Uncommon Grounds: The History of Coffee and How It Transformed Our World

by Mark Pendergrast

  Unfortunately, this competitive spirit did not always work to the benefit of the public. Some U.S. manufacturers produced fake whole coffee beans made from rye flour, glucose, and water. “Sometimes the retailer is deceived,” a contemporary Scientific American article noted, “but nine times out of ten he is the one who introduced adulteration. The ground article is very easily produced in the proper color, and an aroma is infused by using strong decoctions of coffee essence.” The sale of coffee essence itself was usually a con job, made with blackstrap molasses, chicory, and perhaps a dash of genuine coffee extract.

  “The adulterations of coffee are so great,” groused one 1872 consumer, “that pure coffee is rarely to be had except in private families where the head of the house attends in person to the preparation of the precious cup.” Three years later a letter in the New York Times complained, “In this City, veritable coffee has become almost extinct.” In his classic Coffee: From Plantation to Cup, Francis Thurber observed, “The adulteration of coffee and the vast scale on which it is practiced, are well-known facts,” which is one reason he suggested each family grind its own beans. Unlike Burns, Thurber despised chicory and repeated with relish the story of a coffee lover who asked at a restaurant, “Have you any chicory?”

  “Yes, sir.”

  “Bring me some.” After the waiter brought a small can of chicory the guest asked, “Is that all you have?”

  “We have a little more.”

  “Bring me the rest.” The waiter brought another can.

  “You have no more?”

  “No, sir.”

  “Very well. Now go and make me a cup of coffee.”20

  Chicory was not the only coffee additive. The list of coffee adulterants indeed is amazing: almonds, arrowhead, asparagus seeds and stalks, baked horse liver, barberries, barley, beechmast, beetroot, box seeds, bracken, bran, bread crusts, brewery waste, brick dust, burnt rags, burrs, carob beans, carrot, chickpeas, chicory, chrysanthemum seeds, coal ashes, cocoa shells, comfrey roots, cranberries, currants, dahlia tubers, dandelion roots, date seeds, dirt, dog biscuits, elderberries, figs, gherkins, gooseberries, haws, hips, holly berries, horse chestnuts, Jerusalem artichokes, juniper berries, kola nuts, lentils, linseed, lupine, malt, mesquite, monkey nuts, mulberries, parsnips, pea hulls, pumpkin seeds, quaker-grass roots, rice, rowan berries, rutabaga, sand, sassafras, sawdust, sloes, sunflower seeds, turnips, vetch, wheat, whey, wood chips—and more. Even used coffee grounds were employed to adulterate coffee.

  At least none of those myriad items would kill anyone, unlike some of the coloring agents applied to beans. “Very dangerous powders or mixtures are used to color the beans,” Thurber noted, “the practice being resorted to in order to meet the prejudices of consumers in certain sections for a bright yellow, black, or olive-green colored bean.” An 1884 headline in the New York Times blared, “POISON IN EVERY CUP OF COFFEE.” An investigation revealed that Guatemalan and Venezuelan coffee had been “taken to two mills in Brooklyn, and had there been treated with coloring matter, so as to make them resemble Government Java. This deception has been going on for years.” The coloring matter contained arsenic and lead. “A careful analysis led to the conclusion that every cup of coffee made from the colored beans, which are put upon the market as Java, contains one-sixtieth of a grain of arsenious acid, which is a virulent poison.” Rio coffee was also polished and colored to produce a handsome green rather than a dull gray. Chemists asserted that “it requires an almost white heat to destroy the arsenic, but even then the lead will still remain.”

  John Arbuckle, always ready to take advantage of a competitor, printed an Ariosa ad in which the text read: “Help us drive out of the market the poisonous Coffees that are now being so largely sold; 3,000,000 pounds of Coffee have been colored during the past year with Arsenic, Venetian-Blue, Chrome-Yellow and other ingredients.”

