Taubaté Agreement
1906 treaty / From Wikipedia, the free encyclopedia
The Taubaté Agreement (Portuguese: Convênio de Taubaté), was an agreement signed on 26 February 1906 during the First Brazilian Republic between the presidents of the states of Minas Gerais (Francisco Antônio de Sales), São Paulo (Jorge Tibiriçá) and Rio de Janeiro (Nilo Peçanha), the main producers of coffee in Brazil. Foreseeing the harvest of a record crop, the agreement was signed in order to artificially maintain the high prices of coffee. Based on the principles of the Governors' Policy [pt], an intervention by the Federal government of Brazil was agreed for the benefit of the coffee growers in certain regions of the country.
The agreement established minimum prices for the purchase of surplus coffee production by governments, that the export of inferior types of coffee was to be discouraged, the improvement of the advertising of Brazilian coffee abroad, the stimulation of domestic consumption and the restrictment of the expansion of coffee crops. Purchases would be financed by issues backed by external loans. In addition, the federal government was committed to the creation of the Caixa de Conversão [pt] in order to stabilize the exchange rate, and thus, the income of coffee growers in domestic currency. The agreement started the first coffee price defense operation, which was made up of a policy of valuing the product and another of stabilizing the exchange rate.