ucts for which there was a war demand. At least, this is true of the pre-war Brazilian staple exports.

The bulk of the exports of Brazil has for years consisted of two products, coffee and rubber. For example, out of total exports of $313,628,0001 in 1913, rubber and coffee comprised $248,579,000, or about four-fifths of the total. By far the most important single export is coffee, which in 1913 amounted to $198,157,000, or over 63 per cent of the total exports. Coffee is not a war commodity. The Allied powers therefore restricted its import. Even more serious is the fact that the large demand from Central Europe, amounting normally to about 4,000,000 bags a year, was cut off. In consequence, the United States was the only unrestricted market for Brazilian coffee, taking about one-half the total exports. Added to these pronounced restrictions of the demand for coffee is the fact that the Brazilian supply during the war was somewhat above the pre-war normal. The result was that Brazil had on its hands an increasing stock of coffee which it could not hope to dispose of until after the war.

This situation became acute almost immediately upon the outbreak of war, and led in 1915 to the reëstablishment of a valorization system, along somewhat different lines from the famous plan of 1907-08. The federal government by a law of 1915 authorized the issue of 350,000,000 paper milreis, of which a part was to be used for carrying out a new plan of coffee valorization. The paper money was lent by the federal government to the state of São Paulo, which has been conducting the valorization operations. The original plan was to prohibit the export of coffee above 6,000,000 bags a year; the 4,000,000 bags which in normal times went to Germany, Austria, etc., to be held in Brazil, the state of

1 Figures are given in United States dollars.

São Paulo lending, in paper money, up to 60 per cent of a value to be fixed on a basis of past averages to coffee growers who deposited their coffee in warehouses; the warehouse receipts to be handed over by the state government to the federal government as collateral for the issue by the latter of the paper money. This loan feature was dropped, however, and instead the state of São Paulo undertook to purchase at an official price so much of the annual coffee crop as might appear sufficient to maintain prices, or, failing in that, so much as it might be able to purchase with the paper money funds supplied to it by the federal government under the laws above mentioned.

In 1918 the São Paulo government bought large quantities of coffee at the price of 4$9001 per 10 kilos (i.e., about $1.24 for 22.4 lbs.). The ordinary market price, however, was lower, between 4$600 and 4$500. Interior shippers and planters demanded that their coffee be sold to the government, and the coffee Associacão of Santos presented a memorial to the government requesting a further issue of 300,000,000 milreis of paper money for additional valorization purchases.

The statement on page 457 indicates the coffee position up to May, 1918. The table indicates that of a total crop of 17,000,000 bags, about 13 million actually came to market; of this quantity somewhat more than 7 million bags were exported, leaving the enormous quantity of 5,939,291 bags of the 1917-18 crop, and 1,100,000 bags of the 1916-17 crop a total of virtually 7,000,000 bags, or as much as the total 1917-18 exports in storage in Brazil and unable to find an outlet. The state of São Paulo, it is seen, was itself holding almost 2,800,000 bags, or almost 40 per cent of the total amount in storage.

1 I. e., 4 milreis, 900 reis.

THE COFFEE POSITION, 1917-18 CROP1

In hands of São Paulo government, April 30, 1918. . . . .

Bags 2,788,875

In hands of commissarios and exporters, inclusive of 600,000

The fact is that the supply of Brazilian coffee was hopelessly in excess of the demand. The result was that in spite of the large purchases by the government, the price of coffee in Brazil went steadily downward. Meantime, as a result of rising freight and insurance rates (which are, moreover, additional causes of the diminution of exports) foreign coffee prices rose. The following table shows the price of Brazilian coffee in London and in Santos for the period 1911-18:

1 Data on the coffee position" and on prices from Wileman's Brazilian Review for May and June, 1918.

By midsummer of 1918 the purchases of coffee by the state of São Paulo amounted to 4,500,000 bags. The congestion was further relieved by an arrangement made with the French government by which 2,000,000 were purchased on behalf of France. The 191819 crop, at first estimated at 10,500,000 to 12,000,000 bags, was considerably reduced by a severe frost in São Paulo on July 9, 1918. See Fielding Provost, "The Brazilian Coffee Situation," Pan American Magazine, September, 1918, pp. 225 et seq. On September 6, 1918 there were 6,351,000 bags of coffee on hand in Santos and 884,000 in Rio de Janeiro, as compared with 2,825,000 bags in both places combined on the same date in 1917. Bulletin of the Pan American Union, October, 1918, p. 604.

São Paulo lending, in paper money, up to 60 per cent of a value to be fixed on a basis of past averages to coffee growers who deposited their coffee in warehouses; the warehouse receipts to be handed over by the state government to the federal government as collateral for the issue by the latter of the paper money. This loan feature was dropped, however, and instead the state of São Paulo undertook to purchase at an official price so much of the annual coffee crop as might appear sufficient to maintain prices, or, failing in that, so much as it might be able to purchase with the paper money funds supplied to it by the federal government under the laws above mentioned.

In 1918 the São Paulo government bought large quantities of coffee at the price of 4$9001 per 10 kilos (i.e., about $1.24 for 22.4 lbs.). The ordinary market price, however, was lower, between 4$600 and 4$500. Interior shippers and planters demanded that their coffee be sold to the government, and the coffee Associacão of Santos presented a memorial to the government requesting a further issue of 300,000,000 milreis of paper money for additional valorization purchases.

The statement on page 457 indicates the coffee position up to May, 1918. The table indicates that of a total crop of 17,000,000 bags, about 13 million actually came to market; of this quantity somewhat more than 7 million bags were exported, leaving the enormous quantity of 5,939,291 bags of the 1917-18 crop, and 1,100,000 bags of the 1916-17 crop - a total of virtually 7,000,000 bags, or as much as the total 1917-18 exports in storage in Brazil and unable to find an outlet. The state of São Paulo, it is seen, was itself holding almost 2,800,000 bags, or almost 40 per cent of the total amount in storage.

1 I. e., 4 milreis, 900 reis.

THE COFFEE POSITION, 1917-18 CROP1

In hands of São Paulo government, April 30, 1918.....
In hands of commissarios and exporters, inclusive of 600,000

Bags 2,788,875

The fact is that the supply of Brazilian coffee was hopelessly in excess of the demand. The result was that in spite of the large purchases by the government, the price of coffee in Brazil went steadily downward. Meantime, as a result of rising freight and insurance rates (which are, moreover, additional causes of the diminution of exports) foreign coffee prices rose. The following table shows the price of Brazilian coffee in London and in Santos for the period 1911-18:

1 Data on the "coffee position" and on prices from Wileman's Brazilian Review for May and June, 1918.

By midsummer of 1918 the purchases of coffee by the state of São Paulo amounted to 4,500,000 bags. The congestion was further relieved by an arrangement made with the French government by which 2,000,000 were purchased on behalf of France. The 191819 crop, at first estimated at 10,500,000 to 12,000,000 bags, was considerably reduced by a severe frost in São Paulo on July 9, 1918. See Fielding Provost, "The Brazilian Coffee Situation," Pan American Magazine, September, 1918, pp. 225 et seq. On September 6, 1918 there were 6,351,000 bags of coffee on hand in Santos and 884,000 in Rio de Janeiro, as compared with 2,825,000 bags in both places combined on the same date in 1917. Bulletin of the Pan American Union, October, 1918, p. 604.