5. Elimination of Germany’s harmful influence by an attempt at an economic understanding with regard to Russia. For this it is necessary:
5.1. To prepare the ground in France for acquiescence to or participation in such understanding.
5.2. To induce a group of British financiers to take the initiative in forming a British-German pool for the control of Russian Bank Stock.
5.3. To carry out all those measures (some of which have been indicated here) which are necessary for retaining the control in this pool in British or British-French hands.
As a self-appointed expert on Russia and one of the few people in intelligence circles who had actually been there during this critical period, Reilly took every opportunity he could to hawk his views to anyone of influence who might be receptive. An indication of his success in this direction can be seen from a note sent by Sir Archibald Sinclair to Winston Churchill on 15 December 1919.16 Reilly had apparently met Sinclair some days previously in order to give him a copy of The Russian Problem. While discussing it, he had allowed Sinclair sight of a letter recently received from the Daily Mail proprietor Lord Northcliffe, to whom he had also sent a copy. This resulted, as Reilly had hoped, in Sinclair sending the memorandum to Churchill with a covering note in which he remarked, ‘I have seen a very cordial note to Reilly from Northcliffe saying that he had “read every word” of the memorandum “to the end”’.17 This again exemplifies another of Reilly’s tactics, namely establishing influence by association. Despite the mutual suspicion that existed between Northcliffe and Churchill, Reilly knew that Churchill would be keen to see anything that Northcliffe had expressed an interest in.
While Reilly’s mind was clearly fixed on grandiose schemes, SIS was far more concerned with bread-and-butter issues, namely intrigues between pro-German Russians and German militarist elements in Berlin. As a result of information volunteered to the Foreign Office by the daughter of Chaikovsky, a member of the White Russian delegation in Paris, SIS in London sent a cable on 30 January to the SIS station in Paris:
With reference to your telegram CXP.583 of today, enclosed please find particulars of the German-Russian reactionary conspiracy report. This information was obtained from the daughter of Chaikovsky, to whom we have given your private address and told her to write you and fix up an appointment, and she will keep you in touch with any fresh movements she gets wind of… It would be as well to get in touch with Reilly and show him the enclosed report, and ask him to give you all the assistance he can.18
The report stated that:
Information has been received regarding a conspiracy which is being hatched by German and Russian reactionaries. The headquarters is in Berlin, and there are important branches in Paris and the Crimea. The first step in the conspiracy is to be a coup d’etat in the south of Russian Volunteer Army, which is to eliminate the leading pro-Entente elements including DENIKIN unless the latter is willing to fall into line with the plans of the pro-Germans. After this coup d’etat, the Volunteer Army under instructions from Germany, will conclude an armistice with the Bolsheviks.
The report asserts that:
…the centre of these intrigues is in Berlin under the direction of Gen. Ludendorff. Gen. Ludendorff has an agent in Paris whose name is unknown to me, who has received strict instructions from Gen. Ludendorff to have nothing to do with the official representative of the German government in Paris, as his organisation in Berlin is hostile to the German government and intends ultimately to overthrow it.19
Investigations ensued and cables passed back and forth between London and Paris. In a detailed report from Paris on 23 March, Reilly perceptively told C that:
Without wishing in any way to minimise the dangerous possibilities of the so-called ‘German-Russian Plot’ I am inclined to believe that under the present circumstances one is liable to attach to it more importance than it can in reality have. I have no faith from experience in the capabilities of the Russian Monarchists and I cannot imagine that the Germans can consider them as valuable associates.20
The report is also noteworthy in drawing attention to a prophetic view expressed by Nicolai Koreivo that:
Russia has nothing to expect from the Allies who have been all along pursuing a selfish policy towards her, and who have fooled and betrayed KOLTCHAK, DENIKIN and YUDENITCH for their own ends. An alliance between the German military party and the Bolsheviks would be the most satisfactory policy so far as Russian national interests are concerned. The League of Nations is a dream which is fortunately dissipating owing to America’s abstention, and it is therefore all the more necessary to adopt a ‘Realpolitik’ in which Russia and Germany will play a major part, and which promises the quickest political and economical recovery of these countries.21
This is more or less what came to pass two years later in April 1922 when Germany and Russia signed the Rapallo Treaty, recognising each other’s regimes and giving up all financial claims against each other. It was an inevitable recognition by the two nations of their mutual self interest.
Another inevitable recognition of mutual self interest was the decision by Sidney and Nadine Reilly to seek a divorce. Although they were not legally married, Nadine did not know this, and they had therefore to go through the motions of divorce in order that he could keep up the pretence. As such, they journeyed to Paris on 4 March 1920 in order to start the legal process. Reilly and Nadine called into the SIS office in Adam Street to be issued with a passport and travel tickets, although no prior arrangement seems to have been made. This was made apparent the following day when C received a note from Section H: ‘Reilly and wife No. 2 called at Adam Street yesterday for passport and passage to Paris. As you were away, I told Crowley verbally to get on with it, but I know nothing about the journey nor whether it is to be at our expense or not’.22
Not for the first time Reilly was combining his private business with that of SIS. Having made contact with the lawyers who were to attend to the divorce, he wrote two letters to Sir Robert Nathan at the Foreign Office from the Hotel Lotti in Rue de Castiglione, where he and Nadine were staying. From these letters dated 13 and 14 March it is clear that he had met Baranoff and Burtsev23 in connection with the unrest in Germany.24 On returning to London, Reilly wasted little time in typing up two more memorandums on Russian policy, sending copies to Archibald Sinclair, to ask for his view on them, before submitting them to the Foreign Office and the Department of Overseas Trade. Sinclair, as Reilly had hoped, immediately sent them on to Churchill, along with a brief letter dated 24 June:
Secretary of State
I hope you will find time to read these two short memoranda by my remarkable MI1c friend Reilly. They contain a concrete proposal for bringing about the downfall of the Soviet government by economic means and for putting us in a position at the earliest possible moment to obtain food and raw materials from Soviet Russia. He is very anxious to obtain ‘my’ opinion on them before pressing his views on the FO and DOT.
Reilly is reputed to possess an expert knowledge of finance, which would seem to be borne out by his personal prosperity and the authority which he enjoys among Russian financiers such as M. Jarascynski. For knowledge of Russia, grip of Russian problems, insight into the tendencies of political and economic forces and powers of prophecy which have been constantly tested throughout the last year, he is without a rival among my Russian and Anglo-Russian visitors. Picton Bagge would concur in this opinion, and so I have reason to believe would ‘C’ from the Intelligence point of view.25