The truth of the matter lay somewhere in between these two positions. By 1920, the bottling territories were nearly blanketed. The number of franchises peaked at 1,263 in 1928 (the same year the volume of bottled syrup finally surpassed fountain), slowly consolidating in the following decades. While the parent bottlers had unquestionably performed a valuable service in the formative years of the bottling industry, their role had diminished by the time of the trial. They had a sweet deal and they knew it—which is why they weren’t about to give up their contract.
In the midst of the testimony, the city of Atlanta exacerbated the situation by suing The Coca-Cola Company for the names of its stockholders in order to tax them. But that was nothing compared to the daring new tactic of the bottlers’ lawyers. “BOTTLERS SUE FOR COCA-COLA RECIPE,” headlines blared on May 15. Deliberately attacking the Company where it was most paranoid, the bottlers insisted that the original contract granted them the right to the formula. If they lost the first suit, they would at least be able to supply their own syrup if they won the second.
As a finale, the bottlers unexpectedly withdrew their Fulton County suits on May 31, simultaneously filing the same suits in Delaware federal court. “It came as a thunderbolt out of a clear sky,” Dobbs wrote. “This infernal lawsuit hangs over me like the Sword of Damocles.” The public explanation for this move was that “federal questions” were involved, but the lawyers probably wanted to find a more impartial judicial climate than Atlanta. The Delaware case, which got under way in June, was argued for the bottlers by John Sibley from Atlanta and J. B. Sizer from Chattanooga. Having worked effectively alongside Hirsch in the Barrels and Kegs Case, Sizer now found himself on the other side, becoming so emotionally overwrought during his opening arguments that he fainted.
The quibbling over the relative merits of the parent bottlers was really extraneous to the main question—was the 1899 contract permanent? The contract had been modified in 1915 at Hirsch’s suggestion, to avoid possible prosecution under the Clayton Act for restraint of trade. One Florida bottler had refused to sign the amended contract until Hirsch specifically reassured him that it was indeed permanent. Sizer and Sibley triumphantly produced this 1916 letter. “Above all and beyond question,” Hirsch had written, “the new contract is perpetual and even more binding and stronger than the original contract along that line.”
On the stand, Hirsch tried to weasel his way out, asserting that “I did not write this letter as counsel for The Coca-Cola Company [but as] counsel for the bottlers.” Nonetheless, he admitted that he had always considered the contracts to be permanent until he “re-examined” the subject in 1919 and decided he had been wrong. Other testimony revealed that Asa Candler, Sam Dobbs, and Howard Candler had repeatedly begged the Thomas Company to abandon its two-year contracts, pointing to the successful Whitehead/Lupton operation. The Coca-Cola Company officials had insisted, Rainwater testified, that permanent contracts with bottlers gave them “the greatest incentive to do their best at all times,” and made them feel “absolutely safe” in making necessary capital improvements.
THE SUMMER OF ’20
On June 23, 1920, the testimony concluded, and Judge Hugh Morris was left to mull over some 2,500 pages of transcripts before issuing his verdict, which was expected in the fall. Around this time, Howard Candler committed a terrible purchasing blunder. Unable to obtain Cuban sugar at a reasonable quantity or price, he ordered a gigantic shipment from Java at twenty cents a pound. During the summer, one of Cuba’s sugar plantations broke ranks and offered to sell at a cut rate, triggering a steep drop from the artificially high price. By September, the price had fallen from its May high of twenty-seven cents a pound to fifteen cents, continuing to drift down below nine cents in December.
Candler and other Company officials prayed that the boat from Java would be caught in a tropical storm and sunk, but it arrived as scheduled on December 15 with 4,100 tons of high-priced sugar, the largest single shipment of sweetener ever received in Georgia. One unsympathetic wag said that The Coca-Cola Company had a “terrible case of diabetes.” While most other soft drinks lowered their prices, Coca-Cola bottlers could not, and they were blamed for what was beyond their control. “It is very hard for the public to realize that we are NOT manufacturers of our syrup,” wrote bottler Crawford Johnson. In response to pleas to lower the syrup price, the Company actually boosted it in November, provoking an outraged letter from Rainwater.
