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to do?" asked Hermann Sielcken of the commissioner from the state of São Paulo.

"We want you to finance for us five to eight million bags of coffee," said the commissioner blandly.

Here was an adventure. Here was a proposition to lift bodily out of the market half as much coffee as the world's total production had averaged for the ten preceding years when prices had been so low. Presumably, if this were done, prices would be doubled. But Hermann Sielcken shook his head.

"No," he said, "there is not the slightest chance for it, not the slightest." And then he pointed out that there would be "no financial assistance coming from anywhere" if the São Paulo planters kept on raising such ridiculously large crops of coffee.

The commissioner assured him that the prospect was for smaller crops in future. Hermann Sielcken was not so sure about it "At a price low enough," he mused, "I might be able to raise funds to pay eighty percent on a value of seven cents a pound for Rio No. 5."

The commissioner was dismayed. His government had already promised to take coffee from the planters at about a cent a pound above the market, and the market then stood at nearly eight cents. The government would have to dig to make up the difference. Hermann Sielcken's terms were the best that could be got, however, and the commissioner accepted them.

From that time forth Hermann Sielcken was the head of the movement. He approached a few large coffee merchants, including his former rivals, Arbuckle Brothers, and drew up a contract. The merchants agreed to advance eighty percent of the sum required to buy two million bags of coffee at seven cents a pound. If the market went above seven cents, the government was to make no purchases. If it fell below seven cents, the government was to make good the difference to the merchants by cable.

Before the season was well advanced the unexpected happened. Brazil was reaping the largest coffee harvest in the history of the world. The two million bags of coffee purchased by the government were as a drop in a bucket. Financed by Hermann Sielcken, Schroeder, the great London banker, and a few prominent European merchants, the government was forced to buy almost nine million bags. Toward the end of 1907, the government had lifted half of the world's visible supply of coffee, but the market stood only a trifle above six cents a pound. The government was practically bankrupt.

Hermann Sielcken now enlisted the Rothschilds on his side, and shifted the financial burden from the shoulders of the coffee merchants to those of the Paris bankers and their American associates. Then the Rothschilds imposed their conditions on the government of Brazil. A national law was passed determining a heavy penalty for any one who planted a new coffee tree in Brazil. The government guaranteed that not more than mine million bags of the next coffee crop and not more than ten million bags of any succeeding crop should be exported.

By the end of 1911, the coffee market stood well above thirteen cents. Here was a rise of more than one hundred percent in two years, more than sixty percent in six months. Evidently, valorization coffee in the hands of the bankers' committee had become a gilt-edged security. But how?

During the five crop years since the "plan" was launched on the heights above Baden, nearly 90,000,000 bags of coffee had been raised in the world. The bankers' committee still held 5,108,000 bags of this. At the highest estimate, consumption had exceeded production by only 4,000,000 bags. Here was a shortage of only a little more than ten percent in supply as against demand, so far as crops go. Yet there had been a rise of more than one hundred percent in two years in the price of coffee on the New York Coffee Exchange.... Upon the merchant's ability to deliver coffee on the New York Coffee Exchange depends the price of coffee in the world. That explains why the bankers' committee from the beginning refused absolutely to sell valorization coffee on the public exchanges of the world. In Europe, they put it up at auction; and when it didn't go, it was bought in for them. In America, they announced in a printed circular that valorization coffee would be sold only on condition that the purchaser would not deliver it on the New York Coffee Exchange.

Hermann Sielcken absolutely refused to sell coffee to the merchants on the Exchange. Arbuckle Brothers kept on buying coffee heavily, as if they would corner the market. They resold the coffee, however, at private sales, exacting a written contract from the buyer that he would not deliver the coffee on the New York Coffee Exchange, or resell it to any one that would so deliver it. The Coffee Exchange began an investigation, but nothing ever came of it.

Shortly after the valorization committee had apparently cleared up $25,000,000 in one year, the restriction as to the delivery of valorization coffee on the New York Coffee Exchange was officially removed. Yet neither from Hermann Sielcken nor from Arbuckle Brothers, it is charged, could one buy any coffee to deliver for that purpose. In 1911, coffee rose to sixteen cents per pound.

At the end, it was found that the committee's holdings had been marketed at the various sales on a basis, for Santos 4s, from eight and five-eighths cents minimum, to the final sale here forced by the United States government, at which time the price realized was sixteen and three-quarter cents for Santos 4s, and fourteen cents for Rio 7s.

