The Defence of the Realm
Page 9
Kell’s Registry entered the aliens information received from the 1911 Census and chief constables on what were known as ‘Special Cards’: the beginning of MI5’s card index. The Registry was among the most up to date of its era. In preference to the long-established ledger-based systems, Kell was one of the first to adopt what was then the cutting edge of data management, the Roneo carding system.100 Each alien was allocated a Roneo card with serial number and basic information: name, nationality, date of birth, family particulars, address (home and business), place in the household (whether householder, lodger or servant), trade or occupation, and details of any employers. Any additional information was written on the back of the card. Cards were updated when further information arrived from chief constables. Colour-coding and symbols were added to the cards to enable speedy identification of the level of threat each alien was believed to pose. A yellow wafer-seal indicated a possible suspect, subject to periodic reports from chief constables; a red wafer-seal identified those on a ‘Special War List’ of high-risk enemy aliens, subject to special regular reports from chief constables and to surveillance after the outbreak of war. If, in addition to the red seal, the card was marked with a cross (X), the alien was to be searched on the outbreak of war; if with two crosses (XX) he was on a wartime arrest list sent to chief constables. A small hole punched in a yellow seal indicated that the alien was no longer on the suspect list; a hole in a red seal meant removal from the Special War List.101
A majority of the German spies detected by the Counter-Espionage Bureau in the few years before the First World War did not come to trial. Those caught in flagrante while procuring classified information were prosecuted under the 1911 Official Secrets Act. Rather than arrest most other identified members of Steinhauer’s network, in particular Karl Ernst and the ‘postmen’, Kell tried to maintain up-to-date information on their whereabouts and monitored their correspondence in order both to trace their contacts and to be in a position to cripple German espionage in Britain at the outbreak of war.102 Premature arrests risked revealing to the Nachrichten-Abteilung the extent of his knowledge of the existing agent network and leading it to set up a new and more secure network which would be more difficult to penetrate. For that reason Kell also preferred to warn off ‘N’s’ British sources rather than bring them to trial. He complained in August 1912:
Owing to the fact that it is impossible in this country to hold trials for espionage and kindred offences in camera (as is the custom in continental countries) it was considered contrary to the interests of the State to bring these men to trial, which would have entailed a disclosure of the identity of our informants and other confidential matters.103
The most important of these ‘confidential matters’ was that, thanks to Churchill’s change in the HOW system, letter checks were far more frequent than before and had compromised much of Steinhauer’s network. Doubtless to Kell’s dismay, some of the contents of intercepted letters were used as evidence in the trials of Schultz and Graves.104 The Times report on the Gould trial referred to a number of letters signed ‘St’ (though not to the fact that Gould’s papers included a signed photograph of their author, Gustav Steinhauer). On 27 March a warrant was taken out for Steinhauer’s arrest under the Official Secrets Act on a charge of having procured Gould to obtain information which might be useful to an enemy.105 Though Steinhauer later claimed that he had known his letters were being read,106 the arrests of his agents on the outbreak of war demonstrate that he was unaware of the scale of the interception of his correspondence with them. During the July Crisis which followed the assassination of the heir to the Austro-Hungarian throne, Archduke Franz Ferdinand, on 28 June 1914 and precipitated the First World War, Steinhauer made a last, daring visit to Britain to contact some of his agents. Kell knew from intercepted correspondence that a jute salesman using the name ‘Fritsches’ (previously identified as a probable alias of Steinhauer’s) was travelling in Britain, but he lacked the resources to mount close surveillance of all the likely points on Steinhauer’s route, and he escaped undetected.107 Steinhauer later boasted of how, disguised as a gentleman fisherman rather than a jute salesman, he travelled as far north as Kirkwall.108
