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Boris Hagelin
Inventor and business man

Boris Casear Wilhelm Hagelin (2 July 1892 - 7 September 1983) was a Russia-born Swedish engineer, inventor of cipher machines and businessman. He developed his first cipher machine in 1922, whilst working for A.B. Cryptograph of Arvid Gerhard Damm in Stockholm (Sweden), of which his father, Karl Wilhelm Hagelin, and the Nobel family were investors. Hagelin eventually founded one of the largest and most successful manufacturers of cipher machines — Crypto AG.

Hagelin was born on 2 July 1892 in Adschikent, a small town near Baku in Azerbaijan, then part of the Russian Empire. He was the son of a wealthy Swedish industrialist – Karl Wilhelm Hagelin – who managed the Baku oil fields for the Nobel family. As he was a personal friend of Emanuel Nobel, it was assumed that Boris would someday take over management of the Nobel oil interests.

After an initial education in Russia, Boris was sent to Sweden, where he graduated from the Royal Technical University in Stockholm in 1914, with a degree in mechanical engineering. After his graduation he entered service with
ASEA
– the Swedish General Electric – to apprentice for his presumed role in the Nobel enterprises, but the Russian Revolution of 1917 intervened and Boris would never return to Nobel's oil fields.

After spending a year in the United States, Boris returned to Sweden in 1920, where he was given a new job by Emanual Nobel at AB Cryptograph, a small company of the excentric Arvid Damm, in which the Nobels and the Hagelins had invested.
  

They wanted Boris to protect their interests, by assuming day to day management of the firm. Apart from a womanizer, Damm was also a mechanical genius. He had developed and built a few portable cipher machines, and had also invented a rotor-based cipher machine that was so complex that it appears never to have been built, although he did receive a patent in 1919.

In 1922, Hagelin was installed as the general manager of the company. Three years later, when Damm was in Paris with his mistress, Hagelin received an order from the Swedish Government who were looking for a cipher machine that was similar to the German Enigma.

Hagelin took Damm's double-rotor machine and modified it with his own (now famous) pinwheels to control their stepping. The machine would eventually become known as the B-21 and is shown in the image on the right. Although it looks similar to Enigma, its operates differently.
  
B-21 without the top lid showing the interior

The pinwheels would be at the heart of all of Hagelin's creations for the next 40 years. They caused an irregular stepping of the cipher wheels, and made the machine more difficult to break. The Swedish Government accepted the design and provided the company with its first income.

In 1927, Damm died and Hagelin took over the company, which he renamed AB Cryptoteknik in 1932. The Swedish Government represented a rather small market, so AB Cryptotektik did not make much money, until the French Army came along in 1934 and bought Hagelin's B-21.

Like the Enigma, the B-21 had a lamp panel for its output, but that was not wat the French Army had in mind. They wanted a faster machine, that was able to print its output directly on paper. Hagelin developed a rotating print head and a strip printer, and added an electric motor to the design. He called the new machine the B-211.
  
One of the few surviving B-211 machines. Photograph courtesy GCHQ.

The machine was accepted by the French and 500 unit were built at the L.M. Ericsson factory in Colombes (Paris, France) prior to the outbreak of WWII. After the war, another 100 units were delivered. It marked the start of a long-term relationship between Hagelin an the French Army, who also asked him to develop a portable mechanical cipher machine for tactical use in the field.

Hagelin took his pinwheels and combined it with a money changing machine that he designed for the Swedes a few years earlier. The French gave him a piece of wood that specified the maximum size, and Hagelin came up with a machine: the C-35, probably named after the year — 1935.

The machine – shown in the image on the right – had five pin-wheels and a revolving cage with horizontally moving bars, with lugs at specific places. It was an immediate hit and the French promptly ordered 5000 units, providing Hagelin with enough capital to let his company flourish.
  

The B-211 (above) was also sold to other countries. The Russians even copied it after obtaining two working B-211 machines from Hagelin under threat. The cloned machine was named K-37 (Crystal) and was broken by the Americans during WWII. The Russians used it until the late 1940s.

