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Issue No.03 - July-September (2011 vol.33)
pp: 32-45
Bernardo Batiz-Lazo , Bangor University
Robert J.K. Reid , University of Glasgow
<p>The success of currency dispensers in the 1960s was the technological precondition for the now omnipresent automated teller machines (ATMs). An examination of the three earliest separate instances of cash-dispensing technology not only illuminates the history of this device but demonstrates how users&#x2014;in this case banks&#x2014;shape and direct technological change.</p>
history of computing, cash dispensers, ATMs, history, financial data processing, patents, research and development, user interfaces, United Kingdom
Bernardo Batiz-Lazo, Robert J.K. Reid, "The Development of Cash-Dispensing Technology in the UK", IEEE Annals of the History of Computing, vol.33, no. 3, pp. 32-45, July-September 2011, doi:10.1109/MAHC.2010.3
1. J.R.S. Revell, Banking and Electronic Fund Transfers, Organization for Economic Co-operation and Development, 1983, p. 42.
2. J.W. Cortada, The Digital Hand, vol. 2, Oxford Univ. Press, 2006, p. 12; J. Svigals, Smartcards: The New Bank Cards, Macmillan, 1987; A.R. Gourley, "The Diffusion of Process Innovation in the UK Financial Sector: An Empirical Analysis of Automated Teller Machine (ATM) Diffusion," doctoral dissertation, Loughborough Univ., 1999; R. Coopey, "A Passing Technology: The Automated Teller Machine," Wiring Prometheus: Globalisation, History and Technology, P. Lyth, and H. Trischler eds., Aarhus Univ. Press, 2004, pp. 175–192.
3. A distinction made early on by W.H. Roelle, and D.A. Walker, "A Survey of Some Major Issues on Electronic Fund Transfer Systems (Wp 74-19)," Financial and Economic Research Section, Federal Deposit Insurance Corp., 1974, p. 2.
4. P.E. Ceruzzi, A History of Modern Computing, 2nd ed., MIT Press, 2003, p. 80.
5. D.W. Richardson, Evolution of an Electronic Funds-Transfer System, MIT Press, 1970. Other efforts include J.J. McAndrews, "The Evolution of Shared ATM Networks," Federal Reserve Bank of Philadelphia Business Rev., May/June 1991, pp. 3–16; S. Sienkiewicz, "The Evolution of EFT Networks from ATMs to New On-line Debit Payment Products," discussion paper, Payments Cards Centre, Federal Reserve Bank of Philadelphia, 2002; F. Hayashi, R.J. Sullivan, and S.E. Weiner, A Guide to the ATM and Debit Card Industry—An Update, Federal Reserve Bank of Kansas City, 2006. Others who have written on the emergence and diffusion of ATMs in the US include D.A. Hopkins, "Factors Affecting the Adoption of Automated Teller Machines, Direct Deposit of Paychecks and Partial Direct Deposit to Savings Where Available," doctoral dissertation, Ohio State Univ., 1986; M.F. Lozano, "The Diffusion and Adoption of a Technical Innovation: The Automated Teller Machine," doctoral dissertation, Univ. of Arizona, 1987; S.J. Lane, "Entry and Industry Evolution in the ATM Manufacturers' Market," doctoral dissertation, Stanford Univ., 1989; K.G. Peffers, "Information Technology Impact on Performance: An Investigation of Investments in Automated Teller Machines," doctoral dissertation, Purdue Univ., 1991; and E.-J. Lee, "Consumer Adoption and Diffusion of Technological Innovations: A Case of Electronic Banking Technologies," doctoral dissertation, Univ. of Tennessee, 2000.
6. D. Hopton, Electronic Fund Transfer Systems: The Issues and Implications, Univ. of Wales Press, 1979; P. Kirkman, Electronic Funds Transfer System: The Revolution of Cashless Banking and Payment Methods, Basil Blackwell, 1987; and J. Howells, and J. Hine, Innovative Banking: Competition and Management of the Network Technology, TJ Press, 1993.
