The Hollerith electric tabulating machines tallied items by causing an electric current to trigger simple clock-like counting devices. When an electrical current flowed through a hole punched into non-conducting paper strips, a counter was actuated by an electro-magnet. In the first versions of the electric tabulating machine, rolled strips of paper were used as a non-conductive material. Later, manila stock cards were used. Holes were punched in the cards using a hand operated pantograph punch. These cards were then read by a hand operated card reader. The card reader permitted current to be sent to appropriate electromagnets that then triggered the counters.

The size of the Hollerith cards were determined, oddly enough, by the size of the U.S. dollar bill at that time. Hollerith found that to store the cards that were to be processed, he needed a large supply of containers. He was able to obtain such containers from the U.S. Treasury Department for free -- containers that held cut dollar bills.

To organize the cards, Hollerith designed a "sorting box." Because the early census card had a maximum of 24 classifications in any one field, the sorter was designed with 24 compartments. The first sorter was semi-automatic. A compartment cover was electrically unlatched according to the classification and the operator would then remove the card from the card reader and insert it by hand into the appropriate compartment.

The first model of Hollerith's electric tabulating machine was designed to analyze statistical data. Its first public use was by the City of Baltimore in 1887 for tabulating mortality statistics. The state of New Jersey and the New York city Health Department soon followed, offering Hollerith practical tests for the prototype that he used in the 11th (1890) census.

Enumeration counting was often interrupted because of poor quality rolled paper. The edges of the paper would flake off, collect in the mercury cups that produced conductivity, and clog the machines. After replacing rolled paper with cards, Hollerith found that clerks placed cards in the machines incorrectly for processing. He made a simple correction. To control the quality of the materials, Hollerith used heavy stock manila paper. He insisted that all cards for use iwht his machines be purchased from his company, an example of vertical integration. In addition, he cut off the upper left hand corner of each card to indicate proper placement and positioning.

The electric tabulating machine became the centerpiece for all Hollerith's future business endeavors.

The preceding was taken from:
Biles, George E., Alfred A. Bolton, Bernadette M. DiRe. "Herman Hollerith: Inventor, Manager, Entrepreneur -- A Centennial Remembrance. Journal of Management, 1989, vol 15, No. 4, 603-615.