WHERE ARE TODAY’S A.P. GIANNINIS?

At 5:12 A.M. on April 18, 1906, an earthquake with an estimated magnitude of 7.9 on the Richter scale struck northern California in two waves. A foreshock of 20-25 seconds was followed by a mainshock that lasted 42 seconds. One eyewitness in San Francisco who experienced the disaster first-hand described the scene in her house: “It grew constantly worse, the noise deafening; the crash of dishes, falling pictures, the rattle of the flat tin roof, bookcases being overturned, the piano hurled across the parlor, the groaning and straining of the building itself, broken glass and falling plaster, made such a roar that no one noise could be distinguished.”

As bad as the earthquake was, the epic destruction of San Francisco came later that day because of ruptured water lines and a crippled fire alarm system. A family cooking breakfast at a house in Hayes Valley accidentally touched off a blaze that became known as the “ham and eggs fire.” Unbeknownst to them, their chimney was damaged in the earthquake and when they lit the stove to start cooking, the kitchen and home caught on fire. Firefighters quickly arrived at the scene but unfortunately discovered that the water supply was cut off; the fire quickly became an inferno.

The Hayes Valley fire soon moved east towards City Hall, and Mayor Eugene Schmitz made the hasty decision, suggested by an inexperienced deputy fire chief, that to save the entire city from total ruin, the area around City Hall should be dynamited with guncotton. The thought was that a massive explosion would cause a fire break and contain the blaze. It didn't work. Instead, the dynamite not only razed City Hall, but it also touched off a series of new fires, which then quickly moved up Market Street. A resulting 2000-degree sea of flames raged out of control. Army soldiers from the Presidio continued dynamiting around San Francisco in the vain hope of creating fire breaks; those efforts likely caused 60 more fires. By April 19, 1906, approximately 90% of San Francisco lay in ruins – 522 city blocks, 4 square miles, 2,593 acres, and 28,188 buildings. Fires, not the earthquake, caused 90 % of the destruction. The loss of life was staggering; more than 3,000, and perhaps as many as 6,000 people, perished.

As if the earthquake and fire were not bad enough, San Francisco was overrun by looters and gangs who opportunistically plundered damaged buildings and stores. To restore law and order, Federal troops, the police, and a special force were all authorized by a Mayoral proclamation to shoot and kill any looters on sight.

Out of this mayhem, an unlikely hero emerged named Amadeo P. Giannini. He was the 36-year-old son of Italian immigrants who, two years earlier, co-founded a one-teller bank in North Beach called the Bank of Italy to serve the needs of “unbanked” Italian settlers in San Francisco. On April 18, 1906, as fires spread towards North Beach, Giannini took the $80,000 in gold, silver, and paper money stored on deposit with his bank, and hid it under orange crates in wagons, taking it to his home in San Mateo, safely out of reach from looters and gangs. In the days and weeks after the quake, none of the major banks in San Francisco could open their vaults to take out cash or paper records because the metal vaults were superheated; opening the vaults risked setting off new fires. Meanwhile, Giannini set up a new makeshift bank on a North Beach wharf with a cardboard sign reading: “Bank of Italy: Open For Business.” From that unlikely location, he loaned money to residents, presumably people he knew, “on a handshake.”

You may have heard of Giannini’s upstart bank – since 1930, it’s been called the Bank of America. At the time of his death in 1949, Bank of America had $6 billion in assets and was the largest bank in the world.

Maybe some of the story specifics are glossed over in the history books. Still, Giannini provided an essential service to citizens of San Francisco during one of the most significant disasters of the 20th Century. At the moment of crisis, when other banks scrambled to protect themselves and their businesses, Giannini stepped up to provide essential service to his customers. There’s a lesson there.

Last week, a friend told me about a small family-owned business here in California that had banked with, as (bad) luck would have it, Bank of America for more than 70 years. When the Federal government announced the PPP program in April, a loan program designed to help small businesses, the family business immediately applied to BofA. Weeks went by, paperwork was filed, and the loan application stalled in the giant bureaucracy. Fed up with weeks of never-ending excuses and red tape, the business finally moved its account to a small, regional bank in Sacramento; two days later, their PPP loan was approved and funded.

Not to single out BofA, but there are even more reports of horrific customer service in the midst of the current crisis. Laurence Kotlikoff, an economist at Boston University, writes in Forbes that potentially hundreds of small business owners have been badly mistreated by BofA during this pandemic.

Large corporate customers of big banks, like Bank of America, Chase, Citibank or Wells Fargo, probably received top-notch service during the early days of the PPP program and were likely quickly approved. The little guys, the mom and pop businesses for which the program was intended clearly fared less well. In April, BofA, Wells, JP Morgan Chase, and U.S. Bank were sued in what may become a class-action suit brought by a frozen yogurt shop, law firms, an auto repair company, and a cybersecurity firm.

In California and the rest of the nation, the coronavirus pandemic is arguably more destructive than the Earthquake and Fire of 1906. At least 7,000 people in California have already died, not to mention 130,000+ more people in the rest of the United States. The little banks, the community banks, and the regional banks who know their customers, and who care to go the extra mile to help customers when times are tough like right now, are the ones who deserve to be recognized.

Of course, it's not just the actions of banks we need to scrutinize. It is at moments like these that trust and long-term relationships are earned. It matters, even more, that service providers of every kind should do the right thing right now.

We're still very much in the thick of it.

Pay close attention and remember who treated you well, who did or did not have your back, and who was willing to leave you to fend for yourself when the going got tough.

In the years after 1906, people voted with their feet and beat a path to A.P. Giovanni’s door. Someday the coronavirus pandemic will pass. Let us hope that by then, people remember this moment and vote, again, with their feet.

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