Do Not Fold; 3

Do not fold then staple or mutilate this car. The slogan of the computer a University of Illinois radio service presents a series of programs about you and the computer from banks to hospitals and from airlines to music. It's application in this team and these programs will give you a glimpse of these countless applications and what they mean to you. Do not hold takes a closer look at your bank statement. Your credit rating your stocks and bonds insurance and monthly bills are all handled by today's computers across the nation businesses are adopting computerized systems for their financial records and transactions. They passed their calculations on to you your checking account probably is balanced daily by a modern computer. It's likely that your savings account and loans are also tucked under its wing.

Just as more people handle more money more often computers become a necessity. Checking accounts may show thousands of transactions of MUP. There are just not enough bank employees to keep track of all this paperwork. A local bank in aerobatic Illinois the U.S. First National Bank has computer facilities on its premises and the Shiloh manager of the data processing Department explains why. We install our computer in January of 1966 and the first application we put on which most banks normally initiate First of all our checking accounts or what we call demand deposit. We. Felt that this was our major problem area. This is the main reason why we installed the computer. The reason for this is it's a university oriented town and being as we are one of the closer banks to campus we do have a larger percentage of both student hand staff

checking accounts than any other bank in Champagne Urbana for this reason we have quite a high volume on checks and have found it necessary to change from the manual system of bookkeeping through our posting machines to a more sophisticated manner which we decided to use the IBM system computers. Mr Shaw outlined the process by which the check is handled at the bank. The incoming check is already inscribed with magnetic code numbers which identify the issuing bank and the specific account number of the customer. As each check is received for clearing at the bank the dollar and cents amount of the check is also inscribed in magnetic numbers on the check than the checks are fed into a special reader which sorts each jack by its code number so some checks are sent on to other banks in the area. Some are sent to the Federal Reserve bank of the district and still others are of use the bank's own checks. As each jack

passes through the reader the information on the check is recorded on magnetic discs which resemble stacks of phonograph records. A special arm is extended into these magnetic desks to record or pick out or change any information about the customer's account. Each day the total volume of Jack's must balance and the files on every customer's account must be updated at regular intervals because the bank then prints out statements from the data on these disks for each customer. Mr Scholl comments on the advantages of this system. We've been very pleased with the increased efficiency we have found that customers are coming up to complain about a check being posted because their name was Joe Smith and Joe Smith's check was posted their account is nonexistent. We found that. Automation is really increased our efficiency and we are very pleased with it. It took a great deal of planning to install the system at the U.S. bank at the most important part

of the conversion to computers was education. I had shallow outlines this process. The initial problems that we ran into when we installed our computer were employee education and customer education. The main product the customer has to do is use the right type of check. The computer operates off of the goofy little numbers at the bottom of your check which I guess the layman would call him however we call him magnetically in a coded account number or bank number. This is a very important factor in automation and is a key to our accuracy and how accurate we are really going to be. The main problem was making sure that customers were using checks which we call personalized checks which had their account number on them. If the customer was not using his personalized checks we wrote him a letter send him 50 free personalized checks to get him started on it with found that once the customer is aware of what these little

numbers do at the bottom of the check that they are most willing to cooperate. As Joe explains why occasional errors may occur despite such a careful system of employee and customer education. The main problem that I think is the one customer giving another customer his checks marking out his number. However this doesn't help because it's in magnetic ink and it's marked over with regular ink so the computer still reads this check. Now this check will go through and be posted onto the account number that's on the bottom of the check even though another signature is on it. Now some of these signatures are caught however if they're close relatives for example and their names are close together it's very hard to catch this error. Also on deposits there are several times that personalized deposits are made where they might use another person's deposit slip. There's no place for a signature signature is needed if you use your personalized deposit slip.

