The South American Republics, Part 1 of 2

by Thomas Cleland Dawson

In Rio harbour matters came to a stand. Neither side could deal a decisive blow to the other, but in the end Floriano and the land forces were sure to win, because without a base of supplies the fleet could not maintain itself indefinitely. It was necessary for Mello to start a fire in the rear and to open communication with the Rio Grande federalists. He escaped through the harbour entrance with one of his ironclads, and went to Santa Catharina, where he established the seat of the revolutionary government. Gomercindo Saraiva, the able federalist chief, eluded the superior republican forces in the north of Rio Grande and attempted an invasion of Santa Catharina, Paraná, and São Paulo, where it was hoped that the monarchical plantation owners would rise. But he was vigorously pursued and his forces defeated and scattered. The failure of this daring expedition was the death-knell of the revolt. Mello returned to Rio and there his position fast became untenable. The final crisis came with the refusal of the American admiral to permit him to establish a commercial blockade. This took away his last hope of being able to coerce Floriano to terms. The naval revolt collapsed in March, 1894: some of the ironclads escaped from Rio harbour and fled to Santa Catharina, where they were captured by the republicans. The Rio Grande federalists kept up a partisan warfare for a few months longer, but by 1895 they were completely stamped out.

Floriano was supreme, but instead of establishing a permanent military dictatorship he declined to be a candidate for re-election, and selected Prudente Moraes as his successor for the term beginning in 1894. Prudente had been one of the two republican deputies elected from São Paulo in 1886, and had acted as president of the Constitutional Assembly which framed the new constitution. Moderate and conservative in his opinions and methods, his selection was a recognition of the advisability of civil government and an abandonment of the system of military dictatorship. With his assumption of office the Republic may be said to have been at last definitely established.

The state governments were now functioning regularly, and their governors soon began to assume a great importance in the political system. These executives are selected by local cliques instead of by the central government, as in imperial times; their command of the police and state patronage enables them to control elections, name their own successors, and exercise a predominant influence in the choice of deputies and senators to the national Congress. They are the chief instruments through which the president's control of politics is exercised.

The majority in Congress, composed of the leaders of the republican movement, and known as the Federal Republican party, supported Prudente in the early part of his administration, but he was too liberal to suit the Radicals in drawing into participation in public affairs capable Brazilians of other antecedents. This policy and the jealousies that always arise in a dominant party brought about a rupture between him and the leader of the House majority. In the trial of strength which followed, the Federal Republican party was split, and though the president was victorious by a small margin, his position became very precarious.

The Republic had started out on a scale of unprecedented extravagance. The old provincial governments had been given only the fragments from the imperial table, but the republican constitution multiplied the revenues of the new states many fold. The issues of paper money, the high prices of coffee and rubber, and the speculative boom gave both state and federal government for a while plenty of money to spend. The Union and the states vied with each other in multiplying employees, in making loans, in spending money on public edifices, and in building and guaranteeing railroads. The larger the deficits grew the more paper money was issued, and exchange fell with sickening rapidity. A larger and larger proportion of the paper revenue had to be devoted to the purchase of gold bills for the payment of the interest on the foreign debt. The deficits increased in geometrical progression. By 1895 signs of the coming trouble were apparent, though the business of the country was still prosperous. In 1896 came an outbreak of religious fanaticism in the interior of Bahia, which grew into an armed revolt—small, it is true, but which cost much money to suppress. The necessity for retrenchment was evident; railroad building was interrupted; schemes to rehabilitate the currency were brought forward and discussed.

The governments of the poorer states looked for help to the impoverished federal treasury, and some of the stronger states showed impatience at being hampered by an unprofitable connection with their weak sisters. The president was not on sympathetic terms with the victorious Radicals in Rio Grande, and the uncompromising republicans all over the Union felt that they were not sufficiently favoured. In the fall of 1897 an attempt was made in broad daylight to assassinate Prudente, and prominent opposition politicians were strongly suspected of complicity in the plot. A state of siege was declared, but the country remained quiet, and no serious opposition was apparent when Prudente announced that his support would be given to Campos Salles as his successor in office and presumably the continuer of his policies.

A great drop in the price of coffee began, and the financial situation of the government grew worse and worse. Brazil grows about two-thirds of the world's coffee and her crop was enormously increasing. Consequently the production of coffee was outrunning the world's consuming capacity. The enormous profits of preceding years and the abundant supply of good Italian labour had stimulated planting beyond all reason. New and fertile districts were opened up in the interior of São Paulo, with which the older plantations of Rio and the coast regions could not compete. The poorer districts were reduced to poverty, while even the more fertile could not hold their own.

In government finances the lowest point was reached in 1898. The paper money had fallen to seventy-nine per cent. below par and it had become clearly impossible to continue payments on the foreign debt. The last act of Prudente's administration was to make an agreement by which the foreign creditors consented to waive the receipt of their interest for three years and the government pledged itself to reduce the volume of paper currency and to accumulate a fund for the resumption of interest payments.

No contest was made against Campos Salles's election in the spring of 1898. He took office finding an empty treasury, a government without financial credit, and the country in the midst of a severe commercial crisis. He showed great shrewdness in maintaining an ascendancy over the politicians and controlling a majority in both branches of Congress, and, through his minister of finance, relentlessly followed the policy of contracting the currency and increasing taxes. In 1901 the payment of interest on the foreign debt was resumed, and though that debt had been increased fifty million dollars the currency had doubled in value and become relatively stable. The state governments are more dependent on the Union than in the days of their wealth; there is little present danger of disintegration; no real sentiment for the re-establishment of the empire exists. The same habits of political subordination which have kept Brazil together so long are increasing rather than diminishing in force.