America's Banker: A.P. GIANNINI

Anyone with a bank account owes a debt to a produce seller who refused to say no

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At 32, A.P. was asked to join the board of the Columbus Savings & Loan Society, a modest bank in North Beach, the Italian section of town. Giannini soon found himself at odds with the other directors, who had little interest in extending loans to hardworking immigrants. In those days banks existed mainly to serve businessmen and the wealthy. Giannini tried to convince the board that it would be immensely profitable to lend to the working class, which he knew to be credit worthy.

He was soundly rebuffed. So in 1904 he raised $150,000 from his stepfather and 10 friends and opened the Bank of Italy--in a converted saloon directly across the street from the Columbus S&L. He kept the bartender on as an assistant teller. There he began to exploit his guiding principle: that there was money to made lending to the little guy. He promoted deposits and loans by ringing doorbells and buttonholing people on the street, painstakingly explaining what a bank does. Traditional bankers were aghast. It was considered unethical to solicit banking business.

Giannini also made a career out of lending to out-of-favor industries. He helped the California wine industry get started, then bankrolled Hollywood at a time when the movie industry was anything but proven. In 1923 he created a motion-picture loan division and helped Mary Pickford, Charlie Chaplin, Douglas Fairbanks and D.W. Griffith start United Artists. When Walt Disney ran $2 million over budget on Snow White, Giannini stepped in with a loan.

In 1919 he had organized Bancitaly Corp. as a launching pad for statewide expansion. That was succeeded in 1928 by TransAmerica Corp., a holding company with wide interests in financial services, including some overseas banks. That same year he bought Bank of America in New York, one of the city's oldest lending institutions.

Giannini retired again in 1930 and moved to Europe, convinced that his successor would carry on in his spirit. But during the Great Depression, TransAmerica management switched focus. Feeling betrayed, Giannini returned to retake control. He had always encouraged employees and depositors to become shareholders of the bank. To win a 1932 proxy fight, he knocked on doors again, getting all those working-class shareholders to give him their votes. He then consolidated TransAmerica's California bank holdings under the Bank of America name, which would survive when regulators forced TransAmerica to break up in the '50s, just a few years after A.P.'s death.

When Giannini died at age 79, his estate was worth less than $500,000. It was purely by choice. He could have been a billionaire but disdained great wealth, believing it would make him lose touch with the people he wanted to serve. For years he accepted virtually no pay, and upon being granted a surprise $1.5 million bonus one year promptly gave it all to the University of California. "Money itch is a bad thing," he once said. "I never had that trouble."

Daniel Kadlec writes a column about personal finance and Wall Street for TIME

When Plastic Money Was Born

It seems unthinkable, even archaic — using cash to pay for things! But once upon a time, credit cards didn't exist. Our plastic society owes its existence in part to an evening out gone awry.

One night in 1950, businessman Frank McNamara was wining and dining clients at a swank Manhattan restaurant. When the bill arrived, his jaw dropped: he didn't have enough cash. He phoned his wife, who drove to the rescue.

Out of that faux pas came the idea for Diners Club. Oil companies were already extending credit to customers via plastic. Why not a third-party lender to restaurantgoers? In the first year, McNamara issued 200 cards (at a $5 annual fee), which were accepted at 27 eateries. How things have changed since that first supper!

By the mid-'50s, computing power permitted fast, accurate billing and accounting. In 1958 Bank of America introduced the first widely used bank credit card, BankAmericard, which became Visa. Another entrant that year: American Express. MasterCharge arrived in 1966. Today there are 140 million cardholders in the U.S. They owe more than $500 billion, and they will charge $1 trillion this year.

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