This article is part of the
History of Brazil Series.
 Colonial Brazil
 Empire of Brazil
 History of Brazil (1889-1930)
 History of Brazil (1930-1964)
 History of Brazil (1964-present)

Table of contents
1 Depression, coffee oligarchs, and the Revolution of 1930
2 The era of Brazilian populism (1930-1964)
3 Related Topics

Depression, coffee oligarchs, and the Revolution of 1930

Global depression and the monocultural economy

If the Great War and the tenente rebellion did not mark the revolutionary breakthrough of Brazil's bourgeois social reformers, the Great Depression did. The near collapse of the coffee industry in 1929-30, linked to the near-breakdown of the world-capitalist system, had serious political and economic consequences, especially for the country's exporters of primary products. The country's vulnerability to the Great Depression had its roots in the country's heavy dependence on foreign markets and loans; despite limited industrial development in São Paulo, coffee and monoculture were still the mainstays of the economy. In fact, the Great Depression possibly had a severer effect on Brazil , typical of other states of the periphery and semi-periphery. Coffee quotations immediately fell 30 percent , and the subsequent decline was even sharper; between 1929 and 1931, coffee prices fell from 22.5 to 8 cents a pound amid great stockpiling. As world trade contracted, the coffee exporters suffered a vast drop in foreign exchange earnings.

The collapse of Brazil's valorization program, a safety net in times of depression, as it was following the Great War, is another factor linked to the collapse of the coffee oligarchy. The coffee planters had grown precariously reliant on government valorization. Plunging world coffee demand was simply insurmountable; the Brazilian government simply could no longer afford to bail out the coffee planters. By the end of 1930, the country's gold reserves had disappeared , pushing the exchange rate down to a new low. Foreign credit evaporated, as Washington Luís' valorization program for warehoused coffee collapsed altogether. The government was left in a deepening balance-of-payments crisis and the coffee growers were struck with an unsellable harvest. Since their power rested on patronage, wide scale defections in their delicate balance of regional interests left the ruling coalition of Washington Luís quite vulnerable.

Government policies designed to favor foreign interests exasperated the crisis as well, leaving the regime on the brink of collapse, alienated from just about every segment of the Brazilian population. Despite capital flight, President Washington Luís clung to a hard-money policy, guaranteeing the convertibility of the Brazilian currency into gold or British sterling. Once the gold and sterling reserves were exhausted amid the collapse of the valorization program, the government was finally forced to suspend convertibility of the currency. The doomed government of Washington Luís aggravated the crisis by attempting to please foreign creditors by maintaining convertibility according to the money principles demanded by the foreign bankers and economists who set the terms for Brazil's relations with the world economy, despite lacking any support from a single major sector in Brazilian society.

The Great Depression would serve to strengthen the demands of the urban bourgeois groups. In that respect, Brazil was ripe for a politician like Getúlio Vargas. A populist governor of Rio Grande do Sul, Brazil's southernmost state, Vargas was a gaúcho (cattle rancher) with a doctorate in law from the most politically influential of Brazil's peripheral states and the 1930 presidential candidate of the Liberal Alliance, whom Prestes would "defeat" in a disputed election earlier that year. Though a wealty landowner, Vargas hailed from a region with a positivist and populist traditionan, and was an economic nationalist who favored inudstrial development and liberal reforms. At the same time, he ostensibly posed little serious threat to the elite coffee gentry, being a landed elite himself. But he was a forward-thinking one, with well-established political networks, more attuned to the interests of the new urban classes. In his early years, Vargas thus relied on the support of the tenentes of the 1922 rebellion.

The collapse of the coffee oligarchy

Aside from the growth of a middle class and the setbacks for the coffee oligarchy, Brazil's historic dynamic of interregional politics was a significant factor precipitating the 1930 Revolution, prompting Vargas' alliance between the new urban sectors and the latifundios. Northeastern sugar barons were simply left with a legacy of longstanding grievances against the agro-capitalists of the South.

