Hitler's Spy Chief (6 page)

*
The archived photographs distinctly show a white flag, though the German naval ensign has not been lowered.

*
The Admiralty version, which understandably did not wish to underline the contempt of the Senior Service for the Foreign Office, states that on hearing from Canaris that the
Dresden
had already been interned, Luce had required, in a phrase which would haunt Anglo-German relations in a later war, ‘unconditional surrender'. See the introduction to Ian Colvin's
Chief of Intelligence
, London 1951.

CHAPTER TWO

THE LEAGUE OF GENTLEMEN

Secret Work must always be the preserve of gentlemen. When this ceases to be the case, all is doomed to failure
.

COLONEL NICOLAI
,
FIRST CHIEF OF THE IMPERIAL GERMAN INTELLIGENCE SERVICE
1

The young Canaris, by his epic journey and his well-documented outwitting of the Royal Navy, returned to Germany something of a minor hero in naval circles and also decidedly someone with a flair for intelligence work. But in 1915 what kind of opportunities existed in Germany for such talents?

Nicolai's oft-quoted words have long comforted intelligence officers from all countries with the implication that, when all is said and done, after foreign nationals have been suborned, agents blackmailed, sources bribed and spies liquidated, espionage is an honourable profession. But in Germany, as opposed to England, Russia, France or even Austria, the need for this newly emerging power to have an intelligence service opened many neuroses.

How could upright Prussian officers, educated daily by the chimes of the garrison church in Potsdam to practice ‘
immer treu und redlichkeit
' (eternal loyalty and probity) and to be direct, sincere and loyal, involve themselves with spying and double-dealing?

In England the long centuries of internal scheming by powerful
opposing interests had made espionage a fact of life and a crucial dimension of statecraft in the island's struggle to remain independent and prevent Europe uniting to its disadvantage; though even in England some military circles took a dim view of intelligence work. In Russia, harsh methods of internal repression created the dreaded Cheka long before the NKVD was conjured up by Felix Dzerzhinsky. Even easy-going Austria had developed spying into a fine art under Metternich, where famously, at the Congress of Vienna in 1815, the contents of the wastepaper baskets of monarchs were exactingly scrutinised by one of the most feared secret police organisations in Europe.

In Germany, the early years of the nineteenth century offered nothing so ambitious. True, the principalities and dukedoms had their agents but it was not until Bismarck that anything remotely coherent was established. In 1866, during the brief campaign against Austria and then later during the Franco-Prussian War, the earlier primitive and often improvised spying techniques were replaced by a Prussian military intelligence service working closely with the field police under Wilhelm Stieber. But here, even after the German Empire was created, the general staff proved most reluctant to sanction the creation of a secret intelligence service.

‘I am most concerned,' wrote a war minister shortly afterwards, ‘that young officers must year after year engage in regular contact with people of dubious reputation.'
2

When, eventually, Kaiser Wilhelm II allowed such an organisation to come into being it was with a modest budget of 300,000 marks and a cadre of no more than a dozen officers with support staff. This could not compete with France or England, whose imperial traditions required a global network and vast secret budgets. Even Austria's imperial and royal Evidenzbüro, reorganized after the treachery of Colonel Redl under the capable leadership of Feldmarshalleutnant Urbanski von Ostrymicz, was, with its vast network of agents spun throughout the Balkans, a first division service compared to anything imperial Germany had to offer.

The German service was strictly limited to military information in other ‘potentially hostile' countries and expressly forbidden to research economic or political developments. German military officers were not expected or trained to apply their minds to political problems and police methods or lower themselves by becoming involved in political machinations. These dubious activities offended the strict code of honour with which every German officer was imbued.

Another brake on developing a credible military intelligence capability was the jealousy of the German Foreign Ministry's own intelligence service and the informal intelligence gathering operations of the various German political parties who were more than happy to see the new military intelligence apparatus limited to conventional military targets.

