The Brazils of the Regions
The turmoil of the 1890s and particularly Canudos suspended the military's capability to exercise the moderating role that it supposedly inherited from the monarchy. By 1898 the rural-based regional oligarchies had regained command of the political system. Their fiscal policies reflected their belief that Brazil was an agricultural country whose strength was in supplying Europe and North America with coffee, rubber, sugar, tobacco, and many natural resources. Brazil produced 75 percent of the world's coffee. With competition increasing, however, prices fell continually, causing the government to devalue the currency against the British pound.
This devaluation forced up the price of imported goods, thus lowering consumption and government tax revenues from imports. Those shortfalls led to suspension of payments on the foreign debt, and the generally poor economy caused half of the banks to collapse. The oligarchy responded to the situation by attempting to preserve its own position and by limiting national industry and infrastructure to that necessary to support the agricultural economy. The society that the economy underlay was one in which the elites regarded the majority of the people merely as cheap labor. The elites encouraged immigration to keep labor plentiful and inexpensive, although they also wanted to "whiten" the population. They considered public education of little use and potentially subversive.
The political system that took shape at the beginning of the twentieth century had apparent and real aspects. There was the constitutional system, and there was the real system of unwritten agreements (coronelismo ) among local bosses, the colonels. Coronelismo, which supported state autonomy, was called the "politics of the governors." Under it, the local oligarchies chose the state governors, who in turn selected the president.
The populous and prosperous states of Minas Gerais and São Paulo dominated the system and swapped the presidency between them for many years. The system consolidated the state oligarchies around families that had been members of the old monarchial elite. And to check the nationalizing tendencies of the army, this oligarchic republic and its state components strengthened the navy and the state police. In the larger states, the state police were soon turned into small armies; in the extreme case of São Paulo, French military advisers were employed after 1906.
The "politics of the governors" kept a relative peace until the end of World War I. Urban Brazil, the one foreigners saw from the decks of ships, prospered. But there was no integrated national economy. Rather, Brazil had a grouping of regional economies that exported their own specialty products to European and North American markets. The absence of overland transportation, except for the mule trains, impeded internal economic integration, political cohesion, and military efficiency.
The regions, "the Brazils" as the British called them, moved to their own rhythms. The Northeast exported its surplus cheap labor and saw its political influence decline as its sugar lost foreign markets to Caribbean producers. The wild rubber boom in Amazônia lost its world primacy to efficient Southeast Asian colonial plantations after 1912. The national-oriented market economies of the South were not dramatic, but their growth was steady and by the 1920s allowed Rio Grande do Sul to exercise considerable political leverage. Real power resided in the coffee-growing states of the Southeast (Sudeste) -- São Paulo, Minas Gerais, and Rio de Janeiro -- which produced the most export revenue. Those three and Rio Grande do Sul harvested 60 percent of Brazil's crops, turned out 75 percent of its industrial and meat products, and held 80 percent of its banking resources.
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