A.P. Giannini (Founder of Bank of America)

America’s Blue-Collar Banker: The Early Years of Amadeo Peter “A.P.” Giannini

Home mortgages, auto loans, installment credit – they may be taken for granted today, but before this son of Italian immigrants came along, such things didn’t exist. Amadeo Peter Giannini – A.P. to his friends – revolutionized the banking world by focusing on “the little people.” Giannini passed away in 1949 at the age of 79. By that time, the bank he had founded, the Bank of America, had become the largest bank in the world, with $7 billion in assets and more than 525 branches in over 300 American cities. Today, Giannini stands out as one of TIME Magazine’s Builders and Titans of the 20th century – the only banker to make this list of the century’s most 100 important people. 

Giannini was born in 1870 in San Jose, California, to the son of recent immigrants from Genoa, Italy. His father, Luigi, was a farmer who had grown up in Ligure, a small village that today is home to just 500 people. His mother, Virginia Demartini, married Luigi when she was fourteen years old and he was 29. Together, the two decided to leave Italy and head to America in the hopes of making a fortune. With the little money they had collected from relatives, Giannini’s parents rented a house with a few rooms. After six months of renovations, they had transformed it into a functioning inn with over twenty rooms. It was in that inn that the young Giannini was born. 

The family inn continued to grow and eventually became a hotel. Luigi sold it after a few more years and bought a 40-acre plot of land. It seemed that the family was finally living their dreams. That is until one day, when Luigi got into an argument with an employee over a simple one-dollar debt and wound up getting killed. It was a massive blow for the seven year old Giannini, who witnessed the tragic event before his very own eyes. In that instant, his 22 year old mother had become a widow. 

Virginia later remarried to Lorenzo Scatena, who was both a farmer and the owner of a small produce grocery business. She convinced her new husband that produce was more profitable than farming, and so the family moved to San Francisco in 1882 in order to be nearer to the port. When Giannini was 14 years old, he left school and went to work full time for his stepfather. 

For the next five years, Giannini devoted himself to the store. He took on the job of public relations, writing letters to all their potential clients and suppliers and following up in person. When he was 19 years old, Giannini’s stepfather rewarded his hard work by making him a partner in the thriving business. Giannini now owned half of Lorenzo Scatena & Co. It wasn’t until he reached the age of 31 that Giannini decided to get out of the produce business. He made an announcement that he was “retiring”, but few believed he would be gone for very long. Indeed, the next phase of his life was when his real career would begin.

Worth his Weight in Gold: Giannini Takes on the Business of Banking

At the age of 32, after making a handsome profit in produce and having stepped back from the business world, Giannini thought he would have more time to devote to his own interests – reading, traveling and the like. But, fate would have other plans. He quickly began receiving offers from other businesses eager to snap him up, but there was one in particular that caught his attention; the Columbus Savings & Loan Association asked Giannini to join their board of directors.

The Columbus S&L was a modest bank headquartered in the Italian section of North Beach. Giannini decided to accept their offer, in the hopes that the position would allow him to both hold a prestigious title and also to help society. For the next two years, Giannini devoted himself to the bank and things seemed to be progressing smoothly. That is, until he began to encounter difficulties with the association’s other directors. 

Giannini wanted to help hardworking immigrants like his parents, but the Columbus S&L had little interest in extending loans to anyone except businessmen and the already wealthy. In other words, you could only get money if you already had some money. This didn’t make sense to Giannini. However, his pleas to lend to the working class fell on deaf ears. And so, in 1904, Giannini raised $150,000 from his stepfather and ten other friends, and opened the Bank of Italy.

The Bank of Italy was located in a converted saloon right across the street from the Columbus S&L; even the saloon’s bartender was kept on in the role of assistant teller. It might not have been the most professional of ventures – he solicited business door to door at a time when doing so was considered unethical – but that didn’t matter. The Bank of Italy allowed Giannini to fulfill his dream of helping the working class. Within one year, deposits to this ‘bank for the little guy’ were exceeding $700,000. 

