Ah! I thought of the Saruman connection, but he was not interested in the Shire until 1418.
I say the dwarves are clearly responsible for the trade in coffee, as they were the only ones who travelled the east road and had dealings with Hobbits. Many, if not most, dwarves would not ask questions about a luxury item so profitable.
Here's a theory, one you may dispute:
Coffee originated in Numenor, a gift from the Valar.
It's cultivation was freely taught to the people of Far Harad prior to the time of Ar-Pharazon as a form of economic aid.
The latter kings of Numenor however goosed the profit-margin in coffee trade (Dwarves, due to their hard-working nature, particularly prized it) by first having prisoners work the fields, and later slaves. Unfortunately.
The cultivation of coffee in smaller quantities and of lesser quality was also found not far from the city of Osgiliath, in what is now known as Ithilien.
After the fall of Numenor, the trade in coffee fell off dramatically, though the fields near Osgiliath continued to produce the luxury item for the private use of those of the royal lineage of Gondor. The drinking of coffee became a habit of kings, much like the wearing of cloth died indigo in our own medieval history. This habit of coffee being a 'royal' drink was carried on later by the stewards of Gondor (whether they liked the beverage or no), though it was abandoned in the North kingdom. Citizens of Gondor would have been very surprised to say the least at Bilbo's casual use of the beverage for guests. The very fact he had it at all would have stunned them.
But dwarves continued to trade in lands far to the east, and the formerly slave-worked fields of Numenor were for a time worked by free men of the south, who traded their crop to the northeast of the known lands of Middle Earth.
The risks in trading in those lands were rather high for the dwarves, but the coffee trade, cheap and plentiful in the Far East and South, expensive and rare in Middle Earth, was exceptionally profitable. It was relatively light, travelled easily. Passed as ordinary beans to the ignorant, thus avoiding all kinds of taxes, tarrifs and thievery. More than one dwarf expedition, robbed of their gold by bandits, came through with their coffee profits intact. So no dwarf caravan from the east failed to include this "insurance policy."
Sadly, as the power of Sauron grew, the coffee fields were once again worked by slaves, and did in fact finance his war. We must note however that though the trade did not altogether disappear, the proliferation of orcs in the East - due to Sauron - crippled the trade, and Sauron had little profit from Middle Earth because of it.
This is why Bilbo in the late 1300s had coffee, but Frodo in 1418 never mentioned it.
The coffee drinkers in Dale and the Lonely Mountain suffered most. That's when the acorn, chicory and other substitutions were tried, to little effect. The defeat of Sauron was greeted with relief for many reasons.
-Maril
[ September 22, 2002: Message edited by: Marileangorifurnimaluim ]
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