History ol the second worm wa British Intelligence in the Second World War FHHinsley E E Thomas CFG Ransom RCKnight BOSTON PUBLIC LIBRARY BRITISH INTELLIGENCE IN THE SECOND WORLD WAR ITS INFLUENCE ON STRATEGY AND OPERATIONS The authors of this, as of other official histories of the Second World War, have been given free access to official documents. They alone are responsible for the statements made and the views expressed. BRITISH INTELLIGENCE IN THE SECOND WORLD WAR Its Influence on Strategy and Operations VOLUME ONE by F.H. HINSLEY President of St John's College and Professor of the History of International Relations in the University of Cambridge with E. E. THOMAS C. F. G. RANSOM R. C. KNIGHT LONDON HER MAJESTY'S STATIONERY OFFICE © Crown copyright 1979 First published 1979 HER MAJESTY'S STATIONERY OFFICE Government Bookshops 49 High Holborn, London WCiV 6HB 13a Castle Street, Edinburgh EH2 3AR 41 The Hays, Cardiff CFi 1 JW Brazennose Street, Manchester M60 8AS Southey House, Wine Street, Bristol BSi 2BQ 258 Broad Street, Birmingham Bi 2HE 80 Chichester Street, Belfast BTi 4JY Government Publications are also available through booksellers Printed in England for Her Majesty's Stationery Office at the University Press, Cambridge Dd 597077 ISBN o 1 1 630933 4* CONTENTS Preface vii List of Abbreviations xi PART I: ON THE EVE Chapter i : The Organisation of Intelligence at the Outbreak of War 3 Chapter 2: The State of Intelligence up to September x 939 45 PART II: IN THE DARK Chapter 3 : From the Outbreak of War to the Spring of 1940 89 Chapter 4: From the Invasion of Norway to the Fall of France 1 2 7 Chapter 5: The Threat of Invasion and the Battle of Britain 1 59 Chapter 6: The Mediterranean and the Middle East to November 1940 191 Chapter 7: Intelligence on the German Economy, September 1939 to the Autumn of 1940 223 Chapter 8: Strategic Intelligence during the Winter of 1 940-1 94 1 249 PART III: DAYLIGHT COMES Chapter 9: Reorganisation and Reassessment during the Winter of 1 940- 1 94 1 267 Chapter 10: The Blitz and the Beginning of the Battle of the Atlantic Chapter 1 1 : The Balkans and the Middle East from November 1 940 to the German Invasion of Greece Chapter 12: North Africa and the Mediterranean, November 1940 to June 1941 375 Chapter 13: Operations in Greece, Iraq, Crete and Syria 403 Chapter 14: 'Barbarossa' 429 3'5 347 v vi Appendix i : The Polish, French and British Contributions to the Breaking of the Enigma 487 Appendix 2: The SIS Air Photographic Unit 496 Appendix 3: The Organisation of the German Economy 500 Appendix 4: The Displacement of German Capital Ships 505 Appendix 5: The Oslo Report 508 Appendix 6: The COS Directive to the JIC 17 May 1940 513 Appendix 7: AI and MI Appreciations 17 and 18 October 1940 515 Appendix 8: Terms of Reference for the Axis Planning Section 22 March 1941 525 Appendix 9: Intelligence in Advance of the GAF Raid on Coventry 14 November 1940 528 Appendix 10: The Operational Chain of Command of the GAF 549 Appendix 1 1 : GAF Navigational Aids 550 Appendix 1 2 : GC and CS Reports on German Weather-reporting Ships 565 Appendix 13: The Special Signals Service from GC and CS to the Middle East 570 Appendix 14: MI Appreciation on German Action in Syria and Iraq 2 May 1941 573 Appendix 15: MI Summary of German Troop Movements to the East April to June 1941 575 PREFACE IN CARRYING out our brief, which was to produce an account of the influence of British intelligence on strategy and operations during the Second World War, we have encountered two problems of presentation. The first was how to furnish the strategic and operational context without retelling the history of the war in all its detail; we trust we have arrived at a satisfactory solution to it. The second arose because different meanings are given to the term intelligence. The value and the justification of intelligence depend on the use that is made of its findings; and this has been our central concern. But its findings depend on the prior acquisition, interpretation and evaluation of information; and judgment about its influence on those who used it requires an understanding of these complex activities. We have tried to provide this understanding without being too much diverted by the problems and techniques associated with the provision of intelligence. Some readers will feel that we have strayed too far down the arid paths of organisation and methods. Others, to whom such subjects are fascinating in themselves, will wish that we had said more about them. It is from no wish to disarm such criticisms that we venture to point to the novel and exceptional character of our work. No considered account of the relationship between intelligence and strategic and operational decisions has hitherto been possible, for no such account could be drawn up except by authors having unrestricted access to intelligence records as well as to other archives. In relation to the British records for the second world war and the inter-war years, we have been granted this freedom as a special measure. No restriction has been placed on us while carrying out our research. On the contrary, in obtaining access to archives and in consulting members of the war-time intelligence community we have received full cooperation and prompt assistance from the Historical Section of the Cabinet Office and the appropriate government departments. Some members of the war-time community may feel that we might have made our consultation more extensive; we have confined it to points on which we needed to supplement or clarify the evidence of the surviving archives. As for the archives, we set out to see all; and if any have escaped our scrutiny we are satisfied that over-sight on our part is the sole explanation. In preparing the results of our research for publication we have been governed by a ruling that calls for a brief explanation. On 1 2 January 1978, in a written reply to a parliamentary question, the Secretary of State for Foreign Affairs advised war-time intelligence staff on the vii Vlll limited extent to which they were absolved from their undertakings of reticence in the light of recent changes of policy with regard to the release of war-time records. He drew a distinction between the records of the Service intelligence directorates, which will be placed with other departmental archives in the Public Record Office, and 'other information, including details of the methods by which this material was obtained'. He explained that this other information 'remains subject to the undertakings and to the Official Secrets Acts and may not be disclosed'. And he concluded with a reference to this History: 'if it is published, the principles governing the extent of permitted disclosure embodied in the guidance above will apply in relation to the Official History'. This statement has not prevented us from incorporating in the published History the results of our work on records which are not to be opened. The records in question are the domestic records of some of the intelligence-collecting bodies. We have been required to restrict our use of them only to the extent that secrecy about intelligence techniques and with respect to individuals remains essential. The need to apply this restriction to the published history has at no point impeded our analysis of the state of intelligence and of its impact, and it has in no way affected our conclusions. It has, however, dictated the system we have adopted when giving references to our sources. Government departments, inter-governmental bodies and operational commands - the recipients, assessors and users of intel ligence - have presented no difficulty; to their intelligence files, as to their other records, we have always supplied precise references. This applies not only to documents already opened in the Public Record Office, and those to be opened after a stated period of extended closure, but also to individual files and papers which, though they may not be available for public research for a considerable time to come, nevertheless fall into categories of war-time records whose eventual opening in the Record Office may be expected. But it would have served no useful purpose to give precise references to the domestic files of the intelligence-collecting bodies, which are unlikely ever to be opened in the Public Record Office. We have been permitted - indeed encouraged - to make use of these files in our text and we have done so on a generous scale, but in their case our text must be accepted as being the only evidence of their contents that can be made public. This course may demand from our readers more trust than historians have the right to expect, but we believe they will agree that it is preferable to the alternative, which was to have incorporated no evidence for which we could not quote sources. The above limitations have arisen from the need for security. We turn now to others which have been imposed on us by the scale on which we have worked. The first of these is that not merely when security has required it but throughout the book - in the many cases IX where security is no longer at stake and where readers mav regret our reticence - we have cast our account in impersonal terms and refrained from naming individuals. We have done so because for our purposes it has generallv sufficed to refer to the organisations to which individuals belonged: the exceptions are a few activities which were so specialised or were carried out bv such small staffs, and thus became so closelv associated with individuals, that it has been convenient sometimes to use names. In addition, however, we must admit to a feeling for the appropriateness of Flaubert's recipe for the perfect realistic novel: pas de monstres, et pas de hews. The performance of the war-time intelligence communitv. its shortcomings no less than its successes, rested not onlv on the activities of a large number of organisations but also, within each organisation, on the work of manv individuals. To have identified all would have been impossible in a book of this canvas: to have given prominence to onlv a few would have been unjust to the manv more who were equallv deserving of mention. As for the organisations, it has been impossible to deal at equal length with all. In some cases we have had to be content with a bare sketch because thev kept or retained few records. With others we have dealt brieflv because most of their work falls outside our subject. This applies to those responsible for counter-intelligence, securitv and the use of intelligence for deception purposes: like the intelligence activities of the enemv. we have investigated them in these volumes onlv to the extent that thev contributed to what the British authorities knew about the enemv's conduct of the war. Lack of space has restricted what we have been able to sav about intelligence in the field - about the work that was carried out. often in hazardous conditions, bv Service intelligence officers with fighting units and bv the people who were responsible in the field for signal intelligence, for reporting to the SIS and SOE. for examining enemv equipment and for undertaking photographic interpretation. POW examination and manv similar tasks. As for the contribution of the manv men and women who carried out essential routine work at establishments in the United Kingdom and overseas - who undertook the continuous manning of intercept stations or of crvptanalvtic machinerv. the maintenance of PR aircraft and their cameras, the preparation of target information for the RAF or of topographical information for all three Services, the monitoring of foreign newspapers, broadcasts and intercepted mail, and the endless indexing, tvping. teleprinting, cvphering and transmitting of the intelligence output - onlv occasional references to it have been possible in an account which sets out to reconstruct the influence of intelligence on the major decisions, the chief operations and the general course of the war. Even at this last level there are unavoidable omissions. The most important of these is that we have not attempted to cover the war in X the Far East; when this was so much the concern of the United States, it is not possible to provide an adequate account on the basis of the British archives alone. A second derives from the fact that while the archives are generally adequate for reconstructing the influence of intelligence in Whitehall, there is practically no record of how and to what extent intelligence influenced the individual decisions of the operational commands. It has usually been possible to reconstruct what intelligence they had at their disposal at any time. What they made of it under operational conditions, and in circumstances in which it was inevitably incomplete, is on all but a few occasions a matter for surmise. And this is one matter which, after stating the facts to the best of our ability, we have left to the judgement of our readers and to the attention of those who will themselves wish to follow up our research by work in the voluminous records which are being made available to the public. That room remains for further research is something that goes without saying. Even on issues and episodes for which we have set out to supply the fullest possible accounts, the public records will yield interpretations that differ from those we have offered. At the opposite extreme there are particular undertakings and individual operations to which we have not even referred. In our attempt to write a co-ordinated yet compact history we have necessarily proceeded not only with a broad brush but also with a selective hand, and we shall be content if we have provided an adequate framework and a reliable perspective for other historians as well as for the general reader. We cannot let this volume go to press without making special reference to the contribution of Miss Eve Streatfeild. In addition to sharing in the research, she has for several years carried out with great skill and patience the bulk of the administrative work that the project has involved. ABBREVIATIONS Any (Ph\ A^istunt F)irprtr>r Cppr-pf ^prvifp kJCLlCl JCl vitc, T n tp 1 1 1 crp n c(* dloU v> ( PVi ot r» err a r> H i c \ LJ V^i 1V1 lVf i ni ctf^ri ss 1 {""om 1V11II15LC1 Idl v> will A n T ($>r\ JA D 1 \c>C) .T\.35l3t FA/D/35 ; CAB 23/8 1 , CAB 24 (35) of 1 7 April; CAB 24/255, CP 1 00 (35) of 1 3 May, CP 1 03 (35) of 1 7 May, CP 1 06 (35) of 20 May; CAB 24/254, Anglo-German Conservations, 25 and 26 March 1938. 13. CAB 23/81, Cab 27 (35) of 15 May, Cab 29 (35) of 21 May. 14. CAB 16/109, DRC 14 of 28 February 1934. 15. CAB 16/136, DPR 4th Meeting, 29 July 1935; CAB 4/24, CID 1 2 1 5B of 2 March 1936, enclosure No 2, Vol I, Annex. 