The Black Chamber: How America’s First Peacetime Cipher Bureau Broke Foreign Codes Behind a Fake Company Sign

In the summer of 1919, a company moved into a four-story brownstone at 3 East 38th Street, just around the corner from Fifth Avenue in New York. It was called the Code Compiling Company; some sources add “Universal” to the front of the name. It looked like a business that made commercial telegraph code books and sold them to banks and companies. In reality it was the cover for a code-breaking agency the U.S. government had set up in secret. Its staff were not civil servants but civilians paid in cash from a secret account, and even the rent and telephone bills were paid separately so that nothing could be traced back to the government (Smithsonian Magazine; Cromwell International). Later known as the “Black Chamber,” this organization was America’s first peacetime code-breaking agency, one that lived on after the war had ended (Wikipedia). It broke Japan’s diplomatic codes and steered arms-limitation talks in America’s favor. Then, after it closed in 1929, the world learned about it from an exposé written by its own chief.

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Origins: MI-8, the Cipher Section Born of World War I

The story begins with a telegraph clerk. Herbert O. Yardley was born in 1889 in Worthington, Indiana, and learned telegraphy from his father, a railroad station agent and telegrapher. In 1912 he passed the civil service examination and became a clerk in the State Department’s code room. Working the night shift, he tried his hand at the U.S. government’s own coded cables, and he later claimed that in 1916 he broke a 500-word coded message between President Woodrow Wilson and his close adviser Colonel Edward House in under two hours. Alarmed that American codes were so weak, he wrote a 100-page report, “Solution of American Diplomatic Codes,” and submitted it to his superior (Wikipedia; Smithsonian Magazine).

When the United States declared war on Germany in April 1917, Yardley moved to the Army. That June he was commissioned as a reserve officer in the Signal Corps, and he then became head of the newly created Section 8 of the Army’s Military Intelligence Division, the cipher section known as “MI-8” (Wikipedia; Smithsonian Magazine). At first he had only two assistants, neither of whom knew anything about codes. But MI-8 soon grew into an organization of more than 150 people in five sections: code compilation, communications, shorthand, secret inks, and code and cipher solution. Yardley wrote that at one point the section was testing more than 2,000 letters a week for secret ink (Smithsonian Magazine). It was also MI-8 that solved the cipher message found in the clothing of Lothar Witzke, a German agent caught on the Mexican border in 1918, and so exposed his sabotage work (Wikipedia; Cromwell International).

An Organization That Outlived the War: The Cipher Bureau of 1919

After the war, MI-8 was about to be broken up. Back from Europe in April 1919, Yardley recalled that there was no money to keep the civilian code experts and staff (Smithsonian Magazine). He persuaded Brigadier General Marlborough Churchill, director of military intelligence, to put forward a plan for a permanent code-breaking agency funded jointly by the Army and the State Department. In May 1919 the acting secretary of state and the War Department agreed to the plan, and the “Cipher Bureau” was born (NSA; Cromwell International). The original plan called for $100,000 a year, with the Army paying 60 percent. But because the bureau concentrated on diplomatic cables, which mattered less to the Army, the chief of staff cut the Army’s share, and the money came mainly from the State Department (NSA). The funds actually received ran between $15,000 and $50,000 a year (NSA paper).

Why New York rather than Washington is not clear. Yardley pointed to a legal restriction that kept State Department special funds from being spent inside Washington, but no record survives to back this up. Later he also claimed that Washington was crawling with spies (NSA paper; Cromwell International). NSA suggests a plausible reason: several international telegraph companies were based in New York.

The office moved twice. After about a year at 3 East 38th Street, it moved on July 1, 1920, to another brownstone at 141 East 37th Street, and in 1924 to an office building at 52 Vanderbilt Avenue, next to Grand Central Terminal (Cromwell International). The nickname “Black Chamber” was not Yardley’s invention. It came from the “chambre noire,” the name for the secret code-breaking rooms that several European states kept in the 17th and 18th centuries (Wikipedia; NSA paper).

The Quiet Cooperation of the Telegraph Companies

The way to get foreign cables was through the telegraph companies. The State and War Departments made special arrangements with companies such as Western Union and Postal Telegraph (Cromwell International). Intelligence writer James Bamford writes that these companies illegally handed over the cables of foreign embassies and consulates and that, in the end, “almost the entire American cable industry” took part (Wikipedia).

