The Black Door: Spies, Secret Intelligence and British Prime Ministers

The First World War triggered Britain’s tangible intelligence changes. MI5 had only fifteen staff prior to the conflict, but it soon expanded. The Post Office also assumed an intelligence function. It grew into a Censor’s Office that employed over 2,000 officials, each steaming, scanning and resealing some 150 letters per day. Britain now boasted a serious domestic surveillance apparatus.39 By the last year of the war, censorship employed 4,871 people, a sizeable engine of surveillance.40 In the empire, MI5 worked closely with security agencies in Delhi to thwart German plots to promote revolts amongst imperial subjects. With good intelligence to hand, Asquith’s government allowed the German Foreign Ministry to continue its ludicrously ambitious plans to promote insurrection on the subcontinent, content that they were unlikely to succeed.41

Overseas, MI6 remained weak. The majority of important international intelligence instead came from a revival of codebreaking. For at least a decade before 1914, the War Office had plans to recreate a codebreaking centre if a military crisis occurred, and both the army and navy did so independently in August 1914. Although they initially cooperated, differences developed in both personality and approach, rendering any harmony short-lived. Nonetheless, they still managed to break German, French and American codes, alongside a host of other streams of high-level communications. Starting from scratch in 1914, this was an amazing feat. The Admiralty’s famous codebreaking unit, codenamed ‘Room 40’, was the more effective; directed by Reginald ‘Blinker’ Hall, it pioneered many of the scientific methods used by Bletchley Park two decades later.42

The First World War may have transformed British intelligence collection, but Asquith still took little interest. The prime minister was in fact deeply uninterested in war, strategy or intelligence, although he found time for bridge, lavish dinner parties and country weekends. He was not lacking in energy or application, but his focus was elsewhere, not least on his mistress Venetia Stanley, more than thirty years his junior. Asquith wrote to her over five hundred times during his period as war leader, sometimes as often as three times a day. The qualities that had made him a good peacetime prime minister were unhelpful in wartime. He was an affable chairman of the board, able to reconcile differences of opinion and find compromises. But he failed to appreciate the value of some of his partners in the wartime Liberal–Conservative coalition, and above all he failed to take hard decisions that were required for the vigorous prosecution of the war. He offered little guidance and support to the military, which was then led by Field Marshal Lord Kitchener.43

Intelligence proved important in the context of Ireland. Again, however, Asquith seemed broadly unaware of troubling developments, and instead engaged intermittently with particular incidents. The British had failed to properly penetrate the dissident movement, so human sources inside Ireland were few, and their reports fragmented and contradictory.44 Consequently, little warning of the 1916 Easter Rising came through these channels. Room 40 provided more solid intelligence. Decrypted secret German cables from America gave important intelligence on the international activities of Irish nationalists, including details relating to the Rising, during which Berlin assisted the exiled Irish nationalist Roger Casement in fomenting rebellion. Casement’s dealings were not news to the prime minister. Although the flow of intelligence to Downing Street was patchy, Asquith had enjoyed a stream of incriminating material on Casement.45 What appeared to be an intelligence bonanza turned out to have come from an untrustworthy source, Casement’s bisexual manservant and lover, who was ‘a liar, a blackmailer and a fantasist’. When Casement found out about his betrayal he publicly (but falsely) alleged a British plot to murder him. Although the incident embarrassed Asquith’s government, it was enough for MI5 to open a file on Casement and unearth more details of his nationalist scheming – and ultimately his German connections.46

Room 40 intercepted more than thirty cables dealing with German assistance to Ireland during the first two years of the war.47 The codebreakers not only gave full warning of the Easter Rising, but also revealed Germany’s plans to send weapons to Ireland in an attempt to divert British attention from the Western Front, allowing the Royal Navy to intercept a German U-boat carrying Casement to Ireland and the arms shipment to be captured. The signals intelligence, though, was only sent to a small military circle. It seemingly did not reach the politicians, even Asquith.48 Nor did it reach the authorities in Dublin. The sorry episode reflects the perennial problem of using signals intelligence: it is difficult to do so without compromising the source, thereby leading to a reluctance to share, even inside Westminster. More intriguingly, there is evidence that the British authorities deliberately allowed the Easter Rising to go ahead in order to justify repression of the Irish dissidents. Under interrogation, Casement offered to publicly call off the rebellion, but this was declined. Instead, he was told that ‘it’s a festering sore’, and it was ‘much better it should come to a head’.49 Either way, the Easter Rising failed.

