Making It in America

By John Steele Gordon

When we think of Gilded Age bankers, we tend to think of top-hatted men with impeccable WASP names such as John Pierpont Morgan, James Stillman and George Peabody. And, to be sure, many of them were exactly that. But there is one conspicuous exception: Amadeo Peter Giannini (1870-1949), the founder of Bank of America.

The son of Italian immigrants, Giannini grew up on a 40-acre truck farm outside of San Francisco. His stepfather went to work for a wholesale produce firm and soon showed great talent as a commission broker. After he established his own firm, his stepson left school and went to work for him. He, too, quickly displayed a marked talent for the business. Sensing a rising market in pears, the young Giannini, when he was only 17, bought all the pears for future delivery that he could find and cleared $50,000 in profits when he turned out to be right.

Giannini retired from the wholesale produce business when he was only 31. But when he was asked to handle his father-in-law’s estate, he soon found himself in the banking business. His father-in-law had had a seat on a small bank located in San Francisco’s North Beach area, the city’s “Little Italy,” and Giannini took his seat on the board. But when the other members of the board refused to go after small businesses as clients, he resigned from the board along with five others and founded the Bank of Italy in 1904, its headquarters in what had been a saloon, with $300,000 in capital.

Giannini walked the streets of the neighborhood, talking with recent immigrants in his fluent Italian, and convinced many of them to take their savings from under the mattress and put them in his bank. At the end of the year, the bank had loans outstanding of $174,400 and $138,413 in deposits. A year later, the figures were $883,522 and $703,024.

But on April 18, 1906, the great San Francisco earthquake hit. Knocked out of bed in his suburban San Mateo home, Giannini rushed to North Beach and saw the fires that were sweeping the city heading for the bank. He managed to get hold of two wagons and loaded them with the bank’s furniture, ledgers, and, most important, money. Fearing looters, he piled crates of oranges on top and made his way back to San Mateo.

The next day he found most of North Beach, as well as the bank, in ashes. The governor had declared a banking holiday but Giannini put a desk on the Washington Wharf, announced it as the Bank of Italy’s temporary headquarters, and conspicuously put a sack of gold coins on the desk to advertise the bank’s liquidity.

The next year Giannini, with his sensitive nose for market movements, smelled trouble and began hoarding gold coins. When the crash of 1907 hit that fall, he let it be known that he was ready, willing and able to pay gold to anyone who wanted to withdraw their money. Few, of course, did, and his reputation for sound banking soared. “Mr. Giannini and his Bank of Italy,” reported a local newspaper, “were once again the talk of San Francisco.”

Two years later, California allowed statewide branch banking, and Giannini began expanding rapidly. By 1920, the Bank of Italy was the fourth-largest bank in the state. By 1930, its name changed to the now-familiar Bank of America, it was one of the largest in the country. By the time he died in 1949, Bank of America was the largest privately held bank in the world.