El Paso herald. (El Paso, Tex.) 1901-1931, 1911-12-06

" HAT coffee costs a great deal
more than it used to is a fact
well known TO every housewife;
/ that it costs more than twice as much
as it did three years ago is a fact well
/ known TO every retail grocer in the
country. The story Of the increase in
the price of coffee, an Increase artifi-
ciaIly brought about by the coffee pro-
ducers. is unique even In this age OF
frenzied finance and commercial com
[ bination. As it actually costs every
man, woman and child in this country
approximately a dollar year, it is a
story that touches the pocket-nerTe OF
every American.
The increase in price was brought
about and is maintained by what is
known as the Brazilian coffee vaIori-
ZatiOn scheme. That scheme was
started in 1906, but was not made fully
effective until late in 1905 The price
Of Rio rs, the most important of the
ten grades Of coffee, in the New York
market has increased from Z cents
a pound to 14B cents a pound in the
three years between December, 1908,
and December 1911.
MiddIeman Loses in Deal.
While the wholesale price, that
which is paid by the retailer. has in
creased to cents, the price paid
by the consumer has increased an az
erage Of only about 4 to 8 cents
pound, so that in this instance the
middleman is getting the worst OF It.
Grocers long ago ceased to make any
profit in handling sugars. For many
years their principal profitable staples
have been coffee and tea Now the
profit in coffee IS being rapidly ex-
How It Happened.
Here is the story Of how 1t all hap
pened. In the year 1906 the coffee
crop in the state OF Sac PaulO, Brazil,
was an enormous one, and the planters
feared that If this big crop were
n
coffee 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 coffee crop is
produced in Brazil Most of the Bra
lillian 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 con-
troll the worlds supply of cotton. There
is not enough coffee grown elsewhere
TO affect the Brazilian supremacy.
To Obviate the low prices threatened
because OF the big crop Of 1905, the
state of Sac Paulo undertook to cor
ner' the worlds supply Of coffee The
state bought up all the coffee, or
practically all Of il. grown within its
borders. issued bonds thereon and held
the coffee for q raise. This first bond
issue was for s15,000.O0O. 1t soon be-
came obvious that the deal was too big
for Sac Paulo to swing alone. But as
the whole fortune Of Brazil consists
in its coffee and rubber production, the
federal government was interested
and when appealed to it responded
favOrably.
Corners Entire Crop.
In 1903 the state OF Sac Paulo is
sued bonds to the amount of SIS 000-i
600, these bonds being guaranteed with
ment OF Brazil. With the ST5, 5000, 600
thus secured the state of sac Paulo
actually bought up the supply of cof-
fee and has held most OF. it until this
day.
The money for this big bond issue
was secured from English, French.
German, American and Belgian bank
ers. The Rothchilds and J.. Henry
Schroeder & Co OF London took S25.-
100000. the SOciete Generate OF Paris
took the same amount s. BleischrOder
OF Berlin took 100000 and the Ma
tional Bank Of Belgium $1,000 600 The
remaining $4,000. 900 was advanced by
J Morgan & Co, the National City
bank and the First National bank OF
New York.
Put Out to Maintain Average.
The coffee bought with the money,
something between 5000, 600 and 9,0O0,-
600 bags, was stored in warehouses and {
turned over to the control of q com
mittee of seven, one appointed by each
OF the SIX principal banking houses in
tereSUed and the other by the govern
ment Of Brazil. The coffee is to be
sold at the direction of this commit
tee. It is somewhat curious coin
cide1ce that according to the best
aValIable reports the committee has
sold 5000, 600 bags of this valorfzed
coffee and that the shortage of the
present years crop. that is the excess
OF the current years consumption over
production, is 5000, 600 bags In other
words, this valOrized coffee is being
put out so as to maintain as nearly as |
possible the normal average supply OF |
coffee in the world market
As a guarantee for the payment Of |
the bonds, the government OF Brazil ]
agreed to levy an export tax on cof-