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Issue No.04 - Winter (1995 vol.17)
pp: 61-75
ABSTRACT
<p><it>In the mid-1950s a volunteer committee of bankers managed the development of a check processing standard that transformed the banking industry. The standard forced business machine manufacturers to adopt the new system rather than continuing to incrementally increase their own market share. The result was a new system allowing economies of scale through the exploitation of emerging electronic technologies. In tracing these developments, this story illustrates an interesting episode of how the “manager’s guiding hand” works to allow markets to shape technology.</it></p>
CITATION
James L. McKenney, "Developing a Common Machine Language for Banking: The ABA Technical Subcommittee Story", IEEE Annals of the History of Computing, vol.17, no. 4, pp. 61-75, Winter 1995, doi:10.1109/85.477621
REFERENCES
1. “Study of Check Collection System,” Report of the Joint Committee on Check Collection System to the AmericanBankers Association, Association of Reserve City Bankers, and Conference ofPresidents of the Federal Reserve Banks June15, 1954.
2. “Ibid;”
3. “Ibid;”
4. Federal Reserve System—Check Clearance Float, Twenty-second Report by the Committee on Government Operations, Eighty-ninth Congress, Second Session (Washington, D.C., Mar.17, 1966.
5. Interview with A.R. Zipf, San Francisco, California, June8, 1989.
6. Interview with Raymond C. Kolb, Pasadena, California, May29, 1990.
7. Interviews with Herbert R. Corey and John A. Kley, Naples, Florida, Nov.30, 1989.
8. Edward T. Shipley, “The Case for Uniform Punched Cards,” Audilgram, vol. 4, no. 5, Feb. 1954.
9. The Common Machine Language for Mechanized Check Handling: FinalSpecifications and Guides to Implement the Program.Bank Management Commission, no. 147, American Bankers Association: New York, Apr. 1959.
10. Interview with Kley, Nov.30, 1989.
11. William E. Spahr Clearing and Collection of Checks, vol. 37, New York: 1926.
12. “Ibid;38.”
13. “Ibid;55.”
14. “Ibid;110.”
15. “Ibid;89.”
16. Robert S. Aldom, Alan B. Purdy, Robert T. Schneider, and Harry E. Whittingham, Jr., Automation in Banking, vol. 14, no. 26, New Brunswick, New Jersey, 1963.
17. Interview with Kley, Nov.30, 1989.
18. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
19. Interview with Francis G.“Buck”Rodgers, Waltham, Mass.,10 Oct. 1990.
20. Interview with Kley and Kolb.
21. David Hemmenway, Industry-Wide Voluntary Product Standards,Ballinger, 1975.
22. “The Routing no.,” American National Standards Institute, New York, 1980.
23. Jean E. Sammet, Programming Languages: History and Fundamentals, pp. 340-343,Englewood Cliffs, New Jersey, 1969.
24. “Grocery Industry in the U.S.A.: Choice of a Standard Symbol,” HBS Case Services, pp. 677-045, Harvard Business School, Boston, Mass..
25. Automation of Banking Operating Procedure, Bank Management Commission, Savings and Loan Mortgage Division,American Bankers Association, New York, 1955.
26. Magnetic Ink Character Recognition: The Common Machine Language for Check Handling, Bank Management Commission, no. 138, American Bankers Association, New York, July21, 1956.
27. Placement for the Common Machine Language on Checks, Bank Management Commission, no. 141, American Bankers Association New York, Apr.10, 1957.
28. Automation of Bank Operating Procedures, op. cit. 1955.
29. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
30. Interviews with Corey and Kley, June8, 1989.
31. John A. Kley, “The Mechanization of Check Handling: A Progress Report,” Banking, vol. 48, pp. 60-62. Feb. 1956. Also published as Bank Management Publication 136.
32. A.R. Zipf, Eastern Trips: Report to the Managing Committee, 1954-1957.
33. Magnetic Ink Character Recognition, Placement for the Common Machine Language on Checks, Bank Management Commission, no. 141, American Bankers Association, New York, Apr.10, 1957.
