Big Data from the 1920s – Punched Cards Paving the Way for Social Security

1937 IBM advertisement for automating payroll (Image Credit:  IBM100)

1937 IBM advertisement for automating payroll (Image Credit: IBM100)

It was the largest accounting initiative in the nation’s history:  The pioneering technology collaboration between the Social Security Administration and IBM has changed the lives of hundreds of millions of retired American workers and their families since its inception in 1937.  Every employer and employee was assigned an identification (ID) number that would be used for collecting and tracking the funds on a regular basis.  (IBM100)

IBM’s essential role in the creation of the United States Social Security Program in 1937 – the largest accounting job in history to that point – has long been celebrated. But few know that the technology solution that was collaboratively developed by the Social Security Administration and IBM traced its roots back to 1920. That was when the United States Department of Agriculture (USDA) and IBM first began creating punched card accounting systems for agricultural research.  Elwood Way, then a USDA employee with just two years of service, suggested using punched card equipment to coordinate data. This suggestion, Way later recalled, was based on once seeing IBM equipment in action at the Pillsbury Milling Company in Minneapolis. He had no real experience with punched card equipment per say, but since it was his idea, he got “stuck with the job.” Way quickly became a punched card systems expert, and during his decade with what became known as the Machine Tabulating and Computing Section of the Bureau of Markets, he oversaw more than 100 tabulating projects.

IBM Punched card (from IBM100)

IBM Punched card (from IBM100)

Government contracts and government checks During Roosevelt’s New Deal, IBM punched cards were not only used for tabulation and recordkeeping for sizeable government contracts, but they were also used to print the actual government-issued checks. For the 1935 Social Security Administration contract—considered at the time to be "the world's largest bookkeeping job"—millions of IBM punched cards were used. In fact, federal checks were based on IBM’s card design up until the mid-1980s.

IBM punched cards were not only used for tabulation and recordkeeping, but they were also used to print the actual government-issued checks. For the 1935 Social Security Administration contract—considered at the time to be “the world’s largest bookkeeping job”—millions of IBM punched cards were used. In fact, federal checks were based on IBM’s card design up until the mid-1980s. (from IBM100)

The government’s use of IBM equipment accelerated during the early days of Roosevelt’s New Deal, which saw the creation of a series of accounting system projects, each larger and more far reaching than its predecessor. In June, 1933, the government’s tabulating experts – including Way – joined with IBM to take on the task of creating a punched card accounting system for the Agricultural Adjustment Administration’s (AAA) Cotton Control Contract, which would manage contracts with more than 1.6 million cotton farmers. But at the time, the quick installation of IBM’s punched card system had more immediate benefits, according to Dr. Rexford Tugwell, Under Secretary for Department of Agriculture. “This machine that we are now using has prevented a revolution in this country, especially in the Mississippi Valley …. It’s a wonder. We got out these checks with it, and if we hadn’t gotten them out on time we would have had a revolution. Farmers were calling for those checks and there was no way in the world to get them out except by such devices as this company produces and furnishes to the country.”

The next big New Deal project for Way and IBM, in October 1934, was the Railroad Retirement Board (RRB). The RRB intended to create an accounting system to track the retirement funds for some 3.5 million employees whose deductions would be taken from their wages and posted to an interest-bearing account. But before the Board could order the workhorse IBM equipment for the program, the RRB was declared unconstitutional, and the program skidded to a halt. However, the work of Way and his colleagues on the RRB was not wasted, since the plan that was developed for that program would later greatly inform the system designed for Social Security. The punched card concept that was worked out for the Railroad Retirement Board – employee account numbers, wage reports, ledgers, forms and processes – served as the basis for that which would be successfully applied in 1937 with the creation more than 26 million accounts for the Social Security program, one of earliest and most successful Big Data initiatives in the industry.

by Paul Lasewicz, IBM Corporate Archivist

by Paul Lasewicz,
IBM Corporate Archivist

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The Origins of Cloud Computing – from the 1920s

IBM cloud origin -sm

Tabulating Machine Service Division (TMSD) proposal presented to IBM CEO Thomas J. Watson, Sr. in 1922

Sometimes history is tangible, something you can literally hold it in your hand. Like this 1922 document I ran across in our holdings. It very well may be the earliest formal outline of Cloud at IBM.

They didn’t call it Cloud in 1925. It was the Tabulating Machine Service Division (TMSD) in this proposal presented to IBM CEO Thomas J. Watson, Sr.  But at its core, TMSD was Cloud – the provision of data processing capability to clients who couldn’t or wouldn’t invest in building an internal data processing infrastructure.

