An early IT disaster
UNDER CONSTRUCTION
In the 1920's, the Dutch "Postcheque- en Girodienst" came to a halt...
In 1918, the Dutch PTT (Post, Telephone and Telegraph Agency) started a Check and Giro service: the Postcheque- en Girodienst (PCGD). Banks already offered check and giro services. Nevertheless, the Middenstandsbond (Small Business Association) had proposed a "postal check and giro-service" as early as 1906[UN1906]. The Minister of Finance announced a plan for a postal check and giro-service in 1912. The accounts of the PCGD clients were maintained at local postal offices. These offices were supervised by a head office which was housed in the former ceramics factory "Rozenburg" in The Hague. It started with some basic adding machines, that were bought for ƒ11,800 (€84,000).[TK]
Strangely, the PCGD resorted under the Department of Watermanagement and Public Works, because of its links with the PTT, and not under the Department of Finance. In 1919 it was proposed to move the PCGD to the Department of Finance, to convert it to a state enterprise with its own local agencies and reduce the role of the post offices. This reorganisation would cost ƒ481.300 and would save ƒ417.100 per year[UN1919] This plan was heavily opposed, not by the Minister of Watermanagement and Public Works, who was glad to get rid of the increasing burden the PCGD posed on the postal offices, but by members of parliament who claimed that it would result in higher costs and inconvenience for the clients.[UN1920]
In the early 1920's, the PCGD had 113.000 clients and branched out to 358 post offices. The head office had 808 employees and 604 local post office employees were dedicated to the Giro service[VL1923c]. In 1921, it was decided to centralize and mechanize the administration using punched card machines. The savings in paper were estimated to amount to ƒ130,000 per year, and the total cost saving would be ƒ2,000,000 per year[VL1923a]. The initial punched card equipment was ordered at A-T-M and C-T-R for ƒ1,200,000[NRC1993] . For A-T-M, it was the largest European punched card machine order ever.[1]
George van Raemdonck
De Amsterdammer October. 13, 1923, page 10A-T-M vs C-T-R
There were two major punched card machine manufacturers in 1921: Accounting and Tabulating Machines Corp.(A-T-M) en Computing-Tabulating-Recording Co. (C-T-R), which became International Business Machines in 1924. A-T-M made machine according to the designs by James Legrand Powers, and C-T-R machines were originally designed by Herman Hollerith. The basic difference between these machines was that in the Powers machines punched cards were read mechanically, while in C-T-R machines the holes in punched cards closed electrical contacts. Although the A-T-M system was more difficult to program, the machines were considered technically more advanced than C-T-R's machines[Connolly, p.25]. And A-T-M produced a fast printer[Connolly, p.17].
In the Netherlands, A-T-M equipment was used by the Staatsmijnen (National Coal Mining Company). The Central Bureau of Statistics was an early adopter of C-T-R machines. Some organisations, like the Rotterdamsche Bank and the Amsterdam City Electrical Works, used a combination of A-T-M and C-T-R machines[Connolly, p.20].
....
RoBaVer, MABO and Kamatec
....MABO (Mechanische Administratieve Bedrijfsorganisatie) was founded in 1922 in Amsterdam. Its aim was to provide advice on office automation. Its general manager was Abraham Cohen, who had previously worked a.o. for a bank, Rotterdamsche Bankvereeniging (RoBaVer), and for Fles & Co, an office machinery firm. The only other member of the board was Hubertus van Duyl, vice-executive of RoBaVer. MABO an be regarded as a full subsidiary of RoBaVer. [Wijnberg]
RoBaVer also gave birth to another office automation firm: Kamatec (KantoorMachineTechniek). Kamatec was founded by C.J. (Jan) Stuivenberg, who got a lot of experience on punch card machines when working for RoBaVer, and had applied for some patents[2] Kamatec was financially backed by Hubertus van Duyl.
... Powers Accouting Machines were sold through the Dutch sales representative for Kalamazoo Ltd., Birmingham, which made loose-leaf accounting books. [NATak,TEL1921,MAA1923]
The growth of the PCGD
The Big Bang
On Friday August 24, 1923 the centralization would start. A few days before, advertisements appeared in all major newspapers to announce the new system and inform the clients of a one-day delay for transactions initiated on the transition day.
