Brazil's history can be divided into two major parts: the colonial period from the arrival of the first Portuguese explorers in 1500 until independence in 1822, and the national period since independence from Portugal. During the colonial period Brazil became the first great plantation slave society in the Americas, producing sugar and later coffee on large agricultural estates worked by slaves. During the 1700s Brazil experienced the first major gold rush in the Americas after explorers discovered gold on frontier territory inland from the coast. After Brazil broke away from Portuguese rule in the 1820s, members of the Portuguese royal family ruled as emperors until 1889, in the only sustained monarchy in the western hemisphere. Since 1889 Brazil has been a republic, experiencing two periods of dictatorship: from 1937 to 1945 and from 1964 to 1985. The interaction of Europeans, Native Americans, and Africans in Brazil has produced one of the most racially mixed societies in the world, and one with enormous economic and social inequalities.A. Discovery
Most of the hundreds of indigenous peoples who inhabited eastern South America prior to the arrival of the Europeans were members of the Tupí-Guaraní cultures. These Native American groups spoke variations of the Tupian language and inhabited an area along the eastern coast of South America south of the Amazon River and inland to the foothills of the Andes. They generally lived by hunting and gathering. Those who did farm used simple slash-and-burn techniques to clear the land. Their main crop was manioc, also known as cassava. After a few years the soil would be exhausted and the farming groups would move on. These people had no metal tools, no written language, no beasts of burden, and no knowledge of the wheel. They worshiped spirits and relied on religious figures known as shamans for healing, divination of future events, and connection to the world of spirits. Accurate numbers for the size of the indigenous population are difficult to determine, but best estimates place the native population of eastern South America in 1500 at somewhere between 1 and 6 million.The Portuguese claim to Brazil stemmed in part from the Treaty of Tordesillas, which Portugal and Spain had signed in 1494 with the pope's blessing. Both nations had undertaken voyages in search of a sea route to the spice-rich regions of the Indian Ocean and claimed land based on these voyages. In 1492 Italian Spanish explorer Christopher Columbus made his historic voyage and claimed land in the West Indies for Spain. Spain sought international recognition of its right to the newly discovered western lands, and the Treaty of Tordesillas was the result. The treaty drew an imaginary line far out into the western Atlantic. With a few exceptions, the Portuguese laid claim to conquered territories to the east of the line, along the African coast; Spain laid claim to territories to the west of the line. Much of Brazil lies to the east of the Tordesillas line and thus fell under Portugal's jurisdiction.
The Portuguese, however, did not arrive in Brazil until 1500. They landed on the coast of South America by mistake while seeking a route to the Indian Ocean. In 1498 Portuguese explorer Vasco da Gama had made the first successful voyage around the southern tip of Africa to India and back. The Portuguese quickly outfitted a second expedition, led by Pedro Álvares Cabral, a young nobleman. Cabral's fleet strayed too far west in the South Atlantic as it moved around Africa. They spotted land on April 22, 1500. Unaware that he had stumbled on a huge continent, Cabral named his discovery Terra da Vera Cruz (Portuguese for “Island of the True Cross”).
B. Early Settlements
As they had done along the African coast, the Portuguese established trading posts, which they called feitorias (factories), along more than 1,600 km (more than 1,000 mi) of the South American coastline. Portuguese traders visited the factories with some frequency, primarily to load cargoes of a hard wood that produced a red dye known by its Latin name, brasile. Eventually, the land became identified on maps with the brazilwood it produced, and the Portuguese began to call their small colony Brazil.
At the same time, France was attempting to establish trading relationships along the coast. In 1530, to counter this French threat, the Portuguese crown sent an expedition to Brazil led by the nobleman Martim Afonso de Sousa. He founded the settlement of São Vicente (near present-day Santos) and introduced sugarcane cultivation, cattle raising, and an administrative presence in the colony. The king attempted to divide up 4,000 km (2,500 mi) of coastline into a dozen captaincies, giving control of these new territories to nobles. In exchange for developing and protecting their captaincies, these nobles, known as donatários, received control over lands that were sometimes larger than Portugal itself. Many of the donatários never even saw their land grants. Four of the captaincies were not settled, and just two—São Vicente in the south and Pernambuco in the north—experienced any initial success. The captaincies also failed to discourage the French, who continued raids against Portuguese shipping in the area.
In 1549 the king again attempted to establish centralized authority in the colony and sent out a larger and more ambitious expedition of some 1,200 colonists, soldiers, priests, and royal officials led by Tomé de Sousa. He founded a permanent colonial capital on the coast of the captaincy of Bahia, calling the city Salvador (Portuguese for “the Savior”). Within two decades the sugarcane that the colonists had brought from the Portuguese islands off the coast of West Africa spread in the rich soils of the countryside around Salvador. As the demand for agricultural labor increased, conflict between Native Americans and colonists intensified. Plantation owners tried a number of methods to coerce the indigenous people to work in the sugar fields: forcing them into slavery, attempting to turn them into peasants who were obligated to work on the agricultural estates, and offering wages in exchange for labor. None of these attempts succeeded on a large scale.
The Native Americans found a staunch ally against the pressure from the colonists in the Roman Catholic Church, or more precisely, in the Society of Jesus (Jesuits). Jesuit priests had arrived with Tomé de Sousa in 1549, and they founded the Roman Catholic Church in Brazil. A new and very effective religious order, the Jesuits created the first schools in Brazil and sought to convert the Native Americans to Christianity. A group of priests, led by Manoel da Nóbrega and José de Anchieta, eventually created a system of aldeias (villages) to Christianize the Native Americans. By the 1560s and 1570s the Jesuits had gathered thousands of indigenous people in dozens of aldeias.
In the 1560s disease, most likely smallpox, swept through the Native American villages, and large numbers of the indigenous people died. Given the Native Americans' resistance to plantation work and their susceptibility to epidemics introduced by European settlers, the Portuguese colonists began to use African slave labor to satisfy their rapidly increasing labor needs.
C. Colonial Brazil
With the establishment of early settlements along the coast and the successful introduction of sugar cultivation, Brazil began developing an economy based on plantation agriculture and powered by slave labor. The introduction of large numbers of African slaves transformed areas of Brazil into multiracial societies where Native American, European, and African peoples mingled. Following the discovery of gold in the captaincy of Minas Gerais (General Mines) in the late 1600s, Brazil expanded its borders into the interior of the continent. Gold made Brazil the most economically important region of the Portuguese Empire and caused a major shift in the concentration of Brazil's population. Settlements in southeastern Brazil, nearer the gold regions, grew at a rapid pace. Eventually the wealth and influence of the southeastern region eclipsed that of the older settlements of northeastern Brazil.
