On 17 May 1924 Canaris shipped aboard the steamer Rheinland for Japan, on a mission connected with naval rearmament, in particular the U-boat Arm.1 Under the terms of the Versailles Treaty, Germany had been required to surrender all U-boats, lifting ships and U-boat docks, and to destroy all U-boats under construction: ‘The building and acquisition of all submarine craft, even those for commercial purposes, is prohibited in Germany.’2 In January 1920 Naval High Command took the first steps to get round the Treaty; with the approval of Naval High Command, the Germania shipyard at Kiel and the Vulcan yard at Hamburg sold project sketches of German U-cruisers and minelaying U-boats to Japan with the intention that they should be built there under the supervision of German naval architects. Orders for all material supplies were to be placed with German firms.3 In 1922, with the approval of Navy Commander-in-Chief Admiral Behncke, the shipyards Germania, Vulcan and Weser set up an office in The Hague known as ‘Ingenieurskantoor voor Scheepsbouw’ (IvS). Its purpose was to develop new plans for U-boats, to train crews and to organise and develop cooperation with foreign navies.4
After the war the Naval Transport Section at Naval High Command under Kapitän zur See Walter Lohmann handled the return of prisoners of war and prize ships. This led to many overseas contacts. After the occupation of the Ruhr in the spring of 1923, the German Government budgeted ten million gold marks to the Navy, which passed directly to Kapitän Lohmann, who became the éminence grise of German secret rearmament. His eventual fall dragged down Reichswehrminister Otto Gessler and the head of the Naval High Command, Admiral Zenker, while Canaris also did not survive his proximity to Lohmann unscathed.5
There had been complications in the U-boat negotiations with Japan and the aim of Canaris’s mission was to improve the exchange of information between the respective Naval High Commands.6 He was given only the most rudimentary briefing on the state of German–Japanese relations and had no written guidelines. On his arrival at Kobe he was received by a distrustful Japanese officer, and only after convincing him of the serious nature of his mission did he obtain an interview with Navy Minister Takarabe, the Japanese Naval Command, and a visit to the submarine yards. The impression he gained of German–Japanese cooperation was one of discord; the intention, so he wrote in his report, ‘seems to be to make use of German experience and developments’ but without ‘any feelings of sympathy or common interest with Germany’.7
Even before Canaris had returned home, Admiral Zenker had summarised it thus: ‘With Japan, we are always the giver. What we get in return does not justify a pro-Japanese stance,’8 and, in the hope of some alleviation of the terms of the Versailles Treaty, he wrote, ‘An inclination towards the Anglo-Saxons is, for the time being, urgently necessary.’9
At the beginning of October Canaris took over a planning section in the Fleet Division at Naval High Command to organise mobilisation,10 but it was soon apparent to his superiors that he had no love for office work, and at the end of January 1925 they sent him on a secret mission to the country closest to his heart. Naval High Command and the head of the Naval Transport Section, Lohmann, had transferred the major part of their U-boat and other naval planning to Spain. In the summer of1922 Canaris had revived old contacts there for the Marineleitung, gauging what was on offer in the way of war material and ores for steel production.11 He had an agent in Madrid to liaise between himself and the Marineleitung, German industrialists and important Spanish institutions and personalities: former Kapitänleutnant Mayrhofer had accepted an offer from AEG to work in their telegraphic section. ‘Salary is enough to live on. But he has to have a place to manoeuvre for his real work,’ Canaris noted in his report to Marineleitung.12
Spain, entangled in a colonial war in Morocco, wanted an independent naval armaments industry in which submarines, torpedoes and fire direction equipment played a major role.13 This coincided perfectly with German aims to win neutral cooperation partners for the design, building and testing of precisely those armaments.
