Almost Had It: National Intelligence, 1901–20
In the first two decades of Australia’s history, official interest in intelligence collection was not confined to the armed services. Civilian departments of the new Commonwealth government were also keen to develop intelligence systems and, as we saw in the case of Wilson Le Couteur, they were not backward in conducting clandestine intelligence collection if they believed it was required. Indeed, the Le Couteur mission was an entirely civilian affair, run by civilian officials led and organised by Atlee Hunt of the departments of External Affairs and Prime Minister on behalf of Edmund Barton.
Atlee Hunt seems to have had quite a knack for intelligence at a time in history when few people understood intelligence or had any experience in running intelligence operations. Yet Hunt crops up in the Le Couteur mission, as a functionary in some of the military intelligence missions of this period and most certainly as a significant player in the work of the Wanetta organisation. All of this suggests Atlee Hunt was a significant force in the organisation and conduct of early Australian intelligence operations.
It is no surprise that the man heading the External Affairs Department should take an interest in intelligence. Hunt’s department was responsible for the enforcement of the Immigration Restriction Act and in ensuring that all aliens were registered and tracked in Australia. He was also responsible for ensuring anyone who was forbidden to enter Australia was detected and deported. To this end, Hunt created a network of intelligence collectors ranging across members of the armed services, customs and state police forces and agencies (see Figure 8.1). This was most likely the reason he recruited Reginald Hockings.
Atlee Hunt’s requirements for intelligence extended beyond Australia, and he obtained it from two main sources. The first was the imperial government in London and its various colonial governments in Asia, including reporting from the governments of India and the Malay Straits to Australia’s Governor-General. The fact remained, however, that the reporting received in Australia was only what those governments wished to share, and Hunt never knew if they were sharing it all.
Source: Compiled from NAA files.
Figure 8.1: Australia’s first organised intelligence-collection operation
The second source was entirely Australian, and was made up of the agents of trading companies, such as Burns Philp, and the various states officials and trade representatives posted overseas, whose activities we looked at earlier. This system worked, but in the way a Heath Robinson machine might work, and the demands of war had placed great strains upon it. Atlee Hunt, along with many others including George Pearce, William Watt and Edmund Piesse, understood this. They shared a concern over how much leeway Britain would give Japan in the Pacific and Asia in return for her assistance in Europe, and they shared the concern that Britain would act in her own interests first.
This group of government officials and politicians was keen to put an intelligence system in place to keep an eye not only on Japan, but also on Britain and any other countries involving themselves in the region. Other than Atlee Hunt, the most influential of these officials on intelligence developments in Australia over the next few years was Edmund Piesse, a lawyer and militia officer who had joined the Intelligence Corps in 1909 and completed the intelligence course of that year.
When war came in 1914, Edmund Piesse made a startling career choice. Rather than rushing off with the 1st AIF, he chose to remain in Australia and direct the national intelligence effort in the Pacific and the countries around it, particularly Japan. Piesse, like John Fearnley among others, was concerned about Japan and its ultimate intentions. They all understood how powerful Japan had become and how capable it was in waging war. They also suspected that it was overly interested in Australia, but, as we have already explored, they did not know why.
In focusing Australia’s attention on Japan and Asia, the biggest issue Piesse and everyone else had was a simple one: no white Australians spoke Japanese, and few whites spoke any other Asian languages. The result was that while Australia might fret about Japan and its intentions, they could not even read the public statements in the Japanese press. The only source of Japanese-language skills was the NSW Trade Commissioner John Suttor in Kobe, and he could only supply so much.
This lack of language capability was not just a problem in Australia. Even in Britain, where the relationship with Japan was seen as a strategic necessity, few could communicate with Britain’s main Asian ally. With the increased intensity of the fighting in Europe and the need to engage more closely with the Japanese, Britain had created a language course for military officers, and by 1917 British officers were being removed from active service and sent to Tokyo to learn the language and customs, and to network.1
In Australia, in 1909, John Fearnley had recommended that men should be selected to spy on Japan. In 1911, he again raised this suggestion with George Pearce, but this time he recommended that these men be familiar with Japanese customs and attitudes. In 1916, Edmund Piesse, now the Director of Military Intelligence, and Captain Walter Thring, Head of Naval Intelligence, agreed that action was essential, and that selected officers be selected and trained in Japanese. As it happened, the NSW government had already created a rudimentary program of Japanese-language education at Fort Street High School, and a commercial provider was operating as the Berlitz Schools of Languages of Australia, out of Ocean House, Moore Street (now Martin Place), Sydney.2 This made Sydney the logical place to start.