In this proposal, TMSD would target several opportunities in the data processing marketplace. It was to “be utilized for rendering Tabulating Machine facilities to non-users and the small concerns who are not sufficiently large to install Tabulating Machines, for taking care of peak load requirements of present users, and for rendering assistance to existing installations where special service is requested.”

In these cases, the thinking was that the clients would move to having machines put in when the business grew sufficiently large to warrant it. “The Service Department will supply the means of educating a future user to the benefits of Tabulating Machines, preparing them for the installation of equipment when the volume of their work amounts to sufficient to justify recommending the ordering of machines.”

In addition, TMSD would help preserve the existing client base, as “discontinued customers will be followed up actively,” and “those planning reduction of expense through the elimination of machines or changes in methods will offer special opportunities to the service salesmen.”

IBM cloud origin2-zoom

The price of those opportunities was certainly right. The proposal estimated the cost for generating a single report of a thousand cards, up to 4 sorts and 1 total, was $5.68. IBM’s profit? One third – $1.42.  The proposal even offered the 1920s version of sending data to the Cloud … it included retaining the client’s punched cards for a year.

The TMSD concept took a decade and a global economic collapse to come to fruition, but in 1932, at the height of the Great Depression, IBM opened the first of what is now called Service Bureaus. Watson, Sr., later recalled that the Depression re-prioritized the original business rational for the service – in 1932 the most important objective of the Service to preserve the existing client base by taking over the data processing for firms who, due to a downtown in their fortunes, could no longer afford a tabulating machine installation of their own.

Regardless of what business need the Service Bureau targeted, the end result was that clients responded to the flexibility it the concept offered them. By 1946, the Bureau had contracts ranging in value from $10 to $250,000 for a three million card project for Western Union. And it was well positioned to take advantage of the explosion in data processing as the world emerged from the Second World War.

by Paul Lasewicz, IBM Corporate Archivist

by Paul Lasewicz,
IBM Corporate Archivist

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IBM, an Early Adopter Since 1927

IBM President Thomas J. Watson Sr.

IBM President Thomas J. Watson Sr placing trans-Atlantic call in 1927

The theme for May 2013 is ‘Emerging Trends’

When one thinks about emerging trends in business operations, it’s easy to forget that things that we take for granted today were once considered new and innovative. Traditionally, IBM has been an early adopter of any practice that would improve business efficiency.

For example, when AT&T inaugurated the first trans-Atlantic radiophone service between the United States and Europe on January 7th, 1927, IBM was one of the very first companies to place a call that day, relaying a message from our New York offices to our London operations.

In a letter to employees published in Business Machines, IBM’s primary internal publication, IBM President Thomas J. Watson Sr., wrote that this was “an unusual opportunity to be again among the pioneers in the utilization of a new and meritorious time-, labor- and money-saving device. Our appreciation of this new method of trans-Atlantic communication has two contributing causes—the fact that we always welcome, and are among the first to adopt, appliances which aid business, and the fact that our worldwide business in fifty-four different countries of the earth often demands a rapid exchange of messages.”

A focus on continuous improvement is not a modern trend – it’s an IBM cultural trait!

by Paul Lasewicz, IBM Corporate Archivist

by Paul Lasewicz,
IBM Corporate Archivist

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Client Experience: Value One – Dedication to Every Client’s Success

valueone-sm

The March 2013 for The Greater IBM Connection is ‘client experience’.

In honor of the March theme focus on Client Experience, I thought it might be nice to post this link to an IBM Archives Web Site exhibit focused on classic stories of IBM client service. The company from its very beginning has made service a watchword for each and every IBMer. And when you do that, great things can happen. Enjoy!

by Paul Lasewicz, IBM Corporate Archivist

by Paul Lasewicz,
IBM Corporate Archivist

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Related links:

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The March 2013 theme for The Greater IBM Connection is ”client experience”.

IBM’s First Woman Executive: IBM Pioneering Woman (Part 2)

Anne Van Vechten with a non-niblick at the 1939 Hundred Percent Club.

Anne Van Vechten with a non-niblick at the 1939 Hundred Percent Club.

This post is a continuation of the March 8 post, “IBM’s Pioneering Woman: Anne Van Vechten” in honor of International Women’s Day on March 8, 2013.

In 1935, the headiness of the praise IBM CEO Thomas J. Watson, Sr., heaped on his “great pioneer woman,” Anne Van Vechten, and her 24 fellow graduates of IBM’s first co-ed Systems Service School didn’t last long. Despite Watson’s thoughtfulness at the graduation dinner, providing each of them with a corsage, a box of Whitman’s Samplers, and a carton of cigarettes, he struggled with getting them accepted by the organization.

For whatever reasons, Watson’s warning in his commencement address about his personal interest in seeing the women of Systems Service Class No. 126 succeed was largely disregarded by the organization. Anne later recalled that there were mutterings: “The old man is off his rocker. … These girls won’t last long. … This is a tough man’s organization.”

