Chapter 90 - The South American Cold War
The South American Cold WarOne of the first acts of President John Hay was to cut off support for Pedro Augusto, as he viewed the entire Brazilian Civil War as an incredibly dumb waste of resources. The British-backed Peixoto quickly took advantage of the weak Prince, who was already unpopular and was now deprived of his primary foreign backer. In a dramatic march into Southern Brazil, Peixoto's Federalists crushed Pedro's army, which quickly collapsed and resorted to guerilla warfare. Pedro himself fled to Europe, where he fell into mental illness and was soon confined to an Austrian mental asylum. However, the fact that the Federalists and Pedro Augusto had spent the entirety of World War I bashing into each other (as essentially an Anglo-American proxy war) meant that Empress Isabel more or less had several years to simply build up strength. with generous French support (a nation also not involved in World War I). The Royalists made their offensive almost immediately after the flight of Pedro Augusto, battering an exhausted Federalist Army. Moreover, as the sole major royal claimant, the cause of Brazilian monarchism had unified behind her. Peixoto was a gifted organizer and a tough military leader, but many of those who rallied behind him were opportunistic elites - those same opportunists began abandoning his cause as superior Royalist armies barreled down towards Rio de Janeiro.
In the end, the cause was simply doomed when the ailing Peixoto simply died of old age during the Royalist offensive. This sparked a panic as Peixoto was one of the last major military leaders left in the Federalist movement (as Fonseca and Constant had also died). Most of those left were coffee barons and other business types. The collapse of the Federalist Army meant that almost all of the British aid to the Federalists would prove useless, as most of that equipment simply found its way into the victorious Royalists. The de facto head of the Brazilian Federalists, Quintino Bocaiuva, fled from Brazil into nearby Argentina, which gave him political asylum. The Argentinians, who had supported the Federalists, and the Peruvo-Bolivians, who had supported Pedro Augusto alongside their American allies, both feared reprisals from the victorious royalists. The two nations, under the eminent Argentine Estanislao Zeballos, quickly hammered out a pact with each other, which did nothing to cool down the situation. The victorious Empire of Brazil penned a similar agreement with Paraguay and Chile. As a result, two mutually hostile blocs emerged in South America. Both Peru-Bolivia and Argentina had extensive territorial disputes with Paraguay, while Chile had disputes with both Peru-Bolivia and Argentina. Uruguay's struggles between the Colorados and Blancos quickly became a proxy cold war between Argentina and Brazil, as the South American Naval Arms Race continued.
The Civil War would lead to lasting trauma in Brazilian society. Although the Brazilian monarchy seems to have rallied behind a sustainable platform of racial egalitarianism, economic interventionism, and monarchism, it proved remarkably unpopular among Brazil's liberals, who saw the regime as hopelessly backward (especially in its rejection of scientific racist ideas popular around the world at the time). They also believed Brazil was losing ground to Argentina, which was quickly becoming a major immigrant destination due to how unattractive the United States had become for so many Catholics. Brazilian liberals typically ignored that Brazilian-aligned Chile was also undergoing an immigration boom. In addition, Brazil was probably receiving nearly as many immigrants as Argentina, it was just proportionally smaller because Brazil was a much larger nation than Argentina.
Interestingly, the South American Naval Arms Race led to an explosion of heavy industry in Brazil, Chile, and Argentina, all of whom began spending large amounts of tax revenues on constructing local heavy industries that could construct the ships each side required. Only Peru-Bolivia did not, largely because it had such generous support from the United States (to whom it was still heavily indebted towards). Waving the banner of nationalism, tax-hostile landlords and coffee planters agreed to higher taxes on themselves to fuel the industrial expansion necessary to build the modern battleships each nation required to one-up its hostile neighbors. Unfortunately for all nations involved, it seemed inevitable that the South American Cold War would eventually turn hot.