Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1911-12-12
a1istellaneous &raains.
BRAZILIAN VALoRIZATIoN.
How the Government Succeeded in
Raisino Price of Coffee.

than IL USED 10 Is q Idct we'll hHoWIi
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 hetail grocer in the country.
The story of the increase in the price
Of coffee, an increase artifcially
brought about by the coffee producers,
is unique even in this age Of frenzied
finance and commercial combination.
AS it actually costs every man, wo-
man and child in this country ap-
proximately a dollar a year, 1t Is
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 valori-
zation scheme. That scheme was
started in 1906, but was not made
fully effective until late in 1908. The
price of Rio rs, the most important
of the ten grades Of coffee, in the New
York market, has increased from 81
cents a pound to 14S cents a pound
In the three years between December,
1908, and December, 1911.
While the wholesale price, that
which is paid by the retailer, has in
creased 7 to s cents. the price paid by
the consumer has increased an aver
age of only about or cents q
pound, so that in this instance the
middleman is getting the worst of 1t.
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 extin-
guished.
Here is the story Of how 1t all hap
pened In the year 1905 the coffee
crop in the state Of Sac Paulo, Brazil,
was an enormous one, and the plant
ers feared that II this big crop were
dumped into the market the price OF
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 S5 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 threat
ened because of the big crop Of 1905,
the state of Sac Paulo undertook to
corner" the worlds supply Of cof-
fee. The state bought up all the cof-
fee, or practically all Of 1t, grown
within its borders, issued bonds there
on and held the coffee for raise. This
first bond issue was for $15,0O0,OO0 1t
soon became 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
was interested, and when appealed to
1t responded favorably.
In 1908 the state of Sac Paulo is-
sued bonds to the amount of $75,OO0,-
OO0 these bonds being guaranteed
with extraordinary pledges by the gov
ernment Of Brazil. With the $75,O0O,-
900 thus secured the state OF Sac
Paulo actually bought up the supply
Of coffee, and has held most of 1t un-
til this day.
The money for the big bond issue
was secured from English, French,
German, American and Belgian bank
ers. The Rothschilds and ]. Henry
Schroeder & Co. of London, took $685.
600, 900, the Societe Generate Of Paris
took the same amount; s. Bleisch-
roder Of Berlin, took $10,0OO,OOO, and
the National Bank Of Belgium, 3d.
100000. The remaining $1O,O00,OOO
was advanced by ]. P. Morgan & Co.,
the National City bank and the First
National bank Of New York
The coffee bought with the money,
between 100000 and TO-
100000 bags, was stored In ware
houses and turned over to the control
of a committee of seven, one appoint
ed by each of the six principal bank
ing houses interested and the other
by the government Of Brazil. The
coffee is to be sold at the discretion
of this committee. 1t Is somewhat
curious coincidence that according to
the best available reports, the COM
mittee has sold 100000 bags Of this
valorized coffee and that the shortage
Of the present years crop, that Is, the
excess of the current years consump-
tion over production, Is 3,OOO,O 600
bags. In other words, this valorized
coffee Is being put out so as to main
tain as nearly as possible the normal
average supply Of coffee In the worlds
market.
AS a guarantee for the payment OF
the bonds, the government Of Brazil
agreed to levy an export tax on cof-
fee, and to remit weekly the collec-
tions Of this tax to the bankers COM
mittee, the money to go toward paying
the interest and the principal Of the
bonds. 1t was further agreed by the
Brazilian government that the future
supply of coffee should be forcibly
limited by prohibiting the planting OF
any more coffee trees, except to take
the places Of trees actually dead. In
spectors were sent through all the cof-
fee producing region, strip of ter
ritory about $50 miles wide and 700
miles long, and all new trees planted
since the consummation Of the valori-
zation scheme have been destroyed.
1t ought to be said in this connection
that the short crop Of the current year
is due to frost, but as a frost-killed
crop is nearly always lOllOWeu ny d
huge crop-such as that of 1906-and
as trees planted before valorization are
just beginning to come into bearing,
the shortage cannot be expected to
continue The valorization scheme
will continue in force until 1918.
1t was seriously proposed in Brazil
to levy an export tax Of 10 per cent on
all coffee shipped out Of the country,
the tax to be payable in kind; that
is, that one-tenth of the coffee by
weight be taken, and this tenth be de-
stroyed by sinking it in the sea or
by burning 1t.
How perfectly the valorization
scheme has worked out is shown by
the fact that in New York-the prin-
cipal coffee port of the world-the
price of coffee has been gradually but
surely rising day by day, week by
week and month by month until the
net increase on the principal grades
is now considerably more than 100 per
cent.
The burden of this increase falls
more heavily on the American people
than any others because of the fact
that the Americans consume more
coffee, both absolutely and in proper
ton to population, than do any others
frn,