The C-35 was succeeded by the C-36, a similar machine, but slightly larger and more robust. It had a different distribution of the lugs on the horizontal bars, and Hagelin tried to sell it to the Italians and the Americans, but both declined it.

Hagelin first demonstrated it to William Friedman of the Army Signals Intelligence Service (SIS) in 1937. Friedman was looking for a replacement for their (insecure) M-94 hand cipher device, but found the C-36 too insecure. Hagelin tried again in 1939, but the design was rejected once more, and Hagelin went back to Sweden to improve it.
  
C-36 with open case - right view

But before the improved machine was ready, WWII broke out and the situation in Sweden became uncertain. Hagelin persuaded the Swedish government to appoint him as a special courier, and with his wife Annie, he made his way to the US. In his luggage: two unfinished C-38 machines.

After a distressfull journey through war-torn Europe, Boris and Annie finally reached Italy, where they boarded the Conte de Savoia. It was the last ship to sail for the United Status. After several days, they arrived safely in New York.

Upon arrival in the United Status, Stu Hedden – Hagelin's business representative in America – was already busy selling Hagelin's latest design: the C-38. The Army wanted some modifications to the C-38, bought the rights to the improved machine and called it M-209. It would become the cryptographic workhorse of the US Army.
  
The converter M-209

Hagelin sold the rights to the US Government for no less than US$ 8,614,790, using Stu Hedden – his US representative – and James Paulding – a French banker – as feduciaries. 1 By the end of the war, a staggering 140,000 units had been built at the Smith & Corona typwriter plant in Syracuse (New York). And by that time, Hagelin had become the first crypto-millionaire in the world.

 Continue with the history of Crypto AG

  1. Hagelin wanted the royalties to be described as 'capital gains' which were not taxed in Sweden. Instead he payed 25% income tax in the US. His gross proceeds were US$ 2.8 million (netting at US$ 1.8 million). Pauling received US$ 430,000 and Hedden US$ 140,000. Smith & Corona made a profit of US$ 5 million.

Boris Hagelin as a young entrepreneur Boris Hagelin at his 80th birthday on  July 1972 Boris Hagelin after his retirement
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Boris Hagelin as a young entrepreneur
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Boris Hagelin at his 80th birthday on  July 1972
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Boris Hagelin after his retirement

Controlled by Western intelligence
After the war, Hagelin returned to Sweden, but the restrictive export laws and high tax burden, forced him to move the company to neutral Switzerland in 1952. This also brought him closer to the action, as he recalls in his memoires. Especially the French gave him substantial orders. But from the start of the Swiss enterprise, the company was influenced by Western intelligence:

Publications
  1. Boris Hagelin, Die Geschichte der Hagelin-Cryptos
    Original manuscript by Boris Hagelin in German language. Zug, Fall 1979.

  2. Boris Hagelin, The Story of Hagelin Cryptos
    English translation of the above. BCW Hagelin, Zug, Spring 1981. Later edited by David Kahn and published in Cryptologia, Volume 18, Issue 3, July 1994, pp 204-242.

  3. Hans Stadlin, 100 Jahre Boris Hagelin 1892-1992 (German)
    Crypto AG. Crypto Hauszeitung Nr. 11. Jubilieumausgabe September 1992.
Patents
  1. Declassified by NSA on 17 June 2014 (EO 13526).

References
  1. Wikipedia, Boris Hagelin
    Retrieved July 2015.

  2. Boris Hagelin, Die Geschichte der Hagelin-Cryptos
    Original manuscript by Boris Hagelin in German language. Zug, Fall 1979.

  3. Boris Hagelin, The Story of Hagelin Cryptos
    English translation of the above. BCW Hagelin, Zug, Spring 1981. Later edited by David Kahn and published in Cryptologia, Volume 18, Issue 3, July 1994, pp 204-242.

  4. Crypto Museum, The Gentleman's Agreement
    30 July 2015.

  5. Crypto Museum, Operation RUBICON
    February 2020.
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