The one fly in the valorization ointment was Senator G.W. Norris, of Nebraska, who early in 1911 called for a congressional investigation of the operations of the valorization syndicate, which he said was costing the American people $35,000,000 a year. The attorney-general was instructed to report as to whether or not there was a coffee trust. It was a leisurely investigation, which encountered many snags placed in its way by those who believed it would be against international policy to question too closely the participation of the Brazil government in the enterprise. Politics played no inconsiderable part in the investigation, which dragged along until May 18, 1912, when an action was begun in the Federal District Court for the southern district of New York, alleging conspiracy in restraint of trade on the part of Hermann Sielcken; Bruno Schroeder, of J. Henry Schroeder & Co.; Edouard Bunge; the Vicomte des Touches; Dr. Paulo da Silva Prado; Theodor Wille; the Société Generale; and the New York Dock Co.; also praying for injunction and receivership of the valorization coffee then stored in the United States, and amounting to 746,539 bags. The injunction was denied.

Immediately thereafter, rumors began to circulate that the government's coffee suit would never be tried. The Brazilian ambassador threatened diplomatic interference, and Attorney-General Wickersham let it be known that a friendly settlement might be effected. Sielcken boldly challenged the authorities to prosecute the case, and even seemed to invite criminal proceedings against himself. Saving the government's face, and Brazil's face, at one and the same time, proved to be a long and tedious process.

Meanwhile, Senator Norris introduced in Congress a bill designed to give the government power to seize importations of coffee when restraint of trade was proved. It was vigorously opposed by many prominent green-coffee men and roasters; but in February, 1913, it became enacted into a law. It effectively killed all future valorization schemes in so far as direct participation by this country is concerned.

About December 1, 1912, Attorney-General Wickersham accepted good-faith assurances from Mr. Sielcken's attorney—who represented also the Brazil government—and agreed that if the valorization coffee stored here was sold to bona-fide purchasers before April 1, 1913, the government's suit would be dismissed. In May, 1913, the attorney-general of the new Wilson administration, which came into office in March of that year, issued a statement saying that, good-faith assurances having been received from the Brazil government that the understanding was fulfilled in letter and spirit before the date set by the previous attorney-general, and the entire amount of coffee disposed of to eighty dealers in thirty-three cities, the suit would be dismissed.

In the United States Senate about the same time, Senator Norris renewed his attack on "the international coffee trust". He charged that the coffee sale was not as represented, but merely a transfer, and called upon the Department of Justice for the facts, with names of the alleged purchasers.

Attorney-General McReynolds, on May 7, 1913, declined to send to the Senate the official correspondence in regard to the Brazil coffee-valorization matter, because it was "incompatible with the public interests." He did, however, send other papers on the subject. The secretary of state sent copies of some correspondence; but the documents were not made public. This ended the matter, although Senator Norris called for a congressional investigation, charging that the attorney-general had been handed a "gold brick".

Sielcken contented himself with remarking that the suit was a mistake in the first place, and that it was a foregone conclusion the government would be defeated. Also, he offered $5,000 to any one who could explain the Norris bill.

Valorization, then, was started by the state of São Paulo in 1905, when a law was passed authorizing the state to enter into an agreement with the other Brazil states and the federal government for the adoption of measures which would assure the valorization of coffee and facilitate a propaganda abroad for increased consumption.

The states of São Paulo, Minãs Geraes, and Rio de Janeiro proposed, early in 1906, to withdraw from the markets such quantities of coffee as would keep down exports and maintain profitable prices. The plan comprehended the interested states borrowing about $75,000,000 from European and United States bankers with which to buy up the surplus coffee. To take care of interest and amortization, a tax of three francs per bag of 132 pounds (about 57 cents) was to be levied on all coffee exports, collectable at Santos and Rio de Janeiro. Further coffee-planting was to be checked by enforcing the law which carried a tax sufficiently high to operate toward restriction.

When it was understood that Brazil's federal government would not endorse the plan in toto, it was abandoned by Rio de Janeiro and Minãs Geraes. However, the state of São Paulo in the course of the next two years borrowed some $30,000,00 on its own account for valorization purposes, obtaining half the amount direct from foreign banking interests, and the remainder, through the Brazilian federal government, from London sources.

This first valorization was abandoned in favor of the Sielcken plan, which the federal government ratified in July, 1908. By this new plan São Paulo borrowed $75,000,000 from the syndicate composed of American, English, German, French, and Belgian bankers. Out of this it repaid the $30,000,000 loan. The 1908 loan was to expire in ten years, in 1919. Under the plan of the new loan, it was agreed that certain amounts of the valorized coffee should be stored as collateral in warehouses in New York and Europe in charge of a committee of seven, who were authorized to sell the coffee in the market in specified quantities and at prices that would not disturb the price of other coffees. The composition of the committee was as follows: Dr. Francisco Ferreira Ramos, of São Paulo and Antwerp; who was succeeded by Dr. Paulo da Silva Prado; the Vicomte des Touches, of Havre; the Société Generale, of Paris; the firm of Theodor Wille, of Hamburg; Hermann Sielcken, of New York; Edouard Bunge, of Antwerp; and Baron Bruno Schroeder, of J. Henry Schroeder & Co., of London.

Brazil agreed to purchase 10,000,000 bags and to hold them off the market until conditions warranted their sale. It was also agreed that the total exports of unvalorized

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