5° The State of Intelligence up to September ig$g Possibly in reference to information about warship construction at Kiel which the SIS had obtained in May 1934, and which it had circulated as the first sign that Germany was contravening the naval clauses of the Versailles Treaty, the report noted that 'a recent illustration of effective concealment on Germany's part is to be found in her naval rearmament, on which our Intelligence proved defective', and then went on to say 'We know something of Germany's industrial development and capacity, but it would be a dangerous illusion for us to infer that we have a reliable measure of what she can do; still less of what she may be able to do in the near future. The best we can do is to strengthen our Intelligence system and our own war potential (output capacity) so as to be able to increase our forces correspondingly in the case of a German increase. But, although we have included recommendations for both these purposes, we can give no assurance, especially in regard to aircraft production, that we may not be at a serious disadvantage compared with Germany'. 16 Its recommendation for the strengthening of intelligence took the form of urging more funds for the SIS. ' If [its] allowance is not augmented, and very largely augmented, the organisation cannot be expected to fulfil its functions, and this country will be most dangerously handicapped. It is difficult to assign an exact figure to this service, on which increased demands are continually being made; but nothing less than £500,000 will be really adequate.' 17 This figure may be compared with the one established in 1 922 after economies were made following the First World War. In 191 9 the 1920 estimates for the SIS were reduced from £240,000 to£i 25,000. In 1920 the Foreign Office, under Treasury pressure, proposed to reduce this sum again, from £1 25,000 to £65,000. In view of objections to any further reduction from Mr Churchill, Secretary of State for War, on behalf of the General Staff, the Secret Service Committee, originally a ministerial committee under the chairmanship of the Foreign Secretary, was revived as a committee of officials under Sir Warren Fisher in 1 92 1 , when it fixed expenditure on the SIS at £100,000. In 1922 after further discussions in which the War Office countered a reduction to £65,000 with a demand for £ 1 50,000, the Secret Service Committee set the figure at £90, 000. 18 For later years no figures are available; the Secret Service Committee was reconvened in 1925 and 1 93 1 but finance is not mentioned in the surviving records of these later meetings. The Defence Policy and Requirements Committee accepted the recommendation of the DRC in principle at the end of January 1936, thus authorising the Treasury to allow for an increase in the secret vote in its estimates for the coming financial year. Cabinet approval 16. CAB 4/24, CID 1 21 5B of 2 March 1936, enclosure No 2, Vols I and II. 17. ibid, Vol I, para 106. 18. Unregistered Papers in Cabinet Office Archive. A copy of some of these papers is to be found in the Lloyd George Papers in the House of Lords Library. The State of Intelligence up to September igjg 51 followed at the end of February. 19 But the Committee had accepted that it would be impossible to grant so large a sum as £500,000 immediately and, apart from the fact that the Cabinet and its committees do not appear to have discussed the subject again before the outbreak of war, the complaints of the CSS make it clear that, whatever increases he did receive, he regarded them as quite inadequate. At the height of the Abyssinian crisis in 1935 the CSS had warned that financial stringency had long ago forced the SIS to abandon its activities in several countries which would have been good bases for obtaining information about Italy; and he had complained at the same time that the SIS's total budget had been so reduced that it equalled only the normal cost of maintaining one destroyer in Home Waters. After the German occupation of the Rhineland in the spring of 1936 he attempted to get more funds than the Cabinet had approved in the previous February, or to get funds more quickly, but he met with so little success that the SIS 'had to depend more and more on French information' about Germany. During 1938, following the Anschluss of Austria, he secured some increase. But financial stringency returned after the Munich crisis in the autumn of that year. The gravest effects of this stringency were encountered, without doubt, only when war broke out. The SIS had then to establish reporting systems and stay-behind networks in Europe in haste, and in difficult conditions, because the work had previously been impossible for lack of money.* At GC and CS, in the same way, work was impeded at the outbreak of war, and for some time afterwards, by the lack of pre-war preparations.! There was a desperate shortage of receivers for wireless interception, notwithstanding the fact that it had issued frequent warnings on this subject since 1 932, while the staff was for some time less familiar than it might have been with the military communications systems of Germany and potential enemy states because by no means all the available military traffic of these states had been intercepted in recent years and even less of it had been closely studied. More immediately, for their bearing on the state of intelligence in the pre-war years, the direct consequences of the shortage of funds were less serious than the fact that the shortage accentuated the other limitations facing GC and CS and the SIS. * There is no evidence that, as has sometimes been claimed, 20 a ban was placed on SIS activities in Italian territories before the war. t GC and CS was borne on the Foreign Office Vote, and not on the Secret Service vote like the SIS, and we have traced no record of what was spent on it, or asked for on its behalf, before the war. 19. CAB 4/24, CID 1 2 1 5B of 2 March 1 936, covering note and enclosure No 1 , para 51; CAB 16/123, DPR ( DR ) 9 th Meeting, 31 January 1936. 20. Major General I S O Playfair, The Mediterranean and the Middle East, Vol 1 , (1956), p. 9; CAB 79/6, COS (40) 255th Meeting, 8 August. 5 2 . The State of Intelligence up to September ig$g For some years after its establishment the staff of GC and CS and the interception resources provided for it, limited though they were, were not inadequate for the amount of work available. As a result of the phasing out of military activities and the extension of land-lines, the armed forces of foreign states made little use of wireless after the early 1920s. Until the early 1930s, moreover, most military wireless transmissions were in plain language, which in London, though not at the Sigint establishments overseas, was regarded as being of little value for intelligence purposes, and used medium frequencies which were not easily intercepted over long distances. The German armed forces were exceptional in regularly transmitting encvphered signals on stand-by wireless links for practice purposes; and it was far more difficult to intercept their signals in the United Kingdom or at British intercept stations in the Middle East than at stations in, for example, Poland and Czechoslovakia. Until 1935, for these reasons, GC and CS judged that none of the military traffic that it could decypher was worth circulating to the intelligence branches in the Service departments in Whitehall. At the same time, its research on the diplomatic cyphers of the important foreign states was yielding no results. Perhaps as a result of the notoriety gained by the decryption of the Zimmermann telegram in the First World War, those of Germany remained unreadable in the inter-war years, and those of Russia - without doubt in consequence of revelations made in the House of Commons after the Arcos raid 21 - had become unreadable after 1927. From the mid- 1930s, as a result of the introduction of high frequencies for wireless, and still more in consequence of the acceleration of military preparations and the resumption of military operations, more and more encyphered military traffic was intercepted. And GC and CS by no means neglected the increased opportunities thus offered to it. Some of its Service sections received additional staff; the Italian sub-section of the Naval Section grew from 5 in 1934 to 18 by September 1937 and the Japanese sub-section was also expanded. The ablest cryptanalysts at GC and CS applied themselves to military cyphers. They did so to some purpose despite the fact that more sophisticated cyphers were being introduced, so that the most difficult cyphers of the First World War would have barely qualified for inclusion among the medium-grade cyphers that were now being used by the important states. By 1 93 5 GC and CS had broken the chief army and naval cyphers of Japan and some of the high-grade cyphers used by the Italian Services and colonial authorities and was beginning to make progress with Italy's diplomatic cyphers.* The resulting intelligence threw useful light on Italy's intentions before * See Chapter 6, pp 199-200. 2 1 . Hansard Parliamentary Debates Vol 206, Cols 1 842-1 854, 2 195-2310; Cmd 2874 (i9 2 7) The State of Intelligence up to September ig$g 53 and during the Abyssinian crisis and the Spanish Civil War; and in the third report of the DRC and subsequent strategic appreciations it guided the estimates made for the Chiefs of Staff of the condition and whereabouts of the Japanese and Italian forces. 22 But by 1 937 the contrast between these successes and GC and CS's lack of progress against German and Russian high-grade cyphers was becoming acute. And between 1937 and the outbreak of war in Europe, while the German and Russian cyphers remained impregnable, the Japanese cyphers also became unreadable. Japan introduced a new army cypher in 1937 which was not easily mastered. During 1 938 and 1939 she made greater changes, and it was not until September 1939 that, beginning with the Fleet cypher, the new cyphers began to yield to GC and CS's attack.* There was, of course, some increase of Sigint about the Russian and German armed forces from the early 1930s. From Russia sufficient military wireless traffic was intercepted from 1932 to justify the recruitment of two cryptanalysts; they made some advance against low-grade codes. With Germany's low-grade codes progress was made from 1934, when the regular interception of German military signals was undertaken for the first time in 1 5 years. The German Air Force produced a large amount of tactical traffic in the course of training; some of this was readily exploitable and from 1 93 5 , in conjunction with Traffic Analysis, it greatly eased the task of estimating the current operational strength and the dispositions of Germany's bomber and reconnaissance units. It had firmly identified 60 ground stations and 578 individual aircraft by September of that year, and although this kind of information by no means removed uncertainty about the further growth of the GAF, it remained the best source on that subject when the other sources were providing conflicting and only tentative assessments. Exploitation of the German Navy's use of call-signs made it possible to establish the number and, with the assistance of DF, the movements of its U-boats and surface units. But the Germany Navy made virtually no use of medium and low-grade codes, and for lack of traffic the medium and low-grade codes of the German Army remained as unreadable as did Germany's high-grade military cyphers. About those more was known than about Russia's. By 1937 it was established that, unlike their Japanese and Italian counterparts, the German Army, the German Navy and probably the Air Force, together with other state organisations like the railways and * However, some Japanese Sigint continued to be available because of the familiarity with Japan's communications systems that had been built up over the years. It remained possible, for example, to keep track of her main naval movements. 22. For various detailed papers on the Japanese Navy see FO 3 7 1 / 1 7600, A8313/1938/45; ADM 1/9587, 9589, 9649, 9713; and Wells, op cit, pp 253-254, 320-321. 54 The State of Intelligence up to September ig$g the SS, used, for all except their tactical communications, different versions of the same cypher system - the Enigma machine which had been put on the market in* the 1920s but which the Germans had rendered more secure by progressive modifications. In 1937 GC and CS broke into the less modified and less secure model of this machine that was being used by the Germans, the Italians and the Spanish nationalist forces. But apart from this the Enigma still resisted attack, and it seemed likely that it would continue to do so. As late as July 1 939, before receiving invaluable information about it from the Poles, who had been having some success with it for several years, GC and CS could hold out little hope of mastering it even in the event of war.