91 Brazil

The Old Republic

Governance in Brazil’s Old Republic wavered between state autonomy and centralization.

The First Brazilian Republic, or Old Republic, covers a period of Brazilian history from 1889 to 1930 during which it was governed a constitutional democracy. Democracy, however, was nominal in the republic. In reality, elections were rigged and voters in rural areas were pressured to vote for their bosses’ chosen candidates. If that method did not work, the election results could still be changed by one-sided decisions of Congress’ verification of powers commission (election authorities in the República Velha were not independent from the executive and the Legislature, but dominated by the ruling oligarchs). As a result, the presidency of Brazil during this period alternated between the oligarchies of the dominant states of Sao Paulo and Minas Gerais. The regime is often referred to as “café com leite,” or “coffee with milk,” after the respective agricultural products of the two states.

Brazil’s Old Republic was not an ideological offspring of the republics of the French or American Revolutions, although the regime would attempt to associate itself with both. The republic did not have enough popular support to risk open elections and was born of a coup d’etat that maintained itself by force. The republicans made Field Marshal Deodoro da Fonseca president (1889-91) and after a financial crisis, appointed Field Marshal Floriano Vieira Peixoto the Minister of War to ensure the allegiance of the military.

Rule of the Landed Oligarchies

The history of the Old Republic is dominated by a quest to find a viable form of government to replace the preceding monarchy.  This quest swung Brazil back and forth between state autonomy and centralization. The constitution of 1891 established the United States of Brazil and granted extensive autonomy to the provinces, now called states. The federal system was adopted and all powers not explicitly granted to the federal government in the constitution were delegated to the states. Over time, extending as far as the 1920s, the federal government in Rio de Janeiro was dominated and managed by a combination of the more powerful Brazilian states: Sao Paulo, Minas Gerais, Rio Grande do Sul, and to a lesser extent Pernambuco and Bahia.

As a result, the Army developed as a national regulatory and interventionist institution within the republic. The sudden elimination of the monarchy left it as Brazil’s only viable, dominant institution. Although the Roman Catholic Church maintained a presence, it remained primarily international in its personnel, doctrine, liturgy, and purposes. The Army even began to eclipse other military institutions such as the Navy and the National Guard. The armed forces, however, were divided over their status, relationship to the political regime, and institutional goals. Therefore, the lack of military unity and disagreement among civilian elites regarding the military’s role in society prevented the establishment of a long-term military dictatorship within the country.

The Constituent Assembly that drew up the constitution of 1891 was a battleground between those seeking to limit executive power, which was dictatorial in scope under President Deodoro da Fonseca, and the Jacobins, radical authoritarians who opposed the coffee oligarchy and wanted to preserve and intensify presidential authority. The constitution established a federation governed supposedly by a president, a bicameral National Congress, and a judiciary. However, real power rested in the hands of regional patrias and local potentates, called “colonels”. There was a constitutional system as well as the real system of unwritten agreements (coronelismo) among the colonels. Under coronelism, local oligarchies chose state governors, who selected the president.

This informal but real distribution of power emerged as a result of armed struggles and bargaining. The system consolidated the state oligarchies around families that were members of the old monarchical elite, and to provide a check to the Army, the state oligarchies strengthened the navy and state police. In larger states, state police evolved into small armies.

In the final decades of the 19th century, the United States, much of Europe, and neighboring Argentina expanded the right to vote. Brazil, however, moved to restrict access to the polls under the monarchy and did not correct the situation under the republic. By 1910, only 627,000 eligible voters could be counted among a total population of 22 million. Throughout the 1920s, only between 2.3% and 3.4% of the total population could vote. The middle class was far from active in political life. High illiteracy rates went hand in hand with the absence of universal suffrage or a free press. In regions far from major urban centers, news could take four to six weeks to arrive. In this context, a free press created by European immigrant anarchists started to develop during the 1890s and 1900s and spread widely, particularly in large cities.

