Banking and Brazilian Warrant.

1924 

The Moreira Salles group began when João Moreira Salles opened a banking section in his store, through which he represented various private banks and carried out small collection operations, withdrawals, and deposits. The credit mechanism for coffee plantations, the country’s main economic activity in the 1920s, was precarious. In the banking sections, customers deposited their earnings, usually from the coffee business, or were provided with the loans and credit they needed to farm the land, obtained by the sections from bank representatives. Most of the time, these banking sections were established in renowned retail stores in the countryside, with owners who were trusted and respected locally, as was the case with João Moreira Salles, in Poços de Caldas. This marked the beginning of an incipient private banking system in the country.

In the same year, Moreira Salles became a partner in the coffee-buying house Castro, Cardoso & Cia., which was renamed Castro, Salles & Cia. As a coffee trader located in one of the country’s main coffee-growing areas, it was natural – as was customary at the time – for Moreira Salles to provide certain financial services to his clients. If a farmer came to him with no cash but needed to purchase agricultural machinery or other inputs, he would make the sale and receive payment when the crop was harvested, plus interest. This and other operations made production viable. Consequently, banking sections soon emerged and were absolutely necessary in the country’s rural area. Correspondents of large private banks, or of Banco do Brasil, served as the only means of contact between these banks and local clients. Financing shifted from the large banks in the capital, which had no branches in the countryside at the time, to the banking sections representing them in the transaction.

At the same time, E. Johnston and Brazillian Warrant (an English company with the Brazilian corporate name Companhia Agrícola Fazendas Paulistas), initially established to offer warehouses to coffee producers and provide cash advances secured by harvest revenues, made a historic acquisition: the purchase of Fazendas do Cambuhy, located in the city of Matão in the state of São Paulo, with an area of 57,000 hectares, around 2.5 million coffee trees and 15,000 head of cattle. That same year, it was considered the largest coffee farm in the world, and at that time it was four times its current size. The sale was made by Nhonhô Magalhães or Dr. Carlos Leôncio de Magalhães, a pioneer from Matão responsible for the establishment of Fazendas do Cambuhy, on November 4, 1924. He received a check for 20,000 contos de reis, the largest check ever paid in Brazilian history. The news was prominently covered in the national and international press, leaving the world perplexed at the gigantic deal.