18 January 2016
Vending machine slug rejector
A device that separates real coins from counterfeits,
the slug rejector made it possible for coin-operated vending
machines to become an important marketing tool for many
The people behind the invention:
Thomas Adams, the founder of Adams Gum Company
Frederick C. Lynde, an Englishman awarded the first American
patent on a vending machine
Nathaniel Leverone (1884-1969), a founder of the Automatic
Canteen Company of America
Louis E. Leverone (1880-1957), a founder, with his brother, of the
Automatic Canteen Company of America
The Growth of Vending Machines
One of the most imposing phenomena to occur in the United
States economy followingWorldWar II was the growth of vending
machines. Following the 1930’s invention and perfection of the slug
rejector, vending machines became commonplace as a means of
marketing gum and candy. By the 1960’s, almost every building had
soft drink and coffee machines. Street corners featured machines
that dispensed newspapers, and post offices even used vending machines
to sell stamps. Occasionally someone fishing in the backwoods
could find a vending machine next to a favorite fishing hole
that would dispense a can of fishing worms upon deposit of the correct
amount of money. The primary advantage offered by vending
machines is their convenience. Unlike people, machines can provide
goods and services around the clock, with no charge for the “labor”
of standing duty.
The decade of the 1950’s brought not only an increase in the number
of vending machines but also an increase in the types of goods
that were marketed through them. Before World War II, the major
products had been cigarettes, candy, gum, and soft drinks. The
1950’s brought far more products into the vending machine market.
The first recognized vending machine in history was invented in
the third century b.c.e. by the mathematician Hero. This first machine
was a coin-activated device that dispensed sacrificial water in
an Egyptian temple. It was not until the year 1615 that another
vending machine was recorded. In that year, snuff and tobacco
vending boxes began appearing in English pubs and taverns. These
tobacco boxes were less sophisticated machines than was Hero’s,
since they left much to the honesty of the customer. Insertion of a
coin opened the box; once it was open, the customer could take out
as much tobacco as desired. One of the first United States patents on
a machine was issued in 1886 to Frederick C. Lynde. That machine
was used to vend postcards.
If any one person can be considered the father of vending machines
in the United States, it would probably be Thomas Adams,
the founder of Adams Gum Company. Adams began the first successful
vending operation in America in 1888 when he placed gum
machines on train platforms in New York City.
Other early vending machines included scales (which vended a
service rather than a product), photograph machines, strength testers,
beer machines, and hot water vendors (to supply poor people
who had no other source of hot water). These were followed, around
1900, by complete automatic restaurants in Germany, cigar vending
machines in Chicago, perfume machines in Paris, and an automatic
divorce machine in Utah.
Also around 1900 came the introduction of coin-operated gambling
machines. These “slot machines” are differentiated from normal
vending machines. The vending machine industry does not
consider gambling machines to be a part of the vending industry
since they do not vend merchandise. The primary importance of the
gambling machines was that they induced the industry to do research
into slug rejection. Early machines allowed coins to be retrieved
by the use of strings tied to them and accepted counterfeit
lead coins, called slugs. It was not until the 1930’s that the slug
rejector was perfected. Invention of the slug rejection device gave
rise to the tremendous growth in the vending machine industry in
the 1930’s by giving vendors more confidence that they would be
paid for their products or services.
Soft drink machines got their start just prior to the beginning of
the twentieth century. By 1906, improved models of these machines
could dispense up to ten different flavors of soda pop. The
drinks were dispensed into a drinking glass or tin cup that was
placed near the machine (there was usually only one glass or cup
to a machine, since paper cups had not been invented). Public
health officials became concerned that everyone was drinking
from the same cup. At that point, someone came up with the idea
of setting a bucket of water next to the machine so that each customer
could rinse off the cup before drinking from it. The year 1909
witnessed one of the monumental inventions in the history of
vending machines, the pay toilet.
The 1930’s witnessed improved vending machines. Slug rejectors
were the most important introduction. In addition, change-making
machines were instituted, and a few machines would even say
“thank you” after a coin was deposited. These improved machines
led many marketers to experiment with automatic vending. Coinoperated
washing machines were one of the new applications of the
1930’s. During the Depression, many appliance dealers attached
coin metering devices to washing machines, allowing the user to accumulate
money to make the monthly payments by using the appliance.
This was a form of forced saving. It was not long before some
enterprising appliance dealer got the idea of placing washing machines
in apartment house basements. This idea was soon followed
by stores full of coin-operated laundry machines, giving rise to a
new kind of automatic vending business.
Following World War II, there was a surge of innovation in the
vending machine industry. Much of that surge resulted from the
discovery of vending machines by industrial management. Prior to
the war, the managements of most factories had been tolerant of
vending machines. Following the war, managers discovered that
the machines could be an inexpensive means of keeping workers
happy. They became aware that worker productivity could be increased
by access to candy bars or soft drinks. As a result, the demand
for machines exceeded the supply offered by the industry
during the late 1940’s.
Vending machines have had a surprising effect on the total retail
sales of the U.S. economy. In 1946, sales through vending machines
totaled $600 million. By 1960, that figure had increased to $2.5 billion;
by 1970, it exceeded $6 billion. The decade of the 1950’s began
with individual machines that would dispense cigarettes, candy,
gum, coffee, and soft drinks. By the end of that decade, it was much
more common to see vending machines in groups. The combination
of machines in a group could, in many cases, meet the requirements
to assemble a complete meal.
