Following a rally to nineteen and six-tenths cents during the next month (July, 1887), the pendulum again swung downward. The climax came with the culmination of the "European fiasco" of the spring of 1888. Reports were received that various European coffee firms had failed; and future contracts in the American market sold as low as nine cents in March.
A Famous European Bull Campaign
The next campaign of interest lasted more than two and a half years. In September, 1891, there was a corner in the local market which forced the September price up to seventeen and one-quarter cents. George Kaltenbach, a wealthy speculator living in Paris, combining with three operators in Havre, Hamburg, and Antwerp, succeeded in breaking the corner, forcing the price down to ten and eight-tenths cents. They then changed to the bull side, buying heavily in all markets of the world. This was continued until early in 1893, bringing the price back to fifteen cents. Although his associates then returned to the bear side, Kaltenbach kept on buying; and aided by bad crop reports from Brazil, he worked the price up as high as seventeen and seven-tenths cents. At one time it was said that his profits were more than one million dollars. The collapse of this deal occurred in May, 1893, involving thirty firms in Hamburg, Havre, and Rotterdam. As Kaltenbach could not keep his large New York holdings margined, they were thrown on the market, bringing about a sharp break, and causing the failure of his New York agents, T.M. Barr & Co.
The present era of large crops began in 1894, Brazil's production for 1894–95 being placed at 6,695,000 bags. Nevertheless, Guzman Blanco, a former president of Venezuela, then living in Paris, and said to be worth about $20,000,000, attempted to run a corner in April, 1895. He bought 200,000 bags of spot coffee in Havre warehouses and accumulated a big line of futures in various markets. Assisted by reports of cholera in Rio and some reduction in Brazilian crops, he enjoyed temporary success, the price of Rio 7s in New York rising to fifteen and one-half cents in October, 1895. Thereafter, there was an almost continuous decline. In the spring of 1898, a vigorous bear campaign was conducted, largely in the form of market letters; and by November, Rio 7s here had dropped to four and one-half cents.
The Bubonic Plague Boom
The so-called "bubonic plague boom" halted this prolonged downward movement for a time in 1899–1900. The boom derived its name from the outbreak of bubonic plague in Brazil, as a result of which the ports of that country were quarantined. In addition, Brazilian steamers arriving at New York were placed in quarantine; and the impossibility of unloading their cargoes caused a temporary shortage. As a result, prices rose from four and one-quarter cents in September, 1899, to eight and one-quarter cents in July, 1900. The quarantine being lifted, the bears again became aggressive; and by April, 1901, they had forced the price back to five cents.
There was another short-lived attempt to establish a corner in September, 1901. Receipts at Rio and Santos had been running light, encouraging a local clique embracing Skiddy, Minford & Company; W.H. Crossman & Bro.; and Gruner & Company, to endeavor to gain control. The arrivals at Brazilian ports suddenly increased to the largest volume ever known up to that time; and, with vigorous opposition from operators in Havre, the corner here was speedily broken.
The opening of the new century witnessed the beginning of another new coffee era, Santos permanently displacing Rio as the world's largest source of supply. The figures for 1900–01 were: Santos, 2,945,000 bags; Rio, 2,413,000 bags.
Huge crops then became a regular thing in Brazil. That of 1901–02 was far in excess of estimates, being 15,000,000 bags; while 20,000,000 bags were produced in 1902–03. As a result, the world's coffee trade became completely demoralized for the time being. In August, 1902, contracts for July, 1903, delivery sold at six and one-tenths cents. By June, 1903, they had fallen to three and fifty-five hundredths cents, the lowest price ever recorded for coffee.