New-York tribune., 1911-10-06
WOULD SUE COFFEE MEN
Government Making Inquiry as
to VaIorization Plan.
WITHHOLD 100000 BAGS
Action of Brazilian State and
Group of Bankers Said To Be
Responsible for High Prices.


RESPONSIBLE for High Prices.
nice international question has been
suggested to the governments attorneys
by the decided rise in the price OF coffee
since this rise is considered as at least
partlv due to the yalorization plan put
into eject three years ago by the Brazil
ian state of sac Paulo In the race or
heavy bull market in the staple $40
Paulo. represented by Or. Francisco + err
reira Ramos. and the American ana TOT
eign bankers whose loan OF S5"o'Wo Is
financing the scheme. represented by SIX
other members of the valorZation COM
mittec. are holding from consumption
little less than five million bags Of cohee.
II this committee were made mp OF Amer
lean citizens. II has been pointed out
clear case of conspiracy. punishable under
the Sherman antitrust law. could oe eS-
tablisbed. But the only American citizen
who is a member Of II IS Herman SielcKeh'
Of Crossman & Sielcken. coffee importers.
If IL were composed Of private clllzehs'
though foreigners action excluding the"
from American markets might be taken
But the rich state Of a powerful nation y
a party to the conspiracy and not Only
for that reason IS exclusion from the Amer
lean markets out of the question: put SUE"
action would deprive the coffee consume
Of this country Of by far the largest coHec
supply i'm the world.
The Department OF Justice has begun an
investigation OF the coffee situation Ih ''.'9
CITY TO see whether suits can be hroushI
against individual firms. and when II mas
collected sufficient material it Is not I'M
probable that the Department Of state VIII
bring tho subject to the attention OF Brazil
Vbo hears are doing everything in thelr
power to aid the inquiry.
Lewisohn Brothers, of No. Il Broadway
are leading the fcht. Arrayed on the
other side, among other poweri'i hrihs
are crossman & Sielcken and AEbuckle
Brothers. The immediate ease" which the
Department of Justice is working up IN
wolves restricted" sale made by one oi
the bulls to bear. the evidence of when
IS said to be in writing.
Restricted" sales of coffee are common
along Front street They consist of sales
below the New York market price on the
condition that the buyer shall not dump
the coffee back on the local exchange
Such a contract is a technical violation ol
the law. and is usually oral, but in the
case cited above II was made in writ
ing. il is said. In any event the buyer
violated the agreement. being short OF
coffee and needing it for delivery here and
tbe huu firm was obliged 10 buy ii back on
the New York exchange at an advanced
price
Now the bears contend that these re
strictod" sales are Icing made to maintain
,be New York market at an artifcially
high level. but the bulls say they are justi-
fed because they provide coffee at
chcapcr rate FOR the country at large and
lessen speculation.
Sigmund Hirsch. of Henry Nordlinger Il
CO.. no 81 Front street, put the case this
way: Last years to.al supply Of coffee was
Il 40 0no raCs. some 100000 bags below the
normal demand causing a rise In price o.
from s 10 nearly y cents pound. Ims
year the supply is approximately ln'co"W
bags. with slightly curtailcd demand
due to the elimination Of the small roast
ers. and yet the price, instead OF falling,
has been rising.
"The high prices Of this year." Mr..
IIirsch said "are due 10 the speculation
Of n powerful syndicate operating on all
the markets Of the world. The members
Of this syndicate are closely allied to the
vaIorization interests They are figuring
on small crons for seven years 10 come,
hut the extraordinarily heavy rainfall in
Sac Paulo this season means bumper
crop two years hence"
The answer suggested TO many minds IS
that the valorization agreement, made in
1905. has seven more years TO run. 1t re-
stricts the export Of Sac Paulo coffee to
100000 bags q year every bag exported
above that amount being subjected 10
prohibtlye tax of % per cent ad valorem
imposed under the agreement by the Sac
Paulo government. As 100000 bags Of
Sac Paulo coffee added 10 the much small
ar supply from other states Of Brazil and
other parts Of the world, Is only enough
now 10 meet the normal demand import
crs point out that it is reasonable to sup
pose il will fall FAR short Of meeting this
demand few years hence.
Furthermore, the Cnly considerable stock
of coffee not subjected TO this export re-
striction is that held by the hackers Of
valorizatlon as security for their loan. The
valorzation committee meets usually in the
first week of January every year in either
Paris or London, and decides then how
much of this stock II will sell during the
following six months. II can, therefore,
- L IL,