“Practically all contact with the government was now broken. All the employees, including myself, were now civilians on secret pay-roll. The rent, telephonee, lights, heat, office supplies---everything was paid for secret so that no connection could be traced to the government. We were to read the secret code and cipher diplomatic telegrams of foreign governments---by such means as we could. If we were caught, it would be just too bad.” (Herbert O. Yardley in, The American Black Chamber, p.241)

The American Patriot: A Hero's Return

  • On April, 1919 Yardley returns home to Washington, only to find MI-8 in a dire peril. Without money to hold the civilian cryptographers and clerks, and the many others that only sought to return to their old civilian life, MI-8 was on the verge of becoming extinct. 

With hopes of saving MI-8, Yardley, officials of the State, War and Navy departments, decided to disband the Shorthand Subsection, Secret-Ink Subsection, transfer the Code Compilation Subsection to   the Signal Corps, and restore Military Intelligence Communications to the Adjutant-General of the Army. These changes left MI-8 with only the Code and Cipher solution Subsection. As a strong believer that the United States needed a cryptographic bureau,  Yardley used his salesmanship skills on the State and War departments. Ultimately, Yardley gained the support of Frank L. Polk, the acting Secretary of State at the time, General Marlborough Churchill, the director of Military Intelligence, and John Manly, who had been in charge of MI-8 in Yardley’s absence.​​

  • On May 16th, 1919, Yardley submitted a plan for a “permanent organization for code and cipher investigation and attack.” Three days later, the Chief of Staff, approved Yardley’s plan, soon to be followed by Polk’s “O.K.” In his plan, Yardley estimated the budget he believed would be needed in order to sustain the new MI-8, a number he estimated to be one hundred thousand dollar per year. When he presented his numbers to his officials, it was approved and Yardley received forty thousand dollars from the State Department’s special funds, and sixty thousand dollars from Congress.

May 16th, 1919

To: The Chief of Staff, John J. Pershing

 

 

On this date, Herbert O. Yardley submitted a memorandum to the U.S Chief of Staff,John J. Pershing, listing the utilities necessary to run the new MI-8, and the amount their would each cost. Below is a list of said utilities:

 

 

  • Rent, light, and heat: $3,900

  • Reference books: $100

  • Personnel:

    • Chief {Yardley}: $6,000

    • 10 code and cipher experts: $3,000/person ($30,000 total)

    • 15 code and cipher experts: $2,000/person ($30,000 total)

    • 25 clerks: $1,200/person ($30,000 total)

 

ALL ACCUMULATING TO $100,000, AKA 1.4 Millions in today’s currency.

 

 

MI-8, which Yardley referred to as the American Black Chamber, was first housed in a four-story brownstone front in the East Thirties, just a few steps from Fifth Avenue. This brownstone was also owned by an old friend of Yardley’s.

 In moving to New York City, Yardley had been promoted from second Lieutenant to Major, and had been tasked with leading a small group of men and women to the brownstone front in NYC.Therefore,,after having chosen the location, Yardley made a quick visit back to Washington to select the most efficient clerks and skillful cryptographers, and to pack up the necessary tools—language statistics, dictionaries, maps, reference books, and newspaper clippings dealing with international affairs.

Now in NYC, all contact with the government was broken. All employees, including Yardley, were perceived as civilians on pay-roll. All the amenities for the American Black Chamber was paid for secretly so that connection could be traced to the government. During the first few months of his employment, Yardley had an original salary of $6,000; however, that number quickly grew to an impressive $7,500.

Occasionally, Washington submitted their payments for the American Black Chamber through a Grand Central Post Office box—number 354.

Ultimately, this new MI-8 was tasked with reading secret codes, and cipher diplomatic telegrams of foreign government, which they were to do by any means possible. However, if they were caught, then the government would not come to their aid.

To cover up their real endeavors in New York City, Yardley and his fellow MI-8 employee, Charles J. Mendelsohn, who was also a part-time German linguistformed a business called the Code Compiling Company, which produced commercial code books, such as the Universal Trade Code that sold for large numbers.

 Yardley and Mendelsohn's innovative idea not only provided them with a "front" for the American Black Chambers true activities, but it also awarded them an income until they received actual payments from the government.The State Department’s contribution began on July 15th, 1919, and varied from $1,250 to $3,333 per month, with the largest amount coming later on, from 1921 to 1923. However, the American Black Chamber had already been in "business" since late May and therefore, the income the Chamber received from their front company had been essential.

 

Ultimately, the State Department’s contribution ranges from $15,000 to $50,000 per year. Due to the fact that funds for The American Black Chamber were deposited into Yardley’s bank account and his financial records were destroyed in 1950, it is not possible to reconstruct Yardley’s expenses.