Ace of Spies

by Andrew Cook

  In late 1915 the Russian government sent an official purchasing supply committee to New York headed by Gen. A.V. Sapozhnikov, another old Reilly acquaintance from St Petersburg. Whilst the committee was an understandable attempt to rationalise Russia’s munitions purchases in America, it was dogged with scandal almost from the day its members arrived. Although, as usual, Reilly had a personal motive for writing to Lt-Gen. Eduard Germonius on 21 December 1915, he was essentially correct in drawing attention to the disorganised and over-optimistic state of affairs concerning Russian munitions purchases in America. In his report he stated that:

  In the last eight months the chief Artillery Administration in Petrograd and the Russian Artillery Commission in America have been holding talks with dozens of factories and endless different suppliers, banks, ‘groups’ or just ‘representatives’ about ordering from them 1,000,000 to 2,000,000 rifles and corresponding quantity of cartridges. The offers exceeded the demand many times over and if they were all added up it would appear that in these eight months Russia has been offered rifles and cartridges in quantities that may be expressed only in ‘astronomical’ figures. Understandably, there is nothing surprising about the fact that so many offers have been forthcoming: the example of Allison, who secured a contract for shells worth $86,000,000 is still fresh in everybody’s memory. What one cannot understand is that all these offers have been examined in detail, thorough talks have taken place, a huge amount of time and money has been spent on correspondence and telegrams, inspectors have been ordered to look round factories, legal consultants have been given the job of drawing up contracts, in many cases draft, preliminary or even final agreements have been signed (and then torn up) – but these orders for rifles and cartridges have still not been placed.

  The reason for this is that the Chief Artillery Administration does not know enough about the real state of the rifle and cartridge trade in America. Petrograd, as optimistic as the entrepreneurs themselves, is not giving up and continues to hunt for the grain of corn in all the paper-litter put out by Jones, Hough, Zeretelli, Morny, Wilsey, Bradley, Garland, Empire Rifle Company, American Arms Company, Atlantic Rifle Company et al., and is evidently ignoring the actual state of affairs.35

  Reilly went on to draw attention to the fact that the allied countries had placed orders in America for approximately 7.5 million rifles, 3,500 million cartridges and about 1.5 million gun barrels. His conclusion was that in their haste to take advantage of these large Russian contracts, many American firms had seriously overreached themselves and were highly unlikely to be able to deliver on schedule.

  This eventually turned out to be the case, although the situation was not helped by the over-enthusiastic quality-control system. Before too long the system began to have serious repercussions on Russia’s ability to fight the war. The problem now was not the quality of the munitions they were receiving, but the fact that the inspection system was slowing the delivery process down to such an extent that the Russian Army at the battlefront was virtually out of shells to fire at the enemy. When Gen. Germonius became head of the Russian Purchasing Commission in America, this issue was one that was very much to the fore.

  Again, Reilly saw a golden opportunity to exploit this opportunity. According to Vladimir Krymov he visited the plants that were contracted to manufacture shells and were experiencing difficulties in getting them passed, and proposed that in exchange for a commission he could ensure that the inspectors would pass the finished munitions.36 It is not surprising that the companies were initially sceptical to say the least, as he was not the first person who had approached them with this proposal. He told the companies, however, that he and Gen. Germonius were related and that through the general he could not only ensure the successful acceptance of their current orders but could also secure new orders for them. As proof he persuaded the managing directors of two companies to have lunch at the Coq d’Or, a country restaurant outside New York, and told them they would see him, his wife and Gen. Germonius having lunch together. The directors knew that Germonius never went anywhere, let alone had lunch with middlemen or suppliers. Nadine persuaded Germonius to have lunch with them at the Coq d’Or, and Reilly was thus able to show off the unsuspecting general to the directors. On 7 January 1916, an agreement was signed between Reilly and Samuel M. Vauclain, John T. Sykes and Andrew Fletcher on behalf of the Eddystone Ammunition Corporation. The agreement gave Reilly 25 cents commission on every round of three-inch shrapnel shell that was accepted.37

  Within a very short space of time the orders were accepted and Reilly collected a healthy commission. What the companies did not know was that before approaching them, Reilly had heard that fresh instructions were shortly to be issued to the inspectors to be less circumspect as the Russian army was virtually out of shells. The companies, however, were sure that Reilly was responsible for this miracle.