C.1. Plantation Society
The Portuguese initiated the Atlantic slave trade in the 1440s, bringing black Africans back to Lisbon, the capital of Portugal. Slavery dated from ancient times in both Europe and Africa, but the enslavement of black Africans by Europeans was new. For three centuries (roughly 1550 to 1850) Europeans transported their human cargo from Africa to the Americas. More than 10 million Africans survived this forced passage, with about 3 to 4 million going to Brazil alone.
Along the coastal zones of the Northeast, especially in the captaincies of Bahia and Pernambuco, the slave trade created a black majority. (Some 80 percent of the people of the northeastern coast today are descendants of Africans.) As the decades passed, the mulatto population of mixed European and African ancestry grew increasingly larger. The mixing of Native Americans and Portuguese produced the racially mixed mamelucos. The mulattoes and mamelucos formed racial, social, and cultural groups midway between the dominant white elite and the African slaves and indigenous population at the bottom of the social structure.
Probably three-fourths of the 50,000 Portuguese colonists lived near Salvador and Olinda, the capital of Pernambuco. For every white colonist in the early 17th century, there may have been as many as three African slaves. There was probably a total of several hundred thousand Native Americans in the interior. By the early 17th century, the sugar boom had created one of the fundamental patterns that would long plague Brazil: A small white elite controlled vast landholdings and dominated an economic and political system with a nonwhite majority.
In 1580, after the death of King Sebastian of Portugal, who left no heir, King Philip II of Spain placed himself on the Portuguese throne through bribery and the threat of war. The merging of the Spanish and Portuguese monarchies lasted until 1640 when the Portuguese regained their independence. The union created the second largest empire in world history, to be eclipsed later only by the British Empire. It included control of most of the Americas, the Philippines, the Portuguese trading empire in Asia and Africa, and Spanish possessions across Europe—The Netherlands, Sicily, and southern Italy.
Unfortunately for the Portuguese, the forced coalition with Spain drew them into bitter European power struggles between the Spanish and the Dutch. Involvement in this struggle was very costly for the Portuguese. By 1650 the Dutch had taken the Asian spice trade from the Portuguese and had gained control of the Indian Ocean. In Africa, Dutch attackers captured Portuguese territory in Angola as well as Portugal's West African slave ports and held them for decades. In the 1620s the Dutch attacked Rio de Janeiro, Salvador, and Recife. After a bloody struggle they were driven back. A second incursion in 1630 left the Dutch in control of Recife and Olinda, which the Dutch occupied until the 1650s. After their expulsion, the Dutch (followed by the English, French, and Spanish) set up their own sugar plantations in the islands of the Caribbean. Although sugarcane remained Brazil's major crop, the new competition sent the colony's economy into decades of decline.
C.2. Discovery of Gold and Diamonds
In the late 17th century, Brazilian explorers known as bandeirantes began to find gold in the mountain streams to the north of Rio de Janeiro. Word of the discovery of gold filtered back slowly to the coast and to Lisbon. By 1700 the western world's first great gold rush had begun. Thousands of colonists and slaves poured into the rugged mountains north of Rio de Janeiro. The rush eventually spread on a smaller scale to the west, to present-day Goiás and Mato Grosso. It received new stimulus in the 1720s with the discovery of diamonds in the region north of the gold fields. Gold and diamond production rose dramatically until 1760. Probably 80 percent of the gold circulating in 18th-century Europe came from Brazil. The discovery of gold revitalized Brazil's economy, which had been stagnating since the decline of the sugar plantations, although the increase in available cash also caused prices to rise in the colony. In Lisbon, the Portuguese monarchy grew rich from collecting its one-fifth share of the gold that was mined in Brazil. Sugar, gold, and diamonds established Brazil as the economic heartland of the battered and reduced Portuguese Empire.
For the first time, the Portuguese established effective colonization in the interior. The area of Minas Gerais became the most populous in Brazil. The bandeirantes and prospectors had extended the reach of Portugal far into the interior, creating a Brazil of continental dimensions. The Treaty of Madrid signed by Spain and Portugal in 1750 moved the old Tordesillas line westward to reflect the lands effectively occupied by the two major colonial powers in South America. The present boundaries of Brazil roughly follow that line.
The flow of goods and people into the southeast also drained an already weak northeastern plantation economy. In 1763 the king moved the colonial capital from Salvador to the booming city of Rio de Janeiro, which served as the main entry and exit point for colonists, slaves, and goods to and from Minas Gerais. The result of the gold rush in Brazil is evident in the dozens of beautiful baroque churches and hundreds of statues and paintings, principally in Minas Gerais.
In Portugal the wealth from Brazil made the monarchy very powerful. The dictatorial Marquis of Pombal, the chief minister of King Joseph Emanuel of Portugal, used this power to modernize the imperial system. In 1755 he abolished slavery in Portugal and prohibited the enslavement of Native Americans by declaring them free citizens of Brazil. Pombal wanted to outlaw African slavery in Brazil as well, but he realized that slavery formed a central part of Brazil's plantation-based economy. Recognizing the importance of Brazil to the economic well-being of Portugal, Pombal tried to improve the efficiency of the Brazilian economy and administration and to lessen tensions between colonists and their Portuguese rulers. He involved Brazilian-born individuals in the colonial government, promoted new crops, and expelled the Jesuits, who had opposed his economic programs.
D. Independence
In 1789 elites in the captaincy of Minas Gerais revolted, protesting the reassertion of imperial control and the imposition of new taxes. An early sign of Brazilian nationalism, the Minas Conspiracy involved prominent figures as well as military officers. The revolt failed and royal courts sentenced most of the conspirators to prison or exile. The only nonaristocratic member of the conspiracy, a military officer by the name of Joaquim José da Silva Xavier, became the scapegoat. Best known by his nickname, Tiradentes (Toothpuller)—one of his many professions was dentistry—he was hanged in 1793 and became a martyr for the cause of Brazilian independence.
The connection between Portugal and Brazil was severed when Napoleon I and his armies invaded Portugal and Spain in 1807 and 1808. Napoleon, who had become emperor of France following the French Revolution (1789-1799), deposed and imprisoned the Spanish king Ferdinand VII in 1808. This left the Spanish American colonies isolated from royal control and set off a chain reaction that led to a series of long and bloody wars for independence (see Latin American Independence). Brazil avoided a similar fate when the monarchy fled Lisbon shortly before French troops entered the city in 1807. With the help of their British allies, who were fighting Napoleon's forces, the royal family and 10,000 Portuguese followers made an unprecedented voyage across the Atlantic to Brazil, transferring the center of the empire to Rio de Janeiro. For the first and last time in Western history, a European monarch would rule his empire from the colonies.
