Diagram showing the relationship between the leading coffee-consuming
countries]
In South America, Brazil, Bolivia, and all the countries to the north,
are coffee producers. Of the southern countries, Argentina is the chief
coffee buyer, with Chile second. In the western hemisphere, however, the
largest per capita coffee consumer is the island of Cuba, which raises
some coffee of its own and imports heavily from its neighbors.
The list of coffee-consuming countries includes practically all those
that do not raise coffee, and also a few that have some coffee
plantations, but do not grow enough for their own use. These countries
are listed on page 287. Consumption figures can be determined with fair
accuracy by the import figures; although in some countries, where there
is a considerable transit trade, it is necessary to deduct export from
import figures to obtain actual consumption figures. The import figures
given are the latest available for each country named.
[Illustration: No. 5--COFFEE IMPORTS, 1916-1920
In this diagram a comparison is drawn between the coffee imports of the
leading consuming countries over a critical 5-year period]
GENERAL COFFEE CONSUMPTION TABLE
_Country_ _Year_ _Imports_ _Exports_ _Consumption_
(pounds) (pounds) (pounds)
United States 1921[j] 1,345,366,943[k] 41,813,197[k] 1,303,553,746
Canada 1921[l] 17,517,353 20,349 17,497,004
Newfoundland 1920[l] 46,813[m] 46,813
United Kingdom 1921[j] 34,363,728[m] 34,360,128
France 1921[j] 322,419,884 1,154,769 321,265,115
Spain 1920 48,518,854 5,033 48,513,821
Portugal 1919[j] 6,926,575 1,258,271 5,668,304
Belgium 1921[j] 105,365,586 21,541,049 83,824,537
Holland 1921[j] 135,566,943 66,567,702 69,999,241
Denmark 1921[j] 46,571,954 3,449,537 43,122,417
Norway 1921[j] 29,835,544 169,921 29,665,623
Sweden 1921[j] 89,660,766 89,660,766
Finland 1921[j] 27,968,355 27,968,355
Russia 1916 9,801,014 9,801,014
Austria-Hungary 1917 17,966,167 56,217 17,909,950
(former)
Austria 1921[n] 5,128,781 79,365 5,049,416
Germany (former) 1913 371,130,520 1,783,521 369,346,999
Germany (present) 1921[o] 167,675,258 210,535 167,464,723
Poland 1920 7,612,526 26,781 7,585,745
Bulgaria 1914 1,300,493 1,300,493
Rumania 1919 5,134,198 66,757 5,067,441
Greece 1920[p] 13,118,626 13,118,626
Switzerland 1921[j] 31,582,879 47,619 31,535,260
Italy 1920 66,509,255 14,330 66,494,925
Algeria 1920 17,273,041 17,273,041
Tunis 1920 3,458,018 3,458,018
Egypt 1921[j] 20,939,542 218,938 20,720,604
Union of S. Africa 1920 28,752,538 954,181[q] 27,798,357
Northern Rhodesia 1920 43,880 8,263 35,617
Southern Rhodesia 1920 325,900 10,064 315,836
Mozambique 1919 111,614 78,973 32,641
Ceylon 1920 1,853,537 2,240 1,851,297
China 1920 613,217 297,663 315,554
Japan 1920 684,826 684,826
Philippines 1920 3,475,530 26 3,475,504
Canary Islands 1917 529,104 529,104
Cyprus 1918 451,880 451,880
Australia 1920[l] 2,502,429 263,430[r] 2,238,999
New Zealand 1920 304,737 21,104 283,633
Cuba 1920[l] 39,983,001 1,305 39,981,696
Martinique 1918 335,099 10,362 324,737
Panama 1920 216,923 518 216,405
Argentina 1919 37,541,020 37,541,020
Chile 1920 12,357,929 12,357,929
Uruguay 1921[p] 4,896,507 4,896,507
Paraguay 1920 262,737 262,737
[j] Preliminary figures.
[k] Figures are for continental U.S. Imports include both foreign coffee
and coffee from our Island possessions. Exports Include both foreign and
domestic exports from continental U.S. and also exports to our island
possessions.
[l] Fiscal year.
[m] Entered for home consumption.
[n] First six months. Imports in 1920 were 6,042,808 pounds; exports
93,034 pounds.
[o] Eight months, May-December.
[p] First eleven months.
[q] Exports of foreign coffee. Domestic exports were 48,463 pounds.
[r] Exports of foreign coffee. Domestic exports were 208,445 pounds.
On account of the very wide fluctuations in imports during the war and
the period following the war, per capita figures of consumption are of
only relative value, as they have naturally changed radically in recent
years. For the most part, however, the trade has about swung back to
normal; and per capita figures based on the amounts retained for
consumption, as given in the General Coffee Consumption Table, are
fairly close to those for the years before the war. As per capita
calculations must take into account population as well as amounts of
coffee consumed; and as population figures are usually estimates, the
results arrived at by different authorities are likely to vary slightly,
although usually they are not far apart. In figuring the per capita
amounts in the table on page 288, latest available estimates of
population have been used. The figures show that the following are the
ten leading countries in the per capita consumption of coffee in pounds:
1. Sweden 15.25 6. Norway 10.95
2. Cuba 13.79 7. Holland 10.22
3. Denmark 13.19 8. Finland 8.25
4. United States 12.09 9. Switzerland 8.17
5. Belgium 11.06 10. France 7.74
The per capita consumption of the most important coffee-consuming
countries, based on the large table, is given with the 1913 per capita
figures for comparison:
PER CAPITA COFFEE CONSUMPTION TABLE
_Country Year Pounds Pds_., 1913
United States 1921 12.09 8.90[t]
Canada 1921[s] 1.93 2.17[u]
Newfoundland 1920[s] 0.19 0.19[t]
United Kingdom 1921 0.72 0.61[t]
France 1921 7.74 6.41
Spain 1920 2.33 1.64
Portugal 1919 0.86 1.16
Belgium 1921 11.06 12.27
Holland 1921 10.22 18.80
Denmark 1921 13.19 12.85
Norway 1921 10.95 12.29
Sweden 1921 15.25 13.41
Finland 1921 8.25 8.85
Russia 1916 0.05 0.16
Austria-Hungary 1917 0.34 2.54
Germany 1921 4.10 5.43
Roumania 1919 0.29 1.04
Greece 1920 2.97 1.19
Switzerland 1921 8.17 6.48
Italy 1920 1.84 1.79
Egypt 1921 1.53 1.15
Union of So. Africa 1920 3.80[v] 4.19[v]
Ceylon 1920 0.43 0.36
China 1920 0.001 0.01
Japan 1920 0.01 0.004
Cuba 1920[s] 13.79 10.00
Argentina 1919 4.40 3.74
Chile 1920 3.06 3.04
Uruguay 1921 3.61 [w]
Paraguay 1920 0.26 [w]
Australia 1920[s] 0.42 0.64
New Zealand 1920 0.24 0.29
[s] Fiscal year.
[t] Fiscal year 1913.
[u] Fiscal year ending March 31, 1914.
[v] Including both white and colored population.
[w] Not available.
_Tea and Coffee in England and the U. S_.
The rise of the United States as a coffee consumer in the last century
and a quarter has been marked, not only by steadily increased imports as
the population of the country increased, but also by a steady growth in
per capita consumption, showing that the beverage has been continually
advancing in favor with the American people. Today it stands at
practically its highest point, each individual man, woman, and child
having more than 12 pounds a year, enough for almost 500 cups, allotted
to him as his portion. This is four times as much as it was a hundred
years ago; and more than twice as much as it was in the years
immediately following the Civil War. In general it is fifty percent more
than the average in the twenty years preceding 1897, in which year a new
high level of coffee consumption was apparently established, the per
capita figure for that year being 10.12 pounds, which has been
approximately the average since then.
[Illustration: No. 6--WORLD'S CONSUMPTION OF TEA AND COFFEE
Diagram showing their relationship, 1860-1920]
Since the advent of country-wide prohibition in the United States on
July 1, 1919, about two pounds more coffee per person, or 80 to 100
cups, have been consumed than before. Part of this increase is doubtless
to be charged to prohibition; but it is yet too early to judge fairly as
to the exact effect of "bone-dry" legislation on coffee drinking. The
continued growth in the use of coffee in the United States has been in
decided contrast to the per capita consumption of tea, which is less now
than half a century ago.
In the United Kingdom, the reverse condition prevails. Tea drinking
there steadily maintains a popularity which it has enjoyed for
centuries; while coffee apparently makes no advance in favor. In this
respect, the country is sharply distinguished from its neighbors of
western Europe, in many of which coffee drinking has been much heavier,
considering the population, even than in the United States. The contrast
between the tastes of the two countries in beverages is shown clearly by
the per capita figures of tea and coffee consumption for half a century,
as they appear in the table, next column.
TEA AND COFFEE CONSUMPTION PER CAPITA
_Year United States United Kingdom_
Coffee Tea Coffee Tea
pounds pounds pounds pounds
1866 4.96 1.17 1.02 3.42
1867 5.01 1.09 1.04 3.68
1868 6.52 .96 1.00 3.52
1869 6.45 1.08 .94 3.63
1870 6.00 1.10 .98 3.81
1871 7.91 1.14 .97 3.92
1872 7.28 1.46 .98 4.01
1873 6.87 1.53 .99 4.11
1874 6.59 1.27 .96 4.23
1875 7.08 1.44 .98 4.44
1876 7.33 1.35 .99 4.50
1877 6.94 1.23 .96 4.52
1878 6.24 1.33 .97 4.66
1879 7.42 1.21 .99 4.68
1880 8.78 1.39 .92 4.57
1881 8.25 1.54 .89 4.58
1882 8.30 1.47 .89 4.69
1883 8.91 1.30 .89 4.82
1884 9.26 1.09 .90 4.90
1885 9.60 1.18 .91 5.06
1886 9.36 1.37 .87 4.92
1887 8.53 1.49 .80 5.02
1888 6.81 1.49 .83 5.03
1889 9.16 1.25 .76 4.99
1890 7.77 1.32 .75 5.17
1891 7.94 1.28 .76 5.36
1892 9.59 1.36 .74 5.43
1893 8.23 1.32 .69 5.40
1894 8.01 1.34 .68 5.51
1895 9.24 1.39 .70 5.65
1896 8.08 1.32 .69 5.75
1897 10.04 1.56 .68 5.79
1898 11.59 .93 .68 5.83
1899 10.72 .97 .71 5.95
1900 9.84 1.09 .71 6.07
1901 10.43 1.12 .76 6.16
1902 13.32 .92 .68 6.07
1903 10.80 1.27 .71 6.04
1904 11.67 1.31 .68 6.02
1905 11.98 1.19 .67 6.02
1906 9.72 1.06 .66 6.22
1907 11.15 .96 .67 6.26
1908 9.82 1.03 .66 6.24
1909 11.43 1.24 .67 6.37
1910 9.33 .89 .65 6.39
1911 9.29 1.05 .62 6.47
1912 9.26 1.04 .61 6.49
1913 8.90 .96 .61 6.68
1914 10.14 .91 .63 6.89
1915 10.62 .91 .71 6.87
1916 11.20 1.07 .66 6.56
1917 12.38 .99 1.02 6.03
1918 10.43 1.40 1.19 6.75
1919 9.13 .87 .76 8.43
1920 12.78 .84 .74 8.51
Figures for all except most recent years are taken
from the _Statistical Abstract_ publications of
the two countries. For the United States the figures
given apply to fiscal years ending June 30, and for
the United Kingdom to calendar years.
_Coffee Consumption in Europe_
On the continent of Europe, however, coffee enjoys much the same sort of
popularity that it does in the United States. The leading continental
coffee ports are Hamburg, Bremen, Copenhagen, Amsterdam, Rotterdam,
Antwerp, Havre, Bordeaux, Marseilles, and Trieste; and the nationalities
of these ports indicate pretty well the countries that consume the most
coffee. The northern ports are transhipping points for large quantities
of coffee going to the Scandinavian countries, as well as importing
ports for their own countries; and these countries have been among the
leading coffee drinkers, per head of population, for many decades.
Norway, for instance, in 1876 was consuming about 8.8 pounds of coffee
per person; Sweden, 5 pounds; and Denmark, 5.2 pounds. The per capita
consumption of various other countries at about the same period, 1875 to
1880, has been estimated as follows: Holland, 17.6 pounds; Belgium, 9.1
pounds; Germany, 5.1 pounds; Austria-Hungary, 2.2 pounds; Switzerland,
6.6 pounds; Prance, 3 pounds; Spain, 0.2 pounds; Portugal, 0.7 pounds;
and Greece, 1.6 pounds.
Today, the leading country of the world in point of per capita
consumption is Sweden (15.25 pounds); but Holland held that position for
a long while. During the World War the disturbance of trade currents,
and the high price of coffee, greatly reduced the amount of coffee
drinking; and the Dutch took to drinking tea in considerable
quantities.
FRANCE. Second only to the United States, in the total amount of coffee
consumed, is France; although that country before the war occupied third
place, being passed by Germany. Havre is one of the great coffee ports
of Europe; and has a coffee exchange organized in 1882, only a short
time after the Exchange in New York began operations. France draws on
all the large producing regions for her coffee; but is especially
prominent in the trade in the West Indies and the countries around the
Caribbean Sea. Imports in 1921 (preliminary) amounted to 322,419,884
pounds; exports to 1,154,769 pounds; and net consumption, to 321,265,115
pounds.
GERMANY. Hamburg is one of the world's important coffee ports; and in
normal times coffee is brought there in vast amounts, not only for
shipment into the interior of Germany, but also for transhipment to
Scandinavia, Finland and Russia. Up to the outbreak of the war, Germany
was the chief coffee-drinking country of Europe. During the blockade,
the Germans resorted to substitutes; and after the war because of high
prices, there was still some consumption of them. German coffee imports
since the war have not quite climbed back to their former high mark; and
the per capita consumption, judged by these figures is still somewhat
low. Importations amounted to 90,602,000 pounds in 1920. The amount of
total imports was 371,130,520 pounds in 1913; total exports, 1,783,521
pounds; and net imports, 369,346,999 pounds.
NETHERLANDS. Netherlands is one of the oldest coffee countries of
Europe, and for centuries has been a great transhipping agent,
distributing coffee from her East Indian possessions and from America
among her northern neighbors. Before sending these coffee shipments
along, however, she kept back enough plentifully to supply her own
people, so that for many years before the war she led the world in per
capita consumption. As far back as 1867-76, coffee consumption was
averaging more than 13 pounds per capita. In the year before the war,
the average was 18.8 pounds. The blockade, and other abnormal conditions
during the war, threw the trade off; and it is still sub-normal. In 1920
the net imports were about 96,000,000 pounds, which would give a per
capita consumption of about 14 pounds if it all went into consumption.
But part of it was probably stored for later exportation, as indicated
by the figures for 1921, which show heavy exports and a consequent lower
figure for consumption. Eighty percent of the Netherlands coffee trade
is handled through Amsterdam.
Consumption of coffee is now slowly going back to normal, but the change
in source of imports--which before the war came largely from Brazil but
which war conditions turned heavily toward the East Indies--is still in
evidence. Per capita consumption of coffee in Holland up to the outbreak
of the war was as follows:
COFFEE CONSUMPTION PER CAPITA IN HOLLAND
_Year Pounds Year Pounds_
1847-56 9.6 1907 14.9
1857-66 7.1 1908 14.3
1867-76 13.3 1909 16.7
1877-86 16.7 1910 15.7
1887-96 12.8 1911 15.8
1897-1906 16.7 1912 12.3
1906 17.2 1913 18.8
OTHER COUNTRIES OF EUROPE. Denmark, Norway, and Sweden are all heavy
coffee drinkers. In 1921 Sweden had the highest per capita consumption
in the world, 15.25 pounds. Before the war, these three countries each
consumed about as much per capita as the United States does today, 12 to
13 pounds. The 1921 imports for consumption[317] were as follows:
Denmark, 43,122,417 pounds; Norway, 29,665,623 pounds; Sweden,
89,660,766 pounds. Austria-Hungary was formerly an important buyer of
coffee, large quantities coming into the country yearly through Trieste.