* There need be no doubt that obstacles of a technical nature go far to account for the lack of progress. On the one hand, the modifications the Germans added to the Enigma machine during the 1 930s were making it an instrument for cyphers far more secure than those of Italy and Japan - and so much so that by 1938 the Germans had virtually brought the success of the Polish cryptanalysts to a close and had themselves become confident that the Enigma would be impregnable even in war conditions. On the other hand, even the most sophisticated cypher is liable to become more vulnerable if heavily used on interceptable communications; and whereas Italy and Japan, with their involvement in military operations across extended lines of communication, were at last producing enough military wireless traffic to enable the cryptanalysts to make progress, the German armed forces, like the Russian, were either less active or were operating on interior lines of communication and thus resorting far less to wireless. But when this has been said it remains unfortunate that despite the growing effort applied at GC and CS to military work after 1936, so little attention was devoted to the German problem. The volume of German wireless transmissions, in Enigma as well as in the GAF's lower-grade codes, was increasing; it was steadily becoming less difficult to intercept them at British stations; yet even in 1939, for lack of sets and operators, by no means all German Service communications were being intercepted. Nor was all intercepted traffic being studied. Until 1937-38 no addition was made to the civilian staff as opposed to the service personnel at GC and CS; and because of the continuing shortage of German intercepts, the eight graduates then recruited were largely absorbed by the same growing burden of Japanese and Italian work that had led to the expansion of the Service sections. Although plans were made to take on some 60 more cryptanalysts in the event of war, there was no further addition to staff before the summer of 1 939 apart from the temporary call-up of some of the 'hostilities only' staff during the Munich crisis. Thus almost down to the outbreak of war, when GC and CS's * See above, pp 47-48. The State of Intelligence up to September ig$g 55 emergency in-take quadrupled the cryptanalytical staff of the Service sections and nearly doubled the total cryptanalytical staff, work on Germany's Service cyphers was all but confined to the small group which, headed by civilians and working on behalf of all three Services, struggled with the Enigma. The naval sub-section of the German Section, which was started with one officer and a clerk as late as May 1938, still had no cryptanalysts. Since virtually no military traffic was intercepted except during summer exercises, the only regular work by cryptanalysts in the army sub-section was on police traffic. In the air sub-section the communications of the GAF were being studied by only a handful of people. Had more German Sigint been available, it might still have failed to illuminate the darkening scene. At least in peace-time, governments are neither inclined nor forced to refer to the highest secrets of state in their signals communications. The German authorities were taking drastic security precautions. The intelligence branches in Whitehall were as yet unpractised in the art of inferring plans and intentions from the evidence of Sigint which, if always incontestable, is also always incomplete. However that may be, the almost total lack of German military Sigint, together with GC and CS's inability to read Germany's diplomatic cyphers, added to the already considerable difficulties of the SIS. At a time when the embassies and the other overt sources were issuing conflicting warnings and rumours about Germany's intentions, when warnings and rumours that were equally conflicting and equally difficult to substantiate formed the staple content of the diplomatic cyphers that were being read, and when little or no intelligence about such things as Germany's military strength and development was coming from these sources, the fact that the Whitehall departments had no reliable intelligence on these subjects from Sigint induced them to put mounting pressure on the SIS. In the absence of the Sigint check, on the other hand, they found it no less difficult to distinguish what was reliable and what was dubious in the reports circulated by the SIS, and their mounting pressure was accompanied by mounting criticism. By the beginning of 1 938 the War Office was regularly complaining that the SIS was failing to meet its increasingly urgent need for factual information about Germany's military capacities, equipment, preparations and movements, while in that year the Air Ministry, somewhat better placed up to then as a result of the receipt of useful SIS reports and of the existence of low-grade Sigint about the GAF, dismissed SIS intelligence of this kind as being 'normally 80% inaccurate'. And both departments believed that the SIS was failing in what they judged to be its main task because its limited resources were being too much diverted to, or distracted by, the collection and 56 The State of Intelligence up to September ig$g distribution of political speculation about Germany's immediate intentions. By February 1939, however, the Foreign Office was also disenchanted with the SIS's* performance, and so much so that Sir Alexander Cadogan, the Permanent Under-Secretary, felt it necessary to issue a minute in defence of it. ' Our agents ', he wrote, ' are of course bound to report rumours or items of information which come into their possession; they exercise a certain amount of discrimination themselves, but naturally do not take the responsibility of too much selection and it is our job here to weigh up the information which we receive and try to draw more or less reasonable conclusions from it. In that we may fail and if so it is our fault, but I do not think it is fair to blame the SIS. Moreover' - and here he was referring to reports received from the embassies as well as from Vansittart's private detective agency -* ' it is true to say that the recent scares have not originated principally with the SIS agents in Germany, but have come to us from other sources'. 23 There was some substance, naturally, in the departmental criticisms. In July 1938, defending his organisation against the Service complaints, the CSS admitted that except on naval construction, where it was excellent, the SIS's intelligence on military and industrial matters was at best fair; he also recognised that its political reports contained too much propaganda, both from Nazi sources and from the opposition groups in Germany. On this account, instead of circulating all political reports, the SIS in the immediate pre-war years was eliminating all items that were obviously of doubtful credibility. But in the attempt to use its discretion it ran the risk of introducing bias into the selection from the reports. Moreover, while the SIS received too little guidance from the Service departments in the form of requests for precise intelligence or direct questions about the SIS reports they had received on military matters, it was under increasing pressure from the Foreign Office to obtain as much political intelligence as possible, even on such matters as whether the German opposition groups could form an alternative German government. 24 1 Nor, finally, did the criticisms sufficiently allow for the fact that, although in some ways the SIS found it more and more difficult to get reliable intelligence, or to get it in good time, this was because its organisation in Europe sustained a series of severe blows as the international situation became more bleak. * See above, pp 47-48. t Various references to the activities of the SIS in relation to this subject occur in documents that have been opened to the public, and they have evoked suspicions which call for a brief commentary. The SIS's search for information as to the likelihood of a revolt in Germany widened in the spring of 1939, at his request, into preliminary discussions with a 23. Aster, op cit, pp 53-54, quoting from FO 800/270, 39/9; letter from Cadogan to Neville Henderson. 24. CAB 27/624, FP (36) 35th and 36th Meetings, 23 and 26 January 1939 The State of Intelligence up to September ig$g 57 Having suffered one serious setback when the German entry into Austria in the spring of 1 938 led to the arrest of the head of its Vienna station, it suffered another when the German seizure of Prague in the spring of 1939 brought about the collapse of its organisation in Czechoslovakia. Earlier still - though it remained unaware of this development until its representatives at The Hague were captured at Venlo - its organisation in Holland had been penetrated by German counter-intelligence since 1935. To make matters worse, the SIS was unable before 1939 to begin issuing W/T sets to its agents in the field even though events emphasised the need for faster communications. During the Munich crisis, for example, intelligence from some of its sources in Germany was cut off or greatly delayed by the closure of the German-Danish frontier. Despite the difficulties, however, the SIS's performance was im German emissary about the conditions on which the British government might recognise and support the German resistance if it attempted to establish an alternative German government. These discussions became detailed only after the outbreak of war. Transferred to Holland, they culminated in the capture at Venlo, on the Dutch-German border, on 9 November 1939 of two of the SIS's representatives at The Hague; the German emissary was a German security official. On the basis of documents in the PRO and other open archives, it has been claimed that in these discussions the Prime Minister 'used the SIS to investigate the possibility of a compromise peace with Germany in ... an operation which was concealed from the majority of his colleagues' and that 'it was only because the affair ended dramatically with the kidnapping of two British agents from Holland that this episode became known at all. . .'25 Such opened documents as we have seen do not justify these claims. They show that the discussions, though carried out through the SIS, were authorised and supervised by the Foreign Office; that on 24 October 1939 the Foreign Office obtained the approval of the Prime Minister for the reply to a request for a statement of the British conditions; that when this statement prompted a further German request for elaboration the Prime Minister put the matter before the War Cabinet on 1 November; and that it was after consultation with other ministers following this meeting that the Prime Minister and the Foreign Secretary on 6 November authorised the terms of a further statement to the German emissary and that, expressing considerable doubt as to whether the German approach would lead to anything or was even genuine, the Foreign Secretary on 7 November told the French Ambassador what was taking place. Although the documents suggest that in the discussions with their colleagues from 1 November the Prime Minister and the Foreign Secretary were embarrassed by the fact that they had not reported the earlier stages of the negotiations to the Cabinet, they also suggest that the reason for this omission was not their wish to negotiate without the knowledge of the Cabinet but their scepticism as to whether anything would come out of the German request for detailed negotiations. 26 Certain Foreign Office files referring to this episode have not been released. They are closed till the year 2015 on the grounds mentioned in our Preface: they contain references to technical matters and to individuals. We have been allowed to consult these files in accordance with the terms outlined in the Preface. In our opinion they contain nothing to modify the conclusions we have reached on the basis of the opened documents about the relationship between the SIS and the Prime Minister and between the Prime Minister and the rest of the Cabinet. 25. Letter from Dr C MacDonald, The Times, 1 December 1977. 26. Dilks (ed), op cit, pp 226, 228-230; CAB 65/4, WM (39) 67 CA, 1 November; Neville Chamberlain Papers (Birmingham University Library), NC 8/29/1-4 of 30 October, 7 November and 16 November 1939. 58 The State of Intelligence up to September ig$g proving in some ways during the 1 8 months before the outbreak of war. Although Whitehall had been more than half expecting the German occupation of the "Rhineland in 1936 and of Austria in the spring of 1 938, the SIS, like the embassies and the other overt sources, gave no advance warning of these moves. Before and during the Munich crisis, the German entry into Prague and the attack on Poland, in contrast, it provided plentiful intelligence; about Germany's plans. The main reason why it was able to do this lay with the German moves themselves. Especially after the Anschluss with Austria in March 1938, these were creating the circumstances in which it is possible to recruit the best, and perhaps the only good, agents - those who from positions of responsibility volunteer their services from opposition to some policies or principles of government, or from devotion to others, rather than for money. One such informant, who was to continue to supply the SIS with first-class political and military intelligence during the first two years of the war, was a high-ranking officer in the Abwehr, the German military intelligence agency, who approached the Czech intelligence service in February 1936. Between then and the outbreak of war, indirectly through the Czechs at first, directly when he was exploited jointly by the SIS and the exiled Czech intelligence service in London after the German occupation of Prague in the spring of 1939, this man, Paul Thummel, known to the Czechs as A-54, supplied not only excellent information about Germany's order of battle and mobilisation plans, and some information about the equipment of the German Army and Air Force,27 but also advance notice of Germany's plans for intervention in the Sudetenland from the summer of 1937, for action against Czechoslovakia from the spring of 1 938, for the seizure of Prague in the spring of 1 939 and, from the spring of 1939, for the attack on Poland. 28 * From as early as 1936 informants of the same kind established contact with MI5. From one such source Whitehall obtained during the Munich crisis the schedules of Germany's original mobilisation plans and, as they arose, the alterations the Germans made to them. Men in similar positions offered their services to the French intelligence authorities29 and no doubt to others also. * As there will be speculation on this subject we may say that insofar as the British records are any guide A-54 was the sole Abwehr officer who collaborated directly with the Allied intelligence organisations. As will be mentioned later in the text General Oster, the second in command of the Abwehr who was also a member of the German resistance, confined himself to giving last-minute warnings to various authorities on the continent of impending German attacks, see Chapter 3, pp 113, 114, 117, Chapter 4, p 1 35. 27. C. Amort and I M Jedlica, The Canaris File (1970), pp. 1 1, 23; F. Moravec, Master of Spies (197 5), pp 77-87. 28. Dilks (ed) op cit, pp 1 55-1 56, 1 58; Moravec, op cit, pp 1 23-1 31,1 50-1 5 1 , 182-183; Amort and Jedlica, op cit, pp 24, 26-41. 29. P. Paillole, Services Speciaux, pp 107-108, 115, 117, 147, 152-153. The State of Intelligence up to September igjg 59 As was to be expected of informants as well placed as these, their information was as reliable as it was detailed. But it is clear from historical analyses of the pre-war crises that, as with the increasingly frequent and increasingly alarming reports coming in from the embassies, the attaches and Whitehall's various unofficial informants, so with those reaching the SIS, it was no easy task to distinguish reliable information from alarmist warnings or even from the spurious rumours that were being circulated by the German authorities. 