7. Coopey's "A Passing Technology: The Automated Teller Machine"; A. Barrie, "The Impact of Information Technology on UK Banking: The Case of Automated Teller Machines," MSc Int'l Finance and Banking, London South Bank Univ., 2006; B. Bátiz-Lazo, "Emergence and Evolution of ATM Networks in the UK, 1967–2000," Business History, vol. 51, no. 1, 2009, pp. 1–27.
8. M. Ackrill and L. Hannah, Barclays: The Business of Banking 1690–1996, Cambridge Univ. Press, 2001, pp. 214, 332–334.
9. Bátiz-Lazo's "Emergence and Evolution."
10. T. Pinch, "Why You Go to a Piano Store to Buy a Synthesizer," Path Dependence and Creation, R. Garoud, and P. Karnoe eds., Lawrence Erlbaum, 2001, pp. 381–399.
11. C.C. Cooper, "Social Construction of Inventions through Patent Management," Technology & Culture, vol. 32, no. 4, 1991, pp. 960–998.
12. L. Galambos, "Recasting Organisational Synthesis," Business History Rev., vol. 79, no. 1, 2005, p. 3.
13. B.Z. Khan, and K.L. Sokoloff, "'Schemes of Practical Utility:' Entrepreneurs and Innovation Among 'Great Inventors' in the United States, 1790–1865," J. Economic History, vol. 53, no. 2, 1993, pp. 291–292.
14. W.S. Frame and L.J. White, "Technological Change, Financial Innovation, and Diffusion in Banking," Federal Reserve Bank of Atlanta, 2009.
15. "Fast Machine with a Buck," Pacific Stars & Stripes,14 July 1966, p. 7.
16. B. Bátiz-Lazo, T. Karlsson, and B. Thodenius, "Building Bankomat: The Development of On-line, Real-Time Systems in British and Swedish Savings Banks, C. 1965–1985," Proc. Assoc. of Business Historians Annual Conf., 2009.
17. D. Wetzel co-patentee of the Automatic Teller Machine, interview by D.K. Alison curator of the Nat'l Museum of Am. History, 21 Sept. 1995, comphistwetzel.htm; B. Bátiz-Lazo, and R. Reid, "Evidence from the Patent Record on the Development of Cash Dispensers and ATM Technology," Proc. IEEE History of Telecommunications Conf., IEEE Press, 2008.
18. See for instance R. Coopey, Information and Technology Policy: An International History, Oxford Univ. Press, 2004; J.W. Cortada, "Public Policies and the Development of National Computer Industries in Britain, France, and the Soviet Union, 1940-80," J. Contemporary History, vol. 44, no. 3, 2009, pp. 493–512.
19. A payment clearing system existed in London since the 1770s, and for much of that time, it was based at the Banker's Clearing House. ( "Recent Developments in UK Payment Clearing Systems," Bank of England Quar. Bull., vol. 27, 1987, p. 63.) Here, representatives of note- issuing banks met to exchange checks, transfer money between accounts at different banks, and settle net positions with payments from balances at the Bank of England. The system grew to a limited liability company known as the Banker's Clearing House (established in 1864). This company was owned and controlled by the CLCB banks, which offered current account facilities and money-transmission services as their core business. (J. Cooper, The Management and Regulation of Banks, Macmillan, 1984, p. 50.) Nonmember banks wishing to compete with current account facilities could only do so by outsourcing to one of the clearing banks. ( D. Wood and B. Bátiz-Lazo, "Corporate Strategy, Centralization and Outsourcing in Banking: Case Studies on Paper Payments Processing," Int'l Assoc. Management J., vol. 9, no. 3, 1997, p. 39. ) By 1900, the 10 clearing banks controlled 46 percent of total deposits in sterling by residents in England and Wales, and by 1921, five of these banks held 97 percent of total deposits. ( A.R. Holmes, and E. Green, Midland: 150 Years of Banking Business, BT Batsford, 1986, p. 121.) British monetary authorities consented to this high degree of concentration, amenable to "gentlemen agreements," as they considered them, to offer greater flexibility than regulation in controlling the money supply and inflation.