Despite the work of Room 40, Asquith experienced the rebellion as ‘a real bolt from the blue’ – albeit one with a ‘comic side’.50 His wife Margot confessed in her diary that ‘none of us had any idea what had really happened’.51 Upon hearing the news of the Easter Rising, and in the midst of a conscription crisis, the prime minister simply said, ‘Well, that’s something,’ and went to bed. Intelligence seemingly had little impact in Number 10. Such nonchalance belies Asquith’s growing interest in Irish affairs, which had been a key issue in the months prior to war. He subsequently took on the office of Irish secretary himself, and headed off to Dublin to try unsuccessfully to sort things out.52 General John Maxwell, appointed by Asquith to force a military solution on a political problem, drew on Special Branch intelligence to persuade the prime minister that the case against every executed rebel leader had been overwhelming.53

They included Roger Casement. Partly because signals intelligence had thoroughly convinced the authorities of his treacherous links with Germany, Casement was hanged in Pentonville Prison in August 1916. To counter calls for clemency, the ‘Casement Diaries’, containing what were regarded as shocking descriptions of Casement’s homosexual exploits, were leaked by Blinker Hall to influence the trial. Previously, many Irish nationalists had mistakenly insisted that these diaries were forgeries.54 This episode underlines the long history of the selective use of intelligence to influence public opinion.

Meanwhile, the seemingly directionless war strategy left the cabinet unimpressed. Discontent also arose over the quality of information reaching them. Asquith had formed an ultimately unpopular coalition government, with Andrew Bonar Law as his Tory partner. In early September 1915, Bonar Law pressed the prime minister to make changes to the leadership of the war effort. He sought the resurrection of a General Staff at the War Office, with the hope that this would result in better strategic advice to cabinet. Nothing was done until 22 September, when Kitchener was conveniently absent. The Tories then took the lead and insisted on a smaller and more active War Council, together with the provision of better intelligence to cabinet by the General Staff. Asquith was finally forced to write to Kitchener, insisting on an improved flow of intelligence to the centre. He appointed General Archibald Murray as the new Chief of the Imperial General Staff, but beyond that none of the suggested reforms were implemented, and Asquith did not follow up on the cabinet’s requests for more intelligence.55

The Asquith coalition government disintegrated in late 1916, as a result of its own incompetence and disorder. Lacking personal authority, Asquith had spent much of his time assembling factions and alliances. There was little planning, and astonishingly, letters sent by the prime minister to the King after each meeting formed the only record of cabinet discussions. When Bonar Law joined the coalition in 1915 he had been amazed by the lack of any method or even agenda for cabinet meetings. The failure of the Gallipoli campaign at the start of 1916 accelerated the decline of the Asquith government. Mercifully for the war effort, in June 1916 Lord Kitchener, the aged secretary of state for war, died at sea off the Orkneys in mysterious circumstances, an event that many attributed to a bewildering mixture of German, Irish or Russian saboteurs. He was replaced by the energetic David Lloyd George. At the end of the year, however, both Asquith and Lloyd George resigned in short order, while Bonar Law declined to form a government. Lloyd George became head of a new coalition two days later, establishing a Supreme War Council. Neither Asquith nor Bonar Law was mentally equipped to handle the range of decisions required by modern war. The main challenge for Lloyd George, now and for the rest of the war, was to try to wrest strategic control of the conflict from the military chiefs, a task that he never quite completed.56

Asquith had been notably detached from the business of war. He may have presided over the creation of the Secret Service Bureau and the rapid expansion of every kind of intelligence after 1914, but it had interested him very little. By contrast, in December 1916, David Lloyd George became the first prime minister to embrace intelligence, albeit often in an amateurish manner. This was partly to do with his nature, for he was by temperament a man of enormous energy and sudden impulses. But his initial mistakes also reflected the fact that British intelligence lacked a central brain. No system existed for sifting and interpreting intelligence for top policymakers. Despite a quantum leap in the organisation of Downing Street, and the creation of the Cabinet Office in late 1916, intelligence was deliberately left out. As a result, Lloyd George lacked context and made emotional responses to the raw intelligence he received – with unhappy results.57