  On 16 July 1916 Reilly was reunited with Alexandre Weinstein, who arrived in New York aboard the liner the St Louis. Having already made a small fortune in London on munitions commissions, Weinstein now no doubt hoped to get a share of the American honey pot Reilly had often boasted about. Having secured himself a desk in Reilly’s office suite at 120 Broadway, he enthusiastically threw himself into the murky but lucrative world of US munitions deals, as did Moisei Ginsburg, who arrived from Petrograd shortly after Weinstein. Corrupt practice was not the only difficulty the Russian Purchasing Commission had to contend with. In 1916 Col. Sergei Nekrassov, the chief inspector of the Russian Purchasing Commission’s Artillery Department, was accused by George Lurich, an Estonian linked to a pro- Allied intelligence ring, of being a German spy.38 In particular he accused Nekrassov of obstructing munitions production and of diverting supplies to Germany. This was a very serious allegation, and Lurich took the matter up with the commission, but the allegation was dismissed. Lurich then took the matter to Capt. Guy Gaunt of British Naval Intelligence, who passed it on to Maj. Norman Thwaites of SIS to investigate.39 The depth to which Thwaites looked into this matter is unknown, although we do know that he spoke to Reilly to elicit his opinion of Nekrassov. Thwaites, not for the first time, gave a different account of this matter in his autobiography to that which appears on the official record. According to a US Bureau of Investigation report written some two years later, Thwaites ‘had lunched with both Reilly and Weinstein and they had aroused his suspicions in their efforts to get Nekarossov out of trouble’.40 In his 1932 autobiography, Velvet and Vinegar, however, Thwaites recalls:

  I had been asked to investigate certain charges brought against the Russian War Mission in New York. Reilly knew them and gave a clean bill of health. I came to the conclusion that our Russian friends were giving themselves a good time in the hospitable city on the Hudson, but I could find no evidence either of graft or of enemy contacts.41

  He makes no reference to Lurich or Nekrassov by name or indeed anyone else apart from Reilly and Weinstein in this account. He also gives the impression that his enquiry was not concerned solely with Nekrassov, and refers to a young girl who had apparently given testimony ‘against them’. The impression one gains is that she herself had close associations with the Austrian and German Consulates.

  The Nekrassov affair is seen by some as a further validation of the view that Reilly was a German agent, or was at least in league with them. It is more likely, however, that Reilly was seeking to shield Nekrassov purely for his commercial value. Bearing in mind that Reilly had already made over $1million from munitions deals, a good number of which resulted from his ability to ‘assist’ in the inspections process, it would be hardly surprising if he had sought to defend one of his key contacts in the inspections network.

  So far, talk of German sabotage and disruption was confined to the type of activities alleged by Lurich. This was about to change abruptly. At 2.08 a.m. on Sunday 30 July 1916, New York City was rocked by a thunderous explosion caused by the ignition of munitions on nearby Black Tom Island. The ground shook and flaming rockets and scr
eeching shells filled the night sky. Shock waves caused thousands of windows in the Manhattan skyscrapers to shatter, sending a deadly shower of glass raining down on the streets below. Water mains burst, the telephone system went dead and panic gripped motorists on the Brooklyn Bridge as the mighty structure shuddered and swayed. Almost immediately New York was alive with people as thousands took to the streets in bewilderment. Looting was reported on 5th Avenue and the police were thrown into a state of confusion as burglar alarms triggered by the blast sounded off all over the city. Some twenty minutes later a second huge blast shook the city, sending more shells and rockets into the night sky. More than 13,000 tons of explosives had been ignited by the two separate blasts, one in a rail wagon and the other in a barge moored at a nearby pier.42

