Secret Intelligence and British policy, 1909–45
Foreign and Commonwealth Office, London, U.K.
Secret intelligence did not, of course, begin in 1909: the records of the Foreign Office's Permanent Under-Secretary's Department (PUSD) give a good indication of the sort of covert activities that the British government undertook before that date. To look at the overall place of secret intelligence in foreign policy, however, the year of the formation of the Secret Service Bureau is a good place to start.
Before the First World War, the two agencies that emerged from the split of the Secret Service Bureau in 1910 into domestic and overseas branches (MI5, [the Security Service] and MI1c, later called SIS [Secret Intelligence Service] and later still MI6), had only begun to establish procedures and recruit staff before war began. They were low on resources and facilities, and constantly under threat from the military authorities who believed that the only real intelligence was military intelligence. But the Foreign Office and even the War Office realized there was a need for more and better intelligence to meet the perceived German threat, as well as some machinery for effective counter-espionage. At this stage, however, neither the new agencies nor the government itself had worked out fully how secret intelligence could feed into policymaking.
The First World War forced the new intelligence agencies to mature quickly. Though military intelligence was naturally dominant, there was an important role for MI5 to play in tracking spies, in censorship, blockade operations, and the penetration of enemy embassies in Britain; and SIS, working in an occasionally fractious but generally productive collaboration with military intelligence overseas, produced vital information from agents and resistance networks on enemy war preparations and troop movements. Both agencies grew exponentially during the war, and many of the skills and techniques they developed were to prove an essential foundation for their work in the Second World War. Some of the greatest advances were made in a field where there was virtually no capability before 1914: Signals Intelligence (SIGINT). Room 40 of the Admiralty (one of whose notable contributions was the decoding of the Zimmerman Telegram) and Section MI1b of the War Office together changed the British intelligence landscape and laid the foundations for much of today's communications technology. Their contribution was recognized by the Cabinet's decision in 1919 that the two sections should combine into a new agency – the Government Code and Cypher School (GC&CS, FO 1093/104 – and continue work into peacetime.
When wars end, it is common for governments to cut back on their intelligence capability (the so-called "peace dividend"). This happened after 1919, after 1945, and indeed after the end of the Cold War. At the end of the First World War, the British Government was in economic difficulties and hoped that a new, peaceful world, where the League of Nations would settle international disputes, would render an extensive intelligence organization unnecessary. The budgets and staff of MI5 and SIS were cut drastically, although some ministers in the 1920s, notably Winston Churchill, argued that intelligence budgets should not be cut to the bone in what was still a dangerous world, particularly in view of the aggressive tactics of the Bolshevik government in Moscow whose avowed intention was to foment global revolution. With all government departments forced to adopt swingeing budget cuts, and demobilized officers leaving to return to their occupations, the agencies were bound to be diminished. The threat, however, was not.
The Soviet Union, and its campaign of subversion and sabotage against Britain and her Empire, was the principal target of both MI5 and SIS in the 1920s. It was a troubled time for the intelligence community, with a series of scandals undermining ministerial confidence in the agencies, whose jurisdictional battles caused plenty of headaches for the Secret Service Committee. But as the decade progressed and it became clear that Germany was not abiding by the disarmament clauses of the Treaty of Versailles, the focus began to shift and pressure to increase. By the early 1930s, and particularly after Adolf Hitler became Chancellor in 1933, the intelligence agencies were being given an increasingly wide, and often conflicting range of tasks by their military and political masters. But though they recognized the European threat, the government's imperative was to keep out of war while gaining time to rearm: gloomy intelligence could prove very unwelcome news, as the head of the Industrial Intelligence Centre, Major Desmond Morton, found. In terms of foreign policy, the government wanted to have the intelligence but was not yet prepared to act on its message.
The British secret intelligence community has been criticized widely for perceived failure in the 1930s, whether to identify the "Cambridge spies", to stop Russia fomenting revolution in the British Empire, or to acquire accurate information on the war preparations of Germany, Italy, and Japan. It is true there was a lack of focus at times, and that the agencies, preoccupied with the Soviet threat, were perhaps slow to appreciate the extent of the European threat. But the intelligence agencies were tiny, underfunded, and operating in a very hostile environment: global recession, American isolationism, and a potential military threat in both Europe and the Far East. Nor was there a clear political direction coming from the government, still less an effective mechanism for feeding intelligence into the policymaking machinery. Even when the Joint Intelligence Committee came into being in 1936 the secret intelligence agencies were not members, nor was the Committee really effective until the Second World War (CAB 56/1). And despite these disadvantages, the agencies did have some notable successes, in the recruitment of key agents, in codebreaking, and in counter-espionage operations in Britain. All of them began to expand again and make preparations for a future war, using the experiences of 1914–18 to build an enhanced capability for a more technologically sophisticated struggle against an uncertain array of foes.
The beginning of the Second World War did not find the British intelligence community in good shape, however, as ministers recognized. In addition to concerns about overseas intelligence and the threat of a German invasion of Britain, the Venlo incident of November 1939, when British agents were lured into a trap in the Netherlands, was a serious embarrassment. Prime Minister Neville Chamberlain commissioned a major review of intelligence by Lord Hankey, the former Cabinet Secretary, in December 1939, leading to the removal of the veteran Director General of MI5, Sir Vernon Kell, and other organizational changes, though criticism was more muted than might have been expected. When Churchill became Prime Minister, however, he took a dynamic personal interest in every facet of British intelligence, bringing in Desmond Morton as his personal intelligence adviser, demanding to see the decrypted messages from Bletchley Park personally, and instructing the creation in July 1940 of a new agency, the Special Operations Executive (SOE), to "set Europe ablaze."