All local offices would send the account information to the central office. Saturday could be used to transfer all data and the new service would be available to the clients on Monday. If anything went wrong, extra work could be done on Sunday.[VL1923a]
And things did go wrong...
On August 28, the PCGD made an announcement to the public that started with an apology for the piece of carbon copy paper that was attached to the new statements issued to the clients. The PCGD would try to solve this inconvenience. The announcement continues by mentioning the possiblity of some minor mistakes in the accounts due to the speed of transition[UN1923b]. These mistakes turned out to be not that minor.
....
led to an inquiry by the Dutch National Bank, who at first thought that the errors could be easily corrected. But in the end, it was decided to stop all services on October 3, 1923[NRC1923c]
On September 29, 1923, PCGD customers were asked if they could tell what their balance was on August 24![UN1923z] On October 22, balances of 19.609 customers still were not reported. Of the 96.461 records sent i by the local postoffices, only 71.079 were correct.
Announcing a delay of 1 day.
Nieuwe Rotterdamsche Courant, Aug 21, 1923, page 7
Animal studies: Before and after the decentralisation[3]
H. Verstijnen in De Amsterdammer, October 6, 1923, page 7
Consequences
The PCGD clients, especially small businesses, were severely affected by the closure of services. They acted by putting up small advertisements asking their customers not to try paying through the PCGD.
The newspaper Het Vaderland surveyed its subscribers on the preferred solution. Other companies came up with their own solutions.
We are looking into a solution
Nieuwe Rotterdamsche Courant, September 19, 1923, page 1
Please do not use the PCGD
Centrum, September 19, 1923, page 6.
Please use money transfer.
Nieuwe Rotterdamsche Courant, September 22, 1923, page 8
Competing banks offered "quick, easy, reliable, no-hassle" giro services, but only 5000 clients left the PCGD.
Advertisement by a competing giro service
De Rijnbode, October 24, 1923, page 4A central emergency committee was formed that could pay PCGD clients, on special request and after a confirmation by the local post office manager, 90% of their balance at August 22. This arrangement started on Saurday October 6, 1923.[UN1923c] At the end of October, ƒ31.246.819,91 had been paid.[UN1923d] To reduce the work load for the committee, and speed up the payments, local "Middenstandsbanks"[UN1923e] and the Provincial Union of Shareholders[UN1923f] tried to get group arrangements for their members.
Scapegoating
In a well established Dutch tradition, lots of effort were spent on finding a scapegoat. Several candidates were accused or defended in official inquiries or letters to newspapers:
The corporate management of the PCGD would have relied too much on MABO. It did not commminucate well, nor did it sufficiently train the employees. Employees were pushed for speed instead of accuracy. Training interfered with their work in the old system, which led to an increase in errors in the old system that were simply copied into the new one. Procedures were changed frequently during the first few days after the transistion to correct errors that emerged then, but this increased the confusion among the employees.[VL1923b]
The Dutch National Bank was blamed for not immediately forcing the PCGD to stop operations.[VL1923b]
The local post offices made errors in the data transferred to the central office at the start of the centralization. This was claimed to be caused by the speed of the transition[VL1923b]. Several local post office managers were fined or demoted for "lack of cooperation in the centralization process"[VL1923d]
MABO was accused of promising too much, and not taking into account the peculiarities of the PCGD.
Employees of the head office were accused of lacking work ethos, "the women doing needlework and the men flirting"[NRC1993]. It was suggested that this might be due to some employees being forced to move from their local office to the central one, and to reduction of their wages because the work had changed.[NRC1923a] The CBPTT (postal workers organisation) replied that it was the desorganisation that made work impossible.[NRC1923b]
Technology was not regarded as the main culprit. The general opinion was that machines broke down because their users were not trained in using them, not because the machine were poorly constructed. But their capacity was lower than predicted, for which MABO was blamed.
