On the 13 August 1938 'Terra Magica' (Brazil) revealed her greatest gem when a diamond weighing 726.6 carats was picked up in the gravels of the San Antonio River in the Coromandel district of Minas Gerais, an area that was destined to produce several other large stones. Two prospectors, Joaquim Vanancio Tiago and Manoel Miguel Domingues were the lucky finders. Yet their good fortune alas did not extend very far, because not long after they had sold the diamond to a broker for $56,000, the same man took the stone to the provincial capital, Belo Horizonte, where it was sold for £235,000. The buyer was a merchant named Oswaldo Dantes dos Reis who, in turn, sold the gem to a Dutch syndicate represented by the Dutch Union Bank. By then the diamond had been named 'President Vargas' in honour of the President of Brazil.
While the stone remained in the bank's safety deposit vault Harry Winston learned of its existence through his brokers in Brazil; they advised him of its rare quality and exceptional size. After negotiations by wire and telephone, Mr Winston left for Brazil only to find upon arrival that the diamond had been sent to Amsterdam. He travelled to London then on to Amsterdam where he finally purchased the 'President Vargas'. The stone was shipped to New York by ordinary registered mail at a cost of seventy cents although it had been insured by Lloyds for $750,000.
The 'President Vargas' was a very fine piece of rough without carbon spots, and blue-white in colour except for a faint yellowish tinge on two of its edges. The only other flaw was a slight incipient facture which suggested that in the process of its recovery some tool, perhaps a pickaxe, had struck the stone. The shape of the diamond was unusual, being somewhat flattened and strangely bearing some resemblance to the outline of Brazil. In ultraviolet rays the diamond displayed a beautiful bluish-violet fluorescence.
On account of its unusual formation it was decided to cleave the 'President Vargas'. The grain, after being seen at the top, suddenly disappeared into the stone and did not meet with the grain formation from the opposite direction. Accordingly, a 20-carat piece was sawn from the top before the first cleaving; from this a pear-shape, weighing 10.05 carats, was fashioned. After that, the cleaving grain appeared on a 45 degree angle from the sawing plane. Concerning the cleaving of the diamond into two pieces, one of 150 carats and the other of 550 carats. Harry Winston was quoted as follows:
My chief cleaver was nervous about breaking up the $700,000 diamond, so I did'nt dare tell him in advance when we were going to cut. Then one day I suggested casually that he practise a bit with the steel rod that we use to strike the cleaving wedge. After about twenty minutes, he said the stroke felt just right, so I told him to go ahead. Just as he brought the rod down to strike, it was as though an invisible hand had stopped his arm, for the tap he gave the 'Vargas' wouldn't have dented a cream puff. He was the colour of the stone itself and I yelled, 'Hit it! Hit it!' so he upped again with the rod and came down with the neatest blow I ever saw. The diamond couldn't have fallen apart better and neither could that cleaver. He took one look at the job and passed out cold!
In all, twenty-nine gems were fashioned from the 'President Vargas', nineteen sizeable and ten smaller ones weighing a total of 411.06 carats. They comprised sixteen emerald-cuts, one pear-shape, one marquise and among the lesser gems, ten triangles and one baguette. The name 'President Vargas' has been retained by the largest gem, an emerald-cut weighing 48.26 carats. For a number of years this diamond was owned by Mrs Robert W. Windfohr, of Fort Worth, Texas, who had purchased it in 1944. In 1958 Harry Winston repurchased and recut it to a flawless 44.17 carat stone, selling it again to an undisclosed buyer in 1961. The identities of the other buyers are not known but in 1948 it was reported that the Gaekwar of Baroda had bought one of the 'Vargas' gems.
As a sequel to the discovery of the 'President Vargas' another large diamond, weighing 460 carats, was found on 8 June, 1939, just 2km from the site of the earlier find. A prospector, Ramiro Martines Lemos, found this large brown diamond which was happily named the 'Darcy Vargas' after the wife of the President.