By Christopher Woods (Rated PG for war and violence)
Part Two of Four
Origins of the Novo Estado
Salazar was not the only one who recognized the drawbacks of the Republic. In 1926, military officers and civilians from a wide variety of political leanings agreed to work together to establish a more stable government. General Gomes da Costa was chosen to lead the uprising, and a strategy was formed, to be executed on the twenty-eighth of May. While da Costa would lead his men to secure the north, another general, Óscar Carmona, would secure the south. The plan went smoothly meeting hardly any resistance (1). But compared with establishing a new government, overthrowing the old was the easy part. A third general, Mendes Cabeçadas, insisted that he be part of the new government as well, and between the three of them, they divided the ministries. But they were all afraid of each other, and each didn’t want either of the other two to have too much power. The final settlement was that Cabeçadas would be Prime Minister, as well as Minister of the Interior; da Costa would be Minister of War and Minister of Overseas Territory; and Carmona would be Minister of Foreign Affairs. There was one ministry left, and when they agreed that none among themselves would have it, they invited Salazar to be Minister of Finance. They based this decision both on his work as a professor at Coimbra and on the many articles he had written (2).
Although Salazar often wrote about politics, he did not want to get involved in it again. He feared it would only be more of the same useless bickering he had seen when he appeared in Parliament, but he decided to accept the generals’ invitation. When he arrived, he found the Republicans and Monarchists—who had marched side-by-side just weeks earlier—once again arguing fiercely. The military itself was unsatisfied with the generals’ government, and threatened action if the promises the generals had made them remained unfulfilled. Salazar also learned exactly how fiscally irresponsible the Republic had been. Portugal was deeply in debt, and as long as it remained so, had no hope of establishing a lasting government. Salazar approached all three generals directly and demanded that he be given control over all spending, and that any legislature which concerned finances have his approval before it became law. The generals refused, and Salazar resigned. He only spent five days in office, from June eleventh to June sixteenth (3).
The military government did not appear as though it would last much longer, as Salazar predicted. By July, da Costa and Cabeçadas were both deposed, and Carmona became president. Stability remained elusive (4). Despite that, Carmona managed to stay in power for a while longer.
Although Salazar had left government, he did not stop writing about it. On March 28, 1927, Salazar wrote that one can neither regard material wealth as the chief end, nor disregard it altogether. Wealth must come through hard work, and consumption should be regulated by man’s moral, physical, and intellectual development. Judicious saving was also necessary. In short, he proposed a morality of consumption. The money should not be spent rashly, or on frivolous items. It should be put to good use, a use that would benefit man not only materially but spiritually as well (5).
Throughout Portugal, the situation was barely improved. Riots continued, as they had throughout the years of the Republic, resulting in hundreds of people injured, killed, or exiled (6). In Lisbon, Carmona realized that Portugal was indeed running out of money. He requested from the League of Nations a ￡12,000,000 loan. The League agreed, on the condition that Portuguese finances were given over to international control. Clearly, the League thought, Portugal was unable to be responsible with money. But the Portuguese could not swallow this insult to their competence, and Carmona searched for any other way out of the pending catastrophe. Remembering that Salazar had claimed the ability to improve Portugal’s finances, Carmona once again invited the professor (7). Salazar asked for a night to think it over. He spent it in kneeling in prayer. In the morning, he talked with his good friend Cerejeira and served at Mass. Then he returned to Carmona’s messenger, telling him that he would once again accept the invitation. Salazar arrived in Lisbon on April 27, 1927 (8).
Once more in the position of Minister of Finance, Salazar made four demands: each government department was not allowed to spend more than the Ministry of Finance allocated it; anything affecting receipts and expense must be discussed with the Ministry of Finance before any action was taken; the Ministry of Finance would be able to veto any expense that did not have the necessary credit operations; and the Ministry of Finance would collaborate with everyone else in the government to reduce expenses and increase revenue. Describing his goals to the Portuguese people in his first official speech, Salazar admitted that reaching the goal of financial stability was a long way off and would be a struggle for the entire country. While he expected the people to obey, he stated that they were free to study, suggest improvements to, object to, and discuss his plan (9).
Two weeks after being instated as Minister of Finance, Salazar issued his economic principles. Unity of the budget: there would be a single total of receipts and a single total of expenditures, to more easily see the accuracy of the balance. Ordinary expenditure would be completely covered by ordinary revenue; this way, Salazar would not have to worry about always running a deficit. Extraordinary expenditure would be severely restricted. The request of loans would be highly limited. Employees would only receive their pay after they had completed their work. Heads of departments would be responsible for any unauthorized expenditure and would suffer the consequences. The State would never subsidize any private enterprise; such enterprises would have to gain all their funding from other sources. Ad valorem taxes, such as property and sales taxes, would be suppressed, as they were redundant, granted the taxes levied on a product when it was produced. Salazar would defend the budget against oversea demands for more money. The local governments would also be expected to have their ordinary revenue cover their ordinary expenditure (10).
