The Defence of the Realm

by Christopher Andrew

  Officially the British MI5 is only concerned with civilian activities as they affect the army, but in reality and especially recently, they have concerned themselves in general with revolutionary and Bolshevik agents, using the Suspect List, built up during the war and since added to, as a basis for operations.18

  At the end of the war, the ‘Defence Black List’ compiled by the Registry contained 13,500 names. Retitled the ‘Precautionary Index’, it grew to 25,250 names by 1925, and provided ‘a central register of persons potentially dangerous to National Defence’ in the form of a card catalogue. The index was divided into twelve categories ranging from ‘persons connected with foreign secret service’ to ‘persons of foreign blood or connection in British Government civil service’. Within each category names were also ‘grouped by races’. According to Kell’s deputy, Holt-Wilson: ‘It is not the nationality by place of birth, or by law, but nationality by blood, by racial interests, and by sympathy and friendship that is taken as the deciding factor in all classifications of possible enemy agents and dangerous persons.’ Kell believed that the British people regarded ‘with pity and contempt a decent British subject who wilfully becomes naturalised as the subject of a foreign State, and are equally sorry for any of our women folk who marry a foreigner’. He was also suspicious of British subjects who had one foreign parent: ‘We had enough trouble in the late war with half-hearted hybrids who asked not to be sent to the front to kill their relatives . . .’19 Kell’s crude prejudices about ‘hybrids’ are difficult to reconcile with his warm appreciation of William Hinchley Cooke, the son of a British father and German mother, whom he had recommended successfully for an OBE.20 Though the Precautionary Index remained with MI5, Thomson had more resources than Kell for investigating British Communism. As Major William Phillips, later head of A Branch, acknowledged: ‘Whatever grounds for complaint we may have had against Sir Basil Thomson, I think I am right in saying that failure to exchange all useful information was not one. On the whole we probably got from him more than we wanted.’21

  Some of the most valuable intelligence on Soviet subversion came from the new British SIGINT agency, GC&CS. Though wartime British codebreakers had considered Tsarist diplomatic ciphers too complex to decrypt,22 for a decade after the Bolshevik Revolution Soviet ciphers were less sophisticated. The attack on them was led by the head of the Russian section at GC&CS, Ernst Fetterlein, an early Soviet defector who had been one of the leading cryptanalysts in Tsarist Russia. He was a bespectacled, rather solitary man of grizzled appearance whose social contact with most of his colleagues went little beyond saying ‘Good morning’ in a thick Russian accent. The great American cryptographer William Friedman, who met Fetterlein at the end of the war, was struck by the large ruby ring on the index finger of his right hand: ‘When I showed interest in this unusual gem, he told me that the ring had been presented to him as a token of recognition and thanks for his cryptanalytic successes while in the service of Czar Nicholas, the last of the line.’ Fetterlein’s successes in Russia had included decrypting British diplomatic traffic.23 For much of the 1920s he had similar success in decrypting Soviet traffic in Britain.

  During the ten months of Anglo-Soviet trade negotiations which began in London in May 1920, SIGINT was the Lloyd George government’s most important intelligence source. For Moscow concluding the agreement, which represented the first de facto recognition by a major power of the Soviet regime, was of great importance. GC&CS’s ability to decrypt most of the wireless messages between Moscow and its Trade Delegation in London provided an extraordinary insight into Soviet policy.24 Record survives of only one decrypt being sent to Lloyd George while he was wartime prime minister. From May 1920, however, because he took personal charge of negotiations with the Soviet Trade Delegation, Lloyd George received a constant flow of Soviet decrypts; between June and September he received a direct delivery from GC&CS.25 Among the decrypts was a blunt warning from Lenin to the Soviet negotiators: ‘That swine Lloyd George has no scruples or shame in the way he deceives. Don’t believe a word he says and gull him three times as much.’