Tempers must have flared at the Company offices during that summer and fall of 1920. The Bottler Suit was pending, as was the Koke Case. The sugar decline spelled disaster for the next year’s syrup price. Discouraged shareholders sent the price of the stock steadily down. Under these circumstances, the personality clash between Sam Dobbs and Ernest Woodruff came to a boil.
Dobbs quickly developed a distaste for the obstreperous Woodruff. At the onset of the litigation, Dobbs had written to D’Arcy that “our friend Woodruff is in no way helping by his constant butting-in and interfering. . . . He seems too disposed to tell us all what we ought to do and is very much outraged when we don’t agree with him.” In the midst of the trial, Woodruff further annoyed Dobbs by suggesting what might have been the tycoon’s most brilliant amalgamation: “Woodruff is as busy as a mangy dog with fleas, with a great scheme of consolidating The Coca-Cola Company, the parent bottlers and all of the actual bottlers into one big corporation, with the bottlers to take Coca-Cola stock for their holdings and plants.” Dobbs dismissed the idea; he would be damned if he would agree to coexist with both Woodruff and “Lupton and his bunch.”
Now, at a July meeting of the executive board in New York, Dobbs finally blew up. Woodruff insisted on spending no more than $1.2 million for the year in advertising, despite inflated postwar prices. Wall painters, for instance, were demanding twice the previous year’s wages. Dobbs had to inform the board that he had already paid $1.1 million and needed to spend considerably more by year’s end (in fact, the final advertising expense for 1920 was $2.3 million). After the meeting, Dobbs took Woodruff aside and blistered him with an unaccustomed lecture. “I asked him pointedly what he knew about Advertising and Advertising costs,” he recounted to D’Arcy. “I then asked him what his opinion was worth on a question of advertising about which he was densely ignorant.”
From that moment on, Dobbs’ fate was sealed. Harold Hirsch met the president when he returned from a Western trip, explaining that Woodruff had the board’s solid support in demanding that Dobbs step down. Dobbs was blamed not only for the overspent advertising budget, but the Java sugar debacle. On October 4, he tendered his resignation, agreeing to keep silent about it until the board meeting in November, when it would become final. He complained to D’Arcy that “Woodruff, through his confidential conversations with everybody that comes into his office, will soon have it all over town.” He was right. Rumors of dissension within the Company plummeted the stock five dollars in one day. To no one’s satisfaction, Howard Candler was installed as president for the second time. As dividend payments were postponed, the stock dropped to a new low of twenty-five dollars a share.
Beset by management woes, loaded down with overpriced sugar, and threatened by pending lawsuits, the new Coca-Cola Company appeared to be floundering. On November 3, the Fulton County Superior Court ruled that Coca-Cola had to reveal stockholders’ names to the city of Atlanta. Five days later, Judge Morris finally announced his decision. The contract, he held, was indeed permanent. “I never read a more forceful and conclusive opinion in any case,” Sizer exulted. “This is a golden opportunity for The Coca-Cola Company to make a fair and reasonable settlement of this litigation.” At first, he seemed to be correct. While filing an appeal, the Company asked for negotiations. W. C. Bradley and Veazey Rainwater were chosen to represent either side and commenced a protracted series of meetings.
A RAY OF LIGHT
While Bradley and Rainwater sparred, Supreme Court Justice Oliver Wendell Holmes Jr. delivered an opinion that redeem
ed the otherwise miserable year that had almost passed.* In his decisive ruling, Holmes reversed the Court of Appeals, favoring Coca-Cola over Mayfield’s Koke Company of America. In words lovingly quoted by Company officials in years to come, he wrote that Coca-Cola was “a single thing coming from a single source, and well known to the community. It hardly would be too much to say that the drink characterizes the name as much as the name the drink.” In other words, it didn’t matter that the drink was originally named for its primary ingredients or that it had once contained cocaine. The judge ruled that Koke was an infringement on the trademark, but that Dope was a generic term that Mayfield was free to use.
