On November 20, 1944, Brazil’s Eurico Penteado wrote an open letter to George Thierbach, the president of the National Coffee Association, which the Pan American Coffee Bureau ran as a paid advertisement in over eight hundred U.S. newspapers. Penteado explained that the ceiling price was still 5 percent below the average price of the previous thirty years. “This state of affairs is already resulting in the abandonment of millions and millions of coffee trees throughout Latin America,” he pointed out, the majority of which were Brazilian. São Paulo coffee production had declined to a third of its 1925 level. So had prices. Yet production costs had doubled. The Brazilian coffee-burning program, in which 78 million bags had gone up in smoke since 1931, finally had ended, and there was little surplus left.
The Central American growers were equally hard-pressed. “Workers now pay $14 for shoes that formerly sold for $4.50,” complained an El Salvador coffee grower. “Wages, already twice what they used to be, will have to go higher.” Yet these realities did not appear to concern the American consumer. “The U.S. does nothing but talk about 5-cent-a-cup coffee as being something unalterable.” The mild coffee-growing countries could not afford to ship their best coffee at OPA prices, so they began to send lower grades that had not been properly processed or sorted. Many growers withheld their crops entirely, waiting for better prices.
OPA turned a deaf ear to these anguished arguments—which is surprising, since Chester Bowles now headed the agency. Though he had made his fortune advertising Maxwell House, Bowles was now just another bureaucrat who apparently had lost his ability to write clear copy. “It is the view of this Government,” he intoned, “that its decision not to increase the maximum prices of green coffee is essential to the maintenance of price controls that are adequate to withstand the inflationary pressures with which this country is now faced.”
Bowles’s heartless words reflected in part an overall shift in the government’s attitude. Sumner Welles, the chief architect and promoter of the Good Neighbor Policy, had been forced from the State Department in 1943, and sympathetic Paul Daniels left the Coffee Board of the Inter-American Agreement shortly thereafter, replaced by Edward G. Cale, a functionary who worked against the coffee-growing countries even while serving on their board. As a former State Department man later recalled, “After the fall of France and during the dark days following Pearl Harbor, the United States had ardently courted Latin America.” Now, however, “we had next to no time for [its] problems.”
Even when the war ended in 1945, the price ceilings remained in place. With the Brazilian economy in crisis, longtime dictator Getúlio Vargas was forced to resign by a dissatisfied military on October 29, 1945.78 Though coffee prices were not directly responsible for the dictator’s ouster, they added to the public’s general discontent. During this crisis period, Brazil abolished its National Coffee Department and reduced its commitment to coffee advertising. Other members of the Pan American Coffee Bureau followed suit.
On October 17, 1946, OPA finally released its stranglehold and eliminated the price ceiling. “Liberated,” the single-word headline in the Tea & Coffee Trade Journal announced. The first free contract for Santos sold at 25 cents a pound. In following years the price would rise steadily along with inflation.
The Legacy of World War II
More than $4 billion in coffee beans were imported into the United States during World War II, accounting for nearly 10 percent of all imports. In 1946 U.S. annual per-capita consumption climbed to an astonishing 19.8 pounds, twice the figure in 1900. “Way down among Brazilians, coffee beans grow by the billions,” crooned Frank Sinatra, the new teen idol, “so they’ve got to find those extra cups to fill. They’ve got an awful lot of coffee in Brazil.” Moreover, according to the lyrics, in Brazil you couldn’t find “cherry soda” because “they’ve got to fill their quota” of coffee.
During the war the U.S. civilian population had limited access to soft drinks because sugar rationing curtailed the major ingredient in Coke and Pepsi. But the ever-resourceful carbonated giants still found ways to promote their drinks. Pepsi opened Servicemen’s Centers where soldiers could find free Pepsi, nickel hamburgers, and a shave, shower, and free pants pressing. But it was the Coca-Cola Company, through lobbying and insider contacts, that pulled off the major wartime coup: getting its drink recognized as an essential morale-booster for the troops. As such, Coke for military consumption was exempted from sugar rationing. Not only that, some Coca-Cola men were designated “technical observers” (T.O.s), outfitted in army uniforms, and sent overseas at government expense to set up bottling plants behind the lines. When a soldier got a bottled Coca-Cola in the trenches, it provided a compelling reminder of home, even more than a generic cup of coffee. “They clutch their Coke to their chest, run to their tent, and just look at it,” one soldier wrote from Italy. “No one has drunk theirs yet, for after you drink it, it’s gone.”
