How the United Stated created Brazil's basic infrastructure.
Vargas ruled as President of Brazil until 1937. On November 10, 1937 Vargas announced the birth of the Estado Novo. The Congress had been dissolved and replaced by loyal military officers. Thus, began the Vargas dictatorship.
Before 1937, Nazi Germany had a huge hand in modernizing Brazil’s army and providing mechanics necessary for industrialization. However, with the rise of the Estado Novo, the United States took a more active approach to maintaining a favorable relationship with Brazil. The United States won out, after Germany’s failure to provide promised military weapons. From that time on, Brazil became an important supplier of raw materials to the Allied war effort.
These raw materials did not come free of charge. In return for them, the United States invested huge sums of money in Brazilian infrastructure. Highways, railroads, ports, and airports were constructed almost entirely from United States’ funds. The United States also created the Brazil steel industry by funding Brazil’s first steel mill.
Vargas further industrialized Brazil by creating the National Motor Factory, which produced truck and airplane engines. Vargas allowed one union per economic sector. Thus, the labor force was effectively tied to the government. Because of these improvements, industry in Brazil quickly grew, although coffee still remained as the king of the exports.
In 1945, with the defeat of fascism in Europe, the political scene was becoming less and less friendly to Vargas. People were unhappy with the growing foreign debt and the runaway inflation rates. In October 1945, the military that had once supported Vargas deposed him. He was allowed to return to ranch in Rio Grande do Sul.
The Estado Novo was over. In its place the Second Federation would be created. However, this was not the end of Vargas’ political career. In 1950 he was again elected President, this time by means of a direct election. However, once again, he faced harsh economic problems. In 1954, unable to face the huge criticism from nearly every political sector, Vargas shot himself through the heart, effectively ending a political career that was highlighted by nineteen years as the Brazilian leader.
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