So we assume the deposit is being made by the name of the person on the positive and the final analysis the success of such a computerized system at a bank is determined by the people who run it. Mr Sharma puts it this way we have a saying which I think is probably been heard throughout campus and actually throughout the United States now that computers are being used quite frequently in the saying is garbage in garbage out. And this really is true. If. We provide the computer with all the information it's going to process is faulty information and it's going to turn out faulty reports. The. Processing of individual checks and other bank records by computers is only the beginning. In 1965 the bank of Delaware and Wilmington inaugurated a pilot program by

which a customer's able to make purchases at a retail store and have the price of the purchase automatically recorded at his bank. The shoppers account is immediately debited or an installment plan is initiated for him in this on line computer system. Bell telephones touch tone card dialing terminals are installed in each store. Experiments such as these suggest a future cashless society no longer will shoppers carry cash or even checks the amount of purchases will be recorded by telephone line at their bank. Income will be credited to their accounts in a similar fashion. The monthly statements will provide a complete ledger of all expenses for the family budget. An intermediate step in this direction may well be the credit card formulae credit cards were honored only at specific stores within a chain or a particular gas station. However now the Midwest Bank Card system for example makes possible a credit

card which may be used in six states at a wide variety of stores. A hundred banks are involved in this charge card system and provide individual cards for their bank customers as a purchase is made the sales slip is forwarded to one of 15 charge card programs within the Midwest Bank Card system and the billing process is initiated. Robert Martin Dale president of this system explains why computers must be used to calculate the individual monthly statements for each customer. The efforts to start a program get it going and have it operate efficiently. So over 10 million sale slips have been adopted in the last year that will indicate to you that this is a very gigantic business and yet one that must be terribly because not one sale slip can go to the wrong place.

Therefore computers are a key operating in the charge card business and I would dare say that without them we probably could not operate in the charge card business. One of the areas not only does it give us accurate processing of each of the millions of sales slips involved to the proper destination it also gives us excellent accounting records accounting as it pertains to how much to bill the card holder counting as it applies to which merchant receives how much money being reimbursed for the amount of sales that he brought. To us. And he is credited for the proper amount of the fun. Now computers do all of this efficiently. You know very rapid fashion of course and with a high degree of accuracy.

Mr. Martindale also comments on a special problem inherent in the credit card business and the help of computers in this area. One of the interesting areas where computer capability has been essential to our operation is in rapid fraud identification through the computer. We can take rapid corrective action and have a continuing misuse of the card. Now initially the computer programming was set for standard credit card accounting. But extensive changes were made in processing patterns to identify unusual activity by card holders or even merchants for example special reports are prepared by our computers on a daily and in some cases hourly basis. That's enabling us to move in fast on lost

or stolen crowd situations. According to Mr. Martin Dayo progression from the checking account to the credit card is just a part of a long term development in man's financial dealings. As it is with banking here we've moved from the barter system centuries ago to a coin and cash system. We think now that more and more people are using and like the benefits of charge cards and that this may be a first class to another type of payment mechanism very heavily controlled by or operated through electronic banking. Even the sounds of the brisk trade on the floor at the Chicago Board of Trade are a part of the age of the

computer. Every time a futures contract is traded two parties commit themselves to a transaction involving commodities such as corn wheat or pork bellies. The Chicago Board of Trade acts as a clearing house to settle these trades and to assure adequate margins of money available to guarantee those trades. President ese Christian explains why the Board of Trade has used computers to complete these operations since 1963. We began studying the possibility of mechanizing the clearing house at least as early as 1955. At that time the equipment available for this purpose was not just precisely what we thought we might need. Computers were developed in the meantime which lent themselves very nicely to our type of operation but because of the nature of a clearing operation it is one that lends itself very nicely to computerized processing.

We have a vast number of individual transactions which are similar. That lends itself very nicely to electronic data processing. We have had some very sad experiences in years gone by in which clerks of our carry member firms worked. On reasonable hours to get the work done. I can remember when a trade of as much as 100 million bushels bought and sold in one day would keep our three member clerks here all night. And of course our touring house clerks who and those days verified these things by hand. They would be here all night and well into the morning. And it was sometimes it was a little difficult to have the clearinghouse in balance in time to meet the market. We even then managed somehow to know that we were in balance before the market opened it was essential that we do so.