  Though Lloyd George took such insults in his stride, the Foreign Secretary, Lord Curzon, and other cabinet hardliners called for the Trade Delegation to be expelled because of their subversive activities. In addition to the evidence in the intercepts of the Trade Delegation’s secret contacts with British Communists and Soviet funding for the CPGB and the socialist Daily Herald, Thomson’s Directorate reported a stream of Russian and Comintern couriers bringing funds, propaganda and exhortation to Bolshevik sympathizers in Britain. Some of the couriers used unusual methods to smuggle former Tsarist jewels into Britain. One of the directors of the Daily Herald, Francis Meynell, later described how, on one occasion, he brought two strings of pearls from Copenhagen in a jar of Danish butter and, on another, he posted a large box of chocolate creams, each containing a diamond or a pearl, to the then pro-Bolshevik British philosopher Cyril Joad. Thomson reported to the cabinet that ‘Jew dealers from all parts of Europe’ were flocking to London to purchase the precious stones being smuggled into London by the Trade Delegation and individual couriers. Curzon was convinced that, thanks to Soviet-financed subversion, ‘the revolutionary virus is spreading with dangerous rapidity among the classes with whose leaders they [the Trade Delegation] are in daily contact.’ Lloyd George, who now had a much more realistic grasp of the slender prospects for a British revolution, continued the trade negotiations. Following the signing of the Anglo-Russian Trade Agreement on 16 March 1921, the Soviet trade mission in London became a permanent presence; a British trade mission in Moscow opened in August. Though formal diplomatic relations did not follow for another three years, Soviet Russia had taken the first step to acceptance by the international community.26

  MI5 had no formal responsibility for investigating the activities of the Trade Delegation. It already had an extensive file, however, on the Delegation’s Secretary and official translator, Nikolai Klishko, who was in reality the first Soviet intelligence resident (head of station) in London. As a political refugee from Tsarist Russia in pre-war Britain, Klishko had been employed as a technical translator by the armaments firm Vickers, and had been suspected by Scotland Yard of arms smuggling to Russian revolutionaries.27 A Vickers manager reported at the time of the Bolshevik Revolution that Klishko was ‘very friendly with the notorious Lenin’ and had ‘the most extreme Leninite views’.28 The head of the Russian section (G4), Captain Maurice Bray, one of MI5’s Russian speakers (‘recreations: shooting and golf’), concluded in July 1918 that Klishko was the ‘most dangerous Bolshevik here’.29 He was interned in August and subsequently deported, before returning to London in May 1920 with the Russian Trade Delegation. Once back in London he was kept under inadequate surveillance. It was only in the later 1920s that MI5 discovered that he had taken part in setting up a spy-ring headed by the pro-Bolshevik foreign editor of the Daily Herald, William Norman Ewer.30

  The Soviet intelligence which MI5 received from SIS in the early 1920s was of variable quality.31 In February 1921 the SIS head of station in the Estonian capital Reval (now Tallinn) reported that an agent codenamed ‘BP11’, ‘whose reliability has been proved on many occasions’, had successfully penetrated the Reval office of Maksim Litvinov, Soviet Deputy Commissar for Foreign Affairs, and gained access to its code department. During the next few months ‘BP11’ provided over 200 ‘summaries and paraphrases’ of radio messages allegedly exchanged between Litvinov in Reval, Soviet leaders in Moscow and the Trade Delegation in London. The most sensational intercepts were those which reported Soviet aid (mostly channelled via the Trade Delegation) to Sinn Fein ‘germ cells’ in Ireland. The term ‘germ cell’, SIS explained, was ‘used by the Bolsheviks to denote the small Communist groups which they insinuate into unions and movements of any character suitable to their purpose’. Some of the messages, which referred to military matters such as arms supplies to the Sinn Fein ‘germ cells’, were of direct interest to M
I5.32 In April, however, GC&CS exposed the Reval intercepts as fraudulent. It had, it reported, detected no radio traffic between Reval and Moscow, ‘presumably because there is a landline’, and the numbering system on the authentic intercepts it was decrypting between Reval and London bore ‘no relation’ to those obtained by SIS.33 Two years later, a further forged intercept, which once again deceived the SIS station in Reval, was to cause a political sensation and persuade many on the left that British intelligence and Conservative Central Office were conspiring together to keep Labour out of power.

