The Codebreakers: The True Story of the Secret Intelligence Team That Changed the Course of the First World War

by James Wyllie

  For some time Hall had been frustrated by his lack of traction in Argentina: he simply didn’t have the resources or manpower available to match the German presence there. What he did have was Room 40. As it happened, the German minister in Buenos Aires, Count Luxborg, used the Swedish Roundabout to communicate with Berlin. As these messages passed via British cables en route, Room 40 was able to intercept and decode them.

  From May 1917, the codebreakers began work on this traffic – aided by Malcolm Hay’s team at MI1(b), who provided material not only on Argentina but also on Brazil, Chile, Uruguay and Peru. Deciphered messages were forwarded to Robert Lansing, the US Secretary of State. Washington, still blissfully unaware that Room 40 had been reading its communications for several years, responded in kind: all the telegrams sent by Ambassador von Bernstorff to Berlin that had travelled through US diplomatic channels were forwarded to London. Room 40 decoded them as well. Before long, Hall had accumulated a collection of messages that would seriously embarrass the Germans in Argentina.

  He outlined his strategy to Walter Page, the US ambassador in London, who had been deeply impressed by his handling of the Zimmermann affair. Hall’s aims were clear: to force Argentina and Sweden to abandon Germany; to influence other neutral countries, Spain in particular; to undermine Austrian, Turkish and Bulgarian faith in their ally; and to further depress German morale.

  Page, enthusiastic about Hall’s plan, sent a secret telegram to President Wilson at the end of August outlining the way forward:

  Admiral Hall … has given me a number of documents comprising German cipher messages between German diplomatic offices and the Berlin Foreign Office, chiefly relating to the Argentine … the British government hope that you will immediately publish these telegrams asking that their origin be kept secret as in the case of the Zimmermann telegram. I have the cipher originals and am sending them to you by a trustworthy messenger who will deliver them into your hands about 12–15 September. These telegrams also prove that Sweden has continuously used her legations and pouches and her code to transmit official information between Berlin and German diplomatic offices.

  Wilson agreed to the subterfuge. It was then merely a matter of choosing which messages to release to the press. Count Luxborg’s telegrams to Berlin demonstrated the contradictory position he was forced to adopt due to unrestricted submarine warfare. On the one hand, sinking Argentine merchant shipping was necessary if the campaign was going to succeed. On the other, it inevitably worsened relations with the host nation. With stakes that high, it is no wonder that Luxborg’s attitude alternated between aggression and caution.

  A decoded message sent by Luxborg on 19 May regarding two Argentine steamers, the Oran and the Ginzo, ‘which are now nearing Bordeaux’, suggested that either the ships ‘be spared if possible’ or ‘sunk without a trace being left’. Another communication, dated 9 July, was equally muddled: ‘As regards Argentine steamers, I recommend either compelling them to turn back, sinking them without leaving any traces, or letting them through.’

  When a selection of these messages appeared on the American front pages, there was an immediate outcry. Luxborg’s case was not helped by the contemptuous tone he adopted when referring to his Argentine colleagues: they were ‘under a thin veneer, Indians’, while the acting minister for foreign affairs was described as ‘a notorious ass and anglophile’.

  The Argentine government promptly severed diplomatic ties with Germany and expelled Luxborg. The reaction in neighbouring Brazil was even more forthright. Up to that point, Brazil had been exporting large quantities of coffee to Germany via Holland and Scandinavia. The increase in this trade compared to pre-war levels was dramatic. Between August and December 1913, Germany had bought 173,000 bags of coffee from Brazil. During the same five-month period in 1915, it received 1,795,000 bags. Though the blockade was beginning to bite, the quantities getting through were still substantial. The publication of Luxborg’s messages put a stop to that: Brazil declared war on Germany. Its citizens and troops would have to make do with ersatz coffee, made out of acorns, for the rest of the conflict.

