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By Lee Habeeb and Lee Rizzuto
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Every American knows George Bailey, the fictional character Jimmy Stewart brought to life in Frank Capra’s classic Christmas movie It’s a Wonderful Life. But too few Americans know the real-life American upon whom Capra based the local hero banker—A.P. Giannini, who founded the Bank of Italy, which would become the Bank of America.
Though there’s a long list of heroes and heroines—from Capra to Cabrini to Coppola—worth celebrating as Italian-American Heritage Month comes to a close, the story of this relatively unknown man who forever changed how—and with whom—banks in America do business may be the most impactful of them all.
His improbable ascent in the banking world was not predicated on serving the wealthy elites of San Francisco, but the working-class Italian-American immigrants living in the North Beach neighborhood, and local first-generation Chinese, Mexican and Irish immigrants ignored by banks of the day.
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Amadeo Pietro Giannini—known as A.P.—was born in San Jose, California in 1870, the son of immigrant parents from Genoa, Italy. When he was 7, tragedy struck when his father died in a fight over a dollar. His mother remarried to a teamster who started a produce business. Giannini, believing he could learn more about business working with his stepfather, cut short his formal education at the age of 15. It would prove to be the first of many bold moves by the natural-born entrepreneur.
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By 19, he’d earned his way to a partnership. By 31, after helping turn the company he worked for into the leading produce wholesaler in San Francisco, he sold his stake in the business to his employees.
“He hoped to indulge his passions for reading and travel,” Lance Geiger, host of You Tube’s The History Guy, told Our American Stories. “But in 1902, his father-in-law passed away and left his family an interest in the Columbus Savings and Loan Society—and Giannini was asked to join its board of directors.”
It didn’t take long for Giannini to discover that banks only loaned money to people who were already wealthy and could provide collateral. That didn’t sit well with him. Where his industry saw only risk, Giannini saw opportunity.
“Hard-working immigrants and farmers, the people he knew from his produce business, were being ignored,” Steve Forbes noted. “Giannini tried to persuade the bank to woo these customers, but they weren't interested.”
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Giannini believed working-class Americans could benefit from bank loans.
“While they weren't wealthy and couldn't provide collateral, he thought they were generally trustworthy people who could be counted upon to repay their loans,” Geiger said.
In 1904, Giannini quit the board and started the Bank of Italy, and went about proving the industry wrong—serving populations ignored by his competitors.”
Little did he know that an entire industry was about to be disrupted—and change American life in ways even Giannini himself could not have imagined.
His approach was an immediate success. By 1905, bank deposits had risen to $700,000 and were climbing rapidly. Giannini was on his way to serving the growing working-class population of his city with the credit they deserved.
And then calamity struck. In 1906, the Great San Francisco Earthquake hit, and much of the city was leveled. Fires came afterward and did even more damage.
“The Bank of Italy was housed in a converted saloon building, but before the fires came, he loaded the deposits from the vault and the bank records in a wagon and took them out of town to his residence where they’d be safe,” Geiger explained. “That ended up being a monumental decision. The city was in desperate need of capital to rebuild, and because he’d 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, lots of things had been destroyed, including people's records and even identification. Many of those loans Giannini made on nothing but a handshake and a smile, and he was proud to say later that every one of those loans was repaid.”
Giannini’s trust in his customers helped rebuild San Francisco. His customers returned that trust, fueling a growing customer base – and deep customer loyalty.
Giannini’s focus on serving his customers led to innovations in banking that would change American life for the better: the monthly mortgage and car payment put home and car ownership within reach of America’s working and middle-class families. So too did loans to small businesses ordinarily ignored by banks of the day.
But there was more.
“Giannini was a pioneer of branch banking. He saw it as a way to get closer to the community, to expand the depositor base, and to protect banks from instabilities,” Geiger said. “In 1909, when California authorized branch banks, he immediately opened a bank in San Jose. By 1919, the Bank of Italy was the America’s first statewide branch banking system, with 28 branches in California.”
Any of this would have been enough to establish a banking legacy for the ages. But Gianni’s vision would help finance three industries that powered California’s economy in the 20th century: the technology, movie and wine businesses. And a bridge that may be the most recognizable in the world.
The most promising of the three was the film businesses. It turns out many young filmmakers didn’t qualify for loans using the traditional financial model: the use of film negatives as collateral. Giannini chose instead to use the rights and distribution income of two films that had already been produced as security for future films.
Using that model—still an industry standard—Giannini bankrolled Hollywood classics like The Tramp, Snow White and the Seven Dwarfs and Gone With the Wind, filmmakers like Capra and Chaplin. And studios like United Artists.
Giannini’s vision was most evident with a loan he made 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,” Geiger said. “The names were William Hewlett and Dave Packard, and the company today is called HP.
Perhaps his greatest single financial move involved Giannini’s purchase of the first $6 million worth of bonds in 1932—smack in the middle of the Great Depression—which helped ensure the Golden Gate Bridge’s construction. The iconic bridge still stands as one of America’s finest architectural and aesthetic achievements.
“If you're wondering why you've never heard of this Bank of Italy, it might be because in 1930, Giannini merged with another bank in Los Angeles with the goal of creating branches nationwide,” Geiger said. “And he decided the other bank's name more fit the new vision. So since 1930, the Bank of Italy has been known as the Bank of America.”
Giannini’s is a classic American story, worthy of a film of its own.
“He showed how, in a free market, even the most entrenched, powerful institutions can be successfully challenged by a determined outsider," Forbes said. "The son of struggling immigrants created what was then the biggest bank in the world.”
The banker who cared about everyday Americans didn’t die rich. When he died in 1949, he left an estate worth just $500,000.
“Giannini never wanted to be controlled by wealth,” Forbes added. “He never made more than $50,000 a year. That was by choice. He once said, 'No man owns a fortune. It owns him.'"
And in a city known for housing industry disruptors, Giannini may have been the City by the Bay’s first—and very best.
Lee Rizzuto is the U.S. ambassador to the Organization of American States. He is a former vice president of Conair Corporation.
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