Vargas era

In Brazil's history, the Vargas era was the period from 1930 to 1946 when the country was governed by Getúlio Vargas. The period can be subdivided into the Second Brazilian Republic, from 1930 to 1937, and the Third Brazilian Republic, or Estado Novo, from 1937 to 1946.
The Brazilian Revolution of 1930 marked the end of the First Brazilian Republic. The coup deposed President Washington Luís and blocked the swearing-in of president-elect Júlio Prestes on the grounds that the 1930 election had been rigged by his supporters. The 1891 Constitution was abrogated, the National Congress dissolved, and the provisional military junta ceded power to Vargas. Federal intervention in state governments increased, and the country' political landscape was altered by suppressing the traditional oligarchies of the states of São Paulo and Minas Gerais.
After assuming power, Vargas governed by decree as head of the provisional government instituted by the revolution from 1930 to 1934, before the adoption of a new constitution. Following the adoption of the Constitution of 1934, which was drafted and approved by the National Constituent Assembly of 1933–1934, Vargas was elected by Congress and governed as president with a democratically elected legislature. Vargas' presidency was to end in 1938, however, in order to stay in power, he imposed a new dictatorial constitution in a coup d'état and shut down the legislature to rule Brazil as a dictator, thus initiating the Estado Novo.
The ousting of Vargas and the Estado Novo regime in 1945 led to the restoration of democracy in Brazil with the adoption of a new democratic constitution in 1946, marking the end of the Vargas era and the beginning of the Fourth Brazilian Republic.

Fall of the First Republic

The tenente rebellions did not significantly impact the bourgeois social reformers in Brazil. However, the entrenched ruling coffee oligarchy was vulnerable during the economic upheaval of 1929.
Brazil's vulnerability in the Great Depression was rooted in the dependence of its economy on foreign markets and loans. Despite some industrial development in São Paulo, coffee and other agricultural exports were the mainstay of the economy.
Days after the U.S. stock market crash on 29 October 1929, coffee prices fell. Between 1929 and 1931, coffee prices fell from 22.5 cents per pound to eight cents per pound. As world trade contracted, coffee exporters experienced a large drop in foreign-exchange earnings.
The Great Depression had a dramatic effect on Brazil. The collapse of Brazil's valorization program, a safety net in times of economic crisis, was intertwined with the collapse of the central government and its base of support in the landed oligarchy; the coffee planters had become dangerously dependent on government support. The government was not short of cash needed to bail out the coffee industry after the post-World War I recession, but world demand for Brazil's primary products had fallen too drastically between 1929 and 1930 to maintain government revenues. The country's gold reserves had been depleted by the end of 1930, pushing its exchange rate down to a new low, and the program for warehoused coffee collapsed.
The government of president Washington Luís faced a deepening balance-of-payments crisis, and the coffee growers had an unsellable harvest. Since power rested in a patronage system, wide-scale disruptions of the delicate balance of regional interests left the Luís regime vulnerable. Government policies favoring foreign interests exacerbated the crisis, leaving the regime alienated from almost every segment of society. After the Wall Street panic, the government tried to please foreign creditors by maintaining convertibility according to the principles of foreign bankers and economists who set the terms for Brazil's relations with the world economy; this had no support from any major sector of Brazilian society.
Luís clung to a hard money policy despite capital flight, guaranteeing the convertibility of the Brazilian currency into gold or British sterling. The government was forced to suspend currency convertibility when its gold and sterling reserves were exhausted amid the collapse of the valorization program, and foreign credit evaporated.
Washington Luís's decision to choose Júlio Prestes as his successor precipitated the fall of the First Republic, as Prestes was, like him, from São Paulo, which broke the traditional rotation of the presidency between São Paulo and Minas Gerais.

