As far as the American coffee trade is concerned, the first sensational upheaval took place in 1880–81. This period witnessed the collapse of the first great coffee trade combination in this country—the so-called "syndicate", comprising O.G. Kimball, B.G. Arnold, and Bowie Dash, sometimes known as the "trinity".

The period of high coffee prices, commencing in 1870, had greatly stimulated production in many Mild-coffee producing countries, as well as in Brazil, and as a consequence the syndicate found its burden becoming extremely heavy early in 1880. In January of that year our visible supply amounted roughly to 767,000 bags. While this was reduced to about 740,000 bags in July, the latter likewise proved to be decidedly burdensome, especially as another liberal crop was beginning to move in producing countries. The excessive volume of supplies was especially marked, because distributing trade during the summer was strikingly dull, as the majority of buyers were holding off, in view of the prospective liberal new crops. At that time Java coffee was a big item in American markets, whereas Santos was just about beginning to be a factor.

The syndicate found that it had its hands full supporting the Brazil grades, and hence had to let the Javas go. As a result, the latter, which had sold at twenty-four and three-quarters cents in January, 1880, fell to nineteen and one-half cents in July, to eighteen cents in November and to sixteen cents in December. As a matter of fact, the syndicate was practically the only buyer of Brazil coffee during the fall of 1880; and as a consequence, Rios, which had started the year at fourteen and one-half to sixteen and one-quarter cents, were down to twelve and three-quarters cents in December, 1880, and had dropped nine and one-half cents when the break in the market culminated in June, 1881.

The first whispers of financial troubles growing out of these adverse conditions were heard in October, 1880; and on the 27th of that month the first failure was announced—that of C. Risley & Co., with liabilities placed at $800,000 and assets at $400,000. This firm had been doing business in the local market for about thirty years. The efforts of the receivers to dispose of this company's large stock naturally served to accelerate the decline; and the final impetus came on December 6, when the New York trade heard of the death, two days previously, of O.G. Kimball, of Boston, one of the most prominent merchants there. This precipitated the big crash of December 7, when B.G. Arnold & Co., the largest New York firm, suspended with estimated liabilities of $750,000 to $1,000,000. The official statement later placed the liabilities at $2,157,914, and assets at $1,400,000, of which $884,198 were secured. Within three days this failure was followed by the suspension of Bowie Dash & Co., with liabilities estimated at $1,400,000.

For weeks thereafter there was virtually no market. With all of these distress holdings pressing for liquidation, buyers, as was natural, were extremely timid. In the meantime, the import arrivals showed further enlargement at various southern ports, as well as at New York. Total arrivals at this port during 1881 were almost 12,400,000 pounds heavier than for the preceding year. The growing importance of Santos as a market factor was demonstrated by the fact that shipments from there in 1881 were 1,198,625 bags, compared with about 628,900 bags in 1876–77. According to the best informed members of the trade at that time, the losses sustained by the various firms that were forced to the wall aggregated between $5,000,000 and $7,000,000.

The utterly demoralized conditions prevailing while this collapse was in progress, and the practical elimination of a market in the true sense of the word, furnished the principal impetus for the organization of the New York Coffee Exchange. At that time, the Havre market was the only one with an exchange. The local body was organized in December, 1881, and started business in March, 1882.

The Cable Break of 1884

The second noteworthy movement, embracing an advance of four to four and one-half cents and a recession of slightly more than three cents, covered a period of about eight months shortly after the Exchange was organized. Various local and out-of-town firms were interested in the bulge which carried Rio coffee in this market from about seven cents in July, 1883, up to eleven and one-half cents late in November. By the middle of December, the price had fallen to nine and one-quarter cents, the final break to eight and one-quarter cents occurring late in March of the following year. At that time, there was no direct cable communication with Brazil; and as a result of a temporary break in the roundabout service by way of Portugal, the New York and Baltimore agents of the Brazilian syndicate were unable to put up additional margins in this market, and their accounts were closed out. This happened on a Saturday; and by the following Monday, partial cable remittances arrived and all accounts were settled in full with interest from Saturday to Monday.

The Great Boom

What is generally described as "the great boom" of the coffee trade occurred in 1886–87, and had its inception in unsatisfactory crop news from Brazil. The crop of 1887–1888, it was estimated, would be extremely small; and it turned out to be only 3,033,000 bags. These advices and low estimates led to the formation of a "bull" clique, comprising operators in New York, Chicago, New Orleans, Brazil, and Europe, who set a price of twenty-five cents for December contracts as their goal. Toward the end of June, 1886, when this campaign started, No. 7 Rio in New York was worth about seven and one-half cents, with June contracts on the Exchange quoted at seven and sixty-five hundredths cents. With Brazilian crop news still more discouraging, the advance thereafter was almost continuous, and on June 1, 1887, December contracts sold at twenty-two and one-quarter cents—a new high price record, that was not exceeded for thirty-two years, when twenty-four and sixty-five hundredths cents were paid for July contracts in June, 1919. After reaching twenty-two and one-quarter cents, prices suffered an abrupt reversal. Ten days later the closing price for December was twenty-one and four-tenth cents. Then the real crash began. On Saturday, June 11, the panic started with another claim of cable trouble; and in the short session, December coffee broke from twenty and fifteen-hundredths to eighteen and sixty-five hundredths cents, closing at a loss for the day of 275 points. The first sale of December on Monday was at seventeen and four-tenths cents, or 125 points lower; and after numerous erratic variations, the price broke to sixteen cents, a drop of six and one-quarter cents in less than two weeks. Business on that day was of enormous volume, in round numbers 412,000 bags; and approximately $1,500,000 was put up in margins. For the next three days the decline was temporarily halted, and December, at one time, was up three and one-quarter cents from the bottom (nineteen and one-quarter cents). On June 17, another battle commenced, December dropping back to seventeen cents. Then came a rally to eighteen and one-tenth cents, a drop to sixteen and one-half cents; another rally to eighteen and one-tenth, and, on June 24, another break to the previous low level of sixteen cents for December. This sharp reversal in less than a month was traceable largely to more favorable news from Brazil, the 1888–89 crop being estimated at 6,827,000 bags.