This guest post is written by Jack Arrington, who contributed 50% of the genetic material required to produce TechCrunch founder Michael Arrington. Jack was around at the very beginning of what we today call the Information Technology business. In 1950 pure business necessity drove Bank of America, then the largest bank in the world, to look for ways to automate the labor intensive job of handling checks. From that necessity ERMA was born, one of the first large scale data processing machines for business. Jack joined Bank of America in 1963 as a Computer Operator Trainee. He retired in 2002 as Head of Data Processing Operations.
2009 is the half-century milestone in the use of information technology for business applications, and it’s an opportunity to look back and give a nod of appreciation to those early IT entrepreneurs.
In the mid-20th century, the majority of people did not have checking accounts and none of them had bank-issued credit cards. Those in the lower and middle economic classes mostly relied upon cash to buy goods and pay bills. If funds needed to be sent long distances, Western Union provided facilities for the purchase of money orders that were communicated via telegraph and could be retrieved by the payee in another town or country. But the process of consumer banking was tailored for the needs of people who lived most if not all of their lives in the same town. Banking activities were mostly limited to home and car loans and the average customer was well known by the banking staff.
Throughout most of the country, historic bank processes continued to serve well because most banks were single-office businesses, catering to the needs of a stable and known customer base.
California, though, had unique scaling problems. The state faced an exploding population following World War II, when many of the people who had served in the US military decided to settle there instead of going back to the eastern & mid-western hamlets and family farms of their origin. Jobs in California were plentiful, land was cheap and so was construction material. Homes were thrown up throughout the length and width of the Golden State.
California-based Bank of America, then the largest bank in the world, had earlier pioneered the concept of deploying branch offices of the parent bank in many locations. So BofA followed its potential customers into each new neighborhood, providing home loans and other banking services. But if your account was domiciled in Palo Alto, cashing a check in Modesto was difficult because of an inability to share data between two bank offices, even though they were both Bank Of America branches. Identification of account holders attempting a transaction was primarily accomplished by visual comparison of a transaction signature to the one on a signature card on file at the domiciling bank office. In order to retain its leadership position in commercial and consumer banking, BofA desperately needed a banking solution that would accommodate mobility and the financial flexibility of people and businesses.
The system worked, but just barely. BofA was hard pressed to keep up with the demands on its services. Backrooms of the branch offices were crammed night and day with people tapping away on huge adding machines while manually updating paper ledgers for each account-holder. An experienced bookkeeper could post about 245 accounts per hour, but errors were common and required another person to proof the work of the first. Adding more people to fix the problem simply became impossible, and branches began closing earlier and earlier in the day to deal with the mountain of paperwork that piled up.
By 1950, BofA decided it was time to think about replacing all those people with a computer. At the time, computers were used primarily for scientific and military calculations. But there was no reason they couldn’t be built to handle the mundane but important task of processing checking accounts, too.
Displaying focused insight that should be the envy of many in the current crop of Silicon-Valley entrepreneurs, Bank of America teamed with Stanford Research Institute (SRI) and General Electric to invent and then build the first system of automation for commercial banking. They dubbed it ERMA.
The goal was simple – to create a computer that could keep up with the processing demands of the bank’s customers. Transistors had been developed by Bell Labs in 1947 but functionality had not matured sufficiently to enable the processing required of ERMA in the early 1950s, so SRI first settled on vacuum tube technology to meet the requirements set by BofA. A modified octal binary system served the program assembler and Magnetic Ink Character Recognition (MICR, or E13B,) font was developed to allow checks & deposit slips to serve as machine-readable input. Other methods of input included punch-paper tape, which allowed insertion of alphanumeric data such as names and addresses. Reels of magnetic tape (distributed by dedicated air and road couriers,) allowed current account-balance information to be shared between, eventually, each of 14 ERMA Centers located from San Diego to San Francisco.
These were, by today’s standards, monstrously large machines. ERMA weighed about 25 tons and was spread out through four rooms. It contained more than a million feet of wiring, 8,000 vacuum tubes, 34,000 diodes, 5 input consoles with electronic reading devices, (optionally) two magnetic memory drums, a check sorter, a high-speed printer, a power control panel, a maintenance board, 24 racks holding 1,500 electrical packages and 500 relay packages, up to 12 magnetic tape drives for 2,400-foot tape reels, and a refrigeration system. ERMA used more than 80 kW of power and required cooling by an air conditioning system.
