Payment for goods and sending money:
from past to present
Before cheques were common: cash and postal orders
In the first part of the 20th century and before, ordinary people did not have bank accounts. They dealt directly with cash. Going shopping involved taking enough coins and banknotes with one to pay for everything one might buy, and tradesmen collected money at people's doors. This was how it was in my childhood in the 1940s and almost certainly in my parents' time and their parents' before them.
Before cheques were common: postal orders for sending money
For sending money any distance, people bought postal orders from their local post office which they posted. Then the recipients cashed the postal orders at their own local post offices.
Bank accounts and cheques become common
What a bank cheque is
A cheque is a signed instruction to a specified person's bank to pay that person a specified amount of money from the account of the person signing the cheque.
As the century progressed more and more ordinary people got their own bank accounts, and employers paid wages and salaries directly into employees bank accounts. This was by no means universal; coins and notes in small brown envelopes were still common.
People with bank accounts started paying by cheque rather than cash for their goods and services.
The rest of this page goes into some detail about paying by cheque. This seems appropriate on a website about life in bygone times because cheques were used far more widely in the middle to late 20th century than they are today. Indeed there have even been calls to discontinue them and by the time you read this they may have been discontinued. As I write, some companies have already refused to accept them. For why, read on. Consequently, this page describes what was rather than what is, even though some practices may still be in existence as you read.
The cheque book
For people with bank accounts, their blank cheques arrived through the post bound in book, known as a cheque book.
Each page was a tear-off cheque on the right and a stub on the left. All that the person writing the cheque had to do was to fill in the name of the recipient, the date, the amount in both words and figures and then sign. The stubs were for keeping records of used cheques, and they remained bound in the book.
A new cheque book arrived though the post when the bank's records showed that the older one neared its end. The cost was debited to the customer's account, as explained on the page about stamp duty.
'Open', 'Crossed' and 'Pay Cash' cheques
Cheque books could be 'open' or 'crossed'. The 'crossed' was two parallel lines between which the sender could write the name of the person or company to be paid. This was regarded as a safety measure as crossed cheques could only be paid through a bank. A sender with an open version could put their own crossing on it, to give added security that it would only be credited to the payee written thereon. (I usually did so). If not crossed, it was possible for the named recipient to pass it to a debtor of their own, and sign it on the reverse. This would then be paid to that last recipient. One could also 'open' a crossed cheque by writing 'open' over the crossing, and signing the endorsement.
A cheque could also be written 'Pay cash', which meant there was no entry on the recipient's statement, as they would ask for the cash over the counter - useful for recipients with no bank accounts.
Eventually, open versions were phased out, and the crossed version became the norm. Similarly, the 'pay cash' arrangement was discontinued, apart from getting cash out of one's own account.
Early cheque books and work by bank staff
In the days before cheque books were printed with the name of the account holder, the bank staff would have to keep a record of the cheque book numbers sent to a client requesting a new book. If there was an occasional oversight, there would be a hue and cry after cashing-up time, plumbing staff memories as to whom the errant book had been been sent. Likewise, there was an insistence in those days that staff could not go home until the accounts reconciled. Every cheque was examined for its signature, which the home bank quickly learned to recognise. How different from now, when most cheques don't even get sent to the home bank, but are processed electronically, any odd fraud being offset against the time saved in all the previous staff-time checking.
It is clear from my own statements from the 1960s that each customer's statement was put into a typewriter at the end of a day, and the latest entry and updated balance added. Sometimes the lines of type are at an angle, where the sheet was not inserted squarely. It was usual then for a trypewriter to have a dual-colured ribbon, red and black, and if the account went 'into the red', the updated balance did, indeed, appear in red type.
Banks used to close to customers at 3 o'clock the mid-afternoon to allow time for all the checking and other administration. At that time banks also opened on Saturday mornings, and it was only after considerable industrial action from staff, that Saturday closing became the norm. How ironic, then, that a number of banks have re-introduced some Saturday opening, but often only for advice purposes. (That is, if your bank hasn't withdrawn its branch from your High Street!)
Proof of payment by cheque
Every so often - quarterly I seem to remember - banks returned cashed cheques to their customers. These cashed cheques were rubber stamped with 'Paid' so that the customer could check that their cheques had been submitted for payment and that the bank had paid out on them.
Eventually this practice proved too expensive for banks, and the return of cashed cheques was discontinued. I think this was in the 1960s but can't be sure. Do you know? From then on, banks expected their customers to conduct their checks against their bank statements which were posted to them.
Household management of cheques
In my experience the man of the family paid the family's bills monthly and he wrote out the cheques. Then they were either posted to the recipient, or the man's wife would deliver them herself. Of course there must have been exceptions to this practice, but it was certainly the case in the 1940s and 50s that it was not usual for married women to write cheques. Their husbands provided them with housekeeping money as cash. Writing cheques was a man's job. My mother never wrote a cheque until the 1970s when she became a widow. I remember how stressful it was for her as she had never done it before.
Cashing cheques - bouncing and clearing
Recipients of cheques had to take them to their banks to pay them into their accounts.
For large commercial companies it was normal for a member of staff to have to visit the company's bank at least once every working day. It was straightforward but labour intensive.
Occasionally a bank might refuse to pay on a particular cheque, either because the sender's account was overdrawn or because the cheque was simply fraudulent. When this happened the cheque was returned to the sender with a letter explaining why it could not be paid. In everyday speech, this was described as the cheque 'bouncing'.
Recipients of cheques could never be sure whether or not a cheque would bounce until they had allowed a sufficient time for their own bank to submit the cheque to the sender's bank and receive notice that it would be paid on. The delay was known as 'clearing'. It normally took about three days for a cheque to clear and people were often left on tenterhooks waiting for confirmation that a cheque had indeed cleared.
Because of the uncertainty of whether or not cheques would clear, they tended to be used for paying for on-going services, like gas, electricity and water where the provider of the services could cut off the supply until payment was made.
Shopping and the acceptability of cheques
Most of the shops in high streets were small retailers, rather than large chain stories, and these small retailers did not like being paid by cheque. One reason was the uncertainty of letting customers take goods away with them while being uncertain that their cheques would in fact clear. Retailers accepting cheques could so easily find themselves out of pocket if cheques bounced. There were no bank guarantee cards.
Another reason why small retailers disliked cheques was because of the nuisance of having to visit the bank to pay in the cheques. So shops tended only to accept cheques from regular and apparently reasonably affluent customers or customers who had accounts with them and paid monthly. Even then, this was primarily to prevent these customers from shopping elsewhere.
It was of course quite usual to ask a shopkeeper, "Would you take a cheque?" but equally usual for the reply to be, "Sorry, no we don't". Only occasionally a shopkeeper might like the look of a person and agree rather than lose the sale.
So ordinary people could not shop around or buy on impulse unless they carried large amounts of cash. While I was growing up in the 1940s and 50s, my parents always went to the bank or building society to draw out sufficient cash if they were going shopping for something expensive. In fact, even after I married in the 1960s, my husband and I did the same thing for a few years when we set up home.
The beginning of the end for cheques
Electronic payment has signalled the beginning of the end for cheques.
With electronic payment, the person being paid has the payment confirmed almost instantly so avoiding the delay of cheque clearance. Neither does the person being paid have to spend time actually visiting their bank to pay a cheque in.
With electronic payment, the person paying also benefits. By avoiding the delay of cheque clearance, goods bought online can be dispatched immediately and so arrive more quickly.