Imports in 1913 totaled 130,951,000 pounds; and in 1912, 124,527,000
pounds. In 1917 the war cut down the total to 17,910,000 pounds net
consumption. Finland shares with her neighbors of the Baltic a strong
taste for coffee, importing, in 1921, 27,968,000 pounds, about 8.25
pounds per capita. In the same year, Belgium had a net importation of
83,824,000 pounds.
Spain, in 1920, consumed 48,513,821 pounds. Portugal, in 1919, imported
6,926,575 pounds; and exported 1,258,271 pounds, leaving 5,668,304
pounds for home consumption. Coffee is not especially popular in the
Balkan States and Italy; importations into the last-named country in
1920 amounting to 66,494,925 pounds net. Switzerland is a steady coffee
drinker, consuming 31,535,260 pounds in 1921. Russia was never fond of
coffee; and her total imports in 1917, according to a compilation made
under Soviet auspices, were only 4,464,000 pounds.
[Illustration: A MEETING OF THE COFFEE BROKERS OF AMSTERDAM, 1820
Reproduced from an old print]
OTHER COUNTRIES. The Union of South Africa, in 1920, imported 27,798,000
pounds net, or about 3.8 pounds per capita. Cuba purchased 39,981,696
pounds in the fiscal year 1920; Argentina, 37,541,000 pounds in 1919;
Chile, 12,358,000 pounds in 1920; Australia, 2,239,000 pounds in 1920;
and New Zealand, 283,633 pounds in that year.
_Three Centuries of Coffee Trading_
The story of the development of the world's coffee trade is a story of
about three centuries. When Columbus sailed for the new world, the
coffee plant was unknown even as near its original home as his native
Italy. In its probable birthplace in southern Abyssinia, the natives had
enjoyed its use for a long time, and it had spread to southwestern
Arabia; but the Mediterranean knew nothing of it until after the
beginning of the sixteenth century. It then crept slowly along the coast
of Asia Minor, through Syria, Damascus, and Aleppo, until it reached
Constantinople about 1554. It became very popular; coffee houses were
opened, and the first of many controversies arose. But coffee made its
way against all opposition, and soon was firmly established in Turkish
territory.
In those deliberate times, the next step westward, from Asia to Europe,
was not taken for more than fifty years. In general, its introduction
and establishment in Europe occupied the whole of the seventeenth
century.
The greatest pioneering work in coffee trading was done by the
Netherlands East India Company, which began operations in 1602. The
enterprise not only promoted the spread of coffee growing in two
hemispheres; but it was active also in introducing the sale of the
product in many European countries.
Coffee reached Venice about 1615, and Marseilles about 1644. The French
began importing coffee in commercial quantities in 1660. The Dutch began
to import Mocha coffee regularly at Amsterdam in 1663; and by 1679 the
French had developed a considerable trade in the berry between the
Levant and the cities of Lyons and Marseilles. Meanwhile, the coffee
drink had become fashionable in Paris, partly through its use by the
Turkish ambassador, and the first Parisian _café_ was opened in 1672. It
is significant of its steady popularity since then that the name _café_,
which is both French and Spanish for coffee, has come to mean a general
eating or drinking place.
[Illustration: BILL OF PUBLIC SALE OF COFFEE, ETC., 1790
Reproduction of an advertisement by the Dutch East India Company]
Active trading in coffee began in Germany about 1670, and in Sweden
about 1674.
Trading in coffee in England followed swiftly upon the heels of the
opening of the first coffee house in London in 1652. By 1700, the trade
included not only exporting and importing merchants, but wholesale and
retail dealers; the latter succeeding the apothecaries who, up to then,
had enjoyed a kind of monopoly of the business.
Trade and literary authorities[318] on coffee trading tell us that in
the early days of the eighteenth century the chief supplies of coffee
for England and western Europe came from the East Indies and Arabia. The
Arabian, or--as it was more generally known--Turkey berry, was bought
first-hand by Turkish merchants, who were accustomed to travel inland in
Arabia Felix, and to contract with native growers.
It was moved thence by camel transport through Judea to Grand Cairo,
_via_ Suez, to be transhipped down the Nile to Alexandria, then the
great shipping port for Asia and Europe. By 1722, 60,000 to 70,000 bales
of Turkish (Arabian) coffee a year were being received in England, the
sale price at Grand Cairo being fixed by the Bashaw, who "valorized" it
according to the supply. "Indian" coffee, which was also grown in
Arabia, was brought to Bettelfukere (Beit-el-fakih) in the mountains of
southwestern Arabia, where English, Dutch, and French factors went to
buy it and to transport it on camels to Moco (Mocha), whence it was
shipped to Europe around the Cape of Good Hope.
In the beginning, "Indian" coffee was inferior to Turkish coffee;
because it was the refuse, or what remained after the Turkish merchants
had taken the best. But after the European merchants began to make their
own purchases at Bettelfukere, the character of the "Indian" product as
sold in the London and other European markets was vastly improved.
Doubtless the long journey in sailing vessels over tropic seas made for
better quality. It was estimated that Arabia in this way exported about
a million bushels a year of "Turkish" and "Indian" coffee.
The coffee houses became the gathering places for wits, fashionable
people, and brilliant and scholarly men, to whom they afforded
opportunity for endless gossip and discussion. It was only natural that
the lively interchange of ideas at these public clubs should generate
liberal and radical opinions, and that the constituted authorities
should look askance at them. Indeed the consumption of coffee has been
curiously associated with movements of political protest in its whole
history, at least up to the nineteenth century.
Coffee has promoted clear thinking and right living wherever introduced.
It has gone hand in hand with the world's onward march toward democracy.
As already told in this work, royal orders closed the coffee houses for
short periods in Constantinople and in London; Germany required a
license for the sale of the beverage; the French Revolution was fomented
in coffee-house meetings; and the real cradle of American liberty is
said to have been a coffee house in New York. It is interesting also to
note that, while the consumption of coffee has been attended by these
agitations for greater liberty for three centuries, its production for
three centuries, in the Dutch East Indies, in the West Indies, and in
Brazil, was very largely in the hands of slaves or of forced labor.
Since the spread of the use of coffee to western Europe in the
seventeenth century, the development of the trade has been marked,
broadly speaking, by two features: (1) the shifting of the weight of
production, first to the West Indies, then to the East Indies, and then
to Brazil; and (2) the rise of the United States as the chief coffee
consumer of the world. Until the close of the seventeenth century, the
little district in Arabia, whence the coffee beans had first made their
way to Europe, continued to supply the whole world's trade. But sprigs
of coffee trees were beginning to go out from Arabia to other promising
lands, both eastward and westward. As previously related, the year 1699
was an important one in the history of this expansion, as it was then
that the Dutch successfully introduced the coffee plant from Arabia into
Java. This started a Far Eastern industry, whose importance continues to
this day, and also caused the mother country, Holland, to take up the
rôle of one of the leading coffee traders of the world, which she still
holds. Holland, in fact, took to coffee from the very first. It is
claimed that the first samples were introduced into that country from
Mocha in 1616--long before the beans were known in England or
France--and that by 1663, regular shipments were being made. Soon after
the coffee culture became firmly established in Java, regular shipments
to the mother country began, the first of these being a consignment of
894 pounds in 1711. Under the auspices of the Netherlands East India Co.
the system of cultivating coffee by forced labor was begun in the East
Indian colonies. It flourished until well into the nineteenth century.
One result of this colonial production of coffee was to make Holland the
leading coffee consumer per capita of the world, consumption in 1913, as
recorded on page 290, having reached as high as 18.8 pounds. It has long
been one of the leading coffee traders, importing and exporting in
normal times before the war between 150,000,000 and 300,000,000 pounds a
year.
[Illustration: PRE-WAR AVERAGE ANNUAL PRODUCTION OF COFFEE BY CONTINENTS
Fiscal years: 1910-1914
Total pounds: 2,311,917,200]
The introduction of the coffee plant into the new world took place
between 1715 and 1723. It quickly spread to the islands and the mainland
washed by the Caribbean. The latter part of the eighteenth century saw
tens of millions of pounds of coffee being shipped yearly to the mother
countries of western Europe; and for decades, the two great coffee trade
currents of the world continued to run from the West Indies to France,
England, Holland, and Germany; and from the Dutch East Indies to
Holland. These currents continued to flow until the disruption of world
trade-routes by the World War; but they had been pushed into positions
of secondary importance by the establishing of two new currents, running
respectively from Brazil to Europe, and from Brazil to the United
States, which constituted the nineteenth century's contribution to the
history of the world's coffee trade.
[Illustration: PRE-WAR AVERAGE ANNUAL PRODUCTION OF COFFEE BY COUNTRIES
Fiscal years: 1910-1914
Total pounds: 2,311,917,200]
The chief feature of the twentieth century's developments has been the
passing by the United States of the half-way mark in world consumption;
this country, since the second year of the World War, having taken more
than all the rest of the world put together. The world's chief coffee
"stream," so to speak, is now from Santos and Rio de Janeiro to New
York, other lesser streams being from these ports to Havre, Antwerp,
Amsterdam, and (in normal times) Hamburg; and from Java to Amsterdam and
Rotterdam. It is said that a movement, fostered by Belgium and Brazil,
is under way to have Antwerp succeed Hamburg as a coffee port.
The rise of Brazil to the place of all-important source of the world's
coffee was entirely a nineteenth century development. When the coffee
tree found its true home in southern Brazil in 1770, it began at once to
spread widely over the area of excellent soil; but there was little
exportation for thirty or forty years. By the middle of the nineteenth
century Brazil was contributing twice as much to the world's commerce as
her nearest competitor, the Dutch East Indies, exports in 1852-53 being
2,353,563 bags from Brazil and 1,190,543 bags from the Dutch East
Indies. The world's total that year was 4,567,000 bags, so that
Brazilian coffee represented about one-half of the total. This
proportion was roughly maintained during the latter half of the
nineteenth century, but has gradually increased since then to its
present three-fourths.
[Illustration: PRE-WAR AVERAGE ANNUAL IMPORTS OF COFFEE INTO THE UNITED
STATES BY CONTINENTS
Fiscal years: 1910-1914
Total pounds: 899,339,327]
The most important single event in the history of Brazilian production
was the carrying out of the valorization scheme, by which the State of
São Paulo, in 1906 and 1907, purchased 8,474,623 bags of coffee, and
stored it in Santos, in New York, and in certain European ports, in
order to stabilize the price in the face of very heavy production. At
the same time, a law was passed limiting the exports to 10,000,000 bags
per year. This law has since been repealed. The story of valorization is
told more fully in chapter XXXI. The coffee thus purchased by the state
was placed in the hands of an international committee, which fed it into
the world's markets at the rate of several hundred thousand bags a year.
Good prices were realized for all coffee sold; and the plan was
successful, not only financially, but in the achievement of its main
object, the prevention of the ruin of planters through overproduction.
[Illustration: PRE-WAR AVERAGE ANNUAL IMPORTS OF COFFEE INTO THE UNITED
STATES BY COUNTRIES
Fiscal years: 1910-1914
Total pounds: 899,339,327]
Another valorization campaign was launched by Brazil in 1918, and a
third in 1921. Early in 1918, the São Paulo government bought about
3,000,000 bags. Subsequent events caused a sharp advance in prices, and
at one time it was said that the holdings showed a profit of
$60,000,000. The Brazil federal government appointed an official
director of valorization, Count Alexandre Siciliano. A federal loan of
£9,000,000, with 4,535,000 bags of valorized coffee as collateral, was
placed in London and New York in May, 1922.
European consumption during the last century has been marked by the
growth of imports into France and Germany; these being the two leading
coffee drinkers of the world, aside from the United States. Germany held
the lead in European consumption during the whole of the nineteenth
century, and also in this century until all imports were stopped by the
Allied navies; although, in actual imports, Holland for many years
showed higher figures. Both Holland and England have acted as
distributers, re-exporting each year most of the coffee which entered
their ports. In the last half-century, the chief consumers, in the order
named, have been Germany, France, Holland, Austria-Hungary, and Belgium.
However, with the removal of the duty on coffee in the last-named
country in 1904, imports trebled; and Belgium took third place. The
table at the top of this page shows the general trend of the trade for
the last seventy years.
TREND OF EUROPEAN COFFEE CONSUMPTION FOR SEVENTY YEARS
_Year_ _Germany_ _France_ _Holland_ _Aus.-Hung._ _Belgium_
(pounds) (pounds) (pounds) (pounds) (pounds)
1853 104,049,000 48,095,000 46,162,000 44,716,000 41,270,000
1863 146,969,000 87,524,000 30,299,000 44,966,000 39,305,000
1873 215,822,000 98,841,000 79,562,000 71,111,000 49,874,000
1883 251,706,000 150,468,000 130,380,000 74,145,000 62,846,000
1893 269,381,000 152,203,000 75,562,000 79,438,000 52,046,000
1903 403,070,000 246,122,000 78,328,000 104,200,000 51,859,000
1913 369,347,000 254,102,000 116,749,000 130,951,000 93,250,000
Most of the coffee for these countries has for many years been supplied
by Brazil, even Holland bringing in several times as much from Brazil as
from the Dutch East Indies. Special features of the European trade have
been the organization, in 1873, and successful operation, in Germany, of
the world's first international syndicate to control the coffee trade;
and the opening of coffee exchanges in Havre in 1882, in Amsterdam and
Hamburg, in 1887: in Antwerp, London, and Rotterdam, in 1890; and in
Trieste in 1905.
The advance of coffee consumption in the United States, the chief
coffee-consuming country in the world, has taken place through about the
same period as the advance of production in Brazil, the chief producing
country; but it has been far less rapid. From 1790 to 1800, coffee
imports for consumption ranged from 3,500,000 to 32,000,000 pounds. The
figures in the next column show the net importations of coffee into this
country since the beginning of the nineteenth century.
The chief source of supply, of course, has been Brazil; and the
commercial and economic ties created by this immense coffee traffic has
knit the two countries closely together. Brazil is probably more
friendly to the United States than any other South American country, as
shown by her action in following this country into the World War against
Germany. She also grants the United States certain tariff preferentials
as a recognition of the continued policy of this country of admitting
coffee free of duty. The chief port of entry of coffee into the United
States is New York, which for decades has recorded entries amounting
from sixty to ninety percent of the country's total. Since 1902, New
Orleans has shown a big advance, and in 1910 imported some thirty-five
percent of the total. The only other port of importance is San
Francisco, where imports have been increasing in recent years because of
the growth of the trade in Central American coffee.
COFFEE IMPORTS, UNITED STATES, FOR 120 YEARS
_Net Imports_
Year Pounds Year Pounds
1800[x] 8,792,472 1906 804,808,594
1811[x] 19,801,230 1907 935,678,412
1821[x] 11,886,063 1908 850,982,919
1830[x] 38,363,687 1909 1,006,975,047
1840[x] 86,297,761 1910 813,442,972
1850 129,791,466 1911 869,489,902
1860 182,049,527 1912 880,838,776
1870 231,173,574 1913 859,166,618
1880 440,128,838 1914 991,953,821
1890 490,161,900 1915 1,051,716,023
1900 748,800,771 1916 1,131,730,672
1901 809,036,029 1917 1,267,975,290
1902 1,056,541,637 1918 1,083,480,622
1903 867,385,063 1919 968,297,668
1904 960,878,977 1920 1,364,252,073
1905 991,160,207 1921 1,309,010,452
[x] Fiscal year ending Sept. 30; all other years end June 30.