34. Automation of Bank Operating Procesures, op. cit., 1955.
35. “Ibid.”
36. Kley, pp. 60-62.
37. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
38. Magnetic Ink Character Recognition,, op. cit., Apr.10, 1957.
39. Aldom, et al., 32.
40. op. cit. Magnetic Ink Character Recognition., pp. 9.
41. Aldom, et al., 32.
42. Zipf interview, Oct.8, 1989.
43. Magnetic Ink Character Recognition, 10-11.
44. Magnetic Ink Character Recognition, 11.
45. “Operating Procedures,” Banking, vol. 48, pp. 46-47, 142, 144, Mar. 1956; Notes on TSC Meeting, Mar.10, 1956.
46. A. R. Zipf letter to James L. McKenney, May20, 1989.
47. Kley, “Mechanization of Check Handling,” 1956.
48. Letter to John A. Kley. From: G.W. McSweeney, Chair, Executive Committee, Bank Stationers Section, Feb.7, 1956; “Operating Procedures,” pp. 46-47.
49. Zipf letter to McKenney, May20, 1989.
50. McSweeney letter to Kley, Feb.7, 1956.
51. Letter from G.W. McSweeney president, DeLuxe Check Printers, Inc., to John A. Kley, Feb.17, 1955; McSweeney letter to Melvin C. Miller, Feb.24, 1955.
52. Interviews with Corey and Kley, June18, 1989.
53. “Ibid.”
54. Magnetic Ink Character Recognition, 11.
55. Kley, “Mechanization of Check Handlin&” 60-62.
56. “Ibid.”
57. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
58. Magnetic Ink Character Recognition: op. cit.
59. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
60. “Ibid.”
61. R.W. Koch and C.L. Meyer et al., “Summary Report on Evaluation of the Burrough-Todd Fluorescent Check Coding System,” Battelle Memorial Institute. Feb.20, 1956.
62. “, Primary Evaluation of Code-Sensing Fluorescent Ink and Character-SensingMagnetic Ink Systems,” Arthur D. Little, Inc., prepared for the American Banking Association[sic], May23, 1956.
63. Magnetic Ink Character Recognition.
64. Arthur D.Little, Inc., op. cit.
65. Magnetic Ink Character Recognition, 3.
66. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
67. Magnetic Ink Character Recognition.
68. Magnetic Ink Character Recognition, 19-24.
69. John Donald Wilson, The Chase: The Chase Manhattan Bank, N.A., 1945-1985 (Boston, 1986): 306-307.
70. “How Banking Tames Its Paper Tiger,” Federal Reserve Bank of Philadelphia Business Review, pp. 1-11, May. 1960.
71. Interviews with Corey, Kley, Kolb, and Zipf, June,8, 1989.
72. “Ibid.”
73. Placement for the Common Machine Language on Checks, op. cit., pp. 6.
74. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
75. Location and Arrangement of Magnetic Ink Characters for the Common Machine Language on Checks. Bank Management Commission, no. 142, pp. 22, American Bankers Association, New York, Jan.9, 1958.
76. Interview with E. Daniel Spina, Naples, Florida, June28, 1990.
77. Placement for the Common Machine Language on Checks.
78. Herbert R. Corey memorandum to John A. Kley, regarding Location of Magnetic Ink Recognition Coding on Checks. Jan.11, 1957.
79. Zipf, “Report on Eastern Trip: Jan. 20-21, 1957,” Eastern Trips: Report to the Managing Committee.
80. “Analysis of Two Comparative Encoding Locations for Use in a Magnetic Document Processing System,” Booz-Allen&Hamilton, Management Consultants prepare for the American Bankers Association—Technical Committee on Mechanization, New York, Mar. 1957.
81. Zipf memorandum to Kley, Jan.8, 1957.
82. Placement for the Common Machine Language on Checks.
83. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
84. Interview with Jerre D. Noe, Seattle, Washington, Oct.20, 1989.
85. Location and Arrangement of Magnetic Ink Characters for the CommonMachine Language on Checks.
86. “Ibid.”
