April 1941: Questionable American Counter-Intelligence

"Laurel, Maryland. Monitoring at the United States Federal Communications Commission listening post," July 1944. Wikimedia Commons, https://commons.wikimedia.org/wiki/
File:Laurel,_Maryland._Monitoring_8d42303v.jpg.

In spring 1941, the United States was still neutral, and Britain was on the defensive against Germany, with Canada helping to maintain the U.K.’s Atlantic lifeline. Despite their neutrality, however, the Americans found they could not keep entirely out of the conflict, especially in the realm of counter-intelligence. The American Federal Communications Commission (F.C.C.) was one U.S. agency responsible for communications surveillance in peacetime, and it was in contact with Canadian Military Intelligence as early as December 1940 (see CDWI00060, CDWI00061, and CDWI00062. The F.C.C. would have much more contact with Canadian intelligence after the attack on Pearl Harbor, but this briefing book does not go that far into the war). The U.S. F.B.I. was responsible for shutting down illegal radio operators in the United States, and so it also surveilled domestic communications as part of this duty. So even though the Canadians were responsible for keeping an eye on the Americas on behalf of the Allies from 1939-1941, they were not the only ones keeping an eye on the Americas, and the lack of direct cooperation between the intelligence operations of Canada and the U.S. during these years sometimes resulted in tension and misunderstandings.

The episode described below involves half a dozen intelligence bodies in three countries, all of which came to be involved, one way or another, in an F.B.I. counter-intelligence operation against Germany. The Canadians were generally unhappy with the F.B.I.’s actions, with one Canadian intelligence officer even describing the American operation as “dangerous” to Allied interests.

What were the Americans getting up to?

Back in July 1940, the War Office in London had instructed Canadian military intelligence to intercept German transmissions between a slippery unnamed transmitter in the eastern United States (near Boston), and one in Lubeck, Germany (not far from Hamburg) with callsign AOR.

By April 1941, the Canadian Signals Experimental Section had been monitoring these transmissions for some time at England’s request. According to a memorandum to Lieutenant-Colonel W.W. Murray, G.S.O. 1 Intelligence, the enigmatic American station participating in trans-Atlantic communications with the Germans was known to “[use] different call signs almost daily and very frequently [change] its frequency to evade capture and monitors.” The Canadians suspected it may actually be two separate transmitters they were intercepting, part of a network which Canadian and British intelligence had worked to uncover over the past year, relaying radio communications between a South American station, one in Mexico, and the transmitter(s) in the U.S. (CDWI00072). Due to geography, British intelligence could only hear some of these stations, and needed Canada to fill in the gaps in their surveillance net.

Canadian intelligence could tell that the cipher used for the American transmissions was “not machine made” and they strongly suspected that the British had broken the cipher by August 1940. Although the War Office had never explicitly told the Canadians that the cipher traffic they provided was being decrypted and read in London, it was clear from the War Office’s instructions to Ottawa that the content of the messages was not a complete mystery.

But Ottawa was not left completely out of the loop. In late 1940, Navy representatives had apparently met with the U.S. F.B.I. to discuss the station, and the result of these conversations was that the Navy stopped monitoring the illicit transmissions, and that Ottawa received from the F.B.I. (by way of the R.C.M.P. Intelligence Section) the key to the cipher used by the American transmitter—which apparently, the F.B.I. had access to.

In 1941, a game of broken telephone ensued between the Signals Experimental Section, the Royal Canadian Navy, and the Intelligence Section of the R.C.M.P., resulting in the aforementioned April memorandum to Lieutenant-Colonel Murray. Captain E.M. Drake, who was in charge of the Experimental Section, had managed to convince his R.C.N. colleagues to share some of their decrypted messages with him—which they had produced with the help of the F.B.I.’s cipher key-sharing. What Drake discovered in the American East Coast messages to Germany concerned him greatly.

Apparently, the American transmissions had been revealing to the Germans—for months!—the movements of Canadian convoys on their way to England, the shipping of “armaments” from the U.S. to Canada in support of the British-Canadian war effort, and even secret German negotiations taking place in the U.S.: a conspiracy to purchase American goods for Germany.

Synthesizing three disparate sources of information—the War Office, the R.C.M.P., and the R.C.N.—Captain Drake painted as complete a picture as he could about the increasingly concerning situation in the U.S. Drake surmised that the American transmitters which were providing Germany with information about Canadian convoys were in fact being run by the F.B.I. as some sort of “counter-intelligence” program against Germany, which was, in Drake’s view, both reckless and risky.

While the transmitters may have initially been operated by German spies or sympathizers in the United States, they had quickly been caught by the American authorities, who decided not to shut down the transmissions entirely, but to continue to send slightly false information to Germany, pretending to be the very people they had apprehended and presumably jailed.

Drake had little faith in the F.B.I.’s deception scheme to begin with, and his opinion of it was not improved when word from the War Office reached Ottawa, assuring the Canadians that British M.I.6 personnel were both aware of the F.B.I.’s counter-intelligence aspirations, and were actively assisting the Americans in their endeavour. Captain Drake considered the information that was being transmitted to Germany too close to the truth for comfort, and he felt it was more likely to help German intelligence than to hinder it.

Drake did not believe the Germans were stupid, and felt that they must be aware that, with American authorities keeping so tight a rein on all communications into and out of their country, no illegal radio broadcast could hope to survive long without being discovered. Drake concluded cautiously that it was possible the Germans had long since caught on to the American ruse and were detecting and correcting the false bits of information in each transmission as it came. The F.B.I.’s counter-intelligence operation was more likely to do harm to Canada’s war effort than good.