His previous interactions with intelligence had been in the context of the ongoing spy-mania. In May 1915, as minister of munitions, he sought to confront the problem of factory explosions. Such disasters were almost invariably the result of primitive manufacturing processes, running at maximum capacity, which did not privilege safety. Like many others, however, Lloyd George was obsessed with the danger of the German ‘hidden hand’, and blamed saboteurs. His staff were allowed to set up a counter-intelligence unit to ferret out these imaginary enemies. Given the name P.M.S.2, it failed to find any spies, and slowly shifted its attention to trade union activity in the munitions factories.58

Lloyd George later admitted that he and some of his friends had deliberately encouraged rumours of saboteurs within the British munitions programme. This included the vast shell-filling factory at Chilwell on the banks of the River Trent in Nottingham, the largest concentration of high explosives anywhere in Britain. In January 1916, a Zeppelin was reported to be hunting up and down the Trent, supposedly hoping to bomb the factory. The next day, rumours circulated that Lloyd George’s friend Lord Chetwynd, who ran the huge complex, had caught three German spies in the act of trying to guide the Zeppelin to its target with hand-held torches and had shot them. Chetwynd exploited the false rumour by asking a labourer to dig three graves on the hillside by night, placing an anonymous black post at the head of each. This, recalled Lloyd George, ‘turned the rumour into unquestioned history’ and discouraged the curious from prying around the factory. Predictably, when it suffered a catastrophic explosion later in the war, it was blamed on yet more spies.59

In late 1916, shortly before Lloyd George became prime minister, the Germans asked the American ambassador in Berlin to explain to President Woodrow Wilson that they were ‘anxious to make peace’. But they did not wish to appear weak, so they secretly asked the United States, which was then neutral, to make a ‘spontaneous’ offer of mediation. Unfortunately for Germany, Britain’s Room 40 had decrypted the American message. When Lloyd George read it, he wrongly assumed that it signified collaboration between America and Germany. With the cabinet in disarray, and lacking intelligence-assessment machinery, the impulsive Lloyd George decided to act alone. He warned the American press against interference by Washington, and asserted that the war must be a ‘fight to the finish’. In reality, President Wilson was immersed in an election campaign and had no interest in peace initiatives at this point. Either way, diplomacy was not Lloyd George’s responsibility. When rebuked by the foreign secretary for meddling, he used the decrypts to defend himself. Far worse, he also alluded to secret information when explaining his actions in Parliament. Even as he assumed office in Downing Street in December 1916, more decrypts crossed his desk which he wrongly – and amateurishly – assumed suggested that the Kaiser and Wilson were still working together. This was not an auspicious beginning, and pointed to a wider failure around the assessment of intelligence at the centre of government.60

Lloyd George brought his undoubted talents for planning and organisation to the highest level of government. The most important part of this reform was the creation of a professional secretariat by Maurice Hankey, a former Royal Marine officer who became the first cabinet secretary. His background was in intelligence – as a junior officer assigned to HMS Ramillies, the flagship of the Mediterranean Fleet, he had engaged in unofficial reconnaissance. By 1902, he had joined the staff of the Naval Intelligence Department in Whitehall. An outstanding officer who spoke many languages, he was the perfect administrator. In 1909, he had written a report for the Committee of Imperial Defence that proposed a Secret Service Bureau.61 Now, in the newly created Cabinet Office, he was joined by Thomas Jones. Once described as ‘a disguised Bolshevik whom Lloyd George had discovered somewhere in a Welsh coal pit’, Jones was nevertheless an equally formidable organiser. It is difficult to capture the chaos that surrounded cabinet affairs before their arrival, and it is no exaggeration to say that they invented modern cabinet government.62