In April 1916, the acting prime minister, none other than Senator George Pearce, started the ball rolling on Japanese-language training for military officers. This action was taken while Billy Hughes was overseas visiting Britain, and it is likely that Pearce and William Watt, among others, colluded behind Hughes’s back to authorise this program. Pearce exploited Hughes’s absence and involved the CGS in a minute recommending the Military Board appoint a Japanese-language instructor at Duntroon Military College.3 By May 1916, the subject was raised at the Conference of Premiers in Adelaide where they noted a ‘necessity of greatly increased attention to the teaching of modern languages in the various public schools’.4 Even the Associated Chambers of Commerce for the Commonwealth were now calling for the establishment of a ‘Chair of Eastern Languages in the respective universities of the various states’. Of course, it all came down to who was to pay, but all this activity meant that people with real political pull were creating the conditions for Japanese-language training to be implemented.
In June and July 1916, the ACNB began to grapple with the Japanese-language issue as well. Captain Thring had proposed that a chair in Oriental Studies be established at a university and that the ACNB order the RAN College to begin teaching Japanese and other languages to selected midshipmen.5 This initiative fitted well with the plans of George Pearce and Military Intelligence, and with the ambitions of General J.W. Parnell, the Commandant of Duntroon, to establish a lectureship in Japanese at the University of Sydney at Commonwealth cost. The idea was that the Commonwealth would provide the University of Sydney with the necessary funding to establish the chair, providing the University made the professor available to teach Japanese at Duntroon and the Naval College.6
At this point it all looked good, but now the petty politics of middle managers stopped the introduction of the training at the Naval College. The college council was opposed to introducing Japanese, and mounted a campaign of passive resistance that the best efforts of the Naval Staff and the ACNB could not overcome.7 The council wanted the college to teach French, an idea the Naval Staff ‘deprecated’, but the council, particularly the teaching staff, insisted upon this, and the ACNB dropped the matter, choosing instead to encourage those officers who wished to learn Japanese to find their own training.8 This was the mechanism by which RAN paymaster officers such as Eric Nave would be trained.
Now a search had to be made for a suitable teacher of Japanese. The first stop in this search was London, where Billy Hughes asked the British government for help in finding a suitable Japanese scholar. There was not much the British could do to help, as they faced the same problem. The next stop was the British ambassador in Tokyo and, as luck would have it, he was able to nominate two possible candidates, A.M. Cardew of Cox and Company of Calcutta and James Murdoch, a 60-year-old Scottish journalist now teaching in Japan.9
The ambassador’s recommendations were qualified, particularly in the case of Cardew, who turned out to be a former army officer ‘believed to be on special service for the government of India’.10 The ambassador felt that given this, ‘he may not be available’.11 The ambassador was correct. A.M. Cardew, a captain in the Royal Engineers and a noted Asian scholar proficient in Japanese and Chinese, was heavily engaged in counterintelligence activities against Japanese penetration of India and China.12
Optimistically, on 10 July 1916, the Australian government formally approached the Viceroy of India asking for Cardew’s services and asking ‘under what conditions’ he might be made available. The reply on 17 July 1916 greatly regretted that the services of Captain Cardew ‘cannot be spared at present’.13
As for James Murdoch, he was a journalist well acquainted with Australia and deeply imbued with a knowledge and understanding of the Japanese language and culture. The ambassador felt that £600 per annum would be a fair salary,14 an amount that in 2016 figures equates to around $345,800 (labour value) based on average weekly earnings.15 On 29 July 1916, the Australian government authorised the British ambassador to offer James Murdoch this salary, a three-year engagement and first-class tickets to Australia, on the understanding that he was to be attached to the University of Melbourne or the University of Sydney and would be required to visit Duntroon periodically.16 By 11 November 1916, Murdoch had agreed and all of the arrangements were in place for him to travel to Melbourne as soon as possible. These arrangements were vague and it would later turn out that Murdoch had negotiated the entry into Australia of his Japanese wife and her brother, Okada Rokuo, who was included in the group of Japanese language teachers admitted under the program.