Throughout the century and a third of steady increase of importations of
coffee, Congress has for the most part permitted its free entry; as a
rule, resorting to taxation of "the poor man's breakfast cup" only when
in need of revenue for war purposes. At times, the free entry has been
qualified; but for the most part, coffee has been free from the burden
of customs tariff.
The country's coffee trade before the Civil War was without special
incident; but since that time, the continued growth has brought about
manipulations that have often resulted in highly dramatic crises;
organizations to exercise some sort of regulation in the trade; the
development of a trade in substitutes; the advance of the sale of
branded package coffee; the institution of large advertising campaigns;
and other interesting features. These are treated more in detail in
chapters that follow.
[Illustration: PRE-WAR CHART OF COFFEE IMPORTS
Quantity and value of net imports of coffee into the United States for
the fiscal years 1851 to 1914 in five-year averages. Solid line
represents quantity, figures in million pounds on left side. Dotted line
represents value, figures in million dollars on right side]
_Coffee Drinking in the United States_
Is the United States using more coffee than formerly, allowing for the
increase in population? Of course there are sporadic increases, in
particular years and groups of years, and they may indicate to the
casual observer that our coffee drinking is mounting rapidly. And then
there is the steadily growing import figure, double what it was within
the memory of a man still young.
[Illustration: PRE-WAR CONSUMPTION AND PRICE CHART
Import price and per capita consumption of coffee in the United States
for the fiscal years 1851 to 1914, in five-year averages. Solid line
represents import price per pound. Dotted line represents per capita
consumption]
But the apparent growth in any given year is a matter of comparison with
a nearby year, and there are declines as well as jumps; and, as for the
gradual growth, it must always be remembered that, according to the
Census Bureau, some 1,400,000 more people are born into this country
every year, or enter its ports, than are removed by death or emigration.
At the present rate this increase would account for about 17,000,000
pounds more coffee each year than was consumed in the year before.
The question is: Do Mr. Citizen, or Mrs. Citizen, or the little Citizens
growing up into the coffee-drinking age, pass his or her or their
respective cups along for a second pouring where they used to be
satisfied with one, or do they take a cup in the evening as well as in
the morning, or do they perhaps have it served to them at an afternoon
reception where they used to get something else? In other words, is the
coffee habit becoming more intensive as well as more extensive?
There are plenty of very good reasons why it should have become so in
the last twenty-five or thirty years; for the improvements in
distributing, packing, and preparing coffee have been many and notable.
It is a far cry these days from the times when the housewife snatched a
couple of minutes amid a hundred other kitchen duties to set a pan over
the fire to roast a handful of green coffee beans, and then took two or
three more minutes to pound or grind the crudely roasted product into
coarse granules for boiling.
For a good many years, the keenest wits of the coffee merchants, not
only of the United States but of Europe as well, have been at work to
refine the beverage as it comes to the consumer's cup; and their success
has been striking. Now the consumer can have his favorite brand not only
roasted but packed air-tight to preserve its flavor; and made up,
moreover, of growths brought from the four corners of the earth and
blended to suit the most exacting taste. He can buy it already ground,
or he can have it in the form of a soluble powder; he can even get it
with the caffein element ninety-nine percent removed. It is preserved
for his use in paper or tin or fiber boxes, with wrappings whose
attractive designs seem to add something in themselves to the quality.
Instead of the old coffee pot, black with long service, he has modern
shining percolators and filtration devices; with a new one coming out
every little while, to challenge even these. Last but not least, he is
being educated to make it properly--tuition free.
It would be surprising, with these and dozens of other refinements, if a
far better average cup of coffee were not produced than was served forty
years ago, and if the coffee drinker did not show his appreciation by
coming back for more.
As a matter of fact, the figures show that he does come back for more.
We do not refer to the figures of the last two years, which indeed are
higher than those for many preceding years, but to the only averages
that are of much significance in this connection; namely, those for
periods of years going back half a century or more. Five-year averages
back to the Civil War show increasing per capita consumption for
continental United States (see table).
FIVE-YEAR PER CAPITA CONSUMPTION FIGURES
_Five-year Per capita Five-year Per capita
Period Pounds Period Pounds_
1867-71 6.38 1897-1901 10.52
1872-76 7.03 1902-06 11.50
1877-81 7.53 1907-11 10.21
1882-86 9.09 1912-16 10.02
1887-91 8.07 1917-21 11.39
1892-96 8.63
It will be seen that the gain has been a decided one, fairly steady, but
not exactly uniform. In the fifty years, John Doe has not quite come to
the point where he hands up his cup for a second helping and keeps a
meaningful silence. Instead, he stipulates, "Don't fill it quite full;
fill it about five-sixths as full as it was before." That is a
substantial gain, and one that the next fifty years can hardly be
expected to duplicate, in spite of the efforts of our coffee
advertisers, our inventors, and our vigorous importers and roasters.
The most striking feature of this fifty-year growth was the big step
upward in 1897, when the per capita rose two pounds over the year before
and established an average that has been pretty well maintained since.
Something of the sort may have taken place again in 1920, when there was
a three-pound jump over the year before. It will be interesting to see
whether this is merely a jump or a permanent rise; whether our coffee
trade has climbed to a hilltop or a plateau.
In this connection it should be noted that the government's per capita
coffee figures apply only to continental United States, and that in
computing them all the various items of trade of the non-contiguous
possessions (not counting the Philippines, whose statistics are kept
entirely separate from those of the United States proper) are carefully
taken into account.
But for the benefit of students of coffee figures it should be added
that this method does not result in a final figure except for one year
in ten. The reason is that between censuses the population of the
country is determined only by estimates; and these estimates (by the
U.S. Bureau of the Census) are based on the average increase in the
preceding census decade. The increase between 1910 and 1920, for
instance, is divided by 120, the number of months in the period, and
this average monthly increase is assumed to be the same as that of the
current year and of other years following 1920. Until new figures are
obtained in 1930, the monthly increase will continue to be estimated at
the same rate as the increase from 1910 to 1920, or about 118,000. This
figure will be used in computing the per capita coffee consumption. But
when the 1930 figures are in, it may be found that the estimates were
too low or too high, and the per capita figures for all intervening
years will accordingly be subject to revision. This will not amount to
much, probably five-hundredths of a pound at most; but it is evident
that between 1920 and 1930 all per capita consumption figures issued by
the government are to be considered as provisional to that extent at
least.
In the 1920 _Statistical Abstract_ the government has revised its per
capita coffee and tea figures to conform to actual instead of estimated
population figures between 1910 and 1920, with the result that these
figures are slightly different from those published in previous editions
of the _Abstract_. Figures from 1890 to 1910 have also been slightly
changed, as they were originally computed by using population figures as
of June 1, whereas it is desirable to have computations based on July 1
estimates to make them conform to present per capita figures.
_Reviewing the 1921 Trade in the United States_
According to the latest available foreign trade summaries issued by the
government, the United States bought more coffee in 1921 than in any
previous calendar year of our history, although the total imports did
not quite reach the highest fiscal-year mark. Our purchases passed the
1920 mark by more than 40,000,000 pounds and were higher than those of
two years ago by 3,500,000 pounds.
But this record was made only in actual amounts shipped, as the value of
imported coffee was far below that of immediately preceding years.
Coffee values, however, fell off less than the average values for all
imports, the decrease for coffee being forty-three percent and for the
country's total imports fifty-two percent.
Exports of coffee were somewhat less in quantity than in 1920, and about
the same as in 1919; although the value, like that of imports, was
considerably less than in either previous year.
Re-exports of foreign coffee were considerably below the 1920 mark, in
both quantity and value, and indeed were less than in several years. The
amount of tea re-exported to foreign countries was only about half that
shipped out in 1920, showing a continuation of the tendency of the
United States to discontinue its services as a middleman, which raised
the through traffic in tea several million pounds during the dislocation
of shipping.
Actual figures of amounts and values of gross coffee imports for the
three calendar years, 1919-1921, have been as follows:
_Pounds_ _Value_
1921 1,340,979,776 $142,808,719
1920 1,297,439,310 252,450,651
1919 1,337,564,067 261,270,106
This represents a gain of three and three-tenths percent over 1920 in
quantity and of only about one-fifth of one percent over 1919. The
decrease in value in 1921 was forty-three percent from the figures for
1920 and forty-five percent from those of 1919.
Domestic exports of coffee, mostly from Hawaii and Porto Rico, amounted
to 34,572,967 pounds valued at $5,895,606, as compared with 36,757,443
pounds valued at $9,803,574 in the calendar year 1920, or a decrease of
six percent in quantity and forty percent in value. In 1919 domestic
exports were 34,351,554 pounds, having a value of $8,816,581,
practically the same in quantity, but showing a falling off of
thirty-three percent in value.
Re-exports of foreign coffee amounted to 36,804,684 pounds in 1921,
having a value of $3,911,847, a decline of twenty-five percent from the
49,144,691 pounds of 1920 and of fifty-four percent from the 81,129,691
pounds of 1919; whereas in point of value there was a decrease of
fifty-six percent from 1920, which was $9,037,882, and of eighty-eight
percent from that of 1919, which was $16,815,468.
The average value per pound of the imported coffee, according to these
figures, works out at little more than half that of either 1920 or 1919,
illustrating the precipitate drop of prices when the depression came on.
The pound value in 1921 was 10.6c.; for 1920, 19.4c.; and for 1919,
19.5c. These values are derived from the valuations placed on shipments
at the point of export, the "foreign valuation" for which the much
discussed "American valuation" is proposed as a substitute. They
accordingly do not take into account costs of freight, insurance, etc.
It is interesting to note that the average valuation of 10.6c. a pound
for coffee shipped during the calendar year is a substantial drop from
the 13.12c. a pound that was the average for the fiscal year 1921,
showing that the decline in values continued during the last half of the
calendar year.
Coffee imports in 1921 continued to run in about the same well-worn
channels as in previous years, according to the figures showing the
trade with the producing countries. The United States, as heretofore,
drew almost its whole supply from its neighbors on this side of the
globe; the countries to the south furnishing ninety-seven percent of the
total entering our ports. The three chief countries of South America
contributed eighty-five percent; and the share of Brazil alone was
sixty-two and five-tenths percent.
Brazil's progress to her normal pre-war position in our coffee trade is
rather slow, although she continues to show a gain in percentage each
year. Formerly we obtained seventy percent to seventy-five percent of
our coffee from that country; but war conditions, diverting nearly all
of Central America's production to our ports, reduced the proportion to
almost half. In 1919 this had risen to fifty-nine percent, in 1920 it
was somewhat over sixty percent, and in 1921 it attained a mark of
sixty-two and five-tenths percent. The actual amount shipped, which was
839,212,388 pounds having a value of $77,186,271, was about seven
percent higher than in 1920, which was 785,810,689 pounds valued at
$148,793,593; and about the same percent higher than that of
1919--787,312,293 pounds valued at $160,038,196. Although the actual
poundage showed an increase, it will be noted that the value fell off
almost one-half as compared with 1920, and more than one-half as
compared with the year before.
The real feature of the year, and perhaps the most interesting
development in the coffee trade of this country in recent years, is the
steady advance of Colombian coffee.
In the year before the war, we obtained from our nearest South American
neighbor 87,176,477 pounds of coffee valued at $11,381,675, which was
about ten percent of our total imports. In 1919, the first year after
the war, this amount was almost doubled, being 150,483,853 pounds with a
value of $30,425,162. In 1920, there was a further increase to
194,682,616 pounds valued at $41,557,669, and in 1921 the high mark of
249,123,356 pounds valued at $37,322,305 was reached. This was a gain of
twenty-eight percent over 1920 shipments; and, although the value was
less than in the year before, the decrease was only ten percent in a
year when the average fall in value was forty-three percent.
It will be news to many people interested in the coffee trade that the
value of Colombian coffee now imported into the United States is almost
half the value of the Brazilian coffee--$37,000,000 as compared with
$77,000,000. The number of pounds imported is a little less than
one-third the Brazilian contribution; but at the present rate of
increase, it will pass the half mark in a few years.
Colombia and Venezuela together now supply considerably more than half
as much coffee as Brazil in value, and more than one-third as much in
quantity. The average value of Colombian coffee in 1921 was about
fifteen cents a pound, as compared with eleven cents for Venezuelan,
nine cents for Brazilian, ten cents for Central American, and ten and
six-tenths cents for total coffee imports.
Shipments from Venezuela showed a drop in quantity of nine percent as
compared with 1920 imports, being 59,783,303 pounds valued at
$6,798,709; in 1920 they were 65,970,954 pounds valued at $13,802,995;
and in 1919, they were 109,777,831 pounds valued at $23,163,071.
The figures relating to imports from Central America are of interest as
showing to what extent we are continuing to hold the trade of the war
years, when nearly all coffee shipped from that region came to the
United States. Although there has probably been a considerable swing
back to the trade with Europe, the 1921 figures show that a large
percent of the trade that this country gained during the war is being
retained. Imports in 1921 were considerably lower than in 1920 or in
1919, but were still more than three times as heavy as in 1913, the last
year of normal trade.
The displacement of Central America's trade by the war, and the extent
to which it has so far returned to old channels, are illustrated in the
table of Imports into the United States from Central America in the last
nine years on page 301.
As Germany was very prominent in pre-war trade, it is likely that more
and more coffee will be diverted from the United States as German
imports gradually increase to their old level.
IMPORTS INTO THE UNITED STATES FROM
CENTRAL AMERICA
_Year_ _Pounds_ _Value_
1913 36,326,440 $4,635,359
1914 44,896,856 5,465,893
1915 71,361,288 8,093,532
1916 111,259,125 12,775,921
1917 148,031,640 15,751,761
1918 195,259,628 19,234,198
1919 131,638,695 19,375,179
1920 159,204,341 30,388,567
1921 118,607,382 12,308,250
Imports from Mexico in 1921 were greater by thirty-eight percent than in
1920, but were less than in 1919, and were still much below the normal
trade before the war. The total was 26,895,034 pounds having a value of
$3,475,122, as compared with 19,519,865 pounds valued at $3,873,217 in
the year before, and with 29,567,469 pounds valued at $5,434,884 in
1919. The imports in 1913 were more than 40,000,000 pounds, in 1914 more
than 43,000,000 pounds, and in 1915 more than 52,000,000 pounds.
West Indian coffees showed a gradual settling back to pre-war figures,
which ranged from 3,000,000 to 12,000,000 pounds annually, but which in
1918, the last year of the war, leaped to 52,000,000 pounds. In 1919
they amounted to 42,013,841 pounds valued at $7,575,051; and in 1920,
fell to 29,204,674 pounds valued at $5,711,993. In 1921 they continued
to drop, the total being 15,398,073 pounds valued at $1,518,784, a
decrease of forty-seven and three-tenths percent in quantity.
The year under review showed practically a return to normal for
importations from Aden, which up to 1917 ran about 3,000,000 pounds a
year. In that year the full effects of the war were felt in the Aden
district, and shipments of coffee to this country dropped to 187,817
pounds. They rose to 432,000 pounds in 1918; and in 1919, to 681,290
pounds valued at $141,391. In 1920 there was a further rise to 889,633
pounds valued at $200,505; and in 1921 they amounted to 2,799,824 pounds
valued at $476,672. But this trade is of little importance compared with
that of the producing countries of this hemisphere, being less than one
percent of our total imports.
