If the cipher were to be given a modern technical name, it would be known as a "straddling bipartite monoalphabetic substitution superenciphered by modified double transposition.
The initial analysis done by the American National Security Agency (NSA) in 1953 did not absolutely conclude that it was a hand cipher, but its placement in a hollowed out 5¢ coin (later known as the Hollow Nickel Case) implied it could be decoded using pencil and paper.
The VIC cipher has several important integrated components, including mod 10 chain addition, a lagged Fibonacci generator (a recursive formula used to generate a sequence of pseudorandom digits), a straddling checkerboard, and a disrupted double transposition.
A very strong version was used by Max Clausen in Richard Sorge's network in Japan, and by Alexander Foote in the Lucy spy ring in Switzerland.
This has the advantage of slightly compressing the plaintext, thus raising its unicity distance and also allowing radio operators to complete their transmissions quicker and shut down sooner.
Shutting down sooner reduces the risk of the operator being found by enemy radio direction finders.
The standard English straddling checkerboard has 28 character slots and in this cipher the extra two became "full stop" and "numbers shift".
More importantly, the additive was generated not through a keyword, but by selecting lines at random from almanacs of industrial statistics.
Of course the figures from such a book are not actually uniformly distributed (there is an excess of "0" and "1" (see Benford's Law), and sequential numbers are likely to be somewhat similar), but nevertheless they have much higher entropy density than passphrases and the like; at any rate, in practice they seem never to have been successfully cryptanalysed.
The weaker version generated the additive from the text of a novel or similar book (at least one Rote Kapelle member actually used The Good Soldier Schweik).
The cipher broadly worked as follows: Note: this section tracks the calculations by referring to [Line-X] or similar.
[1] Once the key has been generated, the first stage of actually encrypting the Message is to convert it to a series of digits via a straddling checkerboard.
An example encoding is below, where numbers : The message is transposed via standard columnar transposition keyed by [Line-Q] above.
The meaning of 'diagonal' in this case is that triangular disruption zones were employed to make the transposition irregular.
The (unencrypted) Keygroup is inserted into the ciphertext 'P' groups from the end; where 'P' is the unused sixth digit of the Date.
For example, if the seed was '90210', the first 5 iterations are shown below: The encoding step replaces each digit in a number (i.e. [Line-G] in the cipher) with one from a key sequence (i.e. [Line-E.2]) that represents its position in the 1-10 ordering.
[1] However, with the advent of modern computing, and public disclosure of the algorithm this would not be considered a strong cipher.