Finally, the wrangling bottlers and Company officials could rejoice over a mutual triumph. If the opinion had gone the other way, it would have rendered their bickering meaningless, since Coca-Cola itself would have been badly damaged. “The decision is of the utmost importance,” Hirsch told a reporter. “It establishes beyond all question the validity of The Coca-Cola Company’s trademark and trade name, and will forever protect the company against infringement.” In his temporary euphoria, Hirsch may be pardoned for overstatement. He would prosecute plenty of cases in the future, but they would be substantially easier to win.
Meanwhile, Howard Candler continued to price syrup on the inflated twenty-cent sugar in his storehouse. Bottler Crawford Johnson moaned that his consumers could not understand “why we are compelled to sell our product on a basis of 20¢ sugar when the market price today is 81/4 ¢.” Rainwater and Bradley remained deadlocked over the Company’s right to inspect bottling plants and the bottlers’ demand to examine the Company’s books. The new year dawned with no settlement in sight. In February, the bottlers instituted yet another suit against the Company, charging Howard Candler with using fraudulent sugar prices.
A few days later, the Wall Street Journal embarrassed the Company by implying that its annual report was hiding something—which, of course, it was. “The report of the Coca Cola Co. leaves plenty to the imagination. It is unlike any annual statement that has made its appearance since the first of the year.” The stock took yet another dive, and Howard Candler hurriedly filed a profit and loss statement showing a 1920 loss of over $2 million from sugar. In April, in an all-out effort to woo favorable press, The Coca-Cola Company threw a bash at Atlanta’s Capital City Club to unveil big new ads to editors and publishers.
On May 4, 1921, after only two days of hearings, the Court of Appeals judge in Philadelphia virtually affirmed Judge Morris’ opinion from the bench. In an unusual procedure, he called the attorneys to the bar and suggested that they agree on a sliding scale for their mutual benefit. Afterward, Hirsch and Sizer agreed it would be best to leave it up to a court-appointed official, since Rainwater and Bradley were at an impasse. By the end of June, the war within the Coca-Cola family was resolved. The contracts were permanent—even the contracts of the Thomas Company with its bottlers. Beginning on November 1, the price of syrup would be set at $1.17½ per gallon for the parent bottlers, and $1.30 to the actual bottlers, both of which included a five-cent allotment for advertising. For every cent that sugar rose above seven cents a pound, the price of syrup would increase by six cents. The bottlers dropped their other suits.
Coca-Cola had weathered its worst crisis. The overpriced sugar was almost exhausted, and sales continued to increase, despite a national economic slump. A jobber explained the drink’s depression-proof status: “It is a business in innumerable articles of comparatively small cost that have a universal demand.” In June, another major infringement suit against Chero-Cola—a drink that had dominated its home territory of Columbus, Georgia—came down in favor of Coca-Cola.
HARRISON JONES INTO THE BREACH
The internecine struggle may have been over, but it left deep psychic wounds that would never fully heal. The bottlers would never again truly trust the Company. Yet one man who had joined The Coca-Cola Company managed single-handedly to bridge the gap between the two parties. Harrison Jones soon achieved mythic stature among the bottlers. A solidly built 6’2", Jones was an imposing man, his curly hair boiling from an oversized head, while his booming voice dominated any conversation. A journalist, still recovering from an encounter, described him as “a very large gentleman who masks a kindly and patient disposition with a slightly ferocious exterior and a vocabulary more graphic than recordable. . . . Mr Jones appears forever to be about to hit something with an ax.” Jones had joined the firm of Candler, Thomson & Hirsch in 1910 and was involved in the 1919 buyout. Perhaps recognizing that he was more suited to sales than the law, Hirsch suggested that Jones transfer to the Company to reorganize its sales force. The new employee split the country into ten sales territories, installing a manager in each, and instituted annual meetings. In 1921, Jones published the first newsletter for Coca-Cola fountain salesmen, which he called the Friendly Hand. He even managed to pry money out of Ernest Woodruff for thirty brand-new cars.
At the same time, he recognized that the bottlers, too, badly needed a friendly hand from the Company. As a first act of reconciliation, he planned a huge convention for all of the bottlers in 1923—a first-time event, since previous conventions had been sponsored by the separate parent bottlers. He enlisted veteran salesman Ross Treseder to assist him. According to Treseder, Jones became “all steamed up” over the need to make the convention a memorable, effective affair that would inaugurate “permanent closer cooperation” between the Company and the bottlers.