Portugal's prince regent, the future King John VI, arrived in Brazil in early 1808 and for the next 13 years ruled Portugal's Asian, African, and American colonies from Rio de Janeiro. In 1815 John VI elevated Brazil to the status of a kingdom, placing it on an equal footing with Portugal. The presence of the monarchy and court in Rio brought Brazilian and Portuguese elites together and paved the way for a gradual transition to independence.
By 1815 Napoleon had been defeated in Europe, opening the way for the monarchy to return to Lisbon. John VI, however, decided to remain in Brazil, but in 1820 the Portuguese army headed a revolution designed to bring about a constitutional government. The revolutionaries agreed that John VI would serve as constitutional monarch of the empire, but only on the condition that he return to Portugal. Threatened with the loss of his crown, John reluctantly left for Portugal in 1821. His 23-year-old son Pedro remained in the colony as prince regent of Brazil.
Pedro and his advisers realized that revolutions in other Latin American countries were encouraging a movement for national independence in Brazil. A new and aggressive Cortes (parliament) in Portugal contributed to the demand for independence through a series of inept actions that offended many influential Brazilians. Portuguese members of the Cortes showed open hostility toward the Brazilian representatives, whom they regarded as unsophisticated residents of a backward province. The Cortes further alienated Brazilians by attempting to restore Brazil to colonial status. Rather than trying to resist the growing momentum for independence, Pedro and his advisers decided to take control of this movement. On September 7, 1822, after receiving orders from the Portuguese Cortes curtailing his authority in Brazil, Pedro declared Brazil's independence. Thus Brazil became one of the few Latin American colonies to make a peaceful transition to independence.
Pedro became Brazil's first emperor as Pedro I. His greatest challenge was to keep this new nation of continental dimensions from fragmenting into several countries, as had happened in Spanish America. He hired Lord Thomas Cochrane, an admiral who had been thrown out of the British navy, to enforce his authority in Brazil. Cochrane defeated the small Portuguese fleet and crushed separatist revolts in the major regional centers along the coast. With a small, hired navy and very few battles, Brazil retained its unity after gaining its independence. Portugal recognized Brazil's independence in 1825.
Despite his role in leading Brazil to independence, Pedro soon lost much of his support. He had been a resident of Brazil since the age of ten, but he was still Portuguese. Although Pedro abdicated the Portuguese throne, which he inherited in 1826, many Brazilians remained suspicious of his continued involvement in the affairs of his native Portugal. Members of the Brazilian elite were dissatisfied with Pedro for a number of reasons. Many of them opposed the new constitution written under his supervision and enacted in 1824. They were also displeased when he overrode the decision of the newly created Brazilian parliament and surrounded himself with Portuguese-born cabinet ministers. In the 1820s Pedro chose to renew a longstanding struggle with Argentina over the southern border of Brazil. The struggle erupted into the Cisplatine War (1825-1828). The war was unpopular with many Brazilians, especially after Brazil suffered a major military defeat at the hands of the Argentines in 1827. Faced with widespread opposition to his rule, Pedro abdicated his Brazilian throne in 1831 and returned to Portugal.
E. Pedro II and the Brazilian Empire
Like his father, Pedro I left behind his eldest son, the future Pedro II, to take his place in Brazil. Barely four years old when his father and family returned to Portugal in 1831, the young Pedro grew up a virtual orphan and received an extraordinary education. Carefully chosen tutors taught the future emperor Latin, Greek, French, German, Spanish, and English and gave him a broad education in the arts and sciences.
While the young emperor-to-be grew up, a council of regents appointed by Parliament ruled the country. For the first time, Brazilians governed Brazil. As in most of 19th-century Latin America, two political parties contended for power. Conservatives looked back to Portuguese values and traditions for their inspiration. They sought to maintain a strong centralized monarchy, a slave economy, and the influence of the Catholic Church. Liberals sought to mold their country in the image of England, France, and the United States. They wanted to diminish the influence of the church, restrain centralization and monarchy, and move toward a free labor economy. These were the ideals. When in power, each faction tended to be practical, sometimes implementing programs fought for by their opponents.
Throughout the 1830s the absence of a strong executive, disputes between liberals and conservatives, and powerful regional revolts threatened to shatter the fragile unity of the new nation. The constitution did not allow for the coronation of young Pedro until his 18th birthday, in December 1844. However, several factors combined to result in his coronation in 1840. Pedro was exceptionally mature, and both parties hoped that a monarch would provide the stability to prevent rebellions. In addition, both parties hoped that they might dominate the teenage emperor. In 1840 the Parliament offered the 13-year-old Pedro the crown. He accepted, beginning an era known as the Second Reign that lasted from 1840 to 1889.
E.1. A Changing Economy
The 1840s also mark the emergence of coffee cultivation, which became the engine of economic growth that transformed Brazil during the next century. Like sugar, coffee was not native to the Americas, but had been transported there from its place of origin in Africa. Cultivation spread through the fertile valleys near Rio de Janeiro in the 1820s and 1830s. During the next century, coffee cultivation also spread rapidly in the area north and west of Rio, in southern Minas Gerais and, most prominently, in the province of São Paulo. The rapid expansion of coffee fields quickly made Brazil the world's leading exporter, a position it continues to hold today. Revenue generated by coffee drove the Brazilian economy until the Great Depression of the 1930s caused the collapse of national economies around the world. Coffee established southeastern Brazil—principally the states of Rio de Janeiro, Minas Gerais, and São Paulo—as the economic and political core of the nation.
In 1839 the discovery of vulcanization—a processes that stabilizes products manufactured from rubber—caused rapid financial growth in the frontier towns of the Brazilian forests, where rubber was harvested from the sap of trees native to the area. Brazil produced the vast majority of the world's rubber until early in the 1900s, when the British used smuggled seeds to establish more efficient plantations in East Asia.
E.2. Slavery
The coffee economy remained the backbone of the Brazilian economy long after rubber production collapsed, and it ran on slave labor. Brazil had imported half a million slaves in the 17th century to work on the sugar plantations of the Northeast. In the 18th century the gold fields of Minas Gerais had absorbed another 1.5 million Africans. In the first half of the 19th century alone, Brazil imported another 1.5 million slaves to fill the demand for labor on the coffee plantations of the southeast. As the abolitionist movement gained strength in England and the United States in the 19th century, British pressure forced Brazil to halt its 300-year-old Atlantic slave trade in 1850.
