by H. E. Jacob
In 1888, an ill-conceived attempt to raise prices glutted Havre with supplies of coffee. Catastrophe was imminent. To avoid disaster, the bulls tried to enlist the aid of capital from elsewhere. The attempt took the form of trading in “futures.” This helped the speculators, with the aid of extraneous capital, to avoid having to unload their stocks of coffee at knock-down prices; but the result further showed that capital thus used was strong enough to distribute the produce of the harvest quietly and equably throughout the ensuing year.
The introduction of dealing in futures in the coffee trade was natural enough. Coffee, though used in much the same quantities throughout the year, is marketed in vast amounts at a particular season when the staple has been produced in distant lands. The function of commerce is to bridge differences in time and space. Capital could not fulfil this important function without the aid of the “time-bargain,” as dealing futures is sometimes called. The capital invested in time-bargains renders possible a coalescence of the funds of numerous gamblers who are not genuine traders, in the sense of performing some function in relation to the commodity, but wish only to earn profits. One who enters into a time-bargain contracts to sell stocks, shares, or a commodity such as coffee, for a stipulated price at a future time. But the speculator is not interested in a genuine deal with the commodity in question. He does not aspire to handle coffee, not being a real merchant; he wants only to earn a profit from his contract when the term expires—or before. He hopes to gain out of the difference between the price at which he has agreed to sell months ahead and the price which now rules in the market.
German merchants were slow to follow the example set them by Havre. But the Hamburg exchange had to introduce trading in futures when it saw, year after year, all the capital available for trading or speculation in coffee flow away to Havre.
Time-bargains were, indeed, originally devised, not to promote speculation, but to hinder it. With their aid, a prudent merchant could ensure himself against the risk to which he was exposed from future fluctuations in prices. These prices were unknown. By covering purchases or sales in the futures market, by “hedging” in fact, he was able to safeguard his position. But who were his partners in this matter? Speculators, of course! Since these speculators absolved the merchant from risk, they quickly gained control of the market.
Thus, very soon after the introduction of time-bargains into the Hamburg produce exchange, excesses of speculation ensued. There was an unhealthy swing of prices from high to low and from low back to high again, so that ten times as much “paper coffee” changed hands as there was coffee actually produced. That was in the year 1888, when sixty-one million sacks of coffee were bought and sold in seven futures markets, although the harvest amounted to only six million sacks. Gaming-houses where roulette was played had been closed, but people could gamble as much as they liked in time-bargains. What distinguished the time-bargain market from the gaming-house was that in the former the lowest possible stake was five hundred sacks of coffee, and that one could gamble without staking anything in hard cash.
It was no longer the traditional oscillation of the balance between supply and demand that now led to fluctuations in the price of coffee. These latter were determined by the shrewdness and the boldness of rival groups, the bulls and the bears.
“Overseas harvests and speculation,” writes Hans Roth, “affect the movements of the world markets as the winds affect the waves of the sea. Crests and depressions follow each other in a perpetual rhythm. Only when the wind blows against the current of the waters are the big waves broken up into the little ones of a choppy sea. If, on the other hand, the wind and the current are in the same direction, the waves grow higher. When the wind rises to a storm, the waves grow mountains high, and break at their crests. There you have an image of the contest between the bulls and the bears, of the great battles in the exchange. The wreckage after the storm takes the form of bankruptcies and repudiation of contracts.”
These kinds of storms, however, are seen only at or near the surface. The consumer, dwelling at peace in the depths, knows nothing of this turmoil on the surface. Were it otherwise, the consumption of coffee would soon come to an end.
Genuine wholesale dealers within any country are influenced only to a moderate extent by wild fluctuations in the produce exchange. There are other factors besides the price in the world market that determine the wholesale price of coffee in England, Germany, or France. Freightage, customs dues, and other overhead charges do not vary with the fluctuations in the original price of coffee, or at any rate they vary less extensively and swiftly, and the extent of the fluctuations is thereby damped down.
Besides, the trader must not expect too much from the consumer. The majority of petty buyers want to go on buying the kinds of coffee with which they are familiar and to buy them at the accustomed prices. To the unskilled eye, all coffees are alike, so the purchaser regards the price of a coffee as a measure and a guarantee of quality. The individual purchaser reacts against a rise in price by restricting his personal consumption. That is only natural. Oddly enough, however, he is also estranged by a fall in the price of coffee, if that fall affects only certain varieties of coffee, and not coffee in general. “Why is coffee cheaper?” you may hear him ask, with suspicion in his voice. Even when a low price is due to exceptionally large harvests or to other conditions affecting the world market, it is difficult to persuade the purchaser that anything but a decline in quality can account for a decline in price. The retail price must remain stable, if the retailer is to dispose of his stock successfully. The price at which he has bought will differ to a varying degree from the price at which he sells, since the price at which he buys depends upon vacillating conditions in the world market. The larger the difference between purchasing and selling price, the better for the dealer. At times, however, this difference becomes smaller and smaller, until at length the retail trader cannot make any profit. To help himself out of the difficulty, he sells inferior kinds of coffee at the old price. Of course the purchaser must not know anything about this. The retailer’s art lies in a skilful blending which will deceive the consumer’s palate.