James Murdoch was no stranger to Australia, as he had lived and worked as a teacher in Brisbane before becoming a journalist for William Lane’s radical magazine Boomerang. In 1889, Murdoch had moved to Tokyo to take up a position at the prestigious First Higher School, which acted as a feeder for Tokyo Imperial University. Murdoch was introduced to the highest levels of Japanese society and seemed to prosper, which, given he had written egregiously racist material about East Asians in the Boomerang, was ironic. More comical though was that Murdoch had a very broad Scottish accent that made it difficult for his Japanese students to understand what he was saying.
In September 1893, Murdoch had left Japan to join his old friend William Lane at New Australia, outside of Asuncion in Paraguay. It was not a happy or rewarding experience, as the disaffected members of Australian society soon became disaffected with their new society, as well as with William Lane. In 1894, Lane and 63 loyalists moved south to try for utopia again in a colony they called Cosme. James Murdoch lasted only three days at New Australia before he left for London. He returned to Japan in 1894 and worked in various educational institutions until 1908, when his teaching contract at the Seventh Higher School in Kagoshima was not renewed. He then moved into journalism, contributing to the Kobe Chronicle, and, presumably because journalism in Japan did not pay, became a citron farmer. The call to return to Australia in 1917 was probably very welcome.
On his arrival in Australia, James Murdoch learned that he was to be appointed Chair of Oriental Languages at the University of Sydney. It was closer to Duntroon than Melbourne and it was more interested in having such a chair.17
The cover story for Murdoch’s appointment was that the University of Sydney was moving to meet the growing demand created by increased commercial and cultural links between New South Wales and Japan. The Japanese Consul-General in Sydney, however, was fully aware that Murdoch and Murdoch’s brother-in-law, Okada Rokuo, were going to be teaching Japanese to military officers at Duntroon, and that there was more to the initiative than cultural and commercial links.18 The only people who seem to have been confused by the cover story were the authorities at the Naval College, where the Commandant, Captain C.H. Morgan, had to write to Captain Thring to find out who Murdoch was.19
In October 1917, Professor Murdoch returned to Japan to recruit further teachers of Japanese for the NSW Department of Education and lecturers for the University of Sydney. While in Japan, Murdoch maintained a correspondence with Edmund Piesse using a cover name, H. McRae of 39 Broadway, Camberwell, Victoria, to get past the ubiquitous Japanese surveillance system.20 The tradecraft was basic, as the address was Piesse’s private residence and McRae was his wife’s maiden name.
By 20 December 1917, Murdoch had recruited Miyata Mineichi, described as a teacher of Japanese, and Manzi Koide, described as a Professor of Agriculture, to come to Sydney to work as Japanese-language teachers. The two men were to arrive on the Aki Maru on 13 March 1918.21 Professor Miyata would move on to Fort Street High School and later provide private tuition to RAN students, including Eric Nave and Eric Kingsford-Smith (see Chapter 10).22
Oddly, James Murdoch had left his wife, Takeko, in Japan. Mrs Murdoch, accompanied by her brother, Okada Rokuo, finally arrived in Australia aboard the Kamakura Maru on 19 March 1919. The entry of Murdoch’s wife and brother-in-law was managed quietly, and Mrs Murdoch’s admission into Australia was approved with a note that no further action under the Immigration Act was required.23 It is almost as if someone had told James Murdoch that attempting to bring in a Japanese wife might prevent him taking up the post. There is some evidence of this in the response of Atlee Hunt to the arrival of Murdoch’s family. Hunt appeared a little perplexed by the arrival of two Japanese and quickly directed the Collector of Customs in Sydney to ‘ascertain and advise’ him on just how many Japanese were helping Professor Murdoch and what their names were.24
Despite concerns that the Okada clan was invading Australia, the matter soon died off. Marginal notes in the file provided informal guidance to officials that they need not worry about annual extensions for the three men concerned, but that yearly reports were required to ensure they did not change employment.25
In September 1919, Professor Murdoch was bringing in yet another Japanese, Ishiwara Shozo, to teach at Fort Street High School in Sydney. Permission for Ishiwara’s admission was given to the Collector of Customs in Sydney on 27 September 1919, five days after the NSW Director of Education made the request.26
All of this activity would gladden the heart of any intelligence professional. The Australian and NSW governments were actively undermining their own White Australia policies by bringing Japanese teachers into the country so that Australian students could learn Japanese in order to increase trade and commercial relationships and to spy. The work of Piesse, Murdoch and Thring, and their backers in Cabinet and the armed services, started to bring results. Two young officers, lieutenants John Broadbent and George Capes of the army’s staff corps, had become proficient enough in Japanese to accompany James Murdoch to Tokyo to undertake the Japanese-language course run through the British Embassy there.27 In addition, other young officers, including E.E. Longfield Lloyd and Eric Nave, had started to learn Japanese.