The 3 to 4 million Africans who entered Brazil as slaves up until 1850 fundamentally shaped the composition of Brazilian society. In 1800 Brazil had the largest slave population in the world (half of its population of 3 million), and this forced migration created a truly African American culture in Brazil. African music, religions, foods, and language patterns blended with the culture of the Portuguese and the Native Americans to produce a cultural mosaic that was a mixture of African, European, and Native American influences. European colonists adopted Native American customs and borrowed words from the indigenous languages, while African slaves blended their own religious rituals with those of Christianity to form such new Afro-Brazilian religions as Umbanda, Macumba, and Candomblé.
Although the slave trade was abolished in 1850, slavery remained legal in Brazil. Slavery had been central to the fabric of life in Brazil for so long that dismantling slavery took much longer than in any other society in the Americas. The slave system began to disintegrate in the 1880s with the rise of a vocal abolitionist movement, largely in the cities, and the growing tendency for slaves to flee from their masters. Legislation by conservatives attempted to stretch the process over decades by gradually freeing the children of slaves beginning in 1871 and by emancipating elderly slaves after 1885. By 1888 unrest on plantations, and the refusal of the army to step in and halt the flight of slaves from their masters, brought the system to the brink of chaos. Ruling in place of her father, who was in Europe for medical treatment, Princess Isabel decreed the end of slavery in the “Golden Law” of May 13, 1888. Rather than face the anarchy and upheaval of massive slave unrest and flight, slaveowners grudgingly accepted abolition.
With the supply of new slave labor cut off after 1850 and the slave system in a state of disintegration, coffee planters turned to European immigration to meet their labor needs. Some 2.7 million immigrants—mainly from Italy, Spain, and Portugal—arrived in southeastern and southern Brazil between 1887 and 1914. These immigrants gradually replaced slaves as the labor force in the coffee fields. They turned southern Brazil into an area with a more urban and European culture, strikingly different from the older mining and plantation regions of Minas Gerais and the Northeast, where a more relaxed, rural atmosphere prevailed and where African cultural influences remained strong among the Afro-Brazilian population.
E.3. End of the Empire
In stark contrast to the upheaval and instability of some Latin American countries, Brazil's government was stable during the middle part of the 19th century. The Liberal and Conservative parties shared power, with the emperor acting as a moderating power between the two. The emperor called for new elections when it appeared that the ruling party faced a political crisis; invariably the opposition party would win the new elections.
There were elements of Brazilian society that did not support this power-sharing arrangement, however. In the 1870s and 1880s a republican movement emerged that called for the end of the monarchy and the creation of a republic modeled after the United States. Republicanism was especially strong among members of the army.
Over the last century, the military has played a central role in Brazilian society and politics, but this was not the case in the early years of independence. Brazil avoided most of the bloodshed and huge military buildup that plagued the early years of the Spanish American nations. The Brazilian army remained relatively small and did not play a significant role in the nation's affairs until the War of the Triple Alliance (1864-1870). For complex reasons, Brazil joined Argentina and Uruguay in this long and costly war against Paraguay in the 1860s. Despite the enormous disparity in resources, Paraguay tenaciously resisted the invading armies for years, losing the majority of its adult male population and large chunks of territory. Brazil's inability to defeat tiny Paraguay highlighted the weaknesses of the Brazilian military. Disgruntled officers began to envision a future without the monarchy.
By 1889 abolition, republicanism, and dissatisfaction in the armed forces had all eroded Pedro's traditional support from landowners, the clergy, and the military. A small group of conspirators with key support from high-level army officers initiated a coup d'etat on November 15, 1889. The ailing, 62-year-old Pedro found himself with little support and, like his father, chose exile over resistance. The day after the coup the royal family sailed to exile in Portugal and France.
F. The First Republic
Brazil's first republic was established in 1889. A Constituent Assembly convened to draw up a new constitution and swiftly decreed the separation of church and state as well as other republican reforms. In June 1890 it completed the drafting of a constitution, which was adopted in February 1891. Similar to the Constitution of the United States, Brazil's constitution eliminated the monarchy and established a federal republic, officially called the United States of Brazil. It replaced a parliament of senators appointed for life with an elected congress consisting of a house and senate. It also provided for an independent judiciary, and an executive branch headed by an elected president. The balance of power shifted significantly from a strong, centralized federalist system (see Federal Government) to a federalist system that granted substantial powers to the states.
Initially the military dominated the new government under the leadership of General Manuel Deodoro da Fonseca, a conservative general who had joined the revolt at the last minute. The assembly elected Deodoro president of a provisional government and chose a more decidedly republican general, Floriano Peixoto, as his vice president. An inflexible military leader, Deodoro proved incapable of working with the new congress, which took office in late 1890. They fought angrily over financial policy and over the extent of federal influence in the Brazilian states. Unwilling to deal with opposition, Deodoro dissolved Congress several months after it was elected and attempted to rule by decree. Faced with the possibility of civil war, he resigned the presidency in 1891. The tough Floriano assumed control and guided the republic through difficult times. He suppressed rebellions in the state of Rio Grande do Sul and in Rio de Janerio. Floriano supervised the republic's first elections in 1894 and handed power over to a civilian president, Prudente de Morais Barros, who had served as the first republican governor of São Paulo state.
With the election of Prudente, a politician from one of the leading coffee-producing states, the powerful coffee interests again dominated national politics. Under the constitution, voting was restricted to literate adult males. Because of a high illiteracy rate, this provision severely restricted the number of voters. Prior to 1930 no more than 4 percent of the total population voted in presidential contests. Landowners maintained a monopoly on power through political machines—tightly controlled political organizations that they set up in each of Brazil's states. These machines controlled enough votes to guarantee that landowners dominated local and national politics. Governors in the more populous states used their political machines to ensure that the presidency of Brazil went to an “official” candidate of their choosing. Over the four decades following Prudente's election, the coffee states of São Paulo, Rio de Janeiro, and Minas Gerais shared political power. Nine of the 12 presidents from 1894 to 1930 came from these three states, which produced most of Brazil's wealth and accounted for most of its population.
