The group was able to break the codes of the Cheka, the Russian secret police but was most renowned for the breaking of the Japanese diplomatic codes. The United States was embroiled in negotiations with Japan at the 1921 Washington Naval Conference, determining the allowable tonnage for naval warship for major military powers. The United States argued that the ratio should be 10:6 in favor of the U.S. over Japan. Japan insisted on a minimum of 10:7, but Yardley's group broke diplomatic codes allowing the U'S. to learn that the Japanese would accept 10:6 as a final compromise. The U'S. stood firm and the Japanese eventually agreed to the10:6 ratio.

In 1924, U.S. President Calvin Coolidge ordered a sharp cutback on federal spending and five years later, Henry Stimson, President Herbert Hoover's Secretary of State, deemed Yardley's section as non-essential . Stimson, highly offended at how diplomatic messages were being intercepted, reportedly declared "Gentlemen do not read each other's mail," and ordered State Department funded of Yardley's group to cease immediately. Yardley's group, officially called the Cipher Bureau but also known as the American Black Chamber was thus shut down.

Ousted from the intelligence community, Yardley grew frustrated and angry at U.S. naivety as well as his shabby treatment. In 1931, he published a book called The American Black Chamber. The book detailed his experiences in breaking codes and gave detailed explanations of the breaking of the Japanese codes. The book was serialized in the Saturday Evening Post, gaining fame and wealth for Yardley. It also caused him to fall into further disfavor with the U.S. Government and members of the intelligence community. In reaction to his book, Congress passed a bill prohibiting the publication of government secrets, including diplomatic codes and the bill was signed into law by President Franklin Roosevelt in 1933.