there was a spreading of the business. In that year, owing to political disturbances, United States imports of coffee from Brazil dropped off, being 61.5 percent of the total, compared with 67.7 percent in the 192731 period, and 66.6 percent in the 1922-26 period. In these same

1930 31 32 33 34 35 36 37 38 39

Figure 7.-Ten years of cane sugar and coffee imports from Latin America into the United States.

years, Colombia's percentages of the totals were 23.8, 19.5, and 16.6, respectively. Continuing after 1932, Brazil's percentage of the total was 61.4 in 1933-37 and 60.8 in 1938-39, and Colombia's percentage was 22.0 and 21.9, respectively, during these periods. These two countries are compared not only because they are the two leading countries in world volume of trade, but also because they are the two leading coffee suppliers to the United States.

It is apparent that a definite change in trends set in at about this time (1932), and several countries became more favorably placed because some Brazilian grades were scarce or nonexistent and available grades brought very good prices, compared with which "milds” (a designation for all coffees other than Brazilian) were on a parity, or were lower than, or not too far above to induce purchases. Consequently, the demand was most active, and imports from countries producing mild coffee, especially in the last half of the year, showed the effects of this situation.

Total United States coffee imports have, in recent years, been on a constantly ascending scale. Using 5-year periods, with the exception of 1938 and 1939, the gains from all sources in 1927-31 were greater by 12.5, compared with 1922-26 (Brazil by 14.4, Colombia 31.6); the total in 1933-37, compared with 1927-31 was greater by 7.6 (Brazil lost by 2.6, but Colombia increased by 21.1); and, finally, in 1938-39 the total gained over 1933-37 by 20.5 (Brazil by 19.5 and Colombia by 19.8). It is evident that Colombia's rate of increase, though not in percentage of total, was greater in the earliest period, that is, 1927-31, but the percentage of total was higher in the past 8 years, whereas Brazil's averaged less.

CENTRAL AMERICA INCREASES COFFEE SHIPMENTS TO UNITED

STATES

Other countries which increased coffee shipments to the United States in 1932 were Costa Rica and Guatemala, and in the following year heavier shipments from Nicaragua, El Salvador, and Mexico were made to the American market.

All these coffees had a good market in the United States during World-War and post-war years, owing partly to the fact that former European markets were unable to advance finances to take up the customary shipments, and partly to the fact that shipping conditions caused many orders to be transshipped or sold from the United States. A large reexport trade in coffee from the United States ensued, so that not all of the augmented imports from these countries were retained for consumption in the United States. A swing back to former trade channels resulted as conditions became more normal and Europe could resume purchases, but a considerable part of the American business was retained and further gains were recorded in the 1932-36 period and in subsequent years. Gains in all these "milds" became more pronounced by 1938 and 1939. El Salvador for example, has now assumed third place as a supplier of coffee to the United States, and Mexico and Guatemala are fourth and fifth, respectively.

HAITI AGAIN ENTERS THE UNITED STATES MARKETS

Haiti is one of the oldest coffee-producing areas in the Western Hemisphere, and until the latter part of the last century supplied sizable quantities of coffee to the United States. For a period of years, however, the trade dwindled, and it was not until the World War and in the years immediately following that the volume again approached that of the eighties. The trade reached 46,358,000 pounds in 1918, but it is believed that a considerable part was destined for reexport from the United States. The trade again declined, falling as low as 33,000 pounds in 1930. Following 1930, however, there was a revival,

with shipments reaching 11,849,000 pounds in 1937, 18,113,000 pounds in 1938, and 23,102,000 pounds in 1939.

This development has been due in large part to the efforts of the Haitian Government, the initiative of a New York coffee merchant, and the services of a coffee expert in Haiti. Hundreds of coffee-drying platforms have been constructed in the growing districts, and newer and better equipment has been installed in processing plants, thus increasing the capacity for turning out washed coffee. An official report states that output of washed coffee in 1938-39 increased 32 percent over that of 1937-38.

PRICE EFFECTS IN THE PERIOD COVERED BY THIS STUDY

The years 1926 and 1939 reflect the two extremes of prices, the high being reached in the former year, and the low in the latter year. Prices for several grades illustrate the decline that took place following the break in prices in the autumn of 1929 owing to the collapse of Brazil's coffee defense plans then in operation. On the New York spot market the two Brazilian grades, Santos No. 4 and Rio No. 7, averaged 22.3 and 18.2 cents in 1926, and Colombian Medellin and Manizales were 29.6 and 28.5 cents per pound, respectively. By 1932, the Brazilians were 10.7 and 8.1, Medellin was 12.3, and Manizales 11.4, but by 1939 Brazilian Santos had fallen to an average of 7.5, Rio 5.2, Medellin 12.3, and Manizales 11.7. There were no years in the series when Brazilians averaged less than in 1939, but there were 6 years during which Colombians were even lower, in some cases by only a few points and in others by more than a cent.

