Navy Contract NXs7892

SECRET

DELIVER BY OFFICER — HAND TO HAND ONLY.

NAVY DEPARTMENT

OFFICE OF THE CHIEF OF NAVAL OPERATIONS

WASHINGTON

MEMORANDUM

From: The Director of Naval Communications

To:   The Vice Chief of Naval Operations.

Subject: Navy Contract NXs7892.

1.   The following information should not be disclosed except to those few persons who need to know in order to safeguard this vital project.

2.   The Navy Department has a contract NXs7892 with the National Cash Register Company, Dayton, Ohio. This contract calls for the development and production of special analytical equipment for the purpose of breaking the German four-wheel Enigma Cipher Machine. It is about a three million dollar job involving numerous small electronic parts, although the aggregate material is relatively very small in comparison with other important defense projects.

3.   Since February 1942, the German Military and Naval Communications have been attempting to distribute a fourth wheel for installation into their three-wheel Enigma machine. This distribution has now been completed so far as U-Boat traffic is concerned and is spreading to other circuits. All existing devices both here and in England for breaking this cipher have been rendered obsolete, except on rare occasions when mistakes in technique are committed by the enemy.

4.   The importance of meeting this German change was recognized by the British, and I am informed that Prime Minister Churchill has directed that British material needed in the development and production of equipment designed for their special intelligence purposes be given an absolutely clear right of way over everything else.

5.   As a result of British experience with similar equipment for attaching the three-wheel Enigma, we feel that there is but little doubt that the U. S. equipment called for in the subject contract will enable us to read the German submarine traffic currently. This traffic contains specific information as to the location of German submarines, their orders, strategy, courses, depths of operation, etc. With this information, we will not only be able to locate the German submarines for offensive

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action, but we will know their plans and disposition and should thus be able to attack them, and to route our convoys more safely.

6.    The engineering and design of the necessary equipment have progressed to a point where actual contruction of the first two units is completed. It is essential to have between 100 and 350 of these units built, the exact number depending upon the experience we acquire as more units are brought into operation.

7.    In view of the really vital importance of this project to combat the enemy submarines and to safeguard our convoys, every possible effort has been bent to have the equipment in operation in time to meet the increase in enemy submarine activity anticipated this Spring and Summer. We have had the complete cooperation of all Navy personnel in positions to expedite this project. This help definitely does not appear to be sufficient in view of currently established procurement procedures. The fact that this project necessarily must be kept as secret as possible has made it unduly difficult quickly to obtain necessary parts and material. Moreover, this equipment will be in a more or less changing status during and after production due to the fact that it is designed to solve an enemy communicaiton system which may be changed somewhat from time to time to preserve German security. When the enemy makes such a change in his machine communication system, it is usually necessary to meet the change by incorporating changes in our equipment. This involves procurement of parts and materiel which, under the current Control Materiel Plan, cannot always be quickly obtained.

8.    It has now become apparent that this machinery project should be given a special “green light” by the highest authority in order to preclude any delay in making this equipment available on time. It is therefore requested that authority be obtained from the President which will permit the Navy to procure without delay the necessaryparts and material required on Navy Contract NXx 7892. Any action short of this may involve serious delay with

[signed] Carl F. Holden