As a result, the German Empire may have enjoyed the most formidable military machine in the world, but it possessed no centralised political intelligence capability under a unified command. Diplomats gathered intelligence with scant regard for the military implications. Soldiers evaluated intelligence in a political vacuum. There was thus no relationship between military intelligence and political intelligence.

Unsurprisingly, in 1914, the German High Command possessed neither reliable information on the political objectives of France, England, Russia and Serbia nor indeed any solid data on the reactions of its enemies to its projected planning. Had it had any inkling of what the reaction in London would be to the German violation of Belgian neutrality, it is tempting to think that this act, in Asquith's words, of ‘almost Austrian crassness',
3
together with the other parts of the attendant and infamous Schlieffen strategy, might have been consigned to the Chief of the General Staff's equivalent of the shredder.

True, a start was made in 1912, when the relatively junior Oberleut-nant Nicolai was entrusted by the then Colonel Ludendorff with the task of reforming military intelligence and creating a new department known by its organisational shorthand as III B. Walther Nicolai was himself the
embodiment of the old Prussian officer caste. The product of generations of Brunswick pastors and officers, he differed perhaps only in one respect from his peers: for Nicolai, it was not only the destiny of the German officer class to defend the country's future, it was his personal duty to employ all means at his disposal. Ultra-conservative, monarchist, Nicolai had no scruples about expanding his intelligence department into previously uncharted territory.

Ludendorff encouraged him. Unlike most of his contemporaries, Ludendorff was fascinated by intelligence and saw that a secret intelligence service was essential for the ‘total war' that Ludendorff envisaged in the future. Such an instrument was no less necessary for the authoritarian regime that would wage such a war.
4

But even in these early days, there arose a problem that would daunt German intelligence a generation later in the Second World War. Nicolai's intelligence officers, in the organisational chart of command known by their staff shorthand as IC, were never quite sure whether they should answer to the High Command or the General Staff. The line of reporting was kept deliberately vague by Ludendorff in an attempt to concentrate the service, via Nicolai, in his own hands. Needless to say civilian supervision was of course anathema to both men.

Consequently, few spy chiefs took up the reins of office as confidentiy as did Nicolai in 1913. By this time he was a major, and barely forty years old, a spectacularly young age in Wilhelmine (and indeed later) Germany for an appointment of such sensitivity. In common with most Prussian officers, he saw war as the highest destiny of mankind, without which it would lapse, as Moltke had warned, into materialism, atheism and sloth. For Nicolai wars were ‘the days of reckoning'.

However, when war came, in addition to the shortcomings in intelligence evaluation described above, on an operational level the early months were an utter fiasco. Nicolai's agents were rolled up in France and Russia with astonishing ease, while at the same time, the general staff, suddenly
aware of the tactical advantages to be gleaned from sound intelligence, overwhelmed Nicolai with demands for information his small organisation could in no way meet.

The dearth of information from France even forced Nicolai to re-activate a seventy-three-year-old agent by the name of Schluga in Paris, someone who had last seen active service in the Franco-Prussian War forty years earlier. In addition, there was a strict demarcation between operations and evaluation with the result that, in a relatively small organisation, neither part knew what the other was doing, a common and recurring theme in twentieth-century intelligence operations by no means exclusive to Germany.

Nicolai set to work to improve this in every way he could and by the end of 1916, with Ludendorff all but dictator of Germany, he had the chance he had always prized of expanding his organisation into the political sphere. Press censorship, domestic intelligence and the support of propaganda in favour of a war climate all became the work of IIIB. Republicans were smeared or suborned. Nationalist parties were established to promote conquest in Eastern Europe and stimulate German minorities to promote war aims. Supported by the dynamic of war, Nicolai's section IIIB was becoming a powerful instrument of state. Promotion to Colonel and a vastiy increased budget enabled Nicolai to consolidate his position, increase his network of agents and stamp his authority over the internal police counter-intelligence organs. By 1917, hardly any Allied offensives were not communicated in advance by Nicolai's agents to the High Command and in the Middle East the level of penetration of British forces was remarkable. If Schellenberg is to be believed, it was Nicolai who suggested the idea to Ludendorff of sending Lenin in a sealed train back to Russia via Germany, after the Habsburg Emperor Charles, sensitive to what a revolution in Russia would mean for his empire, refused to allow the Communist to reach Russia the more direct way from Switzerland via Austria.
5