“The existing carbonated beverage industry is counting on an immediate 20 percent increase in volume just as soon as the war is over,” said coffee man Jacob Rosenthal in 1944, observing that teenagers overwhelmingly preferred Coke to coffee. “Today to some 30 million school age youngsters a drink means milk, cocoa, soda or coke. We suffer from . . . anti-coffee propaganda with the youngster market despite the fact that cola drinks, cocoa and chocolate have about as much caffeine as coffee when served with cream and sugar.” He urged coffee men to mount a campaign to match the soft drink appeal. “The fact is that as a group these adolescents like to think and act grown-up—and coffee is what the grown-ups drink.” So why not capitalize on that yearning for adult status?
Few coffee men were listening, and the baby boom generation, just then being born, would be devoted to Coke and Pepsi, while coffee itself would become increasingly poor in quality as companies used cheaper beans. A sad chapter in the coffee saga was about to begin.
PART THREE
BITTER BREWS
In this postwar diner, waitresses served up bottomless cups of weak coffee.
13
Coffee Witch Hunts and Instant Nongratification
Over second and third cups flow matters of high finance, high state, common gossip and low comedy. [Coffee] is a social binder, a warmer of tongues, a soberer of minds, a stimulant of wit, a foiler of sleep if you want it so. From roadside mugs to the classic demi-tasse, it is the perfect democrat.
—New York Times, November 14, 1949
There’s every sign that coffee will remain the country’s leading beverage forever.
—1952 Coffee Annual
By the end of World War II, American coffee had become a standardized product, a roasted ground blend, based largely on average Brazilian beans. All coffee tasted pretty much the same. Despite the much-touted virtues of vacuum cans, the preground coffee gradually staled while sitting on the shelf. As the food writer M. F. K. Fisher wrote in 1945, “It comes in uniform jars, which we buy loyally according to which radio program hires the best writers, so that whether the label is green or scarlet the contents are safely alike, safely middling.” And though the drip method was gaining in popularity, Americans came out of the war drinking weak, overextracted percolator coffee. “Our national taste,” wrote one coffee lover, “is still for pallid, grounds-specked, boiled slops.”
From this state of mediocrity coffee went from “safely middling” to awful within the next two decades. What happened? A confluence of economic, political, and technological factors joined to produce the bitter cup.
Guy Gillette’s Coffee Witch Hunt
Coffee prices climbed slowly but steadily after they were finally freed from price controls in 1946. By 1947 roasted coffee retailed for more than 50 cents a pound. The next year, when many restaurants began charging 7 cents a cup instead of a nickel, angry patrons broke mugs, stole silverware, and dumped cream and sugar on countertops in protest. Some coffee firms began to advertise that their brand required less grounds to brew a strong cup. One coffee man concluded facetiously that i
f prices continued to rise, “we may yet see coffee so strong you won’t have to use any at all to get a delicious aromatic, flavorsome cup.”
The price rise stemmed primarily from legitimate free-market forces of supply and demand. Brazil found itself without enough beans. The once-fertile São Paulo soil had lost its nutrients to coffee production, and the weakened trees were suffering from a broca (coffee bug) infestation. From its all-time high of 19.8 pounds just after the war, U.S. per-capita consumption fell slightly to 18.2 pounds in 1948, while European imports topped 7 million bags, aided by the Marshall Plan—still below the prewar 12 million-bag level, but significant and growing. To keep consumption up, the coffee growers boosted their self-imposed advertising tax from 2 cents to 10 cents to support the Pan American Coffee Bureau. Adventurous homesteaders, eager to capitalize on the pending coffee shortage, began to carve new fazendas out of the forest farther south in the Brazilian state of Paraná, but those new trees would take five years to begin producing.
