1. Brazil and the Depression

2. The Coffee Economy Coffee accounted for 70% of Brazil’s economy
The govt. turned to valorization to protect its crop
Valorization attempted to limit the supply and keep prices up
It worked in the 1920’s, but required loans from foreign banks and was expensive

3. The Crash Caused coffee prices to drop from 22 to 15 cents a pound
This drop caused a loss in govt. revenue
and loss of income
Imports and exports declined
Factories sat idle
A bumper crop of coffee dropped the price to 10 cents a pound

4. The Rise of Getulio Vargas
Vargas ran for the presidency and lost in 1930
Instability led him to overthrow the elected government in 1930
Led Brazil through the depression

5. Vargas’ Economic Policies
Supported the coffee industry, but tried to limit its production
Created artificial scarcity-burned excess coffee to keep it off the market
Encouraged production of other crops
Reduced sugar production
Encouraged a favorable balance of trade by limiting imports

6. Import Substitution Industrialization
Vargas encouraged coffee barons to invest in industry & provided tax incentives and low-cost loans
National Steel Company founded- mix of private and public funding
Built roads and encouraged commercial aviation
Diversified the Brazilian economy

7. Vargas and Labor Became a dictator in 1935
Restricted labor unions but also instituted a minimum wage and maximum hours
Set up social security, pensions, and paid vacations

8. Results of Vargas’s Policies
Industrial production grew throughout the depression at 6%
By 1933, Brazil was emerging from the depression- FDR’s New Deal had not yet been implemented in the U.S.