After the war Stephenson returned to Winnipeg and with a friend Wilf Russell he started a hardware business - largely inspired by a can opener Stephenson had taken from his POW camp. The business was unsuccessful and he left Canada for England where Stephenson became a wealthy industrialist with business contacts in many countries. In 1924 he married American tobacco heiress, Mary French Simmons, of Springfield, Tennessee.
As early as April 1936, Stephenson was voluntarily providing confidential information to the British, passing on detailed information to British opposition MP Winston Churchill about how Adolf Hitler's Nazi government was building up its armed forces and hiding military expenditures of eight hundred million pounds sterling. This was a clear violation of the terms of the Treaty of Versailles and showed the growing Nazi threat to European and international security; Churchill used Stephenson's information in Parliament to warn against the appeasement polices of the government of Neville Chamberlain.
Between the Wars
After World War II began (and over the objections of Sir Stewart Menzies, wartime head of British intelligence) now-Prime Minister Winston Churchill sent Stephenson to the United States on June 21, 1940 to covertly establish and run the British Security Coordination (BSC) in New York City, over a year prior to the U.S. entering the war.
The BSC office, headquartered in room 3603 in Rockefeller Center, became an umbrella organization that by the end of the war represented the British intelligence agencies MI5, MI6 (SIS or Secret Intelligence Service), SOE (Special Operations Executive) and PWE (Political Warfare Executive) throughout North America, South America and the Caribbean.
Stephenson's initial directives for BSC were 1) to investigate enemy activities, 2) institute security measures against the threat of sabotage to British property, and 3) organize American public opinion in favour of aid to Britain. Later this was expanded to included "the assurance of American participation in secret activities throughout the world in the closest possible collaboration with the British."
Stephenson's official title was British Passport Control Officer. His unofficial mission was to create a secret British intelligence network throughout the western hemisphere, and to operate covertly and very broadly on behalf of the British government and the Allies in aid of winning the war. He also became Churchill's personal representative to U.S. President Franklin Delano Roosevelt.
Stephenson was soon a very close advisor to FDR, and suggested to Roosevelt that he put Stephenson's good friend William J. 'Wild Bill' Donovan in charge of all U.S. intelligence services. Donovan founded the U.S. wartime Office of Strategic Services (OSS) which eventually became the Central Intelligence Agency (CIA).
In his role as the senior representative of British intelligence in the western hemisphere, Stephenson was one of the few people in the hemisphere authorized to view raw Ultra transcripts from the British Bletchley Park codebreaking of German Enigma ciphers. He was trusted by Churchill to decide what Ultra information to pass along to various branches of the U.S. and Canadian governments.
Under Stephenson, the BSC directly influenced U.S. media (including the writing of American newspaper columnists Walter Winchell and Drew Pearson) and other media in the hemisphere towards pro-British and anti-Axis viewpoints. Once the U.S. had entered the war, BSC then went on to train U.S. propagandists from the American Office of War Information in Canada from 1941-1944. BSC covert intelligence and propaganda efforts directly affected wartime developments in Brazil, Argentina, Colombia, Chile, Venezuela, Peru, Bolivia, Paraguay, Mexico, the Central American countries, Bermuda, Cuba, and Puerto Rico.
Stephenson worked for no salary. He hired hundreds of people, mostly Canadian women, to staff his organization and paid for much of the expense out of his own pocket. Among his employees were secretive communications genius Benjamin deForest (Pat) Bayly and future advertising wizard David Ogilvy. At the height of the war Bayly, a University of Toronto professor from Moose Jaw, Saskatchewan, created the Rockex, the fast secure communications system eventually relied on by all the Allies.
Not least in Stephenson's accomplishments and contributions to the war effort was the setting up by BSC of Camp X in Whitby, Ontario, the first training school for clandestine wartime operations in North America. Around 2,000 British, Canadian and American covert operators were trained here from 1941 through 1945, including students from the ISO, OSS, Federal Bureau of Investigation, Royal Canadian Mounted Police, U.S. Navy and U.S. Military Intelligence services, and the Office of War Information, among them five future directors of what would eventually become the American Central Intelligence Agency.
Graduates of Camp X operated in Europe in Spain, Portugal, Italy, and the Balkans as well as in Africa, Australia, India, and the Pacific. They included Ian Fleming, later the author of the popular James Bond books. It has been said Goldfinger's fictional raid on Fort Knox was inspired by a Stephenson plan (never carried out) to steal $2,883,000,000 in Vichy French gold reserves from the French Caribbean colony of Martinique.
BSC purchased a ten-kilowatt transmitter from Philadelphia radio station WCAU and installed the transmitter at Camp X. By mid-1944, Hydra was transmitting 30,000 and receiving 9,000 message groups daily, much of the secret Allied intelligence traffic across the Atlantic.
Recognition and honours
British-born Canadian author William Stevenson (no relation) wrote a 1976 book A Man Called Intrepid about Stephenson. There are doubts about the veracity of much of what he wrote.
Nigel West in Counterfeit Spies casts doubt on much of Stevenson's account; the award of the Croix de Guerre avec Palmes and the Legion d'Honneur - according to West no such record exists of either award.
John Colville (who was one of Churchill's private secretaries) in his 1981 book The Churchillians took issue with Stevenson's description of Stephenson's relationship with Churchill during the war. He pointed out that Stephenson was not Churchill's personal liaison with Roosevelt, that in fact (as is well known) the two men corresponded directly and constantly. Indeed Colville never heard Churchill speak of Stephenson at all.
There are however numerous other references to the Stephenson-Churchill connection in, for example, Maclean's magazine December 1, 1952, The Times October 21, 1962 and many references to the relationship in Hyde's biography The Quiet Canadian (1962). Churchill was still alive.
Former British intelligence agent Kim Philby refers to Stephenson as a friend of Churchill in his book My Silent War. Stephenson's personal secretary and personal cipher clerks talk of Stephenson-Churchill communication in the book The True Intrepid and in the documentary Secret Secretaries. There is chapter on the relationship in CIA historian Thomas Troy's Wild Bill and Intrepid.
Controversial historian David Irving in Churchill's War reveals evidence of a secret communications link between Roosevelt and Churchill that was run by the FBI but controlled through Stephenson's office. There are references to this link in The True Intrepid.
A dinner in Stevenson's book at Lord Beaverbrook's house in May or June 1940 is highly doubtful too. Colville described the printed letter of invitation from Churchill as clearly an invention, since Churchill was punctilious and never called Beaverbrook "the beaver", and for obvious reasons never signed himself W.C. Lord Trenchard is described discussing his fighter aircraft, where in fact it had been 10 years since Trenchard held a RAF post. Colville's conclusion was to hope that Stevenson's book was not ever "used for the purpose of historical reference."
In the papers of William Stevenson at the University of Regina there is only one reference to the Beaverbrook dinner. Stephenson cables the author that he did not recall the exact date of the gathering decades before, and there is no mention of him receiving a written note invitation. (Macdonald page 372", Troy page 237) In a foreword to Richard Dunlop's Donovan, Stephenson writes he received a telephone invitation to the dinner and he refers to "Boom Trenchard of RAF and Scotland Yard fame."