![ERMA logo](https://upload.wikimedia.org/wikipedia/commons/6/61/ERMA_logo.jpg)
ERMA (Electronic Recording Machine, Accounting) was a
computer technology that automated bank
bookkeeping and
check processing. Developed at the nonprofit research institution
SRI International
SRI International (SRI) is an American nonprofit scientific research institute and organization headquartered in Menlo Park, California. The trustees of Stanford University established SRI in 1946 as a center of innovation to support economic ...
under contract from
Bank of America
The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...
, the project began in 1950 and was publicly revealed in September 1955.
Payments experts contend that ERMA "established the foundation for
computerized banking,
magnetic ink character recognition
Magnetic ink character recognition code, known in short as MICR code, is a character recognition technology used mainly by the banking industry to streamline the processing and clearance of cheques and other documents. MICR encoding, called the ' ...
(MICR), and
credit-card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
processing
Processing is a free graphical library and integrated development environment (IDE) built for the electronic arts, new media art, and visual design communities with the purpose of teaching non-programmers the fundamentals of computer programming ...
".
General Electric
General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston. The company operated in sectors including healthcare, aviation, power, renewable en ...
(GE) won the production contract, deciding to
transistor
upright=1.4, gate (G), body (B), source (S) and drain (D) terminals. The gate is separated from the body by an insulating layer (pink).
A transistor is a semiconductor device used to Electronic amplifier, amplify or electronic switch, switch ...
ize the design in the process. Calling the machine the GE-100, a total of 32 ERMA machines were built. GE would use this experience to develop several
mainframe computer lines before selling the division to
Honeywell
Honeywell International Inc. is an American publicly traded, multinational conglomerate corporation headquartered in Charlotte, North Carolina. It primarily operates in four areas of business: aerospace, building technologies, performance ma ...
in 1970.
History
Background
![ERMA Team](https://upload.wikimedia.org/wikipedia/commons/6/64/ERMA_Team.jpg)
In 1950,
Bank of America
The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...
(BoA) was the largest bank in
California
California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
,
and led the world in the use of
check
Check or cheque, may refer to:
Places
* Check, Virginia
Arts, entertainment, and media
* ''Check'' (film), a 2021 Indian Telugu-language film
* ''The Checks'' (episode), a 1996 TV episode of ''Seinfeld''
Games and sports
* Check (chess), a thr ...
s. This presented a serious problem due to the workload processing time. An experienced bookkeeper could post 245 accounts in an hour, about 2,000 in an eight-hour workday and approximately 10,000 per week. Bank of America's checking accounts were growing at a rate of 23,000 per month and banks were being forced to close their doors by 2 p.m. to finish daily postings.
S. Clark Beise was a senior vice president at BoA who was introduced to
Thomas H. Morrin, SRI's Director of Engineering. They formed an alliance under which SRI would essentially act as BoA's research and development arm. In July 1950 they contracted SRI for an initial feasibility study for
automating their bookkeeping and check handling.
[ Nielson, p. 2-2] ERMA was under the technical leadership of computer scientist
Jerre Noe
Jerre Noe (February 1, 1923 – November 12, 2005) was an American computer scientist. In the 1950s, he led the technical team for the ERMA project, the Bank of America's first venture into computerized banking. In 1968 he became the first ...
.
First study
![Check with MICR](https://upload.wikimedia.org/wikipedia/commons/7/76/Check_with_MICR.jpg)
SRI immediately found a problem. Because accounts were kept alphabetically, adding a new account required a reshuffling of the account listings. SRI instead suggested using account numbers, simply adding new ones to the end of the list. In addition these numbers would be pre-printed on checks, thereby dramatically reducing the time to match the checks with account information (known as "proofing"). Numbered accounts are now a feature of almost all banks.
With that problem out of the way, SRI returned a report in September 1950 that stated a computer-based system was certainly feasible, which they called the Electronic Recording Machine (ERM).
Second study
![ERMA wiring](https://upload.wikimedia.org/wikipedia/commons/4/4e/ERMA_wiring.jpg)
Bank of America then offered a second six-month contract in November to fully study the changes needed to banking procedures, and design the logical layout of production ERM machines. While this was underway, Bank of America went to a number of industrial companies to set up production of the machines, but none were interested. So SRI was given another contract in January 1952 to build a prototype machine.
One of the biggest problems found in the second phase was how to input the check information, especially the account numbers, with any sort of speed. Beise demanded a system that would not require the information to be changed from one medium to another, from check to
punched card
A punched card (also punch card or punched-card) is a piece of stiff paper that holds digital data represented by the presence or absence of holes in predefined positions. Punched cards were once common in data processing applications or to di ...
for instance, while simultaneously lowering error rates.
SRI investigated several solutions to the problem, including the first
OCR system from a company in
Arlington, Virginia
Arlington County is a county in the Commonwealth of Virginia. The county is situated in Northern Virginia on the southwestern bank of the Potomac River directly across from the District of Columbia, of which it was once a part. The county ...