In peacetime, however, more and more companies were reluctant to hand over their customers’ cables. One reason may have been the Radio Act of 1927, which broadened the range of acts punishable as breaches of message secrecy (Wikipedia). Yardley wrote that he had to obtain the cables by rather ingenious methods. Cromwell International takes this to mean illegal methods such as break-ins, theft, and bribery.

Breaking Japan’s Diplomatic Codes

The bureau’s most important target was Japan. Cryptologic historian David Kahn explains that Japan’s push into China, its growing navy in the Pacific, and its commercial expansion into Far Eastern markets all clashed with American interests (Wikipedia). After nearly a year of work, Yardley’s team broke the Japanese diplomatic code, and when the arms-limitation conference opened in Washington in 1921, the team was reading Japanese diplomatic cables (Wikipedia).

Yardley stated that from 1917 to 1929 he solved more than 45,000 diplomatic cipher telegrams of foreign governments. The code books he listed belonged to Argentina, Brazil, Chile, China, Costa Rica, Cuba, Britain, France, Germany, Japan, Liberia, Mexico, Nicaragua, Panama, Peru, El Salvador, the Dominican Republic, the Soviet Union, and Spain (Smithsonian Magazine). Even Britain, an ally, is on the list. These numbers, however, are Yardley’s own claims.

The Washington Naval Conference: Reading the Other Side’s Fallback Position in Advance

The Washington Naval Conference ran from November 12, 1921, to February 6, 1922 (Smithsonian Magazine). The central question was the ratio at which each nation’s capital-ship tonnage would be capped. The U.S. delegation’s proposal held the Japanese navy to 60 percent of America’s, a U.S.-Britain-Japan ratio of 10:10:6 (5:5:3) (Cromwell International). The U.S. Navy wanted an even lower 10:10:5, while Japan insisted on 10:10:7 (U.S. State Department Office of the Historian). Among the cables the Black Chamber decrypted were instructions from Tokyo telling its delegates that, if a clash had to be avoided, they should in the end fall back to 10:10:6. Knowing this, the U.S. delegation held firm, and Japan finally accepted 5:5:3 (Cromwell International; Smithsonian Magazine). The ratio went into the Five-Power Treaty signed by the United States, Britain, Japan, France, and Italy (U.S. State Department Office of the Historian).

The Black Chamber was rewarded with bonuses, and Yardley received the Army’s Distinguished Service Medal (Smithsonian Magazine). The citation, however, named his wartime service, not his work at the conference (NSA paper). NSA judges that, apart from the Washington conference, it is hard to say with confidence that Yardley’s organization directly shaped policy or the outcome of negotiations.

Decline and Closure: October 31, 1929

Once the conference was over, the organization went into decline. When its budget was cut in 1924, Yardley let more than half his staff go, leaving six people, Yardley included (NSA paper; Cromwell International). Around the same time in Washington, William Friedman was doing new cryptologic work for the Army (Wikipedia).

In 1929, Henry L. Stimson, the new secretary of state in Herbert Hoover’s administration, cut off State Department support. That same spring the Army decided to transfer its code-breaking work to the Signal Corps, which rebuilt the operation its own way and let Yardley and all his staff go (Wikipedia; NSA paper). The Black Chamber officially closed on October 31, 1929. The staff received three months’ severance pay, and the files went to the Army’s Signal Intelligence Service (SIS) (Smithsonian Magazine).

The decision is remembered through a single line from Stimson: “Gentlemen do not read each other’s mail.” But that line does not come from a 1929 record. It appears in On Active Service in Peace and War, the memoir Stimson published with McGeorge Bundy in 1948, introduced with the words “as he later said” (Stimson memoir). Cryptology researcher Louis Kruh, writing in the journal Cryptologia in 1988, re-examined whether Stimson made the decision alone and when he actually said the line (Kruh, 1988).

NSA considers it likely that the decision came down to the budget, and it also counts the reorganization of the Army’s code-breaking organization as an important factor. Yardley himself came to believe that Stimson had acted on President Hoover’s orders; his source was word passed on by a woman reporter he did not name (NSA paper). Another reading holds that Stimson objected to decrypting the messages of friendly diplomats, not to intelligence work in general. Indeed, after becoming secretary of war in 1940, he relied heavily on decrypted enemy communications throughout World War II (Wikipedia).

