New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-03-19
New Attempt to
Valorize Coffee
Is Unsuccessful
Bankers Not Disposed to
Lend Funds to Garry
Brazilian Crop

Brazilian Crop
Efforts made By Brazilian interests
70 borrow from New York banks
against coffee stored in the city Of
Santos, Brazil, have not so far proved
successful. From authoritative sources
it is learned that an attempt made to
obtain a 100000 loan here, with
coffee as collateral, has failed. This
was to be the forerunner of a number
of such credits, by means of which 1t
was hoped to finance large portion OF
the surplus coffee now held in Brazil.
The plan, it is understood, has the
backing of several of the state govern
ments Of the republic.
New York bankers who have been
sounded on the proposition are not
disposed TO lend the financial assist
ance requested. They have pointed
out, for one thing. that the project
savored too much of the old valoriza-
ton scheme of 1908. which got into
such bad odor with the United States
government. One banker said yester-
day that in his opinion his was prob
ably another attempt TO control artl-
ficially the price of coffee, and he did
not believe the economies of the plan
were sound.
Financing Crop Problem
Financing Brazil's coffee crop, with
a large portion OF the world engaged
in war, has been a serious problem.
Ordinarily European assistance would
be sought to carry the burden. but
with that avenue closed efforts have
been made internationally to have
American bankers furnish the funds.
At present large quantities of Brazil
ian coffee are held in this country; in
fact, the visible supply here is the
largest in long time. Still there re-
mains a considerable surplus in Bra
iii, estimated at upward of 2,0OO,OOO
bags, which under normal conditions
would be taken care of in Europe.
There is also the new crop to be
reckoned with. At the beginning Of
the present season indications were
for a record coffee crop, but prolonged
drought has reduced the indicated
Weld to 12,500,OO0 bags. A man prom
inent in the local trade said yesterday
that in his opinion the banking inter
ests in this country will be called upon
in the end to finance Brazil's whole
coffee surplus, pending the end OF the
war. At present shipments to Europe
have been reduced 20 a minimum, and
the visible supplies there are very
small. The cutting of Of the demand
there has been one OF the main rea-
sons WHY coffee has been one OF the
few commodities for which the price
has not SCARED.
BETTER Credit Arrangements Sought
An interesting phase of the coffee
situation is that number OF proml-
nent men in the local trade are endeav-
oring to obtain an extension OF greater
credi. facilities for coffee merchants, IN
hopes of shifting the centre OF the
worlds coffee market from London TO
New York. What is urged primarily IS
an extension to the domestic coffee
trade of the credit facilities prevailing
in the trade between New York and
Brazil. Coffee is now imported from
Brazil on the basis Of cost plus
freight against ninety-day acceptances,
but American merchants when buying
coffee in New York have hitherto in
most instances had to pay cash. Now 1t
is hoped to make it possible 10 buy
coffee in the domestic market against
thirty, sixty and ninety day accept
ances.
Valorization Hit Snag
The famous valorization scheme OF
Brazil was put into effect in 1907-'0S.
The worlds crop that year exceeded
the average consumption by about
100000 bags. 1t was proposed to buy
that 100000 bags and hold it off the
market. The three Brazilian states of
Sac Paulo, Rio and Minss entered into
An agreement 10 maintain coffee AZ a
fixed price. The State Of Sac Paulo
was authorized to make loan of $780,
600 900, and this was subsequently
guaranteed by the Federal government
Of Brazil, and sold jointly BY European
and American bankers. New York rep
resentatives took sl5OOO,OOO of the
loan. The syndicate bought 100000
bags of high grade coffee, distributed
il in storage places in the three con-
tinents and sold it out gradually year
by year at prices much above cost.
Proceeds of the sales were applied 10
the redemption Of the bonds. In two
years coffee prices rose 100 per cent. A
period of much reduced crops greatly
aided the successful management of the
pool. But the syndicate ran into a snag
in this country. where certain interests
in the coffee trade criticised the plan,
and the Department OF Justice finally
brought suit in 1912. compelling the
American representatives to sell nearly
100000 bags, with disastrous effect on