30 More than that, it is equally clear from these analyses that, as the international scene became more critical, the over-riding problem in Whitehall was ceasing to be that of knowing what the German government intended to do next and was becoming that of deciding whether and how the British government should act, and thus of calculating how Hitler would respond to whatever the British government might do. On Hitler's intentions there was no lack of intelligence, even if it was not all reliable. As to what Hitler would do if other governments moved to check or deflect his expansionist plans, no agent, however well placed, could provide the answer, or could be believed if he professed to do so, for not even Hitler and his immediate entourage knew what the answer would be. Whitehall's uncertainty as to how Hitler would react to such steps as might be initiated by other governments - an uncertainty that could not be reduced by obtaining advance information about his state of mind from political and military indications - was all the greater because Whitehall was confronted by difficult problems in assessing the state of the German economy. In a situation in which Hitler's intentions were clearly disruptive but his determination to pursue them could only be guessed at, it would at least have been helpful to know whether or not he would be restrained by economic considerations. This, too, however, was a matter on which Whitehall was in no position to make a judgement. It had established an inter departmental body for collecting and assessing intelligence on the economies of foreign states, especially Germany. But this organisation, which in any case did not claim that political and military implications could be deduced from economic analysis, recognised that such an exercise would be especially unprofitable in relation to Germany. Even at the elementary level, despite its long experience in the routine work of collecting the facts about the economies of foreign states, the organisation found it no easy task to calculate the capacity and limitations of Germany's economy. This task was in any case difficult because the factual evidence was 30. Aster, op cit; Middlemass, op cit: Dilks (ed), op cit. 60 The State of Intelligence up to September ig^g incomplete. The German government, secretive about the economic information which democratic governments customarily made public, did not even publish an annual Budget after 1935, and to seek this type of information by intelligence operations was out of the question in view of the higher priority of military and political intelligence. To make matters still more difficult, by the standards of the democratic nations with market economies the German economy under the Nazi dictatorship presented unorthodox characteristics that were open to a variety of interpretation. While there could be no doubt that the economy was geared to massive rearmament and other war preparations, the degree to which resources had been mobilised for that purpose and the true costs of these preparations for the German people were very difficult to estimate. Outward signs of strain were evident in the balance of payments difficulties which marked the years immediately before 1 939; full employment seemed to leave little room for further expansion of industrial output; large imports of raw materials were clearly essential if the momentum of rearmament was to be maintained. On the other hand, the civilian standard of life was reasonably well maintained and capital expenditure on civil projects continued on a very large scale. How long the economic policy of ' guns and butter' could be prolonged, especially if Hitler were to plunge the country into a major war, was a matter for debate. In this situation intelligence faced two principal problems. One was to determine the actual level of armaments production and the scale and type of equipment being provided for the German armed forces. The second was to assess the condition of the economy as a whole, its manpower, food supplies, and raw material and fuel resources, and from readings of these basic facts to draw conclusions about Germany's capacity to sustain her military strength in war and her vulnerability to economic pressure exerted by her enemies. None of the German armed services was of greater concern to the British government than the Air Force. The German aircraft industry was therefore the object of intense study by the Industrial Intelligence Centre (IIC) and the Air Ministry, who collaborated in producing twelve reports upon it between March 1 934 and July 1 939 which, after scrutiny by the Industrial Intelligence in Foreign Countries SubCommittee (FCI), were submitted to the CID. 31 Observation of individual factories and, especially, the size and composition of their labour forces provided the basis in these reports for statistical 3 1 . CAB 4/22, CID 1 1 34B of 22 March 1 934; CAB 4/23, CID 1 1 5 1 B of 5 November 1934, CID 1 1 72B of April 1935, CID 1 186B of 9 September 1935; CAB 4/24, CID 1218B of 9 March 1936, CID 1250B of 22 July 1936; CAB 4/25, CID 1284B of 30 November 1936; CAB 4/26, CID 1339B of 7 July 1937; CAB 4/27, CID 1407B of 4 March 1938; CAB 4/28, CID 1472B of 15 August 1938; CAB 4/29, CID 1541B of 20 March 1939; CAB 4/30, CID 1569B of 24 July 1939. The State of Intelligence up to September ig^g 61 calculations of the current output of air frames and engines. Until 1 938 access to the German aircraft industry by British aeronautical engineers was comparatively easy and they were the principal source of information; it is significant that visits by British observers to German factories, the first by an Air Ministry mission in May 1 936 and the second by Mr Roy Fedden of the Bristol Aeroplane Company in the summer of 1937, are recorded as major sources of intelligence used in correcting estimates based on other material. The other sources were the SIS and the energetic Air Attache in Berlin, who used his own plane to observe factories and GAF installations from the air. 32 Using this type of source material the IIC and the Air Ministry drew an intelligence picture of the aircraft industry which took account of special features such as the shortage of engines which occurred before 1 935, the systems used in manufacturing components and assembling planes, the number of shifts being worked, hours of work and plar reorganisation. The intelligence was sufficiently sensitive to de^ct periods of stagnation in the growth-rate in mid- 1936 and in 1938-39 and sufficiently accurate to permit estimates of the output of complete 'military-type' aircraft (including trainers), at 550 a month in 1938 and 725-750 a month in mid-1939, which were only slightly above the figures of actual output. By the autumn of 1 939 output was in fact 700 aircraft a month. 33 Reliance upon the size and utilization of the labour force as the chief factor in calculating the output of the industry was, however, to be a contributory cause of British over-estimates of the output of German aircraft in 1 940 and 1 94 1 . The estimates for mid-July 1939, which were so nearly accurate, assumed that at that time the industry was working upon a one-shift system, but the IIC and the Air Ministry also calculated that, in an 'emergency', output could be increased to 1 ,500 planes a month if three shifts and a seven-day week were to be introduced. Without an intimate knowledge of German intentions and of the internal problems of the industry there was a natural tendency in Britain to make a 'worst case' assumption that German output would move towards its estimated full potential of 1,500 planes a month after the outbreak of war. The German authorities in fact planned to produce 2,000 planes a month at the outbreak of war, but actual output fell far short of this, partly because planning and managerial shortcomings in the industry hampered its performance. By December 1940 actual output reached only 779 planes a month. 34 32. CAB 23/87, Cab 5 (37) of 3 February and Cab 9 (37) of 24 February; CAB 24/268, CP 69 (37) of 20 February (Air Vice Marshal Courtney's Mission of May 1936); CAB 16/182, DP (P) 7 of 16 July 1937 (Fedden report). 33. AIR 41/10, The Rise and Fall of the German Air Force (1948), p 19. 34. A S Milward, The German Economy at War (1965), p 137. 62 The State of Intelligence up to September ig$g The difficulty of calculating the exact state of the industries producing weapons and munitions for the army was more acute, since production was dispersed bver many sectors of industry and the number of factories was enormously greater. Estimates of arms production in this field, made jointly by the IIC and the War Office,35 differed from the reports in the aircraft industry series in not setting out the basic factory information on which the global estimates were based, and they did not break down those estimates to give, for example, the number of tanks produced. The last assessment before the war, in July 1939, 36 estimated that Germany had available for immediate mobilisation a total of 120-130 divisions, of which about two-thirds would be fully armed and equipped in the most modern fashion, and that the delivery of arms and equipment was proceeding at a rate sufficient to arm 16-17 new divisions per annum. However the calculations were made, their effect was to over-estimate the number of tanks produced for the German Army before the war. In September 1939 the War Office believed that the Germans possessed 5,000 tanks of which 1,400 were medium and 3,600 were light. 37 German Army records show that the total German stock in September 1939 was 3,000 tanks, of which 300 were medium and the remainder light (including 1 ,500 Pzkw I). 38 Of the armaments industry the report of July 1 939 said that ' in spite of the continued demands made upon industry by naval and air construction, the export market, the Four Year Plan... and other special activities . . . the average rate of output of armaments for the German Army ... is slightly greater than in 1 938 .... At the same time the continued intensification of production, the resulting shortage of really skilled labour and the extended use of substitutes has led to a noticeable decrease in the quality of German industry which extends to the armament industry'. 39 Here, in contrast to the aircraft industry, the assessment depicted an industry already very fully extended. No attempt was made to forecast its maximum capacity, and it would almost certainly have been impossible to do so. Pre-war estimates of U-boat production were based upon the numbers of U-boats observed to be in service with the German Navy, on SIS reports and on deductions from the German performance in building U-boats in the First World War. Under the terms of the Anglo-German Naval Treaty of 1935 Germany was allowed to build 35. CAB 4/23, CID 1 152B of 5 November 1934; CAB 4/25, CID 1303B of 4 February 1937; CAB 4/26, CID 1345B of 26 July 1937; CAB 4/27, CID 1421B of 22 April 1938; CAB 4/28, CID 1449B of 21 July 1938; CAB 4/29, CID 1507B of 19 January 1939; CAB 4/30, CID 1571B of 24 July 1939. 36. CAB 4/30, CID 1 57 1 B of 24 July 1939. 37. WO 190/891, MI 14 Appreciation No 27 of 20 February 1940. 38. US Strategic Bombing Survey, The Effects of Strategic Bombing on the German War Economy (Synoptic volume 1945), pp 163-165. 39. CAB 4/30, CID 1 57 1 B of 24 July 1939. The State of Intelligence up to September ig$g 63 up to 57 U-boats. The Admiralty's own 'count' of U-boats appeared to confirm that this was the number actually completed on the eve of the war, but from the autumn of 1938 onwards SIS had been reporting that Germany had built more U-boats than allowed by the Treaty and that some were already operating in the south Atlantic. Unable to prove or disprove the truth of these reports NID reluctantly accepted them and taking a worst case assumption estimated that by September 1939 the German Navy had 66 U-boats. The fact that the total was 57 at the outbreak of war was not finally established by NID until April 1940.* 40 Using their knowledge of the number of boats on the stocks in the summer of 1939 and drawing comparisons with the first 14 months of the First World War, NID forecast in September 1 939 that by March 1940 129 vessels (including the pre-war total) would have been completed. This assumed an average production rate of about 10 per month for the period and also assumed that Germany would achieve 'full mass production' by November 1939. 41 It was later to be proved that these assumptions were unduly pessimistic. In fact only 63 were completed by March 1940, though plans of course existed for an expanded output. As in the case of the forecasts of aircraft production made by the IIC and the Air Ministry, the assumption made by NID that the Germans would immediately move to the maximum production of which they were capable on the outbreak of war was mistaken. The error was due not so much to 'economic' miscalcula tions as to ignorance of Hitler's intentions and of his concept of the 'economics of Blitzkrieg \f In the attempt to assess Germany's capacity and readiness for war these specialised calculations about her armaments industries had to be supplemented by a prolonged study of her vulnerability to economic pressure. On behalf of the Sub-Committee on Economic Pressure on Germany (EPG), the IIC undertook this work in a series of memoranda, initiated in July 1937, on Germany's probable economic situation in 1939. 42 As the work proceeded the IIC brought in the intelligence branches of the Service ministries, 43 the Food (Defence Plans) Department, the Board of Trade44 and other departments to help it with its calculations. From the outset the IIC considered that Germany's difficult external financial situation would not prevent her from waging a war of short duration,45 and * See below, Chapter 7, p 231. t See below, p 68. 40. Memoirs of Admiral Godfrey, Vol 5, Part 2, Chapter XXXIII, 'Truth, Reality and Publicity'. 41. ADM 233/84, NID 01449/39 of 29 September 1939. 42. CAB 47/13, ATB (EPG) 2 of 5 July 1937. 43. Especially CAB 47/13, ATB (EPG) 5 of 10 October 1937. 44. eg, CAB 47/14, ATB (EPG) 34 of 16 July 1938. 45. CAB 47/13, ATB (EPG) 2 of 5 July 1937. 64 The State of Intelligence up to September ig$g consideration of the financial situation played little part in later EPG appreciations. Attempts to assess the German manpower situation were soon abandoned, almost certainly because the problem was too complex and the results too speculative.* Thus the appreciations were concerned mainly with the position in food, raw materials and fuel, and were largely based on published figures inadequately supported by reliable high-grade intelligence. v The last appreciation of this type to appear before the war was prepared by the IIC for the Advisory Committee on Trade (ATB) in May 1 939. 