Committee "Tak" and Committee "König"
On January 23, 1924, it was decided to establish a committee for investigating "who of the personnel of the PCGD was to be held responsible for the collaps of the service". When this comittee was established on January 28, the task was extended to "propose changes in personnel" [NRC1924] The committe was headed bij mr. AndriesTak, Advocate General at the Supreme Court of the Netherlands, and consisted of some postal inspectors, a director of a postoffice, the secretary of the Chamber of Commerce in Amsterdam and a member of the "Nijverheidsraad" (Industry Council)
Early April 1924, a 176 page report was presented by the Committee "Tak"
...
A. Cohen, director of the MABO, published a reply on the Tak report in June 1924 [Cohen1924,VL1924a]
The upcoming re-opening of the PCGD: Let him sleep, then he does no harm.
De Amsterdammer, July 19, 1924, page 3Services Resumed
... when de services were resumed, the cartoonists had another field day.
...
Not all clients were back "online" in October 1924, as shown by a small advertisement in which the "Hoenderloo" Foundation advised to send donations by registered mail.
The failure of the project also lead to an advertisement battle between dealers of calculating machines. P.H. Vermeulen, the Dutch representative for Burroughs, claimed that before 1923 the Postcheque and Girodienst exclusively used Burroughs machines, and that it will return to using these machines.
Reopening: back to Burroughs...
Nieuwe Rotterdamsche Courant October 1, 1924The Dutch dealer of Sundstrand adding machines kicked in: not only Burroughs, but also Sundstrand adding machines were used without problems before the centralization, and will be used after the mechanization is reversed.
... and back to Sundstrand
Nieuwe Rotterdamsche Courant October 2, 1924, page 8C.A. Redfern, A-T-M's representative, denies the accusations, referring to the "Tak" report.
A-T-M's reply
Nieuwe Rotterdamsche Courant Oct. 3, 1924Later years
During the Second World War, the service struggled, hampered by a shortage of spare parts and a reduction in personnel .[SCH1946] Clients were asked prevent a peak in payment orders by spreading them during each month.
After the Second World War, the PCGD was temporarily closed to enable a monetairy reform.[GG1945] In 1955, no new clients were accepted due to lack of personnel. In 1956 a second main office was opened, in Arnhem, and the client stop was lifted in 1957.
The mechanization disaster still sppoked the PCGD in the 1950's. After a long step-by-step process, the process was automated using 16 IBM 1401 computers in 1965.[WIT]
Please limit the use of our services
Dordrechtse Courant, April 23, 1944, page 2Bankers vs Engineers
Part of the problems was the underlying conflict between merchants/bankers and engineers. The Department of Watermanagement was a traditional stronghold of engineers. The fact that the Dutch National Bank was called for advice caused some dismay among the PCGD, because it discredited the new as well as the old PCGD accounting system[VL1923e]. In parliament, van Swaay, the minister of Watermanagement, was accused of "being more an engineer then a business man"[UN1924] Some argued that the Dutch National Bank could not solve the problems because "it knows nothing about punched card machines",[VL1923c] and that the PCGD was not a bank but a service.
Plate
The drama was depicted in a commemorative Delftware plate with the heading "Don't get irritated" (the Dutch name for the game of Ludo).
Notes
According to [Boogaard], the PCGD used C-T-R- as well as A-T-M machines, but most sources only mention A-T-M (Powers)
Note that "Stuivenberg" can also be written as "Stuyvenberg". In the context of the PCGD story, the name appears as C.J. (Jan) Stuivenberg/Stuyvenberg. The patents are issued for C.H. (Cornelis Hendricus) Stuivenberg: US1640381, GB331543, GB644154. See also P.E. Mounier-Kuhn "From Kamatec to Bull Netherlands", Business History Conference, October 24-26, 1994, Rotterdam
The comic artist did not quite understand it: "decentralisation" should read "centralisation"
References
[Boogaard] A. van den Boogaard et al., "De eeuw van de computer: de geschiedenis van de informatietechnologie in Nederland", Kluwer, 2008
[Cohen1924] A. Cohen, "Antwoord op het rapport van de commissie-Tak inzake de ontwrichting van de postchèque- en girodienst", published by S.L. van Rooy, Amsterdam, for N.V. MABO, 1924
[Connolly] James Connolly, "History of Computing in Europe", IBM World Trade Corporation, [1967] (available from the IBM Archives)
[END1994] Jan van den Ende, Anton Nijholt, "Geschiedenis van de rekenkunst: van kerfstok tot computer", Academic Service Informatica, Schoonhoven, 1994, page 104-106. ISBN 90-395-0048-7
[END1998]Jan van den Ende et al., "Kantoor en Informatietechnologie", in: J.W. Schot et al. (eds.), "Techniek in Nederland in de twintigste Eeuw", Vol. 1, Walburg Pers, 1998. ISBN 90-5730-036-2
[Wijnberg]N. Wijnberg et al., "Decision Making at Different Levels of the Organization and the Impact of New Information Technology. Two Cases from the Financial Sector", Group Organization Management September 2002:27:3:408-429
Jan van den Ende, "The Turn of the Tide: Computerization in Dutch Society, 1900-1965", Thesis, Delft University Press, 1994.