Her primary processing unit (which contained memory and I/O interface units) was about the size of a Humvee. Her complement of 8-12 tape drives were each the size of a refrigerator and her printer was a little bit bigger than a fully-loaded Mini-Cooper. The primary peripheral device that ERMA was designed to serve was the Check Reader/Sorter, which could read MICR encoded checks at a rate of 600 per minute, capturing the data on magnetic tape for subsequent posting, while routing them to one of 12 pockets. The contents of each pocket would subsequently be fine-sorted and packaged for return to the domiciling branch-office with the morning’s journals and status reports. ERMA controlled two of the Check Reader/Sorters, each approximating the size of a Ford Explorer. A complete ERMA system required about 3000 square feet of space, to house her components and serve her auxiliary input and output needs. During the busiest hours, ERMA required 5 operators working in harmony to achieve peak processing capacity. By today’s standards, you might consider her a bit chunky…but in our time, we thought she was lean and efficient.
Programs under execution resided on magnetic tape. When needed, commands and calculations were downloaded into the 4000 bytes of memory (donut-shaped iron core components with each bit approximately the diameter of a dime and twice as thick.) This was long before the deployment of wireless or even wired connectivity to user devices, so output was limited to updated magnetic tape files and printed reports produced on a huge noisy device, which (when not broken), could turn out journals and status reports at a speed of 600 lines per minute.
Nearly a decade elapsed in the design, testing and manufacture of the system before the product was put into service in September of 1959. A total of 32 ERMA systems were purchased by BofA and installed in cities throughout California. Each machine processed up to 33,000 accounts per hour (the output of about 135 experienced bookkeepers), providing daily posting of all customer checking and savings accounts. Best of all, the machines never slept, going 24/7 except for (frequent) maintenance – a GE engineer was on site every day to deal with issues. A single ERMA machine, working a week straight, was able to do the work of more than 500 people.
The decision to deploy ERMA wasn’t about simply replacing high-cost jobs with a relatively low-cost computer. While there were undoubtedly significant operating efficiencies, ERMA quite simply allowed the bank to continue to keep pace with the rapid population growth of California. Without computerized data processing, that would have been impossible.
Other banks soon jumped in line to follow the direction taken by BofA and the technology became standard for most banks in the U.S. Although 50 years have passed, E13B (the magnetic ink font at the bottom of checks) remains the most common machine-readable input standard for financial institutions.) A nice thing about E13B is that with a bit of training and focus, people can read it too, although few today are able to determine which district of the Federal Reserve is encoded in the MICR line on their checks.
ERMA served the BofA well until 1967, when her vacuum tubes grew cold and dim and her limited brainpower could no longer cope. She was replaced by an IBM monstrosity (the 360 and its trail of descendants). Two ERMAs were preserved; one is at the Smithsonian in Washington DC and the other at Bank of America’s Technology Center in Concord, CA.
My time with ERMA lasted only two years but the hands-on experience remains a vivid memory, even with a half-century of progress clamoring to dull my senses.
For more information on ERMA, see SRI, GE and Ed Thelen (lots of pictures).
This was a surprsingly insightful article.
Having Jack Arrington as a regular columnist would be a great idea.
All in favour, say Aye!
From India
Anjali Sen
Aye aye captain!
Aye aye!
Very good article indeed.
Jack started in the 1950’s. My father started in 1960 – including writing the first Fortran II compiler. I started with punch cards in 1970’s. But Jack makes me feel young. Welcome.
-DJ
http://s.tEarn.com/
Aye!
Great post. Having historical context posts every now and then would definitely be appreciated!
why u have such a strange name
Aye !!
Aye
Can we have Jack instead of Mike from now on?
Please?
Careful. If you don’t give Jack the reaction he’s looking for he won’t write any more.
Jack! FTW!
what i want to know is how the processing power of the erma compares to, say, a modern day digital watch.
This guest post is written by Jack Arrington, who contributed 50% of the genetic material required to produce TechCrunch founder Michael Arrington.
Haha, yea that was classic.
Great article. Loved it. Would love to see more from Jack.
Mike must take after the other 50%.
Jack rocks. I’d love to see this as a weekly column.
I would, too. This is one of the best articles I’ve ever seen on TechCrunch. And it includes some of the most original material, written from a hands-on perspective, that I’ve ever seen on any website. Aye aye, indeed.
I know it was not that long ago, though I remember helping with the Security installations of some of the data centers that contained the Check Processing computers. If you were caught with an invalid badge, guys with high power weapons came to pay you a visit.
Aye!
Great article, always puts things in perspective to hear first hand about what tech people used before computers that fit into envelopes
Aye!
Necessity truly is the mother of invention.
Thanks for taking the time to write such an interesting article. It really makes one stop and think about what we take for granted.