20. Branch and Staff Numbers, Lloyds Group Archive, 2009.
21. I. Martin, "Britain's First Computer Centre for Banking: What Did This Building Do?" Technological Innovation in Retail Finance: Int'l Historical Perspectives, B. Bátiz-Lazo, J.C. Maixé-Altés, and P. Thomes eds., Routledge, 2010.
22. A.E. Booth, The Management of Technical Change: Automation in the U.K. And U.S.A. since 1950, Palgrave, 2007.
23. A.E. Booth,, "Technological Change and Gender in the Labour Policies of British Retail Banks, 1945–70," Managing the Modern Workplace: Productivity, Politics and Workplace Culture in Postwar Britain, J. Melling, and A.E. Booth eds. Ashgate, 2008, pp. 101–124; P. Wardley,, "Women, Mechanization and Cost-Savings in Twentieth Century British Banks and Other Financial Institutions," Proc. XIV Int'l Economic History Conf., 2006.
24. J.Q. Hollom Bank of England Archive (BoEA), C54/10 Chief Cashiers Duplicate Letters, Letter to Sir Edward Dodd (H.M. Chief Inspector of Constabulary—London), 5 Aug. 1964; BoEA, C54/10 Chief Cashiers Duplicate Letters, C.L.C.B. Meeting of the 2nd July, 30 Jun. 1964.
25. C. Webb, "Never on a Saturday," The Times, 28 Jun. 1969, p. 8; A. Thomas, "Problems Ahead as Saturday Banking Ends," The Times,28 Jun. 1969, p. 11.
26. In 1960, clearing of retail payments was extended to include credit transfers and standing order payments, although the UK did not see widespread use of credit cards, store cards, check guarantee cards, and other substitutes for payment with bills and coins until the 1970s. (B. Bátiz-Lazo, and D. Wood, "An Historical Appraisal of Information Technology in Commercial Banking," Electronic Markets, vol. 12, no. 3, 2002, pp. 192–205.)
27. Booth, "Technological Change and Gender," pp. 119–121.
28. M. Billings and A.E. Booth, "Techno-Nationalism, the Post Office and the Creation of Britain's National Giro," Technological Innovation in Retail Finance: International Historical Perspectives, B. Bátiz-Lazo, J.C. Maixé-Altés, and P. Thomes, eds., Routledge, 2010.
29. While seeking to achieve scale and greater efficiency of specific functions inside banking organizations, the process of mechanization also involved the use of office equipment (such as accounting machines, tabulators, and many other devices) and increasingly from the late 1950s, applications of computer technology (such as mainframes and magnetic ink character recognition in checks). (B. Bátiz-Lazo, and P. Wardley, "Banking on Change: Information Systems and Technologies in UK High Street Banking, 1919–1969," Financial History Rev., vol. 14, no. 2, 2007, pp. 17–205.)
30. B. Bátiz-Lazo and J.C. Maixé-Altes, "Organisational Change and the Computerisation of British and Spanish Savings Banks, Circa 1950–1985," Proc. Business History Conf., 2008.
31. Bátiz-Lazo and Wood, "An Historical Appraisal of Information Technology in Commercial Banking," pp. 192–205.
32. Monopolies and Mergers Commission, "The De La Rue Company Ltd.," rep_pub/reports/1960_1969/fulltext054c03.pdf .
33. Born in Shillong in Assam, India, on 23 June 1925 and died in Scotland on 15 May 2011, he was educated at Stowe School and during the war attended the University of Edinburgh through the military before being admitted at Trinity College as a pensioner in October 1948. (Who's Who, 160th ed., A&C Black Publishers, 2008, p. 2100.) He initially read for the Economics Tripos and appears to have been allowed a pass in the first part of the examination in 1949, but did not complete his degree. (Personal correspondence with A.C. Green, assistant archivist and manuscript cataloguer Trinity College Library, Cambridge, 14 Apr. 2008.) Following his time at Cambridge, he moved to De La Rue as a management trainee based in Surrey where he eventually worked at the board level, including chairman of an armored truck company division (Security Express) and managing director of De La Rue Instruments ( histories De-La-Rue-plc-Company-History.html ).
