Vargas and The Estado Novo
It was not just Vargas who took power in 1930, but a whole new generation of young, energetic administrators, who set about transforming the economy and the political system. Vargas played the nationalist card with great success, nationalizing the oil, electricity and steel industries, and setting up a health and social welfare system that earned him unwavering working-class support which continued even after his death. Reforms this fundamental could not be carried out under the old constitutional framework. Vargas simplified things by declaring himself dictator in 1937 and imprisoning political opponents - most of whom were in the trade union movement, the Communist Party or the Integralistas, the Brazilian Fascists. He called his regime the "New State", the Estado Novo , and certainly its reforming energy was something new. Although he cracked down hard on dissent, Vargas was never a totalitarian dictator. He was massively popular and his great political talents enabled him to outflank most opponents. The result was both political and economic success. The ruinous coffee subsidy was abolished, industry encouraged and agriculture diversified: by 1945 Sao Paulo had become the largest industrial centre in South America. With the federal government increasing its powers at the expense of state rights, regional government power was wrested out of the hands of the oligarchs for the first time. It took World War II to bring Vargas down. At first Brazil stayed neutral, reaping the benefits of increased exports, but when the United States offered massive aid in return for bases and Brazilian entry into the war, Vargas joined the Allies. Outraged by German submarine attacks on Brazilian shipping, Brazil was the only country in South America to play an active part in the war. A Brazilian Expeditionary Force , 5000-strong, fought in Italy from 1944 until the end of the war; when they returned, the military High Command was able to exploit the renewed prestige of the army, forcing Vargas to stand down. They argued that the armed forces could hardly fight for democracy abroad and return home to a dictatorship, and, in any case, after fifteen years a leadership change was overdue. In the election that followed in 1945, Vargas grudgingly endorsed the army general Eurico Dutra , who duly won - but Getulio, brooding on his ranch, was not yet finished with the presidency.
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