Latifundio Economies

Around the start of the 20th century, the vast majority of Brazil’s population lived in semi-feudal communities. Because of the legacy of Ibero-American slavery, abolished as late as 1888 in Brazil, there was an extreme concentration of landownership reminiscent of feudal aristocracies: 464 great landowners held more than 270,000 km² of land (latifúndios), while 464,000 small and medium-sized farms occupied only 157,000 km². Large estate owners used their land to grow export products like coffee, sugar, and cotton, and the communities who resided on his land would participate in the production of these cash crops. For instance, most typical estates included the owner’s chaplain and overseers, indigent peasants, sharecroppers, and indentured servants. As a result, Brazilian producers tended to neglect the needs of domestic consumption, and four-fifths of the country’s grain needs were imported.

Brazil’s dependence on factory-made goods and loans from technologically, economically, and politically advanced North Atlantic countries retarded its domestic industrial base. Farm equipment was primitive and largely non-mechanized. Peasants tilled the land with hoes and cleared the soil through the inefficient slash-and-burn method. Meanwhile, living standards were generally squalid. Malnutrition, parasitic diseases, and lack of medical facilities limited the average life span in 1920 to 28 years. Without an open market, Brazilian industry could not compete against the technologically advanced Anglo-American economies. In this context, the Encilhamento (a “boom and bust” process that first intensified, and then crashed, in the years between 1889 and 1891) occurred, the consequences of which were felt in all areas of the Brazilian economy for many decades following.

During this period, Brazil did not have a significantly integrated national economy. The absence of a big internal market with overland transportation, except for mule trains, impeded internal economic integration, political cohesion, and military efficiency. Instead, Brazil had a grouping of regional economies that exported their own specialty products to European and North American markets. The Northeast exported its surplus cheap labor, but saw its political influence decline in the face of competition from Caribbean sugar producers. The wild rubber boom in Amazônia declined due to the rise of efficient Southeast Asian colonial plantations following 1912. The national-oriented market economies of the South were not dramatic, but their growth was steady, and by the 1920s, that growth allowed Rio Grande do Sul to exercise considerable political leverage. Real power resided in the coffee-growing states of the Southeast—São Paulo, Minas Gerais, and Rio de Janeiro—that produced the most export revenue. Those three and Rio Grande do Sul harvested 60% of Brazil’s crops, turned out 75% of its industrial and meat products, and held 80% of its banking resources.

Struggles for Reform

Support for industrial protectionism increased during the 1920s. Under considerable pressure from the growing middle class, a more activist, centralized state adapted to represent the new bourgeoisie’s interests. A policy of state intervention, consisting of tax breaks, lowered duties, and import quotas, expanded the domestic capital base. During this time, São Paulo was at the forefront of Brazil’s economic, political, and cultural life. Known colloquially as a “locomotive pulling the 20 empty boxcars” (a reference to the 20 other Brazilian states) and Brazil’s industrial and commercial center to this day, São Paulo led the trend toward industrialization with foreign revenues from the coffee industry.

With manufacturing on the rise and the coffee oligarchs imperiled by the growth of trade associated with World War I, the old order of café com leite and coronelismo eventually gave way to the political aspirations of the new urban groups: professionals, government and white-collar workers, merchants, bankers, and industrialists. Prosperity also contributed to a rapid rise in the population of working-class Southern and Eastern European immigrants—a population that contributed to the growth of trade unionism, anarchism, and socialism. In the post-World War I period, Brazil was hit by its first wave of general strikes and the establishment of the Communist Party in 1922. However, the overwhelming majority of the Brazilian population was composed of peasants with few if any ties to the growing labor movement. As a result, social reform movements would crop up in the 1920s, ultimately culminating in the Revolution of 1930.

Years Under the Military Regime

Brazilian society experienced extreme oppression under the military regime despite general economic growth during the Brazilian Miracle.

The Brazilian military government was an authoritarian military dictatorship that ruled Brazil from April 1, 1964 to March 15, 1985. It began with the 1964 coup d’etat led by armed forces against the administration of the President Joao Goulart, who had previously served as Vice President and assumed the office of the presidency following the resignation of democratically-elected Janio Quadros. The military revolt was fomented by the governors of Minas Gerais, Sao Paulo, and Guanabara. The coup was supported by the Embassy and State Department of the United States. The fall of President Goulart worried many citizens. Many students, Catholics, Marxists, and workers formed groups that opposed military rule. A minority even engaged in direct armed struggle, although the vast majority of the resistance supported political solutions to the mass suspension of human rights. In the first few months after the coup, thousands of people were detained, and thousands of others were removed from their civil service or university positions.

