1946-1949: Taking Over, Taking Shape
In the spring of 1942, HYDRA crackled to life at Camp X, in Oshawa, Canada. Cobbled together from spare parts by Benjamin deforest Bayly, a Canadian engineer, it was the main hub of British Security Coordination’s communications between Britain and North America.[1] While the BSC had been a counter-espionage arm of British intelligence in North America, and Camp X had been intended to be their “spy school,” in 1942, the BSC shifted focus to coordinating signals intelligence between London and Washington, and became responsible for setting up secure lines of communication between the two countries at their Oshawa facility.[2] And their set-up was impressive. A 10-kw transmitter and a transatlantic cable linked the BSC training camp in Oshawa to the Secret Intelligence Service in London.[3] Additional telex lines linked the camp to the BSC offices in New York, as well as to officials in Ottawa and Washington.[4] Traffic over the lines was transmitted securely, at a rate of 100 words per minute, thanks to the Rockex, a teletype encryption device (also invented by Bayly).[5] The need for speed and security was high. It was over these lines that Britain, the United States and then Canada shared raw signals intelligence intercepts and top secret ULTRA intelligence.[6] It was, as historian David Stafford has described it, “an integral part of a system in which there was fully developed Allied cooperation in signals intelligence,” and a “harbinger of things to come.”[7]
But at war’s end, what was to come was unclear. Before the war, Canada had no history of signals intelligence. Certainly, Canada had developed some capacity for signals intelligence work during the war, but what had come about was shaped by constraint and by the demands of their more powerful allies. At the start of the war, both the army and navy had wireless intercept programs, but Canada lacked the resources and even the political will for large-scale signals intelligence operations, and raw military intercepts were sent to British intelligence for processing.[8] While a small cryptographic bureau - the Examination Unit – was established under the auspices of the National Research Centre and directed by External Affairs in 1941, they were subject to allied pressure. Despite some early successes uncovering a German espionage network in South America, and cracking the diplomatic codes of the Vichy French and the Japanese, the British and the Americans insisted the first director of the XU be dismissed due to security concerns.[9] [10] Canada was also largely left out of Anglo-American arrangements that saw the two larger powers sharing top secret diplomatic decrypts via the HYDRA transmitter.[11] Canadian intelligence was left in the dark, and had little room to grow.
Gradually, however, Canadian intelligence officials began to carve out a space for themselves. External Affairs reached a reciprocal arrangement with the British in 1942 – one that guaranteed the XU continued access to material concerning Canadian national security, which was to be sent via the BSC link in New York.[12] By 1944, the Canadians had reached a similar deal with the Americans.[13] Cooperation was the key to Canadian signals intelligence success. And at the heart of it all was HYDRA, facilitating the fast and secure transfer of intelligence, decrypts, and intercepts.
At the end of the war, the future of signals intelligence was in question. External Affairs had set about disbanding the XU through the spring and summer of 1945, planning to rely once again on the British for intelligence processing.[14] But proposals advocating for a continuation of signals intelligence and cryptography emerged from the directors of military intelligence.[15] They argued that signals intelligence cooperation with the allies had not only brought Canada international standing, but access to valuable intelligence as well.[16] If Canada brought no intelligence of value to the table, it would receive nothing in return, and would be left in the dark again.[17] And with the explosive revelations of Russian spying laid bare by the Gouzenko Affair, Canada could not afford to be out of the loop.[18]External Affairs gradually came around to the need for peacetime signals intelligence, and it was agreed that the work was to be split between military intercept stations and a civilian cryptographic agency working within the NRC.[19]
Other questions remained as well, particularly regarding how continued cooperation with Britain and the United States should be managed and maintained. In the autumn of 1945, the British and the Americans had begun planning for postwar signals intelligence cooperation, which eventually developed into the BRUSA agreement in March 1946.[20] Sir Edward Travis, head of Britain’s GC&CS, visited Canada in October 1945, and informed officials that he foresaw a role for Canada in this plan.[21] Firmer details on cooperation took shape in 1946. At the Commonwealth Signals Intelligence Conference, the London Signals Intelligence Board advocated for continued cooperation between the Commonwealth countries, including Canada.[22] Shortly after this conference, the United-States-United Kingdom Technical Conference formalized the mechanics of the BRUSA agreement, such as how intercept responsibilities would be divided, and what intercept facilities would be provided.[23] The HYDRA station in Oshawa was specifically referenced in the final report of these talks.[24] It was to continue to serve as an important communications and signals intelligence-sharing hub, under the control of authorities in London.[25] Canada was to be responsible for providing 100 signals intercept positions, with a focus on intercepting traffic from Russia, Asia, Western Europe, and South America.[26]
It was in this context that Canada began to examine the possibility of taking over the HYDRA station. The documents in this section show how Canadian officials (particularly in the Department of External Affairs and National Defence) began to fit HYDRA into the shape of postwar intelligence-sharing, and the structure of post-war signals intelligence within Canada. In addition to Canadian intercept facilities and cryptographic capabilities, a Canadian-run HYDRA came to be seen as another bargaining chip to be brought to the table – one that would ensure Canada would not only receive important signals intelligence, but that it would become a true partner in postwar intelligence sharing. The HYDRA takeover was long, delicate, and fraught with delay. It required collaboration between External Affairs, National Defence, several high-ranking cabinet officials, and the Prime Minister in Canada, as well British officials working for BSC, GC&CS, and the Diplomatic Wireless Service. This process also involved authorities in the United States – however, reference to these authorities seems to have been purposefully limited. These documents cover the Canadian HYDRA takeover, some general system upgrades, and the establishment of postwar working relationships with the British and the Americans, from 1946 to 1949.
[1] David Stafford, Camp X, (Toronto, Canada: Lester & Orpen Dennys, 1986), 156-160.
[2] Stafford, Camp X, 155.
[3] Ibid. 161.
[4] Ibid.
[5] Ibid., 161, 163.
[6] Ibid., 164-165.
[7] Ibid. 165-166.
[8] Wark, “Cryptographic Innocence,” 643,
[9] John Bryden, Best-Kept Secret: Canadian Secret Intelligence in the Second World War, (Toronto, Ont: Lester Pub, 1993), 60-67.
[10] Wark, “Cryptographic Innocence,” 651-652.
[11] Bryden, Best Kept Secret, 186-187.
[12] Ibid., 654.
[13] Ibid., 228.
[14] Ibid, 245, 254.
[15] Ibid., 256.
[16] Ibid., 266.
[17] Ibid., 266.
[18] Ibid., 267-278.
[19] Kurt F. Jensen, Cautious Beginnings: Canadian Foreign Intelligence, 1939-51, (Vancouver: UBC Press, 2008), 132.
[20] Jensen, Cautious Beginnings, 134.
[21] Bryden, Best Kept Secret, 280.
[22] Jensen, Cautious Beginnings, 134.
[23] National Security Agency, “Final Recommendations of the Technical Conference, 11-27 March, 1946,” accessed 31 August 2018, https://www.nsa.gov/Portals/70/documents/news-features/declassified-documents/ukusa/final_rec_tech_conf_1mar46.pdf document
[24] National Security Agency, “Final Recommendations of the Technical Conference, 11-27 March, 1946,” Appendix H, 1.
[25] Ibid.
[26] Jensen, Cautious Beginnings, 165-166.