What would stop people from withdrawing money from multiple banks and over drawing before all bank branches could be updated on the person’s balance?
In: Economics
In the XIX-XX centuries they still had instant communications such as telegraph, telephone and teletype, albeit manually operated. In case of high profile clients they had the option to contact a distant bank. They charged an extra fee for this service. There were ways to get around this and trick the bank, but they were punishable as a form of fraud.
Not exactly an answer to this question but as a kid born in the early 80s, I experienced the era where there was an electronic backend but no consumer electronic banking. But my bank had a passbook printing machine. So I could get a paper passbook and stick it in the machine, and it’d print onto it all the transactions I hadn’t printed yet.
Banks have always needed your ID. Most branches would not, and still do not, allow third party transactions without putting a hold on the funds for one week. If you cashed a check you gave it up to the bank so you could not cash it again. Writing a check before depositing happened might cause your check to bounce. Post dated checks were not cashed early but could be held for deposit on the date written on the check.
Local banks were way more common back then. Your bank was more likely to literally be one bank or a small local chain. There were various paper/phone based systems in place to verify volumes. If you withdrew a lot, they would probably make a phone call to verify the funds. But because of this, it was possible to “overdraw” an account. This should’ve been eliminated with electronic banking but then banks realized they can charge you fees if you accidentally lose track of your expenses and rather than simply not approving a charge, they overdraw you.
But in the broader context of your question, bank fraud was definitely easier back in the day. The real scam was check bouncing. Grocery and retail stores used to accept paper checks as payment. You wrote a check for the total and paid that way. It would take a least a day for it to get processed and for them to find out you wrote a check from an empty account.
You had a small bank book. Every time you went to the bank you gave the teller your book. The teller would either add or subtract the dollar amount depending on your transaction and stamp it with a special stamp and give the book back to you. That way you could go to multiple branches and get or deposit cash. Large withdrawals they might call the other branch to verify you had the money.
Before all the electronic data transfers, there were these special printed bank books. You needed money, go to bank and present this book to cashier. If it said you had money, Thay gave you some and made new entry in your bank book. It also had details of what branch had issued that book, etc… Se they could call if needed
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