Spies at Work, Chapter 2: The Diehards' Hidden Hand

National Propaganda quickly established itself as an active and influential agent of the radical right wing political alliance known as the "Diehards". To understand exactly what, and who, Blinker Hall and Richard Kelly were coordinating by means of National Propaganda it is first necessary to gain a clear picture of the "Diehards" and their role within the Conservative Party. The Conservative Party had entered the 1918 election publicly committed to a coalition government whose days were clearly numbered and with which a substantial section of the party, inside and outside parliament, was thoroughly unhappy. The Party emerged from that election with a massive parliamentary majority, yet still with a Liberal Prime Minister, in the person of Lloyd George, and less than their fair share of ministers. The Conservative and Unionist Party has always been an uncomfortable coalition - not so much a "broad church" as a divided church with two parallel aisles and some pretty eccentric nooks and crannies.

The two main traditions, and the resulting tensions, within the Party are generally associated with the conflict between patriarchal landed interests and the more radical and robust industrial interests. From its earliest days in the 1840s until 1974 and the election of Margaret Thatcher as Party Leader, the patriarchs maintained control of the Party. But this is not say that the Radical Right were a weak, impotent or disorganised force. Despite their apparent weakness they influenced the Party's political agenda, and shaped and mobilised rank and file Conservative Party thinking to considerable extent. The Diehard's agenda dominated Conservative political life during the inter war years: tariff reform, the integrity of the Empire and the Union, and later a generally misunderstood approach to continental fascism which combined pressure to rearm faster with a barely disguised sympathy towards fascism as a practical political force in Germany, Italy and Spain.

TARIFF REFORM AND THE DIEHARDS

In the years before the Great War "protectionism" was the issue which highlighted the division within the Conservative Party. The idea of stiff duties on goods and materials imported from outside the British Empire was generally supported by the industrial lobby, the main exception being the textile industry. Opposition to this "Tariff Reform" movement was not restricted to textile manufacturers, it was opposed by socialists, Liberals and by many of the landowners in the Tory Party.

The two main bodies which argued the case for protective tariffs were the Tariff Reform League and the Tariff Commission. They could command support powerful enough to dominate the political agenda in the first decade of the century. But ultimately the struggle, and failure, of the pre-war Tariff Reformers left the pro-industry section of the Conservative Party feeling that their interests were unrepresented in parliament. When war broke out there was an immediate party-political truce between the Tories and Liberals. As the historian John Stubbs points out:

"A party that suddenly ceased to have a positive or even negative role in the political life of the country, that acted as a mere rubber stamp in the legislative process, and seemed doomed to silence through patriotism not unnaturally found some release of tension in internal stress and strain. " (*1)

The inevitable fault line was the fundamentally class-based distinction between the old money and the new money. Early in 1915 it became clear that a dissident and hawkish backbench voice was emerging. It found a platform on January 27th in the Unionist Business Committee. Attendance at UBC meetings rarely exceeded 40 of which "only a handful regarded themselves as landowners". The following January, 1916, another backbench committee, called The Unionist War Committee, was established. More openly dissident than the Unionist Business Committee, its aim was a "vigorous prosecution of the War". It seems to have filled the role of a sort of unofficial opposition for the remaining years of the war. Indeed, together with the like-minded Liberal War Committee it was regarded at first as a potential opposition party (*3). The UWC was led in the Commons by the veteran Diehards Frederick Banbury and Ronald McNeill (*4) but it was chaired, at least occasionally, by Lord Salisbury and it included the man who would become a central figure in the inter-war Radical Right wing - Leo Amery (*5). After the armistice the UWC became the Unionist Reconstruction Committee - pressing for even more punitive terms against Germany. John Gretton was chair of both the Unionist Business Committee and the Unionist Reconstruction Committee. But the Unionist War Committee was most closely associated with Sir Edward Carson, Tory MP for Dublin University and leader of the Ulster Unionists (*6).

