Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-08-19
CONTROL OF WORLDS COFFEE
BRAZIL CRUSHES SPECULATION
AND MAINTAINS PRICES
Gambling in Quotations on the Berry
Nearly at an End-crop Owned
by the Government.

From the New York World.
For all practical purposes it may be
said that gambling in coffee prices has
ended for the time being, not only In
New York but in Hamburg, Germany.
and Havre. France, where are the other
principal exchanges.
This has been brought about not by in
ternal reform Of coffee exchanges. for
traders are keen as ever. nor by legisla-
ton. for all measures proposed at the
last session Of the New York legislature
to end gambling in foodstuffs and stocks
were defeated.
Due to Braxil's Action.
1t is due solely to the remarkable ex-
pertinent now being made by the gov
eminent of Brazil to control. for the
benefit OF her own people. the surplus
coffee supply of the world. Some mer-
chants in the trade call the undertaking
socialism, others characterize 1t as an
example Of financial paternalism, while
SPECTATORS denounce 1t as corner In the
market, as unwarranted interference by
government in private business. But
those importers who are allied In the val
orization scheme. as ii is call.d declare
that 1t is merely form of protection for
home Industry, a reversal in details of
operation OF our own protective tariff.
The Brazilian experiment. has been in
operation for year and a half. ut only
during the past few weeks has ..re full
force OF its operation been felt in the mar
kets OF the world. Slowly but steadily the
transactions of Spectators have been
squeezed down; very surely has the range
OF fluctuations in prices been narrowed
and steadied. until today the possibility Of
small fraction that there is neither ex-
element nor profit in speculation
Nature smiled on Brazil In 1906 in I'M
precedented plenty. and the coffee crop
Tor the year was nearly double the Gus
tomary production. In the calendars of
trade the coffee year extends from July
i to June 60 SO that officially this bumper
crop is recorded as that OF 1907.
Ordinarily Brazil produces between ten
and eleven million of bags OF coffee. or
the worlds consumption. She did that In
the year previous and the year following
the great yield which upset all calcula-
tions by amounting to 2O.O0O0OO bags, OF
more than enough to supply all the world
without reckoning the output from other
countries.
Faced a Trade Disaster.
To pour such q surplus into the chan
nels of trade would have the certain eff
feet Of lowering prices down to lowest
ebb.' Coffee growing is the principal I'm
dustry Of Brazil. 1t is the life Of the
country: the basis of all trade, the foun-
dalton Of the nations financial operations.
Coffee prices more than cut in half meant
ruin for the planters and almost vital en-
barrassment to the government itself. In
this emergency the government resolved
to embark into commercial enterprise and
become the dominant factor In the cof-
fee trade of the world.
The state of Sac Paulo produces by far
~ QYo osad
the financial operations have been con-
Quoted chiefly in the name of it's govern
ment. although backed sby the federal
government. 1t was resolved that the
their surplus coffee and hold 1T against
possible future short crops and the in
creasing demand OF the world This
would prevent a glut Of the market and
collapse in prices. The necessary legis
lation was enacted. and the government
both state and national. borrowed money
in the financial centers of the world 4
buy up the coffee.
These loans were negotiated in twt
ways. One form was the ordinary loar
from bankers. for which was pledged the
export duties on coffee. This was done
in the case of SIS, COO 900 advanced by the
house of Rothschild. In other cases great
mercantile houses interested in the cot.
fee trade. such as Arbuckle Brothers and
Crossman & Sielcken Of New York and
similar firms in Hamburg and London
advanced funds with the coffee itself as
security.
All told, the Brazilian state and ma
tional governments obligated themselves
stored in warehouses in Santos, Rio ia
metro. New York. Havre, Hamburg and
other trade centers. nearly $1,000 bags
Of coffee, worth between $40 and $11 a
bag. Thus the government is In absolute
control.of the market. 1t not only saved
a crop panic at home, but obtained q
power over the worlds markets that ul
to date has been welded only for good.