Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-12-06

That coffee costs e great deal more
than II used to IL a fact we'll known to
every housewife: that 1t costs more than
twice as much as 1t did three years ago
Is a fact we'll known to every retail grocer
in the country. The story OF the increase
In the price Of coffee, an increase ar
tificially brought about by the coffee pro
ducers, is unique even in this age OF
frenzied finance and commercial combi-
nation. AS It actually costs every man,
woman and child In this country ap-
proximately a dollar q year. It IL story
that touches the pocket.nerve OF every
American.
The increase In price was brought about
and Is maintained by what Is known as
the Brazilian coffee valorization scheme
That scheme was started in 1908, but was
not made fully effective until late IN
1908 The price of Rio Is. the most i'm
portant Of the ten grades Of coffee, in
the New York market has increased from
6h cents a pound to IAN cents pound in
the three years between December. 1865.
and December. 1911
While the wholesale price. that which
is paid by the retailer. has increased z
has increased an average Of only about
to 5 cents q pound. SO that in this In
stance the middleman is getting the worst
of it. Grocers long ago ceased to make
any profit in handling sugars. FOR many
wears their principal profitable staples
have been coffee and tea Now the profit
in coffee is being rapidly extinguished.
Here Is the story Of how 1t all hap
pened: In the year 1905 the coffee crop in
the state of Sac
Enormous Crop, Paulo. Brazil
Corner" Results. one. and the
planters feared that II this big crop were
dumped into the market the price Of cof-
fee would be so reduced that they would
be ruined and that their great plantations
would be returned to the jungle. More
than three-fourths-some experts say as
much as IS per cent-of the worlds cof-
fee crop is produced in Brazil. Most Of
the Brazilian supply Is grown In the
state Of Sac Paulo. Naturally Brazil
controls the coffee supply Of the world
Just as the southern states Of the Union
control the worlds supply Of cotton.
There is not enough coffee grown else
whore to affect the Brazilian supremacy.
To obviate the low prices threatened
because of the big crop Of 1908 the state
Of Sac Paulo undertook to corner the
worlds supply Of coffee The state bought
up all the coffee. or practically all OF it.
grown within its borders issued bonds
thereon and held the coffee for a raise.
This first bond issue was for SIS, O00. 600
It soon became obvious that the deal
was too big for Sac Psulo to swing alone.
But as the whole fortune Of Brazil con-
sists In It's coffee and rubber production
the federal government was interested
| and when appealed to it responded IA
| vorably.
In 1905 the state OF Sac Paulo issued
bonds to the amount Of 81. OO0. 600. these
bonds being guaranteed with extraord-
| mary pledges by the government Of
Brazil. With the seventy-five millions
thus secured the state of Sac Paulo ac-
tually bought up the supply of coffee and
has held most of 1t until this day.
The money for the big bond issue was
secured from English. French, German
and Belgian bankers The Rothschilds and
]. Henry Schroeder & Co. Of London took
twenty five millions. the Societe Generate
Of Paris took the Same amount, 8. Biei-
schroeder Of Berlin took ten millions and
the National Bank Of Belgium five mil
lions. The remaining ten millions was
advanced by ]. P. Morgan & Co., the