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40 years ago today the first American bank ATM opens for business

August 31, 2009

by Mark Ollig

It sure seems like the year 1969 featured many historical American moments.

The moon landing, Woodstock, the PBS debut of Sesame Street, and, oh yes, America’s first automatic teller machine or ATM.

It was Aug. 31 1969, America’s first ATM made its public debut in New York, when it began dispensing cash to customers at Chemical Bank in Rockville Center.

An earlier printed ad Chemical Bank ran in August 1969 sounded mind-boggling at the time. It read, “On Sept. 2, our bank will open at 9 a.m. and never close again.”

You may be surprised to learn that the first ATM machine relied on the honor system, trusting customers not to withdraw more money than their accounts contained.

I wonder how well that went.

Of course, we all know how ATMs went on to revolutionize the banking industry, by making it convenient for us to do our deposits and get cash from our bank accounts – especially during non-banking hours.

By the 1980s, ATMs were becoming popular and we used them for handling many of our check deposits, cash withdrawals, and money transfers.

Today, I can’t imagine us not being able to use an ATM. They have become as indispensable and common-place to us as having our cell phone, computer, and the Internet.

I thought it important to mention (because I know she reads this column) that I also use my nearby ATM to get stamps for my mom when she needs them.

When we look back at the beginnings of the ATM, there are several inventors who worked on earlier versions and different types of “cash-dispensing machines,” but it was Don Wetzel who is credited with developing the first modern ATM we use here in the US.

An interesting side note I discovered about Don Wetzel is that he played professional baseball for three years with the New York Giants farm system while in college. In 1951 he went on to work with IBM.

I had to chuckle when I read Wetzel said he envisioned his ATM idea while waiting in line at a bank for the next teller during his lunch break. How many of us remember those days?

“Golly, all the teller does is cash checks, take deposits, answer questions like ‘What’s my balance?’ and transfer money between accounts,” Wetzel told Fortune magazine in 2004. “Wow, I think we could build a machine that could do that!” Wetzel said.

Wetzel and a group of engineers developed most of the technology required to complete his dream of a magnetic swipe card that stored customer banking information on it.

They also developed the type of automated machine which provided cash and recorded the customer transactions.

And, so in 1969, the first true ATM machine in America located in the Chemical Bank in New York began to give out cash.

Don Wetzel and his group were awarded a patent for the Automated Teller Machine in 1973, after applying for it in 1970.

As with most great inventions, there seems to be some controversy about who has bragging rights to the world’s first ATM.

For one, Citicorp installed what is described as a “hole-in-the wall machine” at its New York City branch in 1938, which was invented by a Luther Simjian, who himself is credited with more than 200 patents. This experimental ATM was abandoned after six months by the bank, who told Simjian it had only “limited appeal.”

Luther Simjian died at the age of 92 Oct. 23 1997 in Florida.

Meanwhile, across the pond, our friends in England widely acknowledge John Shepherd-Barron to be the inventor of the world’s first ATM.

They submit that the world’s first operational ATM was delivered to the Enfield branch in North London of Barclays Bank on June 27 1967.

Shepherd-Barron’s machine provided cash to bank customers who entered a four-digit Personal Identification Number (PIN) number and inserted a paper voucher.

Shepherd-Barron said in an Orland Florida ATM conference Feb. 22, 2007, “I remember trying to coach the deputy chairman of the bank how to press his four-figure PIN; he had obviously never pressed any button of anything in his life.”

In 2008, Retail Banking Research (RBR) projected there will be more than 2.5 million ATM’s world-wide by 2013.

Which day of the week are ATMs used the most? It should not come as much of a surprise that it is Fridays.

Be sure to check out this week’s Web Site of The Week online forum, where the Bits_blogger is featuring a 1995 interview of Don Wetzel, and more history of the ATM.