But it was the type of operation that cried out for mechanization because human fingers just couldn't keep up with the volume we were attempting to handle. Mr Christian outlines how the process now works with the Chicago Board of Trade on a typical trading day. Let's say for example that we have two theoretical customers each of whom places an order for execution of a futures contract through a brokerage house one wishing to buy and the other wishing to sell those orders would be transmitted to the. Chicago office of the brokerage house involved. And from there transmitted to the trading floor by telephone. A Florida would then be written and taken into the appropriate pit and handed to the broker filling orders for the particular firm involved. Now let's say that the broker who is in receipt of the order to buy and the broker who receives the order to sell happened to trade with one another. Each of them will endorse his order showing that

he has executed the order ensuring the price of execution and will send it back to the floor telephone execution will then be confirmed to the brokerage office. The brokerage office will then confirm execution to the customer. At that point we have a clearing member involved on each side of this transaction. Remember representing the buying customer in a carry member representing the selling customer. Each of those crewmembers will prepare a tabulating card punched IBM card as it is sometimes called. The vire will show what he brought in from whom he bought it in the essential terms of the contract. The seller will do likewise. Those two cards will then be submitted to the clearing house and we load those cards onto our. Electronic data processing equipment and the machine takes over from there. First the machine will edit each of the cards to see that both parties have included our essential information.

Machine doesn't know whether the price is right at this point but it knows that a price is there if the price has been omitted the machine will refuse it. But assuming that the machine has accepted the two cards the two records as being at least complete later after all of the transactions for the day have been put on the machine and they have been sorted out in a proper order so that they may be compared. The machine will compare the records of purchases with the records of sales to see that they agree. If they do not agree the machine will print notices in duplicate of the. Trades that were submitted that do not match these notices are then furnished the member of the clearing members who submitted the trades to us those carry members from these unmatched trade notices then will be able to detect wherein they differ they must then get together with one another and reconcile those

differences. They then have an opportunity to resubmit. The trade or submit corrected trade records so that the trade can be cleared because we cannot of course clear a trade unless the buyer and seller agree with one another. Not only men on the trading floor but those in stock brokerage firms across the country may benefit from computer prepared information up to the minute price quotations are being displayed in Chicago offices the compote a new system which uses computers to calculate the latest offered prices for futures. Warren Wu Liebeck executive vice president secretary of the Board of Trade explains how COM quote works. What we have done is take our manual mechanical system that. Included posting quotations manually on a chalkboard and put it in the hands of a computer. The computer is really the heart and the guts of the new situation and basically the way it works is

this as the quotations are flashed to a reporter in a pit on our trading floor. That reporter has an input unit which he automatically activates the quotation into the computer. The computer then makes certain tests of this quotation is it too high to low. Is there something else wrong with it. This of course as you well understand is done in milliseconds and then the quotation let's assume the quotation is correct the computer sends it out. It really does three things with it at the present time one. It posted automatically on a mechanical board on our trading floor which will replace our chalkboard system to it sends it out automatically over the ticker system there is no longer a teletype operator activating the ticker system that's done by the computer and three through a system which is much beyond me electronically. It is the computer signal is turned into a television symbol and is posted on

television sets throughout at the present time only the Chicago Board of Trade Building Cincy does come and which is the. Arrangement which takes the computer signal and puts it on television is one expensive and two it has a limited ability to move these over lines it's limited to about a mile from the dif kind at the present time. And although we have talked to other markets about this they have not as yet seen fit to put a system in. Mr. Lee Baca explains why such a system became necessary and has proved so successful. There were really three reasons why we went to an automated system one where using techniques such as a hole to let graffiti which are dying out and we can't find a Lego first around our present system. Secondly is the fact that the system works faster because computers mechanical means which deal and I work in milliseconds are handling things that the humans used to handle and assert is we think that as

you eliminate the human this way you can increase the reliability. I've learned in the time that we've worked with us that a computer can be quite as irrational as a human being however and you finally get the bugs out of the end but it takes a long time to shake them out. We think that. When we finally get this system thoroughly refined your information will come much faster both over the ticker. On our boards. And it will be much more reliable sense if the reporter in the pit who is really the initial contact between the trade that's made and the outside world. If he gets it correctly and transmission the right way then everything else is going to be in good shape. A similar display of price quotations is also available from the floor of the New York Stock Exchange on television terminals across the country. Within seconds a stock

