logo - Join me in the 1900s mid C20th
The webmaster, Pat Cryer, as a young child

The growth and decline of
payment by cheque

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Before cheques were common: cash for making payments

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.

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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.

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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, though; coins and notes in small brown envelopes were still common. People with bank accounts, though accordingly started paying by cheque.

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 already 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.

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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.

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Payment on cheques

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 check against their bank statements which were posted to them.

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Household management of cheques

In my experience the man of the family paid his bills monthly and he wrote out the cheques himself. Then they were either posted to the recipient or the woman of the house 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. That was a man's job. My mother never even wrote a cheque until the 1970s.

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Cashing cheques - bouncing and clearing

Recipients of cheques had to take them to their banks to pay them into their accounts.

For large commercial organisations it was normal for a member of staff to have to visit its bank at least once every working day. So payment by cheque was no significant hassle for these organisations.

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.

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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.

If you can add anything to this page or provide a suitable illustration, I would be pleased to hear from you.

Pat Cryer, webmaster

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 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 when we set up home.

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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. Furthermore cheques had to be taken to a bank to be paid in, which involved time - and time was money. As mentioned at the beginning of this page, many companies refuse to accept cheques and insist on electronic payment.

With electronic payment, the person paying also benefits from avoiding the delay of cheque clearance because purchases bought and paid for online online goods arrive more quickly.

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