34. De La Rue Company History, De-La-Rue-plc-Company-History.html .
35. B. Milligan, "The Man Who Invented the Cash Machine," BBC News, .
36. J. Shepherd-Barron interview by B. Bátiz-Lazo, and R.J.K. Reid26 Mar. 2008.
37. Martin, "Britain's First Computer Centre for Banking: What Did This Building Do?" p. 1.
38. Some DACS devices were indeed deployed outside of Barclays by the Bank of Scotland in the form of the "Scotcash" system because the latter was, at the time, part of the same group.
39. There is no surviving record at the Midland Bank (namely HSBC Group Archives, HSBC) confirming the invitation to Chubb or Smith Industries.
40. Under the leadership of George Chubb (1911–2003), third Lord Hayter, chairman, managing director and direct descendent of the founder, in 1969 Chubb had a consolidated turnover of £38.4 million (41.2 percent resulted from exports and overseas operations) (Chubb & Son's Lock & Safe Company Group, Annual Report and Accounts, 1970, p. 16).
41. S. Newcombe interview by B. Bátiz-Lazo 5 Feb. 2008; J. Donald interview by B. Bátiz-Lazo, and C. Reese4 Jun. 2008.
42. Holmes and Green, Midland, pp. 232–241.
43. Circular No. S. HSBC 1493 119/1967— "Automated Cash Dispensers," HSBC Group Archives, ref. 0200/0677b.
44. Here the record is unclear as to the role of J. Westhead, the future chairman of Pye and who had been at Cambridge with Shepherd-Barron, in designing the machine.
45. "Improvements in or Relating to Security Documents and Monetary Tokens" (GB990256) was developed by Barry Birch Goalby, Stefan Klackowski, Roy Salter, and Charles Dennis Lowe with a priority date of 26 March 1962 and granted in 1965.
46. A patent for a "Sensing Mechanism for Automatic Vending Machines" (GB990255) was filled on 15 Mar. 1963 and granted in 1965. Developed by Barry Birch Goalby, Stefan Klackowski, Roy Salter, and Charles Dennis Lowe, it focused on automation of customer service rather than any specific goal of automating banking technology.
47. Developed by Frank Albert Richardson, Stanley William Middleditch and Reginald Leslie Walker, it was filled on 30 Jun. 1960 and granted in 1962 as GB912215. This was later developed into a patent filed on 25 September 1964 entitled "Sheet Feeding and Counting Apparatus" developed once again by Stanley Middleditch with Victor Richard Sels. This was granted in 1968 as GB1109466.
48. The earliest De La Rue cash-dispensing-related patents in the record are for simply an "Encoded Card Like Device" (GB1308331), filled on 13 Jan. 1971, while the first complete system within the ATM family patented by De La Rue emerges in GB2046975 (filled on 2 Apr. 1981).
49. J. Shepherd-Barron interview by B. Bátiz-Lazo and R.J.K. Reid, 26 Mar. 2008.
50. Bátiz-Lazo, Karlsson, and Thodenius, "Building Bankomat," pp. 16–17.
51. J. Shepherd-Barron, "In the Words of the ATM Inventor," Proc. ATM Industry Assoc. Conf.,22 Feb. 2007; http://www.atmmarketplace.comarticle.php?id=8541.
52. Files 8A129/1 in the Bank of England Archives (BoEA) contains a note (dated 8 Jun. 1967) that specifically refers to a "recent" meeting held at Chubbs in Wolverhampton where a new cash machine was demonstrated to the Bank of England's Deputy Chief Cashier Richard Creighton Balfour and the Deputy Secretary for Organisation and Methods and Head Office computer projects Robert Catt. A search of a series of Chief Cashier's Duplicate Letters (series reference C54/11 to 21), dating from 1964 to 1967 failed to help ascertain that meeting's exact date. However, the Bank of England representatives were clearly interested in the technology for their own retail branch operations and for servicing their customers rather than for purposes of bank regulation or supervision of the money market (all these areas were at the time under the aegis of the Cashier's Department).
53. "Memorandum for Board," 1 Aug. 1967, Royal Bank of Scotland Group Archives (RBSGA), WES/595/14 (file marked "Mechanisation" ).
