In 1878, James Ritty found his thriving Dayton, Ohio saloon business facing ruin. Though outwardly prosperous, Ritty‘s profits vanished into the pockets of thieving bartenders padding their pay by pocketing customer payments. Such pilfering plagued retail establishments across America in the late 1800s. Without secure cash storage methods, an estimated 80% of businesses suffered significant losses from clerk theft each year. Hidden "leakages" drained up to 4% of total annual sales.
Desperate merchants resorted to radical schemes to stop the hemorrhaging, positioning conspicuous security guards and cameras. Others chained fastened strongboxes to counters in plain sight to deter thieves – though often to little effect. For Ritty, no solutions stemmed the cash bleeding dry his once-booming saloon. Exhausted battling his sticky-fingered staff, Ritty sunk into despair. His needed something new, something ingenious.
Inspiration in the Engine Room
Seeking an escape in 1878, Ritty embarked on a steamship vacation crossing the Atlantic. There in the churning belly of the great engine room, Ritty discovered his savior – not in a contraption of gleaming brass and artful gears – but in an idea. Gazing at the mechanical counters tracking each revolution of the mighty steam engines, Ritty envisioned the same technology recording honest cash transactions back in his beleaguered bar.
Returning home reinvigorated, Ritty recruited his brother John, a skilled mechanic, to build the first prototypes. Customers entered sales by pressing keypad buttons, incrementing number wheels that displayed running totals viewable by merchant and patron. But sand fouled the gears and the inconsistent results frustrated Ritty’s hopes. Successive efforts fared little better, even after abandoning finicky mechanics for paper ribbons punched with holes denoting cash paid.
Though crude, these unpackaged ideas captivated Dayton storeowner John Patterson. Installing two temperamental registers in 1883 multiplied his profits six-fold in one year, from $50,000 to over $300,000. Astounded, Patterson knew that he could perfect and sell Ritty‘s invention by the thousands.
The Birth of a Cash Register Empire
Ever the savvy businessman, Patterson offered $1000 to buy all rights and patents to Ritty‘s cash register in 1884. The overwhelmed saloon owner readily agreed, and Patterson immediately established the National Cash Register Company, retaining the Rity brothers to continue improving the burgeoning product line.
Patterson‘s fanatical salesmanship, innovative marketing, and vertical business integration fueled explosive growth. By 1893 NCR claimed over $3 million in sales from 31,000 registers installed nationwide. In 1904 the "Cash Register King" opened an enormous factory complex in Dayton boasting over one million square feet of production space. Employment skyrocketed from 140 to 7,300 workers over nine years. Monopolizing 95% of the global market share by 1910, Patterson had built NCR into a commercial empire off James Ritty’s humble paper-punching cash register.
Spurring an Industrial Transformation
NCR’s registers revolutionized retail business practices. Their mechanical honesty and bookkeeping transformed store owners previously plagued by invisible “shrinkage” into informed managers, tracking inventory and measuring profit margins with precision. The same technology later enabled nationwide chains like Macy’s and Sears Roebuck to operate many distributed locations efficiently for the first time.
Ushering in facts and accountability, the cash register eradicated the guesswork enabling the wastefulness of the past. Patterson’s innovative investment realized the full potential of Ritty’s inventive idea, spawning systems that still govern modern retail point-of-sale operations today. Though the unassuming Ritty did not live to witness the future empire his inspiration built, his curious vision merits recognition as the spark of a commercial revolution still paying dividends today.
