Coffee: The Epic of a Commodity (33 page)

But who could bell the cat? Who was to coerce the Spaniards to good behaviour?

France!

Louis XVIII, and Chateaubriand as well, would seem to have proposed that the French fleur-de-lis, the banner that thirty years before had been contemptuously torn down by the men of the Parisian Terror, should, now that it had been rehoisted, be triumphantly borne to Madrid. What a splendid idea! New France, the France of the restored Bourbons, monarchical and Christian France, was to show herself the supreme champion of legitimism. Besides, Ferdinand VII and Louis XVIII were both Bourbons, and therefore distant cousins. Blood is thicker than water.

The tacit mandate that Russia, Austria, and Prussia conferred upon conquered France eight years after her supreme humiliation, this mission to play the victor in Spain, was pleasing to French national vanity. First of all, on the pretext that Spanish revolutionists were sowing disquiet in southern France, a police cordon was established along the frontier. Then troops were sent to guard the passes, it being alleged that yellow fever prevailed in Spain. More and yet more battalions were dispatched to the south. At length everyone expected war. People were only waiting for the declaration of King Louis XVIII, as soon as he returned from Verona.

The king read the Speech from the Throne on January 28, 1823. It was moderate in form, but the contents signified war. Louis declared that he had done everything he could to make sure that, henceforward, France should not be disturbed by Spanish propaganda. But the folly of Madrid destroyed all hopes of peace. He was compelled, therefore, he said, to recall his ambassador. One hundred thousand Frenchmen, under the command of a prince of the blood royal, were ready, God willing, to maintain monarchy in Spain, and to reconcile that country with Europe.

The Speech from the Throne was accepted by a decisive majority in the Chamber. Shouts were raised: “Long live the King and all the Bourbons!” The ambassadors of the European powers were looking on like gods of destiny. With one exception, the British ambassador! The British government, in which the whig, George Canning, was secretary for foreign affairs, was not inclined to smile at the notion that, only ten years after England had protected Spain against Napoleonic usurpation, Frenchmen, though royalist, should once more conquer Madrid. In contrast with the deputies, the public of Paris, the French populace, showed little enthusiasm. Those who held national securities were dismayed. One hundred francs in the national debt was quoted at seventy-seven, and most other securities fell in proportion. When the names of the generals were announced who, under Angoulême, were to lead the invasion of Spain—some of them were Napoleonic marshals, such as Oudinot—confidence was somewhat restored.

In these circumstances, speculators began to play for a rise in prices, especially in the prices of imports. King Louis XVIII, in his Speech from the Throne, had declared that French naval stations were adequately fortified, and that a number of cruisers had been equipped to protect marine commerce. Among all the rhetorical flourishes in the speech of this obese and undependable man, this seemed the most alarming. Almost as alarming, however, was the next, to the effect that “if war should prove unavoidable, its area will be restricted and its duration shortened as much as possible.” What did that really mean? Perhaps that England was planning to withdraw from any sort of collaboration with the Alliance, Prussia, Russia, Austria, France, and to make common cause with revolutionary Spain? In that case the war might last for a very long time. As early as January 30, mounted couriers were galloping across Europe from exchange to exchange, to Amsterdam, Hamburg, Vienna, St. Petersburg, Berlin, Frankfort-on-Main, and, on the western side of the Channel, to London. “Buy coffee!” was the watchword. “Within a few weeks there will be no more to be had, since the sea-routes will be closed!” Even if there was not to be a naval war between equally matched forces, the danger of privateering was very great. Neither Spanish nor French merchantmen freighted from coffee-growing countries would dare to keep the seas. While there was a general fall in securities, the price of coffee rose rapidly. Large sums were invested in coffee on the exchanges.

But what had become of the presupposition upon which these transactions had been based: the war? After all, there was no war! The faithless Chamber, which had so recently applauded the king, was now listening, with malicious delight, to the speeches of the opposition. Duvergier de Huranne proved that intervention in Spain would be unpatriotic and scandalous. Sebastiani outdid the previous speaker by asking the nation what interest it could have in espousing the cause of the Holy Alliance, the former enemy of France, which had so unexpectedly shown an interest in Spain. Lainé, Lesaigneur, and Cabanon laid stress upon the injury which a war would do to trade. In the upper house, too, there suddenly appeared many adversaries of the war. Talleyrand, now seventy years of age, roused himself out of his apathy to show, with shrewd arguments, that absolutism in Spain was not genuinely legitimist or, rather, was not strictly lawful, since popular councils had already existed in Aragon of old. Napoleon, said the Emperor’s sometime right-hand man, had really ensured his downfall through fighting a war with Spain, and the restored French monarchy would do well to avoid following his example. He himself, Talleyrand, Prince of Benevento, had, in 1809, warned Napoleon against the Spanish adventure. Perhaps King Louis would pay heed to a similar warning now!

This speech, delivered by Talleyrand in his caustic and intentionally tedious manner, produced an immense effect. It seemed barely credible that after hearing such words the Chamber would vote the war credits. On February 25 there was an oratorical duel between Chateaubriand, who belonged to the extreme Right, and Manuel, the leader of the Left Manuel went so far as to rail not only against the advocates of war, but against the Bourbons themselves and Louis XVIII. Until this sitting of the Chamber, coffee speculators had, in fear and trembling, maintained the price of coffee. They had been hoping for a war; but now, exactly four weeks after the king’s Speech from the Throne, they believed that there would be no war.

