early all the three million inhabitants of
Sao Paulo, Brazil's largest coffee producing state, "entirely gave up
planting corn, rice, beans, everything they needed. They bought them
because coffee was so immensely profitable that they put all their labor
in coffee."

Brazil had been going through a period of low exchange. Paper money fell
below par. The exaggerated issues of it, which provoked the collapse of
exchange, suddenly endowed Brazil with an abundant circulation of money.
Production was enormously stimulated. New undertakings sprang up on
every hand. Armies of agricultural laborers were recruited in Europe and
shipped into the coffee districts. And then, to make the story short,
supply passed demand, surplus stocks began to appear, prices began to
fall, and fell until they dropped below the cost of production.

It was in 1896-97, when the new trees came into bearing by the tens and
hundreds of thousands, that Sao Paulo's folly began to tell. By October
of that year the price of Rio No. 7 in New York had fallen to about
seven cents. The decline continued, until, in 1903, it hung around five
cents. Then began the winter of Sao Paulo's discontent. Too late, the
state government tried by taxing new coffee estates, to force the
planters to raise crops to supply their own necessities. The times grew
harder.

Mortgages held by large coffee houses and bankers were being foreclosed.
The industry was passing into European hands. The smaller planters were
becoming desperate; and desperation is only a step from revolution. The
government of the state of Sao Paulo knew this; and to save the state,
it finally promised it would buy the next coffee crop, and would hold it
for the planters at such a price as would be necessary to continue the
industry. The protagonists of this plan to valorize coffee were Dr.
Jorge Tibirica, Dr. Augusto Ramos, and Dr. Albuquerque Lins.

During all the period covering Sao Paulo's rise and fall in coffee, the
financial genius who was to lead her again into the land of plenty had
been quietly acquiring a knowledge of her problems--also, the ability to
make money out of their solution.

Valorization was undertaken to save the coffee industry. Its intent was
good, even if the theory was bad. The scheme was not new, and there were
no encouraging precedents to augur its success. The situation was
desperate and seemed to justify the trial of a desperate remedy. Sao
Paulo attempted to carry the loa