VISA summary

1. P. Giannini was seven years old when his father, an immigrant and hardworking farmer, was killed over a one-dollar debt. For a while, his mother struggled on her own before remarrying, selling the farm, and heading to San Francisco.

The family owned and operated a produce business which Giannini worked for from a young age. He saw firsthand how hard the farmers worked and how difficult it was for them to get by financially. He also witnessed the way money functioned as a lubricant in society, making everything go round.

As a young man, Giannini saw the good in money – and the bad. At that time, banks were for big businesses and wealthy people. There was no such thing as a bank for everyday people, let alone loans or credit.

By the age of 30, after working for his stepfather’s business all his life, Giannini was a financially secure man. He got married, and upon the death of one of his in-laws, he inherited stewardship over a small, struggling bank.

Having already developed ideas about the need for a banking system for everyday people, Giannini tried to work with the bank and change the minds of the people running it. When he couldn’t, he decided to start his own. On October 17, 1904, he started the Bank of Italy in San Francisco.

This was all happening during an era when the Wright brothers were toying with human flight and Henry Ford was creating the Model T. Giannini felt that pioneering spirit as he spearheaded efforts to give financial power to the people.

In April 1906, an earthquake and fire struck San Francisco. Giannini, seeing the fire heading toward his bank, packed up all the gold and money in the bank into a delivery truck from his stepfather’s produce company, covered it with oranges, and took it to safety. As people struggled in the aftermath, Giannini saw an opportunity for the bank to be in service to the community. He set up a temporary booth and began offering small loans to workers and families to help them rebuild.

Through that experience, he created the installment loan system. Later other forms of small loans would come.

But this was only the beginning. In 1907, a Wall Street–induced financial panic happened with people doing runs on their banks, pulling their money out, and sending the US into financial chaos. Giannini weathered this storm with a unique confidence-building practice. He stacked bars of gold behind the tellers in his bank to give his customers confidence that all was well. As a result, he didn’t experience the same financial problems as other institutions.

But these circumstances had highlighted the need for banking stability. So when Woodrow Wilson, founder of the Federal Reserve System, began speaking out against modern banking flaws a few years later, Giannini was ready to take action. Wilson advocated for a bank branch system. Giannini started one.

His Bank of Italy became a branch banking system that came to be known as the Bank of America.

In 1949, Giannini died having accomplished many great things, but his legacy continued to grow. In the next decade, the demands of managing installment loan banking became too great. The Bank of America watched as several attempts were made to create a charge card, including the Diner’s Club Card started by Frank McNamara, who created it in response to an embarrassing evening when he didn’t have enough cash on him to cover dinner.

The problem with early attempts at developing credit cards was that they were slow and required the user to have enough cash in their accounts. Merchants would wait sometimes longer than a month to receive funds from a charge card transaction. In 1958, the Bank of America solved this problem with the first revolving credit card called the BankAmericard.

As they say, the rest is history. But we’ll get into that in the next section.