In 2011, while Warren Buffett was famously pondering the world from his bathtub, an idea struck him: Bank of America was struggling and out of favor. Buffett decided to intervene, offering $5 billion in preferred equity to stabilize the bank’s balance sheet. Within 24 hours, the deal was done. The story of Buffett's bathtub epiphany made headlines worldwide, but it wasn’t until later that he revealed the true inspiration behind his swift decision. More than 50 years earlier, Buffett had read Biography of a Bank and developed a deep admiration for A.P. Giannini, the founder of Bank of America.
While most people recognize the name J.P. Morgan, A.P. Giannini arguably had an even greater influence on modern banking. Few individuals have left such a profound mark on an industry. A true visionary, Giannini saw opportunity where others only saw risk, revolutionizing banking by making financial services accessible to the average person, not just the wealthy elite.
After a successful career in fruit wholesaling that made him independently wealthy, Giannini joined the board of a bank following his father-in-law's death. After a clash with the board, he decided to strike out on his own, founding the Bank of Italy. Through a whirlwind of acquisitions, Giannini built an empire of banking operations in California and New York, cleverly navigating regulatory barriers designed to stop him. In doing so, he created the largest branch banking system in the United States, laying the groundwork for what would become Bank of America.
Many of the world’s most successful businesses have thrived by democratizing services that were once reserved for the wealthy. Vanderbilt made steamship travel accessible to the masses, Ford brought cars within reach of everyday consumers, Mars made chocolate a treat for everyone, Southwest revolutionized air travel, IKEA offered stylish furniture at affordable prices, and Zara transformed fashion into something attainable for all. A.P. Giannini did the same for banking, enabling ordinary people to access essential financial services.
Though Biography of a Bank was written over 50 years ago, its lessons remain timeless. It highlights the key characteristics of a great business: a fanatical leader driven by purpose rather than profit, a decentralized model that empowers employees, a culture of profit-sharing and stock ownership, a system where all stakeholders benefit, relentless innovation, and an unwavering focus on the core business. Having recently enjoyed the fascinating stories in A.P. Giannini - Banker for America and Biography of a Bank, I’ve shared some of my favourite excerpts below.
Pivot
“From the beginning, Giannini wanted to achieve big things, first as a commission merchant on the San Francisco waterfront, later as a branch banker, still later as the builder of a nationwide network of banks.”
Democratisation of Banking
“The son of Italian immigrant parents, Giannini left school in 1885, at the age of fifteen, to become a clerk in his stepfather’s produce firm on the San Francisco waterfront. At thirty-four he quit the produce business to open the Bank of Italy in the city’s North Beach district—a ‘people’s bank’ he called it—which catered primarily to working-class Italians.”
“Giannini liked to boast that Bank of Italy was a ‘people’s bank’ whose purpose was to serve the financial needs of those other banks had chosen to ignore.”
“The San Francisco Call praised Giannini ‘for daring to become the world’s first financier to make of banking and investment a huge democratic fraternity.’”
“Seizing on branch banking as a way to grow and prosper, Giannini democratized the banking industry in California, developing with his energy and ambition an extensive network of branches that promoted a more vigorous and productive economy.”
“A. P. Giannini, intended [the bank] to be a bank for the person of moderate means, or, as Mr. Giannini put it, ‘the little fellow.’”
“The majority of the Bank of Italy's early patrons were immigrants who had never been inside a bank before. They had hidden their surplus cash under the mattress. When they borrowed they had usually borrowed from loan sharks at merciless rates. Giannini taught them the advantage of interest-bearing savings accounts. He would loan $25 at bank rates, often with no better security than the calluses on the borrower's hands. Very few San Francisco banks would loan as little as $100, in the belief that such small transactions were more trouble than they were worth.”
Reduced Rates
“Going into the agricultural regions, Giannini accepted farm mortgages at 7 per cent, against the going rate of 8 or more. But that was in character. The Bank of America has constantly labored to protect the small borrower against high rates of interest. It was the first bank to move on a large scale into various lending fields that had once been bonanzas for loan sharks.”
