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By March 31st 1929, with the Bank having been operating for almost ten years, the level of banking transactions was in excess of 1-million, that number being generated at 48 branches. Over one million of those transactions were generated at 15 branches, where the number of annual transactions exceeded 45,000:


 
 Transactions
1/4/1928 -
31/3/1929
 Number of
Open A/cs
31/3/1929
 Head Office
188,729 
 38,457
 Small Heath
 83,413
 17,107
 Bournville Works
 78,415
 7,652
 Aston
 74,860
 13,494
 Handsworth
 71,114
 12,607
 Sparkbrook
 69,119
 14,922
 Erdington
 61,214
 11,040
 Rotton Park
 58,910
 11,199
 Aston Cross
 58,272
 9,983
 Balsall Heath
 56,521
 9,643
 Bearwood
 49,710
 9,373
 Kings Heath
 48,982
 7,810
 Saltley
 48,209
 8,840
 Hockley
 45,694
 7,194
 Duddeston
 45,644
 9,252
This level of transactions created a huge volume of clerical effort to post the transactions manually to the depositors' ledgers, and for those transactions to be subsequently extracted as part of the process of verifying the accuracy of the postings, and balancing the ledgers. In addition, the Bank's Regulations required that a list of accounts (by account number and balance) be produced as part of the Annual Balance procedures at March 31st. The Bank also produced listings of account balances at interim dates, principally at the end of November each year.
 

The impetus for the Bank to find a solution to replace all this manual labour resulted from information provided by the Controller of HM Stationery Office, as revealed by a report of the General Manager dated June 7th 1929 to the Finance & General Purposes Sub-Committee:

 

Use of Mechanical Appliances in the Bank.

 

In September last the Controller of HM Stationery Office drew attention to the fact that on a recent visit to Amsterdam he was the accorded the privilege of seeing how the Municipal Bank there keeps its accounts. He found that the Bank is very largely worked, so far as the book-keeping is concerned, on a system which combines Hollerith calculating and tabulating machinery and Elliott-Fisher typewriters. Each accounts is balanced day by day with daily interest to date, and the impression gained was that the work followed an even flow and that it was as easy to strike a balance on the last day of the financial year as on any other day. It is pointed out that there is no peak load of work in the Amsterdam Municipal Bank.

 

The Director of the Municipal Girokantoor, Beuragebouw, Amsterdam, has written to the Controller of HM Stationery Office, and a copy of the letter has been sent to me. In such letter it is stated that up to 1922 Burrough's adding machines were used, but after that date a new system was invented, and there had been a diminution of the total expenses approximating to 30 per cent per annum.

 

At the beginning of May, the City Treasurer received a letter from the General Manager of the British Tabulating Machine Co also drawing attention to the successful working of the Amsterdam Municipal Bank, and pointing out that it would well repay the Municipal Bank at Birmingham if a visit were paid to Amsterdam in order that the system might be inspected and studied. From what the City Treasurer has heard of the matter, he is of opinion that the Municipal Bank at Amsterdam is worth inspecting.

 

As to how far the system worked in Amsterdam can be grafted on to our system is a matter on which I find it difficult to express an opinion, having no knowledge of the Amsterdam method. The Committee will, however, realise that the continual expansion of the Bank means additional staffing under present conditions. The efficiency of the work undertaken by the Bank is not in question, but if the same efficiency can be obtained by a greater use of mechanical appliances without continual additions to the staff, there is something in its favour. I share the opinion of the City Treasurer that it would be advisable to conduct an investigation into the Amsterdam methods.

 

At its meeting on June 17th 1929, the Bank Committee, after considering the above report, resolved that the Chairman (Alderman Sir Percival Bower) and Councillor Cooper (or in the inability of either of them to act, Councillor Gelling) with the City Treasurer and the General Manager be authorised to visit the Amsterdam Municipal Bank, with a view to inspecting the system and application in operation, reporting thereon in due course.

 
The report of that visit was dated October 1st 1929:
 

The delegates appointed to investigate the system of mechanical book-keeping, etc in vogue at the Amsterdam Municipal Bank, beg to report that they visited Amsterdam on the 28th August 1929. They were courteously welcomed by Mr H Keegstra, the Director of the Bank, and given every facility for examining the system.

 

At the conclusion of the investigation the delegated were entertained to lunch by Alderman Walrave Boissevain, MP, who is the Alderman responsible for the housing, public works and markets of the City of Amsterdam. Mr I A Keppler, the Director of Housing, was also present, and after lunch the Alderman and his Director conducted the delegates over several of the housing estates where finished dwellings and dwellings in the course of erection were inspected. The delegates were informed that 50,000 dwellings had been provided in Amsterdam since the war, the great majority being of the flat or tenement type. The delegated were assured that there is little, if any, housing shortage in Amsterdam, and very little unemployment. The money for the erection of houses is provided by the State, and the houses are erected in the main by Societies of various kinds who have considerable freedom as to architectural features, lay-out, etc, but the supervision and control of the funds is vested in the municipality.