Imports from the Dutch East Indies continued to decline, being
fifty-five percent less than in 1920. The total of 12,438,016 pounds,
however, valued at $1,771,602, is still two or three times the normal
pre-war importations.
Exports of coffee in 1921--33,389,805 pounds of green coffee valued at
$5,590,318 and 1,183,162 pounds of roasted valued at $305,288--were
about the same as those of the year before in quantity, although much
lower in value. The 1920 shipments were 34,785,574 pounds valued at
$9,223,966 of green coffee and 1,971,869 pounds of roasted valued at
$579,608.
In the re-export trade, shipments of coffee were lower than in several
years, total amounts for 1921, 1920, and 1919 being 36,804,684 pounds,
49,144,091 pounds, and 81,129,641 pounds, and total values $3,911,847,
$9,037,882, and $16,815,468.
PERCENTAGE OF TOTAL COFFEE IMPORTS INTO UNITED STATES
_Percentage of_
_increase (+) or_
_decrease (-) of_
_1921 imports_
_compared_
1919 1920 1921 _with 1920_.
/ \ / \ / \
From Quantity Value Quantity Value Quantity Value Quantity Value
Central America 9.80 7.40 12.30 12.00 8.80 8.60 -25.50 -50.00
Mexico 2.20 2.10 1.50 1.50 2.00 2.40 +37.80 -10.30
West Indies 3.10 2.90 2.20 2.20 1.10 1.00 -47.30 -73.40
Brazil 58.80 61.30 60.50 58.90 62.50 54.00 +6.80 -48.10
Colombia 11.20 11.60 15.00 16.40 18.50 26.10 +28.00 -10.20
Venezuela 8.20 8.90 5.10 5.10 4.40 4.80 -9.30 -50.70
Aden 0.05 0.05 0.07 0.08 0.20 0.30 214.80 +137.70
Dutch East Indies 4.20 3.80 2.10 2.00 0.90 1.20 -55.70 -65.40
Other countries 2.45 1.95 1.23 1.52 1.60 1.60 ... ...
------ ------ ------ ------ ------ ------ ------- -------
Total 100.00 100.00 100.00 100.00 100.00 100.00 +3.40 -43.40
Re-exports to France fell off from 16,760,977 pounds in 1920 to
11,429,952 in 1921. Mexico took 3,236,245 pounds as compared with
9,892,639 in the previous year, and Cuba also reduced her purchases from
6,319,105 pounds to 2,831,109. Shipments to Denmark, 4,099,403 pounds,
were practically the same as in 1920, 3,951,166 pounds, as were also
those to Germany, 3,200,158 pounds as compared with 2,917,773 in 1920.
In the trade of the two coffee-exporting possessions of the United
States, Hawaii and Porto Rico, the 1921 figures show a considerable
increase in shipments from Hawaii to continental United States and to
foreign countries, while exports from Porto Rico fell off slightly.
Hawaii in 1921 sent 803,905 pounds valued at $123,347 to foreign
countries, which compared with 687,597 pounds valued at $200,180 in the
year before, and 4,183,046 valued at $650,036 to continental United
States, as against 1,885,703 pounds valued at $476,033 in the previous
year.
Porto Rico's crop, as usual, furnished the bulk of the domestic exports
of the United States to foreign countries--29,546,348 pounds valued at
$5,027,741, as against 1920 exports of 31,321,415 pounds valued at
$8,455,908. Shipments from Porto Rico to continental United States
amounted to 211,531 pounds valued at $35,780, as against 418,127 pounds
valued at $118,663 in 1920.
Following are the figures of re-exports of coffee by countries in the
calendar year 1921:
RE-EXPORTS OF COFFEE FROM UNITED STATES, 1921
_Country_ _Pounds_
Belgium 2,717,949
Denmark 4,099,403
France 11,429,952
Germany 3,200,158
Greece 539,933
Netherlands 920,855
Norway 237,155
Sweden 1,935,641
Canada 1,037,628
Mexico 3,236,245
Cuba 2,831,109
Other Countries 4,618,656
----------
Total 36,804,684
Per capita consumption of coffee in continental United States showed a
slight increase during the calendar year 1921 over that of 1920, the
figure being 12.09 pounds as against 11.70 for the previous year. This
calendar-year figure compares with the fiscal-year figure of 12.21
pounds, indicating that imports during the last half of 1920 were
somewhat heavier than during the last half of 1921.
The various items for the two calendar years 1920 and 1921 are shown as
follows:
1921 1920
_Calendar year_, _Calendar year_,
(_pounds_) (_pounds_)
(a) Total imports
into U.S. 1,340,979,776 1,297,439,310
(b) Imports into
non-contiguous
territory
from foreign
countries 7,410 27
------------- -------------
(c) (a) minus (b) 1,340,972,366 1,297,439,283
(d) Total exports from
U.S. 34,572,967 36,757,443
(e) Exports from
non-contiguous
territory
to foreign
countries 30,363,098 32,028,832
---------- ----------
(f) (d) minus (e) 4,209,869 4,728,611
(g) Total re-exports
from U.S. 36,804,684 49,144,691
(h) Re-exports from
non-contiguous
territory
to foreign
countries ... 20,008
--------- ----------
(i) (g) minus (h) 36,804,684 49,124,683
(j) Imports into
continental
U.S. from
non-contiguous
territory 4,394,577 2,303,830
(k) Exports to
non-contiguous
territory from
continental U.S. 798,644 972,303
---------- ---------
(l) (j) minus (k) 3,595,933 1,331,527
Net consumption,
continental U.S.:
(c) minus (f) minus
(i) plus (l) 1,303,553,746 1,244,917,516
Population, July 1 107,833,279 106,418,170
Per capita consumption,
1921 12.09 11.70
[Illustration]
CHAPTER XXIII
HOW GREEN COFFEES ARE BOUGHT AND SOLD
_Buying coffee in the producing countries--Transporting coffee to
the consuming markets--Some record coffee cargoes shipped to the
United States--Transport over seas--Java coffee "ex-sailing
vessels"--Handling coffee at New York, New Orleans, and San
Francisco--The coffee exchanges of Europe and the United
States--Commission men and brokers--Trade and exchange contracts
for delivery--Important rulings affecting coffee trading--Some well
known green coffee marks_
In moving green coffee from the plantations to the consuming countries,
the shipments pass through much the same trade channels as other
foreign-grown food products. In general, the coffee goes from planter to
trader in the shipping ports; thence to the exporter, who sells it to an
importer in the consuming country; he in turn passing it on, to a
roaster, to be prepared for consumption. The system varies in some
respects in the different countries, according to the development of
economic and transportation methods; but, broadly considered, this is
the general method.
_Buying Coffee in the Producing Countries_
The marketing of coffee begins when the berries are swept up from the
drying patios, put in gunny sacks, and sent to the ports of export to be
sampled and shipped. In Brazil, four-wheeled wagons drawn by six mules,
or two-wheeled carts carry it to the nearest railroad or river.
Brazil, as the world's largest producer of coffee, has the most highly
developed buying system. Coffee cultivation has been the chief
agricultural pursuit in that country for many years; and large amounts
of government and private capital have been invested in growing,
transportation, storage, and ship-loading facilities, particularly in
the state of São Paulo.
The usual method in Brazil is for the _fazendeiro_ (coffee-grower) or
the _commisario_ (commission merchant) to load his shipments of coffee
at an interior railroad station. If his consignee is in Santos, he
generally deposits the bill of lading with a bank and draws a draft,
usually payable after thirty days, against the consignee. When the
consignee accepts the draft, he receives the bill of lading, and is then
permitted to put the coffee in a warehouse.
_Storing at Santos_
At Santos most of the storing is done in the steel warehouses of the
City Dock Company, a private corporation whose warehouses extend for
three miles along the waterfront at one end of the town. Railroad
switches lead to these warehouses, so that the coffee is brought to
storage in the same cars in which it was originally loaded up-country.
The warehouses are leased by _commisarios_. There are also many old
warehouses, built of wood, still operated in Santos, and to these the
coffee is transferred from the railroad station either by mule carts or
by automobile trucks.
At the receiving warehouses, samples of each bag are taken; the tester,
or sampler, standing at the door with a sharp tool, resembling a
cheese-tester, which he thrusts into the center of the bag as the men
pass him with the bags of coffee on their heads, removing a double
handful of the contents. The samples are divided into two parts; one for
the seller, and one that the _commisario_ retains until he has sold the
consignment of coffee covered by that particular lot of samples.
[Illustration: THE LAST SAMPLE BEFORE EXPORT, SANTOS]
_The Disappearing Ensaccador_
In the old days it was the custom every morning for the _ensaccadores_,
or baggers, and the exporters or their brokers, to visit the
_commisarios'_ warehouses and to bargain for lots of coffee made up by
the _commisario_.
In the Santos market, until recent years, the _ensaccador_, or
coffee-bagger, often stood between the _commisario_ and exporter. When
American importing houses began to establish their own buying offices in
the Brazilian ports (about 1910) to deal direct with the _fazendeiro_
and the _commisario_, the gradual elimination of the _ensaccador_ was
begun. Today he has entirely disappeared from the Santos market, and is
disappearing from Rio de Janeiro, Bahia, and Victoria.
Coffee reaches Santos in a mixed condition; that is, it has not been
graded, or separated according to its various qualities. This is the
work of the _commisario_, who puts each shipment into "lots" in new
"official" bags, each of which bears a mark stating that the contents
are São Paulo growth. If the coffee is offered for sale by the owner,
the _commisario_ will then put it on the "street," the section of Santos
given over to coffee trading.
The _commisario_ works with samples of the coffee he has to offer and
only puts out one set at a time. He names his "asking" price, known
locally as the _pedido_, which is the maximum rate he expects to get,
but seldom receives. A set of samples may be shown to twenty-five or
thirty exporting houses in a day, one at a time. When the sample is in
the hands of a firm for consideration, no other exporter has the right
to buy the lot even at the _pedido_ price, and the _commisario_ can not
accept other offers until he has refused the bid. On the other hand, if
a house refuses to give up the samples, it is understood that it is
willing to pay the _pedido_ price. The firm first offering a price
acceptable to the _commisario's_ broker gets the lot, even though other
houses have offered the same price.
When a lot is sold, the samples are turned over to the successful
bidder, and he then asks the _commisario_ for larger samples for
comparison with the first set.
[Illustration: STAMPING BAGS FOR EXPORT, SANTOS]
_Commisarios Make as High as Nine Percent_
Having sold the coffee of a given planter, the _commisario_ often gets
as much as nine percent for his share of the transaction. Unless the
bags have been furnished to the planter at a good rental, the coffee
must be transferred to the _commisario's_ bags; and for this the planter
pays a commission.
[Illustration: COFFEE FROM THE FAZENDAS IS DELIVERED AT THE
COMMISSARIOS' WAREHOUSES IN RIO]
[Illustration: INTERIOR OF A SANTOS CLEANING AND GRADING WAREHOUSE]
[Illustration: PREPARING BRAZIL COFFEE FOR EXPORT]
[Illustration: GRADING COFFEE AT SANTOS]
Formerly the coffee, being rebagged by the _ensaccador_, was manipulated
in what is called ligas; that is, mixing several neutral grades from
various lots to create an artificial grade; or, more properly speaking,
a "type," desirable for trading on the New York market.
_Grading and Testing in Brazil_
Having bought a lot of coffee, the exporter's next step is to grade and
to test it. Grading is generally done in the morning and late afternoon,
the hours from one to half-past four being devoted to making offers. The
afternoon grading is done by sight. The morning examinations are more
thorough, some progressive exporting houses even cup-testing the
samples. Samples are compared with house standards, and with the
requirements that have been cabled from the home office in the consuming
country. Some of the coffee is roasted to obtain a standard by which all
"chops" (varieties) are then graded and marked according to
quality--fine, good, fair, or poor. Quality is further classified by the
numerals from two to eight, which standards have been established on the
New York Coffee and Sugar Exchange, and are described farther on in this
chapter. Some traders also use the terms large or small bean; fair,
good, or poor roasters; soft or hard bean; light or dark; and similar
descriptive terms.
When a lot is ready for shipment overseas, the _commisario_ stamps each
bag with his identifying mark, to which the buyer or exporter adds his
brand. If the _commisario_ is ordered before eleven in the morning to
ship a lot of coffee, he must be paid before three in the afternoon of
the same day; if he receives the order after eleven, payment need not be
made before three in the afternoon of the following day. Generally the
terms of sale are full settlement in thirty days, less discount at the
rate of six percent per annum for the unexpired time, if paid before the
period of grace is up.
_Dispatching and Capitazias_
The exporter collects his money by drawing a draft against his client on
deposit of bill of lading, cashing the draft through an exchange broker
who deducts his brokerage fee. The exporter must obtain a consular
invoice, a shipping permit from both federal and state authorities, and
pay an export tax, before the coffee goes aboard the ship. This process
is known as "dispatching," while the dock company's charges are known as
_capitazias_.
In practically all coffee-growing sections the small planter is helped
financially by the owners of processing plants or by the exporting
firms. The larger planters may even obtain advances on their crops from
the importing houses in New York, Havre, Hamburg, or other foreign
centers.
[Illustration: THE TEST BY CUPS, SANTOS]
_The Exchange at Santos_
A new coffee exchange began business at Santos on May 1, 1917, sitting
with the Coffee Brokers Board of Control. This Board consists of five
coffee brokers, four elected annually at a general meeting of the
brokers of Santos, and one chosen annually by the president of the state
of São Paulo. Among the duties of the Board are the classification and
valuation of coffee, adjustment of differences, etc.
[Illustration: WHERE COFFEES ARE SIGHT-GRADED BEFORE BEING SUBMITTED TO
CUP TESTS]
[Illustration: HAND & RAND BUILDING: FIRST FLOOR, STORAGE; SECOND FLOOR,
OFFICES]
[Illustration: NEW YORK COFFEE IMPORTERS' MODEL ESTABLISHMENT AT SANTOS]
[Illustration: PACK-MULE TRANSPORT IN VENEZUELA]
_Transporting Coffee to Points of Export_
Transportation methods from plantation to shipside naturally vary with
local topographical and economic conditions. In Venezuela, the bulk of
the coffee is transported by pack-mule from the plantations and shipping
towns to the head of the railroad system, and thence by rail to the
Catatumbo River, where it is carried in small steamers down the river
and across Lake Maracaibo to the city of Maracaibo. In Colombia, coffee
is sent down the Magdalena River aboard small steamers direct to the
seaboard. In Central America, transportation is one of the most serious
problems facing the grower. The roads are poor, and in the rainy season
are sometimes deep with mud; so much so that it may require a week to
drive a wagon-load of coffee to the railroad or the river shipping
point.
[Illustration: COFFEE-CARRYING CART, GUATEMALA]
_Buying Coffee in Abyssinia_
Coffee is generally grown in Abyssinia by small farmers, who mostly
finance themselves and sell the crop to native brokers, who in turn sell
it to representatives of foreign houses in the larger trading centers.
Trading methods between farmer and broker are not much more than the old
system of barter. In the southwestern section, where the Abyssinian
coffee grows wild, transport to the nearest trading center is by mule
train, and not infrequently by camel back. In the Harar district, the
women of the farmers living near Harar the market center, carry the
coffee in long shallow baskets on their heads to the native brokers. In
the more remote places the coffee farmer waits for the broker to call on
him. From the town of Harar the coffee is transported by mule or camel
train to Dire-Daoua, whence it is shipped by rail to Jibuti, to be sent
by direct steamers to Europe, or across the Gulf of Aden to Aden in
Arabia.