  In Sweden, the exposure of the Roundabout had the desired effect. At their elections in early 1918, the pro-German conservative government was beaten by the pro-Allied liberal/socialist Democrat Coalition. In the aftermath of the scandal, the Germans tried to pinpoint the source of the leak. Although there was no question that their codes had been broken, it was assumed that either the documents had been stolen or somebody had betrayed their contents.

  There was one German agent operating in Argentina who defied all Hall’s best efforts to track him down. Simply called Arnold, he was, according to Edward Bell, Hall’s closest confidant at the US embassy in London, ‘a quiet nice fellow who … is one of the cleverest of all the German agents in the Western hemisphere’. Arnold made it his business to attack Allied—Argentine trade: he placed explosives on merchant ships, infected grain stores with fungus and contaminated livestock – horses, mules and cattle – with anthrax and glanders bacilli.

  Arnold’s biological weapons were sent from Spain by U-boat to America and then smuggled to Argentina. A combination of Room 40 intelligence and Hall’s network on the ground in Spain had stopped several consignments already by intercepting orders placed by the German naval attaché in Madrid, Baron von Krohn. When von Krohn’s involvement in this noxious trade was revealed, he was asked to leave Spain. However, he was determined to have the last laugh. He persuaded his French mistress, Martha Regnier, to sail to Buenos Aires on a Spanish liner with a supply of anthrax-laced sugar cubes hidden in her luggage. Room 40 was aware of the plot – it intercepted a total of 40 messages sent by Arnold to Berlin – and Hall ordered a British ship, HMS Newcastle, to intervene, giving exact instructions about the whereabouts of the anthrax. However, HMS Newcastle lost Martha’s ship in heavy fog and she made it to Argentina.

  Arnold got quickly to work. He infected 200 mules that were bound for Europe: they all died in transit. Another shipment of 5,400 mules heading for Mesopotamia in early 1918 was similarly affected, while a cargo of horses intended for France and Italy had to be left behind. The British minister in Buenos Aires tried his best to pressure the Argentine president into giving Arnold up, but he was reluctant to act.

  Finally Arnold was given his marching orders. He quietly disappeared, only to show up in Cuba with plans to ruin the sugar crop. Luckily the war ended before he could set them in motion: in November 1918, the UK had only three weeks’ supply of sugar left.

  The cooperation between Hall and Washington over the use of Room 40 material ground to a halt with the Irish Question. Using the confession of Joseph Dowling as an excuse – Dowling was a member of Roger Casement’s Irish Brigade who’d been caught after landing on the Irish coast with orders to foment insurrection – the British arrested 500 prominent members of Sinn Fein on the night of 16–17 May 1918. At the end of the month, 69 of them were transported to the mainland and thrown in prison.

  Seeking to bolster the case against them, Hall approached Edward Bell: would it be possible to have some of the messages that had passed between Irish Republicans and Berlin published in America? Bell agreed to put Hall’s proposal to the President. Wilson took 11 days to respond: his answer was no. He was ‘not prepared to publish these documents at this time and is not willing to publicly sanction their publication’. He had been swayed by the advice of his closest adviser, Robert Lansing, who reminded Wilson that ‘the Irish situation is very delicate and anything we do to aid either side in the controversy would … involve us in all sorts of difficulties with Irish in this country’.

  Hall was not ready to give up just yet. However, an attempt to have some of the messages released to the British press failed to get off the ground. Conscious of President Wilson’s objections, and deeply divided over the fate of the prisoners and Irish policy in general, the government decided to do nothing. Frustrated by his colleagues’ timidity, Edward Shortt, the Chief Secretary for Irela
nd, visited Hall at the Admiralty and asked to see all the messages relating to republican—German plots. He was impressed, and wanted the whole lot published. Hall refused: to do so would jeopardise Room 40’s anonymity.

  As it was, the prisoners never came to trial. After Sinn Fein did exceptionally well at the December 1918 elections, pressure grew for their release. But the government continued to prevaricate. It took the escape of two high-profile prisoners from Lincoln Jail at the end of February 1919 to force the government’s hand. A rolling programme of releases began on 4 March: the prisoners were finally free to return to Ireland and civil war.

