Book Review: A.P. Giannini: The Man With The Midas Touch

My first completed book in 2023. “A.P. Giannini: The Man With The Midas Touch” offers a quick look into the life of A.P. Giannini, the legendary immigrant founder of Bank of America and an all-time great businessman. His work ethic, entrepreneurship and unyielding focus on customers are a great example of founders and companies alike. Below are some of my takeaways:

Short bio

Amadeo Pietro Giannini or A.P. Giannini was born in San Jose in 1870 to Italian immigrants. His father Luigi migrated from Italy to the US, wishing, as many, to find gold and change his life. He returned to Italy to marry Virginia DeMartini, whose brothers worked alongside Luigi in gold mines, and brought her over to the US. The Gianninis bought a farmland in California and started to grow vegetables and fruits for sale. Then, a life-altering tragedy struck. Luigi was killed by an employee over a pay dispute, leaving a 22-year-old Virginia as the lone caretaker of two boys while being pregnant of a third. Virginia married Lorenzo Scatena and relocated to San Francisco. Here, Lorenzo quit his job and launched his own product company named L. Scatena & Company, which would give young A.P. the first opportunity into the business world.

Business Acumen

A.P had an amazing business acumen, strong customer orientation and a nose for opportunity. Even at a young age of 16, he already prioritized strong relationships with farmers over short-term sales. He remembered their names individually, asked questions about their business, delivered timely payments in cash and helped the farmers out if they needed it. During the summer of 1887, believing that there would be a supply crunch for pears, A.P. made arrangements with farmers to buy their crops before everybody else. When the price of pears shot up due to supply shortage, L. Scatena & Company benefited handsomely from A.P’s hunch. A.P became so valuable to his step father’s company that he became a partner at the age of 19.

He promised farmers payment in cash and on time. Pop honored those promises, and the farmers learned that they could expect honesty and integrity from L. Scatena & Company. They also could expect accuracy and attentive customer service. A. P. always remembered the farmers’ names. In fact, he remembered the names of their wives and children. He also remembered dates and prices and quantities. This impressive memory won the confidence of potential customers and convinced many of them to do business with Pop’s firm.

After disagreements with other Board of Directors members at a bank, A.P quit, decided to launch a bank of his own and called it Bank of Italy. A.P wanted his bank to cater to poor immigrants, instead of just the rich, because he believed that if Bank of Italy helped them in difficult times, the good will would make them customers for life. Long-term wins over short-term gains, indeed. One of his first hires was a cashier named Armando Pedrini. Armando learned his cashier craft in Italy, South America and the US, spoke multiple languages and more importantly, treated poor immigrants as he would the people in suits.

Two years after A.P opened his bank, a devastating earthquake hit San Francisco and leveled the city. Knowing that his customers needed money for food, home and their future, he made his bank and money available for loans while other banks stayed closed. A.P. set up a temporary desk at the site of fire near the waterfront. He wanted the people to see him, his gold and the Bank of Italy sign when they came for food and supplies. Word of mouth traveled far and fast as people lined up to get loans from A.P’s bank.

A.P took his wife on vacation to New York. The trip was the first vacation the couple had, but it was also an opportunity for A.P. to learn about the banking world in New York. What he learned was alarming. Talking to people in the industry, A.P. learned that banks in New York had dangerously low levels of gold and would not have enough for mass withdrawals. Customer fear is often contagious. If customers on the East Coast fear that banks don’t have their gold ready to be withdrawn, such anxiety will soon spread to the West Coast. A.P. cut short his trip and promptly worked to boost his own gold reserves. His foresight paid off. In 1907, prices on the New York Stock Exchange dropped, causing worried consumers to lean on gold and try to withdraw it from their banks. Riot broke out when banks did not have enough gold to meet customer demand. Not Bank of Italy, though. A.P. spread the word that his bank had enough gold in hand and even publicly displayed it to assuage customers. Bank of Italy came out of the crisis intact and gained trust from customers.

The book is littered with other stories and anecdotes on A.P’s knack for business. Here are a few:

On November 18, 1909, A. P. opened the doors to his first bank outside of San Francisco. He gained the good will of local customers by rehiring the tellers from Commercial and Savings instead of bringing in outsiders. He appointed local business, community, and ethnic leaders to an advisory board to help guide the bank and bring in new customers. He charged lower interest rates than his competitors. He kept the bank open in the evenings and on Saturdays so it would be convenient for working people to use.