[Illustration: COFFEE-LADEN OXEN FORDING STREAM, COLOMBIA]
Ten different languages are spoken in Harar. In order successfully to
engage in the coffee business there, it is necessary either to become
proficient in all these tongues, or to engage some one who is.
[Illustration: TRANSPORTING COFFEE BY MULEBACK IN THE CITY OF CUCUTA,
COLOMBIA]
[Illustration: Schooner from Encontrados to Maracaibo]
[Illustration: One of the lake and river steamers]
[Illustration: COFFEE CARGO CARRIERS THAT OPERATE ON LAKE MARACAIBO AND
TRIBUTARY RIVERS]
[Illustration: DONKEY TRANSPORT TRAIN FOR COFFEE IN MEXICO]
[Illustration: COFFEE TRANSPORT IN MEXICO AND SOUTH AMERICA]
When the coffee is brought, partially cleaned, into Harar by donkey or
mule train, it is first taken to the open air custom-house (coffee
exchange) in the center of the town, where a ten-percent duty (in
coffee) is exacted by the local government, and one Abyssinian dollar
(fifty cents) is added for every thirty-seven and a half pounds, this
latter being Ras Makonnen's share. As soon as the native dealer has
released to him what remains of his shipment, he takes it out of the
custom-house enclosure and disposes of it through the native brokers,
who have their little "office" booths stretching in a long line up the
street just outside the custom-house entrance.
[Illustration: DONKEY COFFEE TRANSPORT ON THE WAY FROM HARAR TO
DIRE-DAOUA]
There, a brokerage charge of one piaster per bag is paid by the buyer,
and the coffee then becomes the property of the European merchant. In
some cases it is put through a further cleaning process; but usually it
is shipped to Jibuti or Aden uncleaned. Arriving at Jibuti, there is a
one-percent ad valorem duty to pay. At Aden, there is another tax of one
anna (two cents) to be paid to the British authorities.
[Illustration: COFFEE CAMELS IN THE CUSTOM-HOUSE, HARAR]
Since 1914, however, Abyssinian coffee has been exported largely through
the Sudan, a much shorter and less expensive trip than that to Adis
Abeba and Jibuti. Now the coffee is carried by pack-train to Gambela on
the Sobat River; and thence by river steamer to Khartoum, where it is
loaded on railroad trains and sent to Port Sudan on the Red Sea.
_Buying Coffee in Arabia_
Most of the coffee in Arabia is grown in almost inaccessible mountain
valleys by native Arabs, and is transported by camel caravan to Aden or
Hodeida, where it is sold to agents of foreign importing houses. Mocha,
once the principal exporting city for coffee, was abandoned as a coffee
port early in the nineteenth century, chiefly because of the difficulty
of keeping the roadstead of the harbor free from sandbars.
[Illustration: SELLING COFFEE AT ADEN BY TAPPING HANDS UNDER COVER]
In Aden there is a kind of open-air coffee "exchange" (as in Harar)
where the camel trains unload their coffee from the interior. The
European coffee merchant does not frequent it, but is represented by
native brokers, through whom all coffee business is transacted. This
native broker is an important person, and one of the most picturesque
characters in Aden. He receives a commission of one and a half percent
from both buyer and seller. Certain grades of coffee are purchasable
only in Maria Theresa dollars; so a knowledge of exchange values is
essential to the broker's calling.
[Illustration: PACKING AND TRANSPORTING COFFEE AT ADEN]
In making coffee sales, the negotiations between buyer and seller are
carried on by means of finger taps under a handkerchief. The would-be
purchaser reaches out his hand to the seller under cover of the cloth
and makes his bid in the palm of the seller's hand by tapping his
fingers. The code is well understood by both. Its advantage lies in the
fact that a possible purchaser is enabled to make his bid in the
presence of other buyers without the latter knowing what he is offering.
_Buying Coffee in Netherlands India_
In the Dutch East Indies cultivation of _Coffea arabica_ has diminished,
the decay of the industry beginning when Brazil and Central America
became the dominant factors in the green market. Not so many years ago
coffee growing and coffee trading were virtually government monopolies.
Under government control each native family was required to keep from
six hundred to a thousand coffee trees in bearing, and to sell
two-fifths of the crop to the government. It was also compulsory to
deliver the coffee cleaned and sorted to the official godowns, and to
sell the crop at fixed prices--nine to twelve florins per picul previous
to 1874, although forty to fifty florins were offered in the open
market. Later, the price was advanced; until about 1900 the government
paid fifteen florins per picul for coffee in parchment. All government
coffee was sold at public auction in Batavia and Padang, these sales
being held four times a year in Batavia and three times a year in
Padang.
Coffee from private estates, not under government control and operated
by European corporations or individuals, has now succeeded the
government monopoly coffee. Private-estate crops are sold by public
tender, usually on or about January 28 of each year. If the owners do
not get the price they desire in Batavia or Padang, the coffee is sent
to Amsterdam for disposal. Some coffees always are sent to Holland;
because the directors of the company get a commission on all sales
there, and also because the coffees are prepared especially for the
Dutch market. The Hollander wants his coffee blue-green in color.
[Illustration: COFFEE CAMEL TRAIN ARRIVING AT THE HODEIDA CUSTOM-HOUSE
FROM THE INTERIOR OF YEMEN]
[Illustration: LOADING BY THE OLD-STYLE HAND-LABOR METHOD]
[Illustration: HERE THE AUTOMATIC BELT POURS INTO THE HOLD A CONTINUOUS
STREAM OF BAGS OF COFFEE]
[Illustration: OLD AND NEW METHODS OF LOADING COFFEE AT SANTOS]
_Loading Coffee at Santos_
In Brazil, when the coffee has been rebagged and marked by both the
_commisario_ and the exporter, the coffee is again sampled. These
samples are compared with those by which the purchase was made; and if
right, the bags are turned over to the dock-master, who sets his
laborers to work loading ship. Two methods are used at Santos. The old
familiar style of hand labor is still in evidence--men of all
nationalities, but largely Spaniards and Portuguese, take the bags on
their heads and carry them in single file up the gangplanks and into the
hold of the ship. The dock company, however, operates a huge automatic
loading machine, or belt, which saves a great deal of time and labor. In
other Brazilian ports all loading is done by manual labor.
[Illustration: A COFFEE FREIGHTER ON THE CAUCA RIVER, COLOMBIA]
Recently, at the suggestion of the Commercial Association of Santos, the
minister of transport of São Paulo ordered that coffees destined for
legitimate traders should be transported during four days of the week,
and those of a speculative nature during the remaining two days. A
premium of as much as five milreis a bag has been paid by speculators in
order to obtain immediate transport.
_Shipping Coffee from Colombia_
As Colombia ranks next to Brazil in coffee, a brief description of its
transportation methods, which are unique, should be of interest to
coffee shippers. A goodly portion of Colombia's coffee exports comes
from the district around the little city of Cucuta, whose official name
is San José de Cucuta. It is the capital of North Santander, is situated
in a beautiful valley of the Colombian Andes mountains that is watered
by several rivers, and is only about a half-hour's ride by motor from
the Venezuelan frontier.
Due to its geographical position, Cucuta serves as the most convenient
inland port and commercial center for most of the department of North
Santander. For the same reason, it is forced to depend on Maracaibo as
its seaport, even though the Venezuelan government has a number of
annoying laws controlling the commerce thus conducted. The Colombian
ports of Baranquilla and Cartagena on the Atlantic are too distant from
Cucuta to be available; and a large part of the traffic would have to be
done on mule-back across one of the most formidable ranges of the
Colombian Andes, involving high cost and delay in transportation. Yet
its frontier position makes it possible for Cucuta to have important
commercial relations with the neighboring republic of Venezuela, and to
enjoy exceptional privileges from the Colombian central government.
[Illustration: COFFEE STEAMERS ON THE MAGDALENA, COLOMBIA]
A cargo of coffee leaving Cucuta has to go through the following steps
on its way to a foreign market:
1. From Cucuta, it travels thirty-five miles by railroad to Puerto
Villamizar, a Colombian river port on the Zulia river.
2. At Puerto Villamizar it is loaded into small, flat-bottomed, steel
lighters that are taken to Puerto Encontrados by man power. Puerto
Encontrados, belonging to Venezuela, is on the Catatumbo river; and the
trip from Villamizar takes from two to four days, depending on the depth
of water in the river. During high water, river steamers are also used,
and make the trip in less than a day.
3. At Encontrados the cargo is loaded on river steamboats more or less
of the Mississippi river type, which take it to Maracaibo, Venezuela.
Coffee is also carried to Maracaibo by small sailing vessels.
4. At Maracaibo it is taken by ocean vessel, which either carries it
direct to New York or to Curaçao, Dutch West Indies, where it is
transhipped to steamers plying between New York and Curaçao. It is
obvious that the many transhipments that coffee coming from Cucuta has
to undergo greatly retard its arrival at a foreign port; and a cargo
sometimes takes a month or more to reach New York.
[Illustration: OLD AND NEW METHODS EMPLOYED IN LOADING HEAVY CARGO ON
THE SANTA CECILIA]
Coffee from Cucuta is stored in the Venezuelan custom-house, from which
it must be shipped for export within forty-five days, or the shipper
runs the risk of having it declared by the Venezuelan government for
_consumo_ (home consumption) at a prohibitory tariff. Arrangements can
be made at considerable cost to have the coffee taken to a private
warehouse; but it is no longer possible to make up the chops in
Maracaibo, as was done formerly with all the Cucutas. The Venezuelan
customs will not even allow the Maracaibo forwarding agent the same
chops, as a general rule. Special permission must be obtained to change
any bags that are stained or damaged. Schooners from Curaçao have, in
the past, carried a great deal of the Colombian coffee to Curaçao.
_Port Handling Charges in Brazil_
It is almost impossible to list all the various charges for the handling
of coffee at the port of shipment in Brazil, the figures not being
accessible to outsiders. Some figures, such as warehouse charges and
various forms of tax, are obtainable, however. For every bag of coffee
which is in warehouse over forty-eight hours from the time of its
arrival from the railroad there is a charge of two hundred reis (about
five cents). In São Paulo there is an export tax of nine percent ad
valorem levied by the state, and in Rio the state tax is eight and a
half percent. Then there is a surtax of five francs per bag in Santos,
and of three francs in Rio, which goes toward defraying the expenses of
valorization. For every bag of coffee that passes over the dock the dock
company charges one hundred reis (about two and a half cents).
_Some Record Coffee Cargoes_
With its superior loading and shipping facilities Brazil has been able
to send extraordinarily large cargoes of coffee to the United States
since the development of large modern freight-carrying steamships. While
75,000 or 90,000 bag cargoes were of common occurrence just prior to the
outbreak of the World War, several shipments of more than 100,000 bags
were made in the years 1915, 1916, and 1917. Up to January, 1919, the
record was held by the steamship Bjornstjerne Bjornson which unloaded
136,424 bags at New York on November 17, 1915. Other shipments of more
than 100,000 bags were by the Rossetti (December, 1900), 125,918 bags;
the Wascana (March 3, 1915), 108,781 bags; the Wagama (October, 1916),
105,650 bags; the American (October 23, 1916), 124,212 bags; the Santa
Cecilia (November 2, 1916), 105,500 bags, and the Dakotan (January 6,
1917), which carried 136,387 bags.
_Transport Overseas_
To bring green coffee to the consuming markets, both steamships and
sailing vessels are used, although the latter have almost wholly given
way to the speedier and more capacious modern steamers. Because of its
large consumption, a constant stream of vessels is always on the way to
the markets of the United States. The majority of these unload at New
York, which in 1920 received about fifty-nine percent of all the coffee
imported into this country. New Orleans came next, with about
twenty-five percent; and San Francisco third, with about twelve percent.
The approximate time consumed in transporting green coffee overseas from
the principal producing countries to the United States by freight
steamships is shown in the table in the next column.
In some cases, that of Guadeloupe, for instance, the vessels stop at a
number of ports, and this lengthens the time. This is also true of
vessels running on the west coast of Central America and of those from
Aden.
During the World War, one shipment of Timor coffee consumed three and a
half years coming from Java to New York. It was aboard the German
steamship Brisbane, which cleared from Batavia, July 4, 1914, and
fearing capture, took refuge in Goa, Portuguese India, where it lay
until Portugal joined the Allies. Then the Portuguese seized the vessel,
and turned it over to the British, who moved it to Bombay. Here the
cargo was finally transhipped to the City of Adelaide, reaching New York
in January, 1918, three and a half years after the coffee left Batavia.
TRANSPORTATION TIME FOR COFFEE[J]
Rio de Janeiro to New York 11 to 16 days
Santos " " " 14 to 18 "
Bahia " " " 17 "
Victoria " " " 19 "
Maracaibo " " " 10 "
Puerto Cabello " " " 10 "
La Guaira " " " 8 "
Costa Rica " " " 10 "
Salvador " " " 18 "
Mexico " " " 9 "
Guatemala " " " 11 "
(Puerto
Barrios)
Colombia " " " 10 "
Haiti " " " 7 "
Porto Rico " " " 5 "
Guadeloupe " " " 10 "
Hawaii " " " 28 "
(via P.C.)
Java " " " 30 "
(via Suez)
Sumatra " " " 30 "
(via Suez)
Singapore " " " 35 "
(via Suez)
India " " " 35 "
(via Suez)
Aden " " " 45 "
(via Suez)
Porto Rico " New Orleans 7 "
Guadeloupe " " " 10 "
Haiti " " " 7 "
Guatemala " " " 8 "
Costa Rica " " " 7 "
Colombia " " " 6 "
Mexico " " " 4 "
Salvador " " " 15 "
Guatemala " San Francisco 10 "
Costa Rica " " " 18 "
Salvador " " " 14 "
Mexico " " " 8 "
Hawaii " " " 8 "
Singapore " " " 30 "
India " " " 33 "
[J] The American Legion and the Southern Cross, of the Munson Line, make
the journey from Rio de Janeiro to New York in eleven days. These are
freight-and-passenger vessels, and have carried as many as 5,000 bags of
coffee at one time.
_Java Coffee "Ex-Sailing Ships"_
Up to 1915 it was the custom to ship considerable Java coffee to New
York in slow-going sailing vessels of the type in favor a hundred years
ago. Java coffees "ex-sailing ships" always commanded a premium because
of the natural sweating they experienced in transit. Attempts to imitate
this natural sweating process by steam-heating the coffees that reached
New York by the faster-going steamship lines, and interference therewith
by the pure-food authorities, caused a falling off in the demand for
"light," "brown," or "extra brown" Dutch East Indian growths; and
gradually the picturesque sailing vessels were seen no more in New York
harbor. At the end they were mostly Norwegian barks of the type of the
Gaa Paa.
It usually took from four to five months to make the trip from Padang or
Batavia to New York. Crossing the Equator twice, first in the Indian
Ocean, then in the South Atlantic, the trip was more than equal to
circumnavigating the earth in our latitude. In the hold of the vessel
the cargo underwent a sweating that gave to the coffee a rare shade of
color and that, in the opinion of coffee experts, greatly enhanced its
flavor and body. The captain always received a handsome gratuity if the
coffee turned "extra brown."
[Illustration: UNLOADING JAVA COFFEE FROM A SAILING VESSEL AT A BROOKLYN
DOCK
The ship is the Gaa Paa, which made the voyage from Padang in five
months in 1912]
The demand for sweated, or brown, Javas probably had its origin in the
good old days when the American housewife bought her coffee green and
roasted it herself in a skillet over a quick fire. Coffee slightly brown
was looked upon with favor; for every good housewife in those days knew
that green coffee changed its color in aging, and that of course aged
coffee was best.
