ARCOS LIMITED.

Following the creation of the Soviet Union, the country had problems forging trade and diplomatic relations with other states, especially those in the west. In 1924 diplomatic relation began with Great Britain, shortly after the soviets created Arcos Ltd based in London. An organisation that would encourage trade between the two countries, however that was the public image, the real purpose of Arcos Ltd was to spy on Britain. The organisation was staffed with twice as many staff as necessary so that the spies could go about their business, while the organisation ran smoothly as not to arouse any suspicion.

With this success the soviets created similar organisations like “Handelsvertretung” in Germany and the Amtorg Trading Corp in the USA, these were set up the same way and the sole purpose was to spy.

Arcos remained unnoticed by the British government until 1926 the year of the General Strike, which crippled Britain. The strike began with a miners dispute and quickly spread throughout the country as the Union movement became established. The soviets made a fundamental error of judgment here, they assumed that the people of Britain were ready for revolution and with this in mind the soviets sent the striker leaders £250,000, in order for them to be able to fund a revolution and possibly join the soviets in an alliance. However the British government became aware of this payment and protested to Moscow that they were interfering with the internal affairs of another state and threatened all sorts of sanctions against them. The Trades Union Congress agreed and the strike leaders sent the money back to Moscow.

Winston Churchill then the Chancellor of the Exchequer took up the gauntlet from there and began a campaign of threats to the soviets regarding the trade relations between the two countries. As did MI5, who began an intense surveillance campaign on all of the 300+ employees of Arcos Ltd, who were free to roam London and Britain seeking out confidential information on both the military and industry. It was in fact common for soviet agents to approach military personnel in pubs and speak openly about troop movements, equipment and ship deployments as well as seeking out personnel in the industrial sector who could gain access to documents on industrial developments.

Prime Minister, Stanley Baldwin authorised a raid on the HQ of Acros at No 49, Moorgate on 12th May 1927, police stormed the building and in the basement found two men and a woman burning documents, one of which was the Chief Cipher Clerk from the soviet embassy, a list was found in his possession containing the names of soviet agents and letterbox drops in the USA, Britain, several South American countries and several others.

The British government ordered all Arcos Ltd personnel to leave Britain and on 26th May 1927 the soviet embassy was closed and all trade and diplomatic relations were severed, this remained so for almost two years. The Amtorg Trading Corp however remained active in the USA until the beginning of World War Two in the late 1930’s.