Liberty Street Economics

« Foreclosures Loom Large in the Region | Main | Do Treasury Term Premia Rise around Monetary Tightenings? »

April 12, 2013

Historical Echoes: The Invention of the ATM–A Case of Multiple Independent Discovery?

Amy Farber

Amazingly, something resembling a drive-through automated bank teller existed back in 1941 (twenty-six years before the invention of the true ATM, or automated teller machine). It was an ingenious curbside teller’s window, as described in this October 1941 Popular Science article, “Bank Gives Curb Service to Motorists with Novel ‘Teller-Vision’ Cage” (p. 63 for IE7 users).

     This “machine” that resembled an automatic teller wasn’t really automatic—it had a living, red-blooded teller (to forestall robbery, prepare withdrawals, and push the buttons of a dumbwaiter)—but was indeed drive-through. However, this doesn’t mark the invention of the ATM, nor does there seem to be any contiguity of thought between this event and the invention of the true ATM. Much more sophisticated was an idea for an automated teller by Luther Simjian, a Turkish inventor in New York, who in 1939 developed an idea for a hole-in-the-wall machine, registering twenty patents. It was determined after a trial of the machine that there wasn’t enough demand to keep going with the idea.

     The modern ATM was invented in two different places (England and the United States) at roughly the same time, as an about.com article explains. It may be considered a case of multiple independent discovery or multiple discovery. Or maybe not, if one considers that the underlying technology wasn’t the same (radioactive check versus magnetic strip). The British version was created by John Shepherd-Barron, and it debuted in 1967. This version wasn’t patented—Shepherd-Barron was advised by his company’s lawyers that revealing the coding system for PIN numbers, a requirement for the patent, would’ve allowed criminals to hack it.

     A self-described geek blogger named Michael Breaux has posted a short video about the rolling out of the first U.S. ATM in Rockville Center, Long Island, in 1969. The video doesn’t mention the British version, only the U.S. version and its co-patentee Don Wetzel (the other two were Tom Barnes and George Chastain, both engineers), a Docutel employee formerly of IBM.

     The story of the Don Wetzel’s invention of the ATM has been captured in an exciting, very thorough 1995 interview conducted by Dr. David K. Allison, curator at the National Museum of American History of the Smithsonian. From this interview, we’re enlightened about the many decisions surrounding this invention. One of the most interesting points is that the developers did research to determine the degree of need for such an invention well before they tackled its technical aspects:

David: By experience, you mean that you approached this, as you describe it, really from a functional perspective and not from a technical perspective at all. Do I understand that correctly?

Don: That’s correct.

David: That you sat down with your planners and looked at the market structure, the functionality. At what point did you begin looking at technical issues? When did that part of the discussion come in?

Don: Once we determined that the marketplace was large enough to warrant us getting into that market with this machine, then we got down to “well, what kind of machine should this be, and how will it work?” And that posed several problems for us.

     Nowhere in the interview is there mention of any knowledge of the ATM’s appearance in England two years earlier. So, it’s difficult to determine if and to what extent there was any knowledge of the English version, although the Wikipedia ATM entry intimates otherwise: “After looking first hand at the experiences in Europe, in 1968 the networked ATM was pioneered in the U.S., in Dallas, Texas, by Donald Wetzel.” There’s no suggestion in the interview that there was any race or extreme competition going on, as compared with today’s giant tech companies. Although both Wetzel and Shepherd-Barron invented different ATMs in the sense of “cash dispensers,” it was Wetzel’s group that soon developed the networked ATM (the ATM “talks” to a person’s bank account in real time). Read the interview to find out about Don’s adventures with encryption, mini-computers, and magnetic tape.



Disclaimer
The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.




Amy Farber is a research librarian in the Federal Reserve Bank of New York’s Research and Statistics Group.


Posted by Blog Author at 07:00:00 AM in Historical Echoes
Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Some additional information on this subject can be found at the following two links:

http://ideas.repec.org/p/pra/mprapa/9461.html

and

http://www.bloomberg.com/news/2013-03-27/how-the-atm-revolutionized-the-banking-business.html

May I suggest you look at material that is actually supported by contemporary documentry evidence rather than using unsubstantiated websites in the internet.

Your story fails in a number of ways. For instance, there is no actual evidence that Simjian worked on the Bankograph before the mid 1950s and his first patent on it dates from 1959 (the 1939 is a typo the MIT refuses to change). There were three (not one) independent British deployments in 1967 (De La Rue - Barclays - as you point out; Chubb - Smith Industries - Westminster Bank; Midland - Burroughs - Speytec). Also in 1967 Asea-Metior and the Swedish savings banks deployed another machine through an independent effort (later branded Bankomat). As further read I suggest

Cash Box: The Invention and Globalization of the ATM [Hardcover]
Tom R. Harper (Author), Bernardo Batiz-Lazo (Author)
http://www.amazon.com/Cash-Box-Invention-Globalization-ATM/dp/1935497626/ref=sr_1_1?s=books&ie=UTF8&qid=1364894888&sr=1-1&keywords=cash+box

But happy to point you to more authoritative material.

The comments to this entry are closed.

About the Blog
Liberty Street Economics features insight and analysis from economists working at the intersection of research and Fed policymaking.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.

Upcoming Posts
Useful Links
Feedback & Comment Guidelines
Liberty Street Economics invites you to comment on a post.
Comment Guidelines
We encourage you to submit comments, queries and suggestions on our blog entries. We will post them below the entry, subject to the following guidelines:
Please be brief: Comments are limited to 1500 characters.
Please be quick: Comments submitted more than 1 week after the blog entry appears will not be posted.
Please try to submit before COB on Friday: Comments submitted after that will not be posted until Monday morning.
Please be on-topic and patient: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post. The moderator will not post comments that are abusive, harassing, or threatening; obscene or vulgar; or commercial in nature; as well as comments that constitute a personal attack.  We reserve the right not to post a comment; no notice will be given regarding whether a submission will or will not be posted.
Archives