by Nigel West
Payments that were obviously of a business character were not to be included. The circular was issued at the instance of Colonel Kell by the financial blockade section of the Treasury on 28 November. Later on the banks were asked to supply the names and addresses of the recipients, and if possible of the persons by whose order the payments were to be made, but owing to banking customs the names of the payee and remitter were not always known to the bankers here.
Of the 216 banks circularised, 113 had no returns to make. They were therefore released from the obligation on the understanding that if any payments of the required nature were made it was to be reported. Enquiry retrospective for the last five years had been ruled out as impracticable, but Sir William Plender was approached with a view to ascertaining particulars about the confidential books of German banks, Mr Bromley Martin of Martin’s Bank having stated that it was practically impossible to discover suspect accounts from a bank ledger. The deed boxes and books of the Deutsche Bank were examined in February 1918.
Meanwhile, Sir William Plender had pointed out that drafts on London could be purchased in Germany and might pass through various hands before being collected through a bank in London; it was therefore impossible to trace enemy payments unless information was supplied as to the source of payment. Owing to these difficulties and to the enormous amount of labour involved, an extension of the scheme so as to include in the monthly returns of the banks all cheques and drafts drawn on the banks from abroad, was withdrawn at the request of MI5.
During November, the London branch of the Comptoir National d’Escompe de Paris received orders to pay £1,000 to each of three individuals, who up to 6 December had not claimed payment. G3(b) asked the bank to obtain from the payees a receipt bearing their signature and address should they call at the bank for the money, or should the cash be drawn through another branch or bank to submit at ones the name of that branch or bank. A reply was received to one of these remittances.
It was suggested in Parliament that German commercial houses were used as spy centres and that examination of their books would reveal suspect payments. A G Branch officer called upon the Comptroller of the Companies Department, who stated that the work of investigating all the more important German firms and banks was practically at an end and he had already notified anything that appeared suspect. In view of the above no general enquiry was made with regard to the staffs of the enemy banks. By the ARO provision had been made for the supervision of individuals and such of the enemy subjects as remained at work at the banks were more or less under observation of the British supervisors, From time to time, however, a question in Parliament or an outcry in the press is noticed in the files.
On one such occasion, in August 1916, the statement was made that eleven German or Austrian clerks had been discharged from the Deutsche Bank and forbidden to take up other employment in England. Occasionally, however, an individual member of the staff would draw the attention of MI5. The following employees and officials of the Deutsche Bank became the subject of investigation: Count James Minotto and Dr Ernest Kuhn, both employees; Baron Maximilian Von Kapp, president; Otto Roese, Wilhelm Pannenborg, managers.
Minotto and Baron George von Seebeck, of the Die Kontogesellechaft, were friends of the German ambassador. In August 1914 Dr Ernest Kuhn had been imprisoned; he was released owing to the action of Minotto who got an official of the American embassy to intervene. Minotto was then carrying an Italian as well as a German passport. The three young men escaped to America at the end of August and procured employment in the Guaranty Trust Company. By the end of the year, Minotto was at Buenos Aires on a mission for the company but he was then in close touch with Count Luxburg. MI5 heard of him first from an intercepted letter to Baron von Rapp, which was sent to the Home Office by Mr Ernest Marshall of the New York Times. Some enquiry was made both as to Minotto and Rapp. Minotto was over here about September 1915 and MI5 heard of him again in March 1916 when he was reported to be a pro-German and travelling frequently between Germany, France, the United States and England. Action was taken to stop and search and keep in touch with him should he come again. In consequence of the arrest of Bolo, von Seebeck, Kuhn, and subsequently also Minotto were arrested in America. Minotto had been arrested previously in August 1917 and let out on bail. MI5 then learned all that was known to the American embassy and took the following steps: a circular was issued to all the ports, GHQ, Home Office, Scotland Yard, Director of Naval Intelligence, the Public Prosecutions Office, the Bureau Central Interallié, GHQ I(b), GS(1), HQ L of C Areas, and MI-1(c) for distribution in New York, Madrid, Rome, Berne, Copenhagen, Stockholm and Christiania D for Malta, informing these offices of the facts, cancelling the previous circular and stating that no visas were to be issued to James Minotto. Property belonging to von Seebeck and Kuhn that was stored in a depository was searched and Kuhn’s correspondence was examined. The papers showed that Kuhn had handled a good deal of money in his financial deals, he had paid cheques for large amounts to Minotto but there was nothing to indicate direct association with the German government and no evidence of direct association with von Seebeck. The indications are that von Rapp and Otto Roese were in fairly close touch with Minotto. They were also in touch with Felix Aschert, who had organised a letter-carrying business. This Aschert was in 1916 reported to be engaging spies and acting as financial agent for Germany.