I’ve only been in the industry for half of the 50 years Jack mentions. To me, DECwriters and 300 baud acoustic couplers are “ancient history”. I can’t image working with vacuum tubes, paper tapes and bits the size of dimes.
I really enjoyed this post but as most posts on TechCrunch, I give this 2-3 more weeks before everyone starts posting, “OMG another jack arrington article! This publication has gone downhill. I’m unbsubscribing”
You guys are so vain and it makes me laugh.
Great article!
Aye aye!
Thats a fantastic article. I really appreciate the time you have put into writing it. It was well worth it. Thanks
Now this is a cool post! Very interesting, much more than the latest “web 2.0 social network” that dropped a vowel from it’s name.
Great article, thanks Jack.
Aye!
Wow, it’s incredible to think that checking accounts and CC’s didn’t exist back then. Can you imagine how the next 50 will come about?
“This guest post is written by Jack Arrington, who contributed 50% of the genetic material required to produce TechCrunch founder Michael Arrington.”
lol. Great intro
This was a really awesome post(Now we can see where Michael got it from). It’s cool to see how much technology has evolved in the past 50 years.
Take the photos now for the next 50 year article:)
Nice article. That’s a compliment, despite which I’m going to get a little persnickety and point out that the correct word would be complement in the following phrase from the article:
Her compliment of 8-12 tape drives…
If Mike is close to retirement, can Papa Arrington take his place? Good journalism must run in the family. Great article!
Awesome post and a great reminder of why we innovate. Thanks for sharing the details.
ayw
I wasn’t thinking of information technology going back that far. My wife has some of her grandmother’s old “credit cards”. They looked like little plastic dog tags rimmed with metal. They were embossed with her name. Not sure if there was a number on them too.
Thanks for the sharing the story.
ERMA’s a sexay biatch.
Fresh read.
Jack you did a good job with this article! I’m thinking you would be a good columnist on TC
Thanks for the sharing the story.
Would love to see more from Jack.
excellent post.
… boy am i old…
i remember… 20 yrs ago working for outfit that utilized a human as an interface between a paper tape puncher and a punch paper reader. The person would pick up the punched tape that came out of one machine and thread it into the 2nd machine for reading. that was their job
I’d love to read more from Jack as well. Very interesting and well written bit of computing history.
Good post, reminds me of the stories my father tells..
He was with IBM in the 60’s and used to “sell mainframes the size of a house, which competed against the pencil.”
He also is proud that he owned one of the 1st “portable” computers, which weighed about 100 lbs.
I love reading TECH CRUNCH . Thanks Jack for taking us down your memory lane.
Congratulations for this delightful insight!
I’m a friend of Jack’s and I wrote him an e-mail saying how much I enjoyed his article. Jack has a way with words and whether it’s on technical, political or personal writings, he is great. I shared with Jack my feelings about the “old days” and how I knew all the tellers, especially Marge and Gail. Marge had a special needs child and Gail was the technical support I needed. They knew my children. When ATM’s came into the picture I hated them. I missed the communication between Marge and Gail. My children looked forward to their smiles and questions about what we were going to do that day. Eventually the ATM became an “after hours” friend but never to put checks into that envelope that went into the slot from the outside of the bank. It was okay to take my money “out” but what if when I put something in it didn’t get it or was mixed up with someone elses. Marge and Gail never did that!! Everything was always right.
I miss some of these times. Now that I have a grandchild who is two years old, I see technology in so many other ways. Everything talks, moves, teaches, etc. What about simple water play toys and army men with forts. What happened to the bed sheets that went over the pool table and you had a wonderful fort. Imagination was key. I sure hope we haven’t lost the imagination of children through so much technology. Jack thought I should share some of my thoughts with all of you so here they are. My last thought to share with you was when my son was 5. I did all the banking so when daddy went to the bank one day with our son they said the signature wasn’t right – or something like that. Then Mark came from behind and said “hi”. The teller asked Mark if this was his daddy. He said yes and then the teller said, “I’m sorry, if you are Mark’s dad then everything is okay”. I will never forget that. It was when you knew who had your money and who would give it back to you. Have a great evening. Sue
“…army men with forts” wow, that almost makes me want to play right now! I totally agree about imagination being the key. Great thoughts. Thanks for sharing!
Enjoyed it
Jack,
I appreciate your sharing such an interesting and insightful article. We do take some things for granted today, especially about the tech world.
Also, most people have little occasion to gain an appreciation for or understanding of the unique complexity or challenges of building, deploying, maintaining, and securing IT/computing assets.
Has it really been 50 years now? Have to think.
Thanks again for sharing corporate knowledge.
