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Backtracking, still on the 31st, some stuff happened on the Santos lowland, São Paulo's outlet to the sea. Since the afternoon the vital steel factory and refinery were controlled by the striking unionists, and Kruel had ordered their takeover. However most commanders - of the 2nd Caçadores Battalion, which I missed, the air and naval bases, the 6th Motorized Coastal Artillery Group - were unwilling to act. The General in charge of the garrison was in a fort, quiet. Only the 3rd Coastal Battery's commander wanted to do something, but with his General's inaction he couldn't employ his own troops. So he grabbed one officer and the Maritime Police and broke into the refinery. The "red caps" were ready to detonate two tankers with ammonia at the entrance, but offered only verbal resistance.
According to Mourão Filho, during the final Kruel-Goulart talks the former had offered to crush the rebellion at the Rio/Minas border if his demands were satisfied, while the latter wanted to first crush it himself and then negotiate. Logically the President wanted to negotiate from a stronger position. He may have heard it from incorrect hearsay as Goulart never gave attack orders and distinctly lacked the will to fight. Explanations may be that he was more confident and planning to attack earlier on, or, more likely, that the defensive battle alone would give him the stronger hand - he had a larger and better armed force with several excellent natural defensive positions.
Once around midnight Kruel switched sides, São Paulo entered into war gear. Its vast economic power would be vital in a protracted civil war and it could within a few weeks count on fuel shipments from abroad. The war economy part was jointly coordinated by the Army, state government and productive classes (e.g. prominent industrialists). It included:
-Orders for thousands of blankets and mattresses
-Requisitioning of drugs, gauze and cotton
-Donation of vehicles, including 90 jeeps straight off the factory
-Requisitioning of fuel stocks
-Radios lended to the HQ
-Calling volunteers; 5 thousand enlisted
The security part consisted of:
-Mass arrests of leftist and unionist figures
-The 4th Infantry's "Operation X", already ready days before, placing machine guns and explosives through bridges in the capital
-Checkpoints and inspections of vehicles around the capital
-Police and antiair assets surrounding the Cumbica and campo de Marte airfields in the capital; the Navy was expected to help but not the Air Force
-Occupation of rail stations, where the strike was underway
-Control of one of the border posts to the south in Registro
The battle plan was to keep a reserve in São Paulo and move the rest, led by the 2nd Infantry Division's commander, to march first to Barra Mansa and then either to Guanabara proper, steamrolling the government, or to Viúva Graça. The latter is where the Dutra road, having taken a right turn towards leaving the Paraíba valley (downstream is the Minas border with Mourão Filho's regiments), crosses near the Araras hills and is right in front of the coastal plain. From there Kruel, in striking range of Rio de Janeiro, would have his boot on the government's neck and could perhaps, as he intended, bend it to his will rather than deposing it.
The IInd Army's decision changed the balance of power, though in theory the government was still stronger. Importantly it introduced a new political dimension to the power struggle between the rebels. Firstly, Mourão Filho had to rush to Rio de Janeiro - he wanted civilian government and thought a Kruel dictatorship would be equal or worse to the current government; to him, it was a race. Secondly, it'd play a role in the Costa e Silva/Castelo Branco struggle as Kruel and Castelo Branco were mortal enemies.