47$ AGRICULTURAL ECONOMICS 



benefit. This benefit was not, however, equal to the excess of price 

 over the market price, for a large part of the surtax on export must 

 be deducted. 



Other planters suffered to the extent of all that portion of the 

 surtax which they were unable to shift, but, on the other hand, they, 

 in common with all sellers, profited by the steadying of prices due to 

 government purchases. The enormous crop of 1906-7 would unques- 

 tionably have demoralized prices, had not the state, or someone else, 

 undertaken to hold the surplus. From whatever beneficial effect thus 

 produced, must, however, be deducted the loss occasioned by the pre- 

 vention of reactionary rise in price such as had always before followed 

 periods of depression. The government's policy of giving preference 

 in its purchases to the better grades of coffee stimulated efforts, 

 already begun, to introduce improved methods. 



The disposal of the surplus stock without too great disturbance 

 to the market, yet rapidly enough to prevent deterioration or dis- 

 proportionate storage and other charges, and the promise of the state 

 government to restrict exportation in spite of increasing crops, present 

 problems still full of menace to the industry. The placing of an 

 import duty on coffee by the United States would ease the financial 

 situation considerably by enabling the trustees to dispose of their 

 accumulations in this country at a profit, but it would only increase 

 the difficulties of the planters and the Sao Paulo government. 



The whole experience serves to emphasize the dangers of govern- 

 ment interference with industry. The state of Sao Paulo came to 

 the rescue of its planters in a situation which the latter had created 

 by their own shortsightedness. Possibly such action may be partly 

 justified in view of the vast importance to the state of that particular 

 industry. , Possibly, too, it may be said to have been partly successful, 

 provided the problems still remaining be solved without further dis- 

 aster. Yet, even if partly successful, it has been so only at large 

 direct loss to the state government, and serious impairment of its 

 credit, and has encouraged producers to rely on government aid rather 

 than their own efforts. It is safe to say that the coffee industry will 

 not resume a normal and thoroughly satisfactory condition until the 

 planters resolve to stand on their own feet. This will involve the 

 introduction of better methods all along the line, the closer watching 

 of the costs of production, willingness to accept low profits compared 

 with those of ten and fifteen years ago, and the elimination of the 

 weaker producers. 



