Minutes of Meeting of the Inter-American Coffee Board, by the Chairman of the Board (Cale)

The Inter-American Coffee Board met at its offices at 2400 Sixteenth Street, N. W., at 10:30 a.m., July 2, 1946 and considered the following matters:

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3. Prices. The Chairman outlined the developments leading up to the announcement on June 26 of the increase in coffee ceiling prices of two cents per pound.7 He indicated that the Price Committee of the Board had met on May 22 with Mr. Chester Bowles, the Director of Economic Stabilization, but that negotiations following that date had taken place very largely within the United States Government, itself. The State Department, he said, had taken a very active interest in these discussions and had urged more favorable price treatment for coffee. The proposal for suspension of coffee price ceilings, which had been supported by the Price Committee and the Department of State, was rejected by the stabilization agencies when it became apparent that the governments of the mild coffee producing [Page 165] countries did not have enough stocks of coffee to give a guarantee of sufficient size to prevent a rather marked increase in mild coffee prices in the event of the suspension of ceilings. The question of whether the increase should be on a percentage basis or a cents per pound basis was considered, he stated, but the percentage increase method was abandoned largely because the government of the country producing the largest quantity of mild coffee took the position that it was willing to make commitments only in exchange for complete suspension of ceilings and because the stabilization agencies felt as indicated above, that this was impossible.

Mr. Cale called attention to the fact that the Memorandum of Understanding between Brazil and the United States8 regarding coffee prices and supplies, which was announced at the time of the price increase, assured to all coffee producing countries that the prices would not be reduced below the new level. The increase which applies to all coffees will be permanent in view of the provision in the Memorandum of Understanding that corresponding adjustments in coffee price ceilings will be made if the subsidy of three cents per pound on coffee is withdrawn in whole or in part.

Following this outline of coffee price developments by the Chairman, representatives of some of the mild coffee producing countries expressed disappointment that the price increase had not been on a percentage basis but appeared to be rather well reconciled to the cents per pound basis which was adopted.

The Chairman indicated that the President’s veto of the bill extending the OPA left the whole coffee price situation uncertain until such time as Congress may take further action on the question of price control.

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Edward G. Cale
  1. In a circular telegram of August 14, 1946, the Secretary of State advised diplomatic representatives of certain American Republics that price ceilings of green coffee had increased 8.32 cents a pound over the level of December 27, 1941 (561.333D3/7–246).
  2. For a synopsis of the Memorandum, see telegram 888, June 29, to Rio de Janeiro, p. 518.