5. Rothschilds and Coffee Finance: Brazil, 1898–1914

The coffee state of São Paulo launched a stockpiling programme to sustain world prices in 1906. Rothschilds publicly opposed the initiative but secretly participated in the transfer of funds to São Paulo in 1908, when a large harvest jeopardized the scheme. The end of the coffee programme would have deteriorated Brazil’s finances in the 1900s. That did not stop Brazil from borrowing in Paris that same year from banks that charged lower commission, suspending Rothschilds’ five-decades-long monopoly. Coffee prices fell in 1913, when the government pressured Rothschilds for a rescue loan. The bankers delayed the operation until the outbreak of the First World War. The conjunction of these adverse shocks—cheap coffee and the war—pushed Brazil to the edge of a default, which Rothschilds would not allow. Rothschilds launched the Second Funding Loan, which was similar to the homonymous operation of 1898 but did not include conditions on economic policy.