A P Giannini The People's Banker Read online

  His father came up with a challenging idea, which he was sure would definitively discourage his teenage son and put a stop to his early business aspirations. With his wife’s approval, he offered A.P. a gold watch if he could locate and convince any farmer who was not already a customer of the firm to sell a boxcar of oranges, considered a luxury item at the time. The best growers were located in Southern California, hundreds of miles from San Francisco. He was sure A.P. would not be able to accomplish such a difficult task, almost impossible for a fourteen-year-old boy.

  A few weeks later, A.P. handed Pop not one but two consignment orders for boxcar loads of oranges from the Santa Ana Fruit Company in Tustin, Orange County. He received, as agreed, a gold watch that he cherished for the rest of his life as a memento of a successful transaction and a good omen for the future. In other words, he proved early on to have the Midas touch by literally turning oranges into gold.5

  The pleasure and satisfaction involved in this precious reward was the driving force in his decision in the spring of 1885 to drop out of school, not to shirk educational responsibilities but simply to realize his potential. His grades at school were surprisingly good and his teachers appreciated him and put him on the honors list, often asking him to come to the blackboard to write in front of the whole class.6

  However, his personal temperament, his ingrained love of a challenge, and his own stimulating business-oriented home environment led A.P. inevitably to an early career. Clearly he preferred to focus his intelligence and learning on practical ends. His interests in penmanship and mathematics in class found an immediate application and reward in his everyday life. “I decided school had nothing more to offer me…I wanted to get ahead,” he told an interviewer years later.7 Despite all of Virginia’s hopes for A.P. to get a college education, she had the good sense to understand the deep motivation behind her son’s persistence and accept his irrevocable decision.

  She did manage to convince him to enroll in a three-month course in accounting at the local Heald Business school, which was a regionally accredited business college with multiple campuses in California. The school offered courses in the fields of business, law, and technology. Eager to finish, A.P. took the final exam after only six weeks and passed it. He knew very well what he wanted to do and there was no point in putting it off.

  His stepfather became his role model, his mentor, teacher, and ultimately his future business partner. The reason that A.P. abandoned his formal education at the age of fifteen was because he felt a strong entrepreneurial vocation that he needed to pursue and he had no time to waste. The waterfront of San Francisco was his school and his playground. His formative years buying and selling fruit and vegetables with his stepfather gave him a valuable experience while exposing him to the world of neglected minority workers—which would inform his entire career—and a remarkable power of negotiation and persuasion. He developed an extraordinary self-confidence and charisma, which gained him the respect and trust of farmers and wholesalers.

  With regret, but also with pride, Virginia would now prepare two late dinners just before midnight for the two men of the family who now went to work. If Lorenzo Scatena had responded quickly to the commission business, his new adolescent associate did so even faster. He was gifted with rare insight, exceptional memory, and psychological and commercial intuition. He had an inborn instinct for the laws of supply and demand, a sixth sense for profit or loss in any transaction, as well as a healthy ambition.

  The commission business was a demanding and tricky one. The most valuable elements of this trade were timing and the capacity for quick decisions. A.P. was very young, bursting with ideas and energy. He loved the multilingual and multicultural microcosm of the waterfront, where he would interact with a crowd of farmers and merchants, talk and listen, store and treasure all the information he could collect from men twice or three times his age, often in hard-fought arguments or fierce bidding sessions. His life consisted of arriving on the docks between eleven and midnight to make deals until early the next morning. He would also accept on behalf of L. Scatena & Co. produce on consignment or contracts for future purchases, an entirely original concept. He guaranteed that the firm would pay on time and in cash. The farmers gradually realized they could trust L. Scatena & Co. since the company honored all its promises. What was particularly unique and amazing was A.P’s knack for remembering dates, prices, and names—not only the names of his clients, but also those of their wives and children. His aim was always to keep existing customers satisfied while at the same time trying to attract new ones. Towards the end of 1885 he became the chief salesman for L. Scatena & Co., after accompanying for a period his stepfather on purchasing trips in the Sacramento Valley. Working in that area as a buyer for a San Francisco commission house was no easy job. During those years many leading commission merchants in this sector were hiring salespeople to solicit business in the newly settled interior areas of California. Most of the buyers A.P. was competing with were tough and experienced dealers much older than him.

  A.P. passionately threw himself into this new challenge because he could foresee a host of opportunities to be grasped all around him. His father proved to be right when he sent his stepson out on his own to do a man’s work. A.P. was not afraid and from the very beginning proved successful mainly because he had a unique way of doing business and was especially interested in laying a foundation of trust and good will as well as building relationships that would support his father’s business over time. He was focused, determined, always on the go, either by horse, buggy, or riverboat, working more than eighteen hours a day, often skipping lunch, which he deemed a waste of valuable time.

