In the course of WWII both the Allies and the Axis powers were able to gain information of great value from reading their enemies secret communications. In Britain the codebreakers of Bletchley Park solved several enemy systems with the most important ones being the German Enigma and Tunnycipher machines and the Italian C-38m. Codebreaking played a role in the Battle of the Atlantic, the North Africa Campaign and the Normandy invasion. In the United States the Army and Navy codebreakers solved many Japanese cryptosystems and used this advantage in battle. The great victory at Midway would probably not have been possible if the Americans had not solved the Japanese Navy’s code.
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On the other side of the hill the codebreakers of Germany, Japan, Italyand Finlandalso solved many important enemy cryptosystems both military and diplomatic. The German codebreakers could eavesdrop on the radio-telephone conversations of Franklin Roosevelt and Winston Churchill, they could decode the messages of the British and US Navies during their convoy operations in the Atlanticand together with the Japanese and Finns they could solve State Department messages (both lowand highlevel) from embassies around the world.
The State Department made many mistakes in the use of its cipher systems and thus compromised not only US diplomatic communications but also the messages of other organizations that were occasionally enciphered with State Department systems, such as the Office of Strategic Services and the Office of War Information. Another similar case concerns the communications of General Barnwell R. Legge, US military attache to Switzerland during WWII. 
Legge was a veteran of WWI and recipient of the Distinguished Service Cross. In Switzerland he worked to promote US interests and he also cooperated in intelligence gathering activities with Allen Dulles, head of the local station of the Office of Strategic Services. The Swiss were officially neutral but they had close economic relations with the Axis countries and thus it was possible for the Allied intelligence agencies to gather information on political and military developments in Europe. Legge sent reports dealing with military developments and Axis war potential to the War Department in Washington but it seems that at least some of them were also read by the Germans and the Finns.
US military attaches used several cryptosystems during WWII. The basic systems were the Military Intelligence Code and the War Department Confidential Code. These were letter codebooks enciphered with the use of substitution tables. The US authorities were confident in their security but in 1941-42 the Italians and the Germans were able to get copies of the codebooks and some of the substitution tables and thus they could read US attache communications from Stockholm, Moscow, Cairo, Baghdad, Teheran and possibly other areas. The communications of colonel Bonner Fellers, US military attache in Cairo during 1940-2, were very important for the Germans and they provided them with valuable information during the fighting in N. Africa.It is reasonable to assume that General Legge also used these codebooks at least in the period 1941-42 but it’s clear that he also had the M-138-A strip cipher and in late 1944 he was given one time pads. A report found in the US National Archives and Records Administration (1) has the results of a security study of his messages sent in the period April-June 1944. The system he was using was the strip cipher and the report says ‘While many violations were found in the traffic, it may be concluded that security has been maintained because of the relatively small number of groups enciphered each day’.
From the information available at this timeit seems that, with one exception, messages enciphered with his systems were not read by the Axis powers. The exception seems to have been messages sent in early 1943. In 1943 the German codebreakers were solving the messages of the US embassy in Bern, Switzerland, so it is possible that they also solved some of Legge’s messages cryptanalytically. It is also possible that his cipher system was compromised in another way. According to ‘Operatives, Spies, and Saboteurs: The Unknown Story of the Men and Women of World War II's OSS’ (2) a janitor working at the US embassy in Bern was a German spy and while going through the trash he found discarded copies of messages that he passed on to the Germans. The Germans could have used these messages to solve Legge’s cryptosystem (plaintext-ciphertext compromise). The compromise of messages in early 1943, is confirmed from decoded US messages found in the Finnish national archives, in collection T-21810/4. A few messages signed Legge are available for March and April ’43. The originals are from NARA, collection RG 319 'Records of the Army Staff'.
Other US messages from Bern, found in the Finnish national archives, have information on German war production and mobilization data. Although these are not signed Legge they must have originated either from his office or from the OSS station. These messages were enciphered with State Department systems that the Germans and the Finns could solve cryptanalytically. So even if US attache ciphers were secure it was still possible for the Axis powers to read some of Legge’s communications in the period 1943-44. For example message No 4.926 of August 1st 1944 and the original from NARA, collection RG 59:
Also message No. 4973 of August 3rd 1944 and the original from NARA, collection RG 59:
Notes:
(1) NARA - collection RG 457 - Entry 9032 - box 1.019 - ‘Working papers on strip cipher systems, 1943-1947’(2) ‘Operatives, Spies, and Saboteurs: The Unknown Story of the Men and Women of World War II's OSS’, p77
Acknowledgments: I have to thank Randy Rezabek of TICOM Archive for the strip cipher security report.