47 It concluded that although the Four Year Plan of 1936 was reducing, and might further reduce, Germany's dependence upon imports of certain commodities, she could not yet have made herself 'indefinitely self-sufficient in all raw materials and foodstuffs'. On the basis of statistics of German imports in 1936 and 1 93 7, qualified by what was known of the stock position, the IIC identified a large number of deficiency commodities. t It noted that for the first year of a war beginning in 1939 Germany, 'failing large reserves', would have to import 9-10 million tons of iron ore from Sweden. Given suitable political arrangements manganese could be imported from the USSR. The supply of non-ferrous metals would probably suffice for six months, after which a shortage would develop, led by copper. Germany was in a strong position as regards aluminium, zinc and lead, and Yugoslavia might be a most valuable potential source of supply of several non-ferrous metals. Romania was the sole source from which the minimum import requirement of 3 ^2-4 V2 million tons of petroleum and its products in the first year of war could be met. The German government claimed four-fifths self-sufficiency in foodstuffs but supplies of edible oils and fat, of which 40 per cent were imported by sea, were vulnerable. It was clearly impossible to estimate precisely the size of the deficiencies in any one commodity in a year of war without knowing the size of existing stocks and what proportion of imports could be cut off by blockade and other measures of economic warfare. About the size of stocks there was little information, although it was known that the level had been considerably raised during 1938 and that the process was continuing. Germany's objective was believed to be to create stocks equivalent to one year's peace-time requirements. * Attempts were made elsewhere, mainly in the War Office, to assess the manpower situation, but the JIC was unable to reconcile the different assessments. 46 t Food and feeding stuffs (cereals, fruit, fish, dairy products, oils and fats, coffee and cocoa). Other vegetable produce (tobacco, timber and rubber). Textile raw materials (cotton, wool, flax, hemp, jute, manila, sisal). Miscellaneous (hides and skins, leather, tanning materials). Minerals and metals (aluminium, asbestos, chrome, copper, iron, lead, manganese, nickel, phosphates, petroleum and products, pyrites, tin, zinc and certain ferro-alloys). 46. JIC 24 of 13 January 1937. 47. CAB 47/16, ATB 181 of 22 July 1938, Appendix I (revised 24 May 1939) The State of Intelligence up to September ig$g 65 Reserves of foodstuffs, aluminium, certain ferro-alloys and aviation spirit were thought to have reached that level, while those of motor spirit and oils, other non-ferrous ores and metals were not thought to exceed six months' normal supplies. Reserves of iron ore were thought to be insignificant. This appreciation did not follow up in detail the discussion on the size of petroleum stocks which had taken place in the EPG SubCommittee in 1 93 7. 48 It had then been estimated that commercial storage capacity in Germany might be 2 V2 million tons and the state emergency reserve about another 1 million tons rising to 2 million tons in 1939. In circumstances most favourable to Germany, therefore, commercial and state reserves taken together would amount to a maximum of 4^2 million tons in 1939 and Germany would require to import 2V2 million tons in the first year of war. When the situation was reviewed by the IIC on 24 May 1939 the minimum import requirement was raised to 3 1/2-4 1/2 million tons. 49 On 1 June 1939 the IIC estimated that stocks amounted to something less than 3 million tons.* 50 The general conclusion reached by the IIC and accepted by the ATB Committee was that, as a result of the accumulation of stocks, reserves of food and certain raw materials had probably achieved the equivalent of one year's peace-time requirement. Assuming replenishment by land routes after the outbreak of war and the continuance of iron ore supplies from Sweden, Germany might be able to maintain her industrial activity without contraction for 1 5-18 months of war. 51 As well as resting on a good deal of guesswork about the size of stocks, this conclusion involved an assumption about the extent to which Allied economic warfare measures would deny to Germany her essential imports. When the ATB presented its plan for the exercise of economic pressure to the CID on 27 July 1938 52 Mr Walter Elliott, Chairman of the ATB Committee, said that the crux of the problem lay in the fact that severe economic pressure could only be exercised through a system of rationing applicable to all neutral countries exporting to Germany. Whereas in the First World War there were only five, not particularly powerful, countries of this sort there were now nineteen to be taken into account, some of which might prove very troublesome. In discussion Sir Warren Fisher of the Treasury took the view that rationing was unlikely to be effective over the whole field. Access to Germany would probably always be available from the * The actual balance according to German official figures was about 2.1 million tons. 48. CAB 47/13, ATB (EPG) 5 of 10 October 1937. 49. CAB 47/16, ATB 181, Appendix I (revised). 50. CAB/HIST/G/9/1/4, ICF 284 of 1 June 1939. 51. CAB 47/6, ATB 181, Appendix I (revised). 52. CAB 2/7, CID 331st Meeting of 27 July 1938. 66 . The State of Intelligence up to September ig$g south-east and she would be able to bring in great quantities of supplies from that quarter, regardless of whether other neutrals were rationed. Although his criticisYn was directed primarily at the measures proposed by the ATB Committee it implied Treasury doubts about the economic appreciation to which the proposed measures were related. The Treasury appears to have been less optimistic about weaknesses in the German economic situation than were either the ATB Committee or the IIC* Treasury views were taken into account during the preparation of the ATB Committee's report, but on the outbreak of war the Treasury ceased to be involved in the economic intelligence system and its opinion played little or no part in the preparation of war-time assessments. The ATB Committee's conclusion that Germany might be able to sustain full industrial activity for 15-18 months implied that supply difficulties would begin to make themselves felt if the war was to continue for a longer period. At the outbreak of war in September 1 939 the implication was that German supply difficulties should begin to be apparent in the spring of 1 94 1 if the war lasted so long, and that they would thereafter be considerable. British assessments of the German economic situation made in the summer of 1 94 1 were to be considerably influenced by this pre-war assumption. But in 1939 the IIC and the ATB Committee were under no illusions about the effect of the economic factor on German capabilities in a short war. It would hardly count at all. Their analysis of Germany's probable war-time supply position was not, of course, a comprehensive statement about the nature of the German economy on the eve of war. On this broad and speculative issue other opinions circulated in Whitehall, and while they sometimes conflicted, their general tendency was to strengthen a belief that manpower and resources had already been so fully mobilised as to leave comparatively little room for expansion of general industrial activity under war-time conditions. The most important defect in the evidence upon which this opinion of the German economy rested was not that factual economic information was lacking on many points, but a misunderstanding of Hitler's own conception of the nature of war and the relationship of the economy to it. Hitler was aware of the facts presented to him by his advisers about the limitations of material resources, which did not differ greatly from those appearing in British assessments, but he confidently believed that successful lightning war would provide the nation, at a minimum cost, with the material resources which it lacked. This being so, he believed that mobilisation of resources for war production need not exceed that required for short-term military operations carried out on Blitzkrieg principles, a degree of mobilisa * See further below, pp 69-70. The State of Intelligence up to September igjg 67 tion which would not involve economic hardship for the civilian population: indeed the maintenance of the best possible conditions for the nation as a whole under war-time conditions was regarded by Hitler and the Nazi Party as an important guarantee of popular support. Having ensured that by 1940 the economy would provide adequate support for the type of campaigns he envisaged, and having appointed Goering to oversee the Four Year Plan, he expected that the economy would thereafter be rapidly adjusted to his military requirements. Short periods of intense economic effort requiring rapid changes of priority within the war sector of the economy, but leaving the production of consumer goods largely unaffected, would be geared to rapid and successful military campaigns. 53 There is no sign in the available papers that Hitler's conception of the relationship between strategy and economics was understood in London on the eve of the war, although some of its symptoms were recognized in the reporting of the British embassy in Berlin. By 1936 the embassy's coverage of the German economy had become so extensive that its annual economic review appeared as a separate print. The three large economic annual reviews for 1936-38 singled out significant and paradoxical features of the German economy, showing that, within the framework of a stringent external financial situation, the Germans were making a frantic effort to produce steel and armaments, but at the same time continuing massive civilian construction, maintaining the output of consumer goods and keeping the cost of living stable. Even so, the tenor of the reviews was to the effect that, so structured, the economy was being subjected to increasing strain. Reporting on the situation in 1936 the embassy considered that the home market was approaching a 'war-time' condition, inflation being avoided only by governmental stabilisation of wages and prices. The iron and steel industry was working at almost full capacity, in several other industries the industrial boom was exploiting all available capacity and there was an acute shortage of skilled labour. 54 In 1937 the salient features were the subservience of all economic considera tions to Wehrwirtschaft: a substantial rise in industrial output (the level of production in particular industries being determined by the rationing of raw materials) and a marked shortage of skilled labour, involving a drive for the recruitment of apprentices. 55 The last pre-war review, covering 1 938 and dated 24 May 1 939, used dramatic language to describe the situation as it then appeared. Germany was heading with 'demoniac persistence' towards the goal of autarky and could not turn back. She must achieve the aims of the Four Year Plan or perish. 53. See B H. Klein, Germany's Preparations for War (Harvard 1959); A S Milward, op cit; B A Carroll, Design for Total War, (Mouton 1968). 54. FO 371/20727, C3226/78/18 of 21 April 1937. 55. FO 371/21702, C3960/541/18 of 5 May 1938. 68 The State of Intelligence up to September ig$g 'Sooner or later further territorial expansion will be necessary'. The Chancellor was faced with a fatal dilemma: he must either accept a modification of the policy 6f autarky or go to war. The financial position in general had deteriorated and the government was experiencing difficulty in financing its plans. In no industry was the utilisation of labour capacity below 75 per cent and in the engineering and metals industries it was over 1 00 per cen.t (ie substantial overtime was being worked). 'The country is now practically at the limit of industrial production ' and some economy measures might have to be taken. 56 The embassy's assessments did not rely in any appreciable degree upon secret intelligence. The Press, published statistics (often defective), personal observations and off-the-record conversations seem to have been its principal sources. But the impression that Germany by early 1939 was not only suffering from serious economic difficulties, but was being driven by them towards war, was reinforced by secret reports containing substantial amounts of economic intelligence which the Foreign Secretary (Mr Eden until February 1938 and then Lord Halifax) submitted to the Foreign Policy Committee of the Cabinet (FPC) between April 1937 and January 1939. While some of these reports may have emanated from the SIS, it is clear that others, representing the views of German critics of Hitler's policies, came from the sources who were in contact with Sir Robert Vansittart and MI 5.* In April 1937 the Foreign Secretary informed the FPC that he had received a report ' from a very reliable source' concerning controversy in Germany about the pace of rearmament. Various departments of the German government had pointed to the wisdom of moderating the rate of expansion in view of the precariousness of the food and raw materials position. t 57 Extracts from reports from 'highly confidential sources' were read to the committee in November 1938. One said that the German financial position was now 'absolutely desperate' and that Dr Schacht knew that financial chaos lay immediately ahead of Germany.?59 A paper on 'Possible German Intentions', taken by the committee in January 1939, 61 contained a * See above, p 47 and below, p 80 et seq. t The 'very reliable source' of this report cannot be identified. The substance of the report was generally true. In April 1937 Field Marshal Keitel was telling the Committee for Reich Defence of the strain upon economic resources induced by rearmament; in the same month Dr Schacht (President of the Reichsbank) was complaining to Goering that German exports were suffering as a result of the policies being pursued. 58 t The source of this report was probably Dr Carl Goerdeler. 60 56. FO 371/23002, C8149/32/18 of 24 May 1939. 57. CAB 27/626, FP (36) 26 of 14 April 1937. 58. Carroll, op cit, p 143. 59. CAB 27/624, FP (36) 32nd Meeting, 14 November 1938. 60. Aster, op cit, p 55. 61. CAB 27/627, FP (36) 74 of 19 January 1939. The State of Intelligence up to September ig$g 69 number of references to secret reports, all predicting the onset of economic catastrophe in Germany. One, from a ' high and trustworthy' source, said that economic strain was causing increased unrest among the population. 'An excellent German source' reported that the German transport system was in a very bad way and that old men and women were being used in the armaments industry. Finally there was a report of a secret speech by Dr Brinckmann, 'technical head' of the Ministry of Economics, predicting imminent economic disaster. To this Hitler had reacted by saying: 'Very well, all this means that a vital decision must come at once, and it is coming at once'.