  On 22 January 1924 James Ramsay MacDonald, illegitimate son of a Highland ploughman and a Lossiemouth mother, became Britain’s first Labour prime minister at the head of a minority government dependent on Liberal support. King George V, whose hands he kissed on taking office, wrote in his diary, ‘Today 23 years ago dear Grandmama [Queen Victoria] died. I wonder what she would have thought of a Labour Government!’34 MacDonald may not have known that during the war MI5 had considered recommending his prosecution for making seditious speeches but had decided not to do so.35 Kell was well aware, however, of Labour suspicions of MI5.36 MacDonald, who combined the post of foreign secretary with that of prime minister, quickly made clear that he was sceptical of the intelligence he received on Soviet and Communist subversion. When shown a report on subversive activities by the head of the Special Branch, Sir Wyndham Childs, on 24 January, he commented facetiously:

  it might be made at once attractive and indeed entertaining if its survey were extended to cover not only communistic activities but also other political activities of an extreme tendency. For instance a little knowledge in regard to the Fascist movement in this country . . . or possibly some information as to the source of the ‘Morning Post’ funds might give an exhilarating flavour to the document and by enlarging its scope convert it into a complete and finished work of art.37

  Childs was not amused. MacDonald declined to circulate Childs’s weekly reports to the cabinet, as his Conservative predecessor, Stanley Baldwin, had done. Kell as well as Childs must have been further disturbed when, on 2 February, the Labour government became the first in the West to give the Soviet regime de jure recognition. The Foreign Office was so nervous of MacDonald’s likely response to the Soviet and other diplomatic decrypts produced by GC&CS that it delayed several months before showing any to him.38

  MacDonald’s government turned out, however, to be far less radical than Whitehall had feared. The Prime Minister, wrote Hankey, ‘affects to regard me as a reactionary, and I retaliate by treating him as a visionary, but this is all more or less banter. I continue as Secretary of the Cabinet as of yore.’39 For MI5 the most reassuring figure in the government was the Home Secretary, ‘Uncle’ Arthur Henderson, who had served in the War Cabinet from 1916 to 1917 and stoutly defended the Special Branch in the Commons against attacks by his own backbenchers.40 To MI5’s relief Henderson continued to authorize Home Office Warrants on the correspondence of leading Communists. (Curiously, until 1937 it was not thought necessary to seek HOWs for telephone calls.)41 Among the Communists of most direct interest to MI5 during the life of the first Labour government was the CPGB’s first Scottish organizer, Robert ‘Bob’ Stewart, who had spent most of his time as a wartime conscript in prison, being court-martialled four times for offences which included declaring, after the February Revolution, that he would not use his gun against Germans. Early in 1923 Stewart began working at Comintern HQ in Moscow, where he met all the main Soviet leaders, including Lenin, whose funeral he attended in 1924. He headed the Party’s secret organization and was involved in passing information on the British armed forces to the Russians. According to an SIS report forwarded to MI5 on 2 July, Zinoviev, the Comintern president, had promised Stewart £3,000 a month for ‘agit-prop’ (agitation-propaganda) work in the armed forces.42

  The MacDonald government as a whole began to take a more friendly view of domestic intelligence-gathering as a result of its early experience in grappling with labour unrest. MacDonald’s very first cabinet meeting on 23 January had to discuss how to safeguard food, milk and coal supplies during a train drivers’ strike. Over the next two months strikes, first of the dockers, then of London tramway workers, led to government plans to use the Emergency Powers Act, which had been violently denounced by Labour when it had been introduced by Lloyd George.43 On 15 April the cabinet appointed a five-man Committee on Industrial Unrest to inquire into the recent strike wave ‘with a view to ascertaining whether any appreciable percentage of the unfortunate aspects of these strikes was due to Communist activity’. Much of the evidence considered by the Committee came from intelligence supplied by the Special Branch, SIS and MI5. It included intercepted letters from British Communists, Comintern and the Red International of Labour Unions (RILU), minutes of the CPGB Politburo and other Party committees, and reports from informers within the Communist Party and the trade unions. The Committee concluded that the CPGB regularly received both finance and instructions from Comintern and that Communists within the union movement similarly received finance and instructions from the RILU. There was also evidence of Communist involvement (with Comintern and RILU encouragement) in the recent strike wave. An intercepted ‘secret circular’ of 18 February revealed that Harry Pollitt of the CPGB’s Central Industrial Committee (and later the Party’s general secretary) had instructed district Party committees that ‘anything coming to you from the British Bureau of the R.I.L.U. is to be acted upon in the same way as a Party communication.’ Willie Gallacher, later Britain’s longest-serving Communist MP, told his wife in an intercepted letter of 30 January that he had spent the whole of the previous day preparing reports on the strikes for Comintern. An intercepted letter from the Communist provisional secretary of the London Transport Workers Solidarity Committee, declared: ‘We must be prepared to sabotage.’44