broker may tell you the latest position of AT&T or American Airlines by pressing certain symbols indicating the stock in question. The broker can draw on information from the New York Stock Exchange stored in computers in Chicago. Stocks can also be purchased at rapid speed with the use of computers. Jack Morris of the Champagne Illinois office of Hayden and stone compares the old manual system and the new automated system for purchase and sale of stocks ended 12 years ago. We had the takedowns system we had a teletype machine and had a single line take it had paste on the bottom and it was about 1 1/2 inch wide. When we received an order we wrote the order up on a regular order form handed it to this teletype operator who would send it to Chicago Chicago would take it off check it for errors and check it for which exchange it was to go to. Then they would give it to another operator who would send it to the exchange it was supposed to

be traded on. This would go to New York and in New York they had separate operators there. The operator then took the order off checked it rewrote it on another slip and then they would drop this lip into a transmitting unit that would carry it along like the low resource machines that you play where you spend the bottom and then move the horse on line. There would be a clock at the end that would pick these up as he had a chance to do so. He would read the order to see that he understood it. Pick up the phone call the trading floor of the New York or the American Stock Exchange transmit the order to the clerk on the floor who then would go to the trading post where the stock is traded after the trade was completed it would be handed back to the clerk and it might not be at the same time might not even be the same credit. He would then return to the phone call upstairs to the clerk would call it down in the first place and the same procedure would be reversed back

to our office. Now the order would take anywhere from I suppose the minimum would be 10 minutes to a maximum of hours before we got the answer back. Now we have a new computerized teletype machine. The salesman will write the order and hand it to the clerk. She types the order which is immediately punched in tape. She reads the punched tape to see that it's correct inserted into a transmitter in the machine. This transmitter will segregate the American New York the Midwest the Chicago Board of Trade or whatever it happens to be and this is an instantaneous thing. Norman looks at the machine by the code is incorporated in the tape. Well segregated. So they trade then goes a mediately to the trading floor where that stock is traded. That product then does pick it up take it to the Trading Post comes back and inserts it in the machine answer and it is transmitted back the same way all the time involvement here. The least that

we've been able to complete a trade in is about 58 seconds from the time that the order was actually typed in the first place until it was received back. Still such a rapid treatment of buy and sell orders in the stock exchanges of the country may create room for error. Mr. Morris comments on the possibility of slip ups as volume growth. You know addition to speeding up the operation we have created such a type format for it that it has eliminated a lot of the air problems in the first place the tape can't be stanching on till it is scanned again where before the tape is it printed we received our hard copy as we call it. But the transmission was inventin used to you couldn't print a whole of your hand look at it and you had it as soon as it was printed it was off and running. So that now we catch a lot of orders and the girl does. Teletype operator. OK it's a lot of these before they actually go out and in order to cope with me they have created what I would call and rather type format to eliminate the possibility of error. But it is really frustrating to find out that you put a

buy order in instead of a starter for a particular stock and you see the tail end of a going through the transmitter and suddenly it dawns on you you made a mistake telling Europe to stop the tape and she says I can't it's gone it's on the New York trading floor already not just the present status of stock and the prices asked or reported by such a system. Computers are also being utilized to analyze the trends in the market and prepare reasonable predictions of future market activity. Top. Insurance companies also rely on computers for rapid processing of all kinds of policies fire auto and life insurance policies growing number each day and companies are hard pressed to handle all these policies with the fish and see the Equitable Life Assurance Society in New York is install the special system to locate policies while they are being processed.

Worried customers who arrange for insurance protection but have not yet received a final copy of their policy may call a special answer back system as Equitable Life as surance handles incoming applications. It attaches a booklet of 15 pre punch controls stub cards as the application moves through the processing area appropriate stubs are torn off and fed into the computer. Thus a customer's question about his policy can be answered quickly. The application can be located and if a policy number has been assigned it can be given by phone to the caller. Typical queries may be handled in less than two minutes. Do not fall or has become the by word of financial institutions across the country. Accounting and the world of dollars and cents has been assigned to today's computer on the next program and the series will meet a new cake maker a computer

that also see automobiles sketched by computers and plastics compounded through electronic data processing. Each week the University of Illinois radio service brings you a new meaning behind the slogan of the computer a do not own band staple or mutilate this card. This program was distributed by the national educational radio network.