For God, Country, and Coca-Cola Page 6

  Pemberton must have been optimistic and full of new schemes. As usual, he had spent the winter working on new formulae and was preparing to unveil his latest. He told the reporter that it was called Phospho Lemonade & Phospho Ironade (renaming it Lemon & Orange Elixir later); it would replace beer and wine, he asserted, comparing the new drink favorably to the finest imported champagne. The inventor appeared to be, as the paper had predicted in 1886, “on the high road to fortune.” He had two best-selling drinks, with more on the way. “The success of this company has been something phenomenal,” the Constitution reporter concluded on that May Day of 1887, and it must have seemed that nothing could go wrong.

  On June 6, to assure his legal claim to the popular new drink, Pemberton applied for a Coca-Cola trademark patent. On June 28, it was granted. A week later, all hell broke loose.

  __________________

  * Globe Flower Cough Syrup was a big seller over the next two decades, purportedly curing consumption, bronchitis, asthma, croup, bleeding of the lungs, pleurisy, and laryngitis. According to another ad, Extract of Stillingia cured “ulcers, pustules, carbuncles, scald head, salt rheum, and the 88 different varieties of skin affections.”

  * As an inventor and pharmacist, Pemberton had ready access to drugs. His formula book included recipes using not only cocaine and morphine but cannabis as well.

  † “Addiction” is difficult to define; cocaine apparently is not physically addictive, because habitual users do not exhibit the classic withdrawal symptoms, but there is no question that the drug is psychologically addictive.

  * The Chattahoochee River runs near Atlanta.

  ~ 3 ~

  The Tangled Chain of Title

  It is always a relief to believe what is pleasant, but it is more important to believe what is true.

  —Hilaire Belloc

  All truth—and real living is the only truth—has in it elements of battle and repudiation. Nothing is wholesale.

  —D. H. Lawrence

  In the middle of July 1887, John Pemberton initiated a series of transactions that would lead to the most confused, convoluted genesis of a successful corporation that the world could ever have witnessed. In a little over a year, the formula for Coca-Cola would be subdivided and passed from hand to hand like the proverbial hot potato. The story resembles a Shakespearean play in which subplots weave among themselves before reaching a final resolution. None of the main characters emerged a real hero; each engaged in some form of subterfuge, deceit, or scheme.

  On July 8, John Pemberton sold two-thirds of his Coca-Cola rights to Willis Venable and George Lowndes for the grand sum of one dollar, though for the time being he kept the sale a secret from his partners in Pemberton Chemical Company. Actually, Lowndes, who supplied the money, paid Pemberton $1,201, but $1,200 of it was considered a no-interest loan to be paid back out of future profits. The inventor, who retained a third interest, would also receive a third of the profits. In return, he sold Venable and Lowndes all of the necessary equipment and supplies at cost ($283.29), as well as providing a copy of Coca-Cola’s formula.

  Why did Pemberton sell? According to Lowndes, it was because he had fallen ill again and was worried about where money would come from—both for his family and his morphine, which he must have needed more than ever to kill pain. Pemberton and Lowndes had been close friends since sharing a boardinghouse in 1869; now the inventor wanted his old friend to buy his greatest creation. “Lowndes, I am sick,” he began, “and I don’t believe I will ever get out of this bed. The only thing I have is Coca-Cola.” Urging Lowndes to buy it, Pemberton told him that “Coca-Cola some day will be a national drink. I want to keep a third interest in it so that my son will always have a living.” Shortly before the sale, the ailing doctor confided to his nephew Lewis that if only he had the proper capital, he could make a fortune from Coca-Cola: “If I could get $25,000, I would spend $24,000 advertising and the remainder in making Coca-Cola. Then we would all be rich.” With the profits, he envisioned endowing “a great hospital for impecunious sons and daughters of Confederate soldiers.” Now, however, he thought that he was dying and would never see the fulfillment of his dream.

  The first partner to get wind of Pemberton’s sale was M. P. Alexander. A small item appeared in the Atlanta Constitution recounting local court news of July 9, 1887, the day after the contract was signed: “Mssrs J. S. Pendleton, F. M. Robinson and C. A. Robinson [presumably Frank’s brother] allege that the president of the [Pemberton Chemical Company], M. P. Alexander, has taken full possession of the books, papers, etc, and is so conducting business as to seriously prejudice their interests. They say that Alexander and other persons have formed a conspiracy to ruin the business.” The judge granted a temporary restraining order and set the case for July 13, though there is no evidence that a court hearing or trial ever took place.