Convenience is the key to the popularity of vending machines.
Their ability to sell around the clock has probably been the major
impetus to vending machine sales as opposed to more conventional
marketing. Lower labor costs have also played a role in their popularity,
and their location in areas of dense pedestrian traffic prompts
Despite the advances made by the vending machine industry
during the 1950’s, there was still one major limitation to growth, to
be solved during the early 1960’s. That problem was that vending
machines were effectively limited to low-priced items, since the machines
would accept nothing but coins. The inconvenience of inserting
many coins kept machine operators from trying to market expensive
items; as they expected consumer reluctance. The early
1960’s witnessed the invention of vending machines that would accept
and make change for $1, $5, and $10 bills. This invention paved
the way for expansion into lines of grocery items and tickets.
The first use of vending machines to issue tickets was at an Illinois
race track, where pari-mutuel tickets were dispensed upon deposit of
$2. Penn Central Railroad was one of the first transportation companies
to sell tickets by means of vending machines. These machines,
used in high-traffic areas on the East Coast, permitted passengers to
deal directly with a computer when buying reserved-seat train tickets.
The machines would accept $1 bills and $5 bills as well as coins.
Limitations to Vending Machines
There are limitations to the use of vending machines. Primary
among these are mechanical failure and vandalism of machines.
Another limitation often mentioned is that not every product can be
sold by machine. There are several factors that make some goods
more vendable than others. National advertising and wide consumer
acceptance help. Product must have a high turnover in order
to justify the cost of a machine and the cost of servicing it. A third
factor in measuring the potential success of an item is where it will
be consumed or used. The most successful products are used within
a short distance of the machine; consumers must be made willing to
pay the usually higher prices of machine-bought products by the
convenience of machine location.
The automatic vending of merchandise plays the largest role in
the vending machine industry, but the vending of services also
plays a role. The largest percentage of service vending comes from
coin laundries. Other types of services are vended by weighing machines,
parcel lockers, and pay toilets. By depositing a coin, a person
can even get shoes shined. Some motel beds offer a “massage.” Even
the lowly parking meter is an example of a vending machine that
dispenses services. Coin-operated photocopy machines account for
a large portion of service vending.
A later advance in the vending machine industry is the use of
credit. The cashless society began to make strides with vending machines
as well as conventional vendors. As of the early 1990’s, credit
cards could be used to operate only a few types of vending machines,
primarily those that dispense transportation tickets. Vending machines
operated by banks dispense money upon deposit of a credit
card. Credit-card gasoline pumps reduced labor requirements at gasoline
stations, pushing the concept of self-service a step further. As
credit card transactions become more common in general and as the
cost of making them falls, use of credit cards for vending machines
Thousands of items have been marketed through vending machines,
and firms must continue to evaluate the use of automatic retailing
as a marketing channel. Many products are not conducive to
automatic vending, but before dismissing that option for a particular
product, a marketer should consider the range of products sold
through vending machines. The producers of Band-Aid flexible plastic
bandages saw the possibilities in the vending field. The only product
modification necessary was to put Band-Aids in a package the
size of a candy bar, able to be sold from renovated candy machines.
The next problem was to determine areas where there would be a
high turnover of Band-Aids. Bowling alleys were an obvious answer,
since many bowlers suffered from abrasions on their fingers.
The United States is not alone in the development of vending machines;
in fact, it is not as advanced as some nations of the world. In
Japan, machines operated by credit cards have been used widely
since the mid-1960’s, and the range of products offered has been
larger than in the United States. Western Europe is probably the
most advanced area of the world in terms of vending machine technology.
Germany of the early 1990’s probably had the largest selection
of vending machines of any European country. Many gasoline
stations in Germany featured beer dispensing machines. In rural areas
of the country, vending machines hung from utility poles. These
rural machines provided candy and gum, among other products, to
farmers who did not often travel into town.
Most vending machine business in Europe was done not in individual
machines but in automated vending shops. The machines offered
a creative solution to obstacles created by regulations and
laws. Some countries had laws stating that conventional retail stores
could not be open at night or on Sundays. To increase sales and satisfy
consumer needs, stores built vending operations that could be
used by customers during off hours. The machines, or combinations
of them, often stocked a tremendous variety of items. At one German
location, consumers could choose among nearly a thousand
The future will see a broadening of product lines offered in vending
machines as marketers come to recognize the opportunities that
exist in automatic retailing. In the United States, vending machines
of the early 1990’s primarily dispensed products for immediate consumption.
If labor costs increase, it will become economically feasible
to sell more items from vending machines. Grocery items and
tickets offered the most potential for expansion.
Vending machines offer convenience to the consumer. Virtually
any company that produces for the retail market must consider
vending machines as a marketing channel. Machines offer an alter-
native to conventional stores that cannot be ignored as the range of
products offered through machines increases.
Vending machines appear to be a permanent fixture and have
only scratched the surface of the market. Although machines have a
long history, their popularization came from innovations of the
1930’s, particularly the slug rejector. Marketing managers came to
recognize that vending machine sales are more than a sideline. Increasingly,
firms established separate departments to handle sales
through vending machines. Successful companies make the best
use of all channels of distribution, and vending machines had become
an important marketing channel.
See also : Geiger counter; Sonar.