The Cash Machine Is Blue And Green

Today in Tedium: We live in a world where, conceivably, you can go without hitting an ATM for months, even years on end, as long as you have the right piece of plastic. After all, why carry money on you—which can get stolen or lost—when you can have it inside a centralized financial infrastructure that manages it for you and presumably will keep it safe? The ATM is on the decline, and its decline feels pretty similar to the decline we’ve already seen from legacy mediums like cable television (where younger people simply opted for Netflix), pay phones (which became less useful when everyone had a cell phone), or landlines (where younger people made cell phones their primary number). But there was a time when ATMs were scary and unusual, and there was a moment where everything started to click. Today’s Tedium talks about the day the ATM began to make sense. — Ernie @ Tedium

Can you trust this machine? (Andrew Valdivia/Flickr)

The initial discomfort of handing your paycheck to a machine

It’s worth keeping in mind that while the ATM has become something of a piece of modern furniture—a kiosk for managing and delivering money—it was not always that way. Most assuredly, the first experience that many people had with a computing device came in ATM form, so naturally, there was going to be some discomfort with the idea.

And no, people did not embrace this idea early on.

Behind the scenes, of course, machines were already kicking up the automation quotient, and then some. As I’ve written in the past, clearinghouses were already processing checks through automated machines in the 1960s and 1970s, which actually had the effect of reshaping the way we produced checks. Additionally, the early forms of optical character recognition were again used to make it easier to scan checks. It was natural to want to extend that automation to the tellers—but it wasn’t easy to get there.

This probably isn’t a surprise to you if you know anything about the history of computers, but the defense industry had the inside lane on a lot of early technology. Alan Turing’s groundbreaking decryption work was put to use by the British military during World War II. The first trackball was made for the Royal Canadian Navy. Ralph Baer was working at an aerospace company when he came up with the machine that became the Magnavox Odyssey.

And likewise, the company that first developed and deployed the first automated teller machine in the United States, Reflectone Electronics, was far better known for its work building military training systems.

Of course, it was not a corporation that invented the Bankograph, as it was called, but an individual. And that man’s name was Luther Simjian, who was Reflectone’s president. An Armenian national whose family fled during the that country’s genocide and eventually came to the United States, Simjian quickly gained a reputation as a prolific inventor, with more than 200 U.S.-based patents to his name between 1927 (a “Pose-reflecting system for photographic apparatus”) and 1982 (a “Golf putting training device”).

(Google Patents)

One of the patents he came up with, a “Depository machine,” represents one of the first steps on the journey to building the modern ATM. This machine did not have a screen. Rather, it would accept cash in an envelope or change, and then print a receipt. As the filing states:

This invention relates to a depository machine which receives articles or envelopes containing letters or money and automatically issues a receipt for the article deposited. It has particular reference to a recording means which identifies the article and means for issuing an identifying ticket exterior to the machine. The invention also has reference to a recording means within the machine for making a complete record of all the articles deposited.

As used throughout the specification and claims, the term article refers to a container which may include a closed bag containing coins, or any other closed receptacle commonly used to transport and store valuable papers and money.

(Google Patents)

A patent filing by Simjian from the same period adds a key element of any modern ATM—a camera. That filing makes clear that the goal is to make banking services accessible at all hours of the day:

This invention relates to automatic machines for depositing an article of value and has particular reference to a machine which is adapted to accept checks or money and to issue a deposit slip in return for the deposit. Specifically, the machine is adapted to accept checks, paper money and coin money, to record an image of the article deposited and to return to the depositor a deposit receipt which is identifiable with respect to the article deposited as well as with respect to the recorded image of the article.

The increasing demand of the public for banking services and the requirement of banks to seek and attract more and new customers and capital have made it necessary for banks to establish branch offices away from the downtown area and open branch stations in suburban and outlying districts, thus making it more convenient for the public at large to take advantage of banking services. In spite of these efforts, there still exist many impediments since banking hours are restricted to certain hours of the day and banks generally are closed on many of the legal holidays, Saturdays, and Sundays. It is apparent, therefore, that contact with banks is subject to a rather restricted schedule.

You probably noticed something about this passage: Most likely, if you use an ATM, you’re usually withdrawing cash from the machine. However, Simjian has at this point only come up with an invention that can handle deposits.