“That the Bank of Italy favored lower rates was no revelation to anyone who had followed its history. ‘You are putting the borrower out of business if you charge 10 or 12 per cent,’ argued Giannini. ‘The man who will fight hard to get cheaper interest rates is one that we want to loan money to, and if he is willing to pay any old price, look out.’”
“To a local newspaperman, Giannini enlarged on the new branch's loan policy. ‘We believe that in having a prosperous surrounding country, the city will prosper and we also think that high rates of interest are ruinous to the farmers. We are here to make good times and ... 7 per cent will be our maximum rate of interest.’”
Niche Market
“Giannini insisted that at least one employee in the branch be fluent in Italian; other branch employees who spoke only English were encouraged to attend evening classes to learn the language of one or more of the other large immigrant groups residing in the area.”
Bank of America Los Angeles 1931 [Source:USC].
“Notwithstanding their great dependence on credit, most farmers found the task of borrowing money from local banks far more difficult—and riskier—than the business of farming itself. Many county banks charged unreasonably high rates of interest—up to 12 percent in remote farm towns, five points higher than the national average. Others tied up the bulk of their money in loans to a few large growers in the community, often for purposes in which the bank’s directors and officers had a piece of the action… The result, as one farmer put it, was that borrowing money from a local bank ‘was like living with a delivery system which was full of rusted plugs and padlocked faucets.’”
“By the early 1920s the Bank of Italy had emerged as an immensely powerful force in the state. A crucial factor was the activity of the bank’s Italian Department.. The department’s corps of handpicked solicitors, or ‘missionaries’ as they were called, all of them Italians, job was to turn every Italian resident of California into a depositor and stockholder in the Bank of Italy.’”
“Other foreign departments grew right along with the Italian— Yugoslavian, Russian, Portuguese, Greek, Mexican, Spanish, Chinese.”
Branch Banking
“Giannini was still the only banker in California who had scattered his branch banking operations in an increasingly powerful interlocking network of local offices far from Bank of Italy’s headquarters in San Francisco. With forty-one branches in some thirty towns and cities and $100 million in deposits, he was far ahead of the competition. Catching up with him would not be easy.”
“The results of Giannini’s efforts were astonishing. Beginning in the spring of 1927 and continuing to the end of the year, he acquired nearly a hundred banks, all of which he then merged with one or another subsidiary corporation he had created for that purpose.”
“By the spring of 1928 Giannini had succeeded in putting together the largest state banking system in California and the second largest in the country, which he would eventually call Bank of America.”
Bank of America, San Mateo Avenue, 1940's.
“Others could also see that California banking should look for its major growth to small deposits, and for its major profits to the retailing of credit to home builders, small units of farm and business enterprise, and consumers. But A. P. — because he sensed both the branch and the savings money opportunities more vividly than anyone else — exploited the relation between them more successfully than anyone else. Only branches could build savings accounts in huge quantities, and only branches could use savings accumulation on such a scale.”
“Why has California been an ideal proving ground for branch banking? Because its productive resources are remarkably diversified.”
“We are convinced that the key to our success is to be found ... in the economic, social and political soundness of branch banking itself.”
“We are rendering a service that could not have been rendered by any individual bank whose business we have acquired nor could it have been rendered by all such banks collectively.”
Competition
“‘For whatever success I have attained,’ Giannini would say toward the end of his life, ‘I give the bulk of the credit to my enemies. They stimulated me. They kept me going. I am thankful to them.’”
“We more than welcome other banking institutions entering the field, for we feel that in competition not only the banks but the public will materially benefit.”
Customer Service
“Giannini always remained the bank’s most energetic booster. He would go to extremes to attract new depositors and to keep them as customers. He did this partly to reaffirm Bank of America’s relentlessly promoted image as a ‘people’s bank’ and partly out of his own fierce competitive urge; there was no such thing as an unimportant customer. ‘When you sell people,’ he was fond of saying, ‘keep them sold.’’
Bank of America Branch, 400 Castro Street.
“To accommodate the busy schedule of local farmers, Giannini took the unprecedented step of keeping his branches open until eight o’clock in the evenings and on weekends. More important was his insistence that employees treat each customer with the same courtesy and consideration that his competitors reserved for their wealthiest clients, no matter how small their deposits. He based his strategy for attracting working-class depositors on personal and high-quality service. ‘The little fellow is the best customer that a bank can have,’ he was fond of telling his branch managers. ‘He starts with you and stays to the end; whereas the big fellow is only with you so long as he can get something out of you, and when he cannot, he is not for you anymore.’”
