diff --git a/scripts/tests/e3/rules.lua b/scripts/tests/e3/rules.lua
index a4ee0ea3f..896c8a0c7 100644
--- a/scripts/tests/e3/rules.lua
+++ b/scripts/tests/e3/rules.lua
@@ -929,6 +929,7 @@ function test_volcanooutbreak_message()
     assert_not_equal("", msg:render("en"))
 end
 
+<<<<<<< HEAD
 function test_bug2083()
     local herb_multi = 500 -- from rc_herb_trade()
     local r = region.create(0,0,"plain")
@@ -961,7 +962,13 @@ function test_bug2083()
     assert_equal(0, u:get_item("balm"))
 end
 
+=======
+>>>>>>> release-3.7.11
 function test_no_uruk()
   local f1 = faction.create("noreply@eressea.de", "uruk", "de")
   assert_equal(f1.race, "orc")
 end
+<<<<<<< HEAD
+=======
+
+>>>>>>> release-3.7.11
diff --git a/src/buildno.h b/src/buildno.h
index 9727f88eb..3ce9dbfe7 100644
--- a/src/buildno.h
+++ b/src/buildno.h
@@ -1,3 +1,3 @@
 #define VERSION_MAJOR 3
 #define VERSION_MINOR 8
-#define VERSION_BUILD 3
+#define VERSION_BUILD 4
diff --git a/src/kernel/save.c b/src/kernel/save.c
index fe8fbd93d..9623aaefd 100644
--- a/src/kernel/save.c
+++ b/src/kernel/save.c
@@ -1154,6 +1154,58 @@ void write_spellbook(const struct spellbook *book, struct storage *store)
     WRITE_TOK(store, "end");
 }
 
+static char * getpasswd(int fno) {
+    const char *prefix = itoa36(fno);
+    size_t len = strlen(prefix);
+    FILE * F = fopen("passwords.txt", "r");
+    char line[80];
+    if (F) {
+        while (!feof(F)) {
+            fgets(line, sizeof(line), F);
+            if (line[len]==':' && strncmp(prefix, line, len)==0) {
+                size_t slen = strlen(line)-1;
+                assert(line[slen]=='\n');
+                line[slen] = 0;
+                fclose(F);
+                return _strdup(line+len+1);
+            }
+        }
+        fclose(F);
+    }
+    return NULL;
+}
+
+static void read_password(gamedata *data, faction *f) {
+    char name[128];
+    READ_STR(data->store, name, sizeof(name));
+    if (data->version == BADCRYPT_VERSION) {
+        char * pass = getpasswd(f->no);
+        if (pass) {
+            faction_setpassword(f, password_hash(pass, 0, PASSWORD_DEFAULT));
+            free(pass); // TODO: remove this allocation!
+        }
+        else {
+            free(f->_password);
+            f->_password = NULL;
+        }
+    }
+    else {
+        faction_setpassword(f, (data->version >= CRYPT_VERSION) ? name : password_hash(name, 0, PASSWORD_DEFAULT));
+    }
+}
+
+void _test_read_password(gamedata *data, faction *f) {
+    read_password(data, f);
+}
+
+static void write_password(gamedata *data, const faction *f) {
+    WRITE_TOK(data->store, (const char *)f->_password);
+}
+
+void _test_write_password(gamedata *data, const faction *f) {
+    write_password(data, f);
+}
+
 /** Reads a faction from a file.
  * This function requires no context, can be called in any state. The
  * faction may not already exist, however.
@@ -1220,8 +1272,7 @@ faction *readfaction(struct gamedata * data)
         set_email(&f->email, "");
     }
 
-    READ_STR(data->store, name, sizeof(name));
-    faction_setpassword(f, (data->version > CRYPT_VERSION) ? name : password_hash(name, 0, PASSWORD_DEFAULT));
+    read_password(data, f);
     if (data->version < NOOVERRIDE_VERSION) {
         READ_STR(data->store, 0, 0);
     }
@@ -1328,7 +1379,7 @@ void writefaction(struct gamedata *data, const faction * f)
     WRITE_STR(data->store, f->name);
     WRITE_STR(data->store, f->banner);
     WRITE_STR(data->store, f->email);
-    WRITE_TOK(data->store, f->_password);
+    write_password(data, f);
     WRITE_TOK(data->store, locale_name(f->locale));
     WRITE_INT(data->store, f->lastorders);
     WRITE_INT(data->store, f->age);
diff --git a/src/kernel/save.h b/src/kernel/save.h
index ca364fc9c..cedd5befc 100644
--- a/src/kernel/save.h
+++ b/src/kernel/save.h
@@ -83,6 +83,9 @@ extern "C" {
     struct gamedata *gamedata_open(const char *filename, const char *mode);
     void gamedata_close(struct gamedata *data);
 
+    /* test-only functions that give access to internal implementation details (BAD) */
+    void _test_write_password(struct gamedata *data, const struct faction *f);
+    void _test_read_password(struct gamedata *data, struct faction *f);
 #ifdef __cplusplus
 }
 #endif
diff --git a/src/kernel/save.test.c b/src/kernel/save.test.c
index e7f85ad7e..71cb6e91c 100644
--- a/src/kernel/save.test.c
+++ b/src/kernel/save.test.c
@@ -5,9 +5,14 @@
 #include "unit.h"
 #include "faction.h"
 #include "version.h"
+#include <util/base36.h>
+#include <util/password.h>
+
 #include <CuTest.h>
 #include <tests.h>
 
