VALORIZATION IN BRAZIL 237 



illegal and null and void; second, that defendant Herman Sielcken 

 be perpetually enjoined from further withholding from the market 

 the coffee held by him and stored in New York, and that he be 

 enjoined from selling the same on condition that the purchaser 

 will not resell same; third, that defendants be enjoined from parting 

 with the custody of said coffee except to deliver same to a receiver 

 of the court, to be sold by him; fourth, that a receiver be appointed 

 forthwith to take charge of said coffee. The brief, in this same 

 lawsuit, states: 



"The immediate effect of valorization was to withdraw from the natural 

 course of commerce more than 10,000,000 bags of coffee, and thus to reduce 

 the available supply and to increase its market price . . . Shortly thereafter 

 the prices began to rise and continued to rise although hi the season of 1909- 

 1910 the production exceeded the consumption by more than a million bags, 

 with the result that whereas' when the scheme of valorization was adopted, 

 Rio No. 7 was selling in New York at about 7^ cents per pound. It is now 

 (1912) selling at 14% cents per pound, an increase in price of nearly 100 per 

 cent. Within the last year, conditions have become especially acute, because 

 the consumption has exceeded the production, and hence the deficiency had 

 to be drawn from the supply already on hand, while a very large part of that 

 supply was and is in the hands of said committee, who were careful to sell 

 therefrom only in such quantities and in such a way as not to reduce the mar- 

 ket price. As a matter of fact said committee are masters of the coffee market. 

 They have under their control such a quantity of coffee, that by placing the 

 same upon the market the price of coffee would be greatly reduced, while 

 withholding it from the market maintains a price which is abnormally high 

 . . . The real intent and purpose of the valorization scheme was through a 

 restraint of the commerce in coffee between Brazil and other countries, includ- 

 ing the United States, by monopolizing the same to increase the price thereof 

 to the enrichment of those instigating the scheme. This fact is made manifest 

 by the amount of money realized by individuals therefrom and from the ex- 

 pense thereof directly to the State of Sao Paulo, but indirectly to the consumers 

 of coffee . . . These figures show that it was not for the welfare of the pro- 

 ducers that this valorization scheme was concocted and carried out . . ." 



The first aim of the scheme was to raise the price of coffee to 

 the producers. This was undoubtedly accomplished. However, 

 it is open to- debate whether the increase in price equaled the 

 increase in taxes required to finance the scheme and reward the 

 bankers. Under an agreement of August 6, 1906, the Sao Paulo 

 government obligated itself to create a " surtax" of 3 francs,. sub- 

 ject to increase or reduction, upon each bag of coffee exported. 

 The law of August 25, 1908, provided that an additional tax of 

 20 per cent ad valorem should be collected on all coffee exported 

 in excess of 9,000,000 bags for the first, 9,500,000 bags the second 

 year, and 10,000,000 bags each year thereafter. The 3 franc surtax 

 above was changed to 5 francs. In September, 1908, the 20 per 

 cent tax, was made 29 per cent. That this system of taxing was 

 unduly burdensome to the coffee trade was recognize'd by the Sao 