“One thing that has made the bank popular is the service it gives the public particularly through these longer hours. The people look for it.”
“Giannini’s bank held other attractions for Italians aside from its access to credit. It also functioned as a voluntary social service agency to assist them in nonfinancial matters. On Giannini’s instructions, the department’s missionaries encouraged Italian aliens to become American citizens and arranged for evening classes in local branch offices to prepare them for their naturalization examination. They found jobs for the unemployed, visited the sick, translated official documents into Italian or English, and paid grocery bills for the needy. Occasionally they were called on to settle domestic arguments. Before long the Bank of Italy became almost as well known among California Italians for its social as for its financial services.”
Purpose not Money
“It is our purpose to make a specialty of the interest of the small depositor and borrower. We aim to do all in our power to help in the building up of Los Angeles. We have money to loan at all times to the man who wishes to build on property that he owns. We have no money for speculators. We consider the wage-earner or small business man who deposits his savings regularly, no matter how small the amount may be, to be the most valuable client our bank can have.” A.P. Giannini
“At thirty-one A. P. Giannini had formulated the philosophy concerning the accumulation of personal wealth that he was to carry through life. ‘I don't want to be rich,’ he said. ‘No man actually owns a fortune; it owns him.’
“Somewhat by accident Mr. Giannini became a banker at the age of thirty-four. He did not go into banking for the reason that men customarily go into that or any business — to make money for himself. Giannini was then worth between $200,000 and $300,000. His young family was growing up in suburban San Mateo. Theirs was a roomy, comfortable home, called Seven Oaks, which Giannini had bought for $20,000. That was all the money and all the home Giannini intended that he or his family should ever have.”
“A.P Giannini surrounded himself with none of the trappings of a great and powerful financier.”
“As successful as Giannini was, nothing generated more public comment than his disregard for his own wealth. He saw no point in accumulating money or in surrounding himself with the signs of material success. The home in which he lived until the end of his life was the one he had purchased when he was selling fruits and vegetables on the San Francisco waterfront. The wardrobe of the man whom Fortune would include in its Hall of Fame of America’s ten greatest businessmen consisted of four off-the-rack suits, three pairs of shoes, and a handful of shirts and ties. ‘My hardest job,’ he said on one occasion, ‘was to keep from becoming a millionaire.’ When he died in 1949 at age seventy-nine, he left an estate valued at $489,278. Considering depreciation, that was less than he had been worth before he went into the banking business.’
“One consequence of Bancitaly’s remarkable rise in profits was to make Giannini potentially a very rich man. In 1924, after stepping down as Bank of Italy’s president, Giannini accepted no further salary. At a board meeting in April 1926, however, Bancitaly’s directors voted to compensate him, ‘in lieu of salary . . . and in recognition of his extraordinary services, 5 percent of the corporation’s annual net profits, ‘with a guaranteed minimum of $100,000 a year.’ Since the corporation’s net profits for 1927 were expected to be around $30 million, this meant that Giannini was entitled to receive approximately $1.5 million.
According to several reliable accounts, Giannini, who had not attended the meeting, was ‘visibly annoyed’ when he learned of the board’s action. He made it clear that under no circumstances would he accept the money. ‘I already have half a million dollars,’ he was quoted as telling a group of Bancitaly directors over lunch one day. ‘That’s all any man needs.’
Giannini recommended that Bancitaly’s board of directors donate the money to philanthropy. Specifically, Giannini had in mind the creation of a research institute to improve California agriculture. At a directors’ meeting in late January of 1928, Bancitaly’s board acquiesced in Giannini’s request and voted to donate the $1.5 million to the Berkeley campus at the University of California for the endowment and creation of a school of agricultural research. The purpose of the institute, as stated in the terms of the endowment, was ‘to rehabilitate and assist agriculture in California.’