Exposure: The American Black Chamber and the Deal with Japan

The Black Chamber closed just after the New York stock market crash. Yardley’s ten years of secretly funded work left no official civil service record, and he had no pension (Wikipedia; Smithsonian Magazine). According to a 1967 memo sent up to the CIA’s deputy director, in June 1930 Yardley sold the Japanese embassy in Washington the secret that the United States had long been breaking and reading Japanese codes, explained how it was done, and received $7,000 (Smithsonian Magazine). The deal was first put into print in 1967 by author Ladislas Farago, in a book based on Japanese Foreign Ministry documents. An NSA historian examined those documents in a 1981 paper, but David Kahn, author of The Codebreakers, was skeptical of the charge (NSA paper; CIA review).

On June 1, 1931, Yardley published The American Black Chamber. Priced at $3.50, the book sold 17,931 copies in the United States and 5,480 in Britain, and its Japanese edition sold 33,119 (Wikipedia; Smithsonian Magazine). The book is thought to have revealed to 19 countries that their codes had been broken (Wikipedia). Japan’s Foreign Ministry bought more than 100 copies and sent them to its embassies and legations to warn them that their codes were at risk (Smithsonian Magazine; NSA paper).

It is often said that the book pushed Japan to strengthen its codes and fed its militarism. How far it did so, however, is hard to pin down. Building on the deal allegation, James Bamford wrote that Japanese hard-liners were all the angrier because Yardley had told the whole world, in a book, information the Japanese military had already paid for (Wikipedia).

The government wanted to prosecute Yardley, but the law at the time gave no grounds for punishing him. In February 1933, when he delivered a second manuscript about the Washington conference, Japanese Diplomatic Secrets, 1921-22, to the Macmillan publishing company, U.S. marshals seized it under the Espionage Act of 1917. The manuscript was not declassified until 1979 (Smithsonian Magazine; Wikipedia). In 1933 Congress passed a law making it a crime for anyone who had access to diplomatic codes, or to messages sent in them, through U.S. government employment to publish them without authorization. That provision survives today as Title 18, Section 952, of the U.S. Code (Wikipedia; Smithsonian Magazine).

Yardley later did code work for China’s Nationalist government (1938-1940) and for Canada (1941), but he never won back the trust of the U.S. government. Even so, NSA inducted him into its Hall of Honor in 1999 (Wikipedia).

Legacy: A Broken-Off Organization, Files That Carried On

The Black Chamber’s papers were moved to Washington by William Friedman, who came to New York in October 1929, and the newly created Army Signal Intelligence Service (SIS) went on to take them over (Cromwell International). Friedman was furious at The American Black Chamber, saying it had revealed sources and methods and inflated Yardley’s achievements (Wikipedia).

After World War II, the SIS became the Army Security Agency (ASA). On May 20, 1949, the military’s code work was brought together under the Armed Forces Security Agency (AFSA) in the Department of Defense, and on November 4, 1952, that agency was reborn as the National Security Agency (NSA) (Wikipedia).

The Black Chamber is not NSA’s direct ancestor. Its staff were all dismissed, and only its papers were handed on; the organization itself did not continue (Cromwell International). Even so, NSA records it as the first peacetime, national-level civilian intelligence agency in American history. A decade in which one man’s talent and self-promotion, the cooperation of the telegraph companies, and budgets and bureaucratic politics were all tangled together left behind one question: should a government read other countries’ communications even in peacetime? That question did not go away when the Black Chamber closed.

References

• The Black Chamber (NSA Center for Cryptologic History)
• The Many Lives of Herbert O. Yardley (NSA, Cryptologic Spectrum, 1981)
• The Spy Who Exposed the Secrets of the Black Chamber (Smithsonian Magazine, 2025)
• Black Chamber (Wikipedia)
• Herbert Yardley (Wikipedia)
• Herbert Yardley and the American Black Chamber (Cromwell International)
• The Washington Naval Conference, 1921–1922 (U.S. Department of State, Office of the Historian)
• Henry L. Stimson and McGeorge Bundy, On Active Service in Peace and War (1948), p. 188 (Internet Archive)
• Louis Kruh, “Stimson, the Black Chamber, and the ‘Gentlemen’s Mail’ Quote,” Cryptologia 12, no. 2 (1988)
• Review of The Reader of Gentlemen’s Mail (CIA, Studies in Intelligence)

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