In the early hours of 26 August, the German light cruiser SMS Magdeburg ran aground at Odensholm lighthouse off Estonia whilst participating in a sweep against Russian patrols in the Gulf of Finland. The destroyer SMS V26 had to abandon her attempts to free Magdeburg when the Russian armoured cruiser Pallada and the protected cruiser Bogatyr appeared.
The Germans tried to scuttle Magdeburg, but were only partially successful. One of her four copies of the Signalbuch der Kasierlichen Marine (SKM), the German navy codebook, was burnt and two thrown overboard. However, the Russians recovered the latter two from the sea and the fourth from the captain’s safe. They later scrapped Magdeburg where she lay.
The Russians retained two of the codebooks for themselves and offered the third to the British, provided that a British ship collected it. This did not happen immediately, but the Admiralty received the codebook on 13 October.
Winston Churchill, then First Lord of the Admiralty, later wrote that Britain ‘received from our loyal allies these sea-stained priceless documents.’ Christopher Andrew and Robert Massie both note that the copy of the SKM in the UK National Archives [ref ADM 137/4156] is not sea-stained. The Russians kept the two copies retrieved from the sea and gave the British the one from the captain’s safe.
As well as the SKM codebook, the British obtained a set of the German squared charts of the North Sea and Heligoland Bight that used to identify the location of German and enemy forces. Arthur Marder writes that Churchill and The Naval Staff of the Admiralty, a Naval Staff Monograph, both state that they were provided by the Russians. However, he goes on to say that Lieutenant W. F. Clarke RNVR, who worked in codebreaking, says in an unpublished paper called ‘Jutland’ that they were from the safe fished up by the trawler.
It took some time until the British could read German naval signals sent using the SKM. Weather reports were encoded only by it, but other ones were re-ciphered. By early November, Fleet Paymaster Charles Rotter, a Naval Intelligence Department German expert, had realised that the re-ciphering was a simple substitution table. The key was changed periodically, but later ones were broken more quickly.
The SKM was the second German naval codebook obtained by the British. The SS Hobart, a German merchant ship, had been boarded by Australians off Melbourne on 11 August. They seized a copy of the Handelsverkehrsbuch (HV), which was used principally for communications between warships and merchantmen, but was also used by naval shore bases and later by U-boats and Zeppelins.
The Australians did not initially realise the importance of their prize and it then took time to send it to Britain, so the Admiralty did not receive it until late October.
The British obtained the third German naval codebook, the Verkehrsbuch (VB), when a trawler caught a lead-lined chest on 30 November. It had been thrown overboard by a German destroyer sunk on 17 October. The VB was used for cable communications with naval attachés and warships abroad and by admirals at sea.
The ability to read German codes would become very significant later in the war, but it took time for the Admiralty to get its decryption operation, known as Room 40 after its original office, working well. At first, the civilian cryptographers did not always understand naval matters and some naval staff officers looked down on them. The Admiralty was also excessively secretive with the decrypts, meaning that it did not always make the best use of the intelligence. Paul Halpern comments that ‘Room 40 would not reach its peak of efficiency and become a true intelligence centre until much later in the war.
 W. S. Churchill, The World Crisis, 1911-1918, 5 vols (London: Odhams Press, 1939), v, Kindle edition, location 7846 out of 9432.
 C. M. Andrew, Secret Service: The Making of the British Intelligence Community (London: Heinemann, 1985), p. 89; R. K. Massie, Castles of Steel: Britain, Germany, and the Winning of the Great War at Sea (London: Jonathan Cape, 2004), footnote, p. 316.
 A. J. Marder, From the Dreadnought to Scapa Flow; the Royal Navy in the Fisher Era, 1904-1919, 5 vols (London: Oxford University Press, 1961-70), ii, footnote 2, p. 132. Marder says that Captain Stephen Roskill, whosse papers are now at Churchill College, Cambridge, had a copy of Clarke’s paper.
 P. G. Halpern, A Naval History of World War I (London: UCL Press, 1994), p. 37.