G. Social Change
Up until the early 20th century, Brazil's economy and social structure reflected a pattern established in the early days of colonial development. A small class of wealthy landowners controlled most of the country's wealth and power, while the majority of Brazilians—mostly slaves, their descendents, and the mulatto population—lived in relative poverty as agricultural workers. This situation began to change gradually toward the end of the 19th century when large numbers of immigrants arrived in Brazil. After the slave trade was abolished in 1850, the coffee planters could not find enough workers and the government began actively recruiting Europeans to immigrate to Brazil. In the last decade of the 19th century about 100,000 European immigrants arrived each year. The numbers increased during the early years of the 20th century, reaching a peak of about 600,000 for the period from 1911 to 1915. Many of these immigrants settled in the cities and urban centers.
Although Brazil's economy continued to be based on agricultural production, industry had begun to develop by the 1920s, especially around the cities of Rio de Janeiro and São Paulo. Industrialization was accompanied by the growth of a small working class and middle class. Both groups found themselves excluded from the power structure developed by landowners to dominate rural workers. The immigrants, particularly Italians who made up about a third of the immigrant population, introduced new political ideologies from Europe, where workers and middle-class citizens were becoming increasingly active in politics. Many of these workers were frustrated with their lack of access to Brazil's political system. As their numbers grew, their demands for a place in the nation's political system also increased. Socialists and anarchists organized unions and strikes, but they encountered intense repression from the government.
H. The Revolution of 1930
A more powerful challenge to the regime came from disgruntled young military officers. Many of these officers supported social reform, but they were also concerned about their professional status. They believed that the civilian government had neglected the army, which struggled with poor equipment, outdated training, and slim prospects for promotion of officers. On July 5, 1922, a group of young officers known as tenentes (lieutenants) staged a revolt in Rio de Janeiro against the government. The revolt was unsuccessful, but two years later a more serious uprising by tenentes in São Paulo shook the foundations of the regime for several weeks before government forces suppressed it. By the late 1920s the challenges of army officers, middle-class groups, and urban workers threatened the stability of the regime.
A worldwide economic crisis and a serious split within the landowning elites over the presidential succession finally brought down the government. In 1929 economies throughout the world collapsed as the Great Depression began. In Brazil the depression caused a dramatic decline in coffee exports and a corresponding increase in the nation's foreign debts. President Washington Luís refused to change his economic policy in order to deal with the crisis, and he did little to improve economic conditions. Amid growing public discontent about the economy, the political elite split over the 1930 presidential election. The official government candidate, Júlio Prestes, was supported by the political machines in the larger states. He was opposed by Getúlio Vargas, governor of Rio Grande do Sul, who had organized a coalition of smaller states, opposition parties, and discontented elements in the military and in urban centers. The March election went smoothly for the government, with Prestes winning easily, but in October, before the new government was inaugurated, a revolt erupted following the assassination of Vargas's running mate, João Pêssoa. After a month of fighting, President Luís stepped down, and rebel troops marched into Rio de Janeiro. The Revolution of 1930 had triumphed.
I. Getúlio Vargas and the New Brazil
Getúlio Vargas played a central role in the 1930 revolt, and he emerged as the most important political figure in 20th-century Brazil. Vargas was the son of an elite ranching family near the Argentine border. In less than a decade, from 1922 to 1930, he rose from federal deputy to governor of his home state of Rio Grande do Sul, and then to presidential candidate and leader of the revolutionary coalition. From 1930 to 1934 he ruled Brazil as the head of a provisional revolutionary government. The Constituent Assembly elected him president in 1934.In 1937, as elections approached, Vargas led a coup with the help of the army, and for the next eight years he ruled the nation as a dictator. He eliminated Congress, ruled by decree, and established federal control over Brazil's states by replacing almost all the governors with his own appointees. With the state political machines neutralized, Vargas ruled without the support of the landowning elite. He maintained power with the backing of the military, the urban working and middle classes, and politicians in smaller states, who had been excluded from power under the republic.
I.1. Estado Novo
During this period Vargas turned Brazil into an Estado Novo (New State). The Estado Novo was based on corporatism, which advocates close economic collaboration between employers and workers under the centralized direction of the government. Vargas appointed government planners to organize industrialization programs and foreign trade policies, and he placed labor unions under the direct control of the government.
To satisfy his urban supporters, Vargas worked to create new Brazilian industries in the 1930s and 1940s. The most important new industry was iron and steel, which received a major boost in 1941 when construction began on the first integrated iron and steel mill at Volta Redonda, in Rio de Janeiro state. Vargas also established policies to protect domestic production from competition from foreign imports. These protectionist policies pleased an emerging new class of entrepreneurs and industrialists and created more jobs for blue-collar and white-collar workers.
Vargas initiated a social welfare revolution as well. Much like the New Deal policies of U.S. president Franklin Roosevelt, Vargas's legislation provided workers with basic social welfare protections: minimum wage, maximum working hours, pensions, unemployment compensation, health and safety regulations, and unionization.
I.2. World War II
During World War II (1939-1945) Brazil fought with the Allies. The Vargas regime, aided by the United States, embarked on a vast program of industrial expansion, emphasizing increased production of rubber and other vital war materials. Naval bases and airfields, constructed at strategic coastal points, became important centers of Allied antisubmarine warfare. The Brazilian navy eventually assumed all patrol activities in the South Atlantic Ocean. In 1944 and 1945 a Brazilian expeditionary force participated in the Allied campaign in Italy. Brazil was the only Latin American country to contribute troops to the war effort.
In the early 1940s, Brazilians were fighting a war against dictators in Europe while living under a dictatorship at home. More and more Brazilians began demanding a return to democratic elections, especially after Vargas postponed the elections he had scheduled for 1943. Vargas responded to these demands by promising presidential elections for 1945 in which he would be ineligible to run for the presidency. Vargas realized that he would eventually have to build a base of support among voters if he hoped to remain active in Brazilian politics. He began to shift his policy to the left in order to establish solid support among urban workers, poor rural laborers, and leftists. He moved toward economic nationalism, challenging the economic and business interests of Britain, the United States, and other foreign powers. He also created social legislation to protect workers. These new laws established pensions and social security benefits, and set a minimum wage and maximum work hours.
Many Brazilians feared Vargas might stage another coup before the elections, as he had done in 1937. To prevent this from happening, members of the army—many of whom were alarmed at his turn to the left—staged a coup of their own in October 1945 and forced Vargas to resign. Vargas quietly left for his ranch in southern Brazil, and the electoral campaign proceeded under a caretaker government.