* On 23 January 1939 63 the Foreign Secretary advised the FPC to proceed on the assumption that the information in this last paper was true. The recent dismissal of Dr Schacht supported the theory that the financial and economic condition of Germany was becoming desperate and 'compelling the mad dictator to insane adventures'. No member of the committee dissented from this opinion, which clearly influenced its judgment that Hitler might soon spring another coup. Since these reports originated in German circles close to Dr Schacht, among others, they inevitably reflected the opinion of financial experts upon Germany's problems, more especially the external ones. These were indeed severe in the years immediately before the war. But under a dictatorship preparing for war, as the IIC and the ATB had recognised, financial issues were not of long-term significance and were secondary in importance to the state of real resources available. Even had they been wholly correct the reports would still have presented a more 'catastrophic' picture of the German situation than was, in terms of real resources, actually the case, as a comparison with the IIC and ATB findings on the supply position would have demonstrated. But the reports were circulated to the Foreign Policy Committee only and do not appear to have been collated with the views of the IIC or the ATB on the German supply position. These two bodies were inter-departmental, but they constituted an incomplete inter-departmental system, one that was not designed to examine all economic intelligence - still less to speculate on such matters as the possible effects of the German economic situation upon Hitler's political moves, which remained the province of the Foreign Office. On 3 July 1939 the Treasury issued a paper on 'The German Financial Effort for Rearmament', above the initials of Sir John Simon, Chancellor of the Exchequer, which put the financial aspects of the German situation in perspective. 64 Drawing attention to the fact that * All this information, including the report of the speech by Dr Brinckmann and Hitler's reaction to it, clearly originated with Dr Carl Goerdeler. 62 62. Aster, op cit, pp 156-160. 63. CAB 27/624, FP (36) 35th Meeting, 23 January 1939. 64. CAB 24/287, CP 148 (39) of 3 July 1939. 7° The State of Intelligence up to September ig^g no detailed statistics for state expenditure had been published for many years and that only incomplete figures for state borrowing were available, the paper concluded that Germany had an absolutely larger sum to spend on armaments than Britain mainly because far more was raised in taxation. She could probably maintain defence spending on this basis for a long period. The German government might be approaching the end of its borrowing powers, but German policy had been to acquire great stocks of imported necessities, to produce substitute materials and to establish political and economic power over adjacent territories. 'The question of the means of payment for overseas imports in war - an ever-present anxiety in our case scarcely arises in Germany'. The paper gave no definite answer to the question: how much longer could Germany go on with her present policy. But when the Cabinet discussed the paper on 5 July the Chancellor of the Exchequer said that in the Treasury's opinion Germany was better prepared for a long war than was Great Britain, whose prospects would be 'exceedingly grim' unless she obtained US loans and gifts on a massive scale. 65 In the absence of any central point in Whitehall at which all the threads of evidence could be drawn together in a single 'master' appreciation of the German economic situation, the IIC supplied the factual economic information for two attempts, one by the ATB Committee, the other by the Chiefs of Staff, to fill the gap. A report of the ATB Committee in July 1 938 s6 assumed a war beginning in April 1 939 in which Britain and the Empire, France and Czechoslovakia were ranged against Germany including Austria, with Italy liable io enter the war on Germany's side at any moment. On these assumptions four economic factors would be most prominent in the probable German situation. She would be able to supply many commodities essential in war only from stocks or imports, despite efforts to attain self-sufficiency. She would have an all-round minimum of stocks equivalent to 3-4 months' peace-time supplies, although for some commodities reserves were known to be greater. She would meet increasing difficulties in paying for imports as the war proceeded. And she would be critically dependent upon the products of the Ruhr-Rhineland-Saar districts. The second general economic appreciation was contained in the strategic assessment issued by the Chiefs of Staff in February 1939.* 67 This assumed that Germany, in alliance with Italy, would be fighting Great Britain allied to France; that the USA would be a friendly neutral; that the USSR would not intervene but that Japanese intervention on Germany's side had to be considered a possibility. On * See below, p 80. 65. CAB 23/100, Cab 36 (39) of 5 July. 66. CAB 47/6, ATB 181 of 22 July 1938. 67. CAB 16/183A, DP(P) 44 of 20 February 1939. The State of Intelligence up to September ig$g 7 1 these strategic assumptions the COS accepted that the evidence supported the following general conclusions about Germany's eco nomic situation: 'The industrial strength of Germany may be assumed to be adequate to equip and maintain in war all the sea, land and air forces which she plans to put into the field and to maintain the essential services, provided that raw materials for these industries are available. Moreover, her mobilisation planning should enable her rapidly to expand production of war stores after the outbreak of war. . ..' 'Germany, if favoured by fortune, might maintain her industrial resistance for about a year.'* ' In April 1 939 the war preparations of Germany and Italy are likely to be considerably more advanced than those of Great Britain or France. We conclude that, if war occurred, our enemies would endeavour to exploit this preparedness by a rapid victory - within a few months; and that the Allies would have no means of winning quickly.' On the other hand: 'In the past it has been after the outbreak of war that a nation's industry has been adapted and expanded and her manpower organised. In Germany and Italy these processes are now being perfected in time of peace. It seems doubtful whether these processes can be achieved without a loss of hidden reserves which normally exist in time of peace, though it is difficult to assess the extent to which this may affect the lasting power of those nations in war.'t Thus although assessments of Germany's economic position in the summer of 1939 did not disregard the advantages Germany had secured by making early preparations, they were influenced by a general belief that Germany was about to enter a war with her economy already fully stretched. The cumulative evidence pointed to * A more optimistic view than that reached by the ATB Committee which had forecast 15-18 months (see above, p 65), but bearing a resemblance to the estimates being made at that time in Germany. 68 t Contemporary academic writing on the German economy was sparse. The most systematic analysis to appear in Britain was an article on 'The National Economy of Germany' by Dr Thomas Balogh published in the Economic Journal in September 1938. Balogh concluded that the Nazi government had evolved a system which, if the available powers of control were ruthlessly and skilfully used, maintained stable employment; that the system was based on control of costs, investment and international trade and was stable in so far as it did not involve cumulative processes undermining the standard of life. In Balogh's view the real sacrifice imposed on the German people by rearmament and self-sufficiency was very much less than commonly supposed. The penultimate paragraph of the article ran as followed: 'The German picture exhibits the signs of an economy on a war footing using fully those reserves of moral and material character which in other countries are not usually mobilised before the beginning of hostilities. The use of these reserves has hitherto yielded impressive returns. It is questionable whether a further intensification would not have different results. The intense activity, the incentive for which lies beyond the material sphere, must imply an increasing strain on the people which will inevitably have its repercussions in the longer run. And if the stability of employment is safeguarded, the flexibility of the system is being impaired'. 68. Carroll, op cit, p 1 77. 72 The State of Intelligence up to September ig$g the conclusion that Germany was suffering serious economic stress, in itself a powerful motive for immediate aggressive action by Hitler, and that unless aggressive war weVe to bring substantial gains in terms of economic resources within 12-18 months Germany must run into serious supply difficulties. The extent to which on the basis of her 1939 frontiers and without an enlarged 'Lebensraum' Germany could restructure her civil economy to meet the demands of protracted war remained unclear. On the assumptions made by the ATB Committee and the Chiefs of Staff their view of the current state of the German economy on the eve of war was not unrealistic. The principal assumptions on which their forecast rested were: (1 ) that 'the war' would be between Germany and Italy on one side and France and Britain and their allies on the other; (2) that German economic resources were equivalent to those of the Reich as it existed in the spring of 1 939, after making allowance for an Anglo-French blockade and the continuance of German imports from several European countries; (3) that the war was likely to be prolonged, since France and Britain could not win quickly; (4) that German war mobilisation plans had depleted the 'hidden reserves' of the economy although a rapid expansion of the production of war stores after the outbreak of war must be expected;* (5) that the supply of raw materials was the critical factor. On these assumptions it was not unreasonable to depict the German economic situation as 'taut', a description which would have been accepted by many German economic administrators at the time. Only two of the assumptions upon which the assessment rested, however, were purely 'economic'. The first three were strategic and political and even the fourth concealed political and administrative problems in Germany which were not examined in depth by British intelligence before the war.f The fifth was narrow, reflecting the terms of reference upon which economic intelligence specialists had been working and anticipating the 'economic warfare' for which plans had been laid in London. After one year of war the military and strategic assumptions of these assessments were to be profoundly affected by the rapid German victories on land in western Europe, and the two principal economic * The implications of this assumption were not fully thought out before the war. The evident conflict between the assumption that the German economy was already fully stretched while at the same time capable of immediately expanding the supply of armaments presented the newly formed intelligence division of the Ministry of Economic Warfare on the outbreak of war with a paradox which was to remain unresolved in the first eighteen months of war. t See Appendix 3 on German economic administration. The State of Intelligence up to September ig$g 73 assumptions were themselves changed by the new strategic situation after the fall of France. None of this could have been foreseen in the spring of 1 939. In the first two years of war, the economic intelligence system was to be faced with the problem of adjusting the assessments inherited from the pre-war period to situations in which the pre-war assumptions were no longer valid. For economic intelligence, even so, Whitehall had at least acknowledged the need for inter-departmental assessment. In relation to intelligence which bore on the military plans and political intentions of foreign states it not only lacked machinery for central assessment but also, until the spring of 1939, the minimum amount of unity of purpose and policy that was essential before any such machinery could be set up. This was especially the case between the Service departments and the Foreign Office, but also within the Service departments, within the Foreign Office and within the Cabinet itself, the division of opinion as to what British policy should be was marked. The need for such machinery had been partially recognised by 1 936 when, however imperfectly, it was met by the creation of the ISIC (later the JIC) in an effort to improve collaboration between the Service departments and between those departments and the Chiefs of Staff.* At that time, however, the fact that it was no less essential to improve collaboration between the Service departments and the Foreign Office, and to ensure that military and political intelligence were considered together in appreciations for the Cabinet or its committees, went unrecognised, or was even resisted. To have thought on these lines would have been to affront Whitehall's deeply entrenched belief about the respective responsibilities of the Foreign Office and the Service departments for advising the government - the belief that they should tender independent advice, provided that the Service departments confined their advice to the military sphere, and have their disagreements regulated only at the Cabinet level, in Cabinet committees or at the CID.t It was in accordance with these views that, also in 1936, in the aftermath of the Abyssinian crisis and the German occupation of the Rhineland, the Cabinet had established the Foreign Policy Committee. 69 Except when it was temporarily replaced by an even smaller inner Cabinet at critical junctures - by the Committee on the Situation in Czechoslovakia, for example, between September and November 1 938 - this committee of prominent ministers, which met under the chairmanship of the Prime Minister and included the * See Chapter 1, p 35. f See Chapter 1 , p 6 et seq. 69. CAB 23/84, Cab 31 (36) of 29 April; CAB 23/85, Cab 51 (36) of 9 July. 74 The State of Intelligence up to September ig$g Minister for the Co-ordination of Defence, but not the Service ministers, continued to advise the Cabinet on foreign policy decisions down to the outbreak of war. The one point at which intelligence assessments were acted on, it was also the one place where military and political intelligence were brought together - for the Joint Planners continued to prepare the strategic appreciations of the Chiefs of Staff with the help only of periodic political summaries from the Foreign Office, and the Foreign Office continued to select and evaluate political intelligence, and to submit it to the committee, without consultation with the Planners or the Service departments. Yet the committee met only at irregular intervals, and had much difficulty in reaching agreement, precisely because there was so little inter-departmental co-ordination of intelligence at the lower level. After 1 936 the absence of a system whereby the Foreign Office and the Service departments co-ordinated their intelligence at the working level, and evaluated it jointly before circulating their assessments, became a greater liability with each deterioration in the international situation. But it continued to go unregarded for want of the minimum degree of unity of purpose that was essential before the departments could bring themselves to change their ways. During 1934 and 1935 the Defence Requirements Committee had at least concluded, without great acrimony, that whereas the Service departments estimated that Germany would be ready for war by 1 942, it would be prudent to accept the Foreign Office's disinclination to guarantee peace beyond January 1939.