20 Things Banks Once Made You Do That Seem Unthinkable Now

Libanus M. Todd, a Rochester, N.Y., inventor, designed and patented what he called the Protectograph in 1899 to prevent check-raising, which was a fraud whereby a forger turned a $10 check into one worth $1,000. A cashier would run a $10 check through the machine, which cranked a set of sharp dies into the face of the document and crushed its fibers. This forced indelible red and black ink into the shredded material, making the check impossible to recover or change once it had been processed.

Between the late 1800s and 1950s, opening a safe deposit box required two keys and two people. The person renting the box would sign a paper visitor log, which was compared by the vault custodian with a signature card on file. At the same time, both the custodian’s “guard key” and the customer’s own key had to turn. The bank never held a duplicate of the customer’s key. Losing that key meant summoning a locksmith to drill it open, in the customer’s presence.

In the past, US paper currency actually had two varieties that promised something real: Gold Certificates and Silver Certificates, which could be redeemed for physical gold or silver coins. Anyone holding those currencies could take them to the bank and get the promised real metal for their paper. The government pulled gold first, in 1933, under President Franklin Roosevelt, but silver certificates continued to be paid out in real silver coins until Congress stopped it in 1968.

The traveler’s check was created in 1891 by Marcellus Berry, an officer of American Express. It allowed travelers to carry large amounts of money without risk. When you purchased one, you signed your name once in ink, right in front of a teller. You then traveled with the check to a foreign country. When you wanted to use it there, you signed your name again, on the bottom, in front of a merchant or a teller. Their job was to look at both signatures and decide if they were the same or not.

In 1909, Merkel Landis, a banker with Carlisle Trust Company in Pennsylvania, launched the first “Christmas Club” savings account. Savers received a book of numbered paper coupons and deposited a dollar or two every week. The teller would tear off that week’s coupon, stamp the stub as a receipt, and log the deposit in a manual ledger. Every November, the bank cut one payout check for the full total. The clubs paid little or no interest, since saving was the point.

When you walked into a bank that didn’t know you, having a check to cash wasn’t enough, and neither was an ID card, so you had to bring along someone the bank already trusted, a local account holder, to co-sign the check. This person would sign his own name underneath your signature on the back. It was his responsibility: if the check bounced, the bank would just take the money out of his account.

Prior to the existence of wire transfers, when a seller in a real estate deal or another big purchase was involved, he would refuse a regular personal check and ask for a certified check, a check drawn by the purchaser but guaranteed by the bank. The teller checked the account balance, subtracted the amount from the customer’s ledger books, then stamped “CERTIFIED” in big letters across the face of the check in indelible ink. Then he used a metal hand press to punch holes straight through the paper, spelling out the dollar amount so it couldn’t be altered.

If you wanted to borrow money in the days before computerized scoring systems, you’d have to sit down with the bank manager and argue your case. You might bring a handwritten paper balance sheet showing your assets, liabilities, and occupations, but that’s not what the bank manager really cared about. The bank manager cared about who you were. What’s your family like? Are you steady at your job? What do people say about you in town? The bank manager’s view of your character determined whether he would lend you money. This gave bank managers in small towns real economic power. The FICO score didn’t come along until 1989.

Bonds were issued as physical, engraved pieces of paper. If you had the piece of paper, the bond was yours, and your name wasn’t on it. There were tiny interest coupons that came attached to the bond with a date stamped on them. Every six months, you’d take your bonds out of your safe deposit box, snip off the coupon that had come due, and give it to a teller, who would hand you cash. “Coupon clipping” is the term that comes from this practice.

Previously, a letter of introduction from a trusted customer or a partner bank would often be required when opening a business or a checking account in a different city. Bankers used to keep those letters tucked into the ledger page as legal protection against theft and embezzlement. The more basic retail savings accounts were not that way, though: you walked in, gave your name and address, and filled out a signature card. Then you got a simple reference from your employer, not a formal letter of introduction, and signed the passbook.