Benefits of a Balanced Budget
On July 31, 1927, Salazar presented his first budget—with an expected surplus of 1,576 contos (the Portuguese currency; one thousand escudos equaled one conto). Taxes increased, and only the most essential public works, such as roads, were authorized. Every single budget between 1927 and 1940 was balanced. By 1940, Portugal had a total surplus of 2,000,000 contos, or ￡20,000,000 (11). When the Great Depression caused depreciation of the escudo and a drop in ordinary revenue, Salazar stabilized ordinary revenue and slowly increased extraordinary revenue (revenue that was only collected once rather than repeatedly occurring). Using this new money, he improved schools, hospitals, roads, harbors, agriculture, housing, and the military (12). By 1934, all of Portugal’s floating debt was paid off, and Salazar tied the escudo to the gold standard. In fact, Salazar had stabilized Portugal’s budget so well that there was no longer any need to borrow from other countries. Portugal paid her remaining debt punctually in regular intervals. In 1936, Salazar launched a fifteen-year plan: six and a half million contos to be spent on the military, afforestation, agricultural hydraulics, and education. Four years later, 1,111,603 contos had been spent, 513,898 of it on the military. Only one fifth of those million contos was raised by loan (13).
As a way of encouraging all Portuguese to adopt his prudent monetary policies, Salazar calculated average tax returns, rather than actual returns. With this system, the state had a more accurate idea of its income. He encouraged initiative in business and discouraged bad management. As an example, Salazar agreed to overlook minimal tax evasion, provided that it allowed increased production. The way he saw it, the tax revenue that would come from the increased production would outweigh the revenue had he completely enforced the tax law (14).
The benefits Portugal enjoyed from the first eleven years of Salazar’s policies were easily seen. Thirty-five hundred miles of roads were repaired, along with one thousand miles of new roads built. Telephone lines were extended to more remote areas. Historic monuments were repaired, to link the present—which looked forward to the future—with the past. Fountains and washing-places were built in all the villages. By 1938, Portugal was very nearly agriculturally self-sufficient. The industry continued improving, and the banks were trusted (15).
In order to facilitate all these improvements, Salazar had to unite the will of the people. To this end, he established the União Nacional on June 30, 1930. It was not a political party, but rather was intended to bind all the sections of the community in a corporative movement. Republicans, Freemasons, and Communists all tried to revolt at different times, but these were repressed (16). The largest obstacles were a lack of confidence and, inertia, as well as defeatism in general, and some critics in particular. Cunha Leal, one of the fiercest critics, claimed that Salazar was poorly chosen, and had even made a pact with the Devil (17). While Salazar accepted constructive criticism, Leal failed to give Salazar any suggestions, other than to resign immediately. Naturally, Salazar ignored him.
A New State
A new constitution passed by referendum on March 19, 1933. It was constructed specifically to fit Salazar’s corporative ideas, though provisions were made for amendments. Most men and some women (specifically university graduates and heads of families) had the right to vote, but a third of the registered voters abstained. The rest, minus a few thousand, voted in favor of the new constitution (18). Even if all those abstentions had been “no” votes, the constitution would still have been approved by the people. The constitution was based in the idea that order and power were founded by God. He was the one who gave it to others, who must then use it in accordance with His will. The legitimacy of the government depended on the common good. If the people prospered, the government was legitimate; if they suffered needlessly, the government was no good at all.
The Estado Novo, or New State (as many called Salazar’s Portugal), was primarily corporative. The State represented the people, who contributed to the State through corporations, which were fashioned after medieval guilds. Political discussion happened at a round table, rather than across the table. Within a common political faith, there was plenty of room for divergence and beneficial debate (19).
The National Assembly was the legislative branch of the government, elected from and by the people. Advising the National Assembly was the Corporative Chamber, a group of representatives from each corporation. Salazar wanted the Corporative Chamber to have more of a say in the legislation, perhaps even fully replace the National Assembly. But the reluctance of the Portuguese to change forced him to take things more slowly, and the Corporative Chamber never fully realized his goals (20).
Despite Salazar’s efforts to make the Portuguese welcome the Novo Estado, dissenters still arose. Dr. Rolão Preto founded a National-Syndicalist movement and demanded President Carmona give all political freedom of press and propaganda. Carmona refused, and Salazar persuaded some of the National-Syndicalists to abandon their ideas, but Preto had to be deported to Spain. As a way of preventing any more dissenters from causing trouble, Salazar established the Portuguese Legion as a voluntary Home Guard, to unite the men of a community in a spirit of fraternity and service. The Moçidade Portuguesa was similar, aimed toward boys. Salazar disliked all kinds of internationalism and banned the International Boy Scouts. The Moçidade Portuguesa filled the role, with a heavy emphasis on service for the community (21).
All in all, Salazar considered politics to be of secondary importance. The country’s well-being would not come from politics, but from each individual leading a habitual and balanced life. At the core of life, Salazar desperately wanted everyone to understand, were spiritual considerations. These superseded politics and were the end goal of everything done in life (22).
1. Hugh Kay, Salazar and Modern Portugal, Hawthorn Books, Inc., © 1970 pp. 36-37
2. Ibid, p. 38
3. Ibid, p. 39
4. Ibid, pp. 39-40
5. Ibid, p. 40
6. Ibid, p. 41
7. FCC Egerton, Salazar: Rebuilder of Portugal, Hodder & Stoughton, Ltd., © 1943, p. 122
8. Kay, p. 41
9. Egerton, pp. 123-124
10. Ibid, pp. 124-125
11. Ibid, p. 125
12. Ibid, p. 126
13. Ibid, p. 128
14. Ibid, p. 130
15. Ibid, pp. 133-134
16. Kay, p. 48
17. Egerton, pp. 134-135
18. Kay, pp. 48-49
19. Ibid, p. 51
20. Ibid, pp. 52-53
21. Ibid, p. 50
22. Filipe Ribeiro de Meneses, Salazar: A Political Biography, Enigma Books, © 2009, pp. 84-85