What Germany found in Spain, however, was a complicated mixture of State, private enterprise and naval-political interests.14 Two large rivals competed for the Spanish Government’s contracts – the Spanish State yard, Constructora Naval, which worked with Vickers to build Spanish submarines to British designs,15 and Union Naval de Levante (UNL), founded in 1924, with shipyards at Valencia, Tarragona and Barcelona, and in which German armaments firm Krupp had been heavily involved. The German engineering office in Holland, IvS, had entered into partnership with UNL and could not negotiate directly with the Spanish Government or its yards.16
A third Spanish player was industrialist Horacio Echevarrieta, who owned shipyards at Cadiz and El Ferrol and was also tendering bids to the Spanish Government to build submarines. Echevarrieta was ‘a political force of the first rank,’ Canaris informed Berlin, ‘Basque by birth, extremely ambitious and proud, Spain’s richest industrialist. Although his yard at Cadiz is not presently competitive, he is determined to found a home-grown war industry in Spain. In this he is resolved to take on both Constructora and UNL.’17
The German yard Blohm & Voss had also tendered to build Spain’s submarines and had submitted torpedo designs.18 The Marineleitung was unhappy with this, fearing that the Spanish would choose to abide by the existing relationships with England and Italy if the competition was enlarged by infighting German firms. Accordingly, Germania-Werft in Kiel, a partner in IvS, sent Korvettenkapitän Blum, an IvS director, with Canaris to Spain to assess the chances for German submarine designs there.19 Upon arrival in Madrid on 31 January 1925, they conferred with UNL technical director Ziegelasch and Spanish director-general Ernesto Anastasio. Canaris met the head of the Cartagena submarine base, Capitan Don Mateo Garcia and Capitan de Corbeta Don Manuel Medina y Morris, a candidate for the post of naval attaché to Germany.20
The German agent in Madrid, Mayrhofer, had prepared useful contacts for Canaris,21 who was also using this visit to reactivate his espionage network.22 Two old comrades with intelligence experience were Carlos Baum, who ran an export business in Barcelona, and Carlos Fricke, later consul at Valencia, both of whom had worked for German intelligence in the First World War.23 Canaris ‘made contracts’ with them as spies, but neither of them would run the organisational network as this involved sending agents abroad – mainly to France – the creation of a spy network in the ports and setting up reporting centres and a sabotage organisation.24 French espionage was very active in Spain and so the risk of compromising newly recruited agents was too great, but in any case Baum and Fricke feared that their innocent commercial activities might be prejudiced. The solution was found in twenty-eight-year-old Conrad Meyer, who had been an officer during the war and a member of Brigade Loewenfeld up to the time of the Kapp putsch. He had fallen on hard times and was willing to take over the organisational work. This was ‘the beginning of the legendary intelligence network that Canaris supported later in Spain’.25
For Canaris, the most important Spanish official in submarine questions was Capitan Don Mateo Garcia. He wanted the design of a submarine ‘of about one thousand tonnes, with high speed and a large radius of action’,26 Canaris wrote in his report. Garcia was planning to visit Germany for talks with MAN Diesel and also Blohm & Voss, hoping to use them as intermediaries to obtain torpedo designs from the Marineleitung in Berlin to be built at a new Echevarrieta factory in Cadiz.27 Canaris was against using Blohm & Voss and convinced Garcia to approach the Marineleitung directly.
Garcia was accompanied to Germany by Capitan de Corbeta Sacro-Lirio, chamberlain to King Alfonso XIII, a member of the Spanish Commission to the League of Nations and Echevarrieta’s naval expert. Canaris had been told by an agent that Baron del Sacro-Lirio was very pro-German, and ‘if things were done right’ it would probably be possible to influence Echevarrieta in his naval plans through that source.28 At this time, Canaris seems to have had no direct contact to Echevarrieta; Sacro-Lirio would become an important go-between for Canaris and he made Echevarrieta the German favourite in the field of naval cooperation.
Of UNL, Canaris had obtained an unfavourable picture: technical director Ziegelasch made an ‘uncertain, one-sided impression’,29 while the UNL financial base was too weak. UNL lacked channels to the Spanish Navy, not even to Don Mateo Garcia, while the value of the royal contact which it did have was not to be overestimated.30 Canaris also took note of private assertions made by Ziegelasch that appeared to be against German naval interests, and even Ziegelasch’s warning that Echevarrieta’s credit was exhausted and that as a Republican he was unlikely to exercise much influence over the king or dictator Primo de Rivera31 could not dislodge Canaris in his belief that Echevarrieta was the man for Germany.