54. T. McMillian General Managers' Committee, Administration Dept., "24-Hour Cash Dispensing Service," 4 Aug. 1967, RBSGA, WES/595/14 (file marked "Mechanisation" ).
55. General Mangers Committee, Administration Dept., "Expenditure on Machines and Equipment," 26 Jan. 1968, RBSGA, WES/595/14 (file marked "Mechanisation" ).
56. "Inauguration of Cash Card Machine," Jan. 1968, Corus Colors Record Center, Shotton, code 425, consignment 13, dept. box 3, location 3528.
57. "City Editor's Awards 1967: Men of the Year," Sunday Telegraph, 31 Dec. 1967, RBSGA, WES/595/14 (file marked "Mechanisation" ). For the same concept, Jack Howe, industrial design consultant, also received the even more prestigious Duke of Edinburgh's Design Price (Chubb & Son's Lock & Safe Company Group, Ann. Report and Accounts, 1970, p. 16 ).
58. Chubb & Son's Lock & Safe Company Group, Ann. Report and Accounts, 1971, p. 9.
59. Chubb & Son's Lock & Safe Company Group, Ann. Report and Accounts, 1974, p. 5.
60. "Automated Cash Dispensers,"15 May 1967, HSBC 0200/0677b.
61. "Automated Cash Dispensers,"26 Apr. 1967, HSBC 0200/0677b.
62. The same source notes trials by the First National Bank of Arizona on a machine that accepted, counted, and validated cash credits. No patent record was found for this machine.
63. GB1329964, filed on Sept. 1969 (granted 1973) by J.D. Edwards, L. Perkins, J.H. Donald, P.L. Chappell, S.B. Newcombe, and M.D. Roe .
64. The intended sum was £200 per cash card ( "Automated Cash Dispensers—Speytec Ltd,"20 Sept. 1968, HSBC 0200/0677b).
65. , The magnetic stripe system was spread over several filings, all of which are based on the original GB1329964 patent. The method for verification of the card was detailed in GB1329965 (filed on 27 Aug. 1970 by Burroughs and granted in 1973) and the card itself was patented under GB1329966 (also filed on 27 Aug. 1970 by Burroughs and granted in 1973).
66. "Automated Cash Dispensers,"26 Apr. 1967, HSBC 0200/0677b.
67. "Automated Cash Dispensers,"30 Sept. 1968, HSBC 0200/0677b.
68. Speytec machines were deployed in branches at Croydon, Glasgow (Clydesdale), London (Old Bond Street, Picadilly, and Shaftesbury Ave), Manchester (Deansgate), Belfast, Crawley, Eastnourne, Hastings, and Romford. This while looking to identify other 50 potential sites. ( "Automated Cash Dispensers," HSBC 0200/0677b, 30 Oct. 1968. )
69. Booth, Management of Technical Change, p.155.
70. "Contracts 500 Cash Dispensers for Bank," The Times,10 Sept. 1969, p. 22, col. G.
71. B.R. Johnson, "First Steps in Self-Serving Banking," TSB Gazette, vol. 37, 1974, pp. 74–80.
72. Pinch, "Why You Go to a Piano Store to Buy a Synthesizer;" N. Reingold, "U.S. Patent Office Records as a Source for the History of Invention and Technological Property," Technology & Culture, vol. 1, no. 2, 1959–1960, pp. 156–167.
73. Reingold, "U.S. Patent Office Records," p. 160.
74. Cooper, "Social Construction," pp. 838–839.
75. R.J. Sullivan, "The Revolution of Ideas: Widespread Patenting and Invention During the English Industrial Revolution," J. Economic History, vol. 50, no. 2, 1990, p. 350.
76. Wood and Bàtiz-Lazo, "Corporate Strategy," p. 36.
77. J.E. Schroeder, "Building Brands: Architectural Expression in the Electronic Age," Persuasive Imagery: A Consumer Response, L.M. Scott, and R. Batra eds., 2003, pp. 349–382.
78. A.G. Konheim, , Computer Security and Cryptography, John Wiley & Son, 2007, pp. 509–511.
79. Ceruzzi, A History of Modern Computing, p. 80.
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