SECTION made by Getulio Vargas at the commemoration

SECTION 1: Identification and
Evaluation of Sources

The question this investigation seeks to answer is “How
successful were Vargas’s labor reforms and economic policies in re-stabilizing
Brazil after the Stock Market Crash and the start of the Great Depression?” and
focuses on the economic consequences of Vargas’s regime as well as the national
stability of Brazil during and after the Great Depression. The investigation
aims to examine the impact of labor laws on both the national economy and the
people of Brazil, as well as the long and short-term successes of his economic
policies. The sources evaluated in this section of the investigation are a
speech made by Getulio Vargas at the commemoration of Labor Day (1st
of May) in 1939, and an excerpt from a chapter authored by Joel Wolfe from the
book The Great Depression in Latin
America, compiled 2014. These sources provide historians with a first-hand
account of Vargas’s labor reforms, as well as an account that historically
contextualizes Vargas’s economic policies and provides insight into his
successes and failures. Together these sources supply this investigation with
contrasting perspectives that allow for critical analysis of the impact of
Vargas’s policies on the stability of Brazil.

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            The first evaluated source is a speech
made by Getulio Vargas at the commemorations of Labor Day on May 1st,
1939.  The origin of this source is
particularly valuable to this investigation as this speech was made by Vargas
himself and gives historians first-hand insight into his motives for the nation
and perspectives on labor reforms. Furthermore the value of the origin is
strengthened as the speech was given at an important celebration that honored laborers
and would have provided Vargas with the needed platform to encourage the
majority of his people to accept the new policies. The origin does present limitations,
however, as Vargas would have been unable to criticize his regime due to his
position as President. This limits the reliability of the speech as a
comparison between Vargas’s successes and failures as President.

The purpose of this speech was to convince the people
of Brazil that their labor was directly contributing to the strength of the nation.
This is shown in the following statement made by Vargas:  “Workers, as you see, in the current regime,
you directly participate in the organizing activities of the State, in flagrant
contrast with the situation previous to 1930.” (cite speech). This statement is
valuable as it shows historians the methods Vargas used to persuade his
audience to his perspective. The content of the speech as a whole provides this
investigation with a primary source to which we can compare the impact of
Vargas’s policies. One limit of the purpose of Vargas’s speech is the intended audience:
the workers and laborers of Brazil. Because this speech was written to convince
others of Vargas’s ideas, it almost certainly does not focus on any potential
negative impacts of the policies, and thus presents a one-sided view of the
potential of the labor reforms.

The second source is an excerpt from “Chapter 3.
Change with Continuity: Brazil from 1930 to 1945” by Joel Wolfe, from The Great Depression in Latin America,
published 2014. The excerpt focuses on how Vargas’s policies in the coffee
sector stimulated the economy and produced the greatest impact on the economic
stability of Brazil following the start of the Great Depression. The author,
Joel Wolfe, is a current professor at the University of Massachusetts whose
focus is the modern history of Brazil. The modern perspective Wolfe studies
covers fifteen years of Vargas’s rule, and provides historians with more detail
and greater depth of impact of Vargas’s policies. This benefits the extent of significance
of Vargas’s policies to this investigation. In an alternate view, Wolfe’s investigation
covers a relatively short span of time, which could limit the connections that
could be made between Vargas’s policies and the stability of Brazil.

Wolfe states at the beginning of his chapter that
Vargas’s grandest success was not his labor policies, as textbooks suggest, but
in fact his debt-financed support of the coffee industry. (cite wolfe 86-87). The
purpose of his investigation then follows to place all of Vargas’s policies
into historical context and compare them to one another, to highlight the
economic success of the coffee sector. This is valuable as it discusses the
consequences of each of Vargas’s policies in relation to the strength of the nation
and the stability of the economy, providing a firm perspective for this
investigation to analyze. One limitation to Wolfe’s purpose is that his
investigation highlights the economic success of Vargas’s coffee policies over
any successes (even minimal) of labor or other reforms, and in a large part
focuses on the limitations and failures of the labor policies.











SECTION 2: Investigation

Following a last-minute entry into World War I that
placed them on the winning side, Brazil found itself with a highly inflated
economy. This effect did not last long, however, and by 1928 the cost of
coffee, Brazil’s main export, had more than doubled (cite skidmore 96). The
Brazilian GDP per capita continued to rise through the 20’s, and the growth of
Brazilian industry provided for the formation of labor unions (cite online
paper “the great depression in Brazil” 4 and skidmore 97). Then, in 1929, the stock
market crashed. Brazil, like all industrialized countries in the Western
Hemisphere, suffered greatly, and found itself in an economic depression. By
January of 1930 coffee prices had dropped by more than fifty percent, and in
October of the same year a military coup placed presidential candidate Getulio
Vargas in the governing position (cite skidmore 97). By the time Vargas became
head of the Brazilian state, the country lacked major stability on the political,
economic, and social levels. As Vargas’s regime progressed, he instituted
national labor reforms and established economic policies in the agricultural
and working sectors. Although Brazil did eventually free itself from economic
depression and increased its national and economic stability, historians argue
concerning the extent of impact of Vargas’s reforms, and if, in the end, his
policies were actually responsible for re-stabilizing Brazil. Perspectives
range from “textbook” style, where workers were empowered by Vargas’s labor
laws and pushed to stabilize the Brazilian economy and social systems, to a
more modernistic approach, which examines the flaws in Vargas’s labor policies
on a social, political, and economic level (cite wolfe 81-82). These modern
perspectives focus instead on Vargas’s economic policies, and their varying
successes in reestablishing Brazilian stability on a national and global level.