Jones wanted the bottlers to feel that it was their convention and traveled to solicit their suggestions. Treseder’s description of the men he and Jones visited reveals the Coca-Cola bottler in his kingdom. Mobile, Alabama, bottler Walter Bellingrath was eager to talk, since Coca-Cola was “his religion morning, noon and night,” punctuating his advice on Coca-Cola with biblical quotations. He used much of his wealth to create elaborately landscaped gardens. From Mobile, Jones and Treseder traveled to Memphis to see “Uncle Jim” Pidgeon, the premier U.S. bottler, who used one hundred thousand gallons of syrup annually. A white-haired dynamo, Pidgeon was another true believer. “By the time you left [him],” Treseder wrote, “any misgiving or doubt you had about Coca-Cola and its potential success would have vanished completely.”* In Paducah, Kentucky, they found Luther Carson, who periodically leaped up in church to testify to Coca-Cola’s wonders. Carson had good reason to praise the Lord, since he owned the best car and biggest home in town; he delighted in showing off his oriental rugs.
Armed with plenty of ideas, Jones and Treseder returned to Atlanta and prepared a complete stage set of “Typical Town,” with mom and pop stores, barbershops, haberdasheries, and shoe stores. On the “wrong” side of the street, Coca-Cola displays were put in out-of the way places or the logo was misspelled. On the “right” side, appropriately placed signs announced the drink’s superiority. The 1923 spring program appealed particularly to the route salesman, who shouldn’t consider himself merely a delivery man. “If a man thinks he’s a salesman, he is a salesman,” Jones said. “If he thinks he is a truck driver, he is a truck driver.” Taking the drivers down “Brass Tacks Lane,” the seminars covered every aspect of a typical day.
Harrison Jones grew positively lyrical in his grand address of reconciliation to the bottlers: “This is a great day! It is a day of reunion, a day of family unity, when the stalwart sons of Coca-Cola . . . meet together in the old homestead . . . to give inspiration and to gain it.” He proceeded to give it, emphasizing the indissoluble bond between the Company and the bottlers: “You, the bottlers of Coca-Cola, and we, the manufacturers of Coca-Cola, are interlocked, interlaced and interdependent one upon the other in a way that injury cannot be done to the one without the other, and that the progress of one must inevitably be the progress of the other. Men, we are one.”
Jones called the bottle and glass “the Siamese twins” of the Coca-Cola industry and summoned “men with guts . . . whole-souled, red-blooded he men” to go out and find consumers “at th
e crossroads country store, at the filling station, at the ball game, at the skating rink, on the trains, at the clubs—literally, anywhere and everywhere.” On the bottler’s heart and mind, Jones wanted the message imprinted: “Let’s make it impossible for a consumer to ever escape Coca-Cola.”
Treseder was awestruck. “He was the best speaker I ever listened to . . . capable of inspiring any audience.” In fact, Jones spent most of his life talking nonstop, relating anecdotes liberally spiced with creative obscenities. Thomas Wolfe, in a lyrical passage about a salesman, could easily have been describing Jones: “He had . . . a wild energy, a Rabelaisian vulgarity, a sensory instinct for rapid and swingeing repartee, and a hypnotic power of speech, torrential, meaningless, mad, and evangelical. He could sell anything.” Jones often called Coca-Cola “holy water”; once, however, carried away at a bottlers’ convention, he declared more truthfully, “Hell, I could sell bottled horse-piss.”
In his travels around the country to boost his salesmen’s morale, Jones was equally enthusiastic. The Canadian business was thriving, despite the long, cold winters. One day in St. Louis, Jones launched into a vivid description of the Canadian enterprise, explaining that in the winter the denizens of the frozen North kept their houses toasty warm and practically lived on Coca-Cola. “Wait,” one of the salesmen interrupted. “Is there any chance for me to get the bottling franchise for the North Pole?” Given Jones’ persuasive powers, the eager potential bottler may not have been kidding. As another Coca-Cola man noted, “Harrison Jones could sell you a snowball in Alaska.”
For God, Country, and Coca-Cola Page 22