J. The Age of Mass Politics
The fall of Vargas ushered in a new era of mass politics in Brazil. A new constitution was approved in 1946 that dismantled the highly centralized government organization of the Estado Novo, returned a great deal of power to the individual states, and provided for regular elections. With the return of elections, politicians had to campaign for the votes of the people through such modern methods as political rallies, radio broadcasts, and newspapers. Although political machines returned to power in many areas, particularly in the rural regions, a style of politics known as populism emerged. Populist politicians challenged the traditional power of the coffee-growing landowners by forging a political following among the masses, especially among the growing number of urban workers and sectors of the middle class. Vargas had used support from these groups to maintain power as dictator. Now elected politicians competed to win the votes of workers and middle-class Brazilians.
Another new feature on the political landscape was the formation of truly national political parties. Three major parties took shape in the 1940s. The National Democratic Union (UDN) attracted the more conservative elements in national politics, while the Social Democratic Party (PSD) appealed to more moderate and liberal voters. Labor leaders and their political allies formed the Brazilian Workers Party (PTB) to represent the interests of the Brazilian working class. The Brazilian Communist Party (PCB), which was founded in 1922 and had survived severe repression for more than two decades, competed with the Brazilian Workers Party for the support of the urban working class.
In the elections of 1945, the Social Democratic Party candidate, Eurico Dutra, triumphed with 55 percent of the vote. Dutra was a former minister of war and one of the most influential officers in the Brazilian military when he became a presidential candidate. In January 1946 he began a five-year presidential term. A hesitant and cautious president, Dutra did not make any major changes in the political system. When he withdrew government support for industrialization, Brazil's economy again became heavily dependent on coffee exports.
J.1. Vargas's Second Presidency
Meanwhile, Vargas won election to the Senate and began planning his return to power. With the support of the Brazilian Workers Party, Vargas defeated the candidates of the Social Democratic Party and National Democratic Union in 1950. Five years after a military coup ended his dictatorship, Getúlio Vargas returned to the presidency with an electoral victory.
Despite his electoral victory, opposition parties, which controlled the Senate and House, fought Vargas at every turn. Vargas saw his election as a mandate to complete the unfinished work begun during his dictatorship. The state role in economic and social development was further expanded. Vargas created federally financed banks, corporations, and agencies, including the national bank of social and economic development (BNDES), the Brazilian petroleum corporation (Petrobrás), and the Brazilian electric corporation (Eletrobrás). At the same time, Vargas turned to the support of urban workers as a base for his political power. Business interests, multinational corporations, and foreign governments viewed Vargas's alliance with the lower classes with suspicion and came together to oppose him. Opponents of Vargas controlled almost all the major newspapers, magazines, and radio stations, and they attacked the president constantly.
By late 1954 the country had come to a political impasse, with Vargas and his opposition in a deadlock. A dramatic attempt to assassinate one of Vargas's bitter enemies broke the deadlock after investigations tied Vargas's personal bodyguard to the attempt. The army high command gave Vargas an ultimatum: resign or be overthrown. Facing the end of a long and brilliant political career, Vargas chose his most dramatic maneuver as his last: On the morning of August 24, 1954, he committed suicide in his bedroom at the presidential palace.
J.2. Economic Expansion
Vice President João Café Filho completed the remaining 17 months of Vargas's term. In the 1955 presidential elections, the Social Democratic Party and the Brazilian Workers Party formed a coalition. This coalition elected the governor of Minas Gerais, Juscelino Kubitschek as president with João Goulart, Vargas's controversial labor minister, as vice president. Kubitschek campaigned on the slogan “fifty years in five,” promising to achieve fifty years of progress during his five-year term. Arguably, he succeeded. During the late 1950s the Brazilian economy surged forward as heavy industries—iron, steel, and automobiles—and basic infrastructure—roads, communications, and construction—expanded. The Kubitschek government helped finance many of these modernization projects by printing currency that had no financial backing. The government printed enough unsupported currency to accelerate the cycle of inflation, which eventually led to major economic problems for Brazil.
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Kubitschek's most vivid and enduring legacy is Brasília, a new capital city built on the plains of central Brazil. Many Brazilians thought that a new capital in the interior of Brazil would stimulate development in the region. Although the idea of moving the capital into the interior dated from the 18th century, it was Kubitschek who convinced the legislature to accept the idea and to fund it. Between 1956 and 1960, Kubitschek personally supervised the construction of this modern, futuristic city, located 800 miles north of Rio de Janeiro. Inaugurated in April 1960, Brasília now has more than 1 million inhabitants.J.3. Descent into Chaos
By the 1960 presidential election, a new figure had emerged on the national political scene. Jânio Quadros, the governor of São Paulo, was the National Democratic Union candidate for the presidency. Quadros vowed to sweep government clean of corruption and even brandished a broom as his symbol while campaigning. He won the presidential election. However, because the presidential and vice presidential candidates were elected separately in Brazil, the Brazilian Workers Party candidate, João Goulart, was elected vice president.
Just seven months after his inauguration in January 1961, Jânio Quadros suddenly and unexpectedly resigned the presidency. No one, including Quadros, has ever offered a satisfactory explanation for the resignation. Whatever the reasons behind Quadros's resignation, it provoked a crisis. The constitution called for Vice President João Goulart to succeed Quadros, but powerful figures in the military high command quickly declared him unacceptable. Many Brazilians saw Goulart as a Communist or Communist sympathizer, whose political ideas were too far to the left of center. The Congress, and many political leaders, rejected the military's position and called for respect for the constitutional process.
For nearly two weeks, the military and Congress negotiated a solution to the impasse. Goulart was sworn in, but his presidential powers were curtailed. New legislation created a prime minister, who would be responsible to the legislature and who would share many of the political powers held by the president. This legislation was reversed in 1962, when Goulart held a national referendum in which voters restored the presidential system of government.
The military's hatred of Goulart must be seen in the context of the Cold War, an intense economic and diplomatic struggle between the United States and its allies and the group of nations led by the Union of Soviet Socialist Republics (USSR). By the 1960s many Brazilian military officers had come to see Brazil as a frontline nation in the Cold War struggle between Communism and capitalism. This vision was fostered by Brazil's alliance with the United States and by ideas circulated in courses and specialized schools for the officer corps. Many officers feared a revolution in Brazil, and they viewed Goulart, with his support for leftist causes, as the leader of Communist forces in Brazil.