Giannini himself remained silent about the donation. Pursued by the press, however, he told a reporter for the San Francisco Examiner, ‘I don’t want any more money. If I had all the millions in the world, I couldn’t live better than I do. I enjoy work. What is called high society doesn’t mean anything to me. I’ve always said I would never be a millionaire. Maybe this will convince some of the skeptics that I mean what I say.’”
“… Giannini said, he ‘seemed to be in danger of getting into the millionaire class.’ To prevent that, he had decided to turn over more than half his personal wealth—approximately $500,000 - to establish the Bank of America - Giannini Foundation, a nonprofit corporation whose purpose was to provide educational scholarships for Bank of America employees and to finance scientific research, particularly in the field of medicine. ‘I’ve always vowed I’d never become a millionaire,’ Giannini said.”
Bank of America, San Francisco 1943.
“Despite the enormous success of his bank, Giannini himself had no interest in accumulating money. He repeatedly resisted opportunities to cash in on profitable ventures; nor did he take pleasure from those things that money could buy. In contrast to other powerful businessmen, he collected no valuable art or priceless antiques; he lived quietly and modestly in the suburban enclave of San Mateo, shunning the glamour of San Francisco society. Giannini’s ambitions were fed not by the privileges of wealth but by the exercise of power and the creation of a gigantic bank.”
“The thing that Mr. Giannini is proudest of is the fact that he is a poor man. He has a salary, yes. It's a pretty good salary. But his tastes are simple and he spends very little of it on himself. . . . ‘When I die,’ said Mr. Giannini, ‘the world is going to be surprised at the little estate that I have left. It won't be a million. I have no sympathy for the man who just lives to make money. There may be pleasure in the game for some, but how futile.”
“Giannini believed that, once a bank helpfully concerned itself with the fiscal aspect of the everyday problems of average men and women, there was no limit to that bank's growth in size or in usefulness.”
“Giannini was the quintessential empire builder, a corporate titan whose departure from traditional banking practices not only remolded permanently the American financial system but also connected great numbers of ordinary people in a direct and personal way to one of society’s most essential institutions. Many Americans had long hoped that private enterprise would help build a society offering equal economic opportunity and greater freedom for the many. By providing easy credit to the working class, the Bank of America expanded the boundaries of life for millions. This was A. P. Giannini’s dream, and its realization was no small achievement.”
“‘Giannini was ahead of his time in instinctively grasping the importance of integrating his business activities into the social interests of large numbers of people,’ said the financial columnist Merryle Rukeyser. ‘His concept of banking for the little people was more than a slogan.’ As the son of immigrant Italian parents and a self-made man, Giannini shared with working-class families the folkloric American belief that success was achieved through a few essential elements: hard work, personal merit, and free enterprise. He had an exceptional sense of other people’s hopes and ambitions. He genuinely believed that Bank of America was the bank of the people, the institutional support for those in search of a more productive and materially satisfying life; he saw himself as a social and economic hero, ready to assist ordinary people in enjoying the benefits of the free market system. ‘It has been my aim to distribute as much good as possible,’ he said on one occasion, ‘to make as many people as possible happy.’ Through Bank of America, he had the idea of creating a greatly expanded middle class, making it larger and more accessible to more socially diverse groups of people. More important, he wanted to make this new middle class the foundation of a revitalized democracy. ‘He wanted them to have the more abundant life,’ one close associate would remember, ‘and more than any one man of his time he consciously engineered just that.’”
Promote Ownership and Profit Sharing
“Giannini was one of the very first American businessmen to promote employee ownership and profit sharing. At the time of his death nearly 40 percent of Bank of America’s shares were owned by its employees.”
Bank of America Advert 1955.
“As far back as 1923, Mr. Giannini was turning over in his mind an idea for liberalizing the extra-compensation plan for the bank's working force. ‘It is my wish to leave the control of the bank in the hands of its employees,’ he told the Coast Banker. The following year the new plan was announced. All the features of the old program, such as life insurance and pensions, were retained. In addition provision was made for the acquisition of bank stock. These benefits were open to all employees and to all officers, with the exception of A. P. Giannini.
Under the new arrangement the bank annually set aside 40 per cent of its net earnings as a gift to its workers. How much an individual received depended on his own thrift. What he saved from his salary toward the purchasing of stock the bank matched with a like amount, plus additional contributions computed on the basis of length of service, the employee's pay, and whether he was single or married.”