THE COUPON ELECTION

The election of December 1918 was a foregone conclusion. Although it was the first general election since the new "Representation of the People Act" had substantially increased the working class vote the threat of a dramatic boost to the Labour Party's for- tunes was held off by the indecent haste with which Lloyd George had called it. Many new voters still in France, and thus disenfranchised (*7). As a result of Lloyd George's manoeuvring the Coalition won 516 seats and a majority of 263 while the official opposition com-prised 27 "Wee Frees" (Liberals loyal to Asquith whom Lloyd George had usurped as Liberal leader in 1916), 62 Labour members and 80 Irish Nationalists (73 of whom refused to take their seats). There were 59 non-coalition Conservatives.

Endorsement as a coalition candidate had guaranteed many candidates unlikely seats in parliament. With this as the carrot, and the possibility of a increased Labour vote as the stick, even the most fundamentally anti-coalition candidates accepted their "coupon" and took their seat in the Commons as supposed supporters of the coalition. As with any landslide electoral victory the "official" opposition was to be less significant than the unofficial opposition within the ruling group. But once the votes had been cast the election had served its purpose for Diehard dissidents within the coalition. They had their seats in parliament and the growth of Labour had at least been temporarily contained. It was only a matter of time before the rebellion began and it was MPs associated with the BCU who were to be key figures.

After the election the BCU set about recruiting those sympathetic MPs they had been unable to contact earlier. At the same time they were contemplating an extra-parliamentary role. These two developments came together with the recruitment of "Blinker" Hall and John Gretton.

AGAINST THE COALITION

The Diehards quickly became the greatest threat to the Lloyd George led coalition, although a small number - including Patrick Hannon and Lord Long - seem to have remained loyal to it and the Party leadership, probably fearing the possible impact of the Labour Party in another election. Gretton and Hall organised the Diehard opposition to the Coalition in the House of Commons, away from it two Diehard peers became the focus of wider Tory opposition to it: Salisbury and Northumberland.

With their encouragement and support the campaign against the Coalition moved into top gear in 1921. In June, Salisbury wrote to the "Morning Post" and other papers calling on the Conservative Party to form an independent government. The following month Gretton and Martin Archer-Shee (a former chief whip) resigned the party whip in protest at negotiations with De Valera in Ireland (*8). In October Northumberland attacked the coalition in the Morning Post (which he later bought in 1924), and in a speech to Newcastle Conservatives. In November Gretton and Rupert Gwynne tabled a censure motion against the government over its negotiations with De Valera. Later in the month they attempted to get the policy overturned at the Party conference in Liverpool.

At about the same time Hall also forced the division over Lloyd George's summary dismissal of Basil Thompson. Although Gretton and Hall only had the open support of 42 other Diehard MPs in the Commons, it was enough to reduce the coalition majority significantly, and while the vote on the Gretton/Gwynne Diehard resolution at the Liverpool conference went decisively against them, it was received well enough to unsettle the Party leadership (*9). The Diehards pressed on with their campaign into 1922. According to Maurice Cowling, between January and July, John Gretton "managed a House of Commons "Party" of about 50".

It was a party that included not only Conservative Party members but also the two National Party members and the rump of supporters of the corrupt political maverick, Horatio Bottomley (*10). There were however still tensions between the Coalition's opponents. Lord Salisbury, for example, didn't get on with Gretton and dealt with him largely through intermediaries. He had since December been trying to set up a parliamentary opposition centred on Edward Carson, Lord Londonderry and Ronald MacNeil. At the same time his Peoples' Union for Economy was campaigning for cuts in government expenditure. Northumberland was also running his own high profile anti-coalition campaign in the pages of the Morning Post and through his publishing firm, Boswell Press, and his magazine "The Patriot". (*11)

But by March, 1922, these three "circles of dissent", as Webber calls them, were finally being drawn closer together. H. A. Gwynne, the editor of the Morning Post (not it seems related to his namesake Rupert) circulated a "Diehard Manifesto". It was published on March 8th and in addition to Gretton, Salisbury and Northumberland its signatories included: Sir Edward Carson, Sir Frederick Banbury, Finlay, Joyston-Hicks, Londonderry, Sir A Sprot, Linlithgo, Capt. Foxcroft, Sumner, Rupert Gwynne, Sydenham, Esmond Harmsworth, Ronald McNeill. (*12)