This decision created a major problem. The Spanish Navy wanted German submarines, and the best shipyard, the favourite of the Marineleitung, was Germania-Werft of Kiel, which formed part of the IvS partnership in Holland. Echevarrieta could not negotiate for submarines in Germany with anybody because of the Versailles Treaty, nor with IvS in Holland, because its partner UNL was a direct competitor in Spain. The Spanish also wanted MAN diesels, and MAN was in the Blohm & Voss camp, with whom Echevarrieta was negotiating torpedo plans. It was in the German national interest to support IvS, since it worked in cooperation with the Marineleitung, but the latter could be compromised by a multi-national IvS;32 German diplomats in Madrid and Barcelona were also opposed to the direct cooperation between Blohm & Voss and Echevarrieta since it could produce difficulties with the Entente.33 The only solution to get Echevarrieta negotiating for everything through IvS was to remove UNL from the IvS partnership, and this was Canaris’s recommendation to Berlin in mid-February.34
UNL was suspicious that something underhand was being plotted and refused to release IvS from the partnership. Berlin gave UNL a verbal assurance of a major submarine contract, which was so convincing that, at Ziegelasch’s request, Navy chief Zenker had a memorandum drawn up confirming his support for the IvS project, but he did not give it to Ziegelasch before he left.35 Meanwhile, Garcia had visited Germany as planned and was given by the Marineleitung their personal guarantee that German support for the Spanish Navy would be given ‘independently’.36
On 20 April 1925 Canaris returned to Spain37 carrying the Zenker memorandum. He met Almirante Marqués de Magaz, the regime’s deputy and rival to dictator Primo de Rivera. He also saw for the first time Oberst Max Bauer, a political fellow-traveller with Ludendorff, who had fled to Spain after the Kapp putsch failed and was now military adviser to King Alfonso XIII.38
Almirante Magaz complained to Canaris that a few days earlier, UNL had tendered an unsolicited submarine project, indicating that the Marineleitung was involved, which contradicted the assurance given to Capitan Mateo Garcia in Berlin that the Marineleitung would treat with Spain independently. Canaris now played his trump by producing the memorandum supporting IvS, which he had orders to hand personally to Spanish Naval Command.39 Once the document was in the hands of Mateo Garcia and Spanish Navy Minister Cornejo, Ziegelasch and UNL were cut adrift. Canaris assured Mateo that the Spanish Navy minister could elect any Spanish yard of his choice to build the submarines ordered by IvS, but it was important to the Marineleitung that ‘German know-how, which will be communicated without reservation by IvS, should not be made known to Vickers’.40 Canaris also guaranteed that all German torpedo designs were at the disposal of the Spanish Navy through IvS. Mateo reported that Echevarrieta had a contract to build a German-designed torpedo factory and was now anxious for twelve submarines to German blueprints; Echevarrieta confirmed personally to Canaris that he wanted to build ‘German-type submarines and in close cooperation with the German Navy. Corresponding to the wishes of Marineleitung he would use German personnel in submarine and torpedo construction.’41
At the beginning of August 1925, Echevarrieta arrived in Kiel. Shortly before, Max Bauer had advised Canaris: ‘It is really important that he is well received and gets to see everything without our giving him the impression that it is being forced on him. He would very much like to be received by Hindenburg. One should emphasise that as a Spanish patriot he is especially welcome amongst us Germans.’42
Spanish politics now intervened in all the careful plans; Almirante Magaz, opponent of Primo de Rivera, was ousted. The Marineleitung lamented:
The submarine building programme of the Spanish naval leaders has been postponed in the first instance, probably until the autumn. The reason is that at the moment there is nobody as supportive of it as Magaz was. The programme will be revived, first, as soon as the Moroccan war finishes (expected this coming spring), second, as soon as Magaz replaces Primo de Rivera at the helm. According to information from Herr Canaris, this turn in politics can be counted on in the near future.43
Canaris was wrong, Magaz was out of the picture for good and the submarine programme never got into its stride. Instead, the Spanish went ahead with torpedo manufacture. On 26 January 1926, Echevarrieta signed a ten-year contract with the Marineleitung for the torpedo factory and guaranteed that he would appoint a German national as manager. He also agreed to supply German-designed torpedoes only to the Spanish and German navies and to make available to the Marineleitung all test material and observations; Marineleitung experts were to be involved in all trials.44
A few weeks later Britain interceded,45 putting favourable credits on the table knowing that Echevarrieta was having difficulty in paying for the overall project, which amounted to around eight million pesetas (five million Reichsmarks).46 The Marineleitung responded by asking Lohmann to negotiate credit for Echevarrieta with the Deutsche Bank.
The explosive political nature of the Echevarrieta affair revealed itself at a session of the Reich Economy Ministry on 13 April 1926,47 at which Admiral Zenker emphasised how vital it was for the Marineleitung that ‘the designs could be tried and tested in practice and the technical personnel kept informed. If that is not possible, U-boat and torpedo science will be lost for ever.’48
Zenker came up against hefty criticism. The state secretary at the Finance Ministry, Ernst Trendelenburg, feared that Echevarrieta would need rather more than the eight million pesetas credit, and this would never be approved.49 In any case, in view of the political and economic risks, his ministry had ‘no interest in concluding a contract with Echevarrieta, since to do so could have catastrophic consequences for German industry’.50 The Foreign Ministry was concerned that the arrangement might infringe the Versailles Treaty; if British competitors brought pressure on the government, Secretary of State Carl von Schubert suggested, it would prejudice the German position at the Ambassadors’ Conference currently being held in Paris, in which concessions to the Versailles Treaty were being sought. Furthermore the British were very sensitive about U-boat building and it might be advisable to avoid for the moment anything in this area that might upset them.
