In February of 1891 General Fonseca was elected first President of the new Republic, for a four years' term. He was set at the head of a Government depending largely on its troops, and these found themselves suddenly possessed of a power which they had not known previously. The new citizens of Brazil writhed uneasily under the restraints and affronts which were now for the first time put upon them; the Press was muzzled, and a tribunal established with the power of summarily trying persons suspected of being guilty of want of respect to the new order of things.

There is no doubt that the first establishment of the Brazilian Republic was followed by measures of severe repression, not directed against the Royalists—for this party, to all intents and purposes, disappeared from existence as soon as the Emperor had left the shores of Brazil—but against the dissatisfied citizens who were clamouring against the autocratic methods pursued by the Government. Some definite accusations were shortly brought against the President. He was accused of several acts which much exceeded the authority vested in him; he was charged in particular with numerous deeds of tyranny, violence, and corruption.

Following on so many precedents of the kind in South America, Fonseca retaliated by the inauguration of more stringent methods than any which he had hitherto employed. A state of siege was declared in the capital, and Fonseca caused himself to be invested with every right and privilege of a dictator. These methods of terrorism he justified by the pretext of monarchical plots. Very soon, however, General Peixoto became prominent as a rival to the Presidency, and shortly a definite revolt arose in the State of Rio Grande do Sul; while in the far north the State of Pará armed itself in preparation for the struggle against the central power.

The Navy declared itself against the Government. On November 23, 1891, the fleet, commanded by Custodio de Mello, took up its position in front of Rio de Janeiro, and actually fired a shot or two into the town. President Fonseca was now convinced that the powers against him were too strong to be successfully coped with; he resigned his office, and retired into private life, surviving his fall only by a few months, since he died in August of the following year.

Fonseca's fall was due not only to the measures employed in the government of the country, but also to the financial state of Brazil at the time of his election. Reckless extravagance and unscrupulous handling of the public funds by the various political parties, together with a too liberal use of the printing-press for the purpose of turning out paper money when funds were needed, had caused a condition of affairs which was very near bankruptcy. This condition, moreover, was largely artificial, since Brazil is almost the first among the States of South America in the matter of natural resources and general aptitude for prosperity. Nevertheless, the costly wars carried on under the Monarchy had left a large burden for the Republic to manage, and in spite of the strictest economy, the people of the country found that the inauguration of the Republic did not bring about the establishment of so prosperous a paradise as they had hoped. Naturally, the blame for this fell upon Fonseca, and added itself to the autocratic methods of his government to render him unpopular.

Fonseca was succeeded by the Vice-President, according to the regulations of the Constitution. This was Floriano Peixoto, who at first gave promise of a liberal and progressive government. Very soon, however, it became evident that the abuses of authority encouraged by him were becoming even more violent than those of the previous régime, and that the military despotism was even more accentuated. Any Governor who did not bend without question to the will of the President was instantly deposed, and in this way the Governors of Matto Grosso, Ceará, and Amazones were deprived of their posts. Every official, in fact, who did not show himself disposed to serve the new autocrat with a blind obedience was deprived of whatever office he had held. The discontent grew rapidly, while numerous Ministers resigned, and once again the flames of revolt broke out in Rio Grande do Sul.

On September 6, 1893, Admiral Custodio de Mello, after various abortive attempts, anchored again in front of the capital, and prepared his cruiser Aquidaban for action. Peixoto, however, determined to defend his position, and prepared himself to face the dozen or more warships which comprised the fleet of the insurgents. On September 12 the first serious fight took place, the town being bombarded heavily by the fleet, to which the guns of the forts responded on behalf of the Government.

The struggle continued in a desultory fashion, and a daily interchange of shots was wont to take place between the naval and military forces. This situation continued for the remainder of the year 1893, and, as time went on, the position of the Government became rather more strengthened, especially when it was reported that some war vessels ordered by Peixoto in Europe were on their way to Brazil.

In the meanwhile, however, the position in the south became far more favourable to the insurgents. The revolutionary forces under Saraiva began a march to the north, when his movement was aided by a portion of the fleet, under Admiral Donello, which had sailed to the south in order to co-operate. Curitiba was captured, and the march up from the south bade fair to be triumphant. This was to a certain extent neutralized by the interference of the United States warships in the harbour of Rio on behalf of some merchant vessels of their nationality threatened by the revolutionary squadron. By this means the rebels lost prestige, and the situation of Admiral da Gama, who had been left in command of the rebel fleet, became serious.

On March 7 the vessels ordered by Peixoto from Europe arrived off Rio, and da Gama, hearing no news from Mello, took refuge, with his officers and men, on some Portuguese men-of-war. The authorities of Rio demanded that these crews should be given up, but the Portuguese refused to surrender them, and sailed away from the harbour with the insurgents on board, a proceeding which caused a diplomatic rupture between Portugal and Brazil.