By 1906, deposits to the Bank of Italy had surpassed $1 million. Giannini seemed to be on top of the world when disaster struck. On April 18, 1906, San Francisco was hit by one of the largest earthquakes in the city’s history; much of the city was destroyed. Whereas other banks took as long as one month to reopen, Giannini had reopened the Bank of Italy in just six days. He may have been operating from just a plank stretched across two barrels in the street, but for those who needed loans – and now, more than ever – that he was operating was celebration enough. 

Over the next ten years, Giannini would open several other Bank of Italy branches throughout the city. In 1928, he approached the President of the Bank of America, Los Angeles, about a possible merger. When the merger was finalized, Giannini remained chairman of the new institution, but agreed to keep the name Bank of America as it was symbolic of the new bank’s broader mission. 

Under Giannini’s leadership, the new Bank of America quickly became one of the only banks to reach beyond a single city. He founded TransAmerica as a holding company for his widening interests, which even included some overseas banks. TransAmerica was also the controlling shareholder of the Bank of America for a period, until the U.S. Congress stepped in to break it up. 

He may have gained many opponents on his rise to the top for his use of unconventional tactics and his focus on the working class, but even as his monopoly expanded, it was hard to make the case that his actions were against the public interest. Today, as banks continue to diversify the range of services they provide, they are carrying out the legacy that was left behind by Giannini.

Lesson #1: Think Big About the Little Guy

Growing up in the produce store of his stepfather, Giannini was surrounded by farmers, merchants, and other labourers. He got to know them, their businesses, and their business needs, in what proved to be an experience he would not soon forget. In fact, the lives and stories of these workers would come back to haunt him when he first took the job with the Columbus Savings & Loan Association. For, it was during this time that Giannini began to recognize that there were entire groups of people – workers – who were readily denied access to bank loans and credit. 

In the beginning of the nineteenth century, it wasn’t easy to get credit from a bank, especially if you were an immigrant or a worker just trying to make ends meet. Financial institutions rarely gave out loans of less than $200, forcing many immigrants to turn to loan sharks just to be able to pay the bills. When Giannini took the job with Columbus S&L, he didn’t want to be a part of that system. Columbus S&L, however, had other plans. 

Columbus S&L was quite happy working with only the wealthier segment of society. Giannini’s insistence that a banker with any dignity would never refuse credit to anyone simply because they weren’t consolidated didn’t find any sympathy within the association. Remembering his origins, Giannini couldn’t settle for anything less. Immigrants from Italy and elsewhere had come to California, eager to make a living for themselves, but had wound up getting caught between hardship and humiliation. Ignorant of the language and with no assets to their name, they were falling between the cracks.

That was where Giannini came in. He believed that it would be these very immigrants and their children – like him – that would serve as the backbone for the development of California. After struggling to change the policies of Columbus S&L for two years, Giannini finally quit to found his own bank, Bank of Italy. Here, service would be made available in Serbian, Russian, Mexican, Portuguese, Chinese, Greek or any other language Giannini felt necessary to adequately represent and serve his customers. He made it possible for immigrants to send money to their homeland with just a 2 percent tax, versus the 8 percent of regular banks. And, the loans he gave out started at just $25; he based his decisions on the feel of a customer’s hands and the look in their eyes.

On its first day in business, deposits to the Bank of Italy totaled almost $9,000. As word of Giannini’s policies grew, so too did his reputation and along with it a loyal customer base. Giannini had seen his father killed right before his very eyes, and he understood that life was too short not to take risks. With the Bank of Italy, Giannini was taking a huge risk where other banks wouldn’t; he was betting on the working class. In the end, every single one of the loans Giannini personally lent out was paid back in full. His bet had paid off.

Lesson #2: Keeping Your Connections to Customers is Key

The faith and courage with which Giannini gave out loans became something of a legend all throughout the Pacific coast. He made loans on a handshake to anyone who was interested, and he never turned someone away. His moral integrity attracted streams of clients from all over. But, Giannini wouldn’t look at what he did as risky. After all, he was a people person. He knew not only the names and faces of all of his clients, but also all about their families and their financial situations; these people were a part of his family now. 

