By: Stephanie Shepard
In November 1921, representatives of the world’s major naval powers arrived in Washington to negotiate what amounted to one of the most expensive games on Earth. The United States, Britain, Japan, France, and Italy had emerged from the First World War with powerful navies, expanding industrial capacity, and the ability to spend enormous amounts of money building increasingly sophisticated warships. Belgium, China, the Netherlands, and Portugal also attended discussions concerning the political order of East Asia and the Pacific. The stated purpose was disarmament, but underneath the diplomatic language was a simpler economic problem: nobody particularly wanted to pay for another arms race.
Each country arrived with their own hand of cards already dealt. Britain possessed an enormous navy and an empire that stretched around the world, but that empire also required ships to protect trade routes and possessions across several oceans. The United States possessed tremendous industrial capacity, natural resources, labor, shipyards, and an increasingly powerful navy. Japan had transformed itself into a modern industrial and military power and had become one of the dominant powers in East Asia, but it was attempting to compete against countries with substantially larger resource and industrial bases. France and Italy had their own financial limitations and strategic concerns after the devastation of the First World War. The conference therefore was never simply about how many ships everyone possessed. It was about how many ships everyone could afford to keep building.
Secretary of State Charles Evans Hughes led the American delegation alongside Elihu Root, Henry Cabot Lodge, and Oscar Underwood. Arthur Balfour represented Britain with an imperial delegation that included representatives from the British dominions, while Japan’s delegation included Admiral Katō Tomosaburō, Ambassador Shidehara Kijūrō, Tokugawa Iesato, and Hanihara Masanao. France sent figures including René Viviani, Albert Sarraut, and Ambassador Jean Jules Jusserand. These were politicians, diplomats, admirals, lawyers, aristocrats, and representatives of some of the world’s most powerful institutions; but in the background was another American participating in the conference who never needed to sit at the negotiating table.
His name was Herbert O. Yardley, and he could see some of Japan’s cards.
The Hole Card
Yardley headed the Cipher Bureau, later popularly known as the Black Chamber, a secret military American cryptanalytic organization operating in New York City. During the Washington Naval Conference, Yardley and his staff obtained copies of encrypted Japanese diplomatic communications. The Black Chamber penetrated Japanese diplomatic communications during the conference and the intelligence revealed internal Japanese discussions and disagreements concerning the negotiations.
The details of exactly how Yardley solved the Japanese systems are less important to this story than what happened after he solved them. Yardley later described an exhausting cryptanalytic struggle that depended heavily upon persistence, pattern recognition, linguistic assistance, and his willingness to continue working problems that appeared impossible. The surviving record does not allow every dramatic detail of his account to be independently reconstructed and Yardley was hardly an uninterested narrator of his own accomplishments. What can be established is that Japanese ciphertext entered the Black Chamber and useful Japanese diplomatic information came out.
That distinction matters because cryptanalysis is only one part of intelligence work. Intercepting a message provides access, breaking the cipher produces readable information, translating it provides comprehension, and interpreting it produces intelligence. None of those steps necessarily tells a government what decision it should make based on the information. The final step belongs to strategy and the Washington Naval Conference demonstrates why that distinction matters.
Japan wanted a larger proportion of capital-ship strength than the United States was prepared to concede. Tokyo preferred a ratio equivalent to 10:10:7 for the United States, Britain, and Japan, while the U.S. Navy initially favored 10:10:5. The eventual compromise became the famous 5:5:3 ratio, giving the United States and Britain equal capital-ship allowances while Japan received sixty percent of their level. The agreement also required the destruction of existing ships and halted construction of new capital ships. This arrangement temporarily suppressed the enormously expensive naval competition the conference had been organized to address.
The Japanese publicly argued that seventy percent was necessary for their national security, and surviving conference documents show Japanese representatives defended that position during negotiations. Yardley’s advantage was the American government had access to information concerning the private instructions and internal discussions behind Japan’s public bargaining position. The NSA’s historical account concludes the decrypts helped American negotiators push Japan toward accepting its minimum position rather than holding out for greater tonnage.
That’s how cryptanalysis becomes poker.
Knowing the Cards
The game of poker is built around asymmetric information. Everyone understands the rules and can see the common activity at the table, but players do not possess identical information. Each player knows something about his own hand the others don’t know. While simultaneously trying to infer what cards everyone else possesses from the amount of their bets, body language, and willingness to remain in the game.
Diplomatic negotiations operate under a similar constraint. Every country has public demands and private limitations. A government might publicly insist it can’t accept anything below a particular number while privately authorizing its negotiators to compromise. The opposing delegation has to determine whether the public position represents an actual limit or an opening bet.