A. P. began by focusing on the banking needs of immigrants as he had done in San Francisco. He wanted working-class people to feel comfortable in his bank. Most banks had marble pillars and fancy ceilings to impress rich customers and scare off any poor ones. Tellers hid behind barred windows to prevent someone from reaching in and stealing the money, and the managers worked in private, locked offices. At Bank of Italy, employees worked in the open where it was easy for customers to see and approach them. The decoration and furnishings were designed to blend in with the neighborhood. Especially in poorer communities, A. P. believed a bank should be simple, sturdy, and orderly.

As usual, Bank of Italy conducted business outside the constraints of conventional wisdom. Times were changing, and A. P. knew it. He believed that women who could vote also would demand greater choice and independence in managing their own money. He saw a great untapped base of customers in this half of the population, and he wanted Bank of Italy to be the first to welcome them at the only bank in the nation run entirely by and for women.

A. P. envisioned attracting women customers on an entirely different scale. With his usual dramatic flair, he selected a prominent and symbolic place to begin. He dedicated an entire upper floor of the bank’s new headquarters in downtown San Francisco as a Women’s Bank. Its sole purpose was to promote the economic independence of women. A. P. set out to create an inviting atmosphere for the customers he wanted. The bank was attractively decorated and filled with flowers. More important, he made sure that the women customers in front of the counter were welcomed by women employees behind it. A. P. appointed a woman to manage the bank.

A. P. had no private office. He had no personal secretary and answered his own phone. He sat at a desk on the open floor, ready to meet with any customer who wanted to see him. With 200,000 depositors, A. P. had built the largest bank west of Chicago, but he did not want his success to alienate the fishermen and dock workers who were his long-time clients.

At a time when most bankers were desperately calling in loans, A. P. was determined to be patient. Many borrowers, both individuals and businesses, were slow to repay their loans during the Great Depression because they did not have the cash. A. P. chose to wait for eventual repayment rather than force borrowers into possible bankruptcy. He believed the economy would improve sooner if people were not forced into desperate actions. He knew, also, that they would feel loyalty to a bank that trusted them. As always, he cultivated long-term customers rather than short-term profits.

For instance, A. P. recognized the great potential of the automobile industry. Automobiles had existed since the 1906 earthquake, when the few available cars had been seized by troops to provide emergency services. After World War II, many people moved to the suburbs where cars were essential for transportation. As cars became more affordable, more people wanted to buy them. A. P. was a pioneer in helping people to pay for expensive purchases. Bank of America offered installment plans that allowed customers to buy cars and other goods—stoves, refrigerators, washing machines, vacuum cleaners—by paying a little each month over time. With low rates and efficient service, the bank attracted many customers. In just a few years, only General Motors would finance more car loans than A. P.’s bank.

As founder of the world’s largest bank, A. P. became one of the most powerful people in the world. However, he had no interest in becoming one of the richest. He studiously avoided personal wealth. “I don’t want to be rich,” he said. “No man actually owns a fortune; it owns him.” A. P. believed that “a lot of people working together can create a lot of wealth for a lot of people. But one man who works selfishly for his own wealth at the expense of others creates nothing worth having. He generates poverty. There’s poverty in his mind, in his heart, and in time it will show up in his pocket.”

Personal tragedy

Having legendary successes in his professional life, A.P. unfortunately endured overwhelming personal losses. As a young child, he saw his own father shot to death. As a man, only three of his eight children lived to adulthood. Both his two surviving sons, Virgil and Mario, had chronic health conditions and died at the age of 38 and 57 respectively. A.P. outlived his wife and all but two of his own children. His daughter Claire died childless, marking the end of the Giannini family.

After reading about A.P.’s success as a founder, many may tempt to envy him. However, would you still want his professional success, knowing what he suffered personally? Granted, in the case of A.P., his personal tragedies didn’t seem to be linked with professional conquers. But that’s not how it works. If you envy, envy the whole deal. That’s probably one of the more effective ways that I know can help quell the thirst of envy.