“[The] plan of employee compensation— over and above normal salaries — is to be used by employees in acquiring an ever-increasing share in the ownership and control of the Bank. Employees are thus put in a position to capitalize their efforts in behalf of the Bank and build themselves up to a position it would otherwise be impossible for them to attain. That in working out this plan stockholders would be benefited has been frankly admitted. That is only fair.”
Value Employees & Reciprocation
“The bank continued to make friends of its employees. It made them feel a partnership in this institution, and savor the excitement of advancing the frontiers of their calling. Christmas bonuses were equal to a half-month's salary. In 1919 a pension system was introduced that was very liberal for its day. Employees could retire at sixty-five provided they had twenty years' service.”
“Hardworking but satisfied employees went a long way toward infecting the bank's patrons with agreeable feelngs. The air of aloofness that Woodrow Wilson had deprecated in banks and bankers was nowhere about a branch of the Bank of Italy. They were bustling, genial places with the friendliness of a country store on Saturdays.”
Innovation
“A. P. Giannini was the greatest innovator in modern banking. The only other to approach his stature was J. P. Morgan, the elder.”
“As early as 1911 Giannini announced that San Francisco’s Board of Education had named Bank of Italy the ‘official’ depository for the savings of school children… each school-age child who opened a ‘one penny account’ in the Bank of Italy was likely to remain a customer for the rest of his or her life.”
Bank of America San Francisco 1943 [Source: Library of Congress].
“By 1921 Giannini was ready to promote the bank’s services among women… Giannini’s ‘Women’s Bank’ opened in June of 1921. Taking up the entire upper floor of the bank’s headquarters, it was equipped with tasteful furnishings, conference rooms, and a staff of twelve female officers and employees. The purpose of the bank, as women were informed through brochures distributed across the state, was to promote their ‘economic independence’ by providing them with the full range of professional banking services.' To assist the uninitiated, the bank conducted free evening classes on business and financial matters.”
“Other kinds of installment borrowing quickly followed Bank of America’s success with its home modernization and FHA loans. In 1936, against the angry and well-organized opposition of finance companies, the bank began offering installment credit to finance the purchase of automobiles. The demand for the loans at far more favorable rates than buyers had been required to pay from finance companies was astonishing. As the San Francisco Examiner explained, ‘When Bank of America announced its policy on automobiles at 6 percent the finance companies all over the nation had to come down off their high horses and make much lower rates.’”
“‘A veritable department-store bank,’ said one East Coast financial writer. “It will finance a new home, lend money to cover the medical expense of the new baby born there, see him through college, discount his business notes, sell him insurance or traveler’s checks when he needs a vacation. When he dies, it will execute his will. It’s a bank that does everything but blow your nose for you.’”
Challenges
“Since 1920, at every turn Giannini had had to fight to keep alive his idea of banking. His victory had been more than a victory for the Bank of Italy. A. P. Giannini and his allies had changed the course of banking in the United States, and changed it for the better.”
“Laws framed for the protection of old-style banking stood in the innovator's path. But Giannini found, by legal means, ways around obstructive regulations and statutes. He was simply ahead of the laws.. over thirty years much of the body of salutary banking legislation and regulation followed the lead of Giannini.”
“Mr. Giannini's slogan all through his career has been 'safety before profit.’ With this philosophy as a guide the Bank of Italy made remarkably few unfortunate boom [time] loans.”
“The Bank of Italy was launched and has had its remarkable record of growth on a policy of conservative yet energetic and enthusiastic optimism. The institution has never known and should never know the word ‘failure’ in any matter, large or small; nor will ‘cold feet’ ever bring it enduring or any sort of success.” A.P. Giannini
Continuous Improvement and Scale
“You have to get big to give the best service. And after that you have to keep building better. You die when you stand still.” A.P Giannini
“In 1927 one of every five Californians of all ages was a depositor in the Bank of Italy. No other banking institution in the United States had even remotely approached this density of patronage — a record to be surpassed only by its successor, the Bank of America.”