  He was always one step ahead of his competitors and able to surprise them with his intuitive deal-making. During the next two years, A.P. would broaden the range of his commercial interests to include the fertile agricultural areas of Napa and Saint Joaquin Valley, besides the Santa Clara Valley he had known so well since his childhood, down to the Los Angeles basin. No waterfront merchant had ever ventured much beyond the 200-mile radius of San Francisco to purchase produce directly from farmers but A.P. was always eager to conquer new territory.8 He would travel from one end of California to the other with his eyes wide open, trying to learn more and more about his native land with an insatiable curiosity about the diverse crops, soil and weather conditions, and the hard-working people living there. Both he and the state of California reflected diversity, optimism, talent, and remarkable energy.9

  He would be away from San Francisco for weeks at a time and would visit farms that were so remote that none of his competitors would have ever considered them. He taught farmers across the state the innovative techniques for picking different crops that he had observed during his travels. He took a chance on a farmer trying to establish a grapefruit grove near Los Angeles and imported the fruit to San Francisco well before anybody knew what a grapefruit was.10 He was able to tell a good farmer from a bad one and behave accordingly; he would develop a special feeling and understanding for farmers and their aspirations and dreams. He would buy in large quantities but, at the same time, he would not refuse to deal with odd lots of produce, usually consisting of one or two crates in a total shipment of over three hundred, which would bring some little extra money to hard-pressed farm people and their families.11

  This understanding attitude gained him a lot of acclaim and many friends. He loved to see and taste what the earth produced in California, from the best grapes to apples and every conceivable variety of fruits and vegetable. At the same time he was a born salesman: persuasive, persistent, and always willing to go the extra mile to gain a client. This is exemplified in a famous anecdote: Once, when A.P. saw a competitor on the road heading towards a ranch, he devised a shortcut by swimming across the slough, holding his clothes above his head. By the time his competitor arrived, A.P. had already completed the papers for a successful transaction. A.P. never let anyone take a customer away from him if he could help it. Sal
esmanship of that sort was second nature to him.12

  By the time he was just nineteen years old, his father offered him a one-third partnership in the firm, and at twenty-one he became full partner and was well on his way in the business world. The earnings of L. Scatena & Co. had risen exponentially after A.P. started to work full time; at the end of the first year of collaboration, net profits were $10,000; the following year they were $15,000 and two years later net profits skyrocketed to $100,000.13 Because of A.P.’s talent and efforts in these first few years, the firm was forced to move several times into larger premises, eventually settling at 300 Washington Street, the heart of San Francisco’s produce district. However, the firm’s growth was not enough to satisfy him and he longed for the freedom to work independently and take bigger risks.14 He wanted to prove his intellectual independence and vision.

  In addition to his charisma, A.P. had a commanding physical presence: six feet two-and-a half inches tall, powerfully built with wavy black hair, a neatly trimmed mustache, and piercing dark eyes. He was a talented and fascinating individual who could be charming and gregarious.15 He took pride and care in his appearance, wearing on special occasions a Prince Albert coat, a top hat and gloves, and carrying a gold-tipped cane. He had a stately presence and was certainly not unnoticed by the young women of North Beach. Although he kept a sharp eye on business, he also had keen ambitions in his private life: a successful marriage could benefit both his public and private affairs. In 1891, while attending Mass at the old Spanish church between Mason and Powell streets, A.P. spotted in the choir a pretty young lady, Clorinda Agnes Cuneo, who also happened to be the youngest daughter of Joseph Cuneo, a very wealthy Italian-American in North Beach. Joseph was an immigrant from the Genoa area, who had made a fortune in real estate.16 A.P. immediately “made up his mind he would never marry any other woman” and, as far as we know, she was his first and only love.17

  Clorinda, the youngest of Joseph Cuneo’s fourteen children, was a well-known singer and already engaged to a young doctor from North Beach, who at the time was in Germany doing postgraduate work. They had made plans to marry as soon he returned to San Francisco. A.P. did not consider the fiancé to be a serious problem. He initiated a relentless courtship campaign, taking Clorinda out to picnics, theatrical productions, sending flowers and candy but above all, composing ardent love letters in his impeccable handwriting. Clorinda was not initially convinced but soon became more and more attracted to his magnetic personality and self-assurance. In the end she broke off the engagement and agreed to marry A.P.

  A deliberate six-month courtship to win her affection resulted in their elaborate wedding on September 12, 1892 in Old St Mary’s, their parish church, consecrating a union that was to last for half a century. Later that day, after a reception at Clorinda’s family home in North Beach, the newlyweds left for their two-week honeymoon by train to Carmel, an idyllic retreat along the Monterey Peninsula.18 Once again, A.P. had overcome a challenge and defeated his competitor with the same single-minded intensity that had characterized him in business.19

  The newlyweds moved into a small furnished house close to fashionable Russian Hill and a few months later into a more convenient Victorian-style frame house on Green Street, next to Washington Square, the heart of North Beach, a few steps away from the waterfront that continued to be the center of A.P.’s life. After one year of marriage, Clorinda gave birth to their first son, Amadeo Peter Giannini Jr. Over the next twelve years, four more sons and three daughters, two of whom died in infancy, would complete the family.20

  It is worth pointing out that A.P. was a one-woman man and was first attracted and inspired by Clorinda in a place of worship during a religious function. It reveals perhaps something of his deeply felt Catholic education, inherited from his parents, as well as his strong desire to start a family. The loyalty he showed throughout his life enhanced his personal integrity and a sense of responsibility not only towards his mother, stepfather, and siblings, whom he supported through university, but also towards his life-long sweetheart and their children.