  Chapter 16

  ‘SAFE FOR DEMOCRACY’ – AMERICA’S INTELLIGENCE WAR

  In his groundbreaking Manual for the Solution of Military Ciphers, published in 1916, US army Captain Parker Hitt begins by letting the student know the four essential pillars of codebreaking: ‘perseverance, careful methods of analysis, intuition, luck.’ Those very same principles were what it took for Ralph Van Deman, known as the ‘Father of American Intelligence’, to get the United States to agree to set up a military intelligence division after the USA declared war on Germany in April 1917. Now that the USA had finally entered the Great War after nearly three years of global carnage, the country whose economy had surged due to the war’s industrial and financial demands had to make a greater surge in military intelligence. If it could not immediately rival the excellence of Room 40, then at least it would put the Americans in a more self-reliant intelligence position so they could do what the Allies expected them to do: bring the war to a victorious end.

  The lanky, thoughtful Van Deman, whose long face reminded a colleague of a beardless Lincoln, was a graduate of Harvard and Yale, where he obtained a law degree. He was commissioned as a second lieutenant in the US army in 1891, when he was 26 years old. He enrolled in Miami (Ohio) medical school and by 1893 had earned a medical degree as well, entering the army as a surgeon. In 1895, while studying at the army’s Infantry and Calvary School in Fort Leavenworth, Kansas, he met the scholarly Arthur Wagner, who convinced him of the importance of military intelligence. As a result, in 1897 Van Deman went to work for Wagner in Washington in the Military Information Division.

  In 1915, Van Deman was assigned to the Army War College, which had taken command of military intelligence and then let it languish in bureaucratic dysfunction. When America declared war on Germany, Chief of Staff Major General Hugh Scott, a 64-year-old cavalry veteran of the Indian Wars with a tendency to fall asleep in cabinet meetings, revealed – at the highest level – the casual neglect the United States had shown toward controlling its own intelligence: Scott believed that if America entered the war, it would get the intelligence it needed from Britain or France, and that would be good enough.

  It was not good enough, and Van Deman knew it. He was grateful for the intelligence help the British had given, and were giving, the United States, and now enlisted even more help from British intelligence to set up his own bureau, particularly Lieutenant Colonel Claude Dansey, an MI5 operative who had arrived in Washington in mid April 1917 on a British mission led by Foreign Secretary Arthur Balfour.

  Ralph Van Deman, the ‘Father of American Intelligence’

  Dansey was part of Vernon Kell’s MI5 crew, and before the war had worked as secretary of the Sleepy Hollow Country Club on Long Island. Despite its anodyne name, the club was a meeting place for some of the titans of American politics and business. One of them was Thomas Fortune Ryan, a tycoon with interests in tobacco, mass transit, insurance, coal mines and the Thompson sub-machine gun. Ryan, who was a player in New York’s powerful political machine known as Tammany Hall, had been a delegate at the Democratic National Convention in 1912 that nominated Woodrow Wilson as the Democrats’ man for the White House.

  Van Deman exploited Dansey’s powerful connections, as well as those of the police chief of Washington DC and a mysterious female novelist who had the ear of Newton Baker, the Secretary of War, to go over General Scott’s obtuse head to get a homeland intelligence service ready for the war it had to fight.

  His persistence and resourcefulness worked. By May 1917 he was a colonel in charge of the Military Intelligence Section, with a staff of two officers, two civilian clerks, and revealingly humble office space on the balcony of the War College Division’s library, overlooking the stacks where previous intelligence files, such as they were, were lost in the volume of data no one had bothered to track when the War College merged files with the Military Information Division. Van Deman’s location belied the crucial nature of his mission, for it was nothing less than ‘the supervision and control of such system of military espionage and counter-espionage as shall be established … during the continuance of the present war’.

