The Great Depression in Brazil

FONTS

The Great Depression in Brazil

by Neil Blackwell

Effects

Impact of the Depression on Society

• Brazil suffered a 7% decline in industrial production.
• Shop owners reported a 40% decline in sales.
• The nation's debt increased to $1.181 billion.
• Imports were greatly reduced and trade practically ground to a halt.
• About one million Brazilians felt the effects of this economic crisis.

Conclusion: The depression imposed harsh economic difficulties upon both the government as well as individual people. The effects of the depression in Brazil were felt by a large majority of the population and spanned multiple industries.

• Many Brazilian workers were landless laborers with no income as planters could no longer pay them. They began to subsist on food they planted between coffee trees and many faced hunger.
• Women were able to vote for the first time in Brazil in 1932.
• Getúlio Vargas banned discussions of racism and although a racial class system still existed, he indoctrinated Brazilians to believe in a "color-blind" society.
• Vargas controlled the press, jailed editors, and filled Brazil's prisons with other political prisoners as he did not tolerate dissent. He also persecuted Communists.

Causes

• The Brazilian economy was too dependent on the export of coffee. (Economic)
• During the 1920s, coffee exports accounted for over 70% of the country's revenue. As Brazil depended on the economies of other countries, especially the U.S., to buy these exports, when they began declining in 1929, so too did the demand for these exports.
• In September 1929, coffee was being sold at 22 cents per pound; by December 1, it had fallen to 15 cents. As a result of this, the national income declined and government revenue was limited.
• The valorization policy that was created to keep coffee prices high and ensure income to coffee planters failed. (Economic)
• This policy was financed through the taxation of business and loans from other countries, and as the demand for coffee fell, countries loaned less and businesses made less money.
• By stabilizing prices, this policy helped Brazil to sustain income and pay debt payments. When it failed, Brazil faced further indebtment and a downward economic spiral.

Cures for the Depression

Government Responses to the Depression

• Political change putting Vargas in power allowed Brazil to be led by a man who would take action and initiative to reform the economy as change was greatly needed.
• Economic policies implemented by the government such as Import Substitution Industrialization, which helped to stabilize the economy and cause it to be more self-sufficient, and many others led the economy on the road to a relatively rapid recovery.
• Used nonpayment during the depression to keep from defaulting on loans.
• World War II helped to re-stimulate the economy by greatly increasing economic demand and causing a great growth spurt in industry and a revival of exports.

• Government: Brazil's government was modeled after the U.S. Constitution until 1930 when Getúlio Vargas became president after leading a series of revolts.
• Getúlio Vargas became president in 1930 and served until 1945. He served as president but ruled with dictatorial powers.
• He implemented a series of policies to deal with the crisis:
• Created the National Department of Coffee to decrease production of coffee to allow this industry to recover
• Provided agricultural incentives to increase production of other crops, such as cotton, which helped to diversify the economy.
• Import Substitution Industrialization
• Reduced imports which lessened foreign dependence and provided Brazil with a favorable trade balance.
• Encouraged Brazilians to invest capital into domestic industries that produced goods that had previously been imported thus growing industry and further diversifying economy.
• Created a new constitution
• Established the 8 hour work day, instituted a minimum wage, and set the maximum work week for Brazilian labor.

Works Cited

• The Great Depression for IB, Cambridge University Press, 2010
• http://www.econlib.org/library/columns/y2009/Martinezgreatdepression.html
• http://www.fsmitha.com/h2/ch17.htm
• http://countrystudies.us/brazil/