  Interestingly enough, A.P. had previously built his honest reputation in business since adolescence by being fair in setting prices and in dealing with people. Nobody before him—in a city that had a well-deserved reputation for corruption—had loaned money without charging any interest to farmers before their crops had been harvested. These advances were often quite high: tens of thousands of dollars were to be considered as an advance against future delivery of commodities. These loans were always granted exclusively on A.P.’s moral evaluation of the man and his professional worth as a farmer, without his realizing that he was gradually developing an original sort of proto-banking mode based on principles he never betrayed.21 Throughout the 1890s, A.P. took advantage of California’s booming economy without ever neglecting his family. He seemed to be everywhere at once, concentrating his efforts in the orange and grapefruit sectors of the south where the competition was fierce. The wholesale trade in those areas was in the hands of a few local merchants who did not have the farmers’ best interests at heart. They would either refuse to honor their contracts or pay out less money than the crops were worth.

  They were very resentful of A.P.’s interference and tried to discredit him as a foreigner by spreading negative rumors such as that he was a member of the Mafia or even a secret agent of the Pope, thereby fueling their anti-Catholic sentiments. He was never intimidated by their hostility and what he offered the farmers was total dependability and better prices.

  His strategy had almost the precision and the discipline of a military operation. He would choose a target and elaborate a strategy to achieve his objectives. More and more farmers saw the advantages of doing business with the Scatena firm instead of the local wholesalers. A.P. gradually revealed an intense competitive streak and he managed singlehandedly to break small local monopolies with his integrity, spirit of service, and generosity. Instead of keeping farmers in the dark about prices, he would openly and honestly show them the price list for produce in San Francisco. Giannini’s dedication paid off and the farmers soon came to appreciate and trust him.

  New employees were hired, including former competitors who had decided to give up a highly risky, tough business to join L. Scatena & Co., which by 1899 Giannini had turned into the largest commission house in San Francisco with six-figure annual profits. Once there were no competitors left to beat in the field, he reached his goal, and his life became less interesting than in the previous decades. He was open to new ideas and began to look for new ventures. By now he was considered the waterfront’s most successful commission merchant, or as he himself admitted in a later interview, “the king of the San Francisco waterfront.”22 His name had gradually become synonymous with integrity and resourcefulness.

  At that time, San Francisco was reputed to be one of the most corrupt cities in the nation as a result of almost twenty years of boss rule by Blind Chris Buckley, a shrewd Irish saloonkeeper who demanded bribes and payments in exchange for not damaging properties or harming people. In the Forty-Fourth Assembly District, which included North Beach, the influence and power of Boss Buckley and his associates was felt everywhere.

  A.P. firmly believed that San Francisco needed honest leaders willing to introduce reforms. He was very pleased to be recruited by James Phelan, a young, civic-minded, successful businessman who had been elected mayor of San Francisco as a reform Democrat three years earlier. Together they would defy the dominant boss in a “good government” campaign, which would seek support from businessmen and concerned citizens from all over the city. The intent was to increase the power of the mayor’s office and bring back centralized authority and civic efficiency to San Francisco. Giannini joined Phelan because he saw a real opportunity to rid North Beach, by now considered a very dangerous area, of the lethal corrupting political influence of Buckley. As a rule, A.P. devoted his entire time to business, but he had come to understand that politics and business are strictly int
ertwined and since October and November were slow months in the commission business he accepted this diversion and challenge. He was convinced that this particular cause was in the best interests of the whole population of San Francisco. He soon proved to be a skilled and inspired civic leader. He organized a New Charter Democratic Club and for this purpose he rented the upper floor of a three-story building at the intersection of Union and Powell Street to serve as the headquarters of the North Beach “Reform Democrats.” With his organizational abilities, he attracted voters to his office from all over the city.

  Although he had a grasp of the big picture, he also had a fine eye for detail. Together with local leaders he worked out a strategy and arranged for rallies at shipyards and factories. Women could not vote at the time, so the campaign was focused only on men. He made it possible for candidates to meet their voters face to face to discuss important issues. Giannini pragmatically agreed to give speeches about good government in Italian and English and then interact and shake hands with the crowd. He proved able to mobilize a personal following, which deeply irritated and angered Buckley’s forces, who reacted fiercely with open threats of physical violence. As a result, Giannini hired seventy-five horse-drawn wagons with his own money and recruited volunteers with rifles to escort voters to the polls and back home, to patrol the district’s streets, and to guard the polling stations. Many people were unhappy and intimidated by the existing regime; they wanted a change but had been too afraid to go to the polls and vote as they wished.