It certainly was. And Watson was the toughest. When after a few months he still found resistance in the field sales management organization to the meaningful use of the women, he allegedly ordered the dismissal of all but one of the 67 male graduates of Systems Service Class No. 125, the one survivor later recollected in his memoirs. If true, it was a brutal message to the organization, one that accelerated culture change by demonstrating that Watson was extremely serious about growing the role and contributions of women in the company. And even if it wasn’t true, the rumor alone would alert people that their jobs could be on the line if they continued to resist. Anne later recalled that it took about two years before the men of the IBM sales organization decided that the “girls” were here to stay.

Anne’s own road was a little less bumpy. That September, just a month after graduation, Watson again surprised Anne by naming her the Secretary of Education of the Women’s Division. He did so in typical Watson fashion. With her on the dais at a large graduation event, he announced that – completely unbeknownst to her – that he was appointing her to lead women’s education at IBM. Anne later recalled that the shock of the appointment, and of having to give an impromptu acceptance speech in front of 1000 people, actually cured her of a slight stuttering problem she had.

This was a valuable side benefit to her promotion, because Watson had made the new role an executive position … back when there were only a handful of positions at IBM that were considered executive. As a result, she was based in headquarters and attended all the top strategy and policy meetings of the company. The executives didn’t know what to make of Watson’s “great pioneer woman”, and she wasn’t quite sure herself … still just 21-years-old, she didn’t know what her role at these meetings was to be. But she was up to speed on all of IBM’s activities in the era, from the use of IBM equipment in a medical study in Cleveland that identified improper administration of anesthesia as a leading cause of surgical deaths, to the IBM’s fingerprint cards played in the FBI’s search for John Dillinger.

Over the next few years, Anne expanded her role at headquarters. In addition to overseeing the women’s education program, where she traveled extensively recruiting prospective candidates and visiting IBM field locations to oversee the integration of co-ed graduates into office organizations, she became a go-to special projects person for Watson. She researched charitable donation requests, found job placements for disabled graduates of IBM training schools, and helped oversee the staffing at IBM exhibits at the New York World’s Fair and San Francisco Golden Gate Exposition.

Anne also handled social arrangements for IBM customers and other VIPs who visited New York City. Watson took great pride in IBM’s abilities to host visitors, and Anne quickly found a role in that activity. Tall and athletic, with youthful good looks and quick with a joke, she met and attended social events like dinners  at the Waldorf with some of the most famous people in the world – explorer Admiral Richard E. Byrd, airline industry entrepreneur Juan Trippe, New Dealer James Farley, opera star Lawrence Tibbett, and a host of European royalty.

Anne left IBM in 1943 when she married Douglas Coupe, a serviceman. Her post-IBM life is perhaps best left for another blog post. But I’ll leave you a clue about what it would touch on. The NY State Golf Association Senior Women’s Amateur Championship trophy is named the Anne Coupe Cup. So it’s fitting to close here with a quote from Anne as she looked forward optimistically to her career with IBM. “I feel that life offers so much and that the rough spots can be gotten out of with a little courage and a good niblick shot.”

by Paul Lasewicz, IBM Corporate Archivist

by Paul Lasewicz,
IBM Corporate Archivist

IBM’s Pioneering Woman: Anne Van Vechten (Part 1)

Anne Van Vechten, and Thomas J. Watson, Jr., at a Hundred Percent Club meeting.

Anne Van Vechten, and Thomas J. Watson, Sr., at a Hundred Percent Club meeting.

March 8, 2013 is International Women’s Day, and IBM will be sharing some stories from our corporate archives in honor of the event.

On March 24th, 1935, a 21-year-old student of the Katharine Gibbs Secretarial School wrote a letter to IBM CEO Thomas J. Watson, Sr., requesting an interview as part of a class project. Anne S. Van Vechten wanted to ask Watson, then one of the highest salaried business men in America, for advice on her future in business.

Anne had a bit of an in – she had been a classmate of Watson’s daughter Jane both in grade school and at Bryn Mawr College. Still, her timing was impeccable, because the role of women in IBM recently had been on Watson’s mind.

Watson had long been a proponent of women’s rights. In his earlier years, Watson had lived for a time in Rochester, New York, stronghold of noted suffragette Susan B. Anthony, and he recalled on several occasions during the 1930s that he had supported her suffrage movement and was gratified when women received the vote. In 1915, in an address to IBM employees, he expanded his famed ‘man’ employee motivational speech to include “ladies too – all mankind.” And he was good to his word. Women were included among IBM’s earliest Quarter Century Clubs in the mid-1920s. In the fall of 1932, he noted in a company publication that he considered secretaries as acting bosses when their managers were on the road, and that he wanted to find advancement opportunities for these ladies within the IBM organization. And, just two days before Anne wrote asking for an interview, Watson gave a speech at the Career Women of New York City Tribute Dinner, where he spoke about his long interest in the question of women’s rights. It was likely that when he agreed to meet Anne on March 29th, the agenda he had in mind was somewhat different than what Anne expected.