  Richard Spence believes Reilly again played ‘a critical role’43 in the destruction of the Black Tom munitions terminal, supposedly for two reasons. Firstly, Spence draws attention to the fact that most of the munitions orders on Black Tom, waiting for dispatch by ship to Europe, were ‘the fruits of Morgan inspired contracts’,44 and secondly that Reilly was aware of the ‘contents, security and layout’ and could ‘arrange easy access to the site for the team of saboteurs led by Jahnke’.45 The charge that Reilly had background knowledge of the Black Tom Terminal seems to centre on the fact that Allied Machinery was one of a number of companies that had an office on the Black Tom site. The reality, however, was that the perpetrators would not have needed someone like Reilly to guide them through the intricacies of Black Tom’s security. As official investigations have clearly demonstrated, security at Black Tom was, in practice, virtually non-existent.46

  Security at the terminal was the responsibility of two private agencies. The Lehigh Valley Railroad Company, who owned the terminal, employed their own force. In addition, the British authorities had contracted the Dougherty Detective Agency to undertake patrols. In spite of this, police and federal investigators noted that there was no gate separating the Black Tom Terminal from adjacent land. Although still referred to at this time as Black Tom Island, a landfill scheme had linked it to the mainland some years before. Those who worked the barges came and went at will and were never challenged or stopped by patrols or security officers. Critical areas of the terminal’s perimeter were unlit. In terms of the waterside boundary it was revealed that no river patrols of any kind were undertaken beyond the occasional passing coast guard or New York City Police boat. Again, lack of lighting on the river side of the terminal would have made it exceptionally difficult for such passing boats to observe any untoward goings on. In fact, the most likely scenario was that saboteurs Franz Jahnke and Lothar Witzke entered the terminal by a small rowboat, while Michael Kristoff made his way in from the land side.

  Spence further develops his theory by suggesting a scenario whereby Reilly, Jahnke and Sir William Wiseman, SIS representative in New York, are effectively involved in a loose-knit plot to entice the then neutral United States into the war on the Allied side. Jahnke, it is argued, was more than likely a double agent working for SIS.47 According to Spence:

  Wiseman could see that [President] Wilson and America would not join the war unless their moral indignation was aroused sufficiently against Germany. Acts of German sabotage, real and imagined, had moved American sentiment in the ‘right’ direction, and Wiseman could logically assume that further outrages would continue this trend.48

  Further outrages did indeed occur. Within six months of Black Tom, residents of New York City once again heard the thunderous roar of exploding munitions. On the afternoon of 11 January 1917, 500,000 three-inch shells ignited at the Canadian Car & Foundry Company’s shell assembly plant in Kingsland, New Jersey, some ten miles from New York Harbour. Thankfully, the shells were not primed with detonating fuses and none of the 1,400 workforce was killed or injured. However, for some four hours those living in northern New Jersey and New York listened to the ongoing explosions as fire engulfed the entire Kingsland plant.49

  Spence asserts that Jahnke led the German sabotage team responsible for the Kingsland explosion, and states ‘again, Reilly could provide the means to breach the plant’s security’.50 As investigation records clearly demonstrate, however, there was no need for anyone to covertly effect an entry into the plant. The official verdict was that one Fiodor Wozniak, who was working in Building 30 where the blaze began, was responsible for starting the fire that led to the plant’s destruction. Indeed, the foreman in Building 30, Morris Chester Musson, later testified that ‘Wozniak had quite a large collection of rags and that the blaze started in these rags. I also noticed that he had spilled his pan of alcohol all over the table just preceding that time’.51 Wozniak was questioned during an internal company enquiry, and although he denied any involvement, he did admit that he was not Russian, as he had stated when he entered the company’s employment, but was instead Austrian. He further revealed that he had served in the Austrian army and police force. After questioning he was shadowed by private detectives, but disappeared without trace.

