SECTION 1: Identification andEvaluation of SourcesThe question this investigation seeks to answer is “Howsuccessful were Vargas’s labor reforms and economic policies in re-stabilizingBrazil after the Stock Market Crash and the start of the Great Depression?” andfocuses on the economic consequences of Vargas’s regime as well as the nationalstability of Brazil during and after the Great Depression. The investigationaims to examine the impact of labor laws on both the national economy and thepeople of Brazil, as well as the long and short-term successes of his economicpolicies.
The sources evaluated in this section of the investigation are aspeech made by Getulio Vargas at the commemoration of Labor Day (1stof May) in 1939, and an excerpt from a chapter authored by Joel Wolfe from thebook The Great Depression in LatinAmerica, compiled 2014. These sources provide historians with a first-handaccount of Vargas’s labor reforms, as well as an account that historicallycontextualizes Vargas’s economic policies and provides insight into hissuccesses and failures. Together these sources supply this investigation withcontrasting perspectives that allow for critical analysis of the impact ofVargas’s policies on the stability of Brazil. The first evaluated source is a speechmade by Getulio Vargas at the commemorations of Labor Day on May 1st,1939. The origin of this source isparticularly valuable to this investigation as this speech was made by Vargashimself and gives historians first-hand insight into his motives for the nationand perspectives on labor reforms. Furthermore the value of the origin isstrengthened as the speech was given at an important celebration that honored laborersand would have provided Vargas with the needed platform to encourage themajority 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 hisposition as President. This limits the reliability of the speech as acomparison between Vargas’s successes and failures as President.
The purpose of this speech was to convince the peopleof 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 flagrantcontrast with the situation previous to 1930.” (cite speech).
This statement isvaluable as it shows historians the methods Vargas used to persuade hisaudience to his perspective. The content of the speech as a whole provides thisinvestigation with a primary source to which we can compare the impact ofVargas’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 convinceothers of Vargas’s ideas, it almost certainly does not focus on any potentialnegative impacts of the policies, and thus presents a one-sided view of thepotential 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 coffeesector stimulated the economy and produced the greatest impact on the economicstability of Brazil following the start of the Great Depression. The author,Joel Wolfe, is a current professor at the University of Massachusetts whosefocus is the modern history of Brazil. The modern perspective Wolfe studiescovers fifteen years of Vargas’s rule, and provides historians with more detailand greater depth of impact of Vargas’s policies. This benefits the extent of significanceof Vargas’s policies to this investigation.
In an alternate view, Wolfe’s investigationcovers a relatively short span of time, which could limit the connections thatcould be made between Vargas’s policies and the stability of Brazil.Wolfe states at the beginning of his chapter thatVargas’s grandest success was not his labor policies, as textbooks suggest, butin fact his debt-financed support of the coffee industry. (cite wolfe 86-87). Thepurpose of his investigation then follows to place all of Vargas’s policiesinto historical context and compare them to one another, to highlight theeconomic success of the coffee sector. This is valuable as it discusses theconsequences of each of Vargas’s policies in relation to the strength of the nationand the stability of the economy, providing a firm perspective for thisinvestigation to analyze.
One limitation to Wolfe’s purpose is that hisinvestigation highlights the economic success of Vargas’s coffee policies overany successes (even minimal) of labor or other reforms, and in a large partfocuses on the limitations and failures of the labor policies. SECTION 2: InvestigationFollowing a last-minute entry into World War I thatplaced them on the winning side, Brazil found itself with a highly inflatedeconomy. This effect did not last long, however, and by 1928 the cost ofcoffee, Brazil’s main export, had more than doubled (cite skidmore 96). TheBrazilian GDP per capita continued to rise through the 20’s, and the growth ofBrazilian industry provided for the formation of labor unions (cite onlinepaper “the great depression in Brazil” 4 and skidmore 97).
Then, in 1929, the stockmarket crashed. Brazil, like all industrialized countries in the WesternHemisphere, suffered greatly, and found itself in an economic depression. ByJanuary of 1930 coffee prices had dropped by more than fifty percent, and inOctober of the same year a military coup placed presidential candidate GetulioVargas in the governing position (cite skidmore 97). By the time Vargas becamehead of the Brazilian state, the country lacked major stability on the political,economic, and social levels.
As Vargas’s regime progressed, he institutednational labor reforms and established economic policies in the agriculturaland working sectors. Although Brazil did eventually free itself from economicdepression and increased its national and economic stability, historians argueconcerning the extent of impact of Vargas’s reforms, and if, in the end, hispolicies were actually responsible for re-stabilizing Brazil. Perspectivesrange from “textbook” style, where workers were empowered by Vargas’s laborlaws and pushed to stabilize the Brazilian economy and social systems, to amore modernistic approach, which examines the flaws in Vargas’s labor policieson a social, political, and economic level (cite wolfe 81-82). These modernperspectives focus instead on Vargas’s economic policies, and their varyingsuccesses in reestablishing Brazilian stability on a national and global level.As mentioned above, many historians reference thelabor reforms Vargas implemented as an effort to bring Brazil’s economy out ofdepression.
