GREEN AND ROASTED COFFEE BUSINESS IN THE UNITED STATES Page 7

Green Coffee in San Francisco

In the early days of the green coffee business in San Francisco these names stood out as most important among the coffee importers: Hellmann Bros. & Co., Montealegre & Co., E.L.G.S. Steele & Co., and Urruella & Urioste.

From their many friends in Central America, they, and others in their line, obtained small consignments that were bought by the roasters according to their immediate needs. Often as many as five or six buyers would share in a parcel of fifty bags, as they were not in the custom of filling up the larder for days of want. There always seemed to be sufficient for every one, and bull movements and corners had not then become the vogue.

Just as today, the mainstays of the early San Francisco trade were coffees produced in Costa Rica, Salvador, and Guatemala, although some were brought from the Colima district of Mexico. The broker had a comparatively easy job in selling his wares. Samples of the lots would be given to him in carefully sealed glass bottles, and usually the buyer would trust his discerning eye to judge correctly the quality of the goods, not even taking the trouble to uncork the bottle. Size, color, and imperfections would be his criterion.

The leading coffee importers at San Francisco in 1875 were B.E. Auger & Co., 409 Battery; S.A. Carit & Co., 405 Front Street; Hellmann Bros. & Co., 525 Front Street; Adolphe Low & Co., 208 California Street; S.C. Merrill & Co., 204 California Street; Parrott & Co., 306 California Street; and Urruella & Urioste, 405 Front Street.

The annual consumption of green coffee in San Francisco in the early eighties was estimated at 100,000 bags.

A marked change in the coffee business of San Francisco was brought about by the discovery that the differences in the taste of coffees could not be accurately detected from their color or from the size of bean. To Clarence E. Bickford belongs the credit of having discovered the cup qualities of high-grown Central American coffees. He was employed at the time by a broker named Hockhofler, and probably did not realize what far-reaching effect his discovery would have on the future of San Francisco's coffee trade; but no other factor has contributed so much to its growth. When the roasters began to examine coffees for their taste, values were of course revolutionized. Antiguas, and other high-grown coffees, that had theretofore been penalized for the small size of bean, soon brought a premium, and have ever since been in great demand. It goes without saying that the new classification was of material assistance to the roasters in bettering their output, as blending was then put on a scientific basis.

About the middle of the nineties San Francisco began to function as a distributing center, and shipments were made from there to St. Louis and Cincinnati. The selection of coffees on their cup merit was undoubtedly a factor of considerable importance in creating new outlets; although it is generally conceded that the winning personality of C.E. Bickford helped considerably. Mr. Bickford, by this time, had succeeded his former employer. He served the trade by living up to the best standards of business practise until his death in 1908; when the institution he founded was continued by E.H. O'Brien under the name of C.E. Bickford & Co.

California Street, the Coffee-Trading Center of San Francisco

San Francisco imported 175,293 bags of coffee in 1900. Imports had grown to 256,183 bags by 1906; and the following were the leading importers, as taken from a compilation by C.E. Bickford & Co.:

Bird's Eye View of San Francisco's Coffee District

The imports of green coffee at San Francisco in 1914–15 amounted to about 400,000 bags. The beginning of the World War was almost coincidental with an energetic campaign waged by San Francisco coffee interests to popularize Central American coffees, and particularly Guatemalas, in this country. The time was well chosen, as the world's exposition at San Francisco offered a good opportunity to acquaint the public with the fine qualities of Guatemala growths. Furthermore, it was necessary to create new markets for these coffees, which in former years had been very extensively used in Europe. Figures show that San Francisco's efforts were crowned with success. In 1916, the importation increased by fifty percent; and in 1917, importations were double those of 1915. In 1918, a total of nearly 1,000,000 bags was reached; and this mark was passed by almost 200,000 in 1919. In 1920, 971,567 bags were imported.

The origin of San Francisco's fight for control of Central American coffee dates back to the years 1908 to 1910, when the German Kosmos Line was fighting the Pacific Mail for the Central and South American shipping business. W.R. Grace & Co., at that time, were already the heaviest shippers of American merchandise to the Latin-American countries; and while their own steamers were not touching at Central American ports, they were handling merchandise from the United States and nitrates from the South American countries in their own bottoms, and were also engaged as general carriers for that trade. The fight directed by the Kosmos Line against the Pacific Mail, which at that time was under the control of the Southern Pacific Company, was accordingly directed against the Grace interests also, so far as South American countries were concerned. The fight was long and bitter, and costly to both sides. At times, the contenders offered to take freight, not only without charge, but to pay the shipper a premium for the privilege of carrying his freight.

