Prior to WWII, only a small minority of Americans had checking accounts. With the postwar economic boom and with some promotion (here’s an ABA video intended to educate Americans about the virtues of the check), the number of checking-account-holders grew sharply, and the problem of processing all the checks became an increasingly large absorber of clerical workers.
Attempting to dig itself out of the paperwork flood, Bank of America hired Stanford Research Institute to develop an automated solution. The prototype system, called ERMA, was operational in early 1956. The now-familiar MICR characters, printed in magnetic ink, were introduced to provide automatic account identification, so that only the amount of the check needed to be entered manually. An ERMA system maintained account data (for up to 32000 customers) on a magnetic drum, so that overdrafts and stop-check requests could be identified in real time. An automated check-sorting machine was included in the system.
EMRA employed 8000 vacuum tubes and drew 80KW of power….it was not a stored-program computer but was wired for its specific function. Development of follow-on production machines, which were solid-state and stored-program, was accomplished by NCR and GE.
It still seems remarkable that checks…flimsy paper documents that are often treated pretty roughly…can be processed and sorted at 10 per second (in the case of ERMA) or even faster in the case of follow-on systems. I read somewhere that when the ERMA system was being demonstrated to GE CEO Ralph Cordiner, he took one of his own checks, folded it in half, dropped in on the floor and stepped on it a couple of times, and then requested that it be included in the processing run. Apparently the system handled it just fine.
Some ERMA history
A GE computer at work in a Chicago bank, in 1960
I post items like this because they provide needed perspective in our present “age of automation” when there is so much media focus of robotics, artificial intelligence, and ‘the Internet of Things,’ but not a whole lot of understanding for how these fit on the historical technology growth trajectory.
Previous Robot Emeritus posts:
Railroad Centralized Traffic Control, 1927
Manufacturing Automation, 1960
In Koestler’s 1950 novel The Age of Longing, a character, speaking about the Common People, says:
“The People–and when I use that word, Mademoiselle, I always refer to people who have no bank accounts”
The considerable majority of Americans today do have bank accounts, yet there remains a segment who are “unbanked”…today’s WSJ put it at about 7.5% of the population.