I am a student of economic history, and love seeing the patterns that a study of history reveals.

Amadeo Peter Gianini was born in 1870 in California, the son of Italian immigrants. His first occupation was as a produce dealer for farms in the Santa Clara Valley of California. He found established banks unwilling to take on his or the farmers business. When his father-in-law died, he was persuaded to take his place on the Board of a small bank. His intention was to influence banking from the inside, but after many rows and ructions, he found it impossible to persuade his fellow bankers to change their practices.

He left, and in 1906, founded a small bank, “The Bank of Italy”. His express intention was to lend money to small businesses and the emerging middle class. Up to that time, they had had no access to banking. On April 18, 1906, San Francisco was devastated by an earthquake and fires. His bank building collapsed, but because of his personal intervention that previous night, he still had all of his bank records. Other banks’ records were destroyed, and their bank vaults to hot to open, and they were not lending.

The next morning, Amadeo went to the harbour, and ran his bank from the side of a wharf. Giving every cent of his $ 87,000 capital in loans to small businesses aiming to rebuild the city. He encouraged ships to go north and buy lumber and bring it back to North Beach, for example. Hundreds of people, who had been hoarding their money, saw his skill and confidence, and invested their money with him. This gave him more capital to continue lending. North Beach was rebuilt faster than any other part of the city. And every single one of these loans was later repaid!

By 1918, he had California’s first state wide banking city. Now, smaller branches could borrow from city branches when they hit tough times. Previously, if a small farming community had been hit by a bad harvest, the small local bank would not have been able to lend enough to keep the farmers going for a season. Amadeo’s ambitions went further. He set out to create a national banking system.

But here is where the story diverges from the ambitions of modern bankers. He was not after bigger bonuses for himself (think of John Thain of Merrill Lynch paying himself an $ 83 million bonus in 2007, and in the midst of last year’s crisis spending $ 1.4 million on redecorating his office!). He was not after growing his personal wealth. Amadeo was never worth more than $ 1 million dollars in personal wealth. In the 1940s, when it became clear to him that his personal wealth was growing exponentially, he formed a charitable trust and poured most of his wealth into that.

Amadeo’s focus was on creating opportunities for middle class people and small business to have access to banking and the capital they required to grow their businesses and improve their lives. In the Great Depression, for example, he set up low interest installment credit plans, and helped thousands avoid unscrupulous loan sharks. He finances great ventures, such as the Golden Gate Bridge and Disney’s “Snow White and the 7 Dwarves”, which brought convenience, joy and employment to thousands. He refused to take increases in pay and bonuses.

Amadeo is unlike almost any banker today. He saw himself and his bank primarily as a vehicle for increasing the wealth of the community. He did have shareholders, and they did receive returns. But he never put them ahead of his customers and the needs of society. The reason governments have bailed banks out is because of their “special position” in society and the economic system. Most banks don’t deserve that special position, given the way they’ve been acting recently.

The would probably not have meant much to him, but he has received many posthumous honours. Plazas, schools and streets in california bear his name. The U.S. Postal Service honored Giannini’s contributions to American banking by issuing a postage stamp bearing his portrait, in 1973. TIME magazine named him as one of their Titans and Builders of the 20th century.

Amadeo Gianini provides a wonderful example of what banking can – and should – be.

The little bank he started now trades under a different name. It is now called “The Bank of America”. If only it still followed it’s founder’s passion.

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