The retailer must also tickle his customers’ imagination. He will give his blends of coffee fancy names, which in most cases have nothing to do with the origin of the coffee that is being sold, or with its accepted destination in the trade. Most of the purchasers are women, and they are attracted by pretty names. To call a blend “pearl coffee” may tickle their fancy so much as to make them willing to pay a higher price.
The name “mocha” has a wonder-working influence. Arabia cannot produce nearly as much mocha as the public demands. Brazil has here come to the coffee-merchant’s aid. During the rainy season, coffee is shipped on old-style windjammers to Arabia, by the longest route, round the Cape of Good Hope. It reaches port as wet as a soaked sponge. The damp and the long voyage have spoiled its aroma. Doctored and dried under the Arabian sun, and rechristened with the money-making name of mocha, it is now shipped on steamers to be sold in the great markets of the West.
We are coming to the realm of jests and anecdotes. Of course coffee can be as sophisticated as wine. Even if the history of the coffee-trade were not fully known, one could guess as much. There are, indeed, as many jokes about humbugging with coffee as there are about the spurious labels on wine-bottles.
One of the greatest revolutions in the coffee-trade occurred in 1906, when a caffeine-free coffee was put on the market. What do we mean by “caffeine-free” coffee? Since, in the seventeenth century, coffee helped to wean the English from drunkenness, and the movement spread from England to Germany, Scandinavia, and the rest of northern Europe, coffee has often been styled “the puritans’ drink.” The enemies of wine, beer, spirits, and intoxicating beverages generally, had armed themselves with this puritans’ decoction.
Now, persistence as well as seriousness are characteristic of the puritan temperament. The waves of puritan thought flowed on. It was only natural t
hat what had led the puritans, aided by coffee, to carry on a campaign against alcohol, should further lead them to attack the excessive craving of human beings for caffeine.
The self-composed epitaph, attributed by some to Balzac, and by others to Voltaire, “He lived and he died through thirty thousand cups of coffee,” though penned in jest, gave many people cause to think. Did the writer mean that coffee was a slow poison? Might it not be that the enormous expenditure of energy demanded by the new times, multiplying achievement, simultaneously cut short the life of the individual? Was not this tropical luxuriance of achievement, with a reduced duration of life, symbolized by caffeine?
During the first years of the twentieth century many began to entertain such thoughts. The friends of coffee tried to reassure doubters by reminding them of Fontenelle, a great consumer of coffee, who lived until he almost became a centenarian. But Fontenelle, said the objectors, had been an exception. The escape of one individual from the deleterious effects of coffee could not guarantee the harmlessness of the beverage for ordinary persons. In any case, far more coffee than ever was now being drunk as a spur to flagging energies. Doctors were almost unanimous in their condemnation of the speeding-up of modern life. Whereas those who died prematurely in former days had often died as victims of beer, wine, opium, or tobacco, in the twentieth century, despite its wonderful achievements, there were manifest the stigmata of nervous insomnia, palpitation, restlessness—in a word, pandemic signs of coffee-poisoning.
Superadded to these considerations was the desire that everything men did should be done by their own unaided powers. It was regarded by many, on general principles, as inadvisable that mental activity should be stimulated by drugs. Just as, at all times, there have been persons who demanded “intoxication without wine,” so now there were persons who demanded “wakefulness without caffeine.” The supply of coffee-substitutes, which began during the Seven Years War, reached its climax in Germany at the opening of the twentieth century. Those who could not afford to buy genuine coffee bought and drank the word coffee at least—“coffee” preceded by another word linked to “coffee” with a hyphen—some such word as “wheat,” “chicory,” “malt,” “acorn,” or “fig.” Generally speaking, the second component of this hyphened word was a phantom. The “coffee” element in the “acorn-coffee,” etc., was non-existent.
One point, however, becomes plain to those who study economic psychology. If it be possible to sell to millions a coffee which is not coffee at all and which is devoid of the stimulant trimethyldioxypurin, this must be because there is a growing repugnance to the stimulating effect of caffeine. The recognition of the fact guided the work now undertaken by a young merchant of Bremen, Ludwig Roselius by name. His attitude towards coffee was twofold. Being an honest trader, he did not wish to sell as “coffee” something that was not coffee. On the other hand, for personal reasons, he was an enemy of coffee. His father, a coffee-taster by profession, had died prematurely, and Ludwig ascribed the death to coffee-poisoning. As a safeguard against overdosage with caffeine, coffee-tasters and tea-tasters spit out the fluid when they have tasted it; but, willy-nilly, they are likely to swallow a little, and persons who are exceptionally sensitive to caffeine have sometimes to abandon the profession. Ludwig Roselius’ belief that his father had died from coffee-poisoning led him to study the possible deleterious effects of coffee in other persons—perhaps as the result of a fairly common idiosyncrasy. He came to regard coffee as one of the causes of heart trouble, gout, and, arteriosclerosis. In diabetes and liver troubles, doctors have long been accustomed to forbid the use of coffee. There can be no question that various ailments, major and minor, have become more common since the middle of the nineteenth century, when a great increase in the consumption of coffee began.