  The swift rise of Brazilian coffee explains the popularity of the poisonous coloring. Owing to Brazil’s climate and soil conditions, its beans produced inferior coffee to the traditional Java and Mocha, and sold at a considerable discount. Consequently many retailers passed off beans from Brazil or other parts of Latin America as coming from Yemen or Indonesia, particularly Old Government Java, which referred to coffee held in go-downs, or storehouses, by the Dutch government for seven years or longer. During this process coffee beans age, mellow, and turn a shade of brown. This coffee, like fine old wine, commanded a premium price and was worth imitating.21

  The Indispensable Beverage

  By the 1870s, according to Robert Hewitt Jr., coffee had become “an indispensable beverage” to citizens of the Western world—especially to Americans, who consumed six times as much as most Europeans. In his 1872 book Coffee: Its History, Cultivation, and Uses, Hewitt added that “there is scarcely any other item of commerce that has made more rapid progress in the world, or gained for itself more general acceptation with all classes.” As a Harper’s commentator put it in the same year, “The proud son of the highest civilization can no longer live happily without coffee. . . . The whole social life of many nations is based upon the insignificant bean; it is an essential element in the vast commerce of great nations.” The coffee industry had become Big Business, as Thurber observed in 1881:

  After leaving the plantation and before reaching the consumer, it has paid tribute to the transporter, to the shipping bankers of that country; to the ships which carry it abroad; the custom-houses of importing countries, to their stevedores, storage warehouses, insurance companies, and bankers; to the brokers who sample and sell it, the weighers who weigh it, and the wholesale merchants who buy it. Then comes its cartage or lighterage, its roasting and sale to retail merchants, and its transportation to the point where it is finally distributed and consumed. Twelve hundred millions of pounds of coffee annually pass through this routine, and probably a hundred millions of people, besides the consumers, are directly or indirectly benefited. Factories have been brought into existence to manufacture the machinery required in the cultivation and preparation of this staple; great mills work throughout the whole year on the bagging required for the packages; warehouses worth millions have been provided for its storage; mighty fleets of vessels are created and maintained for its carriage on the sea, and railroads for its transportation on land.

  By 1876 the United States was importing 340 million pounds of coffee annually, accounting for nearly a third of all coffee exported from producing countries. Of all the coffee consumed in the United States, nearly three-quarters came from Brazil, where coffee had not even been a meaningful export crop two generations earlier. As the steady flow of Brazilian beans became a flood, three powerful American coffee barons—known as the Trinity—struggled to maintain their lucrative domination of the market.

  4

  The Great Coffee Wars of the Gilded Age

  Speculation seeks to discount the future in hope of much and rapid gain, and strengthens the popular tendency to wrestle with scarcely calculable forces, and to enter blindly upon ventures in which rational foresight sees but little hope of eventual good.

  —Richard Wheatley, “The Coffee Exchange of the City of New York” (1891)

  The coffee market has always been volatile. Rumors of Brazilian frosts cause price hikes, while surprisingly large harvests produce dreadful declines, along with misery for farmers and laborers. Market forces, complicated by nature and human greed, have resulted in extended cycles of boom and bust. Since coffee trees take four or five years to mature, the general pattern has been for plantation owners to clear new lands and plant more trees during times of rising prices. Then, when supply exceeds demand and prices fall, the farmers are stuck with too much coffee. Unlike wheat or corn, coffee grows on a perennial plant, and a coffee farm involves a major commitment of capital that cannot easily be switched to another crop. Thus, for another few years, a glut ensues. All of this is complicated by the effects of plant disease, war, political upheaval, and attempts to manipulate the market.


  As the coffee industry boomed during the 1870s, large importing firms made huge profits, but at substantial risk. One syndicate of U.S. importers dominated the coffee scene, comprising three firms known as the Trinity: B. G. Arnold and Bowie Dash & Company of New York, and O. G. Kimball & Company of Boston. It was headed by B. G. Arnold, known as “the Napoleon of the Coffee Trade,” described by one trade insider as “a born trader, a fighter, commercial wizard, an experienced merchant in politics, weather and geography.” For ten years, according to a contemporary, Arnold had “ruled the coffee market of this country as absolutely as any hereditary monarch controls his kingdom.”

