The increasing dissatisfaction with café com leite politics came to a head in 1930. The Great Depression knocked the bottom out of the coffee market. To save the coffee elite from ruin, the government spent millions buying coffee at a fixed rate, only to burn the harvest for lack of foreign buyers. Workers and leaders from other parts of the country were outraged.
Violent revolts broke out in the Northeast , Rio , and Rio Grande do Sul , home of a charismatic and populist politician named Getúlio Vargas. When a military coup deposed the government, Vargas became Brazil ’s new president—for the next 15 years. An astute politician, fervent nationalist, and flamboyant populist (along the lines of his colleague in neighboring Argentina , Juan Perón), Vargas ushered in a new era. He jump-started Brazilian industry by nationalizing the burgeoning oil, steel, and electrical sectors. He endeared himself to the masses by creating a health and social welfare system. He implemented a minimum wage and labor laws and extended the right to vote to women.
The way he carried out these radical reforms was by declaring himself dictator and establishing a regime known as the Estado Novo (New State), which went into effect in 1937. Opposition parties were prohibited, the press was censored, and dissidence was punished with jail sentences. While democracy went into hiding, his centralized government broke the hold of the regional elite, and agriculture and industry thrived.
When World War II broke out, Brazil remained neutral although Vargas flirted with both the Axis and the Allies. Coaxed by promises of generous American financial aid in return for the right to establish U.S. military bases along the Northeast coast , Vargas finally chose the Allied side in 1942, sending Brazilian soldiers to participate in the invasion of Italy.
However, the contradiction between fighting for freedom abroad while running a fascist dictatorship at home proved difficult to justify. At the end of the war, military pressure convinced Vargas to relinquish his powers in 1945. However, Vargas always remained largely popular with the Brazilian people, who returned him to power in 1950—this time as a democratically elected president. However, without his fascist powers to protect him, his tenure was marred by public accusations of corruption.
The fiercest attacks were spearheaded by a Carioca journalist with political ambitions of his own, named Carlos Lacerda. When an attack on Lacerda’s life was traced to one of Vargas’s bodyguards, the ensuing scandal was so great that Vargas was asked to resign. Instead, on the night of August 4, 1954, he went into his bedroom at the Palácio do Catete, in Rio , and shot himself through the heart after leaving a love letter/suicide note to the Brazilian people. Popular grief was so great that Lacerda was forced to leave the country.