When fresh loan negotiations for Echevarrieta began the following year, Legation Secretary Wagenmann noted: ‘Kapitän Canaris has apparently attempted, knowing the reservations of the Foreign Ministry, to finance the procedure and to achieve this by approaching private rather than official sources just as he did when he arranged finance for the torpedo and U-boat factories and the fire direction installations.’51 These private sources were principally representatives of the Deutsche Bank and Banco Alemán Transatlántico, which was founded in 1904 by the overseas agency of the Deutsche Bank.52 A week after Reich Chancellor Luther had delivered his criticism of the Echevarrieta affair, everything had been concluded, and in Madrid on 17 May Echevarrieta received a credit of 240,000 British pounds sterling for which the Reich was to act as guarantor.53 Echevarrieta contracted to place his material requirements for the factory and the manufacture of one thousand torpedoes that the Spanish Government had ordered with German firms wherever possible, and to appoint a German national as manager of the factory for a period of ten years.54
General Primo de Rivera thanked Canaris personally ‘for the great support which the German Navy lent to the Spanish Navy through the office of Senor Echevarrieta’; Canaris informed Berlin, ‘he explained that this grand rapprochement had given him cause to conclude a favourable trade agreement with Germany.’55 During an audience on 20 May, Canaris told the Spanish king of the German–Spanish naval cooperation; Alfonso XIII appeared to be well informed and posed ‘some very searching questions about the matter’.56 Canaris’s mission was a complete success; he reported on his commercial and armaments activities to the German ambassador in Madrid, Johannes Graf von Welczeck, and the consul-general in Barcelona, Ulrich von Hassell (whom he would meet frequently in future years). The ambassador described his own position vis-a-vis the Spanish Government as being much stronger as a result of the progress in naval cooperation.57
Canaris was still in Barcelona on 26 May when he received news of the visit of a German naval squadron commanded by Vizeadmiral Mommsen; Baron del Sacro-Lirio brought the ‘unofficial’ advice that the king ‘would be pleased to receive the admiral and a deputation of officers in the capital’.58 At the request of Welczeck and Mommsen, Canaris was invited to accompany them on the royal visit. At the banquet, Canaris discussed with the king all details of the military planning,59 the highpoint of the visit. Admiral Mommsen reported later to the Foreign Ministry how the king had emphasised that ‘German warships were welcome at any time, and anywhere, in Spain.’ He had shown special interest in weapons developments ‘for which the Spanish Navy would gladly play guineapig for German designers’. Mommsen also noted the special praise the king reserved for Canaris ‘whom he has appointed his “unofficial naval attache” ’.60
A second official visit to Spain followed in August 1926 after Alfonso XIII expressed the desire to inspect the new German rotor-ship Barbara on her first foreign cruise,61 and Canaris was given the job of making the preparations. In the saloon of Barbara, Lohmann had the opportunity to discuss with the king the latter’s plans ‘to build a Spanish national armaments industry with German help’62 and to interest him in German E-boats (motor torpedo boats) and dualpurpose naval tankers that could double as aircraft mother-ships,63 although for these future projects Lohmann would require prior Marineleitung approval. After King Alfonso’s visit to Barbara, he sent an enthusiastic telegram of thanks to Reich President Hindenburg; Lohmann noted, ‘It was certainly one of the best opportunities to take advantage of the enthusiasm for German abilities and technology.’64
After the Marineleitung agreed to ‘surrender to Spain our expertise in the field of aircraft mother-ship tankers and E-boat construction65 Canaris was sent to Spain with the corresponding files, and addressed the Secret Defence Council, which included the king, the dictator Primo de Rivera, the war minister and the navy minister. The outcome was that it was decided to commission the construction of two tankers and eight E-boats, but problems were encountered from the pro-British Navy Minister Cornejo, who obstructed the award of contracts, while the German Foreign Ministry cast a baleful eye on these activities by the Marineleitung and Canaris, considering the danger of political complications too high: ‘This has also been made absolutely clear to Herr Canaris together with the observation that the Foreign Ministry declines any responsibility whatsoever for any difficulties that may arise from the liaison between German official agencies and Echevarrieta.’66 Not even the privately funded projects met with Foreign Ministry approaval: ‘In any case we have no reason – despite the wishes of Herr Canaris – to advocate them to the Reich finance minister.’67
In October, Echevarrieta signed a far-reaching contract during a visit to Berlin. With Deutsche Lufthansa he agreed to the founding of a German–Spanish airline. The foreign minister observed in a confidential telegram to the Madrid embassy that the Reich transport minister would support it as the monopoly concern for German air traffic with Spain and if possible between Spain and South America.68
Canaris and the Marineleitung, meanwhile, forged ahead with the projects disparaged by the Foreign Ministry. At the instigation of Canaris, who since 1 October 1926 had been adviser to the Marineleitung Chief of Staff Kapitän Peter Donner,69 former Oberleutnant Messerschmidt70 was installed in Madrid as liaison officer between the Marineleitung and Echevarrieta.
