The Defence of the Realm (38 page)

The Security Service's main source of intelligence on the BUF came from Maxwell Knight's contacts and agents inside the movement, some of whom dated back to his earlier membership of the British Fascisti.
²⁶
His early reports, however, were somewhat distorted by his belief in the BUF's genuine, if wrong-headed, patriotism. Until the spring of 1934 he refused to believe reports from Rome that the BUF was receiving secret subsidies from Mussolini.
²⁷
On 13 April Knight admitted his mistake. He reported that before Mosley's visit to Italy in March the BUF had been in dire financial straits with talk of Mosley having to sell his late wife's jewels. Since his return from Italy, however, BUF finances had suddenly returned to health. Knight's sources within the BUF reported that it had an active membership of 35,000 to 40,000.
²⁸
A majority, however, probably did no more than pay subscriptions and purchase
Blackshirt
and other BUF publications. The Security Service later estimated the BUF's
active
membership, at its peak in 1934, at only about 10,000.
²⁹

The evidence of foreign funding for the BUF, combined with street fighting between black-shirted Fascists and Communists, chiefly in the East End of London, prompted Kell to prepare his first full-scale report for the Home Office and other government departments on ‘The Fascist Movement in the United Kingdom'. Early in May 1934 he wrote to chief constables in England, Scotland and Wales asking them to supply details at regular intervals of BUF membership, together with ‘their opinion as to the importance to be attached to this movement in their areas'. From their replies he concluded that ‘the Fascists have been more active and successful in the industrial areas and that their achievements in the majority of the Counties may be regarded as negligible'. He reported to the Home Office that the prospect of a Fascist coup was still far away, but detected ‘various tendencies' which were ‘bringing Sir Oswald Mosley and his followers more to the front of the stage'. Their propaganda was ‘extremely clever'.
³⁰
The Fascist threat, such as it was, appeared to reach its peak at the Olympia rally in June 1934, extravagantly proclaimed beforehand by the BUF as ‘a landmark, not only in the history of fascism, but also in the history of Britain'. Most of the choreography for the rally was borrowed from Hitler
and Mussolini. Mosley marched to the platform lit by a spotlight through a forest of Union Jacks and BUF banners while uniformed Blackshirts gave the Fascist salute and chanted ‘Hail Mosley!' Fights between hecklers and Fascist stewards started almost as soon as Mosley began to speak, and continued intermittently for the next two hours. ‘The Blackshirt spirit', declared Mosley afterwards, ‘triumphed at Olympia. It smashed the biggest organised attempt ever made in this country to wreck a meeting by Red violence.' The Communist
Daily Worker
also claimed victory: ‘The great Olympia counter-demonstration of the workers against Blackshirts stands out as an important landmark in the struggle against Fascism in this country.'
³¹
Though virtuously disclaiming all responsibility for the violence, both the BUF and the CPGB, in MI5's view, used ‘illegal and violent methods': ‘In fact, both . . . were delighted with the results of Olympia.'
³²

Despite the evidence of foreign Fascist funding for the BUF, the Home Secretary, Sir John Gilmour, refused a Security Service application for an HOW on Mosley,
³³
apparently in the belief that he remained a staunch patriot who posed no threat to national security. His successor, Sir John Simon, continued to refuse an HOW even when, two years later, Mosley married his second wife, the former Diana Mitford, in a private ceremony attended by Hitler in Goebbels's drawing room. Hitler gave Diana a signed photograph in an eagle-topped silver frame which she kept in the marital bedroom.
³⁴
MI5 later concluded that ‘Before the outbreak of war Lady Mosley was the principal channel of communication with Hitler. Mosley himself has admitted she had frequent interviews with the Fuhrer.'
³⁵
But until their internment in 1940 both, remarkably, were not subject to HOWs, though copies of letters to and from them turned up in the correspondence of other, less well-connected Fascists on whom MI5 did obtain HOWs.

After the Olympia rally of June 1934 the cabinet briefly turned its attention to ways of preventing further rallies in which Fascists paraded in political uniforms. But the problems of framing new legislation to prevent such rallies were complicated by the difficulty of defining what ‘political uniforms' were. Possibly reassured by Security Service reports, the cabinet gradually lost its sense of urgency. Kell reported to the Home Office in October 1934:

It is becoming increasingly clear that at Olympia Mosley suffered a check which is likely to prove decisive. He suffered it, not at the hands of the Communists who staged the provocations and now claim the victory, but at the hands of Conservative MPs, the Conservative Press and all those organs of public opinion which made him abandon the policy of using his ‘Defence Force' to overwhelm interrupters.