Under the Old Republic, the politics of café com leite rested on the domination of the republic's politics by the states of São Paulo and Minas Gerais—largest states in terms of population and the richest. One can illustrate the extent of that domination by noting that the first presidents of the republic were from São Paulo and thereafter succeeded by an alternation between the outgoing governors of the two leading states in the presidency. Meanwhile, the severe drought of 1877 in the Northeast and the ensuing economic collapse—along with the abolition of slavery in the 1880s—propelled the mass labor migration of emancipated slaves and other peasants from Northeast to Southeast, precipitating the decay of established sugar oligarchies of the North. With the concurrent growth of coffee in the Southeast, São Paulo, now emerging as the central state, began to increase in power under the Old Republic (1889-1930). Meanwhile, Northeastern landowners bitterly opposed Washington Luís' discontinuance of the drought projects of his predecessor.

Given the understandable dissatisfaction in the Northeast and Rio Grande do Sul (the leading peripheral states) over this, with the economy of the Northeast in perpetual decline, the astute populist chose as his vice-presidential candidate in 1930 João Pessôsa of the Northeast state of Paraíba, forming the basis of an alliance that would set Brazil on its modern path of uneven development. With the understanding that the dominance of the landowners in the rural areas was to be absolute under any Liberal Alliance government, the Northeastern oligarchies were thus integrated into the Vargas alliance in a subordinate status via a new political party, the PSD. The landed barons of the Northeast were thus ready to join the urban modernizers against a common obstacle: politics of café com leite, now severely destabilized by the Great Depression and decades of social change.

Washington Luís' regime, isolated and unstable, was thus the verge of being toppled with relative facility regardless of official outcome of the election. With the economic power of the coffee oligarchs crippled by the Great Depression, it was time for a political reorganization. So if the refusal to seat opposition deputies from Minas Gerais and Paraíba was not exasperating enough following the customarily rigged election, the politically motivated slaying of Vargas' ex-running mate João Pessoa would be the spark to set off the coup d'état. Insurgents led by the tenentes, backed by planter oligarchies from just about every state other than São Paulo, soon joined army units in seizing a series of state capitals. Crushing the revolt, backed by regional groups like Vargas' fellow gaúchos from Rio Grande do Sul, the sugar barons of the Northeast, urban bourgeois groups, disaffected politicians of the Minas Gerais (Brazil's second leading state), and those of other peripheral states, perhaps would have been an insurmountable endeavor. One week later, on October 24, 1930, Washington Luís peacefully stepped aside, making way for modern Brazil.

The rise of Getúlio Vargas

Behind the façade of Vargas' populism thus lies the intricate nature of his coalition—ever-changing from this point onward. Consequently, these locally dominant regional groups—effectively the gaúchos of Rio Grande do Sul and the sugar barons of the Northeast of the Northeast—themselves ushered the new urban groups into the forefront of Brazilian political life in a revolution from above, tilting the balance of the central government in favor of the Liberal Alliance.

The era of Brazilian populism (1930-1964)

Vargas' interim presidency

While the 1930 Revolution ushered in a coalition favoring protection of Brazilian manufacturers, backed by the bourgeoisie and landed interests, Vargas' intricate coalition under the "provisional government" (1930-34) did not begin adapting fascist-style political and economic policies to any great extent between 1930-34, as Vargas' government did between 1934-1945. Instead, Vargas would follow a path of social reformism to try to reconcile these radically diverging interests. Reflecting the influence of the tenentes, he even advocated a program of social welfare and reform similar to the New Deal, prompting Franklin Roosevelt to proudly refer to him as "one of two people who invented the New Deal."

As a candidate in 1930 Vargas utilized populist rhetoric to promote middle class concerns, thus opposing the primacy— but not the legitimacy — of the paulista coffee oligarchy and the landed elites, who had little interest in protecting and promoting industry. Vargas during this period sought to bring Brazil out of the Great Depression through orthodox policies. Vargas satisfied the demands of the rapidly growing urban bourgeois groups, voiced by the new (to Brazil) mass-ideologies of populism and nationalism. Like Franklin Roosevelt, his first steps focused on economic stimulus—a program on which all factions could agree.

Favoring a state interventionist policy utilizing tax breaks, lowered duties, and import quotas to expand the domestic industrial base, the populist gaúcho linked his pro-middle class policies to nationalism, advocating heavy tariffs to "perfect our manufacturers to the point where it will become unpatriotic to feed or clothe ourselves with imported goods!" In his early years, Vargas also relied on the support of the tenentes. Like Roosevelt and Mussolini—and just about all capitalist leaders during the Great Depression—he also sought to mediate disputes between labor and capital. For instance, the provisional president quelled a paulista female worker's strike by co-opting much of its platform and requiring their "factory commissions" to use government mediation in the future.

However moderate these aims were, mild opposition arose among the powerful paulista coffee oligarchs who had grown accustomed to their domination of Brazilian politics. His tenuous collation also lacked a coherent program, being committed to a broad vision of modernization, but little else more definitive. Having to balance such conflicting ideological constituencies, regionalism, and economic interests in such a vast, diverse, and socio-economically varied nation would, thus, not only explain the sole constancy that marked Vargas' long career — abrupt shifts in alliances and ideologies - but also his eventual dictatorship, modeled surprisingly along the lines of European Fascism, considering the liberal roots of his regime.

By 1934, many shifts were still awaiting Brazil.

Vargas, the sugar Barons, and the northeastern Cangaço

Vargas' appeasement of the landed wing of his coalition would soon reveal the reactionary nature of his government, especially after 1934. To placate friendly agrarian oligarchs, the modernizing state not only left the impoverished domains of the rural oligarchs untouched, the government even helped the sugar barons to cement their control over rural Brazil.

Likely to the detriment of that region's long-term economic development, Vargas' static conservatism on matters of the countryside arguably exasperated the disparities between the impoverished, semi-feudal Northeast and the dynamic, urbanized Southeast to this day. In return for the support of the sugar barons, the state crushed a wave of peasant revolts in the Northeast known as the cangaço, marking the reversal of the drastic but gradual decline of the Northeastern latifundios from the 1870s to the 1930 revolution. Simply put, Northeastern latifundios had been collapsing from within amid inexorable decline and this flaring of peasant revolts. In the more prosperous past during the reign of Dom Pedro II (1831-89), the peasantry under this system remained quite subordinate to the fazendeiros. With each planter retaining his own private militia responsible for the maintenance of law and order within his domain, and with these private militias were even often responsible for kin feuds arose between various dynastic groups, the Northeastern fazendeiros had grown accustomed to their iron grip on the rural countryside.

But the peasantry was not that servile—to the surprise of many accustomed to overlooking Brazil's peripheral regions. Banditry has actually been a common form of peasant protest. Other forms included messianism, anarchic uprisings, and tax evasion—all invasive before 1930. With the Northeastern oligarchies now incorporated into the ruling coalition, the government focused on restructuring agriculture. In reality, the increasingly reactionary state intervened, suppressed the cangacieros, and restored order to the Northeast.

At the expense of the indigent peasantry—85 percent of the workforce —not only did Vargas renege on his promises of land reforms, he denied agricultural workers in general the working class' gains in labor regulations like Mussolini, Hitler, Franco, and Salazar.

Appeasement of landed interests, traditionally the country's dominant forces, would thus require a realignment of his coalition, forcing him to turn against its left-wing. After mid-1932 the influence of the tenente group over Vargas rapidly waned, although individual tenentes of moderate tendency continued to hold important positions in the regime. With the ouster of the center-left tenentes from his coalition, his rightward shift would become increasingly pronounced by 1934.

Toward dictatorship

By 1934 Vargas would develop in response what Thomas E. Skidmore and Peter H. Smith called "a legal hybrid" between the regimes of Mussolini's Italy and Salazar's Portuguese Estado Novo, copied repressive fascist tactics, and conveyed their same rejection of liberal capitalism, but attained power baring few indications of his future quasi-fascist polices.

Changing conditions forced Vargas to eventually abandon the arrangements of the "provisional government" (1930-34), characterized by a path of social reformism that appeared to favor the generally left wing of his revolutionary coalition, the tenentes.

Opposition from the right, however, marked Vargas' earliest moves away from the social reformism of his early years. A conservative insurgency in 1932 was the key turning point. After the July 1932 "constitutionalist" revolt—a veiled attempt by the paulista coffee oligarchs to retake the central government—Vargas tried to recover support of the landed elites, including the coffee growers, in order to establish a new alliance of power. The revolt reacted to Vargas' appointment of João Alberto, a center-left tenente as "interventor" (provisional governor) in place of the elected governor of São Paulo. Elite paulistas loathed Alberto, resenting his centralization efforts and alarmed by the his economic reforms, such as a mere 5 percent wage increase and some minor distribution of some land to participants in the revolution . Amid threats of revolt, Vargas replaced João Alberto with a civilian from São Paulo, appointed a conservative paulista banker as his minister of finance, and announced a date for the holding of a constituent assembly . The coffee oligarchs were only emboldened, launching the counterrevolutionary revolt in July 1932, which collapsed after some minor, lackadaisical combat.

Regardless of the attempted counterrevolution, Vargas was determined to maintain his alliance with the original fazendeiro wing of his coalition and to strengthen his ties with the São Paulo establishment. The result was further concessions, further alienating the left wings of his coalition. The essential compromise was reneging on the promises of land reform made during the campaign of 1930. Vargas also pardoned half the bank debts of the coffee planters, who still had a significant grip on the state's electoral machinery, alleviating the crisis stemming from the collapse of the valorization program. To mollify his old paulista adversaries after their failed revolt, he even ordered the Bank of Brazil to take over the war bonds issued by the rebel government.

As a result of this appeasement, Vargas was increasingly threatened by pro-Communist elements in labor critical of the rural latifundios by 1934, who sought an alliance with the countries peasant majority by backing land reform. Despite the populist rhetoric of the "father of the poor", the gaúcho was ushered Vargas into power by planter oligarchies of peripheral regions amid a revolution from above, and was thus in no position to truly meet substantive popular demands. By 1934, armed with a new constitution drafted with extensive influence from European fascist models, Vargas began reining in even moderate trade unions and turning against the tenentes. His further concessions to the latifundios pushed him toward an alliance with the Integralists, Brazil's mobilized fascist movement. Following the end of the provisional presidency, the reactionary nature Vargas' regime between 1934 and 1945—characterized by the co-optation of Brazilian unions through state-run, sham syndicates, suppression of opposition (particularly) leftist opposition is thus was strongly becoming evident.

Despite the populist rhetoric of the "father of the poor", the gaúcho was essentially ushered into by planter oligarchies of peripheral regions amid a revolution from above, and was thus in no position to truly meet substantive popular demands.

As a result of this appeasement of the rural fazendeiros, Vargas was increasingly threatened by pro-Communist elements in labor critical of the latifundios by 1934 who were actually serious in their demands for land reform. Though eventually crushed by fascist-style force, it was quite astute for labor at the time to attempt to forge and alliance between Brazil's relatively small urban proletariat with the peasantry—who accounted for the vast majority of the population.

Vargas, the Integralists, and the suppression of the communist movement

Aside from these recent political disputes, long-term trends suggest an atmosphere in São Paulo conducive to ideological extremism. The rapidly changing and industrializing Southeast, and the seething class conflict underlying this change, had been brewing an atmosphere conducive to the growth of European-style mass-movements; Brazil's Communist Party was established in 1922 and the postwar period witnessed the rise of the country's first waves of general strikes waged by viable trade unions. The Great Depression obviously intensified their strength.

The same Great Depression that had ushered Vargas into power in a wave of disillusionment with the laissez-faire orthodoxies of the time also managed to rejuvenate the left and calls for social reforms. The Brazilian left, always powerful—but rarely in power (ousted President João Goulart in the 1960s and now Lula da Silva are the exceptions)—has benefited from the nation's socio-economic contradictions—infamous for perhaps the world's most appalling disparity in social class correlated in terms of both race and region. With the challenges of the reactionary Paulista Revolt out of the way, and the mass-mobilization of a potential new enemy—the urban proletariat—looming, Vargas grew more concerned with imposing a paternalistic tutelage over the working class, functioning to both control them and co-opt them. Vargas' elite backers in both urban and rural Brazil, like those that prompted Hindenburg and Victor Emmanuel III to lay the groundwork for fascism in their respective countries, would begin to view labor, larger and better organized than directly after the First World War, as an ominous threat to established interests.

Vargas could unite with all sectors of the landed elites, however, to control the urban proletariat and the peasantry. With the cangaço thoroughly repressed in the Northeast, all segments of the elite—the new bourgeoisie and the landed oligarchs—shifted their well-founded fears toward the trade unionism and socialist sentiments of the burgeoning, often immigrant, urban proletariat from the more European (in terms of population, culture, ideology, and level of industrial development) and more urbanized Southeast. In 1934, following the disintegration of Vargas' delicate alliance with labor, Brazil entered "one of the most agitated periods in its political history." According to Skidmore and Smith, Brazil's major cities began to resemble the Nazi-Communist battles in Berlin of 1932-33. By mid-1935 Brazilian politics had been drastically destabilized.

Luís Carlos Prestes

Vargas' attention focused on the rise of two nationally based and highly ideological European-style movements, both committed to European-style mass-mobilization: one pro-Communist and the other pro-fascist—one linked to Moscow and the other to Rome and Berlin. The mass-movement intimidating Vargas was the Aliança Nacional Libertadora (ANL), a leftwing popular front launched in 1935 of socialists, communists, and other progressives led by the Communist Party and Luís Carlos Prestes, known as "cavalier of hope" of the tenente rebellion (though not a Marxist at the time). A revolutionary forerunner of Che Guevara, Prestes led the legendary but futile "Long March" through the rural Brazilian interior following his participation in the failed 1922 tenente rebellion against the coffee oligarchs. This experience, however, left Prestes, who only died as recently as the 1990s, and some of his comrades skeptical of armed conflict for the rest of his life. As an interesting aside, Prestes' well-cultivated skepticism would later help precipitate the 1960s permanent schism between hard-line militant Maoists and orthodox Marxist-Leninists in the Brazilian Communist Party.

Plínio Salgado

With center-left tenentes out of the coalition and the left crushed, Vargas turned to the only mobilized base of support on the right, elated by the atrocious, fascist-style crackdown against the ANL. As his coalition moved to the right after 1934, Vargas' ideological character and association with a global ideological orbit, however, remained ambiguous—reminiscent of the early phases of leftist leaders Fidel Castro and Daniel Ortega—other leaders who reacted to Latin America's development with imported ideologies. Integralism, claiming a rapidly growing membership throughout Brazil by 1935, especially among the approximately one million Brazilians of German descent, began filling this ideological void. Founded and led by Plínio Salgado in late 1932, a minor literary figure, who adapted Fascist and Nazi symbolism and salutes and wore a square mustache like Hitler, Integralism had all the outlandish superficial trappings of European fascism. With a green-shirted paramilitary organization with uniformed ranks, highly regimented street demonstrations, and aggressive rhetoric directly financed in part by the Italian embassy , the Integralists borrowed their propaganda campaigns directly from Nazi materials —including the usual traditionalist excoriations of Marxism, liberalism, and Jews and espousals of fanatical nationalism (out of context in the heterogeneous and tolerant nation) and "Christian virtues." Like the European fascists, they were essentially petit bourgeois. In particular, they drew support from military officers, especially in the navy.

Class conflict, corporatism, and economic development

The strong parallels between the political economy of Vargas and the European police states thus began to appear by 1934, when a new constitution was enacted with direct fascist influence. After 1934, fascist-style programs would serve two important aims: stimulating industrial growth (under the guise of nationalism) and suppressing the working class. Passed on July 16, the Vargas government claimed that the corporatist provisions of the constitution of 1934 would unite all classes in mutual interests—its stated purpose in Fascist Italy. Actually, this propaganda point had somewhat of a basis in reality. In practice, this meant decimating organized labor and co-opting the working class. Of course, the advance of industry and urbanization, enlarged and strengthened the ranks of urban laborers, presenting the need to draw them into some sort of alliance committed to the capitalist modernization of Brazil. Vargas, and later Juan Perón in neighboring Argentina, another quasi-fascist, emulated Mussolini's strategy of consolidating power mediating class disputes and co-opting workers' demands under the banner of nationalism.

The constitution established a new Chamber of Deputies that placed government authority over the private economy, which established a system of state-guided capitalism aimed at industrialization and reducing foreign dependency. These provisions essentially designated corporate representatives according to class and profession, organizing industries into state syndicates, but generally maintained private ownership of Brazilian-owned businesses.

The 1934-37 constitution, and especially the Estado Novo afterwards, heightened efforts to centralize authority in Rio de Janeiro and drastically limit provincial autonomy in the traditionally devolved, sprawling nation—a parallel to fascist-style centralization of the national regime. This was its more progressive role, seeking to consolidate the 1930 revolution, displacing the institutional power of the paulista coffee oligarchs with a centralist policy that respected local agro-exporting interests, but created the necessary urban economic base for the new urban sectors . The modernizing legacy is firmly evident, state government was to be rationalized and regularized, freed from the grips of coronelismo.

The constitution of 1934 thus established a more direct mechanism for the federal executive to control the economy, pursing a policy of planning and direct investment for the creation of important industrial complexes. State and mixed public-private companies dominated heavy and infrastructure industries and private Brazilian capital predominated in manufacturing, but the 1930s also saw a significant growth of direct foreign investment as foreign corporations sought to enlarge their share of the internal market and overcome tariff barriers and exchange problems by establishing branch plants in Brazil. The state thus emphasized the basic sectors of the economy, facing the difficult task of forging a viable capital base for future growth in the first place , including mining, oil, steel, electric power, and chemicals.

The Estado Novo (New State)

Like the European fascists, Vargas also utilized fears over Communism to justify personal dictatorship. The fascist Estado Novo dictatorship, modeled after Salazar's nominally neutral, quasi-fascist Estado Nôvo in Brazil's mother country, finally materialized in 1937, when Vargas was supposed to step down from the presidency by January 1938 because his own 1934 constitution prohibited the president from succeeding himself. On September 29, 1937, Gen. Dutra presented "the Cohen Plan" (note the Jewish surname) that established a detailed plan for a Communist revolution. The Cohen Plan was a mere forgery concocted by the Integralists, but Vargas exploited it to have Dutra publicly demand "a state of siege" in a chain of events redolent of the Reichstag fire, which Hitler presented as a Communist conspiracy to justify a dictatorship. On November 10, Vargas, ruling by decree, then made a broadcast in which he stated his plans to assume dictatorial powers under the second new constitution of his regime derived from European fascist models , thereby curtailing presidential elections (his ultimate objections) and dissolving congress. Note the fact that Vargas, like Hitler in the Weimar Republic and Mussolini in the postwar Kingdom of Italy, joined the ranks of totalitarian dictatorship, the ranks of Mussolini, Hitler, Franco, and Salazar, in a gradual process within the established political system, not in a single coup d'état or revolution.

Although avowedly totalitarian, the Estado Novo was more similar to Italy's "imperfect totalitarianism", which never reached the rigidity of Nazi Germany. Vargas, like Mussolini, abolished opposition political parties, imposed rigid censorship, established a centralized police force, and filled prisons with political dissidents, while evoking a sense of nationalism that transcended class and bound the masses to the state.

Although his 1938 ban of paramilitary groups also entailed the suspension of the Fascist Integralists, who threatened his personal power, his political and economic policies nevertheless bore extensive similarities to those of Mussolini. Vargas banned strikes and striped workers of the right to organize independent of government-run unions. Vargas, like Mussolini, sought broad power by positioning the state as a mediator between the classes, when, for instance, he set wages and hours for industrial workers, while excluding agricultural workers from such protection, just as Mussolini appealed to the urban proletariat, but disregarded the peasantry. His industrialization policy through central planning under private ownership was another similarity, which demonstrated corporatist rejection of laissez-faire to impose a more orderly capitalism.

The Estado Novo and industrialization

Under the Estado Novo, the state announced an ambitious Five-Year Plan whose goals included the expansion of heavy industry, the creation of new sources of hydroelectric power, and the expansion of the railway network, again, to develop Brazil's capital base. Empirical data can confirm that Vargas was advancing the bourgeois revolution, at least to an extent. By 1940 Brazil's capacity for electricity generation reached 1 million kilowatts, of which 60 percent was located in the Sao Paulo area, primarily due to the construction of hydroelectric power stations. Cement production increased from 87,000 tons in 1930 to 700,000 tons in 1940. Iron and steel output went from 90,000 tons in 1929 to 150,000 tons in 1939. The number of manufacturing enterprises more than doubled during the decade, reaching 50,000 by 1940. Factories in the São Paulo area employed 35 percent of the industrial labor force and generated 43 percent of the value of industrial production. Aside from the export of textiles, the manufacturing industries served the domestic market almost exclusively.

By 1941, Brazil had 44,100 plants employing 944,000 workers; the comparable figure for 1920 was 13,336 plants with about 300,000 workers. In 1942 the government established the Companhia Vale do Rio Doce to exploit the rich iron-ore deposits of Itabira; in 1944 it created a company for the production of materials needed by the chemical industry; and in 1946 the National Motor Company began the production of trucks. In the same year, Vargas saw the realization of one of his cherished dreams: The National Steel Company began production at the Volta Redonda plant between Rio de Janeiro and Sao Paulo. Aware of the need of modern industry for abundant sources of power, Vargas created the National Petroleum Company in 1938 to press the search for oil. By 1940 Brazil's, manufacturing output thus increased substantially, but coffee production declined . As a result, to further placate the forces of the old order, the government between 1934-37 and under the Estado Novo also invested considerably in the expansion of coffee production. Coffee was also the principal foreign exchange export earner.

Vargas, the Axis Powers, and the liberalization of the Estado Novo

Despite the fascist nature of the Estado Novo, Brazil eventually sided with the Allies and Vargas eventually liberalized his regime. Brazil, however, had appeared to be entering the Axis orbit—even before the 1938 declaration of the overtly fascist Estado Novo. The resemblance between the Estado Novo and the European police states had earlier suggested to some interwar observers that the Estado Novo was simply a variant of the European fascist model. Between 1933 and 1938 Germany became the principal market for Brazilian cotton, and its second largest importer of Brazilian coffee and cacao. The German Bank for South America even established three hundred braches in Vargas' Brazil. Eventually the consummate pragmatist sided with the antifascist Allies after a period of pitting both sides against each other, forcing them to compete to offer Brazil the most advantageous trade concessions. As late as May 1941, for example, after the invasions of Poland and the Soviet Union, and the beginnings of the Final Solution, Vargas sent a birthday telegram to Hitler, using it as opportunity to convey Brazilian ambiguity, playing both sides against each other. Vargas dispatched a telegram to Hitler saying, "best wishes for your personal happiness and the prosperity of the German nation." Such periodic overtures to the Axis Powers, along with rapid increase in civilian and military trade between Brazil and Nazi Germany caused US officials to constantly ask, "What is Vargas like and where does he stand."

Vargas' coalition was also torn between pro-Allied and pro-German wings. Brazilian generals, such as Pedro Goes Monteiro and Eurico Dutra, Vargas' close collaborators, admired the German military-industrial complex, and were eager to accept German arms deals. The pro-German faction of Vargas' regime was strongest in the military while his elite contributors were more sympathetic to the Allies, due to Brazil's established economic ties with the US and Britain. Since the Allies were more viable trading partners, Vargas eventually sided completely with the Allies, declaring war on Germany and Italy in 1942 and dispatching troops to aid the Allied war in Europe. Vargas liberalized his regime because of complications arising from this alliance.

Siding with the antifascist Allies created a paradox at home not unnoticed by Brazil's middle class (of a fascist-like regime joining the antifascist Allies) that Salazar and Franco avoided by maintaining nominal neutrality, allowing them to avoid both antifascist sentiment at home arising from siding with the Allies or annihilation by the Allies. Vargas thus astutely responded to the newly liberal sentiments of a middle class that was no longer fearful of disorder and proletariat discontent by moving away from fascist repression—promising “a new postwar era of liberty” that included amnesty for political prisoners, presidential elections, and the legalization of opposition parties—including the moderated and irreparably weakened Communist Party.

Second presidency

Vargas returned to politics in 1950, and through the free and secret ballot he was re-elected President of the Republic.

His Administration was hampered by the economic crisis that affected the country at that time. Getúlio Vargas would pursue in the end of his term a nationalist policy turned to the country's natural resources, to a lesser foreigner dependency and, within this scope he founded the PETROBRAS (Brazilian oil).

The positions assumed by his political adversaries led to a crisis which culminated in the crime of "Rua Toneleiros", where Major Rubens Vaz was murdered. This fact aroused a reaction against Vargas and the Army generals demanded his resignation. Vargas had a last try, calling the ministry special meeting on the eve of August 24, but rumors spread the news that the armed forces officers were inflexible. Feeling himself incapable of maintaining the situation under control, Vargas committed suicide on August 24, 1954.

The collapse of Brazilian Populism

Changing economic structures

Vargas' ever-shifting populist dictatorship helped to reign in the agrarian oligarchs, paving the way to the democratization of the 1950s and 1960s ended by the rightwing 1964 military coup. But the state still maintained a loose variation of Getúlio Vargas' populism and economic nationalism. Between 1930-64, as Brazilian populism itself guided changes in the structure of Brazil's economy (Vargas' policies indisputably promoted industrial growth), Vargas and his successors were forced to shift the makeup of particular kinds of class alliances reconciled by the state.