[DT1941] De Tijd, March 21,1941, page 12.
[MAA1923] De Maasbode, March 15, 1923, page 10
[NATak] NL-HaNA, Cie. Ontwrichting Postcheque- en Girodienst, inv. nr. 2.16.81.07
[NRC1923a] Nieuwe Rotterdamsche Courant, September 8, 1923, page 1
[NRC1923b]Nieuwe Rotterdamsche Courant, September 13, 1923, page 7
[NRC1923c]Nieuwe Rotterdamsche Courant, October 4, 1923, page 1
[NRC1924] Nieuwe Rotterdamsche Courant, April 3, 1924, page 9
[NRC1993] NRC, June 3, 1993.
[SCH1946] De Schakel, nieuwsblad voor de streek van Rijn en Gouwe, March 4, 1946, page 2
[TEL1921] De Telegraaf, December 10, 1921, page 4
[TK]Kamerstukken Tweede Kamer, 1917-1918, 335, 2-3, Wijziging begrooting posterijen, telegrafie en telefonie 1917. Wijziging hoofdstuk IX Staatsbegrooting 1917; Kamerstukken Tweede Kamer, 1917-1918, 335, 6-8; Wijziging begrooting posterijen, telegrafie en telefonie 1917. Wijziging hoofdstuk IX Staatsbegrooting 1917
[UN1906] Utrechtsch Nieuwsblad, July 13, 1906 page 1[*]; Utrechtsch Nieuwsblad, September 12, 1906, page 3[*].
[UN1919] Utrechtsch Nieuwsblad, October 10, 1919, page 7 [*]
[UN1920] Utrechtsch Nieuwsblad, March 4, 1920, page 5 [*]
[UN1921] Utrechtsch Nieuwsblad, November 12, 1921, page 1 [*]
[UN1922] Utrechtsch Nieuwsblad, June 24, 1922, page 5 [*]
[UN1923a]Utrechtsch Nieuwsblad, April 14, 1923 page 5 [*]
[UN1923b] Utrechtsch Nieuwsblad, August 28, 1923, page 1 [*]
[UN1923z] Utrechtsch Nieuwsblad, September 29, 1923, page 1 [*]
[UN1923c] Utrechtsch Nieuwsblad, October 6, 1923, page 10 [*]
[UN1923d] Utrechtsch Nieuwsblad, November 1, 1923, page 4 [*]
[UN1923e] Utrechtsch Nieuwsblad, November 6, 1923, page 1 [*]
[UN1923f] Utrechtsch Nieuwsblad, Novmber 7, 1923, page 5 [*]
[UN1924] Utrechtsch Nieuwsblad, January 30, 1924, page 5 [*]
[VL1923a] Het Vaderland, August 22, 1923, page 1.
[VL1923b] Het Vaderland, November 3, 1923, page 7.
[VL1923c] Het Vaderland, November 8, 1923, page 6.
[VL1923e]Het Vaderland, December 1, 1923, page 3.
[VL1924a]Het Vaderland, June 16, 1924, page 1.
[WIT] D. de Wit, "Facetten van een automatiseringsbeleid: De Postcheque- en Girodienst", Jaarboek voor de geschiedenis van bedrijf en techniek, 6(1989) pages 234-256
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