492 • SINCLAIR, SIR HUGH
Sinclair was unexpectedly engulfed in a major crisis over theZi-
noviev Letter. His complicity in the affair did little to undermine
SIS’s status within Whitehall, however, for C even proposed to the
SSC in 1925 and 1927 that his organization might be the most appro-
priate to absorbMI5, theGovernment Code and Cipher School
(GC&CS) and even theSpecial Branch. This was a complete rever-
sal of the position in which Smith-Cumming had found himself,
fending off ‘‘amalgamation’’ from the War Office, but Sinclair ar-
gued that such a strategy would eliminate wasteful duplication. MI5
fought back, and C retired from the field with control over the code-
breakers of GC&CS, who were moved from Queensgate and accom-
modated in SIS’s main office block at 54Broadway. Simultaneously
he moved up from his home in Fishery Road, Maidenhead, and in-
stalled himself in a splendid, 18th-century town house at 21 Queen
Anne’s Gate (which conveniently backed onto Broadway Buildings),
with his sister Evelyn acting as his housekeeper, although reputedly
as a bachelor he spent much of his time at his club in Piccadilly,
the Naval & Military, typically surrounded by a thick cloud of cigar
smoke.
Despite the cultivation of some impressive sources, Sinclair re-
mained impotent in dealing with the Treasury, and he often com-
plained that SIS, with its secret vote of £180,000, cost the Exchequer
less in a year than a single destroyer operating in home waters. SIS’s
unpopularity in Whitehall was in part because his message, espe-
cially on the subject of the scale and speed of German rearmament,
was unwelcome. On more than one occasion, he clashed with Stanley
Baldwin over official estimates of the size of the Luftwaffe, and on
one occasion, in May 1935, threatened to resign unless the prime
minister returned to the Commons to correct a misleading statement
about German aircraft production figures. The issue led to a secret
Cabinet inquiry chaired by Philip Cunliffe-Lister (then secretary of
state for air, and later Lord Swinton) in July 1935 to take evidence
on the true strength of German front-line aircraft, and the Chief was
supported byDesmond Mortonand the head of SIS’sair intelli-
gencesection,Fred Winterbotham.
The reality was that SIS had produced some very precise statistics
but Baldwin, claiming that he had been misled, was reluctant to ac-
cept them because he believed, as he later acknowledged, that rear-