Do you have any further references about what exact military installation was doing this and when? I’m reading Cryptonomicon by Neal Stephenson and one of the main characters builds a mercury-based data analysis machine that reads punch cards to analyze communication data in WWII and this sounds eerily similar.
IIR mercury-based memories part of a larger class of memory called "delay-line memory" that dates all the way back the 1920s. The basic premise is that it uses the time delay of signals propagating in some medium to temporarily "store" a value.
The modern analog is the need to refresh DRAM in order to keep the bits flipped the right way.
