How did everyone’s password get printed in a welcome message?

MIT’s time-sharing system kept its password file and its message of the day (the note every user saw when logging in) in the same folder. The text editor was built assuming only one person working in a folder at a time, and it saved its work to a temporary file with the same fixed name, regardless of which file was being edited. By the mid-1960s about a dozen programmers looked after the system, and they talked Fernando Corbató, who led it, into letting several of them edit files in that folder at once. One afternoon two of them were editing there together, one the password file and the other the message of the day, and their temporary files got swapped.

For almost twenty minutes, everyone who logged in was shown every password as plain, readable text. Corbató recalled the cleanup taking twelve hours to change everyone’s password. Tom Van Vleck, who helped reset them, called the episode the origin of the idea of storing passwords one-way scrambled, so that even someone who read the file could not read the passwords.