Coffee Sword

Like the sword of Damocles coffee hangs over Brazil.

Brazil holds a hoard of more than 16 million bags, more than 19 billion pounds. She keeps on hoarding because desperately afraid that any other policy would glut the world coffee market, send the price plunging ruinously down.

Of course not all Brazil's coffee is hoarded. She sells and exports every year between two-thirds and three-fourths of the world's supply. But surplus has piled on surplus, year after year, until Brazil's hoard is both an economic and a political menace to the government of distracted

President Washington Luiz Pereira de Sousa. Last week hope loomed. A $100,000,000 loan to support Brazil's coffee hoard in Sao Paulo (principal coffee state) was announced to be in process of negotiation by J. Henry Schroder & Co. of London and their potent Manhattan correspondent Speyer & Co.

Ticklish was the task faced by genial, dapper James ("Jim") Speyer, who was born in the home city of the house of Rothschild, Frankfort, Germany. As well as anybody Jim Speyer knew that a Secretary of Commerce by the name of Herbert Clark Hoover laid down what has since become an unwritten law of Washington: the Government will discourage subscription by U. S. citizens to loans intended to support a foreign monopoly.

"Ah, but this coffee loan isn't to support a Brazilian monopoly!" -- that was what suave Mr. Speyer or somebody for him had to say to the State Department, convincingly. It was said -- convincingly. Last week Acting Secretary of State Joseph P. Cotton officially announced that the administration has no objection to the loan, believing that it will be used only for temporary support of the Brazilian hoard. which the hoarders promise to liquidate within ten years.

Mr. Speyer's personal triumph seemed complete, but on the New York coffee exchange last week many a broker doubted that the loan would go through, "understood" that the Brazilian coffee situation is in such bad shape that J. Henry Schroder & Co. of London were beginning to wonder whether the coffee sword can be stayed, whether a coffee crisis and price slump are not inevitable.

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