Goulart was also confronted with problems that sprang from the gradual disintegration of the economy. Inflation continued to increase, and the government faced large debt payments on foreign loans taken out to finance economic development during the Kubitschek administration. Goulart's economic advisers devised a plan to stabilize the economy by controlling wages and reducing government spending. Goulart followed this policy for several months, but then abandoned it. He feared that the imposition of wage controls would cost him the support of workers, who were his strongest political supporters, and that concessions to foreign bankers would alienate Brazilian nationalists. By early 1964 inflation approached 100 percent a year, foreign loans came to a halt, and the economy neared collapse.
Following the advice of his most radical advisers, Goulart attempted to strengthen his support among the masses. In the first months of 1964 he staged huge rallies in several of Brazil's major cities. He also signed decrees setting low-rent controls, nationalizing petroleum refineries, seizing unused lands, and limiting profits that could be taken out of Brazil by foreign investors. In a final, desperate move to check the power of his enemies in the military high command, Goulart made a televised speech to a group of sergeants. He told them to disobey their superiors if they believed their orders were not in the best interest of the nation. Conspirators in the military had been contemplating the overthrow of Goulart for months; on March 31, after Goulart's speech to the sergeants, the army took control of the government. Goulart fled the country, never to return.
K. Military Rule
K.1. Moderate Leadership
The military intervened with two primary objectives: to eradicate the left and to rebuild the collapsing economy. Military leaders split between political hardliners and moderates over how to achieve these goals. Led by General Humberto Castello Branco, who was named president, the moderates dominated the early years of the regime. Rather than shutting down civilian politics completely, the military attempted to purge the system of “undesirable” elements. They arrested and imprisoned people they perceived as opponents of the regime. Many fled the country. The military dismissed thousands of civil servants, military personnel, and politicians from their jobs and prohibited suspected political opponents from voting or holding office.
The military hoped that these actions would be enough to silence their opponents. This was not the case. By 1968 growing political opposition—even from former supporters of the military government—increasingly called for a return to civilian rule. Even the Supreme Court and the Congress, whose membership had been approved by the military leaders, began to exhibit signs of independence. The Supreme Court ordered the release of three students who had been detained by the government, and the Congress refused to allow the trial of one of its members who had criticized the military. University students in Brazil mounted huge demonstrations against the generals in 1967 and 1968. In addition, a small guerrilla movement developed, based largely in the cities. Its members kidnapped U.S. ambassador Charles Burke Elbrick and demanded a ransom and the release of political prisoners held by Brazil's military government. Over the next four years guerrillas continued their campaign against the government by kidnapping foreign diplomats, bombing government buildings, and robbing banks to finance their activities.
K.2. Hardliners Take Control
The growing opposition provoked a sharp response from the hardliners, who launched a coup within the regime and took the upper hand in the military high command. The coup was triggered when General Artur Costa e Silva, who had been voted president by the legislature in 1967, suffered a series of incapacitating strokes in 1968. The three military cabinet ministers (army, navy, and air force) then took charge.
The generals saw chaos and Communists all around them, and they cracked down, initiating intense repression to crush the opposition. In December 1968 they shut down Congress. The military leaders issued a new constitution that concentrated power in the executive and they named a new president, General Emílio Médici. Between 1968 and 1974, Médici and the hardliners unleashed the systematic and widespread use of torture and repression to silence their opponents. Thousands suffered at the hands of the torturers, and hundreds died.
The regime took control of labor unions and silenced anyone who criticized the regime. Within a few years the guerrillas had been entirely wiped out. The government eventually shut down the national student union, and universities purged their faculties of those suspected of supporting leftist ideas. Large numbers of prominent Brazilian academics and artists went into exile in other Latin American countries, the United States, and Europe.
The years of repression coincided with the years of the so-called Brazilian miracle when the economy grew faster than any other economy in the world. During this period manufactured goods replaced coffee as Brazil's leading export. The staunchly nationalistic military wanted to make Brazil a world power and understood that a strong industrial economy held the key to their goal. They welcomed foreign investment, attracting billions of dollars. The regime channeled that investment into sectors of the economy considered critical for development. Among other things, these included the Trans-Amazon Highway, a large hydroelectric dam at Itaipú in southeastern Brazil, and a nuclear power program.
L. Return to Civilian Government
L.1. Abertura
By 1973 the economy was expanding at an extraordinary pace, and the military appeared to have control over the political system. Moderate forces within the military brought General Ernesto Geisel to the presidency in 1974. The son of German immigrants, Geisel initiated abertura (opening), a series of reforms that gradually allowed limited political organization and elections. The legal opposition party, the Brazilian Democratic Movement (MDB), began to win important elections.
Geisel handpicked his successor, General João Baptista Figueiredo. Figueiredo's presidency began in 1979 by furthering abertura with the declaration of a general amnesty for all political crimes since 1964. The government also allowed exiles to return home. Figueiredo released the last few political prisoners, and official censors finally left the pressrooms and television studios. The Figueiredo government also issued guidelines for the formation of new political parties and for open election of governors in 1982.
L.2. Economic Problems
Abertura was complicated by growing economic problems with roots going back to the enormous industrial and economic expansion of the late 1960s and early 1970s. This expansion had made the country heavily dependent on petroleum, much of which was imported. When Arab nations began limiting oil exports in October 1973, the price of oil skyrocketed, seriously crippling the Brazilian economy. The regime had already borrowed heavily to finance the so-called Brazilian miracle. To keep the economy going, and to avoid a recession, the Brazilian government borrowed billions from international agencies and banks to finance continued growth. The Brazilian foreign debt went from about $25 billion in 1974 to more than $100 billion in the early 1980s—at that time the largest foreign debt in the world. Inflation continued its upward trend, reaching levels far higher than during the crisis of 1963 and 1964. In 1982 Brazil halted all payments on the principal of its huge foreign debt, and the economy entered a severe recession.
L.3. Transition to Democracy
The battered economy severely discredited the military regime in the eyes of most Brazilians. Furthermore, few saw much need for a military regime, given that the threat of leftist revolution had long since been crushed. In 1984 millions of Brazilians took to the streets demanding immediate direct elections for president.
The government managed to fend off the calls for direct elections by instituting an electoral college, in which congressional delegates and state assembly members voted for the president. However, the massive public demonstrations helped split the government party. Many of the government's supporters in the electoral college defected and voted with the opposition, defeating the official government candidate for president in 1984. The electoral college instead chose Tancredo Neves, the governor of Minas Gerais, to become Brazil's first civilian president since 1964. They chose José Sarney as vice president. Sarney, a long time leader of the government party in the Senate, had played a key role in leading government supporters to join the opposition.