This situation has been further aggravated by the outbreak of war in September 1939, which has caused the loss of markets in Europe which are normally among the most important.consumers in the world. Expectations that the United States may absorb more coffee, aided by the promotional campaign of the Pan-American Coffee Bureau with the United States coffee industry cooperating, are current, but obviously at the present rate of production in these countries and surplus stocks still in existence in Brazil, there will be a great quantity of coffee available for which no markets can be found.

COCOA BEANS

Latin America does not furnish to the United States today as large a percentage of cocoa beans as formerly. Prior to the World War 70 percent of our total imports of cocoa beans came from Latin America, whereas in 1939 the percentage had declined to 47 percent. This is not because the total quantity of cocoa-bean imports from Latin America has diminished, but rather that our chocolate industry has been built up during the past quarter century primarily on the socalled common or basic cocoa beans, such as those supplied from West Africa. The only producers in Latin America of the basic or common grades on a large scale are Brazil and the Dominican Republic, known as Bahia and Sanchez, respectively. Not only has Brazil expanded enormously and now ranks in world production second only to the Gold Coast, but the Dominican Republic has more than held its place in the United States imports. To illustrate the growth, imports from the Dominican Republic were 27,242,000 pounds in

1913 and from Brazil, 14,354,000 pounds, but in 1939 the former. furnished 56,746,000 pounds and the latter, 203,805,000 pounds.

The present percentage of so-called common cocoas to the world total is approximately 91.5 percent and of flavor grades 8.5, on the basis of a rough division of kinds, compared with 58.3 and 41.7 percent, respectively, in 1913. Prior to 1913 the percentage of flavor grades was even higher.

The word "common" as applied to basic grades of cocoa beans is the term generally used in commercial circles, and it is not taken to imply any especial inferiority in the beans themselves. On the whole, they are well prepared and graded, but are not regarded as fancy, since they do not command the prices of Venezuelan or Ecuadoran flavor grades.

Table 4.-Imports of Cocoa Beans Into United States From Latin America

INCREASE IN CHOCOLATE MANUFACTURING

The World War gave a tremendous impetus to the chocolate and cocoa manufacturing industry, particularly following the entry of the United States, when additional investments were made in plants and machinery and eventually the total capacity was reported to have been almost doubled. Total cocoa-bean imports in 1913 were 140,039,000 pounds, but by 1918 they had reached 399,040,000 pounds, an increase of 184.9 percent during the 6-year period.

REEXPORTS

As in the case of coffee, the United States reexport trade in cocoa beans was stimulated because of interference in the normal shipping lines between producing and consuming countries. Reexports of cocoa beans from the United States were particularly heavy in 1915 and 1916, and from 1919 through 1921, following which the trade settled to lower levels.

EFFECTS OF THE PRESENT EUROPEAN WAR

Trading history is repeating itself in that the present war in Europe has again stimulated reexports of cocoa beans and exports of cocoa butter from the United States.

Effects of the present European war on distribution are similar to those experienced in the coffee industry, and, indeed, to those affecting cocoa beans during the World War, namely a dislocation in trade and curtailment to those countries involved directly in actual conflict or to those so situated as to be indirectly concerned, with a resulting surplus. In the current war, however, most of the present surplus, aside from any in the consuming countries, is held by the British Government which took over the purchase of the entire crops of cocoa beans in the Gold Coast and Nigeria, including British Cameroons, from native producers soon after the beginning of the major crop

1930'31 32 33 34 35 36 37 38 39

Figure 8.-Ten years of cocoa bean and banana imports from Latin America into the United States,

movement of 1939-40, and also the sale, with established firms in West Africa acting as agents on certain stipulations.

During the World War, cocoa-bean exports were affected by lack of shipping space, with the result that cocoa stocked up and, according to official reports, it was estimated that of the 1917-18 crop in the Gold Coast probably not more than three-fourths was gathered and only about one-half sold. In the present European war, lack of shipping space so far has not presented the same problem, although the possibility of interruption to supplies was one of the underlying causes of price increases following the declaration of the war in September.

The accumulation of unsold cocoa beans, which in this instance is owned by the British Government, has occurred mainly because of loss in markets. Moreover, the fact that the Cocoa Control's price