The Second World War was a period of extraordinary activity and achievement for all parts of Britain's intelligence community. In addition to the three prewar agencies and the new SOE, a multiplicity of intelligence, propaganda, and liaison bodies sprang up between 1940 and 1945, causing inevitable friction at times but doing useful work nevertheless. With Churchill's authority, huge sums were expended by the British government on intelligence in the service of the war effort, in economic warfare, propaganda and public relations, sabotage and subversion, complex deception operations, espionage and counter-espionage and, of course, in codebreaking. Churchill's other great contribution was the creation of the War Cabinet secretariat to coordinate all the military and civil operations and make sure that the right pieces of information got to the right people and places through secure channels at the right time. Of course things went wrong sometimes, but the achievements were extraordinary.
By 1944, however, at the same time that the deception operation FORTITUDE was persuading the German High Command that there would be an Allied landing in the Pas-de-Calais, rather than in Normandy, ministers and senior officials in London were making plans for the reorganization of British intelligence when hostilities ended. However magnificent the achievements of individual parts of the machinery, most recognized that the secret intelligence establishment was too big, too diversified, and too unwieldy to be viable in peacetime. Despite his interest in intelligence, Churchill knew this was true, and other ministers, notably Anthony Eden, made sure the work was set in hand. Although a number of bodies, like the SOE, lobbied hard to continue in existence, a major reorganization took place in 1945–46, resulting in an intelligence establishment that looked very much like it does today: MI5, SIS (MI6) and GCHQ (Government Communications Headquarters).
The Labour Government elected in 1945 under Clement Attlee continued the work of streamlining the intelligence establishment, though they soon found that, as in 1919, the peace dividend did not materialize. The early Cold War years, with the growing threat of Soviet aggression in Eastern Europe and elsewhere and the perceived danger of a third world war, increased the need for good intelligence, and so for the proper funding and efficient operation of the agencies. Between 1945 and 1951 further reviews were set in train by ministers, including the Findlater Stewart report (CAB 301/31), leading to the Attlee Directive to the Security Service (1945–46), and a far-reaching enquiry into the secret intelligence and security services conducted by Cabinet Secretary Sir Norman Brook in 1950–51. Although these put the secret intelligence establishment on a firmer footing that was better connected to government policy, further work was to be needed in future years to ensure a productive relationship with policymaking. And it should always be remembered that intelligence is usually a very small part of the complex web of factors that go into the formulation of British foreign policy, and is only ever one piece of the jigsaw.
 For details see the official histories of the two agencies: Andrew (2009) and Jeffery (2010). On the activities of MI5 and MI1c (SIS) during the First World War see, for example, FO 1093/47–57, 59–62.
 The telegram was sent by the German Foreign Minister, Arthur Zimmerman, to the German Ambassador in Mexico on January 16, 1917, announcing the intention to begin unrestricted submarine warfare on February 1. If this led the U.S. to abandon neutrality, Germany offered Mexico an alliance and help to recover the lost state of Texas. Room 40 got hold of this message even before it reached Mexico, and gave a copy to the Americans: see Freeman (2006); also Kelly (2013). On SIGINT in the First World War see FO 1093/104.
 First convened in 1919, the Committee met on a number of occasions in the 1920s and thereafter, often because of a scandal or the suspicion that the agencies might be exceeding their responsibilities. The Committee's records for 1919, 1921, and 1922 are in CAB 127/355–356, The National Archives, U.K. Those between 1924 and 1931 are in FO 1093/67–74. On the relations between the agencies see Quinlan (2014).
 On economic intelligence and the origins of interdepartmental intelligence cooperation see Bennett (2006).
 See Jeffery (2010) and Mackenzie (2000). For papers on the foundation of SOE, its operations and jurisdictional disputes with SIS, see FO 1093/137–138, 155, 163, 175, 183–184; also CAB 301/49–68. On Churchill's early interventions on intelligence, see Bennett (2006), chapters 11 and 12.
 For files relating to these activities see, for example, FO 1093/128–130, 133, 137–142, 149, 156–158, 161, 163, 172, and 229; also CAB 301/81–87. On the wartime funding of intelligence, see FO 1093/158 and CAB 301/1–4, 47, 55–57, 78. A unique set of wartime accounts of the Secret Intelligence Service from May 1940 to March 1945 can be found in CAB 301/32/1–5.
 See the comprehensive collection of interdepartmental papers relating to the Future of the Secret Services in FO 1093/193–199. This includes documentation relating to the 1944 report by Sir Nevile Bland on SIS. See also 13–14, 31, 48, 53 and 59.
Andrew, Christopher. 2009. The Defence of the Realm: The Authorised History of MI5. London: Penguin.
Bennett, Gill. 2006. Churchill's Man of Mystery: Desmond Morton and the World of Intelligence. Abingdon: Routledge.
Freeman, Peter. 2006. "The Zimmerman Telegram Revisited: A Reconciliation of the Primary Sources." Cryptologia 30 (2): 98–150.
Kelly, Saul. 2013. "Room 47: The Persian Prelude to the Zimmermann Telegram." Cryptologia 37 (1): 11–50.
Jeffery, Keith. 2010. MI6: The History of the Secret Intelligence Service 1909–1949. London: Bloomsbury.
Mackenzie, W. J. M. 2000. The Secret History of SOE: The Special Operations Executive 1940–45. London: St Ermin's Press.
Quinlan, Kevin. 2014. The Secret War between the Wars: MI5 in the 1920s and 1930s. London: The Boydell Press.