In 1944 the Brazilians with great fanfare had donated 400,000 bags of green Santos beans to the U.S. military. Two years later the U.S. Army turned over 500,000 bags of “surplus” Brazilian coffee, along with 200,000 bags of Colombian beans, to the U.S. Department of Agriculture, which in turn sold them for an estimated $6 million profit. The Brazilian growers were infuriated. In 1948 the United States allowed the Inter-American Coffee Agreement to expire, and the group’s advisory capacity was transferred to a toothless Special Commission on Coffee under the auspices of the Organization of American States.
By fall 1949 Brazil’s surplus ran out just as a prolonged drought damaged the year’s flowering in August and September. By October 19 green bean prices had crept up to 34 cents. Then prices rocketed to 51 cents a pound by mid-November. Roasters boosted prices to around 80 cents a pound. At restaurants the nickel cup of coffee yielded to the dime. For the first time in history, world coffee imports cost over $1 billion.
Senator Guy Gillette, an Iowa Democrat and dairy farmer, directed his agricultural subcommittee to investigate coffee prices. Gillette stormed against the “manipulators” and “speculators” he held responsible for raising the price of coffee. His counsel, Paul Hadlick, interrogated witnesses with all the hostility of a murder prosecutor. Why had the price of coffee jumped so enormously in so short a time? “Could you explain,” Hadlick asked a General Foods representative, “why large Brazilian interests were buying coffee in New York?”
Speculative interests had helped to drive up the price, but a shortage of coffee was the fundamental reason for the price increase. Congressional witness Andrés Uribe, the New York representative of Colombia’s National Federation of Coffee Growers and chairman of the Pan American Coffee Bureau, explained the sudden price rise as a result of the “complacency” of the American trade, which never believed that the Brazilian stocks would run out. When they suddenly realized that the 1949 drought was real and that there were no surplus stocks, they panicked and began to buy. This resulted in a classic bull-market run for coffee, and as prices shot up, housewives began hoarding, creating an artificial scarcity.
“Latin Americans generally have been profoundly disturbed—even shocked,” Uribe told the committee, “that the national integrity of their countries has been impugned; that they have been accused of gouging; of defrauding the American consumer; of engaging in plots and cabals.” He pointed out that while U.S. consumers had paid over $2 billion for roasted or brewed coffee in 1949, only 38 percent of that money had gone to the Latin American producing countries. The majority of the profits had been taken by U.S. roasters, retailers, and restaurants.
“Gentlemen,” Uribe said, “when you are dealing with coffee, you are not dealing only with a commodity, a convenience. You are dealing with the lives of millions of people.” He paused for emphasis. “We in Latin America have a task before us which is staggering to the imagination—illiteracy to be eliminated, disease to be wiped out, good health to be restored, a sound program of nutrition to be worked out for millions of people. The key to all of this . . . is an equitable price for coffee.” Otherwise, he warned, “you cast these millions of persons loose to drift in a perilous sea of poverty and privation, subject to every chilling wind, every subversive blast.”79
His plea fell on deaf ears. On June 9, 1950, the Gillette Committee issued its official report, a scathing document so offensive that fourteen Latin American countries lodged an official protest. The American politicians blamed the shortage on Brazilian growers, whom they accused of withholding huge stocks. Gillette suggested that the U.S. government “scrutinize most carefully” any loans to coffee countries, while encouraging coffee growth outside Latin America. The report not only recommended sweeping alterations in established methods of the U.S. coffee trade, but also told Brazil and Colombia that they should change their monetary exchange rates. No further coffee should be purchased through the Marshall Plan, and furthermore, a U.S. Justice Department representative should attend future meetings of the Special Commission on Coffee—as if it needed legal watchdogging.
