This is how it was done prior to the introduction of after-market decals, home computers and graphics software, and ALPS printers. From the "Model Talk" column by Geoffrey Norris, RAF Flying Review (International Edition), May 1960, p. 45.
"You need: a sticky label like those used for re-addressing envelopes*, some clear varnish (I used Humbrol), and ordinary plastic enamels. Working on the sticky side of the label, coat the approximate area of the transfer with clear varnish and allow to dry. Then trace the design onto the varnish. paint it in, and allow to dry again. Another coat of clear or matt varnish on top of this will help strengthen the transfer, but it is not strictly necessary. Once this is dry you can proceed as with an ordinary transfer. One last word of advice: these transfers need a lot of soaking and do not slide so easily as those bought in kits. But they certainly stick on the model very well indeed."
Having done this many tines after discovering this process, I can testify that it does work quite well. My "clear varnish" of choice in those days was Pactra Clear Gloss enamel, Humbrol being somewhat hard to find in the US in the early 1960s.
*Note: this is a gummed label with "lickable" or water-activated glue, NOT the pressure-sensitive adhesive variety.
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