In spite of being the object of much suspicion von Rapp was exempted from repatriation as he was useful in winding up the affairs of the London agency, but in August 1918 his services having been dispensed with, he applied for repatriation which was granted. Meanwhile, various enquiries had been made of him with varying results he gave some information with regard to Richard Mayer Bacum, a suspect bank promoter who had formerly organised a Russian section for the Deutsche Bank in Berlin, but he would or could give no help about a quantity of papers belonging to the Deutsche Bank which it was thought might be connected with German espionage. He was interviewed with regard to certain circulars, alleged to have been issued by German ministers, and dealing with measures which were to be taken by German banks and other institutions for encouraging espionage in countries outside Germany; von Rapp denied having ever received these circulars.
Otto Roese was evidently an important man. Two attempts were made to procure his repatriation. The first took place in April 1915 through Aschert who communicated with Pannenborg on the subject in an obscure wire. Pannenborg having been interned in May the next attempt took place in July through the American embassy. In consultation with the Treasury, the Home Office had however decided that Roese was not to be allowed to return as he possessed important financial knowledge and in July he was debarred from visiting the city. He, however, contrived to get his wife back to Germany. He had lost two sons fighting in the German Army. In May 1916 he was repatriated; he then wrote to von Rapp from Berlin complaining of this country’s action with regard to German banks and their personnel.
Wilhelm Pannenborg was repatriated at some date prior to March 1918, he and von Rapp were reported afterwards either as having lingered in Holland or as having visited that country after repatriation. Thus, although there was no direct proof against the officials of the London agency there were grounds for suspicion and in October 1917, when the Bolo transactions had become known, MI5 successfully opposed the nomination of Felix Aschert as intermediary for communications which were to pass between the official supervisor of the Deutsche Bank London agency and the head office in Berlin. They also opposed the nomination of the Rotterdamsche Vereeniging, an institution which had developed enormously during the war, which was closely associated with enemy interests and indeed suspected of being under German control.
Special enquiry into the position of the German and naturalised British staff of the Dresdner Bank was begun by G2(d) in March 1917. In consequence of information sent to Major Claude Dansey by the editorial department of the Daily Mail. Shortly after, in connection with the discovery that the Deutsche Orien
t Bank had been engaged in political propaganda in Egypt, and apparently also in connection with an article of the Daily Mail, Ml-1(c) asked the bureau for information about the German and Austrian staff of the Dresdner Bank.
With this bank the Khedive had an account into which, as was afterwards known, he had paid the large sum which was conveyed to Bolo by Cavallini. Out of a list of twenty-three names forwarded by MI-1(c) the bureau supplied particulars with regard to twenty-one persons: seventeen Germans had been interned between May 1915 and December 1916, one had gone to America, another had been repatriated, and the fate of the two others was still the subject of enquiry; yet another was a woman concerning whom enquiry would be made. None of these persons were known to have been engaged in espionage.
