At first glance, the photo looks like a standard-issue keepsake of the kind owned by anyone who has served in the military. Yet Friedman found it so significant that he had a second, larger copy framed for the wall of his study. When he looked at the oblong image, taken in Aurora, Illinois, on a winter’s day in 1918, what did Friedman see? He saw seventy-one officers, soon to be sent to the war in France, for whom he had designed a crash course on the theory and practice of cryptology...Several readers here will recognize the phrase as a signature quote by Sir Francis Bacon, who was famous for his work with cryptography, and one reader (Dan Noland) can decipher the code without hints. For the rest of us, a brief explanation that the code is a "biliteral" cipher -
And he saw a coded message, hiding in plain sight. As a note on the back of the larger print explains, the image is a cryptogram in which people stand in for letters; and thanks to Friedman’s careful positioning, they spell out the words “KNOWLEDGE IS POWER.” (Or rather they almost do: for one thing, they were four people short of the number needed to complete the “R.”)
The cipher was based, as the name “biliteral” suggests, on a system using only two letters—or, more precisely, one where each letter in the alphabet is represented by some combination of a’s and b’s... Bacon realized that it was possible to represent all twenty-six letters in permutations of only two by using groups of five...Details of the coding are presented at the Cabinet link, where this important point is offered:
But Bacon added a further twist to the ancient art of steganography, the general name for the practice of concealing messages through the use of disguise and deception. In the biliteral cipher, the cover-text need not, in fact, be “text” at all: the a’s and b’s can be represented by two types of anything—pluses and minuses, flowers of different kinds or colors, even (literally) apples and oranges—and this, for Bacon, is what gives his biliteral system the greatest power of all.Here's an example of an image with an embedded biliteral cipher:
and in a page of sheet music (hidden message ):
This is a fascinating subject, and one which scales up impressively in the modern digital world. The image below, for example, contains the complete text of Herman Melville's novels Moby-Dick and Typee (319,000 words):
Details about this steganograph at the flickr page of krazydad/jbum. And there's much more at the Cabinet article.