VALORIZATION IN BRAZIL 235 



York was represented by Mr. Herman Sielcken; also that when 

 the purchase of coffee began for the State of Sao Paulo, August 

 20, 1906, among the large firms through whom the purchases 

 were made was Grossman and Sielcken of New York City, a 

 partnership composed of George W. Grossman and Herman 

 Sielcken. The expenses of valorization came in for a great deal 

 of criticism. The bonds for the first 3,000,000 loan were to run 

 3, 4, 5, and 6 years, and bear five per cent interest, but yet they 

 were sold at 93. The discount amounts to $1,016,400. The bonds 

 were in fact paid off within three years, the interest thereon 

 amounting to about $2,178,000. In addition to this the bankers 

 received 1 per cent upon the face value of the bonds, and also 

 one per cent upon the interest paid, which amounted to about 

 $167,000, and they were also paid 1 Y per cent, or about $181,500 

 for stamps, taxes, and other expenses. Hence the total cost of 

 this loan of $14,520,000 was about $3,542,000, or more than 

 24 per cent. 



The bonds for the 15,000,000 ($72,600,000) were to run 10 

 years at five per cent interest, and were sold at a discount of 15 

 per cent, which was a loss to the State of $10,890,000. According 

 to the report of the Sao Paulo minister of finance, dated September 

 10, 1910, these loans up to that date had already cost the State 

 in expenses and charges of various kinds, in difference of types of 

 various loans (discounts), freights, insurances, buying and selling 

 commissions, interest on advances, warehousing charges, collec- 

 tion and remittance fees, and other expenses in connection with 

 State-owned coffee $52,591,976 in gold. This meant a cost of 

 3}^ cents a pound in administrative expenses for all the coffee 

 purchased by the Government. The Government could much 

 more cheaply have paid a direct bounty to the producers provided 

 that coffee sank below a reasonable price. 



The marketing of the 10,000,000 bags of coffee withdrawn 

 from the market was left to a committee of the bankers. The 

 government of Sao Paulo obligated itself to offer for sale through 

 this committee at public auction or by sealed proposals, at the 

 price of the day, 500,000 bags in 1909; 600,000 bags in 1910; 700,000 

 bags in 1911; and 700,000 bags in each succeeding year. The 

 government conceded to the committee full and irrevocable power 

 to determine the times of sale, the minimum obligatory quantities 

 mentioned, the markets in which to sell, to make the sales in the 

 name of the government, and exercise control over the transac- 

 tions. The Committee was to be paid 1 per cent upon the net 