When Anne arrived at the IBM offices at 270 Broadway at 3:00 that Friday afternoon, she was ushered into the library adjoining Watson’s office. While she considered the library unusual, decorated in English prints, she later recalled that what she most remembered about the room was relief that she wouldn’t have to talk across an imposing desk. The meeting lasted about 45 minutes, and the topics of conversation ranged from what qualities Watson looked for in his secretaries to philosophy to religion to family.

Watson was impressed enough with Anne to offer her a job on the spot. He told her that she had inspired an idea for him – he wanted to hire and train 19 more just like her. To do what, he couldn’t – or wouldn’t – say. But, Watson was so committed to this initiative that the very next day, in a speech to the Institute of Women’s Professional Relations, he announced that he planned to hire 19 women to be Systems Service Engineers (SSE).

Anne jumped at the offer, and that summer joined the now 24 other women, who were especially recruited from colleges and universities, in a three-month systems service training class – Systems Service Class No. 126 – at IBM’s Endicott, New York, educational and plant facilities. There the ladies received training on the principles of configuring and operating IBM’s tabulating equipment product line. At the consolidated graduation of the 180 students from the four training schools (including 67 men who comprised Systems Service Class No. 125) that Endicott hosted that summer, Watson proudly proclaimed, “In this school we are pioneering in a new field, that of combining men and women in the development of our sales.  So far as I know,” he continued, “this is the first time such a policy has ever been pursued. We have adopted it because we believe the young women can assist the young men in the development of a bigger, broader and better sales policy.”

And, in a prophetic warning to the men in the audience, students and executives alike, Watson said, “One thing uppermost in my mind this morning is the success of you young women.” Lest anyone doubt the sincerity of that statement, he went on to clarify his personal interest in their success. “What I am most interested in, and what I want all of my associates, not only in the school but in other branches of the business to be interested in, is helping the young women make a success of this work.  It is very, very important, and I know you young ladies will have the cooperation and help of everyone in our business.”

As for Anne, Watson embarrassed her by singling her out in his morning commencement address as his “great pioneer woman,” who – by inspiring him – was responsible for all the women receiving this opportunity to work for IBM. He surprised her by chatting with her for about a half hour at lunch. He further surprised her that evening by having her sit as a guest of honor beside him at his dinner table. Not done with her yet, he then danced the first dance with her – she recalled he was an excellent dancer. Heady stuff for the young lady, who was so thrilled by her day (which included a 7:00 AM golf lesson before the graduation ceremony and an afternoon round of golf afterwards), that she was up at 3:30 in the morning typing a detailed-filled letter to her parents, recounting what she called, “the most exciting day I have ever had in my life.” In just a few months, she wrote, IBM had changed her. “A great turning point was affected (sic) in my life,” she told them. “I became a woman of maturity with something more than joke-telling ability.”

But Watson still wasn’t done surprising her yet.

by Paul Lasewicz, IBM Corporate Archivist

by Paul Lasewicz,
IBM Corporate Archivist

World’s First Hard Drive

IBM laboratory at 99 Notre Dame Street, San Jose, the birthplace of the world's first hard disk drive.

IBM laboratory at 99 Notre Dame Street, San Jose, the birthplace of the world’s first hard disk drive.

Walking in footsteps of IBM giants – very cool!  Sixty years ago, in 1952, IBM opened a small research lab in a small, non-descript building on a side street in downtown San Jose. Four years later, the work of the IBM team at 99 Notre Dame, led by Rey Johnson, resulted in the world’s first hard drive, revolutionizing computing and jump starting the storage industry.  Today 99 Notre Dame is a county court.  But the connection to its historic past is evident and celebrated. A plaque honoring that past on the sidewalk outside, and inside there’s a small but well done exhibit explaining the significance of the work that was done there. Interestingly, the current use of the structure means that in order to see the exhibit, visitors have to go through a metal detector – so you know the security there is top notch!

Early RAMAC prototype. Note the horizontal alignment of the disks.

Early RAMAC prototype. Note the horizontal alignment of the disks.

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The December 2012 theme for The Greater IBM Connection is ‘corporate history’, and Paul Lasewicz, IBM Corporate Archivist, will be sharing with us some of the highlights from IBM’s history.

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Paul Lasewicz, IBM Corporate Archivist

Paul Lasewicz, IBM Corporate Archivist

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