Neves, who was 74, fell desperately ill on the eve of his scheduled inauguration in March 1985. When Neves died in late April, before he could assume office, José Sarney was sworn in as president. Sarney immediately faced two momentous problems: the economic crisis and the need to continue the transition to a fully democratic regime by instituting a new constitution that would reestablish democratic institutions.
Inflation in 1985 approached 300 percent, the foreign debt continued to mount, and strikes broke out across the country as workers demanded higher wages. In a drastic effort to stabilize the economy, Sarney introduced the Cruzado Plan in February 1986. The plan froze prices and wages and it brought Sarney to the peak of his popularity when inflation ground to a standstill for a few months. Unfortunately, when the government unfroze prices and wages at the end of 1986, inflation exploded again. Interest payments on the foreign debt gobbled up nearly all of the country's huge trade surplus, draining the economy of badly needed capital. The government incurred large deficits in public spending, and foreign banks refused to extend new loans until the government implemented an economic austerity program.
The Congress elected in November 1986 drafted a new constitution that went into effect in October 1988. The constitution's provisions gave wider power to the legislature and decreased the influence of the executive branch, granted more tax revenues to the states and municipalities, and extended the vote to 16-year-olds. It eliminated the electoral college established by the military regime and allowed Brazilians to vote directly for president.
M. The Collor Administration
The election of Fernando Collor de Mello in late 1989, and his inauguration in March 1990, marked the completion of the long and difficult process of abertura. Finally, Brazilians had the opportunity to elect their president directly through the ballot box rather than having one imposed by a small clique of generals. More than 80 million Brazilians voted in the presidential election, the vast majority for the first time. In his first two years in office Collor implemented an economic program that brought inflation down, but failed to contain it. More important, he began to drastically curtail the state's role in the Brazilian economy and to dismantle protectionist trade policies.
The great hopes millions of Brazilians had for the Collor presidency soon disappeared as the economic program failed to halt extremely high inflation rates, which reached a peak of more than 1,500 percent in 1991. A corruption scandal also badly damaged the government. In 1992 legislative investigations uncovered an influence peddling scheme that involved hundreds of millions of dollars, much of it going to Collor. In December 1992 the Congress impeached Collor and swore in his vice president, Itamar Franco, to serve out the last two years of Collor's term.
N. The Cardoso Presidency
President Franco paved the way for the election of his successor, Fernando Henrique Cardoso. One of Latin America's most prominent intellectual figures, Cardoso was trained as a political sociologist at the University of São Paulo in the late 1950s and early 1960s. A former member of the Communist Party, Cardoso spent part of the 1960s and 1970s in exile. During the late 1970s he entered politics, eventually becoming a senator from the state of São Paulo and an unsuccessful mayoral candidate for the city.Franco chose Cardoso as his finance minister in early 1994 in yet another effort to combat runaway inflation and the debt crisis. Cardoso and a team of advisers put together the Real Plan. This plan created a new currency, the real, in 1994 and put into place a series of measures to reduce inflation without wage or price freezes. Inflation dropped from a rate of 45 to 50 percent per month in early 1994 to a rate of about 1 to 2 percent per month over the next two years, giving Brazilians their lowest inflation rates in decades.
The success of the plan made Cardoso a national hero and the leading contender for the presidency. Cardoso forged a coalition of his Brazilian Social Democratic Party (PSDB), the conservative Liberal Front Party (PFL), and several other parties. The former Communist convinced the business community and conservatives that his views had evolved, and were close enough to theirs to gain their support. With nearly 55 percent of the total vote in the November 1994 elections, Cardoso scored the most impressive electoral victory in 40 years.
Inaugurated on January 1, 1995, President Cardoso forged a majority coalition in Congress that passed fundamental legislative reforms during his first two years in office. This legislation on federal expenditures dramatically reduced government involvement in the economy. The government privatized major state enterprises, broke up the government-controlled telecommunications monopoly, and eliminated restrictions limiting the amount of money foreign corporations could invest in Brazil. The government also reduced expenditures in a number of social security programs and eliminated job security among civil servants in an attempt to reduce government expenditures.
Cardoso also worked to reduce tensions between landowners and the homeless squatters, who occupied large unproductive estates in the countryside. With 1 percent of the population owning 45 percent of the land in 1995, Brazil had the most unequal land distribution pattern in Latin America. Conflicts over land use and ownership led to a number of violent confrontations in 1995 and 1996 in which more than 40 people were shot and killed by Brazilian police. In November 1995 Cardoso signed a presidential decree that took possession of just over 100,000 hectares (250,000 acres) of land from large, private estates and reallocated it to more than 3,600 poor families.
In January 1996 Cardoso signed a more controversial presidential decree that allowed non-Native Americans to appeal land allocation decisions made by Brazil's Indian Affairs Bureau. Cardoso's decree allowed regional governments, private companies, and individuals to challenge indigenous land claims in certain areas of the country, primarily in the Amazon region of northern Brazil. The law was widely condemned by human rights, Native American, and religious organizations.
O. Economic Crisis and Reelection
Largely because of Cardoso's popularity and his success in revitalizing the economy, Brazil's legislature passed a constitutional amendment in 1997 allowing the president to run for a second term in office. Later in the year, however, Brazil's economy was shaken following a collapse in Asian stock markets. The resulting financial crisis affected stock markets in many developing economies. Reacting to the crisis, Brazil's government introduced an austerity program that reduced federal spending and temporarily restored foreign confidence in the economy. The economy received a second jolt in August of 1998 after the government of Russia defaulted on its foreign debts. Fearing that the economic crisis might spread through Latin America, investors began withdrawing their money from Brazil. Cardoso began negotiating an economic bailout with foreign lenders through the International Monetary Fund (IMF), an international agency designed to stabilize the world economy.
Even though the economy had taken a turn for the worse, Cardoso won election to a second four-year term in October 1998. The following month, the IMF and Brazil announced a $41.5-billion loan package to protect Brazil's economy. In return, Cardoso agreed to introduce legislation designed to cut back on government spending and to restructure Brazil's taxation and social security systems. In January 1999 the government devalued the national currency, the real, by 8 percent against the U.S. dollar. (Devaluation involves lowering the value of a nation's currency in relation to foreign currencies.) Financial experts hoped the devaluation would put the economy on a more secure footing by lowering the cost of Brazilian products in overseas markets, making exports more attractive and increasing the flow of cash into Brazil.
In June 1999 the government placed the military under direct civilian control. The separate army, navy, and air force ministries, which had been led by top military men, were combined into one Defense Ministry headed by a civilian cabinet minister appointed by the president.