In October 1917 there came from Rotterdam a list of fifty-nine employees who had left the Dresdner Bank between January and August 1914 with a request for information about these individuals. The list was sent to Mr Bromley Martin who gave the following account of the pre-war terms of employment accepted by the staff of the bank:
The staff of the Dresdner Bank were engaged on a three years’ contract and on a wholetime basis. Only a few of the senior men stayed beyond their contract time; most of the Germans used their time as an opportunity for business education and many of them, on expiry of their contract, stayed in this country and started businesses on their own account.
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In May, the government decided upon the policy of interning or repatriating according to age, all male enemy aliens who could not show cause why they should be left at liberty; all female enemy aliens with the exception of those held during deportation, might be repatriated. This was followed up by a measure enabling the authorities to intern dangerous persons of hostile origin and association.
The competent military and naval authorities, including MO5G, could send in a recommendation to the Home Secretary for an order of internment to be directed to any person under these categories; that person had the right to appeal against the order to an advisory committee; all appeals of this nature had to pass through MO5G.
The measure proved of infinite value to the investigating branch in dealing with suspects against whom there was not sufficient evidence to bring them to trial. Indeed, Major Drake wished to extend the scope of its operation to neutrals convicted of contraventions of DRR but against whom hostile association could not be proved.
In March 1915, Mario Guell, aged forty-one, was recommended to Commandant Wallner of the French Secret Service, by a French agent who had worked with Quell in the automobile trade. In the course of 1915, Commandant Wallner sent him to Germany four times – from March to May, in June, in September, and in December. After his return in June, Guell said he had been arrested at Looerrach in September, he was offered work by Captain von Reschenberg of the German Secret Service in December; he accepted the offer and was sent to Antwerp for instructions. Of the two first trips he submitted reports of no great value, on the third trip in September he gave no report at all; concerning the fourth trip he told Commandant Wallner frankly about his trip to Antwerp. After some hesitation Commandant Wallner accepted him as a double agent and instructed him to write certain letters to an address which had been given to Guell in Antwerp, L. Florini, Entrepreneur, Hotel de l’Europe, Lugano.
Without mentioning these circumstances the address was given to the British authorities who put it on check, and a letter dated 18 January 1916, addressed to Florini, was intercepted and tested with iodine fumes. A secret message flashed up and disappeared after a few moments. The writer could not be traced.
After December 1915, Guell was of no further use to Commandant Wallner. Early in 1916, Guell told the Commandant that together with Jose Berges he was founding a factory of false pearls and that he had worked previously in a similar business run by the firm of Hsuach. Between January and July 1916, Guell went twice to Russia in connection with this new business. In August 1916 he was signalled to the Commandant as a pro-German and as possibly a German agent. He was then preparing for a third trip to Russia. Guell was brought to the notice of the bureau by Commandant Wallner who informed MI5E that two Spaniards formerly employed by the French Intelligence Service had lately undertaken to work for the Germans and were going to Russia; he asked that visas should be gleaned after a delay of six days and that their movements should be watched in Norway. If they went to Russia the Russian authorities were making arrangements to arrest them; if they went to Germany under pretext of working for the French, he suggested that the British authorities should arrest them on their way back.
The two men arrived and were kept under observation in England but they did nothing suspicious. From the Grosvenor Hotel, Guell despatched a telegram to Guell, Calle San Beltram 114, Barcelona, while Berges sent telegrams to: Marsans, Teatro Novedades, Barcelona and Iturmendi, Condal 2, Ohnica, Barcelona.
The wires announced the safe arrival of the two men. The three telegrams were in Guell’s handwriting which Lieutenant Fetherston identified as that of the writer of the Florini letter mentioned earlier. Enquiries made in Spain showed that there was no Guell at the address given; Marsans, the son of a banker, was connected with a lady who was pro-German and greedy of money, Iturmendi was a doctor, and his clinic was a centre of pro-German intrigue in Barcelona.