The military dictatorship lasted for almost 21 years despite initial pledges to the contrary. In 1967, it enacted a new, restrictive constitution that stifled freedom of speech and political opposition. The regime adopted as its guidelines nationalism, economic development, and anti-communism.

Establishing the Regime

Within the Army, agreement could not be reached as to a civilian politician who could lead the government after the ouster of President Joao Goulart. On April 9, 1964, the coup leaders published the First Institutional Act, which greatly limited the freedoms of the 1946 constitution. Under the act, the President was granted authority to remove elected officials from office, dismiss civil servants, and revoke political rights of those found guilty of subversion or misuse of public funds for up to 10 years. Three days after the publication of the act, Congress elected Army Chief of Staff, Marshal Humberto de Alencar Castelo Branco to serve as president for the remainder of Goulart’s term. Castelo Branco had intentions of overseeing radical reforms to the political-economic system, but refused to remain in power beyond the remainder of Goulart’s term or to institutionalize the military as a governing body. Although he intended to return power to elected officials at the end of Goulart’s term, competing demands radicalized the situation.

Military hardliners wanted to completely purge the left-wing and populist influences for the duration of Castelo Branco’s reforms. Civilians with leftist leanings criticized Castelo Branco for the extreme actions he took to implement reforms, whereas the military hardliners felt Castelo Branco was acting too lenient. On October 27, 1965, after two opposition candidates won in two provincial elections, Castelo Branco signed the Second Institutional Act, which set the stage for a purge of Congress, removing objecting state governors and expanding the President’s arbitrary powers at the expense of the legislative and judiciary branches. This not only provided Castelo Branco with the ability to repress the left, but also provided a legal framework for the hard line authoritarian rules of Artur da Costa e Silva (1967-69) and Emilio Garrastazu Medici (1969-74).

Rule of the Hardliners

Castelo Branco was succeeded to the presidency by General Artur da Costa e Silva, a hardliner within the regime. Experimental artists and musicians formed the Tropicalia movement during this time, and some major popular musicians such as Gilberto Gil and Caetano Velsos were either arrested, imprisoned, or exiled. Widespread student protests also abounded during this period. In response, on December 13, 1968, Costa e Silva signed the Fifth Institutional Act, which gave the president dictatorial powers, dissolved Congress and the state legislatures, suspended the constitution, ended democratic government, suspended habeas corpus, and imposed censorship. The military government had already been using various forms of torture as early as 1964 in order to gain information as well as intimidate and silence potential opponents. This radically increased after 1968.

On August 31, 1969, Costa e Silva suffered a stroke. Instead of his vice president assuming the office of the presidency, all state power was assumed by the military, which then chose General Emilio Garrastazu Medici, another hardliner, as president. During his presidency, Medici sponsored the greatest human rights abuses of the time period. Persecution and torture of dissidents, harassment against journalists, and press censorship became ubiquitous. A succession of kidnappings of foreign ambassadors in Brazil embarrassed the military government. Reactions such as anti-government manifestations and guerrilla movements generated increasing repressive measures in turn. By the end of 1970, the official minimum wage went down to US $40 a month, and as a result, the more than one-third of the Brazilian workforce that made minimum wage lost approximately half their purchasing power in relation to 1960 levels.

Nevertheless, Medici was popular because his term was met with the largest economic growth of any Brazilian President, a period of time popularly known as the Brazilian Miracle. The military entrusted economic policy to a group of technocrats led by Minister of Finance Delfim Netto. During these years, Brazil became an urban society with 67% of people living in cities. The government became directly involved in the economy, investing heavily in new highways, bridges, and railroads. Steel mills, petrochemical factories, hydroelectric power plants, and nuclear reactors were also built by large state-owned companies like Eletrobras and Petrobras. To reduce reliance on imported oil, the ethanol industry was heavily promoted.