* Thereafter, the division of opinion as to what British policy should be became every year more marked, and more sustained by uncertainty within the Cabinet itself, as Whitehall confronted the fact that Germany's capacity to rearm was outstripping earlier forecasts and was emphasising the threat from the existence in Italy and Japan of two other potential enemies. And although it was a division of opinion which cut across departmental lines, it also led to recrimination between the Services and the Foreign Office. The Chiefs of Staff and the Service departments, with their knowledge that British military preparations were being held back by Treasury restraint, became more and more determined to delay British involvement in military operations and more and more critical of those in the Foreign Office who seemed to be urging initiatives in foreign policy which, especially in central Europe, threatened to outrun the slow progress of British military preparations. In the Foreign Office some of the leading figures became increasingly incensed with the Chiefs of Staff for pessimism in their strategic assessments and took the view that they were exerting too much influence on the formulation of policy. In these circumstances, far from becoming reconciled to the need to pool intelligence and to reach * See above, p 49. The State of Intelligence up to September iggg 75 agreed assessments, the two sides persisted in their right to render separate assessments. It would perhaps be unjust to suggest that, in doing so, they were conscious that the institution of joint evaluation would have curbed their opportunities for emphasising or glossing over items of intelligence according to whether they chimed with or cast doubt upon their divergent views on policy. But when these views were so powerfully held there need be no doubt that they in fact influenced the selection and interpretation of the intelligence, so much of which was enigmatic and difficult to evaluate. For the Service departments and the Chiefs of Staff an increasingly cautious assessment of the country's strategic position reinforced the traditional military understanding of the role of intelligence in peace-time - one by which it might well discover the actual and, to some extent, the future military capacity of foreign states, but could provide nothing except speculation on larger matters like the political and military intentions of foreign states that were best settled by reference to strategic and logistic considerations. In 1934 and 1935 confusion had prevailed about the current strength and probable rate of expansion of the GAF. During 1934, when the GAF already possessed 550 aircraft, the Air Ministry calculated that it had 350 and would have 480 by 1935; the Foreign Office insisted that its sources of evidence pointed to higher figures; and Foreign Office complaints of Air Ministry incompetence were answered by Air Ministry resentment at Foreign Office interference. 70 From 1936 uncertainty con tinued about the future size of the GAF - a matter of profound importance for the successive schemes for the expansion of the RAF - but was accepted as being to some extent unavoidable. Nevertheless the Air Ministry's estimates of the GAF's current strength improved until, as war approached, they became inflated.* In 1938, when the true figure was 3,000, the estimate was 2,640, and at the outbreak of war the estimate was 4,320 as against an actual strength of 3, 64 7. 71 The War Office's estimates of the current strength of the German Army, and of the number of divisions it was likely to have at future dates, also improved from 1936. In February 1937 it gave the current strength as 39 divisions (plus 2 independent brigades) and the number of divisions that could be mobilised in 1938 and 1939 as 72 and 108 respectively; 72 the actual figures for 1937, 1938 and 1939 were 41,81 * See Chapter 9, pp 299-300. 70. AIR 8/166 and 171 ; FO 371/18833, C2717/55/18, C2881/55/18; FO 371/18835, C3087/55/ 18; FO 37 1 / i 8838, C36 1 4/55/ 18; F0 37i/i8842,C4i74/55/i8;Colvin,opcit, PP 129-133. 7 1 . CAB 4/23, CID 1 1 5 1 B of 5 November 1 934; AI report of 3 1 August 1 938 (retained in Air Historical Branch); D Richards, The RAF: Vol I (1953), p 7; B Collier, The Defence of the United Kingdom, (1957), p 66; AIR 41/10, p 21. 72. CAB 4/25, CID 1303B of 4 February 1937. 76 The State of Intelligence up to September ig$g and 1 03. 73 In July 1939 MI was inclined to scale down the number of divisions available for immediate mobilisation from 1 08 to 99, 74 though out of deference to the French authorities, who had consistently over-estimated the size of the German Army, 75 the General Staff set the figure at 120-130. 76 The NID's estimates of Germany's current U-boat strength were reasonably accurate.* Like the Germans them selves, however, it had some difficulty in calculating the completion dates of the new German capital ships and it failed to discover their true displacement.! But to work out current strengths or even the rate of expansion of Germany's armed forces was a straightforward task compared with that of foreseeing how she would use them in the event of war. And yet in this direction - on important developments like Germany's preparations for the use of Blitzkrieg methods - the Service departments did not merely lack curiosity. They discouraged their intelligence branches from speculating about such intelligence as was available. In the extant records there is no sign that the War Office circulated any study of the possibility that the German Army would use armoured Blitzkrieg methods though evidence to this effect was certainly coming in. 77 It included a report from a well-placed MI5 source giving intelligence on the constitution of a Panzer column as a self-contained unit equipped for rapid movement in battle. Furthermore, in January 1937 the Military Attache in Berlin, in a report entitled 'German Military Equipment and the next Theatre of War', suggested that the development of the German military machine made it possible that Hitler would resort to a series of short wars with limited objectives, on the Bismarckian model, designed to frustrate the Franco-Russian pact and the operation of collective security arrangements; and though such wars were more likely in eastern Europe, they could also be directed westward. The Foreign Office was impressed by this despatch, and sought War Office agreement to its being printed and circulated in Whitehall. But the DDMI was sent over to turn down this suggestion and to explain that 'high authorities in the War Office desire to confine their activities and those of their representatives abroad to purely military matters'. 78 To the extent that, even so, this was a military matter, the War Office's response was no doubt influenced by its doctrine of deferring in questions relating to the German Army to the French, whose High Command * See below, pp 62-63. t See A PPenclix 4 73. B Mueller-Hillebrand, Das Heer, Vol I (1954), p 68. 74. CAB 4/29, CID 1507B of 19 January 1939. 75. CAB 4/23, CID 1 148B of 29 October 1934; CAB 4/29, CID 1507B of 19 January *939 76. CAB 4/30, CID 1571B of 24 July 1 939. 77. Strong, op cit, pp 47-48. 78. FO 37 1/2 1 73 1, MA Berlin report No 65 of 25 January 1937. The State of Intelligence up to September igjg 77 did not expect Germany to resort to Blitzkrieg. At the same time, despite the practice of deferring to the French estimates, it was sceptical of Mi's lower estimates of the rate of expansion of the German Army, on the ground that the War Office could not itself have expanded the British Army at a like speed, and it may be suggested that it was influenced even more by unwillingness to heed intelligence when it pointed to possibilities which lay beyond the War Office's own experience or ideas. This suggestion receives further support from the treatment that the Service departments gave to intelligence reports on German weapons development. After the outbreak of war the British authorities were to be surprised not only by the power and speed of German offensives, and by Germany's use of tanks or aircraft in support of what she hoped would be successful rapid campaigns, but also by encountering weapons whose existence had been reported but had been disbelieved because they were superior in performance to those which Great Britain was developing. Such intelligence as was obtained about German tanks was too incomplete, and too inaccurate, to make firm conclusions possible; even so the belief that British armour was superior was an article of faith, not a matter of evidence. As to new gun developments, an assistant military attache reported just before the war that Germany had developed a single weapon (the MG 34) capable of serving both as a heavy and a light machine gun; but nothing could persuade the technical branches in the War Office to accept this. 79 When it was reported that the Germans appeared to be using anti-aircraft guns against tanks, they took the view that the use of weapons in this dual role was neither possible nor desirable. 80 Yet when it was encountered in the anti-tank role in 1940 the German 88 mm Flak gun was found to be superior to anything possessed by Great Britain and France. In the same way, the Admiralty refused to believe intelligence reports to the effect that Germany's Narvik-class destroyers mounted 1 5 cm (6") guns until the base plate of a 1 5 cm shell was found on board a British warship after an engagement in 1943. The Air Ministry had a lively interest in discovering the characteristics of German aircraft, and it was chiefly due to the difficulty of obtaining reliable intelligence that it had failed to establish many details of known aircraft by 1939, and that in 1940 aircraft were encountered whose development had not been suspected. 81 But it still had a fair knowledge of the aircraft characteristics and the operational methods of the GAF which it failed to use when considering how Germany was likely to use her air force in the event of war. The belief that in the event of war the main role of the German 79. Strong, op cit, p 1 7. 80. ibid. 81. AIR 10/1644, Handbook on the GAF July 1939, Chapter 9. 78 . The State of Intelligence up to September ig$g Air Force would be the independent, and perhaps the immediate, strategic bombing of Great Britain became widespread in Whitehall from the beginning of the expansion of the GAF.* 1 934 and 1 935 saw the establishment of two CID sub-committees on air defence - the Home Defence Committee's Sub-Committee on Air Defence Research as well as the Air Ministry's Committee for the Scientific Survey of Air Defence. At the same time, the first report of the DRC drew attention to the need to anticipate large-scale air attacks against a wide range of targets, and the danger of a German bombing offensive was the chief reason why the DRC in its third report recommended greater expenditure on intelligence .t The danger was accepted by the COS as a worst case hypothesis in October 193 5. 84 These were necessary precautions - as necessary as the fear of a German 'knock-out' blow from the air was understandable. But the Air Ministry's assumptions as to how the German Air Force would be used were so much modelled on the Air Staff's own plans for the RAF that it not only neglected the available intelligence but also omitted to subject its acceptance of the prevailing opinion to technical study. Had a feasibility study been made, it might have revealed that, as Marshal of the Royal Air Force Sir Arthur Harris was to write later, the German bombers were ' not equipped for weight carrying' and were 'too small' to deliver on the United Kingdom the vast tonnages postulated. 85 From what was known of German aircraft it should have been possible to deduce that the long-range bomber force would have had to sacrifice much of its bomb load if it was to carry enough fuel for the flight from north-west Germany and back with or without over-flying the Low Countries. Again, the task of manufacturing, moving and storing the required number of bombs would have been truly vast, yet its feasibility was neither examined nor questioned. It is perhaps not surprising that these calculations were not made before 1937, for the RAF had not by then studied how its own bomber offensive was to be carried out. 86 But it is surprising that later, as the limitations on Bomber Command's own ability to attack Germany were revealed, the operational factors governing Germany's power to deliver a ' knock-out ' blow were not critically examined, or the presumed scale of the attack questioned. In the Air Intelligence branch, it appears, opinion was not unanimous in subscribing to the 'knock-out' blow thesis after 1936. The officer who was DDI3 from 1936 to 1939 has written that 'if my * It was strenuously pressed by Sir Warren Fisher of the Treasury82 and publicly endorsed by Mr Churchill. 83 t See above, p 50. 82. CAB 1 6/1 12, DRC 22nd Meeting, 30 October 1935. 83. M Gilbert, Winston S Churchill, Vol V 1 922-1 939 (1976), passim from p 571. 84. CAB 53/25, COS 401 of 2 October 1935, para 8. 85. Marshal of the RAF Sir Arthur Harris, Bomber Offensive (1947), p 86. 86. Sir Charles Webster and N Frankland, The Strategic Air Offensive, Vol 1 ( 1 96 1 ), p 9 1 et seq. The State of Intelligence up to September igjg 79 German section had been consulted about the probable employment of the GAF, they would have urged that all the indications were that the GAF was going to be used primarily for direct support of land operations, probably eastwards at first, but if the drive were to go westwards the role of the GAF would still be subsidiary to the Army role'. 