His focus on ordinary
people helped build a financial Goliath
By Sun News Publishing
Monday, March 3, 2008
 |
•
Giannini
Photo: Sun News Publishing |
| |
Amadeo Peter Giannini knew what it was to be a working man,
to get up early morning and come home late at night, bone-weary.
The problem: None of the fellow board members at Columbus
Savings & Loan in San Francisco did.
Giannini (1870-1949) joined the board in 1902 but soon found
himself at loggerheads with the other directors. As a one-time
laborer, Giannini wanted the savings and loan to market services
for ordinary people who were struggling to make something
of their lives. He saw an untapped market.
The other directors, however, were more concerned with the
carriage trade, the traditional and almost exclusive market
for banks. After two years of struggling to have his views
heard, Giannini decided he couldn’t take it anymore
and resigned.
“I’ll start my own banks,” he declared.
He set up a shop almost immediately. His determination led
to the Bank of Italy, later the Bank of America, which at
one time was the largest bank in the world.
“It’s no use … to decide what’s going
to happen unless you have the courage of your convictions,”
he said. “Many a brilliant idea has been lost because
the man who dreamed it lacked the spunk or the spine to put
it across.
“It doesn’t matter if you don’t always hit
the exact bull’s-eye,” he said. “The other
rings in the targets score points, too.”
Giannini was born in San Jose, Calif., the son of immigrants
from Genoa, Italy. When Amadeo was 7, his father died. His
mother remarried, and the family moved to San Francisco.
Amadeo was 12 years old when he went to work in his stepfather’s
produce business. He had to rise in the wee hours of the morning,
well before school, and go to the San Francisco docks to await
shipments. It was far from wasted time, though. He used the
time he waited to think about his future and how he wanted
to approach it.
Even at this young age, Giannini was already developing what
was to become the prevailing philosophy of his business life.
“I decided that a man who wants to reach the top must
keep his record clear,” he said later. “He cannot
do anything of which he is ashamed or that might bob up at
some future time to embarrass him. I also concluded that you
had to set up a mark to shoot at. Decide what you want –
and then go after it, hammer and tongs.”
Although a quick learner, Giannini quit school at 14 to work
full time for his stepfather. He understood that to learn
the ways of business, he needed to get first hand experience
he wasn’t getting in the classroom.
Soon he was travelling up and down the California coast meeting
with farmers. Although young, he knew to succeed he had to
be straightforward with them or they wouldn’t deal with
him. He offered honest deals, good prices and respectful treatment,
and he stood by his word.
His reputation and the company’s business grew. His
stepfather made him a full partner by the time he was 19.
Just a dozen years later, the business had grown enough that
Giannini sold his interest to employees with the intention
of retiring.
However, the following year he joined the board of Columbus
Savings and Loans. When he decided to start his own bank,
Giannini borrowed $150,000 from his stepfather and 10 friends
and opened the first branch of the Bank of Italy. It occupied
a converted saloon across the street from Columbus Savings.
He didn’t think of problems that sprang up as barriers.
He looked at them as inspirations that spurred him on.
“I thrive on obstacles,” he said in 1923, “particularly
obstacles placed in my way by narrow-gauged competitors and
their political friends.”
From the beginning, Giannini showed a willingness to defy
conventional wisdom. While banks at the time considered it
unethical to solicit business, Giannini went door-to-door
to convince prospective depositors of the soundness of his
venture.
“I have always believed that if a business is worthwhile,
it is worth seeking,” he said.
After the 1906 San Francisco earthquake and fire, most banks
remained shut to sort out the damage. Not the Bank of Italy.
It set up shop on a plank placed on two barrels in the North
Beach district and lent money to rebuild based on people’s
signatures and whether they had calluses on their hands –
a sure sign, Giannini thought, that they were willing to work
hard.
“We didn’t lose a dollar,” he said, “and
we gained thousands of new friends.”
Doing good was good business, he discovered.
“At the time of fire, I was trying to make money for
myself,” he said. “But the fire cured me of that.”
He made it his life’s mission to use the power of banking
to help others. In 1921, he opened a women’s banking
department. Though the prevailing wisdom in the industry was
“Never loan money on anything that eats,” he helped
finance California’s dairy, sheep and beef industries.
Under his leadership, the institution became the state’s
largest agricultural lender.
Those innovations helped the Bank of Italy continue to grow.
Giannini begin opening branches, something that was unheard
of at the time. In 1909, a Bank of Italy office opened in
San Jose, and in 1913, he expanded to southern California.
By 1920 he’d opened offices in New York City, making
the Bank of Italy the first to do branch banking across states
lines.
Giannini looked at how quickly his bank was growing and decided
he needed to set up a holding company. In 1928, he formed
TransAmerica Corp. as a holding company for his wide financial
interests and, in the same year, purchased Bank of America,
an old New York lending institution.
“The time to go ahead in business is when the other
fellows aren’t doing much,” he said. He continued
to expand.
As Julie Fenster points out in her book, in the Words of Great
Business Leaders, Giannini’s success didn’t change
his way of doing business.
“Even after bank of America took its rank as world’s
largest bank in 1940, Giannini’s desk remained out in
the open on the main floor,” Fenster wrote. “He
maintained standing orders that anyone – anymore –
could come to see him, from a shareholder with a question
to a fisherman looking for a loan. ”
Giannini believed he ran a tighter ship by being more open
with customers and employees.
“I have found it quite possible to dispense with most
of the trappings which many executive find necessary,”
he said. “Perhaps I do not impress people as much as
I might. But of this I am convinced – I can accomplish
more work without the trappings.”
His approach to problem solving was similar, simple and direct.
He’d concentrate on a problem and then shift his focus
to other concerns for a while before re-examining the original
problem. This, he said, gave him perspective.
“In working out any plan or idea, I use what you might
call the intermittent method, I hit the problem hard, then
leave it for a while, and later come back. This method permits
me to bring to the particular problem amny ideas that come
from mature reflection.” |