  He got more help from the British and French, who provided him with intelligence on people of suspicion within the USA. The British, via Claude Dansey, also provided organisational support, and Van Deman arranged his new unit on the British model, dividing ‘positive’ intelligence, or gathering information on the enemy, from ‘negative’ intelligence, which stopped the enemy from doing the same to you. Counter-espionage, a term created by the French, was especially important to the negative intelligence mission, and in June 1917 Van Deman set up a War Department security force, taking his civilian investigators from Tom Tunney’s NYPD Neutrality and Bomb Squad.

  The highly secretive force operated from a private building in Washington DC. Its cover name was the pre-Orwellian ‘Personnel Improvement Bureau’ – and that was what it did, screening military personnel and government employees, as well as applicants for both sectors, for signs of subversive tendencies. In July, the Military Intelligence Section opened its first field office, in New York City, commanded by Special Deputy Commissioner of the NYPD Nicholas Biddle, a Harvard-educated blueblood descended from a Philadelphia banking family, and himself a banker who had been in charge of the Astor Trust, the largest landholding in New York City. Now Colonel Biddle was in charge of a force of intelligence cops given the military rank of sergeant and the police rank of inspector, operating out of NYPD headquarters on Center Street. Van Deman created six more field offices in other major cities and ports as he worked on building US intelligence into a war-ready network.

  The most significant hiring that Van Deman still had to do was find someone who could run MI-8, his cryptological section, which he recognised as a critical component of military intelligence work, and something the US had never seriously practised, a lapse that Van Deman needed to repair with urgency. The obvious choice, Captain Parker Hitt, was needed for work in France. So too were the few other officers who knew a bit about the world of cryptology. Just as Van Deman was quickly exhausting his options, rescue came via a trolley car carrying a lowly code clerk from the State Department. But there was nothing lowly about Herbert Osborne Yardley in his own mind. He too had used all of his perseverance, careful methods of analysis, intuition and luck to get this meeting with Colonel Van Deman. And he was determined to come out of it as the man who could win the code war for the USA.

  At the outset of America’s war Yardley was the US version of Room 40 almost by himself, but he’d had to use all his poker player’s wiles to convince the army to let him into the codebreaking game in the first place. Yardley, who had joined the State Department in December 1912 as a $900-a-month code clerk, had soon proved himself to have ‘cipher brains’ – a gift for solving codes. He had come to Washington from small-town Indiana, having been taught telegraphy by his father, a railroad station agent. He learned about codes and their decryption on his own, after digesting the US army’s only pamphlet for the solution of military ciphers – the one by fellow Indiana code genius Parker Hitt – and through his own robust initiative.

  Though small and skinny, Yardley had played quarterback on his high school football team, starred in school plays, sung baritone in a quartet, and been president of his class. Popular and gregarious, he befriended clerks in other embassies, who gave
him copies of their code and cipher communications, and he worked on solving them while doing his regular State Department work. He was good at mathematics and a gifted poker player, talents that combined to help him master a variety of code and cipher strategies and increase his desire to push himself further.

  President Woodrow Wilson (right) and his confidant Colonel Edward House

  When he heard that White House operative Colonel Edward House, then working on a secret peace initiative in Germany, was sending a telegram to President Wilson, Yardley made a copy as it came over the wire in the code room. He thought that solving it would be the ultimate test, for surely the President of the United States would use the most sophisticated code in the world. To his own astonished dismay, he cracked the 500-word communiqué in less than two hours. ‘This message had passed over British cables and we already knew that a copy of every cable went to the Code Bureau in the British navy. Colonel House must be the Allies’ best informant!’ Yardley marvelled. ‘Is it possible that a man sits in the White House, dreaming, picturing himself a maker of history, an international statesman, a mediator of peace, and sends his agents out with schoolboy ciphers?’

  When war broke out, Yardley paid a call on the Assistant Secretary of State William Phillips to get a letter of release from the State Department. Phillips, a tall, polished, Harvard-educated patrician descended from the family that founded the Massachusetts Bay Colony, tried to kill the five-foot-five, 127-pound balding scrapper from the Midwest with patronising kindness, offering him a cigarette and a raise, but also turned down his request, telling Yardley ‘the Department must function, even if there is a war’.