By 1921, Piesse and Murdoch had created one of the foundations of an intelligence system: language-training courses for military officers and future spies. There was a central bureau within the Prime Minister’s Department, and there was a Japanese-language program staffed by six Japanese teachers: Professor Miyata Mineichi, Okada Rokuo, Ishiwara Shozo, Isamitsa Kitakoji and the Australians James Murdoch and his deputy, Arthur Lindsay Sadler. It provided perfect cover for bringing individual Japanese to Australia in order to turn them into Australian agents. Whether this crossed anyone’s mind at the time is not recorded. If no one thought of it, then it was a big mistake. There is no better spy than an insider.
Although there is no clear record of Piesse having tasked anyone to undertake secret missions inside Japan, there are hints he may have placed two secret agents there. In his paper ‘The Far Eastern question: recent developments and their significance for Australia’, Piesse refers to two sources ‘with exceptional qualifications, one a European and one an Asiatic’ who had been supplying him with the information upon which he based his reports to the government.28 Who the European was is anyone’s guess, but the Asiatic may well have been Professor Manzi Koide, who accompanied Murdoch to Australia in March 1918. Koide had returned to Japan at the end of January 1920, and there is every possibility that he was providing intelligence to Australia.29 If so, then he may indeed be Australia’s first clandestine foreign agent.
All of this good work came to a shuddering stop in 1921, when the newly created system was hit with three massive losses. The first was the implosion of the relationship between William Watt and Billy Hughes. Watt and Hughes had been at loggerheads for a while, but when Hughes went behind Watt’s back during wool clip negotiations in London in April 1920, Watt was finally forced out of government and later resigned. Piesse and Murdoch had now lost their most ardent supporter and, although Senator George Pearce was still an ally, he appears to have been unwilling to fight Hughes.
The next to go was Atlee Hunt, who was moved from his position as Secretary of External Affairs to the newly created position of Arbitrator for the Commonwealth Public Service under the Arbitration (Public Service) Act 1920 in February 1921.30 It does not appear that Hunt wanted this job, but he held this position until he retired in 1931. His main preoccupation in the years following his appointment seems to have been to make himself as unpopular as he could with successive governments until he retired.31 The final blow for the language program came on 30 October 1921, when Professor Murdoch died at his home in Baulkham Hills.32 Edmund Piesse was now devoid of supporters, and he was left to run the Japanese-language program and the Pacific Branch without assistance and in the face of growing hostility from Hughes and those around Hughes.
Hughes was no fool when it came to political manoeuvrings. Watt was part of a group that included politicians such as George Pearce and Littleton Groom, and officials such as Atlee Hunt and Edmund Piesse. In fact, Edmund Piesse was a close friend of Watt’s. With the nomination of Piesse as the Head of the Pacific Branch during his absence overseas in 1919, Hughes would have become immediately hostile to both Piesse and his new intelligence organisation.33
This new branch, the Pacific Branch, was the first truly strategic civilian intelligence organisation created in Australia. Its objectives were outlined as being a ‘part of the intelligence arrangements for the Commonwealth’, with no administrative duties, but solely tasked to ‘study the affairs of the countries of the Far East and of the Pacific (including the US)’.34 The Australian government had created the specialist language-training courses for spies and now the organisation to run them. Their intended targets were everyone in the region, including the Americans.