Prior to 1960, each savings account holder was provided with a passbook, essentially a booklet documenting the account’s balance. Deposits and withdrawals were made by exchanging the passbook over the counter. The clerk would write in the date, amount, and running balance with a fountain pen, then sign and stamp the entry. The passbook wasn’t the only record, though, since the bank kept its own ledgers too. In the event a customer did lose their passbook, the issue could be resolved after the fact.

On the other side of most bank teller windows was a spinning file known as a “Kardex” wheel packed with customers’ signature cards. When you opened an account, you signed your name in pen on one of the cards. When you later wrote a check, the teller would spin the wheel, find your card, and visually compare the slant and curves of your signature. In busy rush periods, tellers would sometimes forgo this check for small routine transactions from regular customers to keep the line moving, accepting a slightly higher risk of fraud.

If you lost a check, you had to fill out a “Stop Payment” form at your branch, and a surprisingly physical process would be set in motion. A bookkeeper would make a little red flag card, and the head clerk would clip that flag to the customer’s signature card in each of the teller cages in the whole building. The information was being passed along by hand, so it might take hours or days before it reached another branch. If the check were cashed somewhere else before the warning got there, the bank was still safe if it had done its part.

At the end of each day, the merchant would collect his cash, coins, and checks into a canvas bag that had a built-in brass lock. He would then unlock a small door in the exterior wall of the bank with a separate key, which allowed him to place the bag into a steel chute leading to the vault. In the morning, the two officers in charge of the vault would open it jointly, record the deposit, and open the bag using a duplicate of the merchant’s key, which was kept in the bank.

When you wanted to exchange money for a trip abroad, a teller consulted a printed currency rate list that was revised from time to time. You’d work out the exchange rate by hand using a piece of ledger paper, and the teller would issue a foreign draft. The bank would then draft a letter of advice, which it would ship via steamship so the foreign bank would receive confirmation of the validity of the draft when it arrived many weeks later.

Purchasing a house or a farm used to involve the bank’s attorney carefully reviewing what was known as an “Abstract of Title,” a massive volume bound in thick leather that contained handwritten transcripts of every deed transfer, tax lien, mortgage, and inheritance associated with the property. The attorney had to read the entire thing and ensure there were no outstanding legal claims on the property before the bank would agree to finance the purchase. A single missing or unclear entry could freeze the deal for months.

Whenever a check didn’t have sufficient funds, the chief bookkeeper took it directly to the branch manager, who checked the customer’s ledger and weighed their business prospects, family standing, and deposit history. Then came a personal call to sign off and extend a bit of informal credit, or send it back marked for insufficient funds. This decision wasn’t based on some posted fee schedule, but on the discretion of one individual.

Wealthy international travelers used a paper-based line of credit from their home bank known as a Traveler’s Letter of Credit. They would arrive in a foreign city and go to a bank listed in a global book of correspondents. That bank would verify the letter’s authenticity: its watermarks, its signature, everything, and then pay out some local currency. The banker would write on the back of the letter how much he had given them, reducing the available credit until it was depleted.

Prior to 1973, when the Depository Trust Company started keeping stock certificates in centralized vaults, owning stock required possession of a physical piece of engraved paper. If you wanted to secure a large loan, you had to surrender your stock certificate to your bank, which held it in escrow while the loan was still being paid. Once you cleared the debt, the bank returned your certificate.

When the month was over, the checking account holder would open the mailbox to find an envelope bristling with their own canceled checks, some stamped with tiny holes and others imprinted with the word “PAID” in thick ink. The envelope also contained a printed statement summarizing the transactions. These documents were the very papers the customer had penned weeks before, returned as evidence. Many checked the documents carefully against their checkbook records, then kept the canceled checks as receipts in case they needed to present them in court or during a tax audit.

This content was created with the help of AI.