Immediately thereafter, rumors began to circulate that the government's coffee suit would never be tried. The Brazilian ambassador threatened diplomatic interference, and Attorney-General Wickersham let it be known that a friendly settlement might be effected. Sielcken boldly challenged the authorities to prosecute the case, and even seemed to invite criminal proceedings against himself. Saving the government's face, and Brazil's face, at one and the same time, proved to be a long and tedious process.
Meanwhile, Senator Norris introduced in Congress a bill designed to give the government power to seize importations of coffee when restraint of trade was proved. It was vigorously opposed by many prominent green-coffee men and roasters; but in February, 1913, it became enacted into a law. It effectively killed all future valorization schemes in so far as direct participation by this country is concerned.
About December 1, 1912, Attorney-General Wickersham accepted good-faith assurances from Mr. Sielcken's attorney—who represented also the Brazil government—and agreed that if the valorization coffee stored here was sold to bona-fide purchasers before April 1, 1913, the government's suit would be dismissed. In May, 1913, the attorney-general of the new Wilson administration, which came into office in March of that year, issued a statement saying that, good-faith assurances having been received from the Brazil government that the understanding was fulfilled in letter and spirit before the date set by the previous attorney-general, and the entire amount of coffee disposed of to eighty dealers in thirty-three cities, the suit would be dismissed.
In the United States Senate about the same time, Senator Norris renewed his attack on "the international coffee trust". He charged that the coffee sale was not as represented, but merely a transfer, and called upon the Department of Justice for the facts, with names of the alleged purchasers.
Attorney-General McReynolds, on May 7, 1913, declined to send to the Senate the official correspondence in regard to the Brazil coffee-valorization matter, because it was "incompatible with the public interests." He did, however, send other papers on the subject. The secretary of state sent copies of some correspondence; but the documents were not made public. This ended the matter, although Senator Norris called for a congressional investigation, charging that the attorney-general had been handed a "gold brick".
Sielcken contented himself with remarking that the suit was a mistake in the first place, and that it was a foregone conclusion the government would be defeated. Also, he offered $5,000 to any one who could explain the Norris bill.
Valorization, then, was started by the state of São Paulo in 1905, when a law was passed authorizing the state to enter into an agreement with the other Brazil states and the federal government for the adoption of measures which would assure the valorization of coffee and facilitate a propaganda abroad for increased consumption.
The states of São Paulo, Minãs Geraes, and Rio de Janeiro proposed, early in 1906, to withdraw from the markets such quantities of coffee as would keep down exports and maintain profitable prices. The plan comprehended the interested states borrowing about $75,000,000 from European and United States bankers with which to buy up the surplus coffee. To take care of interest and amortization, a tax of three francs per bag of 132 pounds (about 57 cents) was to be levied on all coffee exports, collectable at Santos and Rio de Janeiro. Further coffee-planting was to be checked by enforcing the law which carried a tax sufficiently high to operate toward restriction.
When it was understood that Brazil's federal government would not endorse the plan in toto, it was abandoned by Rio de Janeiro and Minãs Geraes. However, the state of São Paulo in the course of the next two years borrowed some $30,000,00 on its own account for valorization purposes, obtaining half the amount direct from foreign banking interests, and the remainder, through the Brazilian federal government, from London sources.
This first valorization was abandoned in favor of the Sielcken plan, which the federal government ratified in July, 1908. By this new plan São Paulo borrowed $75,000,000 from the syndicate composed of American, English, German, French, and Belgian bankers. Out of this it repaid the $30,000,000 loan. The 1908 loan was to expire in ten years, in 1919. Under the plan of the new loan, it was agreed that certain amounts of the valorized coffee should be stored as collateral in warehouses in New York and Europe in charge of a committee of seven, who were authorized to sell the coffee in the market in specified quantities and at prices that would not disturb the price of other coffees. The composition of the committee was as follows: Dr. Francisco Ferreira Ramos, of São Paulo and Antwerp; who was succeeded by Dr. Paulo da Silva Prado; the Vicomte des Touches, of Havre; the Société Generale, of Paris; the firm of Theodor Wille, of Hamburg; Hermann Sielcken, of New York; Edouard Bunge, of Antwerp; and Baron Bruno Schroeder, of J. Henry Schroeder & Co., of London.