Hankey’s reforms were a triumph. They became central to the development of a modern British interdepartmental coordination system, with its labyrinthine sub-committees and orderly minutes focused on Downing Street. Cabinet meetings were no longer rambling conversations amongst twenty-three people, with no agenda. Instead, they became businesslike discussions at which decisions were made and properly recorded. Yet the reforms were a tragedy for secret service. Hankey created a central mechanism for everything except intelligence. Jones, his deputy, recalled that he had been insistent that the new Cabinet Secretariat should not become ‘an Intelligence department’,63 and although the design of the war cabinet at first envisaged ‘a comprehensive and regular gathering of intelligence’, this never happened.64 The lack of a central clearing house for assessing intelligence had been a constant criticism of government for some time, so while Hankey is celebrated as a moderniser of the government machine, he simultaneously retarded the British intelligence community by twenty years. The idea of a central intelligence machine located alongside Downing Street had to await a further world war, and the arrival of Winston Churchill as premier.65

Lloyd George’s personal record as a user of decrypts did not improve during the war. He was often left to deduce the story from individual intercepts, or ‘flimsies’ as they were called, because of the thin paper on which they were recorded, that arrived without context or comment. He was also given little guidance on the need for security. Thus in February 1917, when the American ambassador, Walter Page, visited Downing Street to convey a message from President Wilson, the prime minister could not restrain himself. He boasted that he had already seen Wilson’s message, attributing this to a leak. Page thought it possible that the telegram had been obtained by a ‘British spy service’ from an unreliable American official. In any case, knowing Wilson’s hatred of leaks, he did not inform Washington. Indeed, the president was obsessively secretive, and actually insisted on deciphering his more sensitive telegrams himself, sometimes with the help of his wife. The realisation that Lloyd George was reading his every word would not have endeared London to him.66

Surprisingly, even as Lloyd George put their work in peril, British codebreakers delivered the greatest intelligence coup of the First World War. They had intercepted what would soon become famous as the ‘Zimmermann telegram’. In this amazing message, Germany’s foreign minister, Arthur Zimmermann, promised Mexico the reward of three of America’s southern states if she joined the German cause and declared war on her northern neighbour, the US. The message was one of the most secret of the war, and was supposed to have been taken by safe hand on a German submarine. But the vessel broke down before leaving port, forcing Berlin to trust the safety of its ciphers.

The Zimmermann telegram is a rare example of a single piece of intelligence changing the course of history. The way in which the British exposed it was elegant, but had nothing to do with Downing Street. Instead, it was a cooperative venture between Room 40 and the Foreign Office – and perhaps for that reason it was not bungled. Lloyd George, doubtless kept abreast given his strong interest in American orientations, was a mere observer. President Woodrow Wilson had won his recent election campaign on the slogan ‘He kept us out of war’. But, provoked by the Zimmermann telegram, alongside Berlin’s aggressive submarine policy, he declared war on Germany in April 1917.67 In his memoirs, Lloyd George records his gratitude to the codebreakers of Room 40 and their ‘uncanny efficiency in the unearthing of German secrets’.68

By the end of the war everyone seemed to be aware of the British secret service. The famous German philosopher Hannah Arendt, for example, was fascinated by the rise of Britain’s professional spies. She wrote that after the First World War, British secret services ‘began to attract England’s best sons, who preferred serving mysterious forces all over the world to serving the common good of their country’, adding that as a result ‘the stage seemed to be set for all possible horrors’. However, she noted that with the British, unlike the Russians and Germans, ‘a minimum of human rights was always safeguarded’.69 Bertolt Brecht wrote that Britain controlled detective fiction and also controlled the world, clearly feeling that these two things were connected in some subterranean way.70

Room 40 was created as a wartime emergency. Nevertheless, its product proved too valuable for it to disband once the guns fell silent, and in peacetime Britain continued to read the secret communications of many countries. As the armistice talks opened in France, President Wilson sent his trusted confidant Colonel Edward House to join the negotiations. Lloyd George was able to read everything sent between House and Wilson. Yet strangely he had not been bitten by the intelligence bug, and useful as he found it, was not an enthusiast. Intelligence spending dwindled dramatically after the war, and the prime minister was happy to leave the reorganisation of peacetime intelligence matters to his cabinet colleagues. Accordingly, although Lloyd George established a governmental committee to review secret service in 1919, he did not join it. Instead, Churchill, an avid intelligence enthusiast, was the leading light in this important reordering.71 Its most important decision would be to maintain the wartime codebreaking effort and focus all resources in one unit: the Government Code and Cypher School, or GC&CS.72