If the report’s recommendations were implemented, it would be “tantamount to the bankruptcy of the coffee producing industry,” said the Brazilian delegate to the Special Commission. A Rio newspaper called the report “a model of indelicacy, intimidation and revolting brutality.” Colombia’s foreign minister denounced the report as “an unwarranted act of interference” and “a tremendous blow to the Good Neighbor policy.” In the midst of this outrage, former dictator Getúlio Vargas made a stunning populist comeback and was elected Brazil’s president later in the year, with a pledge to guarantee a minimum price to coffee growers and to strengthen rather than devalue the Brazilian cruzeiro.80
Trying to make amends, Assistant Secretary of State Edward G. Miller Jr. scolded the full Agriculture Committee for not passing the report by the State Department before publication. He said that “no accusations of manipulation of markets, or collusion between producing interests, should be made unless and until there is clear evidence to substantiate such charges.” Indeed there was no such evidence. He criticized the report’s recommendations, noting that “little or no [background] information” supported them. Reluctantly, Gillette’s committee revised the report, softening the tone and moderating its harsh recommendations. International feelings were temporarily soothed, just as the conflict in Korea intensified the new cold war mentality and boosted the price of coffee once again to around 85 cents per pound retail.
Instant, Quick, Efficient, Modern—and Awful
The instant-coffee industry grew tremendously in the postwar period. At first Nescafé dominated sales in the United States through extensive advertising. The internationally powerful Swiss company also introduced its instant brand around the world in Europe, Latin America, Asia, Oceania, and South Africa.
The United States, however, provided the largest potential market. The modern consumer willingly sacrificed quality for convenience, as new instant brands proliferated. When regular roasted coffee bumped up to 80 cents a pound in 1950, the real rush toward instant was on. Although soluble coffee required a gigantic capital outlay for the tall spraying towers and additional treatment processes, it cost 1.25 cents per cup, 1 cent less than regular.
The taste of instant coffee was so poor that it didn’t much matter what kind of beans were used—including cheap robusta beans from African colonies eager for dollar infusions to their war-devastated economies. In addition, the manufacturers could squeeze more solids out of each bean by overextracting the grounds—a process that produced a bitter regular brew.
By the end of 1952, instant coffee accounted for 17 percent of all U.S. coffee consumption. Instant Maxwell House and Nescafé each were spending over $1 million a year on advertising. “AMAZING COFFEE DISCOVERY!” proclaimed Instant Maxwell House ads. “Not a powder! Not a grind! But millions of tiny ‘FLAVOR BUDS’ of real coffee, ready to burst instantly into that famous GOOD-TO-THE-LAST-DROP flavor!” “Easy to Va
ry the Strength to Suit Everyone in the Family,” Nescafé ads explained. “No Fussing with Pot or Percolator. No Tricky Parts to Clean. No Coffee Grounds.” The pedestrian ads of the Swiss company failed to capture the imagination of the consumer, and in 1953 Instant Maxwell House jumped past Nescafé to become the undisputed leader in U.S. instant coffee sales. It held that position tenuously, however, through low prices and extensive advertising. Consumer surveys showed little brand loyalty for instant coffees.
To raise the enormous capital needed to produce instant coffee ($1 million per plant), ten smaller roasters led by Joseph Martinson & Company (formerly noted for its high-quality coffee) banded together to form Tenco, a New Jersey cooperative that ran twenty-four hours a day to produce soluble coffee. Ed Aborn Jr., who like his father before him had championed proper brewing methods, shocked members of the trade by selling the venerable family firm and joining Tenco. Berent Friele, who had dominated the coffee trade as head of A & P’s American Coffee Corporation, convinced Nelson Rockefeller to invest in Tenco.
The popularity of instant coffee accompanied and complemented the rise of the vending machine. In 1947 Lloyd Rudd and K. C. Melikian, two army mechanical engineers, introduced the Kwik Kafe vending machine that dispensed hot instant coffee into a paper cup in five seconds. Rudd Melikian Inc. sold three hundred machines the first year. Other companies soon went into competition with them. By the end of 1951 there were over 9,000 coffee vending machines in the United States, and by the middle of the decade over 60,000.
Uncommon Grounds: The History of Coffee and How It Transformed Our World Page 27