Still, that was enough to freak people out a little. As an AP writer noted in a 1961 piece, “Bank clerks won’t like this, but there’s a new machine called ‘bankograph’ which is said to accept bank deposits and issue receipts automatically.”

The machine came out at an awkward time for its parent company, which may have possibly hurt its chances in the market. Reflectone was in the midst of merging into Universal Match Corp. It did not get much further than New York City, where it was installed in a number of branches of the First National City Bank, a firm now far better known as Citibank. A brief published in cities across the country certainly didn’t make it sound like a particularly appealing idea:

The machine looks something like an automatic washing machine. It has a slot which will accept deposit slips, checks, pa-per money, or currency. It immediately returns a stamped receipt to a customer who has made a deposit and as the customer is moving away, the machine separately photographs everything he has deposited. It then processes the film and places the film and deposit in a bundle. At a later time, the bundles are collected and checked at the bank employees’ convenience.

While I can find evidence that Reflectone attempted to expand it beyond the city—for example, showing off the device at trade shows—evidence that they actually did so is scarce.

The bankograph did not do the trick—after all, it couldn’t dispense cash, only deposit it—and Simjian’s invention was later forgotten. But Citibank did eventually figure out the trick to getting people to interact with a machine.

It required the mixture of a lot of investment and a little good timing.

The NYC Blizzard of 1978 was a turning point for the ATM in the public consciousness. (Anthony Catalano/Flickr)

The snowstorm that finally gave the ATM its edge

If you build them, they will come. It’s not just a Field of Dreams reference, but Citibank’s approach to getting people to embrace the ATM.

Throughout 1977, the company built dozens of them throughout New York City, at an apparent cost of $100 million. The idea was to make them so common and so convenient that people would widely embrace them.

A lot had happened between the point where Citibank tried the Bankograph and it built a sizable network of its own ATMs. The ATM had started to be tested in other parts of the world, including the United Kingdom, Sweden, and Japan. In 1971, a man named Donald Wetzel filed a patent for a “Credit card automatic currency dispenser,” effectively the first ATM patent that included all of the device’s basic functions, including the use of a credit card or similar device. Companies key to the growth of the ATM, such as Diebold, also began to coalesce around the budding industry.

Would this be enough to win over skeptical New Yorkers? (via Newspapers.com)

Citibank was the company that seemed the most excited about the concept, and they built a network like it was going to become a major part of its business.

Its competitors did not do this, however, taking a much more cautious approach, and a piece on the uptake of the ATM from that period made it clear that most people did not think they were worth their time:

One problem, apparently, is that consumers are generally satisfied with paper checks. The inconvenience of paper checking may just be in the minds of bank marketing specialists. Most consumers are not only happy with paper checks, they are also worried by the threat of computer error and invasion of privacy. People do not want their security bent, folded or multilated.

"The stumbling block to electronic banking is the lack of personal touch," Chase Manhattan's Sheeran points out. "Savings Centers (Chase's newest promotion) maintain the personal touch that electronic banking can't. Many people find it hard to deal with a computer instead of a person."

So what changed that made the ATM look like a good idea to average people? A snowstorm.

The winter of 1978 was a pretty insane time for snowstorms—that January, the Great Blizzard of 1978 dropped massive amounts of snow on parts of Canada and the United States.

While New York didn’t get the Great Blizzard, it got plenty of snow of its own, and in the early days of February 1978, the entire Northeast got nailed with so much snow that it closed the schools and caused the Knicks to cancel a game—both events were rarities.

Something funny happened as a result of this, though. Because the banks were closed and people still needed groceries, all those ATM hubs that Citibank built throughout the region proved extremely useful—and ATM usage jumped by 20 percent after the storm left the branches closed, but the machines open.

Citibank got to use its ATM network to its advantage after the huge snowstorm. (via Newspapers.com)

In the weeks after the storm, the company promoted itself as the solution to not being able to access your money in inclement weather.

“We know how it was. There you were in two feet of snow with no way to get to us,” one ad stated. “We understand.”

It was just the opening Citibank—and the ATM in general—needed to finally make inroads on popular culture, the small window of usefulness that helped the skeptics see why having access to money without needing a checkbook was a good idea.