Customers as Shareholders
“Missionaries also devoted a considerable part of their time to promoting the sale of Bank of Italy stock. Sell as much Bank of Italy stock as possible. Tens of thousands of Italians eagerly responded.”
Shareholder Speculation
“Giannini appeared genuinely concerned about the tens of thousands of small investors who were borrowing money at ‘usurious rates’ from banks and finance companies to speculate in his stocks. On March 14, 1928, he issued a press release warning investors to pay off their debts and get out of the market: ‘We want them to own their own shares outright,’ he said. ‘We do not want them held as security for loans. We want our stockholders so firmly entrenched that they cannot be forced to sell out at some unfavorable time.’ Two weeks later he sent an open letter to banks and brokerage firms across the country, urging them to refrain from making loans on Bancitaly stock where the obvious intention of borrowers was to use the money to speculate in his stocks. ‘The public is attributing to me miracle working powers which I do not have,’ Giannini said.”
“More than once, after a sharper than usual rise in the market, Mr. Giannini would walk through the floors at No. 1 Powell saying to employees : ‘Our shares are too high. Don't gamble in them. Pay off your debts and sit tight. If you own your stock you have nothing to fear.’”
Bank of America Los Angeles 1931 [Source: USC].
“It is doubtful if corporate history in the United States exhibits a parallel to Giannini's effort to halt speculation in the Giannini stocks, and to get them out of the hands of speculators buying for a rise and into the hands of investors buying for income.”
“In the case of Bancitaly, Giannini went to even greater lengths to keep the price of the stock down. He borrowed from friends 39,000 shares which he sold at $50 a share below the market — that is, for $1,950,000 less than the quoted price. The loss involved was easily double Giannini's personal fortune…. There are not many men in this cynical old world of ours who could come out with a statement to their stockholders saying that they have borrowed shares of stock from stockholders to maintain the price of the securities at a sane level, then ask the holders to waive their rights to a big block of new stock issued and get away with it.”
Focus on the Business Not the Stock Price
“Obsessed as always by his expansionist ambitions, Giannini gave no outward sign that he was seriously concerned over the dizzying collapse that had swept Wall Street. He immediately made it clear to his top executives in San Francisco and New York that he had no intention of allowing anything to interfere with his goal of nationwide banking. ‘You are not to let the recent market slump change our plans. Go ahead with the work as if nothing had happened.’”
“Giannini's eyes were on the constructive work of establishing a transcontinental bank, rather than on the stock ticker.”
Culture
“Giannini was fond of calling Bank of America employees his “boys and girls,” and he demanded total loyalty from them.”
Confederation of Businesses
“By and large, what Giannini had created was a decentralized country bank.”
“Strictly speaking, there was thus no single Bank of Italy but a financial world in itself, complex and comprehensive, exerting enormous influence in the lives of millions of people. From the outside the bank looked monolithic. Inside, however, it was a confederation of banks, each rigorously disciplined and organized, each aggressively tracking down scattered communities of the foreign-born—all designed to reach the greatest number of people.”
Tailwind
“During the first half of the twentieth century, the California economy underwent a remarkable transformation that catapulted the state into one of the fastest-growing regions in the nation. From 1900 to 1950 the population increased more than sevenfold—from 1.5 million to nearly 11 million—making California the nation’s third largest state. New subdivisions, schools, shopping centers, bridges, and highways dotted the landscape from the Oregon state line to the Mexican border. California ranked first in farm production, growing enough in a wide variety of fruits and vegetables to supply the needs of the entire nation. Along with a remarkable increase in agricultural production, there was a corresponding growth in industrial production. The country’s entry in World War II gave a tremendous boost to the state’s industrial base, triggering an enlargement of production not exceeded anywhere else in the country.”
“No one has a larger claim as the architect of these momentous changes than Amadeo Peter Giannini. He was eager to promote Bank of America as a huge, sympathetic source of credit to ordinary Americans and quick to open branches in his relentless effort to increase the bank’s influence.”
“Giannini was also more aware than other bankers of California’s enormous potential for growth. He believed that what economic historians now call human capital —motivation, discipline, personal sacrifice, and the ethic of self-betterment associated with them— was nowhere more apparent than in California. What he saw, as he traveled throughout the state, was an immensely enterprising people and a region of rich and varied resources joined together in the creation of a huge new social and economic powerhouse whose influence would eventually be felt throughout the nation. The economic possibilities, he believed, were limitless.”