Influenced by these considerations, young Roselius set to work, with the characteristic German perseverance, upon an investigation which was to lead to great results. He wanted to produce a caffeine-free coffee. It was to be genuine coffee, with the aroma and other agreeable qualities preserved, but to be free from the trimethyldioxypurin which is dangerous to the continually growing number of neurotics.
Sufferers from coffee were to be relieved of their troubles without any decline in the consumption of coffee. Those who had abandoned coffee in favour of substitutes were to be recalled to the use of the Arabian berry. No one, henceforward, was to be compelled to renounce the enjoyment of coffee, or to adopt an ascetic life for reasons of health, or forced to accept an unsatisfactory substitute. Roselius was convinced that if he could produce a caffeine-free coffee, this new coffee would no longer be frowned upon by medical opponents of the ordinary beverage.
When, in the year 1820, Goethe sent Ferdinand Runge, the analytical chemist of Jena, a boxful of coffee-beans, the poet was giving away something for which he had no use. To the Dionysiac son of the antique world, the Black Apollo who was the spirit of coffee seemed repugnant. Goethe, as a lover of good wine, wrote several diatribes against coffee. Perhaps the most unwarranted of these is to be found in his last letter to Frau von Stein, under date June 1, 1789, in which he ascribes the loving woman’s distresses and reproaches to insomnia produced by coffee. When, thirty years later, Goethe sent a supply of coffee-beans to a chemist, it was certainly not done that Runge might have coffee to drink, but in the hope that his friend would analyse the beans. In actual fact, Runge discovered the demon that lurked in them; he was the first to extract caffeine from coffee.
This analytical feat caused considerable excitement in the early part of the nineteenth century. First of all for pharmaceutical reasons. Caffeine, the purified drug, was now made available for prescribers and was stored by apothecaries. The solution of the industrial problem, as far as coffee-salesmen were concerned, was reserved for a considerably later date. How could caffeine be extracted from coffee-beans without destroying the other qualities that made it possible to prepare an agreeable beverage from these beans? That was what Ludwig Roselius set himself to discover.
His new process for the extraction of caffeine from coffee produced the alkaloid in such large quantities that its price, which before the war was thirty-six marks per kilogram, has now fallen to six marks. But Roselius was even more interested in the other aspects of his process; the decaffeinized coffee was still coffee. That was the result he achieved after lengthy and laborious investigation.
Roselius set out from the fundamental experience that the taste and aroma of coffee are developed while the bean is being roasted. He therefore extracted the caffeine from unroasted beans. Since the grinding of raw beans is difficult, and since they have a very hard shell, he subjected them to a preliminary treatment, a “disintegrating process.” By this the cells were opened. He exposed the beans to superheated steam, which was acid or alkaline as their quality varied. When, after this preliminary treatment, the beans were subjected to the action of solvents of caffeine, about twenty-nine parts in thirty of the caffeine could be extracted without simultaneously extracting the aromatic substances in the beans.
Thereafter, they could be roasted in the usual manner to develop their aroma.
In the year 1906, Ludwig Roselius founded a joint-stock company to work his patents, with the result that by the year 1912, Bremen came near to challenge Hamburg as a centre of the coffee trade. From the Bremen factory a lively propaganda has gone forth throughout the world in favour of the use of caffeine-free coffee.
BOOK FIVE
Brazilian Dictatorship
21
Soil, Empire, and the Labour Problem
THE historian of coffee will, down to 1850, be chiefly concerned with consumers. But from the middle of the nineteenth century onwards, production was so mightily increased, and the problem of the coffee-growing lands became so serious, that our attention is perforce directed towards producers.
By 1850, the building of railways had made the Old World wellnigh uniform. There might still be differences in the way in which coffee was drunk in Palermo
and in Stockholm. These differences, however, were unimportant. The decisive fact in the history of coffee is that, during the middle of the nineteenth century, this plant became synonymous with destiny for a whole continent.
In the story of coffee, the twentieth century—or, at any rate, the first third thereof—denotes the dictatorship of Brazil. Brazil is the largest state on the South American continent, comprising eighteen and a half millions of square kilometres, more than five and a half million square miles, sixteen times as large as France, and, as a dominion under one government, exceeded in size only by Russia, Canada, and China. In 1906 it produced as much as ninety-seven per cent of all the coffee grown throughout the world. The momentous result was the dictatorship of Brazil as a coffee-growing country; but in Brazil itself coffee was dictator. Coffee was master. Capricious as a volcano, a cyclone, or an earthquake, coffee was not wholly a blessing.