87. Examples include: Edward T. Shipley, “Electronics in the Bookkeeping Department,” Auditgram, pp. 32-36, Jan. 1957, and C.M. Weaver, “Bank Automation,” Auditgram, pp. 22-23, Mar. 1957.
88. Automation and Recent Trends, Hearings Before the Subcommittee on Economic Stabilization of the Joint Economic Committee,Congress of the United States, Eighty-fifth Congress, First Session,Pursuant to Sec. 5 (a) of Public Law 304, 79th Congress, Nov.14-15, 1957.
89. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
90. T.C. Jones Clearing and Collections Foreign and Domestic, New York, 1931.
91. Accounting and Check Imprinting for Mechanized Check Handling, Bank Management Commission, no. 143, American Bankers Association, New York, Aug.9, 1958.
92. R.C. Amara and Bonnar Cox, “A Study of Check Handling Operations in the Federal Reserve System,” Stanford Research Institute, prepared for the Federal Reserve Banks, Sept. 1957.
93. “Ibid;”
94. “Ibid;”
95. Aldon, et. al.
96. Interviews with Kley and Zipf, June8, 1989.
97. Interview with Kley; Interview with Charles W. Allen, Boston, Mass., May22, 1990.
98. “Ibid;”
99. “Ibid;”
100. Interview with Fred J. Kamphoefner, Menlo Park, California, Oct.18, 1989.
101. The Common Machine Language for Mechanized Check Handling: FinalSpecifzcations and Guide to Implement the Program. Bank Management Commission, no. 147, American Bankers Association, New York, Apr. 1959.
102. “The History of a Common Language,” R.J. Mindlin National Cash Register Company, Computer Systems Round Table,New York University Faculty Club, New York, New York Jan.7, 1963.
103. The Common Machine Language for Mechanized Check Handling, pp. 12.
104. The Common Machine Language for Mechanized Check Handling.
105. Interview with Zipf, Oct.8, 1989.
106. Tom Ferris, “Automated Check Processing System Still a Testament toFounders’Foresight: Nation’s Bankers Mark the MICR Line’s 25thYear in the Business,” American Banker, pp. 39, Nov.13, 1984.
107. “Report to Technical Committee 97 Working Group C on Character Recognition,” United States Delegation to the International Standards Organization, Paris, France, Oct. 1962.
108. “Ibid.”
109. Interview with Spina, date unavailable.
110. A reviewer noted at the time of the standard setting process that GE wasnegotiating with Machines Bull for an acquisition. The team was not aware of the standard issue. One year later GE acquired Machines Bull.
111. Interview with Richard J. Midlin, Dayton, Ohio, May15, 1990; interview with Spina, date unavailable.
112. Interview with Midlin, date unavailable.
113. Eric von Hippel, “Transferring Process Equipment Innovations from user-Innovators to Equipment Manufacturing firms,” R5D Management, Vol. 8, no. 1, pp. 13-22, Oct. 1977.
114. Including William J. Abernathy and James M. Utterback, “Patterns of Industrial Innovation,” Technology Review, June/July 1978; Michael L. Tushman, and Philip Anderson “, Technological Discontinuance and Organizational Environments,” Administrative Science Quarterly, vol. 31, pp. 439-65, 1986; and Nathan Rosenberg “Technological Interdependence, American Economy, “, Technology and Culture”, pp. 25-50, Jan. 1979.
115. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
116. Paul A. David, “Clio and the Economics of QWERTY,” American Economics Review, vol. 75, pp. 332-337, May/June 1985.
117. David C. Mowery and Richard Rosenberg, “The Influence of Market Demand Upon Innovation: A Critical Review ofSome Recent Empirical Studies,” Research Policy, vol. 8, pp. 103, Apr. 1979.
118. James L. McKenney Waves of Change: Business Evolution through Technology, Harvard Business School Press: Boston, MA..
119. Interviews with Corey, Kley, Kolb, and Zipf, June8, 1989.
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