The BUF had been publicly disowned a month after Olympia by the press baron Lord Rothermere, previously its most prominent Conservative supporter. Mosley himself was said by MI5 to be in a state of ‘acute depression' and the deputy leader of the BUF, Dr Robert Forgan, who later left the movement, was reported ‘to have doubts as to his leader's sanity'.
³⁶
MI5 reported in March 1935 that, according to a trustworthy source, Fascist ‘cells' had been formed in ‘various branches of the Civil Service'. But the general tenor of Kell's intelligence continued to be reassuring. Reports to MI5 from chief constables showed that, in all major cities except Manchester, BUF membership had declined, branches had closed, sales of the
Blackshirt
had dropped and enthusiasm had cooled.
³⁷
Aware of the BUF's lack of electoral appeal (though unwilling to accept that violence at its rallies had damaged its reputation), Mosley fielded no candidates at the November 1935 general election. The landslide victory of the National Government underlined the BUF's increasing irrelevance in British politics.

Mussolini's subsidies did little or nothing to arrest the steady decline of the BUF during the two years after the Olympia rally. A Nazi ideologue of Scottish extraction, Colin Ross, visited England in April 1936 to report on the state of the British Fascists. According to the Special Branch, which kept him under close surveillance, Ross concluded that the BUF had ‘a fine policy and a splendid leader, but absolutely no organisation'. There were signs, none the less, of growing German influence among the Blackshirts. In July, despite Hitler's unwillingness to provide secret funding, the BUF changed its full title to the British Union of Fascists and National Socialists. ‘Mosley', MI5 noted, ‘has also shown a closer approach to the German spirit in his more pronounced attacks on the Jews during recent months'.
³⁸
Kell reported to the Home Office in July 1936 that the monthly Italian subsidies had been cut from £3,000 to £1,000, and that the BUF was in ‘general decline':

It is true that in the East End Fascist speakers have had a better welcome than elsewhere, but there is a good deal of anti-semitic feeling there and anti-semitic speeches are therefore welcome. There does not seem to be any reason for believing that public opinion in the East End is becoming seriously pro-Fascist.
³⁹

The Security Service emphasized the growing influence within the BUF of the pro-Nazi William Joyce who, it reported, had greater influence on militant Blackshirts than Mosley himself. It continued for several years to rely on a rather optimistic appreciation of Joyce by Knight (identified in reports to the Home Office only as ‘someone who knows him well'), written in September 1934, which claimed that, though Joyce was ‘a rabid
anti-Catholic' and ‘a fanatical anti-Semite' with ‘a mental balance . . . not equal to his intellectual capacity', it was unlikely that anything ‘could occur to shake his basic patriotism'.
⁴⁰
In fact Joyce was dismissed from the BUF in 1937, formed the stridently pro-Nazi (but small) British National Socialist League, took German citizenship in 1940 and became infamous as ‘Lord Haw-Haw', broadcasting Nazi propaganda to wartime Britain.

On 4 October 1936 the attempt by four columns of Blackshirts to march to meetings in Shoreditch, Stepney, Bethnal Green and Limehouse led to the ‘battle of Cable Street' when anti-Fascists threw up a barricade in the Blackshirts' path, fought with police and forced Mosley to divert his march along the Embankment. The day produced, according to the Special Branch, ‘undoubtedly the largest anti-Fascist demonstration yet seen in London'. It also led the government to recover the sense of urgency it had lost after the Olympia rally two years before. Though still unwilling to authorize an HOW on Mosley, Sir John Simon told the cabinet: ‘There cannot be the slightest doubt that the Fascist campaign . . . is stimulating the Communist movement so that the danger of a serious clash is growing.' A Public Order Bill prohibiting political uniforms and empowering the police to forbid political processions was rushed through parliament and came into effect on 1 January 1937.
⁴¹