Canaris had the particular support of ambassador Welczeck, who mentioned the political advantages of German–Spanish cooperation in letters and telegrams to his superiors and pressed for a decision of the Reich Government: ‘As you know, it is the exclusive merit of the Navy, especially Herr Canaris, to have led the most important and influential financier Don Horacio Echevarrieta from the French camp into our own.’71 The mood in Berlin had finally tipped in favour of Canaris. who once again had succeeded in his goals without the help of official agencies. He had convinced Deutsche Bank to take over the financial aspects of the project and to negotiate with Foreign Minister Stresemann and Secretary of State Schubert. On 1 February 1927 the Foreign Ministry reiterated its reservations, but following a conference at the Reichswehr Ministry eight days later everyone had fallen in line behind Canaris. The Deutsche Bank would negotiate the five million Reichsmark loan with the Reichs-Kredit-Gesellschaft.72
In mid-February Canaris discussed with King Alfonso XIII the ever more ambitious plans he was developing with Echevarrieta. Besides the torpedo factory at Cadiz there would be others for torpedo-carrying aircraft, general aircraft and for engines; these sites would also double as test-beds for the E-boats for which Echevarrieta was negotiating with Weser shipyard and the Travemünder Yachthaven AG, part of the Lohmann group. Canaris was also thinking of the Lufthansa project in which Echevarrieta would attempt ‘to penetrate Spanish air travel at the earliest’ and was already in talks with Junkers regarding the aircraft factory at Cadiz.73
The list of projects grew steadily, and extended from negotiations with Mercedes to build a car plant, a planned Spanish oil monopoly and the joint exploitation of mineral wealth and farming in areas in Spanish Morocco and Guinea.74 Much of this was wishful thinking: radical political change in Spain overturned Primo de Rivera’s dictatorship, replacing it with a republic and bringing all these wonderful ideas crashing down. For all the enormous financial investment of the Marineleitung, the Cadiz torpedo factory never began production, while the Echevarrieta shipyard managed to turn out only a single completed U-boat for testing by German personnel.75
The long-term value of Spanish–German cooperation for those states cannot be underestimated, however. The Spanish Navy placed modern submarines at the disposal of German naval forces for testing and manoeuvres. For the future German production of U-boats, these preliminary steps and the fact that Spain helped Germany keep up with new developments in submarine technology would prove of decisive importance.76
In an appraisal, Chief of Staff Donner wrote of Canaris:
In the exercise of his duties, he has created and developed valuable overseas contacts, in his clever, objective and tenacious manner mastered the most delicate tasks. In difficult situations for Reich and Navy he has demonstrated that he can combine caution and correctness with a bold approach. Modest, on first impression almost shy, intelligent and perceptive, people – including foreigners -are swift to recognise his good character and energy, and trust him.77
As with others before him, Donner was concerned that Canaris’s tireless pursuit of his goals could overtax his strength:
Care will have to be taken to ensure that this valuable officer is not ruined for a seagoing career by exclusive employment in internal or foreign political service and on special missions; there is also a danger that he is being overstretched physically and mentally . . . there will always be missions of which it will be said that only he can solve them fully and that accordingly he should postpone returning to sea a little while longer.78
Worries about the health of his subordinate may not have been the only reason for Donner’s attempt to have Canaris removed from the naval-political scene. That summer there had been progress in U-boat construction and air transport affairs,79 which had resulted in the autumn in a contract between Echevarrieta and IvS for the construction and testing of a 600-tonne U-boat and possible ancillary agreements.80 But soon the name Canaris was to make headlines once more, headlines which were anything but welcome even if it would not be Canaris personally who unleashed the greatest scandal for the German Navy since the Kapp putsch.