Wilhelm Kronauer, one of ‘N’s’ forwarding agents on whom Kell had obtained a Home Office Warrant. Just as he began sending t
he reports, Melville’s assistant detective, John Regan, disguised as a sailor, succeeded in befriending Schroeder, who, he reported, talked freely (if inaccurately) about how German money was being used to foment a British revolution. It appears to have taken more than a year for the Bureau to discover that, as well as submitting written reports to Steinhauer, Schroeder and his common-law wife, Maud Sloman, also travelled regularly to the continent to meet Steinhauer and other ‘N’ officers.94 In February 1914, however, an intercept revealed that Sloman was about to leave for Brussels with a gunnery drill book, charts of Bergen and Spithead, and plans of cruisers. Mrs Gould (as Sloman styled herself) was arrested on 22 February as she was on the point of boarding the Ostend boat train at Charing Cross Station, and found in possession of classified documents.95 Schroeder was arrested on the same day and many more documents were found in his attic. Steinhauer’s ‘blood ran cold’ when he learned of their discovery. According to Steinhauer, Schroeder had provided ‘more information on naval matters than all other spies put together’. Among the classified documents referred to at his trial were ‘important matters relating to engines, engine-room and engine arrangements of battleships’. In April 1914 Schroeder was sentenced to six years’ hard labour.96

  By December 1913 the Counter-Espionage Bureau’s secret Register of Aliens was almost complete except for London (where about half the aliens lived), and Kell wrote to the Home Office ‘to express our gratitude to the Chief Constables and their Superintendents for the excellent work they have done for us during the last three years’ and to request that their local registers ‘be kept under constant current revision’.97 Kell’s original plan to use police forces around the country to compile a secret register of all aliens from probable enemy powers (chiefly Germany) had proved difficult to complete because of the scale of the exercise and the limited resources of both Bureau and police. The Home Office had also insisted that no alien was to be asked any question ‘of an inquisitorial nature’.98 The results of the National Census of 1911, however, made it possible to complete a more limited and focused Register of Aliens. During 1913 the Census returns were used to record the particulars of all male aliens aged eighteen and above of eight nationalities (in particular Germans and Austrians) living in areas which would be closed to aliens in wartime. Information on aliens taken from the Census was then circulated for checking to chief constables, who were also asked to take note of those on the Register in their areas.99