Casco Bay breeze., 1908-09-10

Transactions in options and fu-
lures In the New York Coffee Ex-
change have almost ceased. A year
ago the daily sales were $4,000.
There was q net decline In sales.
mostly speculative, of 7,414,000 bags
auring the past twelve months a.
compared with the previous year.
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 Ham,
burg. Germany. and Havre. France.
where are the other principal ex-
changes.
This has been brought about not
by internal reform of coffee ex-
changes. for traders are keen as ever,
nor BY legislation. for all measures
proposed at the last session of the
New York Legislature to end gam
bling In food stufs and stocks were
defeated.
Due to Brazil's Action.
It Is due solely to the remarkable
experiment now being made by the
Government Of Brazil to control. for
the benent Of her own people. the
surplus coffee supply of the world.
Bome merchants in the trade call the
undertaking socialism, others char
hcterize 1t as an example Of financial
paternalism, while spectators de-
pounce 1t as a corner in the market,
IN unwarranted interference by
government in private business. But
those importers who are allied in the
valorixation scheme, as It Is called,
aeclare that 1t is merely a form of
protection for home industry, a re-
versal in details OF operation Of our
OWN protective tariff.
The Brazilian experiment has been
In operation for a year and a half,
but only during the past few weeks
has the full force of its operations
been felt In the markets of the world.
Slowly but steadily the transactions
Of speculators have been squeezed
down; very surely has the range of
Quotations In prices been narrowed
and steadied, until to-day the possi-
bility Of rise or fall has been reduced
TO such q small fraction that there
70 neither excitement nor profit in
speculation.
Nature smiled on Brazil In 1905
In unprecedented plenty, and the cof-
Tee crop for the year was nearly
double the customary production. In
the calendars Of trade the coffee year
extends from July i to June 90, %
that oniciaiiy this bumper crop is
recorded as that Of 1867.
Ordinarily Brazil produces be-
tween ten and eleven million OF bags
of coffee. or about two-thirds of the
total required for the worlds con-
sumption. She did that in the year
previous and the year following the
great yield that upset all calcula-
lions by amounting to 100000
bags, or more than enough to supply
Ill the world, without reckoning the
output from other countries.
Faced o Trade Disaster.
To pour such q surplus into the
channels Of trade would have the GER
tain effect Of lowering prices down
to lowest ebb. Coffee growing is the
principal industry of Brazil. It is
the life OF the country, the basis Of
all trade, the foundation Of tie ma
lions financial operations. Coffee
prices more than cut In half meant
ruin for the planters and almost VI
tai embarrassment to the Govern
ment itself. In this emergency the
Government resolved to embark into
commercial enterprise and become
the dominant factor in the coffee
trade Of the world.
The State of Sac Paulo produces
By far the larger part of Brazilian
eonee, and the financial operations
have been conducted chiefly in the
name Of its Government, although
backed by the Federal Government.
II was resolved that the Government
should buy from the planters their
surplus coffee and hold It against
possible future short crops and the
Increasing demand OF the world. This
would prevent glut Of the market
and collapse in prices. The neces-
sary legislation was enacted, and the
Government. both State and Nation
al. borrowed money in the financial
centres Of the world to buy up the
coffee.
These loans were negotiated In
two ways. One form was the or
dinary loan from bankers for which
was pledged the export duties on
coffee. This was done in the case of
s15,0o0,000 advanced by the house
Of Rothschild. In other cases great
mercantile houses interested In the
coffee trade, such as Arbuckle Broth
ers 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
National Government obligated
themselves for about $4,000 900,
and they hold to-day. stored in ware
houses in Santos. Rio Janeiro, New
York. Havre, Hamburg and other
trade centres. nearly 100000 bags