On this day October 24, 1930
A bloodless coup d’état in Brazil ousts Washington Luís Pereira de Sousa, the last President of the First Republic. Getúlio Dornelles Vargas is then installed as “provisional president.”
Facing the 1929 crisis, the president lost almost all his support. He elected his friend Julio Prestes as his successor in 1930, but just 3 weeks before the end of his term, Luís was overthrown by a coup d’etat (1930 Revolution) and was succeeded by a military junta.
The authoritarian government was modeled on the Estado Novo regime in Portugal.
Days after the U.S. stock market crash on October 29, 1929 (See Black Tuesday), coffee quotations immediately fell 30% to 60%. The subsequent decline was even sharper. Between 1929 and 1931, coffee prices fell from 22.5 cents per pound to 8 cents per pound.
As world trade contracted, the coffee exporters suffered a vast drop in foreign exchange earnings. The Great Depression possibly had a more dramatic effect on Brazil than on the United States.
Washington Luís Pereira de Sousa’s government faced a deepening balance-of-payments crisis and the coffee growers were struck with an unsellable harvest. Since power ultimately rested on patronage, wide-scale defections in the delicate balance of regional interests left the regime of the Washington Luís vulnerable.
Government policies designed to favor foreign interests exasperated the crisis as well, leaving the regime alienated from just about every segment of society. Following the Wall Street panic, the government attempted to please foreign creditors by maintaining convertibility according to the money principles preached by the foreign bankers and economists who set the terms for Brazil’s relations with the world economy, despite lacking any support from a single major sector in Brazilian society.
Despite capital flight, Washington Luís clung to a hard-money policy, guaranteeing the convertibility of the Brazilian currency into gold or British sterling. Once the gold and sterling reserves were exhausted amid the collapse of the valorization program, the government was finally forced to suspend convertibility of the currency. Foreign credit had now evaporated.