Smart Machines

Moving cash over a network of wires long preceded the advent of the World Wide Web--or even electronic-funds transfer between banks or by Western Union. In fact, the first wire-borne transactions took place a century and a half ago, among the earliest large-scale retailers--urban dry-goods merchants and department-store owners.

Prior to the 19th century, rural general stores and urban shops were small enough to be run by owners and their families. But as those businesses grew their personnel demands increased, and the owners hired clerks, who often failed to handle exchanges as carefully--or as scrupulously--as the proprietors. The owners began to demand that the clerks record all transactions in daybooks--"even," as one employer admonished, "if the house is on fire." The clerks seldom did.

As retail stores grew--A.T. Stewart's Marble Palace, in lower Manhattan, employed hundreds of salesclerks in the 1800s--their proprietors tried to maintain close control over monetary transactions by assigning the duty to a small number of cashiers. These so-called change makers were not located at each sales counter, as cashiers are today, however. Rather, they were cordoned off in booths or stationed at wrapping desks. To link together the clerks (who handled the customers) and the cashiers (who handled the money), department stores employed armies of "cash children." At the point of purchase, a clerk would rap on the counter and call, "Cash!" A cash child would spring off the waiting bench, pick up the money along with the goods and a sales check, and speedily deliver all three to the wrapping desk, where the cashier would tear off a sales voucher and make change. The transaction was completed when the young courier returned to the sales counter with the wrapped goods, a receipt, and change.

Not surprisingly, merchants sought ways of automating that labor-intensive process. Building on the concept of limited cashier stations, some began to use what was known as the Lamson cash-basket system. It worked like this: On the main sales floor, the clerk who closed a sale would place the customer's cash and a sales slip in a small metal cage at any one of several sales stations. The basket was then conveyed via a wire-pulley system to a cash booth on the second floor, where the store owner or a trusted employee recorded the sale, counted out change, and shipped the bucket back to the clerk.

In the 1880s, two technological advances signaled the end of the Lamson system. One was the pneumatic tube, which Philadelphia retail magnate John Wanamaker introduced into department stores after first installing the system in the U.S. post office while he was postmaster general. But the enduring solution was the cash register, invented by Alsatian immigrant James Ritty to prevent bartenders in his saloon in Dayton, Ohio, from pilfering. Ritty sold his National Cash Register Co. for $1,000 in 1882. Two years later fellow Daytonian James Henry Patterson paid $6,500-plus for the business, and by 1910 he had built it into a behemoth that controlled 90% of the sprawling cash-register industry.

David B. Sicilia is an assistant professor of business and technology history at the University of Maryland, College Park.

Published on: Jun 15, 1998