 

The following report gives a brief review of the working of the Amsterdam Municipal Bank.

 

The Bank (or to quote its proper title "The Giro Kantoor der Gemeente Amsterdam") came into existence in 1917 when Mr Keegstra, who was an Inspector of Taxes, was asked by the Lord Mayor if he would formulate some scheme for encouraging thrift amongst the citizens of Amsterdam. Mr Keegstra made investigations into many foreign systems, notably Germany and England, and finally decided upon the Giro system adopted by Germany. His scheme, which is practically the scheme in operation to-day, was accepted by the Lord Mayor and the Alderman for the Finances of Amsterdam, and ultimately ratified by the Municipal Council of Amsterdam. Mr Keegstra found that in all the foreign systems the administrative cost of dealing with small deposits was very high and influenced the rate of interest which could be allowed, so he set himself to devise a scheme whereby much of the administration work could be thrown upon the depositor and others, and thus reduce the cost to the Bank. Consequently, he eliminated the use of a pass book, and introduced in its stead a system of periodically advising depositors of the state of their accounts - a system much on the lines recently adopted by some of the large commercial banks in this Country.

 

It should be explained that there are no branches of the Amsterdam Municipal Bank, but in place of branch banks there are 78 pillar boxes in different parts of the city into which the depositors can place their slips. These are collected throughout the day by 20 messengers on bicycles and brought to the Bank to be dealt with.

 

When a new client comes to the Bank he is required to furnish his full name and address and a specimen signature. This is done on the Kardex index system. His deposit is taken over the counter, and he is asked to arrange with his employer for his wages to be paid direct to the Bank in future. If the employer should object, pressure is brought to bear until he conforms to the aim of the Bank, which is to eliminate cash deposits over the counter. The customer is encouraged to make his purchases by means of slips (equivalent to the British cheque system), and there is no difficulty in arranging for these to be accepted by tradesmen. At first certain tradesmen were invited to accept these slips on behalf of the Bank, and even to accept moneys from their customers to be placed to the credit of their accounts in the Bank, for which service the Bank would and did pay. Several tradesmen fell in with the scheme, but others declined to do so until they found business being transferred to shops where the facilities existed, which resulted in a general offer by the tradesmen to do the work without any payment. The Bank does not now make any payment for such services.

 

The depositor is supplied with a book of slips - corresponding to the British cheque book system. He uses these slips for meeting his liabilities or for obtaining cash from the Bank for his own use. There being no stamp duty in Holland, there is no difficulty in working such a system. The depositor either presents the slip to the tradesman as payment for the goods supplied, or puts his slip in one of the pillar boxes, and the Bank makes the payment to the tradesman. At the end of the book of slips there are columns in which the depositor can enter, if he wishes to do so, a record of his deposits or withdrawals, but the Bank makes no entries, nor does it accept any responsibility for entries made by the depositor.

 

The question of overdrawing upon an account is almost unknown, but if a depositor did present a slip to a tradesman for payment in respect of goods received, and there was not sufficient in the account to meet the slip, the slip would be returned to the tradesman. It would be for the latter to recover the amount from the depositor, the Bank taking no action and admitting no liability. The view taken by Mr Keegstra is that the tradesman knows, or ought to know, his customers, and it is his concern if he has misjudged his customers.

 

Coming to the question of mechanical accounting systems, the inspection of which was the primary objective of the visit, the delegates found a highly organised system of mechanical recording effected by a combination of Elliott-Fisher typewriters and Hollerith tabulating and sorting machines. Out of a staff of 140, only some 6 or 8 persons are engaged at the counter, the rest being engaged on the machines or on work connected therewith. Mr Keegstra has exploited both the Elliott-Fisher typewriters and Hollerith machines in order to get a system which his peculiar requirements call for. As a mechanical system of book-keeping the Amsterdam method is no doubt very effective, but whether it can be described as economical is another matter. The automatic balancing by the Hollerith machines eliminates both an internal and external audit so far as the routine work is concerned, and satisfies the requirements of the Amsterdam Municipal Bank.

 

The ledger accounts are kept on the loose leaf principle, and the entries are made in the accounts from credit or debit slips. At the same operation a cash account and a Hollerith card are made out. The Hollerith cards are subsequently punched, placed in the machine and sorted, and the totals automatically recorded and subsequently proved against the ledger totals.