+#include <storage.h>
+
 #include <stdio.h>
 
 static void test_readwrite_data(CuTest * tc)
@@ -42,15 +47,17 @@ static void test_readwrite_unit(CuTest * tc)
     u = test_create_unit(f, r);
     join_path(datapath(), filename, path, sizeof(path));
 
-    data = gamedata_open(path, "w");
-    CuAssertPtrNotNull(tc, data); // TODO: intermittent test
+    data = gamedata_open(path, "wb");
+    CuAssertPtrNotNull(tc, data);
+
     write_unit(data, u);
     gamedata_close(data);
 
     free_gamedata();
     f = test_create_faction(0);
     renumber_faction(f, fno);
-    data = gamedata_open(path, "r");
+    data = gamedata_open(path, "rb");
+    CuAssertPtrNotNull(tc, data);
     u = read_unit(data);
     gamedata_close(data);
 
@@ -61,10 +68,61 @@ static void test_readwrite_unit(CuTest * tc)
     test_cleanup();
 }
 
+static void test_read_password(CuTest *tc) {
+    const char *path = "test.dat";
+    gamedata *data;
+    faction *f;
+    f = test_create_faction(0);
+    faction_setpassword(f, password_hash("secret", 0, PASSWORD_DEFAULT));
+    data = gamedata_open(path, "wb");
+    CuAssertPtrNotNull(tc, data);
+    _test_write_password(data, f);
+    gamedata_close(data);
+    data = gamedata_open(path, "rb");
+    CuAssertPtrNotNull(tc, data);
+    _test_read_password(data, f);
+    gamedata_close(data);
+    CuAssertTrue(tc, checkpasswd(f, "secret"));
+    CuAssertIntEquals(tc, 0, remove(path));
+}
+
+static void test_read_password_external(CuTest *tc) {
+    const char *path = "test.dat", *pwfile = "passwords.txt";
+    gamedata *data;
+    faction *f;
+    FILE * F;
+
+    remove(pwfile);
+    f = test_create_faction(0);
+    faction_setpassword(f, password_hash("secret", 0, PASSWORD_DEFAULT));
+    CuAssertPtrNotNull(tc, f->_password);
+    data = gamedata_open(path, "wb");
+    CuAssertPtrNotNull(tc, data);
+    WRITE_TOK(data->store, (const char *)f->_password);
+    WRITE_TOK(data->store, (const char *)f->_password);
+    gamedata_close(data);
+    data = gamedata_open(path, "rb");
+    CuAssertPtrNotNull(tc, data);
+    data->version = BADCRYPT_VERSION;
+    _test_read_password(data, f);
+    CuAssertPtrEquals(tc, 0, f->_password);
+    F = fopen(pwfile, "wt");
+    fprintf(F, "%s:secret\n", itoa36(f->no));
+    fclose(F);
+    _test_read_password(data, f);
+    CuAssertPtrNotNull(tc, f->_password);
+    gamedata_close(data);
+    CuAssertTrue(tc, checkpasswd(f, "secret"));
+    CuAssertIntEquals(tc, 0, remove(path));
+    CuAssertIntEquals(tc, 0, remove(pwfile));
+}
+
 CuSuite *get_save_suite(void)
 {
     CuSuite *suite = CuSuiteNew();
     SUITE_ADD_TEST(suite, test_readwrite_data);
     SUITE_ADD_TEST(suite, test_readwrite_unit);
+    SUITE_ADD_TEST(suite, test_read_password);
+    SUITE_ADD_TEST(suite, test_read_password_external);
     return suite;
 }
diff --git a/src/kernel/version.h b/src/kernel/version.h
index c18957530..3ff4e927a 100644
--- a/src/kernel/version.h
+++ b/src/kernel/version.h
@@ -33,9 +33,10 @@
 #define SPELL_LEVEL_VERSION 348 /* f->max_spelllevel gets stored, not calculated */
 #define OWNER_3_VERSION 349 /* regions store last owner, not last alliance */
 #define ATTRIBOWNER_VERSION 350 /* all attrib_type functions know who owns the attribute */
-#define CRYPT_VERSION 351 /* passwords are encrypted */
-#define RELEASE_VERSION CRYPT_VERSION /* current datafile */
+#define BADCRYPT_VERSION 351 /* passwords are encrypted, poorly */
+#define CRYPT_VERSION 352 /* passwords are encrypted */
+#define RELEASE_VERSION ATTRIBOWNER_VERSION /* current datafile */
 #define MIN_VERSION INTPAK_VERSION      /* minimal datafile we support */
-#define MAX_VERSION RELEASE_VERSION /* change this if we can need to read the future datafile, and we can do so */
+#define MAX_VERSION BADCRYPT_VERSION /* change this if we can need to read the future datafile, and we can do so */
 
 #define STREAM_VERSION 2 /* internal encoding of binary files */