And so it came about that Java coffees were preferably shipped in
slow-going Dutch sailing vessels, because it was desirable to have a
long voyage under the hot tropical sun suitably to sweat the coffee on
its way to market and to have it a handsome brown on arrival. The
sweating frequently produced a musty flavor which, if not too
pronounced, was highly prized by experts. When the ship left Padang or
Batavia the hatches were battened down, not to be opened again until New
York harbor was reached.
Many of the old-style Dutch sailing vessels were built somewhat after
the pattern of the Goed Vrouw, which Irving tells us was a hundred feet
long, a hundred feet wide, and a hundred feet high. Sometimes she sailed
forward, sometimes backward, and sometimes sideways. After dark, the
lights were put out, all sail was taken in, and all hands turned in for
the night.
The last of the coffee-carrying sailing vessels to reach the United
States was the bark Padang, which arrived in New York on Christmas day,
1914.
[Illustration: THE BUSH TERMINAL SYSTEM OF DOCKS AND WAREHOUSES
Much of the green coffee received in New York is discharged and stored
here, at one of the most modern waterfront and terminal developments in
the world]
[Illustration: AIRPLANE VIEW OF NEW YORK DOCK COMPANY'S PIERS AND
WAREHOUSES
This is the Fulton Street section of the Brooklyn waterfront, where more
than half the coffee received in New York is unloaded. The storage
warehouses are to be seen back of the piers]
[Illustration: RECEIVING PIERS FOR COFFEE AT NEW YORK]
_Handling Coffee at New York_
The handling of the cargoes of coffee when they arrive at their
destination is a source of wonder to the layman. There is probably no
better place to study the handling of coffee than in New York City--the
world's largest coffee center. Millions of bags of coffee pass into
consumption every year through its docks, and scarcely a day goes by
when there are not one or more ships discharging coffee upon the docks
lining the Brooklyn shore, the center of the coffee-warehouse district
for New York. In 1921, the New York Dock Company alone had 159 bonded
warehouses with a storage capacity of some 65,000,000 cubic feet; and 34
piers, the longest measuring 1,193 feet and containing more than 175,000
square feet. These piers have a total deck space of sixty-one and a half
acres. The wharfage distance is more than nine and a third miles. More
than twenty steamship lines berth their vessels there regularly, and
many of them are coffee ships. The warehouses have direct connections
with all the principal railway trunk lines running into the New York
district; and the whole property of the company stretches along the
waterfront opposite lower Manhattan for about two and one-half miles.
Although coffee is admitted to the United States free of duty, it is
subject to practically the same formalities as dutiable goods. Before
the cargo can be "broken out," a government permit to "land and deliver"
must be placed in the hands of the customs inspector on the dock. This
done, the ship's samples, which consist of the samples sent by the
exporter to the importer, are taken to the United States appraiser's
office for inspection, and are then delivered to the importer's
representative. Meanwhile the shipping documents covering the cargo,
including bills of lading and consular invoices, have been sent to the
post office for delivery to banks and bankers' agents, who check and
deliver them to the customs officers for entry. The government requires
that this entry shall be made within forty-eight hours of the vessel's
arrival, else the cargo will be stored in a United States bonded
warehouse under what is known as "general order" which makes the
consignee liable for storage and cartage charges.
[Illustration: UNLOADING COFFEE AT ONE OF THE COVERED PIERS OF THE NEW
YORK DOCK COMPANY]
When a coffee ship arrives in New York, not much time is lost in
discharging the cargo. As soon as the vessel is securely moored to the
pier, and the government's permission to "land and deliver" is secured,
the hatches are removed, the coffee is hauled out of the hold by block
and tackle and swung off in slings to the pier, where dock laborers
carry the bags to their proper places. If each cargo consisted of one
consignment to a single importer, and contained only one variety of
coffee, unloading would be a comparatively simple affair. In general
practise, however, the cargoes consist of a large number of consignments
and a variety of grades, necessitating a careful sorting as unloading
progresses. Accordingly, even before the unloading begins, the dock is
chalked off into squares, each square having a number, or symbol,
representing a particular consignment. As the bags come up out of the
hold, the foreman of the laborers, who has a key to the brand marks on
the bags, indicates where each bag is to be placed. Coffee to be
reshipped, either by lighter or rail, is heaped in piles by itself until
loaded on to the lighters or freight cars.
[Illustration: STORING COFFEE BY MARKS AND CHOPS]
[Illustration: HOISTING COFFEE INTO THE STORAGE WAREHOUSES ADJOINING THE
BROOKLYN PIERS]
[Illustration: RECEIVING AND STORING COFFEE AT NEW YORK]
The next step is to transfer the cargo to the warehouse, and to
separate each consignment according to the various kinds of coffee
making up the invoices. When the importer gives his orders to store, he
sends also a list of the different kinds of coffees in his consignment,
called "chops" by the trade, with directions how to divide the shipment.
To do this, the floor of the warehouse is chalked off into squares, as
was done on the dock; but now the numbers, or symbols, in each space
indicate the chops in each invoice, or consignment.
[Illustration: TESTER AT WORK, BUSH TERMINAL, NEW YORK]
[Illustration: LOADING LIGHTERS, BUSH DOCKS, NEW YORK]
The importer naturally is eager to sample the newly arrived coffee.
Sampling is generally done by trained warehouse employees, who are
equipped with coffee triers, sampling instruments resembling
apple-corers, which they thrust into the bags. The instrument is hollow,
and the coffee flows into the hand of the sampler, who places each
sample in a paper bag which is marked to indicate the chop. The total
sample of each chop usually consists of about ten pounds of coffee,
which the importer compares with the exporter's sample.
When sampling for trade delivery, about two-thirds of the bags in a chop
are tried. But when sampling for delivery on Coffee Exchange contract,
every bag must be tested, and care taken that each chop is uniform in
color, kind, and quality. Coffee for Exchange delivery must be stored in
a warehouse licensed by the Exchange; and the warehouseman is
responsible for the uniformity of grade of each chop.
When approximately ninety percent of the cargo has been unloaded and
stored, the warehouse issues what has become known as the "last bag
notice." In the majority of cases the coffee has been sold before
arrival; and on receipt of the last bag notice, the importer can
transfer ownership of the coffee and save interest.
In a cargo of 75,000 to 100,000 bags of coffee that have been hurriedly
loaded in the producing country and unloaded at destination in equal
haste, a small portion of the cargo is almost certain to be damaged.
Generally the damage is slight. If a bag is torn or stained, the coffee
is placed in a new bag. If the contents have become mildewed, the
damaged portion is taken to a warehouse for reconditioning; while the
sound coffee is thoroughly aired to remove the odor and is then placed
in a clean bag. The reconditioned lot is put into a separate package and
forwarded to the buyer with a "reconditioning statement" that shows what
has been done.
[Illustration: THE NEW TERMINAL SYSTEM ON STATEN ISLAND
On the left are three piers of the Pouch Terminal at Clifton; on the
right, four of the American Dock Terminal at Tompkinsville; and between
these are thirteen piers of the new Municipal Terminal]
Bags that have become torn in transit, and parts of their contents
spilled, are called "slacks." These are weighed as they arrive on the
dock by a licensed public weigher; and a sufficient quantity of the
coffee remaining on the floor of the ship's hold is put into the bag to
make it of the proper weight. The expense of reconditioning and
rebagging is generally borne by the marine insurance companies. When the
entire cargo is unloaded, and the slacks and bad-order bags are weighed
and marked, the warehouseman tallies up the records of his clerks, and
renders a corrected chop list to the consignee.
[Illustration: MOTOR TRACTOR MOVING COFFEE AT THE BUSH TERMINAL DOCKS,
BROOKLYN]
_Electric Tractors and Trailers_
Another district along the water front of Brooklyn where coffee is
discharged in large quantities is that between Thirty-third and
Forty-fourth Streets, south Brooklyn, occupied by the Bush Terminal
Stores. This plant is laid out with railroad spurs on every pier, so
that its own transfer cars, or the cars of the railroads running out of
New York, can be run into the sheds of the docks where coffee is being
discharged from the ships. The methods employed by the Bush Terminal are
similar to those just described, except that all the coffee is handled
by electrically-manipulated cars or trucks, in some instances the
powerful little tractors hauling many "trailers" to various parts of the
yards.
_Handling Charges at New York_
Before the World War, it cost approximately one-half cent a bag to
handle green coffee from the vessel to warehouse and in storage in New
York. The rate advanced nearly one hundred percent in the latter part of
1919, then dropped slightly, although it is still (1922) above the
pre-war price. Other handling charges are shown in the following
tabulation:
COFFEE HANDLING CHARGES AT NEW YORK
Pre-war prices Present prices
Cents per bag Cents per bag
(132 lbs.) (132 lbs.)
Storage 3 to 4 5 to 8
Labor 3 to 4 5 to 8
Sampling for damage 1 1
Cleaning 35 20
Dumping and mixing 10 15
Dumping and airing 10 15
Shoveling and airing 10 15
Transferring coffee
from floor to floor 4 8
Marking 1 1
Labor at vessel $9 per M $12.50 to $15 per M
The warehousemen in 1919 charged four cents per bag for loading into
railroad cars. This charge was discontinued in 1921. The cost of
weighing increased from two and one-half cents per bag in 1914 to four
and one-half cents in 1919, and then dropped to the present price of
three to three and one-half cents. Other handling charges at the port of
New York are:
OTHER HANDLING CHARGES, 1922
Cents per bag
(132 lbs.)
Drawing samples, each 10 lbs 17 to 20
Grading for variation 4
Matching in 12
Reducing or evening off slack 9
Transferring to new bag 10
Trucking to weigher in store 3
Collecting and preparing
sweepings 25
Delivering sample below Canal
Street 75
Each additional sample 10 to 15
New bags 15
Old bags 6
[Illustration: UNLOADING COFFEE WITH MODERN CONVEYOR, NEW ORLEANS]
A plan intended to cut down handling costs in New York, and to expedite
deliveries, was inaugurated by the National Coffee Roasters Association
at the beginning of 1920. The Association formed a freight-forwarding
bureau, and invited members to have their coffee shipments handled
through the bureau. The charges for forwarding direct importations are
two cents per bag. Cartage charges vary from six to eighteen cents per
hundred pounds. Claims are handled without charge.
_The Seven Stages of Transportation_
The foregoing story has taken the reader through the seven most direct
routes that lead from the plantation to the roaster: first, from the
patio to the railroad or river; then to the city of export; into the
warehouses there; then into the steamers; out of them, and upon the
wharf at the port of destination; from the wharf into the warehouses;
and, finally, from the warehouses to the roasting rooms. It will be
understood that in some instances where the plantation is hidden away in
the mountains, it is necessary to relay the coffee; and again, at this
end, the coffee is very often transhipped. In such cases, more handlings
are required.
[Illustration: UNLOADING A COFFEE SHIP BY BLOCK AND TACKLE AT THE PORT
OF NEW ORLEANS]
[Illustration: IN FOREGROUND--LOADING COFFEE BY MEANS OF AN AUTOMATIC
TRAVELING-BELT CONVEYOR, ON GOVERNMENT BARGES FOR ST. LOUIS]
[Illustration: COFFEE-HANDLING SCENES ON THE WHARVES AT NEW ORLEANS]
_Handling Coffee at New Orleans_
Coffee ships are unloaded in New Orleans, the second coffee port in the
United States, in about the same general manner as in New York, with the
important exception that the block-and-tackle system for transferring
the bags from the ship to the dock has been largely supplanted by the
automatic traveling-belt conveyor system. Another notable feature is New
Orleans' steel-roofed piers, whereon the coffee can be stored until
ready for shipment to the interior. Because of the class of
labor--mostly negro--employed in unloading ships, New Orleans has found
it expedient to retain the old flag system to indicate the part of the
pier where each mark of coffee is to be piled as taken from the vessel.
These little flags vary in shape, color and printed pattern, each
representing a particular lot of coffee, and they are firmly fixed at
the part of the pier where those bags should be stacked. Trained
checkers read the marks on the bags as the laborers carry them past, and
tell the carrier where the bag should be placed. To the illiterate
laborers the checker's cries of "blue check," "green ball," "red heart,"
"black hand," and the like, are more understandable than such
indications as letters or numbers.
[Illustration: SHOWING HOW COFFEE IS STORED UNDER STEEL-COVERED SHEDS AT
NEW ORLEANS]
_Handling Coffee at San Francisco_
San Francisco ranks third in the list of United States coffee ports,
having received its greatest development in the four years of the World
War, when the flow of Central American coffees was largely diverted from
Hamburg to the Californian port. In the course of these four years, the
annual volume of coffee imports increased from some 380,000 bags to more
than 1,000,000 bags in 1918. The bulk of these importations came from
Central America, though some came from Hawaii, India, and Brazil and
other South American countries. Because of its improved unloading and
distributing facilities, San Francisco claims to be able to handle a
cargo of coffee more rapidly than either New York or New Orleans.
Handling Central American coffees in San Francisco is distinctly
different from the business in Brazil. In order to secure the Central
American planter's crops, the importers find it necessary to finance his
operations to a large extent. Consequently, the Central American trade
is not a simple matter of buying and selling, but an intricate financial
operation on the part of the San Francisco importers. Practically all
the coffee coming in is either on consignment, or is already sold to
established coffee-importing houses. Brokers do not deal direct with the
exporters; and practically none of the roasters now import direct.
[Illustration: DISCHARGING COFFEE FROM A STEAMER JUST ARRIVED FROM
CENTRAL AMERICA]
[Illustration: HOW A LARGE CARGO OF COFFEE IS HANDLED ON THE PIER AS IT
IS UNLOADED FROM THE SHIP]
[Illustration: UNLOADING AND STORING COFFEE AT SAN FRANCISCO]
In recent years San Francisco has adopted the practise of buying a
large part of her coffee on the "to arrive" basis; that is the purchase
has been made before the coffee is shipped from the producing country,
or while in transit. This practise applies, of course, only to well
known marks and standard grades. Coffee that has not been sold before
arrival in San Francisco is generally sampled on the docks during
unloading, although this is sometimes postponed until the consignment is
in the warehouse. It is then graded and priced, and is offered for sale
by samples through brokers.
San Francisco is better equipped with modern unloading machinery and
other apparatus than either New Orleans or New York, even more liberal
use being made there than in New Orleans of the automatic-belt conveyors
both for transferring the bags from the ships to the docks and for
stacking them in high tiers on the pier. Another notable feature of the
modern coffee docks is that the newer ones are of steel and concrete
and, as in New Orleans, are covered to protect the coffee from wind and
storm.
_Europe's Great Coffee Markets_
Europe has three great coffee-trading markets--Havre, Hamburg, and
Antwerp. Rotterdam and Amsterdam are also important coffee centers, but
rank far below the others named. In point of volume of stocks, Havre led
the world before the war; while in respect to commercial transactions,
it ranked second, with New York first. In pre-war days, the largest part
of the world's visible supply of coffee was stored in the Havre bonded
warehouses, being available for shipment to any part of Europe on short
notice, or even to the United States in emergencies. Even during the
World War, this French port remained a powerful factor in international
coffee trading. Coffee trading in Havre, both exchange and "spot"
transactions, follows about the same general lines as in New York and
the other great coffee markets. Coffee "futures" are dealt in on the
Havre Bourse.
Green coffee is sold in London by auction in Mincing Lane. On arrival,
it is stored in bonded warehouses, and is released for domestic use only
when customs duty at the rate of four and one-half pence per pound has
been paid. The bulk of the coffee comes in parchment on consignment; and
before sale, it must be hulled and sorted in the milling establishments,
most of which are on the banks of the Thames.