When the devastating earthquake hit San Francisco on April 18, 1906, it was these personal connections with his clients that would save Giannini’s business. The city was a mess; people were wandering around like zombies in the rubble and smoke left behind from the aftershocks. Giannini could have gone into a state of shock like the rest of the city, but instead, he grabbed an old fruit cart from his stepfather and went directly to the Bank of Italy headquarters to begin transporting its reserves to a safe place. 

Through the dusty streets that were filled with looters eager to take advantage of the damage left in the earthquake’s wake, Giannini and his partners quietly transported all of the Bank’s money and gold to his semi-destroyed house, hiding everything in his fireplace. But, it wasn’t so much the loss of capital that was threatening banks throughout the city. After all, other banks had also been able to salvage some of their reserves.

What made Giannini’s situation unique was that while the other banks were reeling from the loss of their customer account books, Giannini was able to recall all of his customers and the loans he had given out by memory. Other banks were paralyzed for months, unable to find their ground, but Giannini bounced back to business within just six days. He hung out the burned bank sign he had found and placed another sign beside it that read simply: “Loans like before, more than what was given before.” Almost overnight, the Bank of Italy was back in business. 

It was the personal connections Giannini had created with his clients that enabled his business to spring back to life while his competitors floundered. After that event, many of the other banks would never be able to rebound; their customers would withdraw their money and move it into Giannini’s bank. He was the only banker they would trust. 

Giannini was a firm believer that banks should be an active part of communities. Managers should know their customers like neighbours; they should be out and about instead of cooped up in private offices and remaining out of touch with the local pulse. He abhorred the old idea of a banker – one that was aloof, wore expensive clothes, and kept to himself in fancy quarters. No, if a banker was going to succeed, Giannini believed he had to know his customers inside and out.

Lesson #3: Money May Have Much Worth, But It Has Little Value

When Giannini died at the age 79, his total net worth was less than $500,000. That was a lot of money for the time, but nowhere near the amount he could have accumulated had he been money hungry; he wasn’t. “Money itch is a bad thing,” Giannini once said. “I never had that trouble.” 

Giannini could have been a billionaire and, indeed, one of the richest men in the world if he had wanted to. However, Giannini looked upon great wealth with disdain. “I don’t want to become too rich,” he said, “because not one rich person controls richness, but is controlled by it.” Giannini didn’t want to lose touch with the people he was serving. After all, if he wasn’t one of them, how could he ever understand their financial needs? 

When Giannini was first starting up the Bank of Italy and looking for employees who would fit well within his vision, he immediately thought of a teller by the name of Pedrini. The only problem was that Pedrini was working with Columbus S&L at the time. That didn’t stop Giannini. In order to lure Pedrini to his camp, Giannini offered to double his salary. Naturally, Giannini’s partners at the Bank of Italy protested. They didn’t care that Pedrini was supposedly a good worker, courteous with all types of people; they didn’t see the need to pay someone so much money to do a job they presumed someone else could do just as well. In order to ease his partner’s complaints, Giannini offered to give half of his own salary to Pedrini. While this clause was withdrawn soon after Pedrini had lived up to his reputation at the Bank of Italy, it nonetheless demonstrates Giannini’s nonchalant attitude towards wealth. 

On a similar note, Giannini never wanted to be president of the Bank of Italy. He didn’t feel the need for the power or the wealth that accompanied that position, and so he resigned himself to acting as vice president. After the Bank’s first year of operations, he even made his stepfather, Lorenzo Scatena, the vice president. He, of course, stayed on with the bank, but all the while accepting virtually no salary. When Giannini was once given a surprise $1.5 million bonus, he unhesitatingly gave it all to the University of California to fund their research into agricultural technology. 

By 1922, the Bank of Italy had over 60 branches. It was expanding at a rapid rate and realizing unprecedented success. Would that tempt Giannini to keep a larger slice of the pie for himself? Far from it; when the Bank’s board recommended increasing his yearly salary by $50,000, Giannini refused. He had already saved nearly $500,000 and commented that anyone who wanted to have more than half a million dollars should leave their office and head straight to a psychiatrist’s. 