The Diehard Manifesto itself said little with which the party leadership would quarrel, it was more a gesture of defiance. The campaign against the coalition was given a boost in June 1922, when the Morning Post launched its "Diehard Fund". The impetus was an "Honours Scandal". For years Lloyd George had been manipulating the honours system to the financial advantage of his Liberal Party. However he over-reached himself, and presented the Diehards with their best shot at the "Welsh Wizard", when he tried to bestow a peerage upon J B Robinson - a crooked South African mine owner who had been a generous benefactor of the Liberals. The Diehard's own newspaper, The Morning Post, not unnaturally, led the hue and cry and took advantage of it to portray them as the last bulwark against "National Dishonour". Its banner headline of June 13th -

"An appeal to the National Honour. The restoration of clean government, support the Diehards. "

The money came rolling in. When the fund was closed, two months later, it stood at £22,000. The responsibility of distributing the fund was given to Salisbury. Blinker Hall and the Duke of Bedford were its trustees, and John Gretton its business manager. But with only £8,000 of the money distributed the Conservative leadership finally pulled out of the coalition and the fund remained unspent for a number of years. Two years later there was a dispute about whether, as Gretton wanted, the money should be given to the Irish Loyalists. Gretton lost the argument and in the end it was only in 1933 that it was finally used, to finance opposition to the National Government's Indian policy. (*13)

The policies of the coalition government had not been a success; a short lived post war boom had soon turned into a slump and its foreign policies had no shortage of opponents. The growing support for the Diehards among rank and file Conservatives was a major influence on the Conservative leadership's decision to break the coalition.

THE FIRST LABOUR GOVERNMENT

The Coalition collapsed on the 19th October 1922. Lloyd George resigned on the 23rd, and was replaced as Prime Minister by Bonar Law who had come out of retirement to supervise the Coalition's demise. The following May, Bonar Law retired again on the grounds of ill-health and was replaced by Stanley Baldwin. Shortly before this, Law had made Blinker Hall the Party's Principal Agent. According to Party historian, Ramsden, Hall "was perhaps the only true Diehard to be promoted by Law".

As Principal Agent, Hall had been given full control of the Party mechanism and although it was good news for the British Commonwealth Union's clandestine Industrial Party, it was bad news for the Party:

"He was the only MP ever to direct the professional side of the organisation and found that he had insufficient time to give to the task; nor did he have the appropriate knowledge of electoral matters that made up the bulk of his subordinates' work". (*14)

An election was due in 1923 and Baldwin, who had succeeded Law to the leadership of the Conservative Party and thus as Prime Minister, decided, "at some point between August 27th and October 8th" (*15) to make protectionism the issue upon which it was fought. The Election, on December 6th, sought a mandate for Tariff Reform. It was a disastrous decision - ninety Conservatives lost their seats, including Hall (who was defending a Majority of 10,000). But in spite of this the Tories remained the largest party and Baldwin resolved to remain Prime Minister - daring the Liberals to throw their lot in with the Labour Party. Which is what they did. On January 21st the Liberal and Labour Parties carried a vote of no confidence against Baldwin's minority government. Baldwin resigned and the Labour Party (with 191 seats to the Liberal's 158) formed its first government.

This first Labour government's reliance on Liberal support made it an unspectacular affair. Most of its activity was devoted to attempting to reach an agreement with the Russian government. When it became clear that the Liberals were not going to support the terms of the Anglo-Soviet treaty this Labour-Liberal alliance collapsed. It was inevitable that "Bolshevism" would be the prominent issue in the ensuing election. Hall, the red scaremonger, would have been well placed to mastermind the election campaign.

However, contrary to the impression sometimes given by historians, he was (albeit briefly) in the political wilderness. He had been sacked unceremoniously by Baldwin in the previous March; he was out of Parliament and no longer running the Economic League (*16). Nevertheless he returned to Parliament in the General Election as member for Eastbourne, having played a useful but far from honourable role in the "Zinoviev Letter" affair, which was perhaps the most notorious election ploy before "Watergate". On October 25th 1924 the Daily Mail and The Times printed in full a letter alleged to have been sent by Gregori Zinoviev, president of the Comintern, to the Communist Party of Great Britain on September 15th. The letter urged the CPGB to make preparations, "in the event of danger of war . . . . to paralyse all the military preparations of the bourgeois".