  The firm of R. G. Dun assessed business credit risk during the Gilded Age, and its agent’s annotations on Arnold’s firm tell their own story:Jan. 6, 1872: Concern is said to have made fully a million during the past year, having a monopoly of the coffee trade. . . . Their business is mainly speculative.

  June 5, 1875: Estimated worth at least 1.5 million dollars. In the long run have made a large amount of money in their coffee operations. Occasionally the market will go against them but it is more than made up by after rise.

  Then, in 1878, it became clear that the Brazilian state of São Paulo was going to flood the market with coffee. The Trinity struggled to maintain its stranglehold on the market, but the tide had turned. Two years later the Dun agent wrote:Nov. 20, 1880: The firm are known to have lost heavily lately, yet they are not seriously affected.

  The syndicate of B. G. Arnold, Bowie Dash, and O. G. Kimball had artificially held up the price of Java coffee for many years. As vast amounts of Brazilian beans began to flood the market, the Trinity increasingly had difficulty holding so much of the available stock that its members could demand favorable prices. Whereas they had heretofore specialized in quality Java beans, they now began to buy Brazilian beans in a desperate bid to boost prices. In October one coffee importer failed, but it was known to be overextended. On November 25 a tea importing firm went bankrupt. Front Street (shorthand for the coffee district) tensed for the next blow.

  A Coffee Suicide?

  On Saturday, December 4, 1880, O. G. Kimball died in Boston. Only forty-two, Kimball had no known health problems. He played cards on the Saturday night of his death, making “a great effort to appear unusually cheerful,” according to a friend. He retired before his wife at 10:00 P.M. She found him dead on his bed an hour later. “The fact that his death practically dissolved his firm caused considerable uneasiness among his creditors to learn the exact condition of his affairs,” wrote a New York Times reporter on December 8. “It also inflicted a blow to the credit of B. G. Arnold & Co.” The newspaper that day attributed the death to “congestion of the lungs” but added that “his death was hastened by the anxiety and reverses of the past few months.”

  Rumors of suicide flew on the street—though Kimball’s friends denied that he would have done away with himself. Regardless, his death spelled the end for his two cohorts in the Trinity.

  On December 8 the New York Journal of Commerce reported on the suspension of B. G. Arnold & Company. “At first the report was not credited,” the reporter wrote, “as the house had always borne the highest reputation for financial stability, and its dealings have been on a gigantic scale. But about noon the announcement was officially made.” Later it came out that the firm was left owing over $2 million.

  The following day, “there was no attempt to do business, everyone being suspicious of his neighbor,” recalled Abram Wakeman, a veteran coffee man. Two days later Bowie Dash & Company suspended business transactions, with liabilities of $1.4 million. The losses for coffee amounted to nearly $7 million in 1880, with $3 million more lost the following year. “The history of the trade for the twelve months [of 1880] is a record of loss and disaster such as never was experienced before in the coffee trade in the United States,” observed Francis Thurber.

  Creating the Coffee Exchange: No Panacea

  Some who had been worst hit by the ruinous 1880 collapse decided to begin a coffee exchange. Though complex in execution, a coffee exchange is a simple concept. A buyer contracts with a seller to purchase a certain number of bags at a specified time in the future. As time goes by, the value of the contract changes, depending on market factors. Most real coffee men would use the contracts as hedges against price changes, while speculators would provide the necessary liquidity, since every contract requires a willing buyer and seller. Though a speculator may profit, he also may lose his shirt. Essentially he provides a form of price risk insurance for coffee dealers.

  “It was contended,” recalled Abram Wakeman, “that had there been an Exchange . . . the crash would not have taken place. Also, roasters wishing to have a certain price to figure on could, by buying futures, tell just what the coffee would cost.” Besides, it would be good for New York, concentrating the trade there. The exchange could arbitrate disputes and police the growing trade abuses. Those in favor of a new coffee exchange also argued that, with fixed standards for grades of coffee, outsiders and bankers would take an interest in coffee, carrying additional quantities that would help the market.

  Others argued against a coffee exchange, predicting that speculators would push out real coffee men—a charge that has since been repeated many times. Nevertheless, the exchange was duly incorporated on December 7, 1881, exactly a year after B. G. Arnold & Company had gone bankrupt. Benjamin Arnold was one of the incorporators and became the first president. For quite some time no one trusted the exchange, which became “the laughing stock of the trade, very little business being done,” as Wakeman recalled. Eventually, however, it became a frenzied scene of buyers, sellers, and speculators yelling and screaming at one another in the pit. Rather than discouraging attempts to corner the market, however, the exchange only added new wrinkles to the power play, as the ticker tape became the heart-stopping center of attention, spitting out price symbols.

  A great boom occurred in 1886-1887, for instance, on news of a Brazilian crop failure. Several large houses in Brazil, Europe, New Orleans, Chicago, and New York—led by Tammany boss Joseph J. O’Donohue—joined forces to bull the market (artificially raise prices by purchasing stock or future contracts) up to a target of 25 cents a pound for December options. O’Donohue took his profits at 17.5 cents by selling his position, but a Brazilian bull syndicate, represented by B. G. Arnold, continued to boom the market up, with December futures closing above 21 cents in June 1887. On Monday, June 13, hundreds flocked to the exchange to witness “the slaughter of the bulls,” as the December option price plummeted to 16 cents.

  “Collapse was inevitable and precipitated panic,” wrote contemporary journalist Richard Wheatley. “Immense quantities of coffee were thrown overboard by holders unable longer to carry them.” The bears themselves came to the rescue, however, buying huge amounts of cheap coffee. Tammany boss O’Donohue joined with Hermann Sielcken, of W. H. Crossman & Brother, and bought 100,000 bags at declining prices. For this they were “loudly cheered for their bravery.” Of course they also made money on both ends of the market swing. Sielcken, a brilliant German immigrant, would soon become a major force within the coffee world—feared, respected, and loathed by many in the trade. At this point, however, Sielcken was the hero who saved the market, bidding the price back up to 17 cents.

  The Most Speculative Business in the World

  By century’s end, technology had made worldwide communication virtually instantaneous. Coffee exchanges in major European ports corresponded rapidly with New York. “Silently the submarine cable ticks off the news that supple fingers chalk and print of steamers leaving Rio and Santos on certain days, and with what cargoes,” wrote Richard Wheatley in 1891. Traders could ascertain the stocks of coffee at eight principal European ports in each month of the past two business years. “These facts and conditions, comparisons and symptoms, of the world’s commerce in coffee daily, weekly, and yearly, are under the eye of the broker,” Wheatley continued, “and guide his judgment in the cont
racts made so explosively on the floor of the Exchange.” Despite such sophistication—or perhaps due to it—speculation and attempts to outguess or corner the coffee market continued unabated.

  In ensuing years the coffee drama repeated itself many times, with rumors of over- or underproduction, war, disease, and manipulation. With the era of larger and larger Brazilian crops, especially since 1894, prices dropped for several years, down to 4.25 cents a pound for Brazilian beans in November 1898. In 1899 Brazil was quarantined due to a serious outbreak of bubonic plague. Turning bullish, the coffee men, rejoicing in the sorrows of others, called it the “bubonic plague boom,” as coffee advanced (temporarily) to 8.25 cents.

  John Arbuckle, the coffee magnate, took the stand to testify in an antitrust case in 1897: “There will be a failure of the crops . . . in Brazil, and the price will run way up; they will have a big crop and it goes way down; the fact is, since I have been in the business here, since 1870, nineteen or twenty of the men have failed on that account. . . . There appears to be no help for it; coffee is the most speculative business in the world.”

  In 1904 novelist Cyrus Townsend Brady penned The Corner in Coffee, a melodramatic tale of love, betrayal, bears, bulls, and coffee speculation. He conducted research by interviewing coffee dealers, brokers, and members of the Coffee Exchange. “I acquired enough information about speculation in coffee to cause me to make a solemn resolution never to touch it except as a beverage,” Brady wryly noted in his preface. In the book the original mastermind behind a coffee corner reverses himself to save his girlfriend’s money. He helps to break it in the most dramatic scene of the book:The corner was breaking, it was broken!