The last month and a half has been flooded with two kinds of news ,other than those related to cowid and lock down ..On one side we had Reliance raising about 1 lac crore of rupees through various private placement of equity and on the other we had scores of news of people and smaller companies struggling to stay afloat and how capital is required urgently to tide over the present situation..
Closer to the turn of the century when I used to interact with lot of my friends who had moved to the US for studies and work I was always amazed by their stories of easy credit availability both at a personal and at an organisation level..We will try to understand how Amadeo Giannini the creator of the Bank of America evolved to create the Bank of America and the banking system as we know today and how we might need a similar disruption to overcome the present situation
Before we get into how Amadeo Giannini changed the banking industry it is important to get a feel about the US at the turn of the 20th century..The US then was not the economic and military super power that we have know it as today..It was poorer than several of todays under developed countries ..Amadeo Gianni is among the innovators who helped make the US what it is today..
His first real breakthrough happened after the San Francisco earthquake of 1906 just two years after he had founded the bank..He managed to remove 80,000 dollars in gold from his banks deposit vaults before fire burned down the whole building and the buildings housing most of the other banks..While the other banks pushed for a banking moratorium for the next few months as the banking vaults were too hot to open after the fire,Gianni was open for business the very next day on a make shift desk put up on two barrels ..He offered to lend to business and people in need of money to rebuild their business and lives with only a signature and this spurred the cities redevelopment
The next biggest innovation that Giannini brought about was the establishment of bank branches as we know today..This led to banking facility spreading far and wide and resulted the proper utilisation of capital in the ways that we know of today and made capital available to all
The bank of America founded by Giannini was also instrumental in helping to build some of the biggest corporations that we know of today..The list is numerous but listing below two of the most popular ones
o He helped pull out Disney with a 2 million dollar loan when the creation of the worlds first fully featured animation movie Snow white and the Seven Dwarfs went way above budget
o He provided the initial capital to William Hewlett and David Packard founders of Hewlett Packard one of the biggest corporations of today
While I agree the requirements of today are very different from when Giannnini set out to make banking available for all..But the basic requirement of making capital easily available to all remains the same wheather it is to a multinational or an SME or a migrant worker who has been forced to shift back to his village ..All of them need the required capital at the right time to get things back to what it was.
Whether this happens or not only time will tell.. Watch this space for more