Before the Beginning; the Examination Unit and the Joint Discrimination Unit
The Examination Unit (XU) was Canada's first civilian office that was solely dedicated to the encryption and decryption of communications signals. Until then, signals intelligence (SIGINT) was entirely within the purview of the military. The impetus for the creation of a civilian cryptolologic unit came from two different directions concurrently.
At the beginning of the Second World War, Canadian armed forces were already collecting raw ciphered signals from enemy military and foreign mission communications traffic. Canadian Military intercepts of enemy SIGINT were used mostly to locate enemy positions and movements based on meta-data, and sent to Britain and the USA.
With the Nazi occupation of France, Canada was encouraged by the Allies to put together a civilian office that would decrypt signals traffic content, such as messages from the Vichy Government and other military and diplomatic communications. On occasion, depending on the type of communications, some content could be analysed by the Military Discrimination Units, but it was the civilian XU that would regularly decipher content and disseminate intelligence to Canadian Foreign Affairs as well as to the Allies.
By 1945, the disparate SIGINT collection units of the Navy, Army and Air Force were joined together in the Joint Discrimination Unit (JDU) in the same building as the XU, where by the end of the war, the two Units, Military and Civilian, were able to coordinate signals intelligence collection and analysis and dissemination so efficiently that their success was a primary justification for the establishment of a peacetime Canadian Cryptologic Agency which would be the Communications Branch of the National Research Council of Canada (CBNRC).
Testimony to the value of this tiny unit's contribution to the Allied War effort is demonstrated in the purpose statement of the Secret Order in Council that created the peacetime cryptologic service, the CBNRC in August 1946-today's CSE. Specifically, the creation of a peacetime civilian organization was recommended in order to allow the individuals with highly developed and virtually irreplaceable skills and expertise to continue their work; almost all of whom had been XU and JDU employees.