  Three months after Kingsland, on 10 April 1917, an explosion occurred at the Eddystone Works in Pennsylvania, killing 132 men at the plant. Richard Spence draws attention to the fact that some weeks before the explosion, managing director Samuel Vauclain had been in negotiation to sell the plant to the US government. Reilly, in Spence’s words, was ‘cut out completely’52 from the deal. Was the explosion, asks Spence, Reilly’s revenge?53 Again, not a shred of evidence was produced to connect Reilly or indeed anyone else with the catastrophe at Eddystone. Indeed, while Spence rightly states that sabotage was suspected, it was, in fact, never proven or established.

  The whole thesis is somewhat fanciful and an example of the conspiracy theory at its worst. Reilly was without doubt a ruthless man who would stop at little to meet his ends. The foundations which support this theory are somewhat shaky, however. The earlier meetings and coincidental journeys by train and ship clearly could not have taken place. As for the acts of sabotage themselves, it seems evident that some were quite simply tragic accidents. Others, such as Black Tom and Kingsland, did not require the kind of covert role attributed to Reilly – poor security and a lack of employee vetting is explanation enough for the ease with which German saboteurs were able to carry out their objectives unhindered.

  By 1917, Reilly’s cumulative earnings from war munitions contracts were well over $3 million.54 He was now occupying an entire suite at one of New York’s most expensive and luxurious hotels, the Saint Regis on 5th Avenue and East 55th Street. While his fortunes had never looked better, back on the Eastern Front the tide of the war was turning against Russia. Two and a half years of conflict had confirmed that Russia was neither strong enough militarily or economically to meet the challenge of all-out war. Heavy defeats quickly made conditions worse at home, triggering a wave of strikes. These developed into a general strike which began on 9 March.55 Two days later the Tsar mobilised army units, but they sided with the strikers. On 15 March, under pressure from all sides, Tsar Nicholas abdicated on behalf of himself and his son and a Provisional Government took power.

  Closer to home, a telegram from the German Foreign Minister to the German Ambassador in Washington was intercepted and decoded by British Naval Intelligence. The telegram instructed the ambassador to approach the President of Mexico with a view to them joining the war on Germany’s side and launching an invasion of the United States. When the story became public, President Wilson frantically tried to find an alternative to war, but the Germans sealed their own fate by commencing a policy of unrestricted submarine warfare in March. After three American merchant ships had been sunk, Wilson asked the Congress for a Declaration of War on 2 April, and got it four days later. America’s entry into the war would, in due course, turn its direction decisively in the Allies’ favour.

  As these dramatic events unfolded on the world stage, Reilly was, according to virtually everyone who has ever written about him, working behind German lines as a British agent.
According to Pepita Bobadilla, who Reilly would later marry, he:

  … undertook the difficult and hazardous task of entering Germany (usually by aeroplane via the front line) in quest of military information. His services in this direction were of the utmost value and his exploits in Germany have become legendary.56

  Reilly told his first wife, Margaret, a similar story.57 Robin Bruce Lockhart asserts that Reilly enlisted in the German Army and, disguising himself as a colonel, bluffed his way into the headquarters of the German High Command and sat in on a briefing attended by the Kaiser.58 In the 1992 revised edition of Ace of Spies, Lockhart challenged John Major’s Conservative government to ‘open a window on the past’ in order that Reilly’s ‘amazing’ exploits in Germany could be made known.59 The Official Secrets Act aside, no government could do this, for the reality is that Reilly’s work behind enemy lines was nothing more than a fanciful fabrication on his part. Throughout the Allied offensives at Messines, Passchendaele and Ypres, Reilly was comfortably billeted at the Saint Regis Hotel on 5th Avenue. The only action he saw on the Western Front was in the newsreels shown in Manhattan’s picture palaces.