The first moves in establishing this organisation took place at a Cabinet meeting chaired by Watt on 8 May 1919, when approval was given for the appointment of an officer to take charge of Far Eastern questions. This officer was to build up Australia’s understanding of Asia and the Pacific, and to oversee the collection of intelligence and information on the nations and their relationships. The official had no executive role and was not responsible for the conduct of Australia’s external relations.35
The survival of the newly created intelligence branch depended on Watt maintaining a modus vivendi with Hughes. With Watt’s sudden resignation, it was incumbent on Piesse to make himself and his organisation as useful to Hughes and his supporters in the government as he could. Unfortunately, Piesse did not do this; in fact, he did the exact opposite. The fight between Watt and Hughes continued after Watt resigned from the government, and the ground upon which Watt chose to fight was Australia’s attitude—that is Hughes’s attitude—towards Japan. Watt embarrassed Hughes by issuing a public statement expressing admiration for the work of Japan as Britain’s ally in the fighting of 1914–18. This was a very public denigration of Hughes’s position at Versailles and would have rankled anyone, let alone a man as self-important as Hughes.
Even now, Piesse and his Pacific Branch could have survived, but Piesse rashly entered the fray by writing reports supportive of Japan, such as ‘Japanese Expansion as it Affects Australia’. Historian Neville Meaney believes that Piesse’s reports represented a mellowing of his attitudes towards Japan and this got him into trouble with Hughes.36 What got Piesse into trouble, though, was aligning himself with William Watt. Hughes was not the sort of man to see them in any light other than that of immediate political necessity. Watt had gone, and Piesse would follow. Piesse now chose to visit Japan and Asia, removing himself from Australia between September 1919 and March 1920, just when the Pacific Branch needed him in Melbourne to protect it.
The next stage of Hughes’s attack was simplicity itself. He gave Piesse his head and allowed him to develop his pro-Japanese arguments to such an extent that Piesse eventually argued to exempt the Japanese from the provisions of the Immigration Restriction Act. This left Piesse completely isolated, and now that Hughes had paid out the rope, he pulled it tight by cutting Piesse’s access to secret intelligence reporting from Britain, India and the other British colonies in Asia.37 Piesse had been obtaining these from the Governor-General’s office, an arrangement George Pearce had put in place.38 The reason this reporting had to come via the Governor-General was simply that the Governor-General controlled British codes and cipher keys in Australia and these reports had to be decoded before being handed over to the Australian government.39
The reports Piesse was obtaining were ‘Extracts from newspapers’ and the ‘Intelligence summaries’ prepared by the Indian Army General Staff, as well as reports and summaries from other departments of the Indian government concerning the ‘activities of the Japanese’.40 The Indian government had also agreed to release ‘highly secret’ information, including ‘The Indian Brief Against Japan’ and the ‘Weekly report of the Director Central Intelligence’.41 Hughes arranged for all of these to be sent to him from 14 May 1920,42 and by July he had cut off Piesse’s access.
Hughes cut Piesse off to stop him having access to intelligence that Hughes saw as irrelevant but as useful to his opponents. The fact that Hughes stopped the flow of reports in July 1920 underlines the political imperatives behind his action. When Lord Forster, the new Governor-General, was informed that the reports were no longer required, he demanded a reason.43 The reply was that ‘these reports have not been found to contain information of relevance to the Commonwealth Government’.44 So Lord Forster ended the flow of reporting, leaving government ministers isolated and ill informed.45
On 9 February 1923, Billy Hughes was forced to resign as prime minister following the Country Party’s refusal to serve under him. Stanley Melbourne Bruce became the new prime minister, but as Piesse was soon to learn, Bruce had little interest in international affairs, foreign policy or intelligence. This was the final straw, and Piesse tendered his resignation in August 1923, taking a position in the Melbourne law firm Davies and Campbell.46
Tellingly, the resignation of Edmund Piesse was discussed in Cabinet on 20 November 1923 and Earle Page, as the acting prime minister, was delegated to speak to Watt about the arrangements to be made with Piesse following his departure from the public service. This was no ordinary resignation, and it appears that the Cabinet felt Piesse deserved much more than just a final pay cheque.47 That said, by getting involved in the political infighting of parliamentarians, Piesse destroyed the Pacific Branch and deprived Australia of an effective Australian foreign intelligence organisation until May 1952. The nation would have benefited far more if Piesse had played a better political game and given Hughes what he wanted.