Differences were finally settled in conference; but the experience taught the American interests that they could survive in any territory only if at all times they were able to provide their own cargoes for their own boats, as had been accomplished with nitrate in South America. J.H. Rosseter, the Grace manager, who later became well known as director of operations of the United States Shipping Board during the war, undertook an extended trip to Central America in 1912 to study the situation at close range. There was only one product of Central America that was available in cargo quantities, namely coffee; and naturally his attention was drawn to the possibility of carrying coffee to San Francisco to provide return cargoes for ships of the Pacific Mail, or associated lines, carrying merchandise for the Central American countries.

While in Guatemala, Mr. Rosseter outlined a future policy in regard to Central American coffees; the basis being his firm determination that coffees grown in Central America, and logically and geographically tributary to San Francisco distribution, should come to San Francisco in largely increasing quantities.

Up to that time San Francisco had received, on an average, only 200,000 bags of Central American coffee annually for the ten preceding years; while Europe had received about 1,500,000 bags a year. The quantity necessary to make San Francisco a factor would call for an importation, on an average, of 750,000 bags—a quantity almost four times as large as then established.

This was an extremely ambitious undertaking, considering the conditions then prevailing in Central America. European countries were firmly entrenched in the coffee business in Central America, with Germany leading in Guatemala, France in Salvador and Nicaragua, England and France contending for superiority in Costa Rica, and the United States getting only the leavings.

The European countries held their position in the Central American Coffee trade by liberal financing, and a thorough knowledge of the varying qualities of coffee produced on the different plantations. San Francisco, the only important port in the United States dealing in Central American coffees, had neither strong financial entrenchment in Central America nor expert knowledge of coffee quality. Year after year, San Francisco merchants had depended on consignments chosen by the consignors. This rendered quality selection of coffees by the importers impossible.

Rosseter, being primarily a steamship man, tackled the proposition from the standpoint of transportation, figuring that if he could establish and maintain preferential steamer service to San Francisco, and steady freight rates, a great step would be accomplished toward the desired end. This led to his interest in the Pacific Mail Company, of which the final outcome was his present position as vice-president of the reorganized Pacific Mail Company. In that capacity he maintained, practically throughout the entire period of the World War, freight rates on coffee from Central America to San Francisco that gave that Pacific port an immediate and definite advantage.

This gave merchants in San Francisco the chance to build up a steady trade, and prevented other ports in the United States from entering into serious competition with San Francisco as a distributing point for Central American coffees. The view taken by Rosseter was as far-sighted as it was broad. He argued that with the end of the war there would be no strength in a scattering distribution of Central American coffees by New York, New Orleans, and San Francisco; and the only promise of maintenance of the business for the United States would be in maintaining unity of distribution in one port of the United States, namely San Francisco.

The first year open to European competition after the war showed that San Francisco was well able to maintain its lead in Central American coffees. Today, the mortgages formerly held by European merchants on the native coffee plantations, and the control thereby of the produce of these plantations, are in the hands of American merchants; and what is more, out of general merchandising and importing by merchants of San Francisco there have developed expert coffee departments in all of the larger houses. The years of the war brought the product of virtually all plantations in Central America to the intimate knowledge of these expert coffee departments; and today the advantage that Europe formerly had—of knowing exactly what a specific plantation produced—is possessed by San Francisco merchants.

This is no small advantage when we consider that in Guatemala and Costa Rica, qualities vary from plantation to plantation, and that often on adjoining plantations there is from three to five cents a pound difference in quality, from the standpoint of cup merit.

One can not buy coffee in Central America as in Brazil, as these countries are not highly organized commercially, and the importers here are forced to assume the rôle of the Brazilian commisario and banker. The crop has to be financed from six to nine months before it is brought to the port; and the securities covering such advances are at best of questionable value, on account of political insecurity, and the ever-threatening earthquakes, and the uncertainty of the elements. Distribution of the coffee after it has been brought to San Francisco also involves many difficulties, notwithstanding that the demand is good. This will be better realized when we consider that the Pacific coast, from Alaska to Mexico, and eastward as far as the Rocky Mountains, embraces a population of about 8,000,000, whose annual consumption is estimated at 400,000 bags; and that, as already stated, treble that quantity was imported to San Francisco in 1919.

In 1900, ninety-nine firms were engaged in the green coffee importing business (some were roasters also) in New York; six in Philadelphia; twenty-eight in San Francisco; twelve in New Orleans. In 1920, there were two hundred and sixteen in New York; thirty-one in San Francisco; fifteen in New Orleans.