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How to make money from the Enigma machine


2018 marks the centenary of the invention by Arthur Scherbius of the Enigma machine.

Enigma was probably the most famous of the mechanical cipher devices used in World War Two, its fame assured by the feats of code-breakers at Bletchley Park who devised ways to uncover which of the possible 150 million million million ways the German armed forces were setting up the machine to conceal their secret communications – every day.

Scherbius’s original concept became available in physical form in 1923. Enigma machines are said to look a bit like typewriters, but that is a bit misleading because the wartime machines had no ability to print their output, having instead a panel of windows labelled A to Z under which one of 26 torch-bulbs would light up to show how a letter was enciphered. But Scherbius’s 1923 model didn’t look much like the kind of Enigma we are familiar with from World War Two: it really was like a typewriter, since it was designed to produce a typed document, but in cipher. Its rotors were concealed behind the keyboard, and were turned by special knobs that stuck out of the side of the machine.

Unfortunately for Scherbius the typewriter version of the Enigma machine was a commercial flop. It was much too heavy and unreliable – in particular, the printing mechanism had problems, which led to the development of the more familiar lightweight (at 10 kg or more, people might quibble with that description) model with torch-bulbs – the “glowlamp machine”, according to Scherbius’s marketing material. This trimmed-down Enigma machine was demonstrated at the International Postal Congress in 1924, where it immediately attracted interest from not only potential commercial buyers but also diplomats and military personnel from several countries. As we know, the most enthusiastic buyer was the German armed forces. Some estimates suggest that as many as 100,000 Enigma machines were made.

So, surely Arthur Scherbius became horribly wealthy? Alas for him, the period of development of the machines coincided with the post-war hyperinflation in Germany, during which many people lost all they had. Scherbius struggled to keep afloat, and it took until 1928 for his company, Chiffriermaschinen AG, to stabilise. It had undertaken a capital-raising exercise, and old losses were still being paid off; the company never paid any dividends although it managed to stay solvent. The final tragedy was the death of Scherbius in a road-accident in 1929 – years before Germany scaled up her armed forces, and the number of Enigma machines with it.

Money was, however, made out of Enigma by the spy Hans-Thilo Schmidt, who had access to secret documents describing the machine and its operating procedures. He regularly sold copies of these papers to French Military Intelligence during the 1930s, netting RM 5,000 (up to $20,000 in present-day equivalent values) tax-free for each delivery. Schmidt, it appears, made more out of the Enigma machine than Scherbius.

In due course the Chiffriermaschinen company changed its name to Heimsoeth and Rinke, named for its new principals Rudolf Heimsoeth and Elsbeth Rinke, who also seem to have done well out of it. But maybe not as well as anyone who kept hold of one of their machines: in 2015, a standard German Army three-rotor machine sold at auction for $235,000, and the following year a four-rotor German Navy machine went for $463,000. All of which makes the attempt to extract a ransom payment of £25,000 for an Enigma machine stolen from Bletchley Park in the year 2000 look rather feeble. There are ways to make money out of Enigma machines, but they’re not all completely orthodox.

By Dermot Turing

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