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April 5, 2018 Reading Time: 5 minutes

It still gives me chills when I’m in a small restaurant or coffee shop, and they ring up my tab on an iPad or iPhone, pushing my credit card across a small disk. No cash register. Maybe if I used cash, they would open the drawer for change but most customers do not. The whole experience still strikes me as futuristic, elegant, and generally beautiful.

I think the first time I saw a store without a cash register it was at an Apple store. The employees walk around with iPhones. You pick out your product. Your card is charged while standing in the store. No lines. No big separators between the employees and the customers.

I know that technically this is no different from paying for gas at the pump with a card or swiping my card in a taxi. But somehow it feels different to do this at the restaurant or store. It’s the same with the bars at airports that have the menu and “cash register” right at every single chair.

Even the self-checkout machines at the grocery store are a delight. No matter how you want to pay, there is functionality for that. As the machines have improved, ever less goes wrong, as scales, barcodes, and adaptable databases calculating discounts and member cards ring up the right totals and process payments.

That Ding

It’s a new world. In my earliest jobs, a major task was learning to work the cash register. I remember the ding that would sound when the drawer came open. I learned to count change and give it to the customer in a way that he or she could count it too. This way everything stayed honest and open. The financial leakage was stopped. The books stayed balanced.

But that ding in the future may be no more. And that’s fine. But it is worth exploring because that ding has been part of the retail experience for more than one hundred years. Thanks to Wikipedia, we can learn very quickly about the history of the ding.

The cash register was invented following the Civil War, as part of the huge wave of invention that characterized those years. They were amazing times. Between 1865 and 1910, we saw the commercialization of internal combustion, flight, domestic electricity, the availability of steel and the bridges and tall buildings that made possible the telephone, washing machines, book printing so that everyone could have a library, and so much more.

The cash register was part of that wave of innovation. It was designed for a particular purpose: to keep track of retail transactions to minimize theft and assist in balancing the books. The legend (which mostly comes from patent records) traces its invention to James Jacob Ritty, a saloon owner and shopkeeper from Dayton, Ohio. He had major problems with employees stealing money.

The Invention

Ritty is said to have taken an international trip on a boat. He saw that there was a machine that kept track of the turns of the boat propeller. This is where he gained the insight that the same kind of machine could be used to track inventory and prices in his retail shop. Four years later in 1883, he and his brother patented Ritty’s Incorruptible Cashier. It did not have the ability to make receipts but it did allow employees to key in what was owed, what was given, and calculate the difference.

The drawer would open with a ding. Why? To alert the owner that money was coming and going. He could come over to monitor the transaction. There was also a psychological trigger here to the employee: be honest. Don’t overcharge. Count out the change properly. Don’t take any extra money out of the register because this will be balanced by day’s end.

Also, the opening of the drawer is how this simple adding machine registered transactions, which is one reason that fractional pricing came along: $4.95, $2.99, and so on. The need to give change became a technological imperative.

Very soon, the patent was sold and then sold again, and landed in the company that became National Cash Register. This company exists today and is located less than a mile from where I’m writing now. But it has been a long slog from a century ago to today. In 1911, it had grown to have 6,000 employees. During the trust-busting craze of the Progressive Era, the company was found guilty of violating the Sherman Antitrust Act.

The Attack

The claim was that the company was battling back against the used cash register market by sending people into small towns to buy up the used models at inflated prices and thus taking them off the market. This allowed NCR to obtain a monopoly by selling new machines. It’s a clever tactic that the market would have worked to subvert in time. But regulators weren’t having it. The company heads and 25 employees were sentenced to one year in jail. The convictions were overturned in 1915.

It’s a good history to recall if you think the attack on enterprise is only a modern problem. Here you have a case in which a company became big due to tremendous demand for its highly innovative product, one that was needed in every retail shop in the United States. It was rewarded for its public service with growth and profits. Then the government came in with criminal penalties and the public humiliation of jail sentences.

But that’s hardly the end of the story. In 1981, NCR itself traded lawsuits with AT&T over patent claims. From the beginning, antitrust law has been a useful means by which companies attack each other over market share, with government regulation serving as the weapon of choice. In its absence, the forces of market competition would turn managerial attention toward the right approach to winning: serving others with better products at better prices.

Think about this when you see the attacks on Amazon today. It is a mighty company that grew from nothing through unrelenting service of the consumer. Now you have the president of the United States threatening every kind of legal action against the company, including, yes, antitrust investigations into its business practices.

A Seamless Garment

Some things never seem to change. Politics will be politics but innovation proceeds despite it all. The things we use in our daily lives come to us not descended from clouds, perfected and flawless, but through a trial-and-error process of learning, experimenting, and tweaking.

There is real inspiration to be had by looking at the iterative process of innovation, how that funny little machine from 1883 gradually evolved into the tiny payment processing units we use routinely today, an epic story of improvement in machinery in which the current stage is knitted to all previous stages through an invisible thread of passion for solving problems and serving others.

That iconic ding of the cash register can probably still be heard in country stores all over the country but there will come a time when it will finally fall silent, a stage of history ended and a new one begun. Indeed, you can visit the old spot of Ritty’s first machine in Dayton, Ohio, today, and see all the new technology in operation.

What is the next stage? If you have ever processed a transaction using cryptocurrency – peer-to-peer, nearly instant settlement, no intermediaries – you already know the answer. We’ll get there, without or without the approval of the regulations. They can slow down progress but cannot stop it. You can try it out right now with a contribution to AIER. 

 

Jeffrey A. Tucker

Jeffrey A. Tucker served as Editorial Director for the American Institute for Economic Research from 2017 to 2021.

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