 

There are other mechanical devices in use which indicate that provings and testings are carried out to an unreasonable extent, judged by the English standards. For instance, the moment a cashier has dealt with a slip at the counter it is stamped with the time by a clock, and when the entire book-keeping, etc is completed for that particular slip a card is put through recording the time by another clerk. Thus the Director is able to see how much time is taken up with each transaction, and can deal with cases of slackness or make comparisons between the quick and slow worker on his staff. Another instance relates to errors. If a clerk makes a mistake by the Elliott-Fisher typewriters or the Hollerith machine, a card has to be put through by the clerk in question which is duly punched and a record taken, so that the Director may know how to deal with such clerk at the end of the year or when his salary is under consideration.

 

Whilst appreciating the value of the mechanical book-keeping and its application to the peculiar nature of the transactions at Amsterdam, the delegates were not convinced that the introduction of the Amsterdam system for our Bank was desirable, nor would it be likely to meet with acceptance by depositors. The fact that our pass book is the depositor's receipt and voucher, and the fact that the Regulations require two officers of the Bank being parties to each transaction, make it difficult to compare the Amsterdam system with our own.

 

Nevertheless, the investigation has been valuable in the sense that it may be found advisable to introduce some mechanical system for dealing with work behind the counter. The General Manager has indicated to the delegates, and the Treasurer concurs, that a suitable machine would save considerable time and labour in the House Purchase Department, where so many recurrent charges in respect of fire insurance and ground rents have to be dealt with.

 

As regards mechanical posting into ledgers and ascertainment of balances, it is doubtful whether any economy can be effected on the present system. The General Manager has arranged with the City Treasurer to carry out experiments from time to time, for which purpose the Treasurer's Hollerith machine will be placed at the disposal of the General Manager as and when required. The efficiency of the present system has been proved, and the testimony of the Bank's Auditors speaks for itself. While it cannot be expected that the annual balance at March will be more rapidly ascertained than it is under present conditions, it is worth considering as to whether the time taken in checking and proving ledger postings day by day so as to secure this quick annual balance is justified or not. Burroughs adding machines and comptometers are in use at present, and it may be found that additional machines will meet the case.

 

The delegates realise, as the Committee will equally realise, that the introduction of a mechanical accountancy system means more space, and as each branch is self-contained so far as the accounts of depositors are concerned, the provision of more space will be a serious problem at branches as well as Head Office.

 

There are certain requirements of our Regulations which we must observe, viz:

 

1 There must be a pass book containing entries of deposits and withdrawals, and these entries of deposits and withdrawals, and these entries must be initialled by Bank officers.

 

2 A specimen signature must be preserved and verified with every receipt for withdrawal of moneys.

 

3 Before a withdrawal takes place the balance as shown by the pass book must be confirmed with the ledger account.

 

4 There must be a confirmatory check of ledger postings against counter cash books.

 

5 There must be a detailed extraction of depositors' balances at the end of the financial year, and modified extractions at the end of July and November when interim accounts and balance sheets are prepared.

 

All these points will require to be carefully considered in connection with the introduction of a mechanical system of accountancy, and the General Manager and his staff will pay due attention to these points in conducting their experiments and prosecuting their enquiries.

 

PERCIVAL BOWER, Chairman

 

A H COOPER

 

J P HILTON, General Manager

 

J R JOHNSON, Treasurer

 

As the delegates may have only found when they reached the Amsterdam Municipal Bank, that institution was not a savings bank on the lines of the Birmingham Municipal Bank, but a Giro Bank. Postal Giro systems have a long history in Continental Europe with a basic concept based on direct transfer between accounts. If the accounting office is centralised, as it was in the Amsterdam Municipal Bank, then transfers between accounts can happen simultaneously. The system works most efficiently where the majority of the population have accounts in the same institution, as seemed to be the case in Amsterdam. A giro system was not introduced into the UK until October 1968 when the Post Office Giro commenced business.

 

Regarding the machines being utilised, the Amsterdam Savings Bank was principally using the Hollerith tabulating machine, which was an electromechanical machine designed to assist in summarizing information stored on punched cards. It was invented by Herman Hollerith in the USA in the late 19th-Century. This machine was familiar to the City Treasurer who had a version in his office. The second machine referred to (the Elliott-Fisher typewriter) was probably also familiar to the delegates as these machines were, at that time, the best selling typewriters in the world. From about 1910, the company added addition and subtraction devices to their typewriters.

 

It is not clear to what extent the machines at Amsterdam were used as the sentences The ledger accounts are kept on the loose leaf principle, and the entries are made in the accounts from credit or debit slips. At the same operation a cash account and a Hollerith card are made out, suggests that posting to the ledger was by hand and the Hollerith machine was used to accumulate totals. In any case, the delegates thought that only the house purchase ledgers would significantly benefit from machines.

 

The delegates' report ends by listing five points which must be observed when considering the introduction of a mechanised accounting system, but two of these (items 1 and 2) have no relation to the accounting system, suggesting that the concept of using a machine that posts to individual ledger sheets and simultaneously accumulates totals had not been grasped.

 

 

 

Continued ....

 

 

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Burroughs' Sensimatic accounting machine