Nonetheless, in February 1920, Lloyd George was required to revisit intelligence matters. He sought to end the festering conflict with the Bolsheviks, viewing Britain’s support for the White Russians as an unhappy extension of the First World War, and therefore a chapter that should now be closed. Although reluctant to offer recognition to the revolutionaries, the prime minister offered Moscow trade agreements as a path to restoring relations. His cabinet colleagues Churchill and Curzon were horrified, not least because of mounting evidence of Bolshevik subversion against the British Empire. Indeed, although there was clear evidence of Soviet funds going directly to the increasingly communist-dominated Labour Research Department during the early 1920s, it was Moscow’s interference in areas such as India that really got the British cabinet excited.73 MI6 had been active in this clandestine conflict too, and many military intelligence officers who had been heavily involved in the Russian Civil War were also dismayed.74

Once more, Lloyd George had access to his opponents’ decrypts. Not for the last time, a British leader was able to read the derogatory terms in which his opposite numbers discussed him. Lenin denounced the prime minister as a deceiving ‘swine’ and a man without scruples, and urged the Soviet trade delegation in London to repay him with even greater levels of deception. This, of course, was difficult, given that every line of Lenin’s instructions was being decoded by the British. Lloyd George declared himself ‘unruffled by Bolshevik intrigues’, which he considered amateurish and unimportant. He was also prepared to turn a blind eye to the war between Russia and Poland that developed in late 1919. But Moscow was a highly political and divisive issue, and by early 1920, some senior military chiefs had begun to question Lloyd George’s motives. On 15 January General Henry Wilson, the Chief of the Imperial General Staff, wrote in his diary: ‘I keep wondering if L.G. is a traitor & a Bolshevist, & I will watch him very carefully.’ Wilson was especially paranoid about Bolshevik plots, and made several similar entries to the same effect over the next few months.75

The activities of Soviet negotiators in Britain were inflammatory. In August 1920 Leonid Krasin, a Soviet trade representative, had arrived for talks accompanied by Lev Kamenev, head of the Moscow Communist Party. Decrypts clearly showed that Kamenev was establishing secret contact with the embryonic British Communist Party, and subsidising the far-left newspaper the Daily Herald, using smuggled diamonds. Every move was visible to the codebreakers, and General Wilson was incredulous that Lloyd George had not immediately ejected the trade mission. On 18 August, Wilson confided his worries to Winston Churchill and the director of military intelligence, General Sir William Thwaites. Over the next few days he did the rounds of the security chiefs, including Lord Trenchard, who commanded the RAF, Sir Basil Thompson from the Home Office, and Rear Admiral Hugh ‘Quex’ Sinclair, director of naval intelligence, and received a sympathetic hearing.76 On 24 August he noted in his diary: ‘Trenchard with whom I discussed the matter later and to whom I showed … the intercepts thinks like Basil Thompson, that Lloyd George is a traitor.’77

On 2 September, with Lloyd George away in Lucerne, his coalition partner Bonar Law summoned a meeting at Downing Street that included Balfour, Churchill and Basil Thompson. Thompson circulated the latest material from the codebreakers. Thomas Jones, the deputy cabinet secretary, recalled that ‘Everyone felt that the last intercept from Lenin where he lays down propaganda as the business of the Russian Delegation put the lid on and that there was nothing for it but to clear them out as quickly as possible.’78

Hankey, who had accompanied Lloyd George to Lucerne, argued exactly the opposite. He insisted that Wilson was absurdly alarmist, and that the activities of the Soviets in London were silly and easy to counter. His main worry was that if they ejected the Soviets they would have to publish the decrypts to justify their actions, placing the prime minister in a very difficult position. Britain would then lose its ‘most valuable and trustworthy source of secret information’, as no matter what they did to try to disguise the fact, Moscow would probably realise its communications were being read. He continued: ‘This particular cypher is a very ingenious one which was discovered by great cleverness and hard work. The key of the cypher is changed daily and sometimes as often as three times in one message. Hence if it becomes known that we decoded the messages all the governments of the world will probably discover that no messages are safe.’79