Cold Fury

Harshing your mellow since 9/01

It’s a wonderful life

One of my all-time favorite movies, but I had no idea at all about any of this.

The man was A.P. Giannini who was said to be who Capra modeled the character of George Bailey as well as the bank president in Capra’s 1932 movie, American Madness, after. At the age of 14, Giannini left school and began working with his step father, Lorenzo Scatena, in the produce industry as a produce broker. By the time he was 31, he was able to sell much of his interest in this company to his employees and had planned to retire. However, one year later, he was asked to join the Columbus Savings & Loan Society, which was a small bank in North Beach, California.

Once he joined up, he found that almost nobody at the Savings & Loan, nor other banks, were willing to give loans to anyone but the rich or those owning businesses. At first, Giannini attempted to convince the other directors at the Savings & Loan to start lending to working class citizens, to give them home and auto loans, among other things. He felt that working class citizens, though lacking in assets to guarantee the loan against, were generally honest and would pay back their loans when they could. Further, by loaning them money, it would allow working class citizens to better themselves in ways they would not have been able to do without the money lent to them, such as being able to buy a home or to start a new business. He was never able to convince the other directors to begin lending to the working class.

Not to be dissuaded, he then set out to start his own bank. With $150,000 raised from various friends and family, Giannini founded the Bank of Italy in 1904, which would be a bank specializing in loaning money to the common man. The first Bank of Italy branch was in a converted saloon across the street from the Savings & Loan he had formerly been a member of. The assistant teller at the Bank of Italy was the former bartender of that very saloon.

Mr Martini, a teller at George’s bank? How odd and…UNEXPECTED! Okay, sorry. Onwards.

He then went about educating the working class on what a bank does and how one could help them. He then made a practice of not offering loans based on how much money or equity a person had, but based primarily on how he judged their character. Within a year, Bank of Italy had over $700,000 in deposits from these working class individuals, which is somewhere around $15-$20 million today. By the middle of the 1920s, it had become the third largest bank in the United States.

I’ve always said that in order to get a loan from a bank, you first have to conclusively prove to them that you don’t need one. Much, much more fascinating stuff here, including this:

During his time with Bank of Italy and eventually Bank of America, as it became, he instituted a variety of practices that are standard among nearly all banks today. He also was a key figure in making California what it is today, including: being an integral part of the California wine industry getting started; providing numerous loans to various entities in Hollywood in its early days, by starting the motion-picture loan division, which provided loans to many budding Hollywood groups and individuals including funding Walt Disney’s Snow White, when it had gone $2 million over budget; and funded the United Artists, which was founded by Charlie Chaplin, Douglas Fairbanks, and D.W. Griffith.

He also loaned money to the founders of HP, William Hewlett and David Packard, to start their business. More significantly, he had his bank purchase the necessary bonds to fund the construction of the Golden Gate Bridge. And, of course, the aforementioned integral role in financing much of the rebuilding of San Francisco directly after the earthquake of 1906, among other things.

By 1930, Giannini had retired once again and this time moved to Europe. However, his successor began running the bank like traditional banks of the day, only lending to the wealthy and businesses and the like. Because of this, Giannini came back to the United States and rallied various employees and depositors to him, with them buying shares in the bank until they owned the controlling interest. He eventually accumulated enough shares owned by working class citizens, who backed him, to allow him to regain control of the bank, at which point, he returned it to its former ways of lending to the “little man”. He did not retire again.

Much like the fictitious George Bailey, Giannini kept little for himself through all this. Despite that fact that the bank he started was worth billions at the time of his death, Giannini’s entire estate was valued at only $500,000 when he died at the age of 79 in 1949. He avoided acquiring great wealth as he felt it would cause him to lose touch with the working class. For much of his career, he refused pay for his work and when the board attempted to give him $1.5 million as a bonus one year, he gave it all away to the University of California stating “Money itch is a bad thing. I never had that trouble.”

Turns out his bank was the originator of the VISA card too, and there’s loads more yet. All in all, it’s a truly remarkable story about a truly remarkable man, and a downright riveting read. Don’t miss it, including the “fun facts” that follow the actual article.

(Via Debby Witt)

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1 thought on “It’s a wonderful life

  1. You say:

    He also was a key figure in making California what it is today…

    You mean he’s the GD sumbitch who started the illegal alien invasion which is destroying this country? Damn him to hell where he belongs!

    Or wasn’t that what you meant???

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