Giannini was no slouch of a businessman. Of course he wanted to make a profit; he just didn’t see the need to pocket that money for himself. It was in maintaining that attitude throughout his entire life that Giannini was able to build both his reputation and his bank into things that people could have faith in.

Lesson #4: Don’t Let Anyone Keep Your Ambitions in Check

When Giannini first came onto the scene, the banking world was a very different one to that which exists today. Most banks were single, stand-alone entities, and had limited capital, which meant that they could only lend out the amount of money they had in reserves. Giannini helped to change all of that by building a large branch network in California, and with a dream of going national, but none of it happened without a fight. 

Today, Giannini is considered to be the father of nationwide banking. It is almost unfathomable to think of any of today’s major banks as operating in one city, and one city alone. But, that was indeed how it worked in Giannini’s time. He had a vision of a bank doing business in all parts of the country, which would make the system strong enough to handle regional crises. He wasn’t able to see that vision become a reality during his own lifetime, but Giannini was able to make significant inroads with state-wide banking, and set the stage for what was to come. 

It was during the Panic of 1907 that Giannini first realized the need for large, nation-wide banks. He had been one of the few bankers who had retained enough gold and currency to meet depositor’s needs, and it served as his wake up call. He then began to understand that it was only big banks, with significant assets, which would be able to protect themselves and their customers in the face of a future panic. 

With that lesson learned, Giannini headed to Canada, where banks had already begun to establish effective branch systems. He wanted to learn from their experience. Upon returning home, Giannini quietly began making moves to expand his bank into other western states, as well as into the insurance industry. However, Giannini’s competitors were not happy with his progress. They argued that branching out in such a way would actually hurt customers. Many of his opponents even took to giving him nicknames such as “Sicilian fruit merchant” to undermine his banking credibility. Despite their best efforts, Giannini’s competitors watched as the Bank of America slowly became one of the largest banks in existence. Racial slurs had done nothing to stop the determined Giannini. In fact, only federal legislation was able to deter his ambitions – for awhile. 

In the early 1930s, Giannini prepared himself to fight one of the biggest battles of his life. A Federal Act had been passed prohibiting banks from operating in more than one state. As a response, Giannini created the holding company TransAmerica Corp. in order to facilitate his nationwide expansion and to help combat these growing legal challenges in doing so. In 1956, just a few years after Giannini’s death, the California State legislature passed the Bank Holding Company Act, which proposed even further limits to bank branches. TransAmerica had to divest itself of all its banking activities, which were diverted into FirstAmerica Corp., while TransAmerica was left with its life insurance operations. 

It might not have been until the 1980s when federal banking legislation was amended to allow the Bank of America to revive Giannini’s dream of expanding its activities nationwide, but Giannini was the one who put the wheels in motion to make it happen. The Bank of America became the first bank in the U.S. to have branches coast to coast, in a model that is applied today throughout the international banking system.

Lesson #5: Branch Out To Build Your Base of Success

Though you might not know it since Giannini never liked to toot his own horn, America’s most beloved banker actually had a significant impact on American culture that was far removed from the world of banking. From cinema to architecture to relief efforts overseas, Giannini devoted much of his resources to causes he felt equally passionate about. It was in doing so that he is today remembered as not just a great banker, but a great supporter of entrepreneurship in all its various forms. 

Much like the Bank of Italy was a risk-taking endeavour, so too was Giannini’s tendency to give loans to out-of-favour industries. In the 1920s, sensing that Hollywood could develop an equally active film scene as was thriving in New York, Giannini committed funds to promoting the local industry. He wasn’t just out to make a profit; Giannini wanted to make films that had important socio-cultural messages behind them. 

Whereas New York bankers were financing films with interest rate as high as 20 percent, Giannini began offering more reasonable rates of 6 percent to support those scripts he felt were deserving. One of the first films Giannini supported was Charlie Chaplin’s “Il Monello.” Within the film’s first six weeks, Giannini had made his money back, and went on to make even greater profits.