The Washington Naval Conference therefore already resembled a high stakes poker game before Yardley entered the picture. Britain knew Britain’s requirements, Japan knew Japan’s requirements, and America knew America’s requirements. Everyone could observe existing fleets, shipyards, naval bases, economic conditions, and public statements; but nobody was supposed to know exactly how far another government had privately authorized its delegation to retreat.
Yardley’s intelligence changed that information structure entirely. America could see part of Japan’s hand while Japan still had reason to believe their cards remained concealed. The advantage did not guarantee victory nor did it tell Hughes exactly what to do. Instead, it changed the probabilities surrounding his decisions.
Knowing the cards isn’t the same thing as knowing how to play the hand.
If Hughes pushed too little, the intelligence advantage would accomplish very little. If he pushed too hard, Japan might reject the agreement despite its private willingness to compromise under less extreme conditions. If American negotiators revealed exactly what they knew, Japan might realize its supposedly confidential communications had been compromised. The most valuable application of the intelligence therefore required the Americans to act differently because of what they knew without necessarily revealing how they knew it.
A poker player who somehow sees an opponent’s hole card doesn’t improve his position by standing up and announcing to the whole room that he’s seen it. He stays quiet and changes his bet.
The Cards Were Not Just Cables
The poker metaphor becomes more useful when the Japanese decrypts are treated as only one category of cards in the game. Industrial capacity was another card; and so were labor, government finances, and access to natural resources. The negotiators were discussing numerical ratios, but those numbers represented enormous economic commitments that would continue for years if the countries failed to reach an agreement.
The size of the national economy therefore functioned somewhat like the stack of chips sitting behind a poker player’s hand. A country could possess excellent ships and experienced sailors while still confronting an opponent capable of replacing ships faster, financing larger construction programs, or drawing upon greater supplies of raw materials. The United States and Britain had advantages Japan could not simply eliminate by demanding a different ratio at the negotiating table.
This was one reason naval limitation could benefit competitors simultaneously. The treaty didn’t make the strategic rivalry disappear, and it certainly didn’t permanently solve the Pacific balance of power. It allowed governments to stop raising the stakes of one particularly expensive competition. The Five-Power Treaty froze capital ship construction, required older ships to be scrapped, and established agreed tonnage limits. The agreement succeeded temporarily, which is still meaningful considering what an unrestricted naval building race could’ve cost.
The cards in the deck consequently existed at several levels. Yardley helped reveal hidden information about Japan’s negotiating position, but American economic power affected how credible continued competition would be if negotiations failed. Intelligence altered the bargaining environment while economics established the underlying limits of the game.
Different Players at the Same Table
The Washington Naval Conference also brought together political cultures with very different histories. Britain represented an old imperial and diplomatic establishment with global naval commitments, while France possessed its own diplomatic traditions and security concerns following the First World War. Japan had spent decades adopting Western industrial, military, educational, and governmental methods while emerging as a great power in its own right. The United States shared much of Europe’s political and intellectual inheritance but had developed its own institutions, commercial culture, and strategic traditions.
It’d be impossible to demonstrate that European diplomats didn’t know how to play poker, nor would such an argument be necessary. The distinction is between knowing how to play a game and habitually using that game as a model for understanding problems. Chess provides an excellent model of visible position because both players can see every piece. Poker models something different because strategically important information is deliberately concealed.
Yardley’s American poker playing background makes that distinction important because of how the information was used in the negotiations. He didn’t emerge from the aristocratic diplomatic establishments traditionally associated with European statecraft. His career developed through telegraphy, military intelligence, cryptanalysis, practical problem solving, and eventually an unusually serious interest in poker. He would later write an entire book about the game, but poker already provided a useful intellectual model for the kind of uncertainty intelligence officers confronted.
Chess asks what an opponent can do from a visible position. Poker asks what an opponent might possess that can’t be seen.
The Washington Naval Conference required both forms of reasoning. Ships, naval bases, industrial production, and geography could be observed and calculated, while private negotiating instructions could not. Yardley’s contribution mattered precisely because he reduced one of those uncertainties.
Methodology as an Advantage
There’s a broader technological principle underneath the Black Chamber story. When competing powers gain access to similar technologies, the advantage often migrates from possession of the technology toward the methodology used with it.
International telegraph networks were not uniquely American. Japan could transmit diplomatic instructions across them just as the United States could, and commercial cable companies provided the physical infrastructure through which enormous quantities of international information traveled. The Black Chamber’s advantage came from finding a method of obtaining, processing, deciphering, translating, and interpreting information moving through infrastructure that existed for ordinary commercial communication.
