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Difficulty: HardEconomy in the Interwar Period

Source: Getúlio Vargas, President of Brazil, address to the National Coffee Council, 1931

'We must seek to transform our economic structure, which has historically relied on the export of raw materials to industrialized nations, leaving us vulnerable to the fluctuations of foreign markets. The current global crisis has shown that we cannot rely on the purchasing power of Europe and North America. Brazil must establish its own basic industries—steel, energy, and transportation—under the guidance and support of the state. Only through domestic industrialization can we achieve true economic independence and safeguard our national sovereignty.'

Which of the following interwar developments was the economic policy advocated by Vargas in the passage most directly responding to?

  1. A
    The territorial annexation of Latin American nations by Western industrial powers
  2. B
    The reallocation of territories under the League of Nations mandate system
  3. The collapse of global trade and commodity prices during the Great DepressionAnswer
  4. D
    The rise of Marxist revolutionary regimes that abolished private property

Answer

The collapse of global trade and commodity prices during the Great Depression
The correct option is correct because the Great Depression severely disrupted global trade networks, causing coffee prices to plunge. Since Brazil's economy was heavily dependent on coffee exports, this crisis prompted the government under Getúlio Vargas to turn away from export-oriented capitalism and initiate state-supported industrialization to produce manufactured goods domestically.

Step-by-Step Solution

1
Analyze the historical context of Getúlio Vargas's address in 1931.
The year 1931 is immediately after the onset of the Great Depression (1929), which caused a severe decline in global demand for industrial and agricultural exports.
Establishing the temporal and global context helps connect the document to major interwar economic events.
2
Examine the specific economic issues and solutions proposed in the text.
Vargas criticizes Brazil's reliance on raw material exports to Europe and North America and calls for state-led domestic industrialization to achieve 'economic independence'.
Identifying the core argument of the source helps determine the specific economic policy being described (import substitution industrialization).
3
Evaluate the choices to find the development that directly caused this policy shift.
The collapse of global trade and commodity prices during the Great Depression directly undermined Brazil's coffee export economy, prompting state intervention to build domestic industries.
Matching the source's content and context with the options identifies the correct historical cause-and-effect relationship.

Key Concept

The global impact of the Great Depression and the resulting shift toward state-led economic policies (such as import substitution industrialization in Latin America) during the interwar period.
Estimated Time:2m 0s
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Topics

Economy in the Interwar Period

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