[Illustration: ONE OF THE MODERN DEVICES USED IN SAN FRANCISCO FOR
HANDLING GREEN COFFEE]
The auctions are held four times a week, usually on Tuesday, Wednesday,
Thursday, and Friday. The sales are advertised in the market
papers--chief among which is the _Public Ledger_--and also by the
auctioneers, who issue catalogs of their offerings. A few hours before
the beginning of the sale, samples are laid out for inspection by
prospective buyers, who may cup-test them if they desire. The actual
selling is done by competitive cash bidding, the highest bidder becoming
the owner. Two classes of brokers do the bidding, one for home trade and
the other for exporters.
Home trade takes about a tenth of the coffee, the remainder being sold
for export. If the coffee is bought for re-export, it can be transferred
to the shipping port, still in bond, and shipped out of the country
without paying duty. During the World War, auctions were held about
twice a week; but after the signing of the armistice in November 1918,
the London traders resumed the four times a week practise.
[Illustration: COFFEE AUCTION SAMPLES ON DISPLAY AT AMSTERDAM]
[Illustration: GREEN COFFEE STORED ON THE DOCKS AT HAVRE, FRANCE]
[Illustration: HANDLING GREEN COFFEE AT TWO EUROPEAN PORTS]
_Coffee Exchanges and Trading Methods_
Green-coffee buyers in the large importing centers of the United States
and Europe recognize two distinct markets in their operations. One of
these is called the "spot" market; because the importers, brokers,
jobbers, and roasters trading there deal in actual coffee in warehouses
in the consuming country. In New York the spot market is located in the
district of lower Wall Street, which includes a block or two each side
on Front and Water Streets. Here, coffee importers, coffee roasters,
coffee dealers, and coffee brokers conduct their "street" sales.
The other market is designated as the "futures" market; and the trading
is not concerned with actual coffee, but with the purchase or sale of
contracts for future delivery of coffee that may still be on the trees
in the producing country. Futures, or "options" as they are frequently
called, are dealt in only on a coffee exchange. The principal exchanges
are in New York, Havre, and Hamburg. New Orleans and San Francisco
exchange dealers trade on their local boards of trade.
Coffee-exchange contracts are dealt in just like stocks and bonds. They
are settled by the payment of the difference, or "margin"; and the
option of delivering actual coffee is seldom exercised. Generally, the
operations are either in the nature of ordinary speculation on margin or
for the legitimate purpose of effecting "hedges" against holdings or
short sales of actual coffees.
The New York Coffee and Sugar Exchange--the most important in the world,
because of the volume of its business--deals in all coffees from North,
South, and Central America, the West Indies and the East Indies (except
those of the Robusta variety) and uses Type No. 7 as the basis for all
Exchange quotations. All other types are judged in relation to it. In
determining the number of a type, the coffee is graded by the number of
imperfections contained in it.
[Illustration: NEW YORK COFFEE AND SUGAR EXCHANGE
The building fronts on Hanover Square and extends through to Beaver
Street. The exchange rooms are indicated by the arched windows on the
second floor. The rest of the building is devoted to offices. The
exchange was founded in 1881, and was the first national coffee trading
organization in the world.]
These imperfections are black beans, broken beans, shells, immature
beans ("quakers"), stones, and pods. For counting the imperfections, the
black bean has been taken as the basis unit, and all imperfections, no
matter what they may be, are calculated in terms of black beans,
according to a scale, which is practically as follows:
BLACK-BEAN SCALE
3 shells equal 1 black bean
5 "quakers" equal 1 " "
5 broken beans equal 1 " "
1 pod equals 1 " "
1 medium size stone equals 1 " "
2 small stones equal 1 " "
1 large stone equals 2 to 3 " "
[Illustration: THE COFFEE PIT IN THE NEW YORK COFFEE AND SUGAR EXCHANGE]
By this scale a coffee containing no imperfections would be classified
as Type No. 1. The test is made on one-pound samples. If a sample shows
six black beans, or equivalent imperfections, it is graded as No. 2; if
thirteen black beans, as No. 3; if twenty-nine black beans, as No. 4; if
sixty black beans, as No. 5; if one hundred and ten black beans, as No.
6, and if more than one hundred and ten black beans, as No. 7 or No. 8.
These two are graded by comparison with recognized exchange types.
Coffees grading lower than No. 8 are not admissible to this country.
The quotation relationship of other types with the basic Rio No. 7 is
shown in the table below.
By this scale one can determine that when Rio No. 7 is quoted at 17.10,
Rio No. 2 is 18.60, Santos No. 3, 19.10, and Bogota No. 5, 18.10. The
quotations are on the pound and cents basis.
SCALE OF QUOTATION RELATIONSHIP
BRAZILIAN COFFEE-- SANTOS COFFEE OTHER KINDS--NOT
NOT SANTOS BRAZILIAN
Type Type Type
No. 1--180 points above No. 1--260 points above No. 1--300 points above
No. 2--150 points above No. 2--230 points above No. 2--250 points above
No. 3--120 points above No. 3--200 points above No. 3--200 points above
No. 4---90 points above No. 4--150 points above No. 4--150 points above
No. 5---60 points above No. 5--100 points above No. 5--100 points above
No. 6---30 points above No. 6-- 50 points above No. 6--50 points above
No. 7---Basis No. 7--Basis No. 7--Basis
No. 8---50 points below No. 8--50 points below No. 8--50 points below
A point is the hundredth part of a cent
In the spot market, a trader may also buy or sell coffee "to arrive";
that is, a consignment that is aboard ship on the way to the market.
Coffee is shipped to New York either on a consignment basis and sold
for a commission, or it may have been bought in the shipping port and be
already the property of an importer. When shipped on consignment, a
wholesaler usually buys on the in-store contract, which provides that
the purchaser must take delivery at the warehouse, though he is
generally given a month's storage privilege before removal of the
coffee. The practise among New York importers at present is to buy
coffee on either the basis of F.O.B. delivery steamer at loading port,
or delivery C. & F. (cost and freight), or C.I.F. (cost, insurance, and
freight), port of destination. Payment is made by letter of credit drawn
on a New York or London bank, entitling the exporter to draw at ninety
days' sight against the shipping documents, so that the shipment will be
in the hands of the purchaser long before the draft is made. Frequently
a jobber acts as his own importer of Brazil coffee, buying direct from
the exporter without utilizing the agency of a broker or a regular
importing firm.
Brazil coffee is bought with the stipulation that differences between
samples and the coffee actually delivered may be adjusted either on
"Brazil grading," "half difference," or "full difference"; and with the
further provision that, if the delivery is a full type higher or lower
than specified in the contract, the entire shipment may be rejected.
Under the "Brazil grading" provision, the buyer must accept delivery if
the coffee is better than the next lower type, even though not up to the
type ordered; and if the coffee is of a higher type than contracted for,
he need not pay premium for it. In buying on the "half difference" or
"full difference" basis, the buyer is entitled to payment for half the
difference or the full difference, respectively, for any undergrading,
or must pay the seller accordingly if there is any overgrading. When a
buyer specifies special features of description, in addition to type,
some sellers protect themselves against claims for difference on this
score by inserting in the contract a clause to the effect that the
description is given in good faith, but is not guaranteed by the seller.
[Illustration: TWO OF THE COFFEE EXCHANGE BLACKBOARDS
The one on the right is a record of transactions in the coffee pit. As
soon as a trade is made, it is noted in the proper column on the lower
part, the entry showing the time of the transaction, the number of
"250-pound bag lots," and the price. The left-hand board gives Santos
and Rio future quotations. For a detailed description of these and other
exchange quotation boards, see page 457]
_How the New York Exchange Functions_
When the New York Coffee Exchange was incorporated in 1881, its charter
stated its purposes to be "to provide, regulate and maintain a suitable
building, room or rooms for the purchase and sales of coffees and other
similar grocery articles in the city of New York, to adjust
controversies between members, to inculcate and establish just and
equitable principles in the trade, to establish and maintain uniformity
in its rules, regulations and usages, to adopt standards of
classification, to acquire, preserve and disseminate useful and valuable
business information, and generally to promote the above mentioned trade
in the city of New York, increase its amount, and augment the facilities
with which it may be conducted."
In the promotion of trade at New York the Exchange has been highly
successful. From time to time it has been criticized; and, more than
once, coffee traders in the East and in the West have raised a question
as to its value to non-speculating members. There are those who believe
it serves a useful purpose, and others who call it a huge pool room. To
say that, on the whole, it is not of benefit to the trade would be
untrue. As one of its champions pointed out in 1914, when it shut down
for a period of four months on account of the World War:
The ability to discount the future is a necessity, and demands the
facilities that a unit of centralization like the Exchange affords.
There is no difference between a purchase of coffee and one of a
future month on options.
The experience gained here and abroad demonstrates that any check
placed upon such dealings is detrimental, with far-reaching effects
upon the whole body of the trade. Unquestionably the Exchange is a
powerful factor as a regulator of extremes in the market.
The experience gained in Germany, where an embargo was placed upon
transactions in futures, is illuminating. The disastrous effects
were so plain that the authorities were forced to abandon their
objections and permit a resumption of the business along the old
lines.
But a good thing can be abused, and the opportunity to gamble in
options availed of by so many is the increment that disturbs the
legitimacy of the market and creates the opposition to the whole
proposition. When the Exchange is ready to insist that every
transaction in futures must be a legitimate one, and that every
trader under its jurisdiction using the facilities of the Exchange
is made to realize that any operations that are purely of a
gambling nature will subject him to severe discipline, then the
Coffee Exchange will begin to stem the tide of an ever-growing
opposition by the general public.
[Illustration: THE "COFFEE AFLOAT" BLACKBOARD]
The New York State legislative committee on speculations in securities
and commodities had the following to say on the Coffee Exchange in its
report to Governor Charles E. Hughes in 1909:
It [the Coffee Exchange] was established in order to supply a daily
market where coffee could be bought and sold and to fix quotations
therefor, in distinction from the former method of alternate glut
and scarcity, with wide variations in price--in short, to create
stability and certainty in trading in an important article of
commerce. This it has accomplished; and it has made New York the
most important primary coffee market in the United States. But
there has been recently introduced a non-commercial factor known as
"valorization," a governmental scheme of Brazil, by which the
public treasury has assumed to purchase and hold a certain
percentage of the coffee grown there, in order to prevent a decline
of the price. This has created abnormal conditions in the coffee
trade.
All transactions must be reported by the seller to the
superintendent of the Exchange, with an exact statement of the time
and terms of delivery. The record shows that the average annual
sales in the past five years have been in excess of 16,000,000 bags
of 130 pounds each.
Contracts may be transferred or offset by voluntary clearings by
groups of members. There is no general clearing system.[319] There
is a commendable rule providing that, in case of a "corner," the
officials may fix a settlement price for contracts to avoid
disastrous failures.
The original initiation fee was $250. Seats on the Exchange once sold
for as low as $110. In January, 1916, there was a sale at $3,000; in
October, 1916, there was a sale for $5,000; in April, 1921, three seats
were sold for $5,500 each; but the record price of $8,600 was paid in
1919. Seats are now (1922) worth about $6,000.
The Exchange includes in its membership 323 brokers, importers, dealers,
and roasters. Membership is passed upon by a committee on membership;
but any one twenty-one years old, resident or non-resident, of good
character and commercial standing, is eligible when proposed and
seconded by Exchange members. The committee refers the application with
its recommendation to the board of managers, which takes a ballot. The
adverse vote of one-third of all votes cast rejects.
The Exchange elects annually a president, a vice-president, and a
treasurer, who perform the usual duties of Exchange officers. The real
governing body is the board of managers, consisting of the president,
vice-president, treasurer, and twelve other members. This governing
board, meeting monthly, appoints the necessary subordinate officers and
employees, and fixes their compensation, and may "summon before them any
officer or member for any purpose whatsoever." It appoints the secretary
of the Exchange from among its own number, a superintendent of the
Exchange, and the numerous committees which are in active charge of
specified activities. It also licenses the necessary coffee graders,
warehousemen, weighmasters, and samplers of the Exchange.
A brief discussion of the duties of the superintendent and the various
committees will help to explain the methods of the Exchange market. The
superintendent, under the direction of the board of managers, has charge
of the details of its work and of that of the various committees. He
keeps all the books and documents of the Exchange; collects and pays
over to the treasurer all moneys due the Exchange not otherwise provided
for; receives, deposits, and pays over all margins on coffee contracts;
has active charge of the Exchange rooms and the bulletin board; and
manages and appoints, with the consent of the board of managers, the
assistants needed to perform the details of the work under his charge.
One of the functions of the Exchange is to grade and to classify coffee,
in which it takes every possible precaution. The rules provide for eight
standard grades; and only licensed graders are permitted to pass upon
the product handled on the Exchange. There are twenty-five of these
graders; one of whom is appointed as a supervisor of types, to provide
fresh standards and to "maintain them as nearly as possible on an
equality." When these standards are approved by the board and the
Exchange, they remain in force for a year.
When coffee is received at a licensed warehouse, two official graders
are chosen, one by the buyer and one by the seller. These graders
receive four cents a bag if employed by a member; and eight cents a bag,
if employed by a non-member.
If the graders disagree, their differences are referred to the board of
coffee arbitrators, consisting of ten experts appointed by the board of
managers. The superintendent selects by lot three of these arbitrators,
who decide on the basis of the samples submitted, but will not make a
decision lowering the grade below that of the lowest submitted nor
higher than the highest. If the disputants do not change the grading to
come within the arbitrators' findings, the samples are sent to the
entire board of arbitrators, exclusive of those who may have been the
original graders, and final decision is made by majority vote. As soon
as the coffee is graded, a certificate is issued stating the grades, and
bearing the signatures of the superintendent and graders. This
certificate is conclusive evidence of the grade as far as the parties
involved are concerned, for the subsequent twelve months. The buyer
receives the original, and the seller a duplicate.
The rules provide that weights decided upon at the initial delivery are
good during the life of the grading certificate for re-delivery, with
definite allowances to the receiver, on re-delivery, of a quarter of a
pound a bag a month, instead of having to re-weigh and re-sample for
every separate delivery, as formerly.
As claims and trade controversies occasionally arise, the Exchange has
provided means for their peaceful settlement. The board of managers
elects annually an arbitration committee of five members, who swear to
decide disputes fairly. This is the only committee on the Exchange that
has power to adjudicate disputes between members and non-members; and
its services must be sought by the disputants, who must agree to abide
by its decision. An adjudication committee of seven is annually chosen
from the membership by the managers, to adjust all claims and
controversies between members arising out of any merchandise
transaction, "if notice in writing of such claim or controversy, and of
the intention to demand an adjudication thereon, be served by either
party thereto within ten days from the ascertainment thereof."
Within three days of the serving of this notice, each disputant selects
an Exchange member as his adjudicator; and these two name the third, who
must be a member of the adjudicating committee. Even this decision may
be appealed to the board of managers, which, if it finds the grounds of
appeal good (as decided by majority vote), appoints an appeal committee
of five, of whom three must be members of the board. This last
committee's decision is final. No new testimony bearing on the case may
be introduced after the case has been closed by the adjudicators.
Arbitration is voluntary with both parties; while adjudication is
compulsory upon the application of either.
Another committee of trade importance is the spot quotation committee of
five Exchange members. Each day at two o'clock, except on Saturday, when
it meets at 11:45, this committee by a majority vote establishes the
official daily market quotation of No. 7 coffee. There is likewise a
committee on quotations of futures. This committee of five meets daily
"immediately after the first call and at the close of the Exchange and
reports to the superintendent the tone and price of the contract market,
to be posted on the blackboard and transmitted to other Exchanges and
commercial bodies."