The battle of Cable Street, condemned by the BUF as ‘the first occasion on which the British Government has surrendered to Red Terror', gave Mosley just the publicity he was looking for. The Security Service reported that at meetings organized by Mosley in the East End immediately afterwards ‘the display of pro-Fascist sentiments on the streets surprised a number of experienced observers.' But the BUF resurgence was short lived. At the end of November 1936 MI5 put BUF membership at ‘a maximum of 6,500 active and 9,000 non-active members'; the Special Branch put it rather higher, and probably less accurately, at a total of nearly 20,000.
⁴²
With the banning of the Blackshirts the BUF dwindled into peacetime insignificance.
⁴³
The Security Service, however, regarded it as a potential wartime threat. Holt-Wilson drafted an amendment to the Government War Book (a classified compendium of legislation, regulations and other measures to be introduced in wartime) which was intended to ensure that British citizens should not, as in the First World War, be exempt from internment. In July 1937 the Committee of Imperial Defence approved the terms of a draft Bill providing for ‘the detention of persons whose detention appears to the Secretary of State to be expedient in the interests of the public safety or the defence of the Realm', so laying the groundwork for the internment of Mosley and many of his followers three years later.
⁴⁴

By the time the British Blackshirts lost their shirts, Germany had, for the first time since the First World War, replaced Soviet Russia as the main target of British foreign intelligence. The Soviet menace slipped into fourth place in the SIS ‘Order of Priorities' behind the more important threats to British interests from Germany, Italy and Japan.
⁴⁵
German rearmament also produced a modest revival of British government interest in its intelligence services. On 16 March 1935, in defiance of the Versailles Treaty, Hitler announced the introduction of conscription. On the 25th he made the exaggerated boast that the Luftwaffe had already ‘reached parity' with the RAF. An investigation by the Ministerial Committee on Defence Policy and Requirements discovered a serious shortage of intelligence on the Luftwaffe and ‘brought out very clearly the need for increased financial provision for Secret Service funds'. Without debate in parliament the Secret Vote was raised from £180,000 in 1935 to £250,000 (with a supplementary vote of £100,000) in 1936, to £350,000 in 1937, to £450,000 in 1938 and to £500,000 in 1939.
⁴⁶

The most committed Whitehall supporter of both MI5 and SIS was Sir Robert Vansittart, permanent under secretary at the Foreign Office from 1930 to early 1938. ‘Van' was much more interested in intelligence than his political masters were. Unlike Simon and Sir Nevile Henderson, the British ambassador in Berlin, he ‘felt that we indulged in it all too little',
⁴⁷
dined regularly with Quex Sinclair,
⁴⁸
was also in (less frequent) touch with Kell,
⁴⁹
and built up what became known as his own ‘private detective agency' collecting German intelligence.
⁵⁰
More than any other Whitehall mandarin, Van stood for rearmament and opposition to appeasement. His suspicions of Germany were of long standing. As a student in Germany, he had been challenged to, but succeeded in declining, a duel. A generation later he was among the first in Whitehall to forecast, in May 1933, that ‘The present regime in Germany will, on past and present form, loose off another European war just so soon as it feels strong enough . . . We are considering very crude people, who have few ideas in their noddles but brute force and militarism.'
⁵¹
Van later described his German sources as ‘a few brave men' who ‘knew that I realised a war to be nearing': ‘They thought that, if they fed me with sufficient evidence, I might have influence enough to arouse our Government and so stop it. Of course they were wrong, but we tried.'
⁵²

With Vansittart's encouragement, the Security Service began for the first time to develop sources within the German embassy.
⁵³
By far the most important was the aristocratic diplomat Wolfgang zu Putlitz, proud of the fact that his family had owned the castle at Putlitz in Brandenburg since
the twelfth century. Putlitz's first experience of Britain, on arriving to learn English in 1924 to prepare for a diplomatic career, was mixed. Though he had a letter of introduction to Lady Redesdale (mother of the Mitford sisters), when he went to call on her the door was shut in his face.
⁵⁴
Putlitz did, however, become close friends with a German journalist in London, Jona Ustinov, who was recruited as an MI5 agent (codenamed U
₃₅
) early in 1935,
⁵⁵
six months after Putlitz (then aged thirty-five) was posted to the German embassy in London. Both men were committed anti-Nazis, though Putlitz later had to join the Party in order to keep his job. Putlitz (codenamed PADGHAM by the Security Service) later recalled that he met Ustinov every fortnight: