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NSA “[Draft] Report of Visit to Crypto A.G. (Hagelin) by William F. Friedman,” Top Secret, March 15, 1955

---- --------- - - - REF ID A2436243 TOP SEeRE'F - '- REPORT OF VISIT -TO pRYP 'O A G HAGELm WILLIAM F FRIEDMAN SPECIAL ASSISTAft TO THE DIRECTOR NATIONAL_ SECURITY AGDCY 21 - 28 FEBRUARY 1955 ooo o ooooo oo oo T6P SEeRET Declassified and approved for release bv NSA on 07-22-2014 pursuant to E O 13529 Ji 'i'0F SESRH l' I INTHODUCTION - ------l In accordance with Letter Orders 273 dated 21 January 1955 as modified by L o 273-A dated 4 February 1955 I left Washington via MATS at 1500 hours on 18 February 1955 arrived at Orly Field Paris at 1430 hours on 19 February and a t Zug Switzerland at 1830 th same day I spent the next few days with Mr Boris c w Hagelin Renior and Mr Boris Hagelin Junior for the purpose of learning the status of their new developments in crypto-appa ratus and of ma king an approach d a proposal to Mr Hagelin Senior as was recently authorized by USCIB and concurred in by I BIB Upon completion of that part of mi mission I left Zug at 1400 hours on 28 February and proceeded to London arriving at 1845 that evening 2 The following report is based upon notes ma de of the substance of several talks with the Hagelins at times in separate meetings with each of them and at other times in meetings with both of them 3 The notes regarding the status of new developments and plans for the future should be of interest Included among these notes is information of conside able importance in connection with the problem of French COMSEC 4 The approach and proposal which is referred to in paragraph 1 above and which I was authorized by USCIB to present to Mr Hagelin Senior USCIB 29 14 29 dated 27 December 1954 nd concurred in by message from Chairman LSIB to Chairman USCIB was ma de to him during the evening of 26 February and the discussions thereon were continued with Mr Ha gelin Junior on 27 February at the request of Mr Hagelin Senior I 5 The approach was quite successful for the USCIB proposal was accepted with alacrity and without any nxl l 1fication I o o oo o o PL 86-36 50 USC EO 3 3 h 2 l TOP SECRET 36Q II STATUS OF NEW DEVE'LoPMENTS l Sales and' Prospects of Sales of C-Line of Ma chines -- The following information under this heading was given mostly by Ha gelin Jr who either hB d the data in memory or had quick access to the records pertaining thereto a The present manufacturing capacity of the Ha gelin plant in Stockholm for the manufacture of' the C-line of ma chines C-52 CX-52 etc is 6o to 80 ma chines per month the goal is to increase this to 100 per month as soon as practicable ter the Stockholm plant is closed down and the new plant in Zug is' well established see para lb below No manufacturing quotas were mentioned with regard to other ma chines the latter are still ih the development prototype or pre-production stage b Decision has been ma de to close down the plant in Stockho1and to moV'e such of its manufacturing tools and equipment as is deemed advisable or necessary to Zug where two new buildings are to be prepared for production of the new lines of ma chines One of these buildings is an existing structure which is to be modified to suit the need for additional space for operations but its top floor is to be ma de into an apartment for the chief engineer Mr Sture Nyberg presently in Stockholm but scheduled to move to Zug as soon as the e pa rt ment is completed The other building is to be newly constructed and the excavation therefor has been completed its top floor is t be an apartment for Boria Ha gelin Junior and his family The three buildings the two abovementioned plus the present research and development building are ad Jacent to the home of Boris Hagelin Senior so that the new plant comprising Crypto A th will be a compact homogeneous set of uni ts I was told by Hagelin Junior that his father expects to retire f om active direction of Crypto A G in two years at age 65 although tindoubtedly he wil continue to have a voice or hand in direction thereafter From one cmnmen made by Hagelin Senior I gathered the unmistakable impression that he plans to let Ha geliri Junior take over the Crypto business and direct its affairs when he himsel f retires c i The plant in Stockholm besides being now engaged in manufacturing of w C-52 and CX-52 ma chines is also to fill an order for 500 to 1 000 ma chines or the old C-446 type See paragraph t l4 below In order to execute this order some or most of the toois tor ma king the C-446 will bs e to be rehabili ted or else replaced with new ones I asked 11 Senior if he needed any fine ncial help in this regard his answei' W i in the negative since as he said he 2 'f P SEEURRET o o oo o oooo estimated the cost of rehabilitating the old tools or making new ones to be only about $10 000 However he indicated that he might like to have some help in building up his new plant in ug for without it he will have to sell some of his liquid capital assets stocks and bonds I ma de no comment and the matter was not referred to again I wish to point out however that the rehabilitation of the C-446 tools offers certain potential advantages to UKUSA for once these tools have been rehabilitated Hagelin will be able as he himself mentioned to me to make more C-446's than are needed by the government for which he is making this old model In other words he was hinting to me that this rehabilitation would make it possible for him to supply certain customers with a model almost like the u-209 This model is of course easier to solve than the new models and OGA 2 The present space occupied by the Hagelin plant in Atockholm will be turned over to the Johansen Gauge Company together with all of the C-446 tools Jigs and dies these are to be held by Johansen on loan until the order for the 500 to 1 000 C-446's has been completed These tools Ji er a and dies together with certain ma chineey will then be shipped to Zug The Johansen firm is to take over and employ all or most of the Ha gelin workers in Stockholm except Chief ngineer Nyber mentioned above d 1 It may be well at this point to set forth specifically the different models or machines which are comptised in the C-line usinp designators which the HagelinR and I agreed would be suitable The C-line ma chines are readilv clnssifiable accordinp to Ha gelin Senior iato two main cl asses a Class 1 -- Where all keywheelfi advance the same number of steps In the or the M- 09 of tne C-446 nd t certain version of the C- th advance iFI one ate o case EIO 3 '3 t 2 PL 8q- 6 50 USC 3605 o ___ -_____ In this class the rna chines are not to be equipped for operation with a one-time tape OTT o o o o o 3 TOP SECRET b Class 2 -- Where the stepping is il'regular and where OT ' readers are proviued as well as equiprm mt for producing the tapes 2 Based pon the foregoing ca t gol ization in Class 2 there are the following models a CX-52a The model with Sta nda1 d A slide bars for the cage which produce irregular or varying angular displacements of the key wheels each wheel advancing O 1 2 3 4 or 5 steps per I b CX-52b The model with Standard B slide for the cage which p i oduce regular or fixed angular displacements of' the key wheels all wheels advancing the srune number of steps but the number may be any one from l to 32 c CX-52c The mouel which is compatible with the old types of C ma chines the-M-209 the C-446 or a certain version of the C-52 ma chine d CX-52ak A CX-52a with the Hllettenhain kompl Lmentary i'eat ure incorporated there in e CX- 2bk or CX-52ck These are likewise the same as CX-52 and CX-52GBP butwith the complirnc tary feature incorporated therein r CX- 2 10 anu cx-52 30 T nese are CX-52's for 10-character ciphering digits l'or enciphering numerical code groups or for 30-charo cter ciphering 30-elmncnt alphabet These ma chines can be of the a b or c type a nd ca11 also be pr ov1ded with the complimentary feature Example CXM 2ak 10 3 In Class 1 there are the following models a C-52 The model whlch is compatible with M-209and C-446 but also can be ma de t o t'unctlou with interchangeable key wheels and with key wheels of larger ntunbers of elellltlnl s than M-209 or CM446 so that a set of key wheels can comprist more t han the 6 wheels now incoi pore ted in the M- 209 or C-l li6 Also the C-52 can be provided with a larger numbe oi' Slide bars than has tile M-2 or C-446 b I presume that the re can be a C-52 10 or c-52 30 but these were not mcm loned anti at the moment I do not l ecall asking whc-thcr thcH e coulu be a C- 2u 01 C- i2b or C- 21 or C-52ak etc I could no doubt a ocen a in t hls-point easily cnouoh-by askingeither of the Hagelius 4 TOP SEEURRET o e 1 However there is a new C-52 machine which is of conslderable interest and which llagelin Jw1ior mentioned with much enthusiasm This l'uoclel wo agreed to call the C-52Y 2 In the C-52Y the print wheel may be advanced according to combinations of one to 4 different amounts and each of the key wheels may also be advanced according to comblnations of one to 4 different amounts Perhaps the best way to explain what this model will do is GBPirst to mention what the M-209 1 or the C-446 or the ordinary C-52 does In each of these models if there are say 4 lugs presen ted to o key wheel and the latter is in active position t he print wheel advances '4 Steps but in the C-52Y this same condition co n bring about 4 kinds or amounts of stepping of the print wheel o 1 3 1 or 4 steps can be made depending upon the particular slide bar and lug arrangements in the cage Or if 7 lugs are presented to a key wheel and the latter is in active position the print wheel can advance 0 1 3 4 or r steps by one arrangement or 0 1 2 1 5 r steps by a second arranGcment or 0 1 1 1 6 1 7 steps by a third arro nBement the total amount is the sum of the 4 parts So much i'or the advance of the print wheel How for the stepping 01' the key wheels In the M-209 and the c-1 46 these always advance and qui te regularly each wheel makes one and only one step In the C-52Y however the key wheels are advanced according to the same qua dri 1rtite combir1ation rule as that applicable to the print wheel depending upon the slide bar and lug arrangement If 7 is the Jll3 Ximum amount for a certain key wheel the latter can auvance o 31 4 1 or 7 steps by one arrangement of slide ba rs and lugs or 0 1 2 5 or 7 steps by a second arranBement or 0 1 1 1 6 1 or 7 steps by a third arrangement The different key wheels mo y receive diffe1 cnt sets 'or quo dripa rtite combination steppings but the total nwnbcr of different sets can not exceed 32 This type of action which was conceived only recently December 1954 can be brought about in the C-52 merely by placing star1dard B slide bu rs in the cage in a certain sequence and with a certain kind of lug assembly 3 Hagelin Junior was so enthusiastic about this new model that within two or three minutes immediately following our initial exchange of' greetings he announced that they had decided to stop making the CX model and are switching over to a variation of the C-52 which he said is simpler in mechanical effectuation and more readily adaptable to the crypto-control mechanism f'or the HX or electrical-rotor machine I was of course rather startled by this statement and later queried Hagelin Senior about it saying that I was astonished at the decision to switch to the C-52Y bef'ore any security evaluation at all had been made of i't Hngelin Senior said Oh Bo is young and overflowing with enthusiasm We will hold up ma king that model if you want us to hold up on it I told him that I thouaht this mieht be advisable and that in any case we would want one o r thcse models juat as soon as possible Hae elin Senior so id that it was eo sy to convert a T0P SEEURRET ooo o o o C-52 to C-52Y and that we could do it wi h the one he is sending us from Stockholm at my request by air all we would need would be the special instructions for the slide bar and lu arrangements and he is to provide these instructions soon 4 A few minutes later Hagelin Senior read me a paragraph from a recent letter from the Italian defense department in which it was stated that they were withholding an order for new Ha gelin ma chines until more