A committee of five on trade and statistics has the important function
of reporting to the board as to regulations for the "purchase, sale,
transportation and custody of merchandise," and it attempts to establish
uniformity in such matters between different markets. It has charge also
of "all matters pertaining to the supply of newspapers, market reports,
telegraphic and statistical information for the use of the Exchange. In
the early 80's the Exchange abolished the old method of keeping coffee
statistics, and the basis then adopted has since been accepted by all
the large coffee markets of the world."
The minimum rates of commission on coffee "per contract of 250 bags, for
members of the Exchange residing in the United States, are based upon a
price" as follows, quoting from the Exchange bylaws adopted June 8,
1920:
COFFEE EXCHANGE COMMISSION RATES
(Per contract of 250 bags)
Floor
Commission brokerage
for buying for buying
or selling or selling
Below 10 cents $6.25 $1.50
10 cents up to 19.99 cents 7.50 1.75
20 cents and above 10.00 2.00
For non-members residing within the United States, double the above
rates of commission shall be charged.
For members and non-members residing outside of the United States a
commission of $2.50 shall be charged in addition to the above
rates.
Whenever before thirty minutes after the close of the exchange a
member gives to another member for clearance purchases and sales of
contracts corresponding in all respects except as to price, made
during the day by himself or for his account _when present on the
floor_ of the Exchange, a charge for each contract shall be made
equal to the corresponding floor brokerage rate for buying and
selling, in addition to any floor brokerage incurred.
Members procuring business for other members may, by agreement, be
entitled to one-half the commission rates for non-members
prescribed in this Section, less the corresponding brokerage
charge, whether paid or not.
When a transferable notice is given or received by a customer in
fulfillment of a contract the brokerage in that case shall be not
less than one-half of the corresponding buying or selling
commission prescribed in Section 103.
Other committees are the finance committee (two) to audit bills and
claims against the Exchange, to direct deposits and investments, and to
audit the monthly and yearly accounts of the treasurer; a law committee
(three), to deal with matters of legislation; a membership and floor
committee (five); and a nominating committee (five). Organized as above
outlined, and with a well established code of trade rules, the Exchange
annually transacts a large number of sales in a business-like way.
There is considerable trading in future contracts; and a standard form
has been adopted by the Exchange. No future contracts are valid unless
they are made in the following form:
BRAZILIAN COFFEE--NOT SANTOS
Office of _____________
New York__________ 19__
Sold for M_______________________
To M_______________________
Thirty-two thousand five hundred pounds in about 250 bags coffee,
growth of North, South or Central America, West Indies or East
Indies, excepting coffee known as "Robusta," and also any coffee of
new or unknown growth, deliverable from licensed warehouse in the
port of New York, between the first and last days of ________ next,
inclusive. The delivery within such time to be at seller's option,
upon a notice to buyer of either five, six or seven days, as may be
prescribed by the trade rules. The coffee to be of any grade, from
No. 8 to No. 1 inclusive (no coffee to grade below No. 8) provided
the average grade of Brazilian coffees shall not be above No. 3.
Nothing in this contract, however, shall be construed as
prohibiting a delivery averaging above No. 3 at the No. 3 grade. At
the rate of __________ cents per pound for No. 7, with additions or
deductions for other grades according to the rates of the New York
Coffee and Sugar Exchange, Inc., existing on the afternoon of the
day previous to the date of the notice of delivery. Either party to
have the right to call for margins as the variations of the market
for like deliveries may warrant, which margins shall be kept good.
This contract is made in view of, and in all respect subject to the
rules and conditions established by the New York Coffee and Sugar
Exchange, Inc., and in full accordance with section 102 of the
bylaws.
_____________________________
Brokers
Across the face is the following:
For and in consideration of one dollar to __________________ in
hand paid, receipt whereof is hereby acknowledged, ______________
accept this contract with all its obligations and conditions.
All deliveries on such future contracts must be made from licensed
warehouses. There is a separate "to arrive contract"; but this likewise
requires delivery at a licensed warehouse, unless the buyer and the
seller have a mutual understanding to deliver the coffee from dock or
ex-ship. Margins to protect the contract may be called for by either
party. The largest deposit for margins was made in 1904, when
$22,661,710 was deposited with the superintendent as required by the
Exchange rules.
The basic grade in a future sale is No. 7; but variations are provided
as follows: 30 points for Rio, Victoria, and Bahia of all grades between
7 and 1, and of 50 points between 7 and 8; 50 points is allowed on
Santos and all other coffees except between grades 1 and 2 and 2 and 3
Santos, which are allowed 30 points. Thus the buyer and the seller when
entering upon a transaction know exactly what the difference will be
between the standard No. 7 and the coffee that can be delivered. The
right to deliver any grade in a future transaction has done much to
lessen the probability of corners in coffee; but this protection is
further given by the stringent rule that the maximum fluctuations on the
Exchange can be only two cents a pound on coffee in one day and one cent
on sugar. If greater changes should threaten, the Exchange operations
would automatically cease.
False or fictitious sales are prohibited, and all contracts must be
reported to the superintendent. All contracts are binding and call for
actual delivery.
The future contract, besides being used for the delivery of coffee
during stated months in the future at a given price, is also used for
hedging purposes. As in the grain and cotton markets, dealers protect
themselves against price fluctuations by hedging in the future market.
Importers, for instance, when purchasing coffee abroad, frequently sell
an equal amount for future delivery on the Exchange. When the time for
delivery arrives, it is simply a question of calculation of the market
conditions whether it is more advantageous to repurchase the sales made
as a hedge, or as a kind of insurance to protect themselves against
loss, and free the coffee so engaged, or to make delivery of the coffee
as it comes in.
The board of managers has power to close the Exchange or to suspend
trading on such days or parts of days as would in their judgment be for
the Exchange's best interest.
The Clearing Association is a recent outgrowth of the Exchange, and is
composed exclusively of Exchange members. Every member has to bring his
contracts up to market closing every night, either by making a deposit
with the Association to cover his balances, or by withdrawing in case he
should be over. Members deposit $15,000 at the time of joining as a
guaranty fund; and if the surplus is not sufficient to take care of
balances, the bylaws provide for the levying of assessments.
The daily quotations on the coffee exchanges of New York, Havre, and
(before the war) of Hamburg, determined to a large extent the price of
green coffee the world over. The prices prevailing on the New York
Coffee and Sugar Exchange are studied by coffee traders in all
countries, the fluctuations being reflected in foreign markets as the
reports come from the United States. Quotations are cabled from one
great market to another; and as each must heed those of the others to
some extent, the coffee trade thus obtains a world price, and the
effect on supply and demand is universal rather than local, as would be
the case if quotations were not exchanged.
In 1921 the Exchange adopted an amendment to the trade rules, and
abolished the one day transferable notice for both coffee and sugar.
_Foreign Coffee Quotations_
Brazil coffee cable quotations are the market prices, in Rio or Santos,
of ten kilograms of coffee, the price being stated in milreis, the
monetary unit of Brazil money. The basic grade of coffee at Rio is the
No. 7 of the New York Coffee Exchange; and at Santos, the international
standard of good average ("g. a.") Santos. One kilogram (often written
kilo, or abbreviated to K.) is equal to two and one-fifth pounds; and
the ten-kilogram standard of quantity is, therefore, equivalent to
twenty-two pounds, or just one-sixth of a standard Brazil bag.
The money value is not so simple, since Brazilian paper currency is
unstable; and the milreis quotation means nothing unless it is
considered in connection with the rate of exchange for the same day,
i.e., the current gold value of the milreis. This gold value is always
given with the daily quotations from Brazil, and is expressed in British
pence. The par value of the milreis (1000 reis) is 54.6 cents (gold) of
United States money; but its present actual value is only about 15
cents, and it has been as low as 11-1/4 cents. Our dollar sign is used
to denote milreis, placing it after the whole number, and before the
fractional part expressed in one-thousandths. Thus, 8-1/4 milreis would
be written 8$250 RS.
Suppose, for example, a Rio quotation is given at 8$400, with exchange
at 7-1/2 d. This means that 22 pounds of coffee have a gold value of 63
British pence (8.4 × 7-1/2 = 63.0), or 5/3, as the Englishman would
write it, which is equal to $1.27-1/2, making the coffee worth 5.8 cents
per pound. Of course the person familiar with Brazil quotations will not
need to make this reduction to the pound-cent term in order to
understand the figures. They will have a proper relative meaning to him
in their original form; and it must not be overlooked that it is in this
form only that they express correctly the value of the coffee in Brazil.
It may make a great difference to the Brazilian planter or exporter
whether an increased gold value of his coffee arises through a higher
milreis bid or an appreciated exchange, simply on account of local
currency considerations. That is to say, the purchasing power of a
milreis in Brazil will not necessarily vary exactly as the rate of
exchange on London.
London quotations are made in shillings and pence, on one hundred-weight
(cwt) of coffee. This "cwt" is not 100 pounds but 112 pounds, one
twentieth of the English ton (our long ton) of 2,240 pounds. And in all
English coffee statistics the coffee quantities are expressed in this
ton. A London quotation of 30/9 (30 shillings and 9 pence) for example,
is equivalent to $7.44 for 112 pounds of coffee, or 6.64 cents per pound
at the normal rate of exchange, $4.80 to $4.86 the pound sterling.
At Havre, the coffee price is given in francs, on a quantity of 50
kilograms. This is 110 pounds and almost as much, therefore, as the
British cwt. In normal times the franc is equal to 19.3 cents. A French
quotation of 37-1/2, for instance, means, therefore, $7.19 for 110
pounds of coffee, or 6.53 cents per pound.
The Hamburg quotation (formerly from Brazil per fifty kilos) is made on
one pound German, equal to 1/2 kilogram, and is expressed in pfennigs.
One pfennig is one-hundredth of a mark, and the mark once was equal to
23.8 cents. A German quotation of, say, 31, means, therefore, 7.38 cents
(31 × .238 = 7.378) for 1.1 pounds, or 6.71 cents per pound.
_Three Kinds of Brokers_
In the coffee trade there are three kinds of brokers--floor, spot, and
cost and freight.
Floor brokers are those who buy and sell options on the Coffee Exchange
for a fixed consideration per lot of 250 bags. The coffee commission
rate put into effect June 8, 1920, for round term (buying and selling)
by the New York Coffee Exchange was as follows:
COMMISSION RATE ON 250 BAGS
(For Round Term--Buying and Selling)
Up to 10¢ to
9.99c 19.99c 20c & up
per lb. per lb. per lb.
Members $12.50 $15.00 $20.00
Non-members 25.00 30.00 40.00
Foreign members 17.50 20.00 25.00
Foreign non-members 30.00 35.00 45.00
Floor brokerage--
Buying or selling 1.50 1.75 2.00
There is at present (1922) a stamp tax of two cents on each hundred
dollars value, or fraction thereof, figured on each separate lot.
[Illustration: SUN-CURING THE WASHED GREEN BEANS ON CEMENT DRYING
PATIOS]
[Illustration: NEAR VIEW OF HEAVILY LADEN TREES READY FOR THE PICKERS]
[Illustration: TYPICAL COFFEE SCENES IN COSTA RICA]
Spot brokers are those who deal in actual coffee, selling from jobber
to jobber, or representing out-of-town houses; the seller paying a
commission of about fifteen cents a bag in small lots, and half of one
percent in large lots.
Cost and freight brokers represent Brazilian accounts, and generally
receive a brokerage of one and one-quarter percent. On out-of-town
business, they usually split the commission with the out-of-town or
"local" brokers. The out-of-town brokers sometimes, however, deal direct
with the importer. All brokers except floor brokers are sometimes called
"street brokers." Most of the large New York, New Orleans, and San
Francisco brokerage houses also do a commission business, handling one
or more Brazilian or other coffee-producing-country accounts.
_Important Rulings Affecting Coffee Trading_
The United States have no coffee law as they have a tea law--prescribing
"purity, quality and fitness for consumption"--but buyers and sellers of
green coffees are required to observe certain well defined federal rules
and regulations relating specifically to coffee. Up to the year 1906,
when the Pure Food and Drugs Act became law, the green coffee trade was
practically unhampered; and several irregularities developed, calling
into existence federal laws that were designed to protect the consumer
against trade abuses, and at the same time to raise the standards of
coffee trading.
Under these regulations it is illegal to import into this country a
coffee that grades below a No. 8 Exchange type, which generally contains
a large proportion of sour or damaged beans, known in the trade as
"black jack," or damaged coffee, as found in "skimmings." "Black jack"
is a term applied to coffee that has turned black during the process of
curing, or in the hold of a ship during transportation; or it may be due
to a blighting disease.
Another ruling is intended to prevent the sale of artificially "sweated"
coffee, which has been submitted to a steaming process to give the beans
the extra-brown appearance of high grade East Indian and Mocha coffees
which have been naturally "sweated" in the holds of sailing vessels
during the long journey to American ports. Up to the time that the Pure
Food and Drugs Act went into effect, artificial "sweating" was resorted
to by some coffee firms; and out of that practise grew a suit[320] that
resulted in a federal court decision sustaining the Pure Food Act, and
classifying the practise as adulteration and misbranding.
The Act also is intended to prevent the sale of coffees under trade
names that do not properly belong to them. For example, only coffees
grown on the island of Java can properly be labeled and sold as Javas;
coffees from Sumatra, Timor, etc., must be sold under their respective
names. Food Inspection Decision No. 82, which limited the use of the
term Java to coffee grown on the island of Java, was sustained in a
service and regulatory announcement issued in January, 1916. Likewise
the name Mocha may be used only for coffees of Arabia. Before the
pure-food law was enacted, it was frequently the custom to mix Bourbon
Santos with Mocha and to sell the blend as Mocha. Also, Abyssinian
coffees were generally known in the trade as Longberry Mocha, or just
straight Mocha; and Sumatra growths were practically always sold as
Javas. Traders used the names of Mocha and Java because of the high
value placed upon these coffees by consumers, who, before Brazil
dominated the market, had practically no other names for coffee.
One of the most celebrated coffee cases under the Pure Food Act was
tried in Chicago, February, 1912. The question was, whether in view of
the long-standing trade custom, it was still proper to call an
Abyssinian coffee (Longberry Mocha) Mocha. The defendant was charged
with misbranding, because he sold as Java and Mocha a coffee containing
Abyssinian coffee. The court decided that the product should be called
Abyssinian Mocha;[321] but since then, general acceptance has obtained
of the government's viewpoint as expressed in F.I.D. No. 91, which was
that only coffee grown in the province of Yemen in Arabia could properly
be known as Mocha coffee.
Another important ruling, concerning coffee buyers and sellers,
prohibits the importation of green coffees coated with lead chromate,
Prussian blue, and other substances, to give the beans a more stylish
appearance than they have normally. Such "polished" coffees find great
favor in the European markets, but are now denied admittance here.
The Board of Food and Drug Inspection decided in 1910 against a trade
custom that had prevailed until then of calling Minãs coffee Santos when
shipped through Santos, instead of Rio.[322]
For years a practise obtained of rebagging certain Central American
growths in New York. In this way Bucaramangas frequently were
transformed into Bogotas, Rios became Santos, Bahias and Victorias were
sold as Rios, and the misbranding of peaberry was quite common. A
celebrated case grew out of an attempt by a New York coffee importer and
broker to continue one of these practises after the Pure Food Act made
it a criminal offense. The defendants, who were found guilty of
conspiracy, and who were fined three thousand dollars each, mixed,
re-packed and sold under the name P.A.L. Bogota, a well known Colombian
mark, eighty-four bags of washed Caracas coffee.[323]
After an exchange of views with the United States Board of Food and Drug
Inspection, the New York Coffee Exchange decided that, after June 1,
1912, it would abolish all grades of coffee under the Exchange type No.
8.