Rise of Getúlio Vargas

A populist governor of Brazil's southernmost Rio Grande do Sul state, Vargas was a cattle rancher with a doctorate in law and was the 1930 presidential candidate of the Liberal Alliance. A member of the local landed oligarchy who rose through the system of patronage and clientelism, he had a fresh vision of how Brazilian politics could be shaped to support national development. Vargas came from a region with a positivist and populist tradition, and was an economic nationalist who favored industrial development and liberal reforms, built up political networks and was attuned to the interests of the rising urban classes. He relied on the support of the tenentes of the 1922 rebellion.
With the urban bourgeois groups, northeastern sugar barons had a legacy of longstanding grievances against the southern coffee oligarchs. Northeastern landowners opposed Washington Luís' 1930 discontinuance of Artur Bernardes' drought-relief projects. The decay of the northeast sugar oligarchies began dramatically with the severe drought of 1877, combined with the rapid growth of coffee-producing São Paulo. After the abolition of slavery in 1888, Brazil saw a mass exodus of emancipated slaves and other peasants from the northeast to the southeast, ensuring a steady supply of cheap labor for the coffee planters.
Under the Old Republic, Brazil's presidency was dominated by the southeastern states of São Paulo and Minas Gerais in the so-called café com leite politics. Given the grievances with the ruling regime in the northeast and Rio Grande do Sul, Vargas chose João Pessoa of the northeastern state of Paraíba as his vice-presidential candidate in the 1930 presidential election.
As a candidate in 1930, Vargas utilized populist rhetoric to promote middle-class concerns, opposing the primacy of the São Paulo coffee oligarchy and the landed elites who had little interest in protecting and promoting industry. Behind the façade of Vargas' populism lay the ever-changing nature of his coalition. Locally-dominant regional groups – the gaúchos of Rio Grande do Sul and the sugar barons of the northeast – ushered the new urban groups into the forefront of Brazilian political life, tilting the balance of the central government toward the Liberal Alliance.
Vargas understood that with the breakdown of relations between workers and owners in Brazil's growing factories, workers could become the basis for a new form of political power: populism. He gradually established mastery of the Brazilian political world, and remained in power for 15 years. As the stranglehold of the agricultural elites eased, urban industrial leaders acquired more influence nationally and the middle class strengthened.
In addition to the Great Depression and the emergence of the Brazilian bourgeoisie, the country's inter-regional politics encouraged the alliance Vargas forged during the Revolution of 1930 between the new urban sectors and landowners hostile to the government in states other than São Paulo.

Second Brazilian Republic

Vargas' tenuous coalition lacked a coherent program beyond a broad vision of "modernization". He tried to reconcile the divergent interests of his supporters with social reform between 1930 and 1934, with his policies increasingly reliant on populism.

The ''tenentes''

In the first year of the Vargas regime, the tenentes, the dominant forces of Vargas' inner circle, attempted to differentiate themselves from the dissident oligarchical politicians of the Old Republic, as well as other sectors of the new government by branding themselves as the "true revolutionaries". The tenentes formed, in February 1931, the '3rd of October Club' aiming to link civilian and military tenentes. Many members of Vargas' government were also members of the club, such as Góis Monteiro, Oswaldo Aranha, and Juarez Távora. Leading intellectuals like Francisco de Oliveira Viana were added to the club shortly after as well. The tenentes had considerable influence over the Vargas's regime in its first years. The 3rd of October Club had veto powers they could use against Getúlio Vargas, which were used several times against the various appointments of state intervenors. The tenentes also formed a revolutionary legion with branches in many states in order to spread their revolutionary ideas. The legions' first major parade in São Paulo had noticeable fascist undertones.
The tenentes also played a key role in influencing economic policy, like supporting state intervention in the support of coffee, and also encouraging a shift from export to non-export agriculture and industry. They also influenced social policy, supporting state intervention in trade unions to promote their growth, and to extend welfare measures to workers and their family.
Eventually, the tenentes lost their influence due to their growing reliance on Getulio Vargas and their lack of deep rooted connections with most of Brazilian society. They also did not have a coherent ideology and never had a cohesive plan for government even if they were to take over Vargas's government. The October 3rd Club was disbanded in 1935 as the result of internal ideological conflict.

Economy

Vargas sought to bring Brazil out of the Great Depression through statist policies which satisfied the demands of the rapidly-growing urban bourgeois groups voiced by the new ideologies of populism and nationalism. His first steps focused on economic stimulus, with which all factions could agree. Favoring a policy of tax breaks and import quotas to expand the country's industrial base, Vargas linked his pro-middle class policies to nationalism. He sought to mediate disputes between labor and capital, quelling a paulista female-workers' strike by co-opting much of their platform and requiring government mediation in the future.
With the northeastern oligarchies now incorporated into the ruling coalition, the government focused on restructuring agriculture. To placate friendly agrarian oligarchs, the state left the impoverished domains of the rural oligarchs untouched and helped the sugar barons cement their control of rural Brazil. The peasantry, surprising many accustomed to overlooking Brazil's peripheral regions, was not that servile. Banditry was common but so were messianism, anarchistic uprisings, and tax evasion, all common practice before 1930. The government crushed a wave of banditry in the northeast which was known as cangaço, reversing the drastic decline of the northeastern latifundios from the 1870s to the 1930 revolution. At the expense of the indigent peasantry—85 percent of the workforce—Vargas reneged on his promises of land reform and denied agricultural workers the working-class gains in labor regulations. Opposition arose among the powerful paulista coffee oligarchs to this intervention and to increasing government centralization, its increasingly populist and fascist stances, its protectionist and mercantilist policies, and the increasingly-dictatorial Vargas himself.
The appeasement of landed interests required a realignment of Vargas' coalition, forcing him to turn against its left wing. The influence of the tenentes group over Vargas rapidly waned after mid-1932, although individual moderate tenentes continued to hold important positions in the regime. The ouster of the center-left tenentes from his coalition marked his rightward shift by 1934.