“Giannini’s influence over the way banks conducted their business was enormous. Over the years that followed his founding of Bank of Italy in 1904, he financed much of California’s rise to agricultural ascendancy with his liberal loan policy and the far-flung branch banking system he created to sustain it. California’s remarkable industrial development in the twentieth century — manifested in the rise of Kaiser, Bechtel, Douglas, and Lockheed, among many others — benefited significantly from Giannini’s determination to free the state’s aggressive and newly emergent community of industrialists from their dependency on Wall Street.”
No Committees
“Giannini had no patience with committees, organizational flow charts, and the mechanisms of corporate management.”
Walk the Floors
“[Giannini placed his desk] on the open floor of the bank. He avoided the protective environment of a private office and a personal secretary, answered his own phone, and frequently saw as many as one hundred people in a single afternoon on a first-come, first-serve basis. His conversations with them were of necessity rapid-fire and to the point, none lasting more than a few minutes, all held within the hearing of other people. ‘You can’t learn anything from a secretary,’ he once told a visiting reporter from New York. ‘The people who come to see me tell me what’s going on.’”
“A. P. Giannini had his desk in no private room, but in the open on the first floor where everyone entering the bank could see him and talk to him. ‘That's one trouble with bankers,’ he said. ‘They shut themselves off away from people and don't know what's going on. Why a banker should do that I can't imagine.”
“If we would have anything to do with a bank in New York we would see to it that the managing officers, from the President down, were put out in front and in the open where they would come in contact with and greet the people as they would come in or go out of the bank. That is one thing that is lacking in most of the New York banking institutions. We certainly do not want our officers cooped up in an office.”
Business Fanatic
“Giannini as the archetype of the driven businessman. Aside from Sunday dinner with his family, he had no personal life outside the bank. His capacity for work was legendary. His day began at five in the morning and ended, as he liked to say, ‘in sleep.”
“Giannini slept, lived, and breathed the bank, which he referred to as ‘my baby.’ He cared more about the bank than anything else.”
“Giannini prided himself on his incessant work habits, which he defended with one of his frequently repeated aphorisms, ‘Be first in everything.’”
“Giannini was fond of telling people later in life that he had no patience with leisure pursuits or social occasions of any kind.”
“‘My day began early and ended late,’” Giannini would recall years later. ‘In fact, it never ended at all except in sleep. And at night I did my planning for the next day, the next week and the next year; in fact, the next ten years.’”
“To the last month of his life Giannini was as interested in the service his banks rendered to the little fellow as to the corporations. He, personally, would discuss a $50 loan as earnestly and as patiently as he would discuss a $5,000,000 loan. That sort of thing alone, stretched over forty-five years, is enough to make a man remembered. Taken alone it is not enough, however, to create a great bank. Fortunately, in addition to a deep interest in the concerns of ordinary peole, A. P. Giannini had the gift to see horizons for banking that no one else had seen. He had the genius to realize them in the face of obstacles that at times seemed insuperable.”
Hiring and Autonomy
“Giannini surrounded himself with the best talent he could find and drove his executives to the limit. In return, he gave them a free hand in running their departments. ‘Come to me for advice, if that’s what you want, but don’t come to me for a decision,’ he would instruct them. ‘If a decision is involved, bring it with you.’”
“The customers of the branch deal with the local officers, and only in extraordinary circumstances are they brought into contact with the head office departments.”
“One of the secrets of A. P. Giannini's success had been his ability to develop subordinates and give them heavy responsibilities.”
Rotating Staff
“Since the early years of the bank’s remarkable climb to financial power, Giannini had maintained the practice of rotating his top executives out of their positions every five years to make way for others. ‘When a man knows he has a chance to go up the ladder instead of having to wait for the chief to die before he can hope for advancement,’ he liked to say, ‘it stimulates him to concentrate on his job and to achieve something.’”
No Yes-Men and Unconventional
“Giannini delighted in tossing out unconventional ideas in the company of his executives, suspicious of those who seemed overly eager to agree with him. ‘Are you yessing me?’ he would shout in a hoarse voice that some compared to the sound of a howitzer; he would then demand that his supporters explain why they thought he was right.”
