Grounds for Discipline?

Spurred by reports of shortages, the price of coffee shot upward last fall. In three months' trading on the New York Coffee & Sugar Exchange, March futures in "Santos S" coffee rose 69% to a record of 50.1-c- a pound. The retail price of coffee hovered around 80-c-. For the rise, the Pan-American Coffee Bureau, which represents Latin American growers, had a crisp explanation: "The sudden rise in coffee prices may be explained in just two words--'bad weather.' "

But last week, Senator Guy M. Gillette's special Senate investigating subcommittee said flatly that this was not truer there had been no genuine coffee shortage. In its sharply worded 44-page report, the committee blamed high prices chiefly on big Brazilian growers who, the committee said, had created a synthetic shortage by withholding huge stocks of coffee from the U.S. market. They had thus made fat profits through speculation in futures on the New York Coffee & Sugar Exchange, the committee intimated.

Furthermore, the committee hinted that the Brazilians had the cooperation of a few big U.S. commodity dealers, notably George V. Robbins, then president of the National Coffee Association and green-coffee buyer for the Maxwell House Division of General Foods Corp. To make sure that Coffeeman Robbins' cooperation would be good to the last drop, the committee implied, Brazilians secretly sold him several hundred thousand bags of coffee at the bargain prices of 18-c- and 19-c- a pound. (General Foods denied that any action of theirs had anything to do with the price rise.)

One way to help end such shenanigans, said the subcommittee, was to put the unregulated New, York Coffee & Sugar Exchange under control of the Commodity Exchange Admiiiistration. The subcommittee recommended that the Federal Government:

P: Curb coffee speculation by increasing margin requirements, now around 15%, to 50% on the New York exchange; amend certain trading rules which permit Brazilian interests virtually to control the New York market.

P: Slap a 30% capital gains withholding tax on trading profits made on U.S. commodity exchanges by foreign speculators.

P: Pressure Brazilian and Colombian dealers into selling the coffee stocks which they now have stored in U.S. warehouses. At the threat of federal control of coffee trading, coffee futures dropped 1.41-c- in a single day last week. But at week's end Santos No. 4 was still at a lofty 46-c- a pound, still 70% higher than last June.

This file is automatically generated by a robot program, so reader's discretion is required.