On 29 July, six days before Britain entered the First World War, Kell’s Bureau began sending chief constables ‘warning letters’ with lists of suspected German agents and dossiers on those to be arrested.109 During the final days of peace Kell remained in his office at Watergate House twentyfour hours a day, sleeping surrounded by telephones, and – according to Constance Kell’s unpublished memoirs – ready to order the arrest of twenty-two identified German spies as soon as war was declared.110 But for the co-operation established by Kell with chief constables since 1910 the rounding up of the core of Steinhauer’s agent network would have been impossible. Never before in British history had plans been prepared for such a large number of preferably simultaneous arrests of enemy agents at diverse locations. With a total staff of only seventeen (including the caretaker) on the eve of war, Kell depended on local police forces for much of the investigation and surveillance which preceded the arrests as well as for the arrests themselves. Nowadays hundreds of Security Service staff and police officers would be required for such a large operation. Kell, however, had neither the staff nor the modern communications systems required to remain in close and constant touch with all the police forces involved. Unsurprisingly, six police forces took independent initiatives. The Portsmouth police jumped the gun by arresting one of those on Kell’s list (Alberto Rosso, alias ‘Rodriguez’) on 3 August, the day before Britain went to war. On or soon after 4 August other local police forces arrested seven additional suspects they had identified (apparently on flimsy evidence) whose arrest had not been ordered by Kell.111
Kell’s original arrest list no longer survives, but was later reconstructed by the interwar Registry from MI5 files.112 Following the premature arrest of Rosso on 3 August, nine further arrests ordered by Kell were made on the 4th, five on the 5th and five more over the next week. The final arrests were made on 15 and 16 August, bringing the total to twenty-two.113 The total included one suspect who was not on the original arrest list: the previously unidentified husband of a female German agent, Lina Heine, who was discovered in her company when she was arrested.114 One spy on the original arrest list, Walter Rimann, a German-language teacher in Hull, was later discovered to have taken the ferry to Zeebrugge on 1 August and never returned to Britain. His intercepted correspondence over the previous two years had revealed recurrent nervousness about his own security, following revelations about Steinhauer’s British operations during espionage trials.115
Though the identification of the twenty-two German agents arrested in August 1914 on Kell’s instructions owed much to police investigations,116 the key role usually belonged to Kell’s Bureau. At least seventeen (probably more) of the twenty-two had been subject to letter checks under HOWs obtained by Kell which provided the most reliable method of monitoring their contacts with the Nachrichten-Abteilung.117 In the run-up to war Kell’s Bureau had also begun to influence government policy, helping to draft legislation ‘to prevent persons communicating with the enemy’ and restrict the movement of aliens, which was rushed through parliament after the outbreak of war.118
The twenty men and two women arrested represented espionage threats of very different orders of magnitude. All, however, with the possible exception of Lina Heine’s husband, had been in contact with German intelligence and thus clearly represented potential wartime espionage risks. The Nachrichten-Abteilung had no doubt that its British operations had been struck a devastating blow. Gustav Steinhauer later acknowledged that at the outbreak of war there had been ‘a wholesale round-up of our secret service agents in England’.119 The Kaiser, he recalled, was beside himself with fury when told the news of the arrests:
Apparently unable to believe his ears, [he] raved and stormed for the better part of two hours about the incompetence of his so-called intelligence officers,
bellowing: ’Am I surrounded by dolts? Why was I not told? Who is responsible?’ and more in the same vein.120
Steinhauer is scarcely likely to have fabricated such a devastating denunciation of his own incompetence.
In the less than five years since the founding of the Secret Service Bureau, Kell had transformed British counter-espionage. He had begun by chasing phantoms. Few, if any, of the first cases his Counter-Espionage Bureau examined involved real spies. By 1912, however, the Bureau was fully focused on actual German espionage. The cases of Parrott and Schroeder, among others, demonstrate that, if unchecked, the Nachrichten-Abteilung might well have collected an impressive amount of intelligence on the strengths and weaknesses of the Royal Navy. The expanded HOW system for authorizing letter checks and the data-management system of the Registry laid the foundations for MI5’s future development. The small scale of the Bureau’s resources made its achievements the more remarkable. Its staff were fewer in number than the spies whose arrest it ordered in August 1914.
