The tabulating machine was first invented by Herman Hollerith. Its first use was in the 1890 U.S. Census.
Hollerith's machine was developed to deal with an immense logistical problem. Due to rapid growth of the U.S. population from 1880 to 1890, primarily because of immigration, it was estimated that the 1890 census would take approximately thirteen years to complete. The 1880 census had taken seven years to tabulate, and by the time the figures were available, they were clearly obsolete. As the U.S. goverment depended on the census figures to apportion taxation between the states and to determine Congressional representation, a faster way had to be found.
Hollerith had been inspired by railway tickets . Conductors used a hole punch to mark information on a ticket (for example, the destination and age of the traveller). Hollerith realized the card would act as an electrical insulator , except where the holes were punched.
Hollerith used a series of punched cards which were the same size as a dollar bill, as receptacles of that size were readily available. (Cards of the same size were used for computing until punch cards were phased out in the 1980s, but punch card voting systems using the same sized cards lasted into the 21st century). The cards were coded for age, state of residence, sex and other information, and clerks could punch holes in the card to enter information from returns.
Hollerith's machine was rather simple. A set of spring loaded wires were suspended over the card reader. The card sat over several pools of mercury, one pool corresponding to each hole in the card. When the wires were pressed onto the card, holes allowed the wire to dip in the mercury, completing an electric circuit, which would advance a counter and set off a bell to let the operator know the card had been read. Simultaneously, a receptacle would open for storage of the card, the choice of receptacle depending on the information in the card.
Coding the cards and entering them into the counter could be done by clerks. As such, the process was much faster than assembling census returns by hand. With Hollerith's machine, the 1890 census was completed in eighteen months, after the count was double-checked.
The advantages of the technology were immediately apparent for accounting and tracking inventory. Hollerith set up a company to market his invention, which eventually became a part of International Business Machines, which developed faster and faster tabulators until the invention of the electronic computer in the 1940s.