Ambassador Griscom to the Secretary of State.

[Extract.]
No. 16.]

Sir: Referring to my dispatch No. 12, of July 4 last,a relative to the scheme for the valorization of coffee in the States of São Paulo, Rio de Janeiro, and Minas Geraes, I inclose herewith a copy and translation of the executive decree of August 6, officially promulgating the law, as well as a copy of the convention of February 26 and the amendment of July 4 last.

In order to put the law into force, the contracting States are now seeking to secure a loan of fifteen million pounds sterling.

I have, etc.,

Lloyd C. Griscom.
[Inclosure.]

Decree No. 1489, of August 6, 1906.

[Translation.]

Approves the convention which took place between the presidents of the States of São Paulo, Rio de Janeiro, and Minas Geraes on the 26th of February, with the modifications of the agreement signed by the same presidents on July 4 of the current year.

The President of the United States of Brazil.

I make known that the National Congress has decreed and I have sanctioned the following resolution:

  • Article 1. The convention which took place on the 26th of February of the present year between the presidents of the States of São Paulo, Rio de Janeiro, and Minas Geraes, with the modifications of the agreement signed by the same presidents on July 4 of the same year, is hereby approved. The clause referring to the caixa do emissãoouro e conversão (gold issue and conversion department) is excluded from this approval, as its creation is dependent on a resolution of the National Congress.
  • Art. 2. All dispositions to the contrary are hereby revoked.


  • Francisco de Paula Rodrigues Alves.
  • Leopoldo de Bulhões.

[Copy.]

Convention between the States of Rio de Janeiro, Minas Geraes, and São Paulo, with the object of valorizing coffee, regulating its trade, and promoting its increased consumption, and the creation of a caixa de conversão (note issue and conversion department) for the fixing of the value of the currency.

  • Article 1. During the term that may be convenient, and which may be reduced or extended by mutual accord, the contracting States bind themselves to maintain in the Brazilian markets the minimum prices of 55 to 65 francs [Page 110] gold, or the equivalent in currency, per bag of 60 kilos of coffee, American type No. 7, during the first year; this price may later be raised to the maximum of 70 francs, according to the conveniences of the markets.
  • For the higher qualities, according to the American classification, the prices indicated will be augmented proportionally during the same periods.
  • Art. 2. The contracting governments will endeavor to prevent by adequate measures the exportation to foreign countries of coffee inferior to type No. 7, while favoring as far as may be possible the development of their consumption within this country.
  • Art. 3. The contracting States oblige themselves to organize and maintain a regular and permanent service of coffee propaganda with the object of increasing the consumption, by the development of the actual markets, by the opening and conquest of new ones, and by defensive measures against fraud and falsification.
  • Art. 4. The contracting governments, whenever it may be judged opportune, will establish national types, promoting the creation of exchanges of syndical chambers for the coffee trade; in accordance with these types will then be fixed the prices referred to in article 1.
  • Art. 5. Means will be placed at the disposal of producers for improving the quality of their product by mechanical treatment.
  • Art. 6. The contracting governments bind themselves to create a surtax of three francs (subject to augmentation or diminution) per bag of coffee exported by any of their States, and also to maintain the laws which impede by sufficiently high taxes the increase of the areas of land planted with coffee within their territories during the period of two years.
  • Art. 7. The products of the surtax, referred to in the preceding article, will be collected by the union, and is destined to the payment of interest and amortization of the capital necessary for the execution of this convention, the surpluses being applied to defray the expenses demanded by the services of the said convention, and the collection of the surtax will begin after the realization of the dispositions contained in article 8.
  • Art. 8. For the execution of this convention the State of S. Paulo is from this date authorized to promote in this country or abroad, with the guarantee of the surtax of three francs referred to in article 6, and with the conjoint responsibility of the three States the necessary credit operations up to the amount of 15 millions sterling, which will be applied as a gold reserve for the department for the emission and conversion of gold notes, which may be created by Congress for the fixing of the value of the currency.
    1.
    The product of the emission against this reserve will be applied, in terms of this convention, to the regularization of the coffee trade and its valorization, without prejudice to other endowments created by law.
    2.
    In case there should be need of the indorsement or guarantee of the Union for these credit operations, the dispositions of Clause X of article 2 of law 1452 of December 30, 1905, will be observed.
    3.
    The State of São Paulo, before closing the credit operations indicated above, will submit the terms and conditions to the knowledge and approval of the Union and of the contracting States.
  • Art. 9. The organization and direction of all the services of this convention will be intrusted to a commission of three members nominated by each of the States and a president chosen by the three States, who will only have a casting vote.
    1.
    Each director will have a substitute to replace him when absent, the nomination of these substitutes being also made by the respective States.
  • Art. 10. The commission referred to in the preceding article will organize all the departments and nominate all the functionaries necessary for the execution of this convention, and it may intrust, in part, its execution to some national association or company (empreza) under its immediate control, in accordance with the respective regulations.
  • Art. 11. The domocile of the commission will be the city of São Paulo.
  • Art. 12. For the execution of the objects of this convention the commission will organize the necessary regulations which will be submitted to the approval of the contracting States, which will be considered to approve them if they do not state their objections within fifteen days.
  • Art. 13. The responsibilities and advantages of this convention will be divided among the contracting States in proportion to the quota of surtax paid on the coffee from each of them.
  • Art. 14. The contracting States recognize and accept the President of the Republic as arbiter in any questions that may arise between them in the execution of this convention.
  • Art. 15. The present convention will come into force from the date of its approval by the President of the Republic, in terms of No. 16 of article 48 of the Constitution.

(Signatures)—
Nilo Peçanha; Francisco A. Salles; Jorge Tibiriça
.

Modifications and amendment to convention of Taubaté.

The presidents of the States of Rio de Janeiro, Minas Geraes, and São Paulo have agreed and resolved to modify the convention of Taubaté and to add the following clauses, which shall now be a part of the convention:

I.

Article 1 of the convention shall be substituted by the following: During such period as shall be judged convenient the contracting States undertake to maintain in national markets a minimum price of 37$000 per bag of 60 kilos of coffee of New York type No. 7 in the first year; this minimum price can later be raised to a maximum of 40$000, according to the exigencies of the market.

As regards superior qualities, according to the same New York classification, prices will be raised proportionately during the same period.

II.

If the credit operations necessary for the carrying out of this convention are undertaken by the three States without consent or guarantee of the Federal Government the surtax of 3 francs, referred to in article 8 of the said convention, will be collected by the States and the proceeds deposited for the purposes land down in article 7.

III.

The date for the commencement of the collection of the 3 francs surtax shall be determined by the contracting States.

IV.

So long as the caixa de emissão e conversão has not been created or is not in working order the States are empowered to apply the proceeds of the loan directly to the valorization of coffee.

V.

The government of the State of São Paulo, before making the final arrangements relative to the operations of credit, which are mentioned in article 8 of the convention, will submit the conditions and clauses of the contract for the knowledge and approval of the governments of the other contracting States and to the Government of the Union, in the case of a federal guaranty, in order that the exact responsibility of each may be clearly defined in the operation, which will depend on that approval.

VI.

The present convention will remain in force after the date of its approval according to the terms of No. 16 of article 48 of the Federal Constitution.


(Signed)
Jorge Tibiriça.

Francisco A. Salles.

Nilo Peçanha.
  1. Not printed.