@CheriSigmon
Thanks, Susie…For the heartfelt comments to my story.
You and I (and perhaps a good percentage of other TechCrunch readers), while enjoying the features and stimulations of modern technology, can look back and lament the loss of interpersonal relationships available in our past that are becoming more difficult to attain in the present. But give everyone else another 50 years and we will have a whole new crop of people who understand (or will be so befuddled, that they think they do).
Jack
Mike,
Get out. You pop’s much better than you. Please spare us.
Wow. The poor guy just got back and you’re spitting in his face.
Why not question whether the milkman was involved!
Jack Arrington, I liked it. You have a nice way of telling a story.
Great story, I would love to see the two remaining one when ever I visit Washington or C.A
Jack – great story telling. Thanks!
Jack’s Corner has a nice ring to it.
Maybe someone at TC can get Lynn Wheeler to be a guest article writer too?
Hi Jack,
Being Nigerian,
The Automation came quit late on but we are catching on. From my own point of view I am glad technology came. In the early 90’s going to the bank with my dad was HELL! I waited on queue for hours unending for my dad or mum to make a simple banking transaction almost being suffocated between adult backsides. THANK GOD FOR ATM’s! although they came in quite late (2001) so I have no pleasant childhood experience of going to the bank. Interesting how technology affects people differently.
I detest the effect the iPod has on communication between people. I am in the UK now and when ever I am on a queue or in the bus or train, I look around and all I see is zombies with white rope stuff coming out of their ears. Nobody talks to anyone…. Using Darwin’s theory of natural selection, the next generation might go dumb!
In my country where the iPods has not invaded completely (it is happening gradually) strangers talk of different things when on the bus or queues you learn new things. How is it in the US?
PS: I miss Mike’s write up’s cos they are entertaining (that’s why I started reading Techcrunch.)
Jack is a very good writer and it will be good to see his articles once a week. If it becomes a lot, the people shouting Aye Aye will be the ones shouting Nay Nay!
Great article. Will be interesting to read about the current exciting times 50 years down the road.
Good post
“…who contributed 50% of the genetic material required to produce TechCrunch founder Michael Arrington”
DNA evidence?
On a serious note, excellent article. Thanks.
Great article.
I wonder about the memory core bits “the size of a dime” though; the largest ones I’ve seen or heard of are maybe 1/16″ across or so.
Flipping the magnetic direction in a core the size of a dime would require a pretty scary amount of electric current. I’d love to see a photo of it…
As I’ve grown older, many of my memories contain objects and event that seem larger now than they probably were in reality. So I’ll admit to the possibility of an error.
I could not find a picture of ERMA’s core memory but I did locate the following site which describes the size and function of core memory during the period in discussion. The picture contained there is very similar to my recollection of ERMA’s memory…and the diameter of the bits is defined as being about 11 millimeters (within a reasonable margin of error, to the size of a dime). See:
http://www.psyc...pdp-11/core.htm
And…if it makes my story more palatable, rest assured that ERMA did indeed consume a “pretty scary amount of electric current.”
Hi,
Thanks for looking it up. Actually the PDP-11 page quotes the core size as ‘11 mil’; mil in this case is 1/1000″ so the 11 mil core would be about 0.28mm. That makes sense, as core memory was pretty refined by the time the PDP-11 rolled around.
I’m sure they were a lot larger in ERMA’s day. Surfing around a bit, I found this photo of a core plane from 1952:
http://www.colu...story/core.html
240 mil is about 6mm, getting into the realm of dime sized. Yow!
My dad, Alfred Maffei, was one of those guys working on ERMA in Berkeley. We used to visit as kids, and I remember doing a report on ERMA to my 4th grade class. My dad wasn’t really a computer guy, he was the guy who told the programmers what the bank needed — the interface guy.
True, the kind of innovation and strategies that earlier IT entrepreneurs deployed to make businesses work is truly remarkable. Such articles of historical importance act as eye openers. well done…
Totally awesome post. More of these Jack! A weekly comment from J. Arrington would be so cool.
Excellent article! My dad is a partner in a small CPA firm in small town Illinois. I remember when I was a kid, about 1973 or so, and he took me in to see their new computer that took up a whole room. I remember many magnetic reels and punch cards. I bet it couldn’t do half of what even my first Commodore 64 could do in 1984. I love stories like this about how it all started. Thank you!
“This guest post is written by Jack Arrington, who contributed 50% of the genetic material required to produce TechCrunch founder Michael Arrington. ”
I guess a little nepotism never hurt anyone. But of course, Michael just couldn’t resist somehow making himself once again the centre of the post.