t. The news was not taken seriously by the trade at
large. "Frost news" from Brazil was no novelty, and in the past had
always been looked upon as a regular and seasonable method of bulling
the market. This year, however, the frost was a fact, and the market
began to move upward with surprising speed. Reports of the damage to the
trees varied from forty to eighty percent. Quotations from Santos
advanced two cents per pound in as many days. United States buyers were
not disposed to follow the advance; offerings of steamer room were
declined; and boats booked for coffee, owing to the lack of cargoes,
were transferred elsewhere. Meanwhile the market continued to advance
rapidly. The allies were holding the enemy, and peace prospects were
brighter. From September 1 to November 15, the records of the food
administration showed very small purchases. The buyers did not believe
in the frost. With the news of the armistice, Brazil markets went wild;
and Santos 4s, which had sold at eight and one-quarter cents in May,
were quoted at twenty and one-half cents by December 10.

The food administration had decided, on February 6, 1918, after
consulting the committee appointed by the Exchange, and on their advice
and recommendation, to permit trading in futures on the following plan:
a fixed maximum price of eight and one-half cents per pound for the spot
month, with a carrying charge not to exceed fifteen points per pound for
delivery for each succeeding month. Thus the price for March delivery
was fixed at eight and one-half cents, while July delivery could be sold
at nine and one-tenths cents; but when July arrived, it became the spot
month, and eight and one-half cents was the maximum at which it could be
sold.

This rule effectively stopped speculation, but failed to work out
satisfactorily to the trade. Experience proved that a maximum fixed
price at which coffee could be traded in would have produced much better
results. Business on the Exchange followed its usual course, and the
customary hedging of purchases was done by dealers. The indifference of
buyers, already referred to, had resulted in a heavy decrease of the
United States visible supply; and it had shrunk to 2,445,000 bags on
September 1; to 2,173,098 bags on October 1; to 1,857,260 bags on
November 1. Included in these amounts were at least 500,000 bags, held
in New York by foreign owners, which could not be sold; and of the
balance left, there was undoubtedly a lib