87 There is some evidence in the departmental minutes that he held this view at the time,*88 and his claim that he was discouraged from including his views in lectures may be accepted. It may be on this account that even so the AI branch did not make full use of the intelligence that might have supported his views. Aircraft of the GAF, which on training flights before the war used wireless with few inhibitions, gave no sign of being engaged in the type of exercise that would have been necessary to train a new force to undertake so difficult and unprecedented an operation as the 'knock-out' blow; and the operation would have required immense infra-structural preparations in a relatively small area of north-west Germany. Yet it does not appear that Air Intelligence emphasised the need for these developments, or initiated any search for them. Nor does it seem to have pointed out during the Munich and the Polish crises that the German bombers were deployed in eastern Germany in support of the Army, and were not available for bombing London (or Paris, as the French feared). When positive intelligence was lacking on this and other strategic problems, and intelligence deductions, if made at all, had to be made from negative evidence, it is not altogether surprising that the Air Staff, and the Chiefs of Staff as a whole, did not press the intelligence branches for their views on this and similar subjects. That they did not do so is clear from the series of strategic appreciations which they issued between February 1937 and February 1 939. 91 There was no lack * It is perhaps no coincidence that he was chairman of the inter-departmental sub-committee of the JIC which made a detailed examination of the use of air power during the Spanish Civil War. It was as a result of the experience of the Condor Legion in Spain that the GAF decided to adopt support of the ground forces as its main strategic task. 89 As we have seen in Chapter 1 (p 37), one of the sub-committee's conclusions was that 'all, or nearly all, of the air effort of each combatant was primarily devoted to the direct or indirect support of the land forces', though it added the caveat that this provided no basis for judging what might happen in war between first-class powers. 90 87. Air Vice Marshal Sir Victor Goddard, Epic Violet (unpublished autobiography, held in Air Historical Branch), p 33. 88. DDI3 minutes, 15 April 1937, 20 July, 9 and 21 August 1939 and, in particular, 16 May 1937, to PA/CAS (Retained in Air Historical Branch). 89. AIR 41/10, pp 13-14. 90. CAB 54/6, DCOS 1 01 (JIC) of 10 June 1939. 91. CAB 16/182, DP(P) 2, 'Planning for War with Germany' of February 1937, DP(P) 5, 'Far East Appreciation' of 14 June 1937, DP(P) 18, 'Mediterranean, Middle East and NE Africa Appreciation' of 21 February 1938; CAB 16/183, DP(P) 22, 'Military Implications of German Aggression against Czechoslovakia' of 25 March 1938, DP(P) 32, 'Appreciation of Situation in the event of War with Germany' of 9 October 1938, DP(P) 44, 'European Appreciation 1939-40' of 20 February 1939. 80 The State of Intelligence up to September ig$g of intelligence in the paragraphs which compared the first-line military strengths of Great Britain and the other major powers, but only in the last, the Europe'an Appreciation for 1 939-1 940 that was drawn up in February 1939, did the Chiefs of Staff incorporate any intelligence bearing on the way in which Germany might use her armed forces; and even then it bore only on the subject of the air threat to the United Kingdom. Looking at t^iis from Germany's point of view the Chiefs of Staff thought that the best results would be obtained by attacking the civil population, sea-borne supplies and war industries; and on balance they doubted whether Germany would initially attack the civil population as ' it is reported ' that some officers in the German High Command believed that the RAF should be the first objective. But they drew attention, also, to ' recent indications ' that the German Air Staff was ' tending to turn ' in favour of attacking the civil population, and noted that the belief of Nazi extremists in British decadence might lead to an attempt to bring about the swift submission of the United Kingdom by demoralising the population. 92 It is evident from this how little it was thought that intelligence on Germany's strategic planning should be allowed to modify the assumptions which the Service departments and the Chiefs of Staff based on professional calculations. And these assumptions being what they were - that, whereas Great Britain could not win a short war and had scarcely begun her preparations for a long one, Germany, being the aggressor and having, as it seemed, economic reasons for needing a short war,* would aim at a rapid defeat of Great Britain or France; that if Germany gave priority to an attack on France she would make it with reserves permitting operations on the scale of 191 8, and might succeed in forcing a quick decision; that if instead she first turned on Great Britain, she would seek to reduce her by concentrated air attack93 - it is understandable that they carried more weight with the Cabinet than did the Foreign Office's more plentiful political intelligence so long as that intelligence did not point to action by Germany in western Europe. But until the beginning of 1939 the political intelligence pointed either inconclusively (up to the Anschluss with Austria) or conclusively (in the months before the Munich crisis) to German expansion only in eastern Europe. This is clear from the proceedings of the Foreign Policy Committee. Down to the Munich crisis only two of the papers this committee received contained intelligence material, t The first was a Foreign Office survey of July 1937 of reports, mainly diplomatic, pointing to * See above, p 66 et seq. t In addition, however, the Foreign Secretary reported verbally on intelligence about the German economy in April 1937. See above, p 68. 92. CAB 16/183, DP(P) 44 of 20 February 1939. 93. CAB 16/182, DP(P) 2 of February 1937; CAB 16/183, DP(P) 22 of 25 March 1938; DP(P) 44 of 20 February 1939. The State of Intelligence up to September ig$g 81 Germany's intention to move against Austria or - though this seemed less likely - Czechoslovakia; and if the committee did not discuss it, this was because the Foreign Office had concluded that the evidence was ' not very strong', and in part contradictory, and had admitted that the British Ambassador in Berlin had poured scorn on it. 94 The second paper was submitted on 2 1 March 1938, in the aftermath of the German occupation of Austria. It was the strategic assessment by the Chiefs of Staff of 'The Military Implications of German Aggression against Czechoslovakia' - a paper which compiled the available intelligence about comparative military strengths; speculated as to what Germany might do if she found herself at war with Great Britain over Czechoslovakia, with emphasis on the possibility that she would attempt a 'knock-out' blow from the air; and concluded in pessimistic tones that Great Britain was unprepared for the world war that would probably develop if a crisis over Czechoslovakia was not handled with the utmost caution. 95 In the light of this appreciation, described by the Foreign Secretary as 'this extremely melancholy document', the committee recommended on 22 March, and the Cabinet accepted, that the British government should adopt the advice of those in Whitehall who had been advocating for some time that the Czech government should be pressed to come to terms with the Sudeten Germans. For the rest of 1 938, before and during the Munich crisis, the sombre conclusions of the strategic appreciation carried even more weight with the Foreign Policy Committee than did the fact that though firmly pointing to Germany's intention to move against Czechoslovakia, the political intelligence, now a flood,* could give no reassurance that she would not move against Great Britain if her intention was crossed. This did not deter the Foreign Office, where all departments were professionally inclined to be absorbed by the latest political news and some were keen advocates of British intervention, from giving prominence to such of the political intelligence reports as were insisting that Hitler would desist, or could be overthrown, if he was opposed. But these reports were by now suspect to the committee. In July 1 938 the Prime Minister referred to those with this message that were coming from Sir Robert Vansittart's private contacts as being 'unchecked reports from unofficial sources'. 96 In August, when a member of the opposition groups in Germany came to London with a similar message, the Prime Minister commented that 'he reminds me of the Jacobites in King William's reign, and I think we must discount a good deal of what he says', 97 while the Foreign Secretary * See above, pp 58-59. 94. CAB 27/626, FP (36) 36 of 29 July 1937. 95. CAB 16/183, DP(P) 22 of 25 March 1938. The first draft by the Joint Planners was CAB 53/57, COS 697 (JP) of 19 March 1938. 96. CAB 23/94, Cab 32 (38) of 13 July. 97. Woodward and Butler, op cit, Series 3, Vol 2, pp 686-7. 82 The State of Intelligence up to September ig$g felt that all reports to the effect that the German moderates would stage an anti-Hitler coup if the British government stayed firm must be treated 'with some reserve'. 98 Occasionally, moreover, intelligence from a source of proven reliability seemed to justify this scepticism. Thus on 28 September, at the height of the crisis, a well-placed MI 5 source conveyed the warning that if Great Britain declared war Germany would at once unleash an air attack on London." By November 1938 the burden of the political intelligence had begun to undergo a distinct change. On 14 November the Foreign Secretary called a special meeting of the Foreign Policy Committee to which he outlined the contents of reports received from various highly confidential informants who had proved to be reliable during the summer. 100 He mentioned that some of them were in touch with Schacht or Ribbentrop; others among them were MI 5 contacts in touch with the German propaganda ministry or German offices in London. Taken together they indicated that, partly because Germany's financial situation was 'desperate'* and partly because Hitler was more than ever convinced of French and British decadence, and had received reports on the weakness of their air defences, the German authorities were preparing to take the offensive in the west as well as to extend their position in south-eastern Europe. In the Foreign Office's view the reports rang true for another reason - the gratitude of the German people to the Prime Minister for having averted war over Czechoslovakia had probably so infuriated Hitler that he now regarded Great Britain as his main opponent - and it recommended a firm attitude, which might discourage the German extremists. This meeting was followed by persistent rumours of German preparations for the bombing of London 101 and also by further reports from the same confidential sources. The Foreign Secretary presented these to the Foreign Policy Committee on 23 January 1 939. Reiterating that Hitler had substituted a western for an eastern policy, they added, now, that he was contemplating another coup, the danger period being from the end of February. The meeting also considered assessments in which the Foreign Office concluded that this intelligence had to be taken seriously and suggested that, since Germany seemed to be bent on attacking Great Britain without involving France, the coup would be either an air attack on the United Kingdom or the invasion of Holland. 102 On the strength of this assessment the Foreign Policy Committee * See above, p 68. 98. CAB 23/94, Meeting of Ministers, 30 August 1938. 99. Compare Colvin, op cit, p 263 for opposite information on 27 September. 100. CAB 27/624, FP (36) 32nd Meeting, 14 November 1938. 1 01. Aster, op cit, p 43; I Kirkpatrick, The Inner Circle (1959), pp 1 37~ 1 39 102. CAB 27/627, FP (36) 74 of 19 January 1939; CAB 27/624, FP (36) 35th Meeting, 23 January 1939. The State of Intelligence up to September ig$g 83 asked the Chiefs of Staff to report on the implications of a German occupation of Holland. The Chiefs of Staff, though still pessimistic about Great Britain's readiness for war, replied that the move would be a direct threat to British security and had to be opposed. 103 In the light of this view, long held by the Chiefs of Staff, the committee attended for the first time by the three Service ministers and representatives of the Chiefs of Staff - concluded on 26 January that the Cabinet could no longer defer committing itself to an Expeditionary Force and authorised the opening of staff talks with France, a step which the Cabinet had long resisted on the advice of the Chiefs of Staff. 104 On 25 January the Cabinet had given its approval in principle to these decisions, should they be recommended. 105 It reluctantly confirmed them on 22 February. 106 On 25 January the Cabinet was shown the Foreign Office assessment of the intelligence reports but not the reports themselves; the Foreign Secretary gave only a short verbal summary of them. There is no evidence that the reports w rere seen by the Chiefs of Staff. In the wake of Germany's entry into Prague on 1 5 March reports of an even less substantial character precipitated the Cabinet's next important decision at the end of March, and did so without being considered by the Foreign Policy Committee. On 28 March the rumour reached London from the embassy in Berlin and through a British journalist who had contacts with the German General Staff that Germany would attack Poland forthwith unless France and Great Britain made it clear that they would fight. The Foreign Secretary asked for a special meeting of the Cabinet. 107 On 30 March he informed the Cabinet that there was now sufficient evidence to warrant 'a clear declaration of our intention to support Poland. . .' and the Cabinet agreed that the Prime Minister should make such a declaration in the Commons on 31 March. 108 So far as can be discovered, the Foreign Office had received no intelligence to support the rumour; the SIS was soon to provide a series of warnings that Germany would attack Poland some time after the middle of August, but these had not yet begun to come in.* On the other hand, the Prime Minister in his declaration of 3 1 March made it clear that an immediate attack on Poland was not expected. The idea that Great Britain and France * See above, p 59. It may be noted that these reports were not passed on to the War Office, which received them only on 1 1 August after the CIGS had requested copies from CSS. 103. CAB 24/282, CP 20 (39) of 24 January 1939; CAB 27/627, FP (36) 77 of 25 January 1939. 104. CAB 27/624, FP (36) 36th Meeting, 26 January 1939. 105. CAB 24/282, CP 2 (39) of 25 January 1 939 106. CAB 23/97, Cab 8 (39) of 22 Februarv 1939. 107. Harvey, op cit, Diarv entrv for 29 March 1939: Colvin, op cit, p 303 et seq. See also S Newman, The British Guarantee to Poland (1976). 108. CAB 23/98, Cab 16 (39) of 30 March.