He had never been particularly interested in cinema, but much like the immigrants and workers he lent money to through the Bank of Italy, Giannini was willing to take risks for those ventures that he believed in. After Chaplin, Giannini gave a $2 million loan to help finance Walt Disney’s first feature-length film, “Snow White and the Seven Dwarves.” Again, Giannini realized an even greater profit than he ever expected. He went on to finance such Frank Capra films as “Once Upon a Night,” and “Happiness is Coming.” Capra was a Sicilian with whom Giannini felt a bond; that was enough for Giannini to make a deal. Between 1932 and 1952, the Bank of America would finance over 500 films and invest over half a billion dollars. 

When San Francisco was in the depths of the Great Depression, Giannini came across the story of Joseph Strauss, a young architect who had created a design for a glorious Golden Gate Bridge to span the San Francisco Bay. Strauss had been unable to find a financier for the project. After realizing that the bridge could help the city’s people get out of their economic slump, Giannini agreed to give Strauss a $6 million loan. When it was completed in 1937, the Golden Gate Bridge was the largest suspension bridge in the world and helped put the city back on the map. 

During World War II, Giannini came to the defense of many Italian Americans who were being threatened with imprisonment. Following the war, Giannini also worked with Arthur Schlesinger to help speed up the shipment of aid to Italy; the Bank of America would send the amount headed for Italy without any interest. 

Time and again, Giannini was willing to step outside the world of banking and help support those projects he believed would have a positive impact on society. It was in doing so that he expanded his success and the lasting legacy he would leave.

Banking on Success: How Giannini Achieved his Greatest Ambitions

He never dreamed of being a banker when he was a child, but today, there is nary a student of retail banking who does not know the incredible story of this determined entrepreneur. A son of poor immigrants, Giannini helped build the first national system of banks for the ordinary person, all the while fueling California’s economic development and inspiring a new generation of entrepreneurs. What were Giannini’s secrets for success? 

Roots: Giannini came from a family that had uprooted itself from its home country in order to pursue a better life in America, and he never forgot it. He had a vision to create a bank that served the very people he had grown up with – the average worker. By refusing to cow tow to the larger banks, and by being willing to take risks on often nothing more than a handshake, Giannini stayed true to his roots in creating a bank for the little guy. 

Relationships: Whereas most other bankers at the time had little interaction with their customers beyond what was absolutely necessary for business, Giannini made sure that he developed strong connections with all of his customers. Knowing all of their names and situations, he became involved in their struggles for a better future. It was this characteristic of Giannini’s that endeared him to the ordinary worker, and what caused people to travel outside of their own cities just to do business with his bank. 

Priorities: He had grown a small business into the country’s largest bank, but that is not something that would be reflected in his own bank account. From refusing salary bonuses to giving millions of dollars away to charity, Giannini had no interest in pocketing money for himself beyond what was necessary. If profits were a good thing it was only because they could then be reinvested in the business or given back to society. That unique attitude of Giannini’s was what gained him the admiration of all the people he served. 

Drive: At present, the Bank of America has close to 6,000 branches that serve one in four American households. If Giannini were alive today, he would be beaming at the realization of his dream. But, in his time, banks were limited to operations in just one city. It was Giannini who pushed the boundaries for state-wide and nation-wide banking, paving the way for the international banking system active in the world today. 

Diversification: From the Golden Gate Bridge to “Snow White and the Seven Dwarves”, Giannini’s name can today be found behind many of America’s most famous cultural icons. Where other entrepreneurs were afraid to take risks, Giannini got right in the middle and mixed things up. He supported projects he believed in even when he was unsure of the financial outcome. It was in doing so that Giannini succeeded where no others had. 

American Banker Magazine recognizes Giannini as one of the most influential bankers of the twentieth century. Even the U.S. Postal Service issued a postage stamp that bears his portrait. Today, it is not just the working class families that Giannini was willing to give loans to who remember him. Giannini’s impact on the international banking system, the economic development of the U.S., and American culture itself can still be felt the world over.

A.P. Giannini Quotes

Serving the needs of others is the only legitimate business today.

Money itch is a bad thing. I never had that trouble.

I don't want to become too rich because not one rich person controls richness, but is controlled by it.