“Not many San Francisco bankers noticed the appearance of North Beach’s newest Italian bank. The few who did were scornful of Giannini’s direct solicitation of business. Such practices were thought to be vulgar, unethical, and demeaning to the staid traditions of the banking profession.'° Giannini, however, had no such inhibitions. ‘They thought I was undignified,’ he would remember. ‘I could never figure it out. I always thought that if business was worth having, it was worth going after. How can people know what a bank can do for them unless they’re told?’”
Local Integration
“Giannini retained the services of [acquired banks] former employees; he thus avoided alienating local residents by staffing the branch with unfamiliar faces brought out from San Francisco.”
“Giannini aimed at keeping his banking premises simple and cordial. But he varied them with the neighborhood. For instance, in the heart of great wealth, would be a more elaborate and expensive building than the branch in a strictly working class neighbourhood.”
“To insure a broader distribution of the shares, Giannini liked to have a number on hand to sell locally when the bank went into a new community.”
Maintain Focus
“Giannini said he had succeeded because he had stuck exclusively to his business, which was developing and managing a bank. ‘It's no trick to run any business if a man has the intelligence and industry to concentrate on the job. The great trouble with most men is that they scatter too much. A few men can go into many things and succeed, but they are very few.’
Social Proof
“For the success of auto loans much credit is given the advertising campaign put on by L. E. Townsend, the bank's advertising director until 1952 when he retired. Townsend used newspapers, the radio and billboards to convey the bank's message: ‘Today 266 Cars Will Be Financed by Bank of America’; ‘Every Five Minutes Another Bank of America Financed Car.’”
Mistakes
‘“Giannini could tolerate mistakes, but never lazy or careless mistakes.”
Legacy
“News of Giannini’s death was given prominent coverage in newspapers across the country. The New York Times wrote, ‘The rise of Amadeo P. Giannini made pale the tales of Horatio Alger,’ adding that ‘no one has had a greater influence on the history of California.’ The Los Angeles Times editorialized that Giannini was ‘a man of large ideas and the nerve to experiment with them. Money was not an end for him; it was a means. He saw profit where others saw only risk, and from the standpoint of fiscal result he was usually right. His unorthodox methods have been much criticized, but also much copied. That he changed banking in this state, if not in the nation, can never be denied.’”
“Letters and telegrams of sympathy poured into San Francisco from around the country. Many came from ordinary people whose sentiments gave evidence to their feelings about Giannini as a figure of enormous influence, one whose motives and ambitions had differed significantly from others in the world of high finance. ‘I write so poorly,’ said one typical letter, ‘but it is not often that a great man passes away and still rarer when it is someone like A. P. He is the first big businessman for whom many people will grieve or shed any tears. While I have the greatest respect for Morgan, Vanderbilt, Rockefeller and our authentic big shots, AP was the only one of them who had any sincere interest in the average American or any love for the common people.’"
Summary
A.P. Giannini was the Bank of America. As Peter Keefe noted in a previous post, behind every 10, 100, or 200-bagger is a visionary leader. “These people are artists, focused on building something of great value—not just to accumulate wealth, but to create something meaningful for society.” Giannini was an extraordinary example of such an individual.
His success was driven by purpose, not profit. Giannini had no personal interest in getting rich, famously refusing to take a share of the bank's profits that the board offered him. For him, banking was about empowering the "little fellow" and helping communities thrive.
Corporate culture starts at the top, and Giannini laid a strong foundation. Over fifty years after reading Giannini’s story, Buffett had the chance to invest in the bank—a reminder of the lasting value of continuous learning and the profound impact that visionary leadership has on building enduring businesses.
In your quest for the next multi-bagger, remember that the qualitative characteristics Giannini embodied - from purpose-driven leadership to an unwavering focus on long-term value - are often what shape successful companies and rewarding investments.
Sources:
‘Biography of a Bank - The Story of Bank of America,’ Marquis James and Bessie Rowland James, Harper & Brothers, 1954.
‘A.P. Giannini : Banker of America,’ Felice A. Bonadio, University of California Press, 1994.
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