Research in German archives demonstrates that Kell’s Bureau did not succeed in identifying all the German agents present in Britain at the outbreak of war. It seems, however, to have rounded up all those that mattered. There is no evidence that in the critical early weeks of the war any worthwhile intelligence reached Germany from Britain. Holt-Wilson later recalled:
A German Order came into our hands early in the war which disclosed the fact that as late as the 21st August (i.e. 17 days after war was declared), the German Military Commanders were still ignorant of the despatch or movements of our main Expeditionary Force, although this had been more or less common knowledge to thousands in this country.121
There was, of course, much that Kell’s small Bureau had not discovered about German intelligence work during its first five years. Its central error was to believe that German military as well as naval intelligence was operating in Britain. In reality, before the outbreak of war German military intelligence (Sektion IIIb) concentrated exclusively on Russia and France; indeed, intelligence from its agents in Russia helped to alert the Prussian General Staff to Russian mobilization at the end of July 1914.122 Kell’s belief that Sektion IIIb was also targeting Britain was not, however, a foolish mistake for a young intelligence agency. The head of Sektion IIIb, Lieutenant Colonel Walter Nicolai, later revealed that, though ‘Time had not sufficed to extend this organisation to England, this was, indeed, to have been the next step in the organisation of our I[intelligence] S[ervice].’123
2
The First World War
Part 1: The Failure of German Espionage
War with Germany raised British spy mania to unprecedented heights. On 4 August 1914, the day that Britain went to war, Basil Thomson, Assistant Commissioner at Scotland Yard in charge of the Criminal Investigation Department (CID), whose responsibilities also included the 114-man Metropolitan Police Special Branch (MPSB),1 was informed that secret saboteurs had blown up a culvert near Aldershot and a railway bridge in Kent. An inspection next day found both to be intact. Spy mania, wrote Thomson later, ‘assumed a virulent epidemic form accompanied by delusions which defied treatment’: ‘It attacked all classes indiscriminately and seemed even to find its most fruitful soil in sober, stolid, and otherwise truthful people.’ Reports flooded in of German agents planning mayhem and communicating with the enemy by a variety of improbable means. All were false alarms.2
The Home Secretary, Reginald McKenna, sought to calm public fears on 5 August by announcing to the Commons that twenty-one spies and suspected spies had been arrested ‘all over the country’ in the past twentyfour hours, ‘chiefly in important military or naval centres’.3 In his anxiety to reduce spy mania, however, McKenna had jumped the gun. Seven of the German agent network identified by Kell had still to be arrested.4 New legislation gave the government unprecedented powers to deal with aliens and suspected spies. The Aliens Restriction Act, drafted by the Home Office in consultation with Kell and Holt-Wilson,5 in readiness for war, was rushed through parliament on 5 August and gave the government carte blanche ‘to impose restrictions on aliens and make such provisions as appear necessary or expedient for carrying such restrictions into effect’. The Defence of the Realm Act (DORA), also drafted in consultation with Kell and Holt-Wilson,6 which became law three days later, gave the government powers close to martial law:
i to prevent persons communicating with the enemy or obtaining information for that purpose or any purpose calculated to jeopardise the success of the operations of any of His Majesty’s Forces or to assist the enemy; and
ii to secure the safety of any means of communications, or of railways, docks or harbours.