becomes known about what had been decided with regard to the various levels of NATO communications Ha gelin Senior wanted to know whether I thought there was a possibility that a Hagelin ma chine might be adopted for 3rd level NATO col lUlUilications I indicated that this was certainly conceivable and that that was why I was so interested in the proposed shift from QX-52 to c 52y manufacturing for I pointed out to him that NATO COMSEC authorities would have to be sure of the security of the new model and that detailed studies would certainly have to be ma de of the C-52Y before it could be given serious consider ation for possible NATO usage It was then that Hagelin Senior said that he would hold up on the C-52Y if we wanted him to do so o f the C-line Following is information regarding sales of ma chines of 1 E ypt -- now negotiating for 50 C-52 ma chines oThey also want 10 BC-52 machines They are waiting until an agreement Qan be reached en to prices No final decision has yet been reached either as to whether their ma chines are to have Roman 6r Arabic characters I asked Hagelin Senior whether there had been a nY trouble with the Egypt ins because they- weren' t being given the CX model Well the only thing they can have now is the c-52 We just stopped talking about the CX we talked only about the C-52 and they were satisi'ied 2 Jordan -- has bought about 30 ma chines 10 are C'-52's and 20 are BC-52's Ha gelin is going to make delivery soon He said I have a very good agent there These machines are for the Ai-ab League and the Foreign Office It is the British who are behind this purchase -1t' s they who are paying The Jordan Chief Signal Officer is a Britisher '' 3 ' -- The Hagelins have no agent in that country There seems to be no interest there in cryptomachines according to Bagelin Senior 4 J raq -- is negotiating for an order of about 50 to 200 C-52's with Arabic characters ''They have a more than lukewarm intereat 6 T0P SEEURRET o o o o oo o 5 Syria -- has recently pw chased 50 C-36 sic ma chines I asked Hagelin Senior where in the world he found so many of that old tnodel We had some down in thP basement in Stockholm recently 6 Saudi Arabia -- only some correspondence exchanged Ha gelin has no agent nearby 7 India -- wo s shown only the C-52 model The Hageline felt quite certain that the Indians will order some of these ma chines and they are also definitely interested in the BC-52 Hagelin Junior on his recent trip it will be recalled did not demonstrate the CX 52 to any of the Arab countries nor to India J The Indian Army ls interested in these 118Chines too They want to have a lot of BC-52's for test purposes Don't you think that queer I said that it seemed a bit unusual to ask for a lot of 1nachlnes merely for testing 8 Pakistan -- is waiting for a model of the C-52 for Hindustani which has 29 or 30 characters 9 Belgium -- The Armed 1''orces have ordered more than 200 CX-52's and about 160 have already been delivered These are CX-52a 1 s with variable typewheels The BoJlgian Foreign Office have C-446-machines and will stick to these but have bought 100 variable typewheels 10 France -- 11 The French have had the CX-52 two years already for study 11 The Foreign O t'fice has pla ced an ordei for about 100 ma chines 80 CX-52 _ 20 cx-52 10 LTf The Armed Forces arc much more interested in the HX ma chine Ha ' din said I will have more to say about France later in this report J - 11 Portugal -- bought five CX-52 's 12 Italr -- no action yet They are 'bellyaching' about 'what will NATO do ' Hagelin Senior stated that endorsement of the CX-52 would serve as a real stimulus to their placing an order 13 Greece and Turkey -- have been given literature and are interested Ha gelin Junior is supposed to have gone there long a go for a selling trip but has postponed the journey -- no date mentioned 14 Holland -- The sit uation with regard to the Dutch is interesting in view of the Petersen Case They are sticking to the C-446 in the ma in this is certainly true as regards the Foreign Ofi'ice 7 TOP SEC RET o o oo oo oo oo Referring to the r ncwcrt man1lfnct 11re of l ilo olc l C- 11IP liYJ e of m tcMne mentioned in pariig 'apn c 1 a bo'Io t'ieuc GBPLl'i ' f 1r 1 he Du ten Government Most of' thes 1 io c11 ines ar for t ne lJukti Flll f ' tc 1 Off' ice but n cood many are also j nten1lc u for tne Outr h Army Ai ct rd in to Hugc lin s nlor the Dutch Foreuin Office f mls t ne C-1 1 16 quil r sat iofac t ory br cutrne as they say o they url wel l orgnnizell now for using that model and b the new models arc much rnore t Xpc nsive than the old or1cs Hnbelln Senior commentr d thr t DuL h tiir rL n oe 3 i10 v in1 t p iy murc than they think wa rrnnte d Howr ov1 r t oucil i nc Dul c'1 F'ord n Ut' 'icc l ikt s Lhe C-446 it wants a certain numocr or trwir new c-L 4lJ' to ue provided with means for using one time-tape control of the steppirl ' rr edianism instead of pin-wheel control The d veiovment 01' thE tai i-i ontrol mechanism has g lven Hage Lin some trouble but the problem was recently solved Hagelin Senior stated that tbe Dutch Army ls m1Jcn intere-sted in the new CX-52 model and waut s to obtain some n achinloS or tho t type as well as a number oi' BCX-52's 15 Uni t ed Kingclom -- '''fhe Br1 t ish bought two CX-52' s They pa id for them moreover in 1''n 1J Swiss Francs and they d idn't relish thls 11 11 Germany and Austrla -- Dr Hell who by contract supplies the West Germans and W st Austria r mo rket for C-line machines has assembled ten CX- 2' s 1'01 the Bonn Goven1111ent These are CX-52bk type -- 11 the only model wh ich is approved by H uet tenhain 11 L ' l'he personal -relations between Hl J l and llagelln are still very cordial and theJ r contractual relations are the same as rela ted in my previous reportJ 17 Sweden -- is going to ruple ce all its C-446 ma chines with CX-52' s in a J one-t el'm rt plaeerr ent proeram with a more or less i'ixed amount of money nvaUahJe c11ch year for thiG JUrpose I asked Hagelin Junior what the Swe i stl Governmento s rf a ct1on had been to the decision to move the Stockhol rn plant to u His reply 11 They don't like it of course but have become r concile1i to the idea What else could they do 18 no order as yet Spa in -- has S 1owr1 a gt'l at interest in C-52 but has placed They a re also nt 1 rest ed in othP r naw ffagelin products 19 Eire -- has l'f en ly plac t 1d u n order for two CX-52' s These arc soon to bt i leliverelt 20 lniion s in - - 11 Wo hau quite a mP asy busj ness corre pond- cnce back a nd forth bui now t h1 y ha Vt l'ina lly decided to place an order for 8 T6P SEeRET oo o o oo oo oo oo oooo oo o ooooo oo 20 or 30 C-52's The order is not firm as yet -- thGBPY are waiting to get tht appropriation and also an import permit failed to ask why an irnpOrt permitJ LI 21 Pol and and Hi yiga ry -- Chief engineer Nyberg in Stockholm recently sold 2 C-440 ma chines to each of these two governments without first consulting Hagelin Senior vho said that they hs d indica ed requirements fol' many ma chines I asked what he would do if' they really came throu h with firm orders in auantity His renlY I i r 3 3 h 2 86-36 50 USC 3605 22 Jugosl avia -- interested in the C-lines Hagelin Senior said that he takes for granted that this country falls in the same category as the other fellows of the Middle East I said Let's regard them for the moment as Satellites of the Soviets Hagelin Senior That's O K with me if you want it that way 23 Central America -- There's not much interest there in our machines Costa Rlca recently bought two c-446 1 s Cuba showed some interest at one time but this has died down W have inMexico a good agent with Norwegian background and he wa nt s to sell some ma chines to the Mexicans Venezuela is going to buy some ma chines 24 Brazi -- The Brazilian is interested to the extent of some 500 or more ma chines but Hagelin cnior didn't think they would come through with as la rge a n order as this in one lump The Brazilian has bought 60 GX-52's these to be compatible with their c-41 6's When they will put in an order for more machines these will be of the CX-52 type 25 Argentine -- T'ne Navy bought 13 CX-52' s but these are to be compatible with the c- -4u 26 Chlle -- 27 Pe ru Not greatly interested but will buy aome Int ares ted to t he extent or 9 TOP SECRET about 200 CX-52' s o o oo ooo o ooo 28 Paraf3 lay -- no interest 29 Uruauay -- bought five CX-52's and two BCX-52's That's their firs t experience with cryptomachines 30 Colombia -- has ordered about 100 CX-52's and about 40 BCX-52's EO 3 3 h 2 PL 86- 16 50 USC 3605 2 o In discussing with both Jla B elins the matter ot new deve1oprncnts in crypto-appa ratus and their sales proJ110tion they both stated tha t they a re sometimes confronted with a considerable amount of sales resistnuce which arises from excessive nationalism and which makes it difficult for a country to accept a chines invented or nBnu f'actured in somo country other than its own France for instance wanted to use only such ma chines as were invented or ma de in France Ebia statement ir a kes r e mRpect that the French have told ITagelin 1 1bout the machines furnished them recently by the U S and the U K o perhaps this feeling on the part of the French has a bearing upon their dilatory conduct in rcs rd to putting these u achinea into usage b I said to Hagelin Senior that Boris Junior had told me that his father had wsain been to Paris recently and that I imagined it was in connection with th modification to the B-211 When he nodded affirmatively I said that I lra s elad to learn that he was trying to help the French for they were our allies in NATO I asked him if he could give any reason for the recently heightened interest in crypto mat ters on the part of France He said he thought that increased interest was a result of Via la's coming into the picture in the Foreign 0GBPfice Viala wn otcd to replace the o o o o oo oo oo Hagelin said that there is another unrelated Viala in the crypto business for the French DeF1rtment of the Interior 10 TOP SEEURRE'F o o o oo ooo olU -fo shloned methods and 1''oreie n Ol'i'ic corlt books with more up-to-date things Via la is a forceful dm ra e l er he so ht But he added that Via la of course cbnf'inea his activit'ics in t his ree ard to the Foreign Office He-went on to say that the commision dH Chiffre undt 'r President Ollier is now very active Captain Mueller a meriber ot' the Cor1m1ision rnpresenti nB t hr Presi rlence de Conscillers is also very active 011 ler is o man 40 to 1 5 yea rs of age rat her cold but Hai elin sized him up as belng extremely lntP lligent ancl a very strong character Hasc lin so id he could l el l me about some very important French plans for improvement in crypto affairs For one thlng for example the French Government ls gains to stablish a plant in Pa r 1s but as a private enterprise There is plenty of money behind the people who are prepared to do that The Government will buy the tools since they want to be sure to have all the tools nccesaa ry for mo nufncturing their machines but the plant itself wlll be under private ownership This ownership will probably be that of a subaid ary of an already well-established firm called the Societe Electronique Automatlsrne SEA which though a relatively new firm is already a very important concern ma king electronic computers Its president is M Raymond a young man but supposed to be first in France in technical know-how as regards such nnchines The people behind SEA have plenty of money -- they a re considerably higher up in Government affairs than people like Colonel Arnaud who is conatantly being J 1 E edled by Ollier to get busy on thlo crypto 11'1 'J nufa cturing business The Plant will start with mo king HX electr lc rotor machineo possibly also ex ma chines 1 ' and developed by the c 1 The B-211 modificul i on designed Hae elins -has turn d out to ue quite successful according to Hag lin Senior What I saw of this development in Paris last September s merely a rough design they had worked it out in pro ctice so that it can easily be added to the existing B-211 h ls agent in Paris M Rene de Chauny will probably do the work on the ma chines when the latter are sent to him in batches for servicing The Hagelin firm had an order tor 250 B-211 modification kits for the French Army and 200 will probabJ y be ordered by the French Air P'orce Captain Mueller told me that with this improvement the modified B-211 will be more secure than the origiJia l British TYPEX meaning Hagelin said the type with the simple reflector -- not the one with the straight-through circuiting and reversing switch Hagelin commented that the French had something on their B-2ll's which was not put on by him a nd hence he didn't know what it was The parts tdr the modi1'ica tion kit will be ma de ln Zug either by Crypto A G itself' or by a sub-contractor in Zug 2 I ask d HD c eJin Senior whether this modification kit tor the B-211 would be avails bl to other owners of' that ma chine ll TOP SECRET There o aren't any others nov Oh but we have somc 11 I said to which he ma de the laconic cormnent Yes two I said Yes and you will recall also that I have one personally one you presented to me tor my collection -- tl1e one formerly owned by Ivor Krueger Then he went on to say that he would do the conversion in Zug on our two or three ma chines at such time as would be convenient 3 a Relations wUh Siemens and Hn lske are now formalized in a signed contract Siemens agreed to stay out of the cryptoma chine manufacturing business a nu confine itself to the teleprinter ma nufa cturo ing business Hagelin agreed to stay out of the teleprinter ma nufacturM ing business and conflne h l msclf to the cryptoma chine ma nui'a cturing business In case in the future Siemens wishe to go into the crypto ma chine manufacturing business they must give Hagelin notice thereof and for at least one and a half years after giving such notice they must stay out of such 111a nufacturing b Hagclin Junior showed me the la st page of the contract with Siemens in which t e marketable areas for teleciphering ma chines were divided between Siemens and Hagelin as follows 1 2 Siemens alone C1 ypto A G a lone Europe France Italy Switzerland Sweden Norway Benelux America Brazil All except EBYtrt Africa Egypt All except India Indonesia Chim Asia Ind ia West Germany West Austria Jue oslavia Portugal Iri land All except Brazil USA and Canada All Australia 3 Siemens and Crypt o A G together DenmarJ Greece Spain Europe 12 - T0P SEEURRET o o Siemens and Crypto A G together Cont'd 4 Indonesia Asia None America or Africa Areas not yet assigned or clearly a greed Finland Russia and all satellites East Germany China USA and Canada 4 Rather casually I asked Hagelin Senior but in the presence of Hagel1n Junior why if they were moving the Stockholm plant to Zug they hadn't considered moving the whole business to the U S He replied You'll have to ask Bo a bout that I said Why Bo'l Boris Junior answered somewhat quietly I suppose he means f'or me to carry on the business What would be the acivantages of moving the business to the U S 2'1 I said Well I thought you didn't like Switzerland at all and the same goes for Edith doesn't it1 11 His reply 11We 1 1 e both getting better adjusted to living in Switzerland And then soon when the Nybergs have settled down a inong us we'll have some agreeable company Ha gelin Seniors I suppose the U S could e nd would bind me with restrictions so I couldn't be free to export where I please I said that I supposed that certain things could be done along that line -- there were of course restrictions on sending instruments of war or material for Wa r to countries behind the Iron Curtain But I added that I didn't think the U S would be tough or have a veo oy ro'l gh policy I did not pursue this subject any further nor did they Later on Hagelin Junior's wife Edith confirmed that she was getting better adjusted It takes a couple of ye'ars you know I was so upset last year that my doctor sent me to a psychiatrist but after the one and only one visit I made up_my mind I didn't need such help and would help myself out of the spell l'she did look much better than when I saw her last September 5 a The new base for the BC-line electrically operated keyboard machines was shown me It looked extremely simple and compact Any C-52 or CX-52 need merely be placed inside the frame and fastened down by two screws thus becoming a keyboard me chine To adapt the base to take a c-446 or an M-209 requires some modification but Hagelin felt that this could be done though he questioned the practicability or doing it because the shaft on which the keywheel assenibly and the print wheel 13 'f p SEEURRET o o PL 86-36 50 USC 3605 EO 3 3 h 2 is borm ln theoc modeln ls too r hort o11his new BC base would facilitate opern t l on by OTr a n'1 the sensJ ng pe r1 of' the mr chan sm for opera ting e C-52 or a CX-52 o r eventualJy u nd posnlbly o C-1 4G or M-209 by m l1llS or 01'T ia now worked out so that the sam mech a 11is1t1 wlll do for all b Thia new base for the BC-1 l ne will coot about $800 When I co11uu mted t hut I thought tho t a pre i t y stiff pd cc for what Wt'l S shown me Ho selin Senior l'tlplicd thu t he ur uuJ ly chat'ge l what I ha t rai'f le would bear bu at t ha price the cost 01' I he base plus the cost of t he o C or ex tnachine itself the l otal cCJst w il L still be leras than tha I of thr old Bc 1 4G which Wt s 8 ooo Swcdtsh Kronor wherens the cost or the new base pl us the C or CX come to about 6 ooo 'Krono r On a bie ord nr for BC mflchines he voulrl r coursr mako n pr lee a dJustmcnt c The B buses are now bolng lll1 1le ln f3 1 ockholm about 25 ZUp will begin making them ln about J O numt lw 11ccord lng to iohe Ha gullns 6 One eloctronic OT'l' 1_ fmerator cul Ind the ZG machine Zu falle generator Random generD or was dee ignL d and built in the Zue research and development plant Jn f'ive months by Hugcliu englneer Stllrzinger It wa o just recently t w ncid over to tht French Foreign Office for study and as lessment by the Comnri sion elf Chiffre No t est s for randomicity were made by HEl gelin 'l'his moliel ur es a Creeti pi rforator and produces one orl i nal and one copy It is no t equippco w lth marking apparatus which la gc lin Senior said in the heart of the Job TheoFrench aro going to wo r k that out He expects an orc