Through his primary fifteen-year span as president, Vargasestablished laws that aimed to empower workers in the agricultural sector, stabilizethe national economy, and establish a centralized government. The first moveVargas made was to establish a corporatist labor system. This attempt to balancethe national economy by grouping labor into different sectors was not verysuccessful, and Vargas was met with organized strikes across the nation (citewolfe 83). In 1939, Vargas established a National Ministry of Labor, which gaverepresentatives in each state the power to establish labor unions, whosepurpose was to equalize workers’ benefits and stimulate the economies of theagricultural and industrial sectors (cite speech and wolfe 84). These policies hadlittle impact on industry, and virtually no positive effect on wages. Thefailure of the unions left workers without the government support they needed.
Their frustrations again culminated in repeated strikes, letters, andpetitions, all directed at Vargas. A dissertation published in 1999 claims thatVargas’s attempts to unionize workers was simply a bid for more governmentalcontrol of the nation (cite dissertation 1999). This view is supported by Vargas’simplementation of a minimum wage in 1943. The people, who had never supportedVargas’s corporatism, were outraged. Wolfe recounts that “Vargas’s policies hadfailed to provide Brazil’s workers with direct support (e.
g., wage increases) orindirect aid (through union-based social services) during an era of sustainedincreases in the cost of living” (cite wolfe 85). So far Vargas’s labor reformshad only limited success and practically no positive reaction, and the majorityof his policies consistently failed to reach rural sectors.
It is here wherethe “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 hadprevailed prior to his rule, and focus instead on centralizing the government.Vargas established the National Ministry of Labor, which drew power away fromthe coffee oligarchs that had previously controlled all state functions.
Thisdid not, as Vargas had hoped, centralize the nation. As shown, his furtherattempts to spread labor reforms failed to reach rural sectors, leaving thenation widely dispersed. His political moves also prompted a Paulista attemptat civil war in 1932 (cite wolfe 85). This new resistance, combined with adissatisfied working class and the powerless rural sectors, ruined Vargas’s chancesat centralizing the political sphere of Brazil (cite wolfe 87). Altogether, despiteVargas’s attempts to promote the agricultural and industrial sectors throughunionization and other labor reforms, the policies had little economic effectand also failed to centralize the government.
Vargas made several egregious failures in the laborsector. Despite this, following the aftereffects of the crash of 1929, Brazil’sGDP per capita rose for nearly a decade (cite paper 4). Joel Wofle claims thatthe primary reason for this was financial support to the coffee sector from thegovernment (cite wolfe 86-87). As previously explained, by 1930 coffee priceshad dropped by more than fifty percent, and prior to the crash, over seventypercent of Brazilian export revenues had come from selling coffee (wolfe 84).The drop in value of their main commodity left the nation’s economy inshambles, and trade deficit grew as exports decreased (cite trade paper 234).At this time Vargas made several economic decisions. His first decision was tosuspend all foreign debt. By renegotiating the amassed debt, and laterimplementing exchange regulations that limited the flow of money leaving thecountry, Brazil did not necessarily regain much stability, but it did receivetime to sort out its internal issues.
The next move Vargas made was to devaluethe currency. This process of monetary expansion increased the internal supplyof money and allowed Vargas to provide support to the coffee sector. Vargasestablished the National Coffee Council, which provided planters with federalsupport and increased government shares in the coffee economy (cite wolfe84-85). Government expenditures increased after 1931, and a large amount of spendingwas attributed to the purchase of excess coffee stocks in order to increase theprice of coffee abroad (cite skidmore 97-98). Another method employed by thegovernment was coffee burning. Several million tons of coffee were burned,which both stimulated demand for the Brazilian economy and severely limited therural agricultural sectors (cite book 570). Following the decision to implementcoffee burning Vargas established a minimum wage (see above), however thedevalued money meant that there was limited increase in the working sector,which angered civilians (cite wolfe 85).
Despite these limitations, thegovernment support in the coffee sector stimulated industry, and the monetaryexpansion from the devaluing of the currency sparked economic recovery inBrazil and stabilized the trade balance of the country (cite skidmore 98). Adissertation from 2015 claims that the Brazilian coffee trade balance had beenunstable for decades, and the dependency of coffee as an export meant that thecoffee economy would have collapsed regardless of the stock market crash andthe proceeding Great Depression (cite dissertation 162). The Paulistaperspective cited by Joel Wolfe disagrees with this view, however it is clearthat the national imbalance of power between the agricultural and industrialsectors contributed to the failure of the coffee economy. This perspective issupported by the great impact the government-financed program had instabilizing the coffee economy and stimulating industry, as opposed to theminimal impact the establishment of minimum wage had upon the industrial sector(cite wolfe 84). Overall, Vargas’s economic policies had a great impact on thestability of the national economy, and in particular, the debt-financed supportof the coffee sector by the government. By increasing the supply of nationalmoney and feeding that money back into the coffee sector, Vargas was able tostimulate trade growth and provide stability to the economy through the coffeesector. During Getulio Vargas’s time as President of Brazil,he established multiple labor reforms and economic policies as an attempt tostabilize the nation following the Stock Market Crash of 1929 and the followingGreat Depression.
Despite major failures with his labor reforms in terms ofboth the industrial sector and attempting to centralize government power,Vargas’s economic policies had an incredible impact on the stability of thenation. Government involvement in the coffee sector stimulated not only thecoffee economy and world trade, but also sparked industrialization andstabilized national power. The limited success of Vargas’s labor reforms wasmore than made up for by the national prosperity and stability that came as aresult of Vargas’s economic policies. Those policies laid a foundation that hassince seen Brazil grow into the eighth largest economy in the world.