Thanks to Nicolai, once Canaris had recovered from his exertions, there was indeed work for him: work that would exploit his resourcefulness and knowledge of Anglo-Saxon methods. For Canaris had come to know and admire the Anglo-Saxon world. The first love of his life was an American, Edith Hill, daughter of a wealthy businessman, to whom he had more less become engaged in the last months of 1913. The affair soon ended, but not before Canaris had come to learn much of Anglo-Saxon customs and business habits.
6

Promoted to
kapitänleutnant
, Canaris, despite being troubled by a recurrence of malaria he had picked up in the tropics before the war, was initially posted to Kiel to take eventual command of a torpedo boat. But the German naval intelligence department of Nicolai's organisation was reluctant to see such a gifted officer wasted on conventional naval duties. Canaris, they knew, had already proved that he could deceive the enemy, operate effectively in hostile territory and use agents to organise not only his supplies but also to weave a web of carefully orchestrated deceit to make fools of the Royal Navy.

In the spring of 1915, Italy, in an act the Austrian Emperor Franz-Josef described as ‘a breach of loyalty whose equivalent is unknown in history' had denounced the Triple Alliance and declared war on Austria and Germany. Bribed by the British and French with promises of colonies in the Adriatic, to the consternation of the Russians who had their own Pan-Slav ambitions in the Adriatic, the Italians went to war on the promise of Trieste, tracts of Dalmatia and the South Tyrol enshrined in the secret Treaty of London.
7

The Mediterranean, key to the lines of communications of the British Empire, was now an important theatre of war and, as every naval staff knew, a happy hunting ground for submarine warfare. But neither Austria nor Turkey had effective submarines, though the former possessed a significant force of Dreadnoughts. The German fleet of U-boats was 4,000 miles away from the principal Austrian naval base of operations at Cattaro.
The distance for submarines was enormous: typically, U-21 took more than a month to reach the port from the North Sea. The alternative of sending smaller submarines in parts by rail down to Pola and reconstructing them was not of much strategic value, though in practice this saved two weeks. But the smaller submarines were not as effective.

At the same time, with increasing American hostility to submarine activity in the North Sea, the pressure to deploy the U-boats around the Mediterranean increased, not least as they were an ideal way of supplying subversive elements in British and French-controlled North Africa. By the end of the year, a number of U-boats had travelled south to spread psychological warfare and sink a number of Allied ships in Funchal on the island of Madeira. The success of such operations, however, depended entirely on the submarines being able to refuel and resupply, somewhere nearer to home than Cattaro on the other side of the Mediterranean.

In particular, the tribesmen who were prepared to raise the flag of revolt in North Africa against the French and Italians needed modern weapons and money on a regular basis, from somewhere nearer than the Eastern Adriatic. Only one country in the western Mediterranean offered the benefits of neutrality to the Germans, and that was Spain. Only Spain could act as a suitable port of call for the U-boats, though obviously in order to maintain Spain's neutrality such replenishments of supplies would need to be handled with the greatest delicacy. Spain, therefore, was critical to the German war effort, but at this stage of the war, much underestimated by many in Nicolai's organisation.

Nicolai's representative in Madrid was Major Kalle, the military attaché. Kalle, however, appears to have found Spain, miles away from the fronts where titanic armies were locked in battle, to be very dull and asked Berlin to be posted elsewhere. ‘There is,' he wrote, ‘little intelligence of importance here.'