W
HAT THE
A
RMY
N
EEDS
M
OST
. . . provided Prussia should become involved in the Crimean War. (
Cartoon
, 1855)

Instead of a war, something else came. Coffee! Coffee from all directions! The seas were no longer dangerous, so, during March, trading ships in abundance arrived from America. Supplies of coffee were shipped from Mexico, the Antilles, Jamaica; and the vessels brought news that a huge Brazilian harvest was expected. Prices, which had been artificially sustained, fell with a rush. There were failures in London, Paris, Frankfort, Berlin, and St. Petersburg; a mercantile crash of gigantic proportions led to hundreds of suicides. Millionaires became paupers.

Then, when the earth was still fresh upon the tombs of these victims of speculation, war was, after all, declared between France and Spain. A short, local war, such as the king had predicted. An almost bloodless war, in which the British took no part. On April 7 the Duke of Angoulême’s army crossed the Bidassoa, which, for twelve miles of its course, forms the boundary between France and Spain.

But the victims of the coffee crisis did not hear the martial tramp of the French regiments as these entered Madrid.

T
HE
happiness of countless thousands in Europe, their lives, their wealth, and their health, depended upon the harvest in coffee-growing countries.

Vacillations in the price of this staple were not due exclusively to the machinations of speculators. They depended also upon the nature of the coffee-shrub and upon the nature of man. The mutual relationships between these respective natures, the way they reacted upon each other, determined whether, as far as coffee was concerned, a year should be a year of plenty or a year of famine.

It worked as follows. The harvest was sold for cash. The planter, naturally, had a strong motive for investing as much as he could of this cash in new plantations. His material benefit from the harvest was like money won at the gaming-table, which always incites gamesters to hazard it once more. In extending their plantations, planters took no heed of the commercial side of the question, forgetting that since markets first existed they have always been subject to the iron law of supply and demand.

Thoughtlessly, therefore, the planters extended their enterprises, with the inevitable result of over-production. Confident that prices would be maintained, they grew more and ever more coffee, to learn, in their despair, that each new million sacks had the effect of reducing profits instead of increasing them.

Was this the immediate effect? Unfortunately not. The planters were given time to persist in their mistaken courses. Had they been taught within a year that they were on the wrong track, the crisis would have been less catastrophic.

The nature of the coffee-shrub is such that it does not begin to bear fruit until after the lapse of four barren years! During these four years, in which no return could be expected, the planters had no direct evidence that their reckless extension of plantations would recoil upon their own heads, so they continued to put more and more land under cultivation. It was after the lapse of four years that over-production became manifest. In the fifth, sixth, seventh, and eighth years, larger and ever larger quantities of coffee were poured into the market. Prices thereupon crashed. In the seventh year, the psychological consequences became manifest. There was a panic among the planters; the new plantations were neglected; workers were discharged; coffee fell into disrepute because “it did not pay”; landowners turned their attention to maize, cotton, or stock-raising. Then the price of coffee began to recover. Supply was falling short of demand. The planters found, to their astonishment, that their worthless coffee could once more be sold for good money. Here was a stimulus to fresh plantation, and the cycle was resumed—
da capo
.

Approximately every seven years the life of a coffee-planter completes this predestined cycle. Seven years are a long time, and memories are short. Men forget their mistakes, and make them once more. Again and again this happened. Throughout the nineteenth century we can trace the history of this anarchic succession of over-production and under-production of coffee. Delight in a year when prices have been high is translated into an undue extension of planting, which, four years later, leads to the recurrence of rock-bottom prices. Then there is a panic. In the seventh year, the pendulum swings back once more towards the side of extended planting.

In 1790, when the revolution put an end for a time to coffee-planting in Santo Domingo, there was a shortage of coffee in the world. Prices rose, so that there might have been expected extreme over-production towards 1799. The Napoleonic wars prevented this. Although prices were high, the planters did not venture to go on producing a commodity that was continually exposed to capture upon the high seas. This state of affairs lasted until 1813. Very soon after sea traffic had been freed from its hazards, under-production took effect in a rise of prices, and, at the beginning of the eighteen-twenties, over-production in the West Indian plantations was the inevitable consequence. Except for the perturbations produced by wars, and especially by the American Civil War, decade after decade was characterized by a regular succession of over-production and under-production, with intermediate years when, for a brief period, there was a balance.

In the year 1903, at a congress of representatives from coffee-producing lands, held in New York, a retrospect of nineteenth-century experience was drawn up, to the following effect: “Very remarkable is the way in which, for some decades, at least since the War of Secession, but before this as well, crises of over-production and underproduction have regularly alternated; periods of very high profits and periods disastrous to the planters. This anarchy is, in both cases, the outcome of extravagant views; of enthusiasm, which leads to excessive planting, and then to moral depression, the result of which is that large areas are left uncultivated. . . . The coffee-planter’s life is characterized by decennial crises. For what reason? The planters do not know one another, and do not take counsel together. . . . They make no attempt to consolidate the market.”

Often enough, in the tropics, a white coffee-planter was several days’ journey from his nearest neighbour, with whom he might have exchanged ideas. This isolation was supposed, by those who assembled at the aforesaid congress, to account for the failure to organize coffee-planting in the nineteenth century. The isolated planter, left entirely to his own devices, and connected with the outer world by nothing more than the news which reached him concerning the price of coffee, acted upon the impulses of the moment.

He acted foolishly, to his own detriment. Nevertheless—and herein lies the tragic element—his actions were logically accordant with the laws of political economy.