  The Industrial Unrest Committee concluded that, while the Communists had done their best to aggravate the recent strikes, they had played only a minor part in starting them. Despite ‘substantial assistance’ from Comintern, the CPGB was ‘constantly in great financial difficulties’. Though the Party was ‘extremely active’, its membership had fallen from a peak of 4,000–5,000 two years earlier. The Committee was, however, concerned by the evidence of ‘systematic instructions and plans . . . issued by the Communist Party’ aimed at penetrating and taking over the unions. It believed that ‘responsible Trade Union leaders’ should be shown this secret evidence ‘informally and confidentially’.45 On 15 May the report of the Industrial Unrest Committee was approved by the cabinet, which in effect thus sanctioned the interception of Communist and Comintern communications, accepted the authenticity of the intercepts, and decided ‘in favour of some form of publicity’ for the intelligence derived from them.46

  Britain’s first Labour government lasted little more than nine months. No longer able to count on Liberal support, MacDonald called an election in October 1924. It was sadly ironic that Labour’s election campaign should be disrupted by another intercepted Comintern communication, which became known as the ‘Zinoviev letter’. This time, however, the intercept was a fabrication. As in 1921, the flow of authentic intercepted correspondence and diplomatic decrypts in 1924 was polluted by forgeries – though on a much smaller scale. Like the bogus intercepts of 1921, the Zinoviev letter came from the SIS Reval station, which appears to have been deceived once again by anti-Bolshevik White Russian forgers. Allegedly despatched by Zinoviev and two other members of the Comintern Executive Committee on 15 September 1924, the letter instructed the CPGB leadership to put pressure on their sympathizers in the Labour Party, to ‘strain every nerve’ for the ratification of the recent treaty concluded by MacDonald’s government with the Soviet Union, to intensify ‘agitationpropaganda work in the armed forces’, and generally to prepare for the coming of the British revolution. On 9 October SIS forwarded copies to the Foreign Office, MI5, Scotland Yard and the service ministries, together with an ill-founded assurance
that ‘the authenticity is undoubted’.47 The unauthorized publication of the letter in the Conservative Daily Mail on 25 October in the final week of the election campaign turned it into what MacDonald called a ‘political bomb’, which those responsible intended to sabotage Labour’s prospects of victory by suggesting that it was susceptible to Communist pressure.

  The call in the Zinoviev letter for the CPGB to engage in ‘agitationpropaganda work in the armed forces’ placed it squarely within MI5’s sphere of action. Like others familiar with Comintern communications and Soviet intercepts, Kell was not surprised by the letter’s contents, believing it ‘contained nothing new or different from the [known] intentions and propaganda of the USSR’.48 He had seen similar statements in authentic intercepted correspondence from Comintern to the CPGB and the National Minority Movement (the Communist-led trade union organization),49 and is likely – at least initially – to have had no difficulty in accepting SIS’s assurance that the Zinoviev letter was genuine. The assurance, however, should never have been given. Outrageously, Desmond Morton of SIS told Sir Eyre Crowe, PUS at the Foreign Office, that one of Sir George Makgill’s agents, ‘Jim Finney’,50 who had penetrated the CPGB, had reported that a recent meeting of the Party Central Committee had considered a letter from Moscow whose instructions corresponded to those in the Zinoviev letter. On the basis of that information, Crowe had told MacDonald that he had heard on ‘absolutely reliable authority’ that the letter had been discussed by the Party leadership. In reality, ‘Finney’s’ report of a discussion by the CPGB Executive made no mention of any letter from Moscow. MI5’s own sources failed to corroborate SIS’s claim that the letter had been received and discussed by the CPGB leadership – unsurprisingly, since the letter had never in fact been sent.51