J cr 'or sevE'ra l more of' these O'I' r generators from the Fret1ch He also is making 3 or 4 for Denmar k Danish Navy Captain Weilbach being much interested ln this machine Belgium has also placed an order fo1 one ma chine 7 a Crypto A G Zug has mtl d e po r1 r Co r a first series of ten OTP producing ma chines CBI-series and one mo r hine was assembled and ope1oa ted for me during stay in Zug The machine is astonishingly small in size about 1 cu rt but weighs I estimate about 50-60 lbs It prints in a single operation a line of 8 groups of 5-letters but can be made to print 10 such groups per line Present operatil16 speed 7 to lines per minute It can also produce similar length lines and groups of 14 T P SECRET o o o o 8 o o digits I have brought back with me a sample of each letter groups and f'igu re groups for preliminary testing The machine easily makes one carbon copy and I imagine that it could make two carbon copies though IIagelin Junior was dubious thereof b Of the 10 ma chines constituting this first series 7 are already sOld to countries as follows u s Italy J ortugal leach Belgium France 3 Crypho A G hasn't tried to sell any more of these l J S yet Ha gelin Junior mentioned that in his talks in India he learned that the Indians are now using IBM for making their OTP's but became much interested in the new Hagelin OTP ma chine A retired general officer Indian came recently to Zug for a look-see There is a possibility that U S will buy one or two more The 1st machine for the U S will be ready for delivery in l - 2 months oo c Hagelin Senior said that Dr Huettenbain had tested the end produ Ct of the prototype CBI machine some months a go and stated that the letter Z was unbalanced compared to th rest or the letters Hagelin Senior said this had been corrected to a large degree but in future models they were not going to combine letter-group production with figure-group production in the same ma chine two separate ma Qhines would be offered and they would be faster simpler and produce a more random end result Hagelin Junior told me that they weren't going to ma k e atJy profit on their first 10 ma chines and I imagine they would be glad to sell them all Hagelin Senior asked me if u s could use ' more than one I said we'd want to test the end product of our first one as soon as possible and that it might be that we would have use f'or several if they were really good Ha gelin Senior then reminded me which reminder I didn't need that General Canine had once indicated we would buy at lea st a couple These ma chines are expensive a bout $5 1 000 but of course practically all the parts are hand-ma de However small countries would not need more than one or two such machines-- Ha gelin Junior said the Indian Signal Corps is also interested l n the Hagelin teleciphering ma chines 15 TOP SEEURRET EO 3 3 h 2 PL 86-36 50 USC 3605 ooo o o o o o PL 86-36 50 USC 3605 EO 3 3 h 2 8 a 'l'he status of the HX development was d iscussPd Sarac progress has been ma de in regard to the type of rotors that will be used Hagelin Jun-tor talked about their uslne printed c trcuits a 1Da tter lleing investi6a tecl for them by an English f'irrn the name or which was not rnent1 oned nor did I ask for it ' rhe new ma chine is now definitely to have 10 rotors a s ment loned in rrry last repor t and he showed rne a prototype rotor with 32 con tacts The rotor was about 1 inches in diruneter the contacts of silver I asked Hagelin Senior whether the HX-54 was to be a 26-character machine and if so what he proposed to do a bout the 6 extra characte rs This question was o lso asked in the course of 11 Y previous visit He told me that these 6 extras would be re-entered from the qutput side into the input side of the maze J wondered whether I ohouJ d ask him if he had put in for patent coverage on this idea but decided not to ask The U S has one in secret status in the U S Pate t Office b TWo prototypes of the HX-55 will be ready before June 1955 there will be three crypto-components for these that is there will 'be bne spare crypto-component for test purposes c I told Ha gelin Junior that the sooner they coultl get us an HX-55 the sooner could an answer be given as to the security of the ma chine d 'I'he Hagelins demonstrated a bench odel of the slide bar and rotor-drive mechanlsm for the HX r iachine using the C-52Y principle This component was very quiet in operation and quite rapid However the unit used was the same 5-rotor assembly that was in the HX-54 I saw on rtr f visit last Sl ptember not the new propos d 10-rotor assembly 9 a Ito gelin Senior has definitely iven up the idea of having a single-pa ckage ma chine that ir _ one that can be used both for on-line teleciphering as well as for off-line literal operation in a single apparatus made up of several components He gave up the idea because 1 it would take much longer to develop than he could afford at this juncture of his research and development and 2 the Siemens people didn't like the idea and I don't want to buck them Hence he is going to have one off-line li teral machine which might be the HX-55 or even HX-56 and a separate on-line telcciphering machine b The first model of his on-line ma chine 'rL-55 or 56 will employ merely the 5-unit code baud addition by the Vernam principle controlled by O'IT The second model TC-55 will also use baud addition 16 TOP SEEURRET o o oo o o o ooo eP SH6RB'f but this will he controlled by tlte same cryptomcchanism and p1 inciple a G that t o be incorporated 111 the C-52Y tbe thircl model still an onlinc teleelphc rine machJne 'fCX-55 will use t he cryptoprinciples of the CX-52 machine and fjnally a fourth mode L TH-55 or 56 will use the me crypt oprinci1Jle 10 kctrical rotors with 5 to 32 and 32 to 5 tro nslators All of the latter three models of machines wilJ also be operable by mo a ns of oi r r Hagel ln is tryinG to produce prototypes of the new tcleclpheriug machines o s soon as possible but so far they have only sketches not even good drawings Still they hope to have prototypes this year c Ha elin Senior t old me that he was going to try to eliminate rotors from the TH-56 and use relays instead He thought that with about 1 i oo relays he could accomplish wllat the rotors do He did not mention the word electronic in this connection nor did I of course d No more of the preaent TC-52's or TL-52 1 s will be produced of the former a total of 20 was to be made and these have been complet d o f the latter a to l al o f 50 was to be made but only a few have been complei ed These mn chines are for the French ForeiBn Office Army and No vy -- no Air Force because they a re tied up w i th SAGEM which hns i e ently improved Us model but still uses the cryptoprinciples em11loyed by Ha gelin in the prototY e he built for SAGEM 'he u s lm s placed an order fo r one TC-52 and I think for one TL-52 e Itnc el in Senior stated that Er ypt a p U India are interested in hnving- telecj phering rr uchines cont 1oolled by the C-52 principle and these would be in ov tded wHh bu l one tape reader not two so that the D' achlne could uot be operateu by 0o1v11 He asked me if I thought it would be O K for him to p1 ov ide them with machines of this type I told him I thought this mlght be satiGfactory 10 a The new pocket ciphe l ' device CD appears to be well under way and the Hfl 5elins ure enthusiastic about it This device will use six noi chcJ clisks nu le of pJastic the customer breaks off pieces on the periphery to rna ke the notches this will make the disks equivalen t to the pln wheels of the C-line mo chines In fact the CD will have the C-typc cry Jl op dnc i plc bul it can also be given the CX-52 cryptoprinciple Sincn the CD ill nol have lugs on slide bars there can be no 11 overJ uppi11c 11 but the CD could easily have seven or eight disks instead of only si x or it could cv m be operated by O'rT One keying mechanism has o lreo tl y 't t cn buHL at SLodd1olm -tt is the size of the transistorized ra dio 1 eL I l1out h fo 1 him ln the U S l e ath red that the CD will produce a pr inta l J ccortl 'l hi i1r1nt uul t ts really very simple but 1ny 17 TOP SECRET oo oo o oo o oo oo o oo oooo oo o notes also say that the CD will have C-type motion controlling two concentric alphabet rin s 11 b The history of this development may be of interest Part ot it was-related to me privately by Hagelin Junior with the request I say nothing about it to his father According to Hagelin Junior many ot their customers for several years in the past have importuned the Ha gelin firm with the request that they be provlded with a pocke t-size cx-Yptodevice and he Ho gelin Junior bad in 1951 or thereabouts proposed a mGchanism for such a device -- the sa rne or nea rlj the same as that incorporated in the present CD prototype o But Ha gelin Senior was not interested in such a project and rejected Hagelin Junior's ideas -until an ex-Ha gelin employee one VIGO LINDSTEIN came out recently with a pocket-size device Jfote This is the T RAriSVERTEX device the Swedish Government turned over to the Norwegian Government which turned it over to NATO COMSEC authorities i't is now being given security studies by UKUSA How the Hagelins learned about the Lindstein device i not known to me it is held in a secret status by the Swedish Government and has been from the beginning handled as SECRET in NATO and UKUSA so far as I am aware 7 When Ha gelin Senior learned of the Lindstein device he then became much interested in such a project and somehow or other considered the ideas originally proposed by Hagelin Junior as his own When Ha gelin Junior11 learned that Ho gelin Senior had decided definitely to turn over the Sund sor brick ma nuf'ncturine works to his other son Gunnar Hagelin Junior said to his father th at in view of what he was doing for Gunnar he should at least turn over what royalti s there would be on the new CD to him Junior whereupon his father went into a rae e apparently claiming all credit for the CD hirnseli' It's not nice of me to sey this much about the matter but that's the way it wa s 11 c I asked Hagelin Senior what usages he could foresee for the CD He felt that secret agents small military W litb or patrols could find good use for it 11 In connection with the 5 to 32 and 32 to 5 translator principle to be used in the proposed fourth model of the on-line teleciphering ma chine THX-55 or 56 a principle which incidentally the U S uses in one of its own new developments Hagelin Scniol' stated that he was afraid he was going to have some difficulties with the Lorenz people in Germany That firm has a German patent elsewhere too I think on the means for accomplishing or using that principle application for patent having been entered in 1943 and just recently granted January 1955 Hagelin Senior showed me the German patent and he is to send me the numbers of the whole series which Lorenz has in Germany and in other countries on this translatpr 18 T P SEEURRET ooo o o ooo WP ssenB'f Jn c ha nism or on other ltcmn of interest LN'u turally I did not say anything to Hagel Ln a hout uur use of the translator pr inc i ple but I am bo ginninc to vonder whd hcr the U G rnn y not huvc s imi La r trouble with ll Jrenz J b One Lorenz pnt ent also r mt cre1i ln application forrn in L943 and granted in 1955 was however kilk l when Ho gelin showed prior urlc oi' the it cm I urn to gP t that ro t mt l uc 1 12 a _ Wlth rei'crcncC t o what tht Bonn Uovt ruracnt may bf do lng now with the Huettenha J n crowd Hn jcl ln Senior oa id he was told that for Bonn there would be 11 u small ma china mnu c by Dr He l l rl'lmt would or courso be our own Jna chinc the C 'X- bk But l here' woulcl al au be a 1111 ce Dlll chine made not by us nor by Sl mens lJut prol11ibly I t hink by Telefon und Norm llzcit T N Co Hagul tn ua icl o 1 hnt he djd not know any details for those were classified I 11ak1o1J Couldn't it be Lorenz rather than T N I don't really know ho r epll1 11 It could well be l suppose l orenz did some work on c ryptoma chines for the Ge rma ns during the war just as did tho firm WANDEHER ln who t if1 now Ea at Germany They stolu my c lpher plnwhc- el o ncl sJ _c1 -l10 r-wlt h lu1r n Ideas and cons t ructed a ma chlne in 1941 you know 'he su-l J lla gC lir1 has one of these in his officeJ b In a Jn tcr talk with Ha r cl l n Junior he asked me whcliher 'With West-Germany now or soon to b freeo they wtll establish laws such as in Sweeten prohlbi1 i ng exporting 1 crtaln kinds of equipment to certn 1 n countries I told him I nupponcll they might well do aomething ulong those lines He aske1l me to send him if posoible what lnformtion there wn s and which could bn ma de ava i lo bln with reference to such prohibitions It seems that the H a gclina a re worr ed ahout the compe tition they might get In future from such f lrrnr as T N or tlw one that ma de Enigmas 'if West GE rma ny wbuld p l IJ ce a ban on export l ns cl phcr ma chines the llngellns would i'C'el much more secure aga tnst the poss ilJi l l t y tha 1 su h firms woul l peddle their rnachineo o brond and givr -' us serious l'Ompetitlon I snid I'd aee wh1J t literature or documents wr rC' ava lla blr to send them for informat i on o on exporting bans o o o o o 19 TOP SEEURRErr III 'l'HE APPROACH TO HAGELIN AS AU1'HORIZED IN USCIB 29 14 29 OF 2'7 DECBMBEH 1951-i 13 a Having been with the llae elins for scvcra l days in a most amicable relatirJnship on the evcnina of 25 Fel rua ry 1955 after dinner I felt thP time ho d come and wus ro it lous to broach to Ha eliri Senior the sub ect authorized iri b I began by telling h i m of U S a pprec l ation of his i B tience l n mainta In tng tho s ta tus quo in rcgar l to t hi so-cal led gentlemen's understanding 1oeetched ln January 1951 i that understanding was to run only to l July 1954 but he hn cl bean consiclerat e enough to extend the understanding for more than a whole Yf ar therefore on behalf of my Government I win hell to thank him for that Secondly I told him that we were well aware of M s d i sinclinat ion to be po id money for not doing something thin was in line with his i d ca s of prop r conduct an l we understood nir fe llngs in this rega rcl ai1d his reluc t a nce to enter into any rcl ati onoh l Jn which such a fei -iture wcmld play a rominent rt Thirdl 1 c Ho se lln Senior r spomle1l by thanking me for what I had said about our-apprecfo tion nnd understanding of his position Moreover he wanted me to know how th tnkl'ul anu grateful he and his wife are for what we had done anci were conl inu ine to do for vurlous members of his family He hoped th o t everythine wouJd turn out w1 1 l with regard to his son-in-law Conradi and his retention on active duty status i'n the USAF as a result of our lntervent lon -- th yowlB man kr t ps assurinc me that he is working like hell HE o nd hia wif'1 apprr cirtted very ruch what we ho d done for her cousin Mias Barth ln making o place J'or her in our or o nization 11 o o oo oo ________________________________________________________________________ s use 3sos _ uscm I told him that lie need nol e lvu h ls answer th ere and then but 1 hlnk i 1 over if he wished could ta kc his time to 20 T6P SECRET ooo e Hagelin Senior thanked me but said he did not need time to ter overo he was re red to r that if he wanted me to do so I could per ps give a precis to him or to Boris Junfor in writing He thanked me t'or this gesture but said he'd prefer not to have anything like tha t in writing However he would appreciate it if' I would convey the proposal orally to Boris Junior myself This I did the following day but by tha t time Hagelin Senior already had a chance to tell his son very briefly the substance of the proposal and of' his own acceptance Ha gelin Junior also was ready with his assent J do not think that if he had withheld his assent it would have ma de any difference in the situation or to Hagelin Senior for the latter had said when he asked me to talk with Boris Junior about the proposal that even though his son was young enthusiaetic and wanted to make money he would be kept in line 7 --o f -- -t -he_p_r_o_p osal I said I was sorry and I hoped the producers of the machines were not also authorized to be recipientd of such instructions L----r l ' ey w- -o - d-no- -t'l 'b- e e mb rar-2- - a- s - s e- d-- -if' -- t ' ' h -e- -y--- - -'theinselves EO 3 3 h 2 PL 86-36 50 USC 3605 o o i Nothing was said on either side a s to the term of the understanding 'IT that is how long it was to continue in effect I _______ al o The Hagelins wanted me to identify by na me the authorities this they said would be of great interest and help to them in their business I told them I could not do so now I could only say 21 T P SECRET oo ooo o o r 'L'Ol' 8J 10RW OGA I 1 ir ke l tbcrt t hl r be iia ttent in this rc ard a nil hut it wuuld perha po be possible to give them more information later In any case it was not l who were to ask for any endoraement but the NATO customer who had to take that action addressing their inquiry themselves to the NATO COMSEC authorities they would know where or whom to address their inquil-y rhat k up tii Ha gel in Junior said but not in the presence of his father thio timo he did not ask I PL 86-36 50 USC 3605 EO 3 3 h 2 14 In my last report of a visit to Zug I mentioned Hagelin Junior's uraent desire to acquire a TYPEX ma chine which he could turn over to Mr Rossby mentioned above in pa raBraph lf 21 who was anxious to obtain one Hae clin Junior brought this subject up again said that Rossby was still very anxious to Get his hands on a TYPEX and that when he Hagel in Junior learned on his trip to India that the Indians had some TYPEX machines he tried to et one from them but was not successful He went on to sny that Rossby somehow or other got hold of a copy of' the instructions for operating the machine but this Rossby said was not enough for his needs Hagel in Junior said that he didn't necessarily have to have a machine in perfect operating condition -- one that worked only haltingly would do He was quite in earnest about this and I think that if he could acquire a ma chine through U S or UKUSA action such a gesture would certainly cement good relations with Hagel in Junior for he suid I am sure I could get for myself a new automobile out of such a deal 11 oooo o ooooo o o o o ooo o ooo ooo 22 T P SECRET This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu