BRAZIL

1. BRAZIL Anmol G, Bavika A, Michelle K, Fatima A

3. Background Information • Fifth largest country in the world • Fifth largest population in the world • Shares frontiers with all expect 2 of the other 12 countries that make up the continent of South America • Currency: Cruzeiro CR$ • Economy: increasingly industrialized • Major resources: minerals, coal, oil, timber, rivers • Major products: coffee, soybeans, sugar, rubber, textiles, footwear, paper, miter, vehicles, electrical and electronic goods, minerals. • Largest City: Sao Paulo; Highest population  most impacted during depression

4. Background Information • Most of brazil has a tropical climate (92%); cooler in hilly areas and in far south • Rich in natural resources, particularly in the states of Para, Minas Gerais, and Rondonia • Brazil is estimated to have a third of the world’s iron ore reserves, which form the basis of its steel industry • Other minerals in brazil include coal, bauxite, manganese, zinc, nickel, lead, cobalt, cadmium, copper, chrome, and tin • Reserves of gypsum, titanium, phosphates, and platinum • Deposits of niobium, thought to be the world’s largest, have been found in Amazonas • Brazil also supplies 90% of the world market for several semiprecious gems, including amethysts and topazes • Energy resources include large deposits of oil off the coast and in the states of Rio Grande de Norte, Sergipe, Bahia and Ceara, and big gas reserves • The country’s timber reserves are estimated to be the world’s third largest • Most of the wood is used as fuel

5. Government • Vargas held many revolts in 1930 • Current government could not stop the rebel forces, thus a revolutionary junta was formed on October 24 • Getulio Vargas became the provisional president on November 4 • Getulio Vargas (1930-45 and 1951-54) • During his reign he created a new form of governance, Estado Novo (New State) in 1937 • Estado Novo was an authoritarian form of government • It allowed the government to have varying degrees of intervention in the economy Getulio Vargas

6. Biography of Vargas (1930-1945) • Studied law and then had a professional career as a politician. • Vargas governed until 1945, creating a new constitution in 1934 and a new form of governance- the Estado Novo (New State) in 1937. • Dictatorship occurred in 1938 after a communist plot was discovered and Brazil was declared to be in state of siege. • 1940s- Known for his policies that improved the lived and working conditions of Brazil’s poor yet many called him a fascist dictator. • His domestic policies included relaxation of censorship and curbing of repressive policies which increased middle-class support but also brought his dictatorship to an end. • Vargas imposed economic nationalism on Brazil. • Vargas sought to bring Brazil out of the Great Depression through statist-interventionist policies. Like Roosevelt, his first steps focused on economic stimulus, a program on which all factions could agree. • Many assassinations were attempted on Vargas, member of the military leadership tried to force Vargas to resign. • Vargas committed suicide in 1954 ending his term as the populist leader of Brazil.

7. Economy was dependent on... • Prior to Oct. 1929, the Brazilian economy was dependent on agriculture and coffee. • Mostly depended on coffee • 1925: created Sao Paul Institute for Permanent Defense of Coffee • To keep coffee prices high, and the institute would buy and withhold from world market. • Successful (policy) in the 1920s • 1927, produced all time high of 27 million coffee bags and as world prices fell, institute bought coffee and prevented a decrease in the price • 1928, coffee crop was small, stocks that were purchased were on the market and prices held and there were enough coffee to be sold. • As long as coffee prices were high, the system worked to their advantage • May 1929, price of coffee declined • Weakened the economy and foreign lenders began to limit their credit to them • Institutes assured that policies were okay and gave people false sense of security.

8. Industries Agricultural Industry: • Brazil was dependent on coffee but rubber, cotton, and cocoa were important crops too. • High exports of coffee it was the source of over 70% of the country’s revenue. • Valorization- to maintain prices that will help the economy. It was dangerous during the depression because Brazilians wanted to expand its coffee markets in other parts of Latin America, but coffee planters were increasing coffee production in other parts of Latin America limiting Brazil to export its coffee abroad. • The economy was dependent on Valorization. • 1927- Brazil produced 27 million bags of coffee when the prices began to fall. • 1928- Export of coffee had started to decrease and there were extensive coffee bags to sell. • There was overproduction of coffee in the 1920s and the prices fell significantly and trading with Brazil had also stopped.

9. Industries cont’d • $900 million was the foreign debt for Brazil and the government paid $175 million/ year • Coffee exported worked to Brazil’s advantage only if the prices were high. • May 1929- prices declined further. • In September 1929 coffee was sold for 22 cents/lb December 1929 crash prices of coffee fell to 15 cents/lb. • São Paulo went bankrupt. • Foreign debt was extended due to the poor economy of São Paulo and used the money to buy the coffee bags produced in the 1920s to stabilize the prices of coffee. • Result- the prices fell even more to 14 cents/ lb then later to 10 cent/lb and the economy was dangerously close to collapsing. • Debt for Brazil was increased to $1181 million. • Coffee economy had collapsed right then and European countries and American countries were hesitant to trade with Brazil any further.

10. Main Trading Partners • Wall Street Crash had a devastating impact on Brazil’s export economy • Sept 1929 -22cents/pound to Dec 1st - 15cents/pound • Dramatic fall meant that the national income declined; gov’t revenue = limited • Govt tried to curtail the effects by exporting its gold reserves to London & New York • b/c they had the short-term result of preventing a downward spiral • Harwood exports went to mainly the US and UK

11. Class Structure • Two sides – one for democracy other for revolutionary ideas • Vargas took advantage of situation and led many revolts. • Nov 4, Vargas became president. • Many saw Vargas as a charismatic leader who could make decisions to improve Brazil’s economy. • Many attempts to overthrow his regime which led to the Estado Novo, or New State in 1937 • Economy needed various degrees of government intervention.

12. How hard was it hit by the depression? • Problems leading to the depression…. • As Brazil’s economy was significant dependent on agriculture (especially coffee) the raise in competition limited Brazil’s dominance in the international market • In May 1929 the price of coffee quickly declined • Most manufactured goods came from overseas; thus most profits from export were spent overseas which led to an outflow of capital • Brazil’s foreign debt was $900 million right before the Depression hit • Brazilians had a false sense of security as the institute declared its policies sound • The Wall Street Crash (1929) significantly impacted Brazil’s export economy • The fall in coffee price meant that national income declined and government revenue was limited • This decline had a great effect on local businesses • Shop owners reported to have a 40% decline in sales in December 1929 • Imports were drastically reduced, trade stagnated and the small industrial sector sat idle

13. The Depression • While exports fell, they didn’t fall as fast as other countries • Brazil became a favourable trade balance despite the economic crisis • Brazilians began to invest in the industries that produce the goods that they once imported • The government assisted by providing tax exemptions and long-term loans with low interest rates • The growing international belligerence and the approach of the Second World War led to the greatest economy growth spurt of the era • The government recognized the need for more support for and control of labour • The economy was organized into different industries and worker and employer sectors • Vargas instituted minimum wage and a maximum work week for labour • The same Great Depression that had ushered Vargas into power in a wave of disillusionment with the laissez-faire orthodoxies of the time also rejuvenated the left and calls for social reforms. – Revolutionary movements got him into presidency

15. How hard was it getting out of the depression? • Brazil started to recover quite fast after the collapse of the crash. • Getúlio Vargas was the president during the depression and helped the economy to recover by the start of WWII • Brazilians saw him as a charismatic leader who could make decisions to improve Brazil’s economy. • Vargas’s policies attempted to recover the coffee industry as well as make Brazil less dependent on coffee. • National Department of Coffee- under his control and had its flexibility. • Reduction of coffee-tree planting was ordered. • By the mid 1920s there were 3 billion coffee trees which reduced to 2.5 billion trees in 1939. • 1931 government created a program to burn coffee and an estimated of 60 million bags were burnt in 1939.

16. How hard was it getting out of the depression? • These programs were successful and at the same time the start of WWII helped the coffee industry to recover. • Other agricultural exports were encouraged in livestock and cotton production. • 1920s cotton was only 2% exported but by the 1930s it rose to 18%. • Coffee production was limited so they could farm other crops. • Sugar production decreased significantly due to larger competition in other countries. The government decided to free up the land for more profitable cash crops. • Brazil’s agricultural policies kept a larger sector of the society employed. • The government assisted by exempting taxes and long-term loans were with low interest rates. • Imports had tariffs up to 40% exceptions were made for machinery or raw materials that were use to help build new industries.

17. How hard was it getting out of the depression? • 1940- National Steel Commission was established followed by National Steel Company which was Brazil’s first steel plant. • Other productions like iron, aircraft and truck engine. • Transportation development by 1939 there were 9 Brazilian companies flying routes that covered over 43,000 miles carrying 71,000 passengers, 223 tons of mail and 490 tons of freight. • 1941 Vargas created the Air Ministry and railroad expansion took place at the same time. • By 1939 there was also construction of 258,390 mile roads. • Vargas also created minimum wage and maximum work week for Brazilian labor.