By 1980, 57% of Brazil’s exports were industrial goods compared to 20% in 1968. Additionally, average annual GDP growth was close to 10%. Comparatively, during President Goulart’s rule, the economy had been nearing a crisis, with annual inflation reaching 100%. Additionally, Medici presented the First National Development Plan in 1971, which aimed at increasing the rate of economic growth, particularly in the Northeast and Amazonia. Brazil also won the 1970 Football World Cup, promoting national pride and Brazil’s international profile.

Brazil’s Growing Economy

Brazil’s economy is characterized by moderately free markets and an inward-oriented approach to development.

From 2000 to 2012, Brazil was one of the fastest growing major economies of the world, with an average annual GDP growth rate of over five percent. In 2012, Brazil’s economy temporarily became the world’s sixth largest economy, surpassing that of the United Kingdom. However, Brazil’s economic growth decelerated in 2013 and the country entered a recession in 2014. Similarly, Brazil’s development during the 1960s was so impressive it was dubbed the Brazilian Miracle. During that time, Brazil opened its markets and took an inward-looking approach to economic development. Its economic growth was only impeded by a series of international energy crises during the 1970s.

The Brazilian Miracle

The Brazilian Miracle refers to a period between 1968 and 1980 during which Brazil experienced exceptional economic growth during the rule of its military government. During that time, the average annual GDP growth was close to ten percent. Economic growth was particularly strong from 1969 to 1973 during the tenure of President Emilio Garrastazu Medici. Perception of the so-called golden age of Brazilian development was strengthened in 1970 when Brazil won the FIFA World Cup for the third time and the military government adopted the official slogan, “Brasil, ame-o ou deixe-o” (“Brazil, love it or leave it”).

Much of Brazil’s economic growth can be attributed to a group of technocrats led by Minister of Finance, Agriculture, and Planning Antonio Delfim Netto, to whom the military government entrusted economic policy. The government became directly involved in the economy, investing heavily in new highways, bridges, and railroads. Steel mills, petrochemical factories, hydroelectric power plants, and nuclear reactors were also built by large state-owned companies such as Eletrobras and Petrobras. Additionally, to reduce reliance on imported oil, the ethanol industry was heavily promoted. By 1980, 57% of Brazil’s exports were industrial goods compared to just 20% in 1968.

Energy Crises and Deceleration of Growth

As a result of this industrial growth and investment in infrastructure, Brazil became an urban society, with 67% of its population living in cities. Sao Paulo, in particular, grew quickly due to a population influx from the poorer countryside. However, to continue fueling its economic growth, Brazil needed more imported oil. In the early to mid-1970s, President Ernesto Geisel removed long-time Minister of Finance Netto and opened Brazil to oil prospecting by foreign firms for the first time since the 1950s, fending off nationalist objections. Although its growth and borrowing were sustainable during the early years of the Brazilian Miracle, the 1973 global oil crisis required the military government to borrow increasingly from international lenders to cover the rising costs of fuel, and the resultant debt became unmanageable. By the end of the decade, Brazil had the largest debt in the world at approximately US $92 billion.

As a result of the energy crises of the 1970s, Brazil experienced a 14-year period of hyperinflation from 1980 until 1994. During this time, the republic cycled through several short-lived currencies, including the cruzado, cruzado novo, cruzeiro, and cruzeiro real. In 1994, the Brazilian real was introduced and proved stable and enduring. Brazil also suffered drastic reductions in its terms of trade as a result of the 1973 oil crisis. In the early 1970s, the performance of the export sector was undermined by Brazil’s overvalued currency. With the trade balance under pressure, the oil shock led to a sharply increased import bill, raising import requirements and the already large current-account deficit.

Brazil shifted its foreign policy to meet its economic needs. Due to its reliance on foreign oil, Geisel shifted its strict alignment with the U.S. and its allies to a more pragmatic approach, including a more neutral stance on Middle Eastern political affairs. His government also recognized the People’s Republic of China and the new socialist governments of Angola and Mozambique, both former Portuguese colonies. The government moved closer to Japan and Latin American and European countries as well.