That distinction would appear repeatedly throughout twentieth century intelligence. Radios eventually became commonplace military technology, but a communications system could still create an advantage through an unusual language, specialized code, organizational method, or cryptographic procedure. The technology provides the channel while methodology determines how effectively the channel can be exploited or protected.
Niche expertise can be particularly valuable because an opponent doesn’t merely need comparable technology to reproduce it. The opponent must first recognize what methodology is being used, locate people possessing the relevant expertise, integrate those people into an organization, and solve the problem before the information loses its value. A system doesn’t have to remain impossible to understand forever. It just has to remain difficult long enough to outlast the decision being made.
Yardley’s Black Chamber demonstrates the same principle from the offensive side. Obtaining a Japanese telegram wasn’t enough. Someone had to recognize the cryptographic system, solve it, translate the Japanese language, determine which messages mattered, and deliver useful information to people capable of acting on it. The advantage existed in the entire chain rather than in any single technological component.
When Information Became a Commodity
The greatest irony of Yardley’s career is the same man who demonstrated the strategic value of keeping information secret eventually demonstrated that secret information could also possess commercial value.
The Cipher Bureau closed on October 31, 1929, after Herbert Hoover became president and Henry Stimson became Secretary of State. Yardley later portrayed Stimson’s decision largely as a moral rejection of diplomatic espionage, immortalized by the sentiment that gentlemen should not read other gentlemen’s mail. Later histories suggest the decision was more complicated and likely involved changing government priorities and budget considerations as well. Whatever combination of motives produced the decision, Yardley suddenly found the institution around which he had built his career was gone.
The timing could hardly have been worse. The Black Chamber disappeared just as the United States entered the Great Depression, and Yardley needed money. He possessed something unusual that could still be sold: knowledge. In 1931 he published The American Black Chamber, revealing the sources and methods of the organization he had once been paid to keep secret. NSA’s history describes Yardley as desperately needing money after the closure and notes the book exposed cryptologic information affecting the communications security of numerous countries.
The transformation is remarkable. Information originally gathered through government cooperation with commercial communications networks had been converted into diplomatic intelligence. Diplomatic intelligence had been converted into negotiating advantage. After the government organization disappeared, Yardley’s personal knowledge of that intelligence system became material for publishing and entertainment.
The information changed markets without changing its underlying nature.
What had once been valuable because almost nobody knew it, became very valuable to Yardley because other people wanted to know it.
This is where the story begins to resemble later questions surrounding corporate intelligence, proprietary information, financial information, and commercial databases. Information can possess strategic value when it’s secret, analytical value when it reduces uncertainty, and commercial value when someone is willing to pay for access to it. The same piece of information can move between all three categories depending upon who possesses it.
Yardley couldn’t have known the intelligence world that would develop after the Black Chamber closed. The CIA and NSA didn’t exist, nor could he have known the naval limitations negotiated at Washington would only temporarily suppress the competition that eventually contributed to another world war. From Yardley’s perspective, the game was over and the Black Chamber was history. Publishing its sources and methods was less like revealing his cards during the game and more like a magician explaining how the trick worked after the show was finished.
The Information Abundance Problem
The Washington Naval Conference is usually remembered for battleship ratios, treaty limitations, and an unsuccessful attempt to build a durable Pacific security order. Through Yardley, however, it also becomes an early case study in the economics of information.
Information was expensive to obtain. Communications had to be intercepted or acquired, codes had to be solved, languages had to be translated, and useful messages had to be separated from irrelevant ones. Even then, information had no independent ability to change history. Someone still had to decide what it meant and what should be done with it.
That’s what makes poker a better metaphor for Yardley than cryptanalysis alone. The objective of poker is not to collect the largest possible quantity of information. The objective is to make better decisions than the other players while operating under uncertainty. Additional information is valuable only to the extent that it improves those decisions, and revealing what you know can sometimes reduce the future value of knowing it.
A century later, the technological problem has almost inverted. Modern governments, corporations, and individuals can accumulate quantities of information that Yardley could scarcely have imagined. Satellites, digital communications, financial networks, sensors, databases, and the internet continuously produce information. While artificial intelligence increasingly promises to translate, classify, correlate, retrieve, and summarize it.
The old strategic problem remains underneath the new technology. A machine may help find the cards, sort the cards, and identify which cards appear unusual, but none of those achievements guarantees an institution will understand the hand being played. The Washington Naval Conference occurred in an era of information scarcity, yet Yardley’s experience points toward a problem that becomes even more important in an era of information abundance.
Knowing the cards isn’t the same thing as knowing how to play the hand.
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[ H/T The Burning Platform ]