Enemy aliens were required to register with the police and forbidden to live in a large number of ‘prohibited areas’ without police permits.7 Kell and the other army officers on the retired list in his Bureau were mobilized for war service as general staff officers (GSOs).8 The Special Intelligence Bureau (SIB), as it continued to style itself, was integrated into the War Office as MO5(g) and its responsibilities extended to include ‘military policy in connection with civil population including aliens’ and the ‘administration of the Defence of the Realm Regulations in so far as they concern the M[ilitary] O[perations] Directorate’.9 Its role, however, was kept secret. MO5(g) policy, approved by Whitehall, was to conceal ‘the very existence of a British Contre-Espionage Bureau’.10
The new wartime legislation did little in the short term to calm spy fever. When McKenna made a further attempt to allay public anxieties on 9 October by claiming that pre-war spies had obtained ‘little valuable information’ and that the whole German spy network had in all probability been ‘crushed at the outbreak of the war’, The Times was ‘more than a little incredulous’: ‘It does not square with what we know of the German spy system . . . In their eager absorption of the baser side of militarism, the Germans seem to have almost converted themselves into a race of spies.’11 Security Service files still contain a small sample of the letters forwarded to it by the War and Home Offices from correspondents as deluded as those who had contributed to the spy scares of Edwardian England. An army officer, based in London, reported, inter alia, that ‘Haldane is the first and foremost spy. His houses should be raided, as he has got a wireless set behind the cupboard in one of his bedrooms.’ Other correspondents claimed that German coalminers in the Kent coalfields had dug a series of tunnels which were to be used for wartime sabotage. According to a correspondent from East Ham, one of the tunnels passed under Canterbury Cathedral.12
The spy scares which followed the outbreak of war gave William Le Queux a new lease of life. He was, he declared, ‘not affected by that disease known as spy mania’ and was full of praise for the ‘unremitting efforts’ of Kell’s Bureau, which he referred to as ‘a certain nameless department, known only by a code number’. Le Queux fraudulently claimed to be ’intimate with its workings’: ‘I know its splendid staff, its untiring and painstaking efforts, its thoroughness, its patriotism, and the astuteness of its head director, who is one of the finest Englishmen of my acquaintance.’ But he now considered the scale of the spy menace altogether beyond the capacity of Kell’s ‘nameless department’: ‘The serious truth is that German espionage and treasonable propaganda have, during past years, been allowed by a slothful military administration to take root so deeply that the authorities today find themselves powerless to eradicate its pernicious growth.’13
Milder forms of spy fever were common even among those who escaped the wilder fantasies of Le Queux and his readers. They were strengthened by the sinking of three British cruisers by U-boats in the North Sea on 22 September. Admiral Lord Charles Beresford, MP for Portsmouth and former Commander in Chief of the Channel Fleet, told a recruiting drive on 2 October: ‘Three cruisers were lost by information given from this country to the German Admiralty. The British people should insist that the Home Office prevent the British Army and Navy being stabbed in the back by assassins in the shape of spie
s. All alien enemies should be locked up!’ Soon afterwards he claimed in a letter to the press: ‘Numbers of men have been caught red-handed signalling etc. and have been discharged through not enough evidence.’ Requests to Beresford from the Director of Public Prosecutions for evidence to support his claims brought only confused and choleric replies. The Attorney General, Sir John Simon, however, was inclined to believe Beresford’s explanation for the sinking of the cruisers. He wrote privately on 26 October:
Experience has shown that the German Navy is extraordinarily well informed of our movements, and though I have the greatest detestation of spy mania, I do not think it is open to doubt that there are a number of unidentified persons in this country, who have been making treacherous communications, and who were not known to us at the beginning of the war.14
MO5(g)’s growing responsibilities, combined with serious concern within and beyond Whitehall at the threat from German espionage, led to a steady expansion in its staff which continued throughout the war. By the end of 1914, MO5(g)’s staff had more than doubled in the four months since the outbreak of war (from seventeen to forty), but was still far too small to deal with the rapid increase in its work. An intensive recruitment campaign produced 227 new recruits in the following year.15 Many officer recruits were men who had been wounded on the Western Front or other theatres of war, and been declared unfit for active service. A wartime cartoon shows a new recruit telling a visiting general: ‘Oh, they knocked a piece out of my skull, so they sent me to the Intelligence Dept.’16 Some recovered sufficiently to return to the Front. In 1915, to cope with increasing numbers, MO5(g) acquired rooms in Adelphi Court, a block of flats next to its HQ at Watergate House, York Buildings, Adelphi. Later, the whole block was acquired.