Under the Old Republic, the politics of café com leite rested on the domination of the republic's politics by the states of São Paulo and Minas Gerais — the largest in terms of population and wealth. One can illustrate the extent of that domination by noting that the first presidents of the republic were from São Paulo and thereafter succeeded by an alternation between the outgoing governors of the two leading states in the presidency.
The politics of café com leite rested on an oligarchic system known as coronelismo. Known as the "rule of the colonels", this term referred to the classic boss system under which the control of patronage was centralized in the hands of a locally dominant oligarch known as a "colonel", particularly under Brazil's Old Republic, who would dispense favors in return for loyalty.
Meanwhile, other states resented this grip on the central state by São Paulo and Minas Gerais. The severe drought of 1877 in the Northeast and the ensuing economic collapse — along with the abolition of slavery in the 1880s — propelled the mass labor migration of emancipated slaves and other peasants from Northeast to Southeast, precipitating the decay of established sugar oligarchies of the North. With the concurrent growth of coffee in the Southeast, São Paulo, now emerging as the central state, began to increase in power under the Old Republic. Northeastern landowners bitterly opposed rival oligarchs in São Paulo, explaining their role in the 1930 Revolution. (For details, see the main article History of Brazil (1930-1964).)
In time, growing trade, commerce, and industry in São Paulo would serve to undermine the domination of the republic's politics by the landed gentries of the same state (dominated by the coffee industry) and Minas Gerais (dominated by dairy interests) — known then by observers as the politics of café com leite. Under Getúlio Vargas, ushered into power by the middle class and agrarian oligarchies of peripheral states resentful of the coffee oligarchs, Brazil moved toward a more centralized state structure that has served to regularize and modernize state governments, moving toward more universal suffrage and secret ballots, gradually freeing Brazilian politics from the grips of coronelismo.
However, the legacy of café com leite is still strongly visible. Brazilian politics is still known for being highly patrimonial, oligarchic, and personalistic and São Paulo and Minas Gerais remain the country's dominant states.