Hi, I’m the History Guy, I have a degree
in history and I love history and if you
love history too, this is the channel for
you. You might never have heard of Amadeo
Pietro Giannini but you have likely
benefitted from one of his innovations,
because before AP Giannini much of the
world operated much differently than it
does today.
Born in San Jose California to immigrant
parents in 1870, Giannini left business
college at the age of 15 because he
thought he could do better out in the
real world and he joined his stepfathers
produce business becoming a produce
broker in California's rich Santa Clara
Valley. By the age of 31 he had become so
successful that he was able to sell his
stake in his company to his employees
and retire, he hoped to indulge his
passions for reading and travel. But in
1902 his father-in-law passed away and
left his family an interest in the
Columbus Saving and Loan Society, which
was a small bank in North Beach
California, and so Giannini was asked to
join the bank on its board of directors.
But when he got into banking he was
disappointed, he found out that banks
really only loan money to people who
were already wealthy, and who could
provide collateral. Giannini was
convinced that working-class Americans
could benefit from things like home
loans and auto loans and small business
loans, and while they weren't wealthy and
couldn't provide collateral, he thought
that they were generally trustworthy
people who could be counted upon to
repay their loans. But he was unable to
convince the rest of the board of
directors of this vision, and so in 1904
he resigned from the Board of Directors
and with some investors, started his own
Bank.
He called his new bank the Bank of Italy
and he served those populations that had
been previously ignored by banks, in this
case, largely italian-american
working-class immigrants in San
Francisco's North Beach community. He
offered this population accounts and
loans and he
his loans not so much on the collateral
that they could provide but on his
judgment of their character, and by 1905
his bank had a respectable $700,000 in
deposits. In 1906 the great San Francisco
earthquake hit and much of the city was
leveled in the initial earthquake and
then the fires that came afterwards.
Giannini's Bank, the Bank of Italy which
was housed in a converted saloon
building, took real damage in the
earthquake but before the fires could
come, he loaded all the deposits from the
vault and the bank records in a wagon
and took them out of town to his
residence where they would be safe from
the fire. He did that in a garbage wagon
in order to hide what he was doing, to
deter thieves. That decision to protect
the deposits ended up being monumental.
While larger banks had vaults that would
protect their deposits in the fire, when
a fire burned over one of those vaults
it would be several weeks before it
cooled down enough that you could open
it, and most of their buildings were
destroyed, and so the banks were unable
to open, but the destroyed city was in
desperate need of capital to rebuild, and
because he had protected his deposits
and records Giannini could open up right
away, initially just using two beer
barrels and a plank as a desk, he started
serving his own depositors and making
new loans. Because of the devastation a
lot of things have been destroyed,
including people's records and even
identification, and so many of those
loans Giannini made on nothing but a
handshake and a smile, and yet he was
very proud to say later that every one
of those loans was repaid. And the Bank
of Italy played a major and important
role in helping to rebuild the city of
San Francisco, and at the same time
increased trust in the community in his
bank. And it was largely because his
bank focused on smaller middle-class
depositors, that the Bank of Italy was
able to withstand the 1907 bankers panic
which caused many other banks to close
their doors.
Giannini was a pioneer of branch banking
in America, he saw it as a way to get
closer to the community, to expand the
depositor base, and
to protect banks from instability. He
studied the system that was used in
Canada and so in 1909, when the state of
California changed the law and
authorized the opening of branch banks,
he immediately opened a bank in San Jose.
By 1919 the Bank of Italy was the United
States first statewide branch banking
system with 28 branches in the state of
California. Giannini made his success
serving underserved communities like
immigrant communities and small
businesses.
He believed that money should not set
idle and that it should benefit everyone.
And his efforts not only greatly
impacted growth in the American West, but
banking policy, if for example, you've
ever had a monthly repayable home or
auto loan, then you have AP Giannini to
thank for that innovation. Prior to
Giannini's vision banking in America was
generally a service that was only
offered to the very wealthy. But Giannini
himself was not a fan of great wealth,
his banks were usually owned by the
employees, he often didn't accept a
salary and when he was offered a large
bonus one year of over a million dollars,
he quickly donated it to the University
of California and created the Giannini
foundation of agricultural economics
When he passed away in 1949, he left an
estate of just $500,000 now that was not
a small sum at the time but it was far
less than the millions that he could
have earned had he wanted to. “Money itch, is
a terrible thing” he was quoted as saying,
“I've never had that trouble” Giannini's
actions affected America in so many ways,
for example his bank bought bonds that
allowed the building of the Golden Gate
Bridge.
He made the loan to Walt Disney that
allowed him to make the movie Snow White,
the world's first full-length animated
motion picture. He helped to develop the
California wine industry. In 1939 he made
a loan to two inventors who wanted to
build oscilloscopes, and they used that
money to start a company that originally
sold testing equipment. Their names were
William Hewitt and Dave Packard, and of
course the company today is called
HP.
And Giannini never forgot his Italian
roots, after the Second World War he
arranged loans to help rebuild the
destroyed Fiat factories in Italy and
rebuild that country's economy. AP
Giannini's impact on banking for the
little guy, on economic development in
the West and on international banking
was profound, he is generally recognized
as one of the most influential bankers
and businessman of the 20th century. And
if his character sounds somewhat
familiar, it might be because a director
named Frank Capra based a character
named George Bailey on AP Giannini in
the 1946 film, “It's a Wonderful Life” and
if you're wondering why you've never
heard of this Bank of Italy that might
be because in 1930 Giannini merged with
another bank in Los Angeles with the
goal of creating branches nationwide, and
he decided that the other banks name
more fit the new vision, and so since
1930 the Bank of Italy has been known as
the Bank of America. You might heard that
one, and its founder AP Giannini deserves
to be remembered.
I'm the History Guy and I hope you
enjoyed this edition of my series, 5
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