The Authorised History of British Defence Economic Intelligence

A Cold War in Whitehall, 1929-90

Peter Davies

• Verlag: Routledge
• Jahr: 2018
• ISBN:
  9781351709521
• Auflage: 1
• Thema: Politics & International Relations
• Thema: Intelligence & Espionage

This book is the first history of UK economic intelligence and offers a new perspective on the evolution of Britain's national intelligence machinery and how it worked during the Cold War.

British economic intelligence has a longer pedigree than the Joint Intelligence Committee (JIC) and was the vanguard of intelligence coordination in Whitehall, yet it remains a missing field in intelligence studies. This book is the first history of this core government capability and shows how central it was to the post-war evolution of Whitehall's national intelligence machinery. It places special emphasis on the Joint Intelligence Bureau and Defence Intelligence Staff - two vital organisations in the Ministry of Defence underpinning the whole Whitehall intelligence edifice, but almost totally ignored by historians.

Intelligence in Whitehall was not conducted in a parallel universe. This contrasts with the conventional wisdom which accepts the uniqueness of intelligence as a government activity and is symbolised by the historical profile of the JIC. The study draws on the official archives to show that the mantra of the existence of a semi-autonomous UK intelligence community cannot be sustained against the historical evidence of government departments using the machinery of government to advance their traditional priorities. Rivalries within and between agencies and departments, and their determination to resist any central encroachment on their authority, emasculated a truly professional multi-skilled capability in Whitehall at the very moment when it was needed to address emerging global economic issues.

This book will be of much interest to students of British government and politics, intelligence studies, defence studies, security studies and international relations in general.

Part One
Prelude

1 A New Field of Intelligence

[T]he conditions of the present war gave greater importance than has been the case in any previous war to intelligence on political and industrial matters.

Report of Secret Service Committee, 1919¹

In the war of 1914–19 no Department was responsible for watching, in the light of all available evidence, the development and decay of the enemy’s power to fight, for noting economic symptoms of collapse, or for providing those who planned the Armistice and the Peace Treaties with the economic appreciations which they needed.

Finlay Report, May 1943²

Four characteristic features of early twentieth century Whitehall were its strong preference for inter-departmental committees over executive or centralised bodies; its instinctive reluctance to embrace specialists and new forms of administration; its determined resistance to establishing either a Defence Ministry or a Minister of Defence with authority over the three Service Departments; and the absence of a recognisable intelligence ‘community’. It was in this unpromising setting that economic intelligence emerged and survived as a core British Government capability.

The First World War

A recognisably British concept of economic intelligence began to emerge between 1914 and 1918 in response to the demands of total war. Paradoxically, its origins are found in the precipitous failure of the British Government’s economic warfare strategy in the event of a war with Germany. Britain envisioned harnessing its naval supremacy and effective monopoly control over the infrastructure of the global trading system to exploit the ‘technological revolutions in communications, transportation, and financial services which had facilitated the global spread of market capitalism’ already so critical to the functioning of a modern nation state. The ensuing financial turmoil would, it was envisaged, precipitate an economic crisis, rapidly undermine Germany’s ability to prosecute the war, and bring a swift end to hostilities.³ This was economic warfare on the grandest of scales – nothing less than the systematic dislocation of the world economy.⁴

What this daring strategy lacked, however, was the political will to see it through against inevitable and foreseeable economic, political and diplomatic obstacles. Nicholas Lambert records that ‘After just three weeks of war … fearsome projections of the high political, diplomatic, and economic costs attending the implementation of the strategy broke the will of the cabinet’.⁵ Having fallen at the first hurdle, the policy was abandoned to be replaced by the economic blockade – a more limited form of economic warfare for which in 1914–15 Britain lacked both the intelligence and the administrative machinery to coordinate and process it effectively. This new economic blockade would eventually entail a complex organisation moving beyond the Royal Navy’s interception of enemy ships to include diplomatic pressure on neutral countries to close supply routes, withholding financial and insurance pressure for neutral cargoes, and control of neutral shipping. But it was not until the creation of the dedicated Ministry of Blockade nominally under Foreign Office (FO) control in early 1916 and its War Trade Intelligence Department (WTID) working in concert with the FO, Admiralty, Board of Trade (BoT), Board of Customs and Excise, and the Ministry of Shipping that duplication and bureaucratic friction were gradually overcome and effective machinery put in place for the collection, assessment and dissemination of intelligence. Only then was Britain in a position to really begin to tighten the co-ordination of economic pressure on the Central Powers and starve them into submission.

The WTID’s remit encompassed ‘every kind of War Trade problem, questions affecting the policy and operations of the blockade, and economic resources, conditions and developments in various parts of the world.’⁶ It exploited intelligence from myriad sources, including reports from other Government Departments (OGDs), intercepted communications obtained through the censors, foreign press articles, communications from British traders around the world, as well as the economic section of SIS.⁷ Between 1916 and 1918 economic intelligence proved indispensable in the prosecution of the ultimately successful naval blockade of Germany. Greg Kennedy maintains that the WTID provided ‘the most sophisticated and wide-ranging intelligence assessment ever done to that date’ and that ‘[W]ithout the creation and evolution of the enormous intelligence machinery that supported the Blockade strategy … it is unlikely that the Allied side could have triumphed.’⁸ Even this munificent assessment is trumped by John Ferris for whom the WTID was the ‘finest intelligence assessment body of 1914–18, perhaps of the entire twentieth century’.⁹ And, as noted above, the ‘Report of the Secret Service Committee’ in 1919 highlighted the growing importance of intelligence on political and industrial matters and its contribution to the success of the blockade strategy.¹⁰