The letter had originally been passed to MI5 by Donald im Thurn, a former agent. The foreign office, MI5 and Special Branch all vouched for its authenticity and it was passed to Ramsay MacDonald who accepted their judgment. Zinoviev's instructions in the letter merely confirmed the intelligence services' understanding of the Comintern's ideas, and although it was useful intelligence it was by no means clear that it required any public response from the prime minister or government. Before MacDonald could make any final decision about the text of the official response to the letter, the letter was leaked from MI5 to Conservative Central Office and also to Reggie Hall and thence to the two newspapers with the implication that MacDonald had been trying to suppress it.

It was Hall who almost certainly leaked one of the two copies of the letter received by his friend Thomas Marlowe, the editor of the Daily Mail. But there were two ironical twists to the story of the Zinoviev Letter. The first twist is that it was a forgery. However there is no evidence to suggest that, at the time, any of those involved in leaking the letter, or authenticating it, or drafting the government's response to it believed it to be less than genuine. The second twist is that although Labour Party was the overt target of the leak it was the Liberal Party which was decimated by it. In the election the Liberals lost 117 of their 156 seats, the Labour Party just 40 of their 191 seats and actually increased the number of votes cast for them. Whatever Hall's intention, the leaking of the Zinoviev letter had once again polarised British political life and not only effectively secured the Labour Party's position as the second party but also strengthened the democratic socialists' and social democrats' control of it.

NATIONAL PROPAGANDA'S RIGHT WING NETWORK

From its formation National Propaganda rapidly became the focus for most of the Diehards' extra-parliamentary activity. Its absorption of the British Empire Union and the National Citizens Union in particular created a coordinated and active Radical Right wing network whose power and influence in shaping British political life has never been properly grasped.

THE BRITISH EMPIRE UNION

By far the largest and most active of the groups whose activities National Propaganda was coordinating was the British Empire Union. It had its origins in the Anti-German Union of 1915, changing its name to the British Empire Union in 1916. A minor novelist of imperial life, Sir George Makgill, was the secretary and organiser of the AGU and was then the BEU's Honorary Secretary. Its treasurer was the newspaper proprietor Edward, later Lord, Illiffe who was later also to be a member of the Central Council of the Economic League. (*17)

Despite the change of name throughout and following the War it was associated not only with general anti-German agitation but specifically with the sort of anti-semitic agitation and conspiracy theories associated with Leo Maxse, editor of the National Review and speaker at its first public meeting in the Aeolian Hall on June 1915 (*18). By 1916 the BEU was organising anti-German demonstrations, four in Hyde Park in London during June and July. and 50 throughout the country during the year. It later raised petitions in support of its campaign for wholesale internment, one containing 1,250,000 signatures was presented to Downing Street following a demonstration organised by the National Party in July 1918. At the same time it also adopted a boycott of German goods and refusal to employ anyone of German origin for six years after the end of the War, which had been proposed by the Merchant Seaman's League. The League was run by J Havelock Wilson, who stood successfully against the Labour Party in South Shields having received at least two secret payments from the British Commonwealth Union (*19). The British Empire Union's attempts to disrupt the meetings of pacifist and civil libertarian organisations didn't stop short of violence and threats of violence, and it was implicated in anti-jewish riots in Leeds in 1917.

The historian Panikos Panayi has estimated that by the end of the War the British Empire Union had a membership of 10,000 - spread across fifty local branches. Its vice presidents included 25 peers or their wives, and it had been closely associated with establishment figures such as Lord Derby, Lord Leith, and the Earl of Harewood and with leading Diehard figures such as Lord Carson, Ronald McNeill, and William Joyston-Hicks. After the War the BEU maintained its anti-German and anti-semitic campaigns but also adopted many of the "imperial unity" ideas of the Tariff reformers and became fanatically anti-communist.

In Liverpool the British Empire Union became the instrument of its secretary, a remarkable man called John McGuirk Hughes. Hughes obtained substantial support from Liverpool employers, in particular the shipping firms, for what was obviously something more than a simple propaganda machine. According to John Hope:

"For five years Hughes and his agents broke into premises, stole and forged documents and behaved as agents provocateurs. "

Documentary evidence of Hughes' and the BEU's activities in Liverpool were first unearthed by Ron Bean in 1977, in the Cunard Papers which were deposited with Liverpool University. These show that not only was Hughes passing on to local employers the names of trades unionists he felt to be in some ways "ringleaders", he had also established a formal relationship with Scotland Yard.

