Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1912-05-24
COFFEE vALoRIzATIoN.
Scheme Though Laughed at 10 Worry
Successful.

Scheme Though Laughed at 10 Very
Successful.
"Valorization," as undertaken by
the Brazilian coffee-growing state Of
Sac Paulo, backed by the United
States of Brazil was called an econ
omic absurdity when it was first ad-
vanced to the Brazilian coffee plant
ers. Briefly the idea was that by
taking out Of the market the then
large surplus Of coffee the position
Of the staple in the worlds markets
| would be strengthened. To event.
ually market this coffee temporarily
held back it was, Of course, necessary
that the worlds annual crops should
tive demand, the deficiency being sup
piled out OF the stored surplus.
Economists hailed the scheme as an
attempt to fly in the face Of the mex
| orable law Of supply and demand,
and predicted disaster. Brazil would
be caught, they said. holding the UNI
I'brella, and the rest Of the world
would supply the deficiency which
laws restricting production in Brazil
might bring about.
The coffee raisers, however, pinned
or four years needed to bring newly
planted coffee trees up to the point Of
bearing (until they are six or seven
years old they do not reach their full
productive capacity and the fact that
about IS per cent Of the worlds coffee
Is grown in Brazil.
Other coffee-growing countries
would not greatly increase their pro-
duction, while the surplus stocks ac-
quired by the government under the
valorization plan were being distri-
buted, 1t was argued, because they
would fear to put capital into plan
tations, knowing before the new trees
came into full fruit the Brazilian re-
strictions might be withdrawn and the
full quota Of that country in the
worlds supplies again be produced.
The entire justification of this be-
lief In the working out Of these con-
ditions has been seen in the events in
the coffee market from that day to
this. In December, 1908, when the
existing S75,000,000 ''valorization"
loan was placed the price Of MOI
Rio coffee on the Coffee Exchange
here was 6 1-2 cents pound. From
that date with scarcely reaction the
price rose to Is cents. Yesterday the
price was IA 1-2 cents. In fact, the
success Of the plan has far ex-
ceeded the most optimistic predic-
tions Of the hackers, made six years
ago, when they were seeking to en-
list the interest Of capital in the Bra
lillian loan.
So doubtful were bankers Of the |
possibility of limiting the worlds pro-
duction until the oversupply had been
gradually absorbed, although the plan |
was first undertaken in 1906, 1t was
not until 1908 that the Rothschilds |
and the powerful interests, which |
eventually took the present loan, con-
sented to advance money.
Bankers here were especially skep- |
tical. They had seen attempts to |
limit cotton acreage in this country |
fall time after time. and often result |
in an enlarged planting. It was only
the fact that the Federal government
Of Brazil lent its credit to Sac Paulo.
guaranteeing the. bonds, that made
them salable here. An earlier issue
had been put out by the state Of Sac
Paulo, Of which $4,000, 900 was taken
here, and, although offered for SUBJ
scription by the National City bank at
a price to yield per cent, 1t was not
profitable to the bankers-New York
Times.