As mentioned above, many historians reference the
labor reforms Vargas implemented as an effort to bring Brazil’s economy out of
depression. Through his primary fifteen-year span as president, Vargas
established laws that aimed to empower workers in the agricultural sector, stabilize
the national economy, and establish a centralized government. The first move
Vargas made was to establish a corporatist labor system. This attempt to balance
the national economy by grouping labor into different sectors was not very
successful, and Vargas was met with organized strikes across the nation (cite
wolfe 83). In 1939, Vargas established a National Ministry of Labor, which gave
representatives in each state the power to establish labor unions, whose
purpose was to equalize workers’ benefits and stimulate the economies of the
agricultural and industrial sectors (cite speech and wolfe 84). These policies had
little impact on industry, and virtually no positive effect on wages. The
failure of the unions left workers without the government support they needed.
Their frustrations again culminated in repeated strikes, letters, and
petitions, all directed at Vargas. A dissertation published in 1999 claims that
Vargas’s attempts to unionize workers was simply a bid for more governmental
control of the nation (cite dissertation 1999). This view is supported by Vargas’s
implementation of a minimum wage in 1943. The people, who had never supported
Vargas’s corporatism, were outraged. Wolfe recounts that “Vargas’s policies had
failed to provide Brazil’s workers with direct support (e.g., wage increases) or
indirect aid (through union-based social services) during an era of sustained
increases in the cost of living” (cite wolfe 85). So far Vargas’s labor reforms
had only limited success and practically no positive reaction, and the majority
of his policies consistently failed to reach rural sectors. It is here where
the “textbook” perspective fails. When he was established as president in 1930,
one of Vargas’s aims was to move away from the statist chauvinism that had
prevailed prior to his rule, and focus instead on centralizing the government.
Vargas established the National Ministry of Labor, which drew power away from
the coffee oligarchs that had previously controlled all state functions. This
did not, as Vargas had hoped, centralize the nation. As shown, his further
attempts to spread labor reforms failed to reach rural sectors, leaving the
nation widely dispersed. His political moves also prompted a Paulista attempt
at civil war in 1932 (cite wolfe 85). This new resistance, combined with a
dissatisfied working class and the powerless rural sectors, ruined Vargas’s chances
at centralizing the political sphere of Brazil (cite wolfe 87). Altogether, despite
Vargas’s attempts to promote the agricultural and industrial sectors through
unionization and other labor reforms, the policies had little economic effect
and also failed to centralize the government.

Vargas made several egregious failures in the labor
sector. Despite this, following the aftereffects of the crash of 1929, Brazil’s
GDP per capita rose for nearly a decade (cite paper 4). Joel Wofle claims that
the primary reason for this was financial support to the coffee sector from the
government (cite wolfe 86-87). As previously explained, by 1930 coffee prices
had dropped by more than fifty percent, and prior to the crash, over seventy
percent of Brazilian export revenues had come from selling coffee (wolfe 84).
The drop in value of their main commodity left the nation’s economy in
shambles, and trade deficit grew as exports decreased (cite trade paper 234).
At this time Vargas made several economic decisions. His first decision was to
suspend all foreign debt. By renegotiating the amassed debt, and later
implementing exchange regulations that limited the flow of money leaving the
country, Brazil did not necessarily regain much stability, but it did receive
time to sort out its internal issues. The next move Vargas made was to devalue
the currency. This process of monetary expansion increased the internal supply
of money and allowed Vargas to provide support to the coffee sector. Vargas
established the National Coffee Council, which provided planters with federal
support and increased government shares in the coffee economy (cite wolfe
84-85). Government expenditures increased after 1931, and a large amount of spending
was attributed to the purchase of excess coffee stocks in order to increase the
price of coffee abroad (cite skidmore 97-98). Another method employed by the
government was coffee burning. Several million tons of coffee were burned,
which both stimulated demand for the Brazilian economy and severely limited the
rural agricultural sectors (cite book 570). Following the decision to implement
coffee burning Vargas established a minimum wage (see above), however the
devalued money meant that there was limited increase in the working sector,
which angered civilians (cite wolfe 85). Despite these limitations, the
government support in the coffee sector stimulated industry, and the monetary
expansion from the devaluing of the currency sparked economic recovery in
Brazil and stabilized the trade balance of the country (cite skidmore 98). A
dissertation from 2015 claims that the Brazilian coffee trade balance had been
unstable for decades, and the dependency of coffee as an export meant that the
coffee economy would have collapsed regardless of the stock market crash and
the proceeding Great Depression (cite dissertation 162). The Paulista
perspective cited by Joel Wolfe disagrees with this view, however it is clear
that the national imbalance of power between the agricultural and industrial
sectors contributed to the failure of the coffee economy. This perspective is
supported by the great impact the government-financed program had in
stabilizing the coffee economy and stimulating industry, as opposed to the
minimal impact the establishment of minimum wage had upon the industrial sector
(cite wolfe 84). Overall, Vargas’s economic policies had a great impact on the
stability of the national economy, and in particular, the debt-financed support
of the coffee sector by the government. By increasing the supply of national
money and feeding that money back into the coffee sector, Vargas was able to
stimulate trade growth and provide stability to the economy through the coffee

During Getulio Vargas’s time as President of Brazil,
he established multiple labor reforms and economic policies as an attempt to
stabilize the nation following the Stock Market Crash of 1929 and the following
Great Depression. Despite major failures with his labor reforms in terms of
both the industrial sector and attempting to centralize government power,
Vargas’s economic policies had an incredible impact on the stability of the
nation. Government involvement in the coffee sector stimulated not only the
coffee economy and world trade, but also sparked industrialization and
stabilized national power. The limited success of Vargas’s labor reforms was
more than made up for by the national prosperity and stability that came as a
result of Vargas’s economic policies. Those policies laid a foundation that has
since seen Brazil grow into the eighth largest economy in the world.