Guell and Berges went through to Russia. Care had been taken at the British ports to do nothing to arouse the Spaniards’ suspicions but in Norway they were seen conversing with Germans. The Germans noticed that the party was being watched and no doubt warned the Spaniards. In October it was thought that the men would return shortly. Towards the end of the month the French had news that they were returning from Germany in seven or eight days and would probably sail for Spain direct from Scandinavia. Guell and Berges were not arrested n Russia. They made several journeys from Petrograd to Rostov and went also to Vitebsk and Guell went to Petrozavodsk.
In Rostov they bought from an English firm 288 kilos of fish scales for the manufacture of false pearls, but the Russian government refused permission to ship this purchase. This was on 17 November but it was not till 7 January 1917 that the two men left Petrograd for Spain via England. Instructions were issued to Newcastle that they were to be sent under escort to Scotland Yard. Among Guell’s papers were found the address of the proprietor of boats going direct from Bergen to Spain; the record of a telegram which he had despatched from Bergen; receipts for six telegrams and two registered letters sent direct from Russia to Spain, a pass-book showing a credit of more than £2,000 and no withdrawals in an account which he had opened with a Russian bank in 1916; a number of addresses but no letters, for he had torn them all up.
Berges had no addresses; he had a letter of credit on the Credit Lyonnais for £1,000, of which he had withdrawn only 1,000 francs for a draft on Paris. Both men carried a quantity of picture postcards, mostly of Russia, and some of these had been marked. Guell carried aspirin tablets, potassium bromide and a box of brown powder labelled Protargolf Berges had tincture of iodine and throat tablets. These materials were sent for testing but the final report of the expert on secret writing is not in this file.
In examination, Berges asserted that he had written the two wires signed with his name and despatched from the Grosvenor Hotel, while Guell admitted that all the three telegrams were in his own handwriting. Berges explained that he was by profession an actor and the director of the Teatro Novedadis, but that he wished to retire from the profession and devote his energies to business, and take a partnership in the firm of Antonio Guell, the father of Mario Guell. Both men asserted that Antonio Guell was a maker of artificial pearls, and that Mario Guell was travelling for it. Guell declared that his father’s business had been carried on at 14 Calle San Beltrani, Barcelona, until August or September of 1916, when he moved to a place called Bardalino (or Badalona) two miles from Barcelona. Guell’s account of the Florini letter was confirmed by Commandant Wallner who added the information that Guell’s father, Antonio, carried on the m
anufacture of paper bags and tinfoil at 14 Calle San Beltrani, Barcelona, and that in September 1916 Mario Guell had moved to 36 Calle Badalona, a little house in which there was no trace of any industrial undertaking. There he passed as a commercial traveller. Although Commandant Wallner had never quite trusted Guell he was unable to formulate any definite charge against the man.
Orders were given to search the GPO for any telegrams that Guell might have despatched from England on his various visits to this country. Meanwhile, the Spanish ambassador was pressing for a definite charge to be brought against the prisoners. As no direct evidence of espionage was found and neutrals could not be interned on the mere ground of hostile sympathies, the suspects were released on 30 January 1917 and sent to Spain on 10 February, and instructions were issued for their arrest should they attempt to return. After they had left, the originals of the telegrams they had despatched from Russia arrived in England; they were not considered suspicious.
The Director of Naval Intelligence had demurred to Guell’s release on the grounds that he was the agent of the suspect firm of Heusch. Subsequently the French Intelligence Service supplied the information that the firm of Heusch, manufacturers of artificial pearls, had sent Mario Guell to Russia in 1918 to buy fish scales for them. In 1916 they used him for the same purpose, but instructed him to act as though for his own account and as he was without money or credit Mario had his business paper and cards stamped with the name of his brother’s firm, Antonio Guell y Soler. Thanks to the help of the Spanish consul in Russia, Guell had contrived to procure fish scales for Heusch and was engaged in effects to get permission for their export. The credits standing to Guell’s account in Russia represented funds belonging to Heusch.