After Vargas' death in 1954, the support base for Brazilian populism began deteriorating. Vargas' first ouster from 1945-51 and his suicide in 1954, awaiting a seemingly inevitable military coup, would foreshadow that the formula of Brazilian populism had been deteriorating for some time. Brazilian populism would linger for another decade but in new forms. If corporatism was the hallmark of the 1930s and 1940s, nationalism, and developmentalism characterized the 1950s and early 1960s. Each of these contributed to the crisis that gripped Brazil and resulted in the authoritarian regime after 1964.

The Kubitschek era

Arguably, populism and economic nationalism were casualties of Juscelino Kubitschek's presidency (1956-61) more than anything else. Campaigning on a platform of "fifty years of progress in five," Kubitschek sought to achieve this progress with the aid of foreign investments, which in turn would be given generous incentives, such as profit remittances, low taxes, privileges for the importation of machinery, and donations of land. This influx of capital rapidly conquered domestic industry, unable to compete with the greater efficiency and expertise of foreign capital. Domestic manufactures, once the core base of support for Vargas' economic nationalism, were idly contented to become managers or partners of the multinationals. The urban bourgeoisie—the original base of Vargas coalition—had little use for Brazilian populism any more, having outgrown state planning and having lost its autonomy. In a sense, Brazilian populism was a victim of its own success, fostering a middle class that would soon find state control threatening rather than protective.

Juscelino Kubitschek

The most most notable manifestation of the nationalistic aspirations of the Kubitschek's was the construction of Brasília, Brazil's ultra-modern, Bauhaus-style capital.

Thus, as the historical context shifted, so did the ideology of Brazilian populism. Between 1934-45, Brazilian populism was a surprisingly reactionary phenomenon, exhibiting remarkable parallels to European fascism. In contrast, under the presidency of João Goulart (1961-64)—a protégé of Getúlio Vargas and another gaúcho from Rio Grande do Sul, the closeness of the government to the historically disenfranchised working class and peasantry and even to the Communist Party under none other than Luís Carlos Prestes was equally remarkable. Interestingly enough, Goulart appeared to have been co-opting the Communist movement in a manner reminiscent of Vargas' co-optation of the Integralists shortly—and not coincidentally—before his ouster by reactionary forces. Eventually, the 1964 junta and the ensuing military dictatorship would prove that the establishment forces that ushered Goulart's mentor into power in the first place, and the bourgeoisie that Vargas helped rear, found the left-leaning turn of Brazilian populism intolerable.

Goulart and the fall of the Second Republic

After Kubitschek's retirement, the next president, João Goulart was forced to shift well to the left of his mentor Getúlio Vargas, forced to mobilize the working class and even the peasantry amid falling urban bourgeois support. The core of Brazilian populism—economic nationalism—simply was no longer that appealing to the middle classes. Mild structural reforms under Goulart cumulated in the watershed 1964 military junta supported by a "dependent bourgeoisie" that would restore the same acceptance of neocolonial dependency that Vargas, however conservative, had attempted to overcome. Effectively, this political crisis stemmed from the specific way in which the political tensions of Brazilian development had been controlled in the 1930s and 1940s under the fascist Estado Novo.

Vargas' dictatorship and the presidencies of his democratic successors marked different stages of the broader era of Brazilian populism (1930-64), an era of economic nationalism, state-guided modernization, and import substitution trade policies. Vargas' polices were intended to transform Brazil into a capitalistic First World nation by linking industrialization to nationalism, a formula based on a strategy of reconciling the conflicting interests of the middle class, foreign capital, the working class, and the fazendeiros. The landed gentries—the formidable forces of the old order, of course, were won over by the lack of structural changes (agrarian reforms) under Vargas.

Essentially, this was the epic of the rise and fall of Brazilian populism from 1930 to 1964: Brazil witnessed over the course of this time period the change from export-orientation of the Old Republic (1889-1930) to the import substitution of the populist era (1930-64) and then to the dominance of the multinationals of the neoliberal era (1964-present). Each of these structural changes would force a realignment of class forces and open up a period of political crisis. The 1964 coup would also end a cycle in Brazilian history beginning with Vargas' 1930 Revolution, a now bygone era marked by the marriage of middle class aspirations, nationalism, and state-guided modernization in Latin America. A period of rightwing military dictatorship would mark the transition between this era and the current period of redemocratization.

Article preceded by:
History of Brazil (1889-1930)
Histroy of Brazil (1930-1964) Article followed by:
History of Brazil (1964-present)

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