Captain Drake wrote to Lieutenant-Colonel Murray:

“It may be concluded, therefore, that the Germans are aware of this situation and are using the information fed to them to their own advantage after making the necessary corrections. The case, therefore, could be placed in a category of a ‘reciprocal counter-intelligence’ system.”

Unfortunately, Drake himself could take no action to prevent M.I.6 and the F.B.I.’s shared project from continuing, no matter how dangerous he felt their actions to be. It seemed to Drake as well that there were some misgivings in the War Office, too, about the American counter-intelligence operation—or at least a desire to keep abreast of what exactly their M.I.6 colleagues based in the U.S. were getting up to.

“…despite the complete control by the F.B.I., the traffic handled is assuming a dangerous turn. Even though the M.I.6 branch of the War Office is in close co-operation with the F.B.I., the War Office have been continuously intercepting all the traffic and sending numerous cables to Canada with requests for all possible assistance.”

The assistance London was requesting from Canadian military intelligence was, of course, the continued monitoring of all radio traffic between the F.B.I.-controlled American transmitters and Germany. To fulfil this seemingly-redundant request—wouldn’t M.I.6 be able to provide copies of every message sent, if they were indeed in such “close co-operation” with the Americans?—Drake needed to get his hands on the F.B.I.’s cipher key so that his Experimental Section could decrypt the transmissions themselves and divine useful information like when and on what frequency this slippery transmitter would next broadcast, to ease the task of interception.

But in order to get the cipher key, Captain Drake needed to scale the wall of Canadian bureaucracy that stood in his way. London had the cipher key, the U.S. F.B.I. had the cipher key, the Canadian R.C.M.P. had the cipher key, and even the R.C.N. had the key, but not Drake’s R.C. Signals Experimental Section.

"Woods Building and Canadian Buildings, Slater Street, Ottawa, Ont," April 6, 1938. These buildings were acquired by the Department of National Defence in the 1940s. Credit: Dept. of Public Works / Library and Archives Canada / PA-046857

The Experimental Section could not receive the key directly from Canadian Naval intelligence (despite their close proximity both physically and in terms of cooperation), because apparently the R.C.M.P. would need to provide the Navy with express permission in the form of a “release” in order to share the key that the F.B.I. had entrusted to the R.C.M.P., who in their turn had shared it with the R.C.N.

When on April 8th, Drake had gone to the R.C.M.P. directly to obtain the key for his people, he returned to the Woods Building unsuccessful (CDWI00075), and began drafting the four-page memorandum to Lieutenant-Colonel Murray, explaining the convoluted situation necessitating cooperation between three countries and at least six disparate intelligence bodies.

The day after Lieutenant-Colonel Murray received Drake’s memorandum, on April 11th, 1941, Murray sent a letter addressed to the Officer in charge of the R.C.M.P.’s Intelligence Section, requesting the F.B.I.’s key on Drake’s behalf (CDWI00075). But Murray’s letter proved to be no more successful than Drake’s in-person visit to the R.C.M.P. had been, or at the very least, the R.C.M.P. was moving too slowly in processing Murray’s request.

On April 14th, Lieutenant-Colonel Murray was forced to escalate the matter of retrieving the key from the R.C.M.P., to the Director of Military Operations and Intelligence, who forwarded Murray’s concerns all the way to the Chief of the General Staff (CDWI00074).

As it made its way up the chain, Drake’s cautiously-worded statement of doubt in the potential efficacy of the F.B.I.’s counter-intelligence program turned into a stronger and more serious suggestion by Murray to his superior: that the Americans were not the masterful deceivers they believed themselves to be, and were in fact being expertly played by the Germans, to Canada’s detriment.

Lieutenant-Colonel Murray wrote:

“There is a great deal of mystery surrounding this station, and I am not altogether satisfied that deceptions are being played on the Germans. The more I think of it the more I am coming to the conclusion that the shoe is on the other foot…The whole procedure regarding the Boston station fills me with great misgiving. And I am assured that the Navy are also feeling very restive about it now.”

In Murray’s mind, the importance of getting the cipher key from the R.C.M.P. to Captain Drake was not just a matter of completing the monitoring task set to Ottawa by the War Office, but also of giving Canada some agency and an ability to independently assess the situation that was currently controlled by the United States and Britain (CDWI00073).

“It is asked that authority be given me to ask that the appropriate officer of the R.C.M.P. be asked to make this cipher available to our Intelligence Officer at the Experimental Wireless Station [Captain E.M. Drake], so that we may have an equal opportunity to ponder the uses of this station [the Boston transmitter] and present our views on it.”

Although, working only from the documents in this file, it is unclear how this episode was resolved, these events reveal a great deal about the dynamics of cooperation between Canadian, British, and American intelligence bodies during the time of American neutrality. Despite the fact that the U.S. was not yet at war, American intelligence was playing a dangerous game with Nazi Germany, alarming both Canadian and British personnel, for whom the intelligence war with Germany was not a diverting pastime but a full-time occupation, and quite often a matter of life and death. In April 1941, Canadian military intelligence sought to give Canada more control over a situation the War Office claimed to have well in hand (even though their own contradictory instructions to Ottawa would suggest otherwise). Another interesting aspect of this incident was Captain Drake’s obvious frustration with the bureaucratic barriers preventing him from gaining access to intelligence which was already widely available among the Experimental Section’s collaborators at home and abroad.

Hopefully, for the sake of Captain Drake’s sanity, the letters from the very top of the Canadian military intelligence establishment quickly succeeded in convincing the R.C.M.P. to share the F.B.I.’s cipher with the Experimental Section. Then, armed with new intelligence about the American transmissions to Germany, perhaps Lieutenant-Colonel Murray and other Canadians were able to convince their British and American colleagues to take a more cautious approach in their counter-intelligence operations against Germany.