When built in the early 19th century, Käsmu was often known as 'millionaire's village', such were the profits made from salt smuggling. In the 1920s smuggling shifted to alcohol when Finland attempted to impose prohibition. Finland gave up this aim in April 1932 and Käsmu suffered considerably. A macabre end to this traditional role came in June 1940 when many likely victims of Soviet hostility were smuggled out of Estonia before the whole country was occupied.
Käsmu is clearly no ordinary fishing village and this early prosperity shows signs of returning as affluent Tallinn businessmen buy up the former captains' houses. The main building is the Maritime Museum which previously served as a navigation college during the first period of independence and then as a coastguard station in the Soviet period. The large watchtower next to the building dates from the latter, when swimming was banned after 21.00, such was the supposed risk that escapes to Finland might be made under the cover of darkness. The museum has two unique features in that there is no admission charge and it is open at any time. The owner, Aarne Vaik, spent 20 years collecting material surreptitiously for the museum when there was no chance of displaying it. At present the collection concentrates on the 1920s and 1930s but it will be extended through World War II and the Soviet period. A natural history section to cover sea fauna and flora is also being planned. One item of particular interest to British tourists is the £1 note from 1919; with all local currencies at that time being so insecure, sterling was the only acceptable currency for maritime insurance.
Beside the village church is the Baron Bellingshausen Memorial, perhaps unique in being built by him to feign his death. He was implicated in the failed plot to kill Tsar Alexander II in 1881 and fled to Germany with this memorial as a safeguard against the police looking for him. The false tomb was soon discovered but the baron was able to die of natural causes in the safe environment of Potsdam. The building now houses a photographic exhibition of local people at work and at home, all the pictures having been taken in 1999.