Cost and freight brokers represent Brazilian accounts, and generally receive a brokerage of one and one-quarter percent. On out-of-town business, they usually split the commission with the out-of-town or "local" brokers. The out-of-town brokers sometimes, however, deal direct with the importer. All brokers except floor brokers are sometimes called "street brokers." Most of the large New York, New Orleans, and San Francisco brokerage houses also do a commission business, handling one or more Brazilian or other coffee-producing-country accounts.
Important Rulings Affecting Coffee Trading
The United States have no coffee law as they have a tea law—prescribing "purity, quality and fitness for consumption"—but buyers and sellers of green coffees are required to observe certain well defined federal rules and regulations relating specifically to coffee. Up to the year 1906, when the Pure Food and Drugs Act became law, the green coffee trade was practically unhampered; and several irregularities developed, calling into existence federal laws that were designed to protect the consumer against trade abuses, and at the same time to raise the standards of coffee trading.
Under these regulations it is illegal to import into this country a coffee that grades below a No. 8 Exchange type, which generally contains a large proportion of sour or damaged beans, known in the trade as "black jack," or damaged coffee, as found in "skimmings." "Black jack" is a term applied to coffee that has turned black during the process of curing, or in the hold of a ship during transportation; or it may be due to a blighting disease.
Another ruling is intended to prevent the sale of artificially "sweated" coffee, which has been submitted to a steaming process to give the beans the extra-brown appearance of high grade East Indian and Mocha coffees which have been naturally "sweated" in the holds of sailing vessels during the long journey to American ports. Up to the time that the Pure Food and Drugs Act went into effect, artificial "sweating" was resorted to by some coffee firms; and out of that practise grew a suit[320] that resulted in a federal court decision sustaining the Pure Food Act, and classifying the practise as adulteration and misbranding.
The Act also is intended to prevent the sale of coffees under trade names that do not properly belong to them. For example, only coffees grown on the island of Java can properly be labeled and sold as Javas; coffees from Sumatra, Timor, etc., must be sold under their respective names. Food Inspection Decision No. 82, which limited the use of the term Java to coffee grown on the island of Java, was sustained in a service and regulatory announcement issued in January, 1916. Likewise the name Mocha may be used only for coffees of Arabia. Before the pure-food law was enacted, it was frequently the custom to mix Bourbon Santos with Mocha and to sell the blend as Mocha. Also, Abyssinian coffees were generally known in the trade as Longberry Mocha, or just straight Mocha; and Sumatra growths were practically always sold as Javas. Traders used the names of Mocha and Java because of the high value placed upon these coffees by consumers, who, before Brazil dominated the market, had practically no other names for coffee.
One of the most celebrated coffee cases under the Pure Food Act was tried in Chicago, February, 1912. The question was, whether in view of the long-standing trade custom, it was still proper to call an Abyssinian coffee (Longberry Mocha) Mocha. The defendant was charged with misbranding, because he sold as Java and Mocha a coffee containing Abyssinian coffee. The court decided that the product should be called Abyssinian Mocha;[321] but since then, general acceptance has obtained of the government's viewpoint as expressed in F.I.D. No. 91, which was that only coffee grown in the province of Yemen in Arabia could properly be known as Mocha coffee.
Another important ruling, concerning coffee buyers and sellers, prohibits the importation of green coffees coated with lead chromate, Prussian blue, and other substances, to give the beans a more stylish appearance than they have normally. Such "polished" coffees find great favor in the European markets, but are now denied admittance here.
The Board of Food and Drug Inspection decided in 1910 against a trade custom that had prevailed until then of calling Minãs coffee Santos when shipped through Santos, instead of Rio.[322]
For years a practise obtained of rebagging certain Central American growths in New York. In this way Bucaramangas frequently were transformed into Bogotas, Rios became Santos, Bahias and Victorias were sold as Rios, and the misbranding of peaberry was quite common. A celebrated case grew out of an attempt by a New York coffee importer and broker to continue one of these practises after the Pure Food Act made it a criminal offense. The defendants, who were found guilty of conspiracy, and who were fined three thousand dollars each, mixed, re-packed and sold under the name P.A.L. Bogota, a well known Colombian mark, eighty-four bags of washed Caracas coffee.[323]