In one of his reports, in the Cunard papers, Hughes wrote:

". . . . we have the complete confidence and help of Scotland Yard, and in fact have received payment from them. The Assistant Commissioner [Col. Carter] considers that we are the only efficient organisation. . . our relations with the provincial police continue to be good. . . We had placed under us a number of plain cloths (sic) men of the Glasgow police. . . . ".

Hughes seems to have been recording the activities of the BEU nationally here, not merely in Liverpool and in 1924 he would seem to have been involved in the theft of documents from the Headquarters of the Minority Movement in London (*20). But it is also possible that he was presenting a report from another organisation, since by 1924 Hughes relationship with the BEU national and locally had collapsed. Indeed between 1923 and 1925 he was running his "Special Propaganda Section" as an independent organisation and operating in Liverpool, Glasgow, Barrow and Sheffield. This organisation seems to have been financed by shipping lines of which Cunard was the main one.

Eventually Reginald Wilson, the Secretary of the BEU and a director of the Economic League, approached Cunard asking for the support for Hughes to be withdrawn. Cunard did withdraw its support with the result that Hughes' setup was closed down and the Central Council of the Economic Leagues and its satellites once again had a monopoly on this area of private intelligence work. Quite what was actually happening during this early, and obviously acrimonious, split remains a mystery.

Afterwards James McGuirk Hughes disappeared from the scene until 1932, when he reappeared, as "P. G. Taylor" head of the intelligence section of the British Union of Fascists. At the same time he was also claiming to be an established MI5 agent, probably therefore controlled by Maxwell Knight. This of course only deepens the mystery and further muddies already murky waters. It would seem to suggest that some sort of reconciliation may have been effected, but it may simply bear witness to Knight's pragmatism in choosing agents, at a time when MI5 resources were limited and fully stretched (*21). In the first years following the Great War there was a reorganisation and rationalisation of Radical Right wing pressure groups. According to the historian Maurice Cowling, after the War the BEU had absorbed "about twenty similar organisations in Britain and Ireland". (*22)

How long the BEU was closely associated with National Propaganda remains unclear. It remained in active until the mid 1970's, although it changed its name to the "British Commonwealth Union" in 1960, and it was publishing a monthly journal until at least 1952 (*23). Those later involved in it included the Monday Club Founder, Sir John Biggs Davison who had in the Club's first pamphlet described it as an attempt to revitalise the Diehard tradition in the Conservative Party.

THE MIDDLE CLASS UNION/NATIONAL CITIZENS' UNION

The Middle Class Union was established in March 1919, to "withstand the rapacity of the manual worker and profiteer". It became the National Citizens Union in 1921 under the presidency of the Rt Hon Lord Askwith. Its Vice Presidents included Sir J R Prettyman-Newman who had links with the British Fascists (*24). In 1926 Lord Askwith was still president and it was claiming that it "Organised Volunteers for service on Railways, Tramways, Electricity Power Stations, and for Road Transport etc., in 1919, 1921 and 1924, and in many local stoppages". When it issued its volunteers with a questionnaire, in 1926, asking them to specify there areas of work in which they could offer their services, the General Secretary Colonel H D Lawrence offered to negotiate with the employers of any volunteers who were reluctant to release them for service with the NCU. In 1927 the Chair of the National Citizens Union was Colonel A. H Lane, who was a member of the overtly anti-semitic group called the Britons which the following year published "The Alien Menace", an influential anti-semitic book, and founded the Militant Christian Patriots (*25).

The British Empire Union and National Citizens Union were, like the Economic Study Clubs, the public face of National Propaganda's network, though the existence and breadth of the coordinated network itself was certainly not public knowledge. Within two years of its formation therefore National Propaganda was not only running a strike breaking mechanism which would provide the groundwork for the defeat of the General Strike, it was contributing to the ideological foundations of British fascism, and establishing a domestic, "counter-subversive", intelligence operation which was many times larger than the state's own.