Is It Who You Know? Entrepreneurs and Bankers in Sao Paulo, Brazil, at the Turn of the Twentieth Century

This article examines the trust-producing mechanisms investors and financiers used in São Paulo, Brazil, to determine where to invest their money in the late nineteenth and early twentieth centuries. The coffee boom that began in the 1880s spurred bursts of new domestic business development that transformed São Paulo into Brazil's industrial leader. Using shareholder and director data from an array of business sectors, this article demonstrates that early development (1856-1905) of the institutions that provided business finance was accompanied by highly personal relationships between financier and entrepreneur. By the early twentieth century (1906-1920), rapid economic growth and business diversification rendered these personal connections inadequate and hence less important to business finance. Investors and directors concentrated their energies and their money, abandoning the practice of forming broad connections in general—and connections to a bank in particular—and turned to the stock market instead. By providing an alternative to personal forms of trust production, the rise of impersonal intermediation promoted the significantly broadened market for corporate business formation that underwrote São Paulo's economic transformation.