. However, they found that it was all too easy for banks, and customers, to write over the account numbers and spoil the system. They also experimented with
barcode
A barcode or bar code is a method of representing data in a visual, machine-readable form. Initially, barcodes represented data by varying the widths, spacings and sizes of parallel lines. These barcodes, now commonly referred to as linear or o ...
information, and while this worked well even when printed over, if there was enough "damage" to the code a human operator could not read them in order to input them manually.
Instead, they decided to combine the two technologies, and used
MICR
Magnetic ink character recognition code, known in short as MICR code, is a character recognition technology used mainly by the banking industry to streamline the processing and clearance of cheques and other documents. MICR encoding, called the ' ...
-printed account numbers which could be read by a magnetic reader similar to those in a
cassette tape recorder. The resulting reader was a mechanical tour-de-force, combining five MICR readers with a large rotating drum that forced checks dumped in the top to come out the bottom single-file. The system was eventually able to read ten checks a second, with errors on the order of 1 per 100,000 checks.
Final prototype
The final ERM computer contained more than a million feet (304,800 metres) of wiring, 8,000
vacuum tube
A vacuum tube, electron tube, valve (British usage), or tube (North America), is a device that controls electric current flow in a high vacuum between electrodes to which an electric potential difference has been applied.
The type known as ...
s, 34,000
diodes, 5 input consoles with MICR readers, 2 magnetic
memory drums, the check sorter, a high-speed printer, a power control panel, a maintenance board, 24 racks holding 1,500 electrical packages and 500 relay packages, and 12
magnetic tape drives for 2,400-foot (731-metre) tape reels.
ERM weighed about 25 tons (22.7 tonnes), used more than 80 kW of power and required cooling by an air conditioning system. By 1955, the system was still in development, but BoA was anxious to announce the project. At the time, computers (still known as "electronic brains") were all the rage; if BoA could announce that they were using them, it would convey a sense of futuristic infallibility. In September 1955, BoA froze the design.
By this point, no fewer than 24 companies had expressed interest in building the production machines, and
General Electric
General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston. The company operated in sectors including healthcare, aviation, power, renewable en ...
won the competition. Among GE's team members was AI pioneer
Joseph Weizenbaum
Joseph Weizenbaum (8 January 1923 – 5 March 2008) was a German American computer scientist and a professor at MIT. The Weizenbaum Award is named after him. He is considered one of the fathers of modern artificial intelligence.
Life and caree ...
. The company took the basic design, but decided it was time to move the
tube
Tube or tubes may refer to:
* ''Tube'' (2003 film), a 2003 Korean film
* ''The Tube'' (TV series), a music related TV series by Channel 4 in the United Kingdom
* "Tubes" (Peter Dale), performer on the Soccer AM television show
* Tube (band), a ...
-based system to a
transistor
upright=1.4, gate (G), body (B), source (S) and drain (D) terminals. The gate is separated from the body by an insulating layer (pink).
A transistor is a semiconductor device used to Electronic amplifier, amplify or electronic switch, switch ...
-based one using
core memory
Core or cores may refer to:
Science and technology
* Core (anatomy), everything except the appendages
* Core (manufacturing), used in casting and molding
* Core (optical fiber), the signal-carrying portion of an optical fiber
* Core, the centra ...
. This won SRI yet another contract, this time by GE, to study the commercial computer market and suggest how ERM machines could be sold into other markets. After the construction run, they also contracted them to dispose of the original machine.
Legacy
The first production ERMA system, known as the GE-100, was installed in 1959. Over the next two years 32 systems were installed and by 1966 twelve regional ERMA centers served all but 21 of Bank of America's 900 branches.
[Bank of America history: Technology & innovations]
, Bank of America The centers handled more than 750 million checks a year, about the number they had predicted to occur by 1970. The automation was so effective that it allowed Bank of America to be the first bank to offer
credit card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
s attached to a user's bank account. They were so successful in operation that Bank of America was propelled ahead of other banks in profitability, and became the world's largest bank by 1970.
ERMA machines were replaced with newer equipment in the early 1970s. There is a special room commemorating ERMA machines inside the Bank of America facilities in
Concord, California
Concord ( ) is the largest city in Contra Costa County, California. According to an estimate completed by the United States Census Bureau, the city had a population of 129,295 in 2019 making it the eighth largest city in the San Francisco Bay ...
.
Payments experts contend that ERMA "established the foundation for
computerized banking,
magnetic ink character recognition
Magnetic ink character recognition code, known in short as MICR code, is a character recognition technology used mainly by the banking industry to streamline the processing and clearance of cheques and other documents. MICR encoding, called the ' ...
(MICR), and
credit-card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
processing
Processing is a free graphical library and integrated development environment (IDE) built for the electronic arts, new media art, and visual design communities with the purpose of teaching non-programmers the fundamentals of computer programming ...
".
References
External links
{{Commons category
SRI page on ERMA
Early computers
General Electric mainframe computers
SRI International
Payment systems
Science and technology in the San Francisco Bay Area