Official acknowledgment of these achievements counted for little after the war. Without effective arrangements for the higher administration and co-ordination of both intelligence and defence policy, economic intelligence was an early casualty of postwar financial retrenchment, abetted by the Treasury’s newly acquired control over civil service organisation, expenditure and appointments and resistance to exploiting professional economic expertise other than in an advisory capacity. The UK’s effective economic intelligence capability was rapidly dismantled, disappearing with the dissolution of the Ministry of Blockade in October 1919. The BoT’s economic intelligence department which had been set up in 1917 ‘to anticipate, watch and suggest ways of dealing with, important questions and movements likely to arise in commerce and industry, and which, from their generality or novelty did not fall within the scope of a specialized Department’ also disappeared.¹¹ When the inter-departmental Advisory Committee on Trade Questions in Time of War (ATB) was established in 1924 with a wide-ranging remit to assess the application of economic pressure on foreign countries it had no specialist economic intelligence expertise or secretariat support. It would take over a decade from the end of the war before economic intelligence regained a foothold in Whitehall. And when, at the end of the 1920s, the fighting Services began to address the implications of the rapid industrial and technological developments on the nation’s interests and security, the impetus to do so came from events completely outside the British Government’s control.

Committee of Imperial Defence

In his seminal study of the Whitehall committee system the constitutional historian, Sir Kenneth Wheare, proposed that ‘Of the many phrases by which British government may be described shortly and with illumination, such as “cabinet government” or “parliamentary government” or “constitutional monarchy”, it seems justifiable to say that by no means the least accurate and significant is “government by committee”.’¹² The Committee of Imperial Defence (CID) and its sub-committees (including the JIC) in which the coordination of Britain’s security was vested, exemplified this British practice. With its hallmark inclusiveness, pragmatism, and quality of research, the CID was deemed to be the superior British way of peacetime administration. The Cabinet Secretary, Sir Maurice Hankey, was also Secretary to the CID between 1912 and 1938. He retained an ‘almost religious belief in the efficacy of and constitutional propriety of the CID system and its flexibility in changing international circumstances’.¹³ Presided over by the Prime Minister, the CID’s flexible membership comprised the Chancellor of the Exchequer, the political heads of the defence and major overseas offices of state, and the Permanent Secretary of the Treasury, with the Service Chiefs of Staff acting as advisers. Executive authority was anathema to the CID’s ethos and structure. Arthur Balfour, Prime Minister from 1902 to 1905, continued into the 1920s to hail this ‘novel organ of consultation’ he had established in 1902 and nurtured as a ‘cheap, efficient and infinitely flexible’ machine.¹⁴ Hankey saw it as the forum ‘for the continuous study of defence problems by Cabinet Ministers, the Fighting Services and Civil Service. It is inter-departmental, but does not impair the responsibility of Departments’.¹⁵ Without the CID there would be

no means for co-ordinating defence problems, for dealing with them as a whole, for defining the proper functions of the various elements, and for ensuring that, on the one hand, peace preparations are carried out upon a consistent plan, and, on the other hand, that, in times of emergency, a definite war policy, based upon solid data, can be formulated.¹⁶

The CID was fundamentally a peacetime organisation. Beginning in November 1914 its responsibilities had passed in succession to the War Council, the Dardanelles Committee, the War Committee, and finally (from December 1916) to the War Cabinet – although Hankey continued throughout as secretary to oversee the administration of all these committees. A debate running throughout the interwar years was whether national defence strategy and expenditure should be secured inter-departmentally through the reconstituted CID or by a more centralised body under a Minister of Defence with authority over the Service Departments.¹⁷ In the immediate aftermath of WW1 considerable support could be found amongst ministers and the Chiefs of Staff for a unified MoD and/or a Defence Minister. A report in 1919 by a committee chaired by Lord Haldane (Secretary of State for War between 1905 and 1912) for the short-lived (1916–19) Ministry of Reconstruction on the lessons of wartime administration for post-war machinery of government acknowledged a theoretical case for a Minister of Defence as part of a smaller peacetime Cabinet, but it did not recommend creating a department with strategic and financial control over the three Service ministries.¹⁸ In 1921 the Geddes Committee (appointed by Prime Minister David Lloyd George to identify economies in government departments) accepted that a unified ministry was essential to reduce overlap and duplication among the three Services. However, the countervailing campaign claimed that a unified MoD would be unable to coordinate all the military and civil resources necessary for the preparation and prosecution of the new warfare, and emphasised the threat it posed both to the Service ministries and to the authority of the Prime Minister.¹⁹ Lloyd George eventually plumped for reviving the pre-war CID system, though in all likelihood more ‘for political and personal aspects of the question than the theoretical or practical advantages of one system of higher defence machinery over another.’²⁰

Thereafter until his retirement in 1938 Hankey exploited his position as Secretary of both the Cabinet and CID to great effect to prevent establishing a MoD.²¹ One instrument was the creation of the Chiefs of Staff Sub-Committee (COS) in 1923 under CID auspices with terms of reference codifying individual and collective responsibility for advising on defence policy as a whole. Though conspicuously lacking effective planning and intelligence staffs, simply establishing the new committee demonstrated the CID’s flexibility and weakened the case for a dedicated ministry. It also served to consolidate Hankey’s position at the centre of defence planning, the source of much of his personal authority with the Prime Minister. During the 1931 economic crisis Hankey brazenly maintained that the CID system ‘might not i...

Inhaltsverzeichnis

• Cover
• Title
• Copyright
• Dedication
• Contents
• Foreword
• Acknowledgements
• List of Abbreviations
• Chronology
• Who Was Who
• Preface
• INTRODUCTION Economics and Intelligence History
• PART ONE Prelude
• PART TWO The War Years
• PART THREE The Golden Age
• PART FOUR Marking Time
• CONCLUSION Economic Intelligence 1929-1990
• APPENDICES
• Select Bibliography
• Index