  According to M. P. Alexander’s grandson, the rebelling partner believed that he rightfully owned a quarter interest in the Coca-Cola formula. When Alexander somehow learned that Pemberton had secured the trademark patent in his own name and had sold two-thirds of the rights to Venable and Lowndes, he realized that Pemberton was an unreliable, devious partner. At that point, Alexander withdrew from the partnership, taking control of the books and what remained of his initial investment, and went back to Tennessee. Later, he migrated to Texas, where he practiced pharmacy until he retired. There is no evidence that he conspired to ruin the business, but it appears that Alexander did not tell poor Frank Robinson about Pemberton’s perfidy.

  FRANK ROBINSO N’S SURPRISE

  Two tense weeks passed. On July 21, Pemberton wrote out an inventory of materials he was selling to Venable and Lowndes and received a check for $150 with a promissory note for the balance of $133.29 to be paid in thirty days. Pemberton then calmly informed Robinson that he had obtained a patent for the Coca-Cola label as sole owner and had, in addition, sold most of the rights.

  Robinson, who had named Coca-Cola, written out the Spencerian-script logo, manufactured it, and masterminded the advertising and promotion, was in shock. Because Coca-Cola was created while Pemberton was a partner in the Pemberton Chemical Company, Robinson had assumed that each partner owned a fourth interest in the formula. After all, the company letterhead specifically stated that the Pemberton Chemical Company was the “sole proprietor” of French Wine Coca, which Pemberton had invented before the partnership commenced. Now, however, the company was a mere shell, with Alexander (and his money) on the lam and Coca-Cola sold.

  The next day, July 22, 1887, Robinson carefully reconstructed a financial statement for Coca-Cola, probably from memory, because Alexander had the books. With fitting irony, he wrote it out on Pemberton Chemical Company letterhead that proclaimed Alexander the president of the firm. The stationery listed all of Pemberton’s proprietary medicines, including Coca-Cola. Robinson’s figures showed that 990 gallons of Coca-Cola syrup were sold for $1,500 from March 1 to July 14, 1887. He estimated the cost of materials at a dollar per gallon, leaving a $510 profit. Then, however, he listed salaries and expenses for the same period amounting to $1,459.78. The resulting balance sheet was decidedly in the red. Still, he was sure that in time the drink would pay handsomely.

  He persuaded partner Ed Holland to accompany him to consult John Candler, who had recently represented the partners against Alexander, “to see if he didn’t think [we] could have [our] rights maintained.” Candler, an ambitious twenty-six-year-old prosecuting attorney, agreed to look into the matter and paid a visit to Pemberton, still bedridden in what the lawyer described as “a small cheap house.” Pemberton denied any wrongdoing. “They are mistaken,” he said. “They have got no interest in [Coca-Cola] whatever; I have done what they say, but I never did give them any rights in it, nor their company.” He sighed. “It don’t make much difference, though, even if they did have any rights. I don’t know how you would get anything out of me.” The lawyer decided not to take the case, because neither Robinson, Holland, nor P
emberton had any money. “I laughingly told [Mr. Robinson] I didn’t see much chance,” Candler recalled. “I didn’t care for his case on any contingent fee . . . and that was the end of it.”

  As far as the independently wealthy Holland was concerned, perhaps the lawyer was right. But Frank Robinson had worked hard for Coca-Cola and believed in the future of the product; he wasn’t about to let the matter drop, and he didn’t feel it was a laughing matter. Robinson cast about for another plan. Pemberton may have sold the rights to the formula, but Robinson still had a copy of it, and he must have felt legally entitled to it. He needed to find someone to purchase the rights to Coca-Cola and promote it properly, someone with vision and capital.

  VENABLE AND LOWNDES SELL OUT

  Meanwhile, Willis Venable and George Lowndes had carted their inventory from 107 Marietta down the block to the corner of Marietta and Whitehall, where they dumped it in the basement of Jacobs’ Pharmacy. Venable, who as the self-proclaimed “soda fountain king” of Atlanta had written a glowing testimonial to Coca-Cola in April, agreed to manufacture the product as well as market it. The first man to sell a glass of Coca-Cola, Venable was a well-respected businessman, dispensing a standard array of drinks at his twenty-five-foot soda fountain. Lowndes, who worked for another patent medicine house, simply supplied capital. Busy at the soda fountain, Venable couldn’t spare the time to promote Coca-Cola, much less make it. After several months, Lowndes forced a change. “We did very little business, that’s the truth,” he later testified, “and it went into the concern to pay the expenses. . . . I found he wasn’t handling it as a thing of that sort should be handled, and I told him we had best separate—he buy or sell to me.”

  According to Lowndes, Venable did indeed sell to him, but Lowndes couldn’t find the time to promote the drink either. “I realized that Coca-Cola would die if it did not receive immediate attention. Consequently, I resolved to sell it.” On December 13, 1887, Pemberton signed a note authorizing the sale, and the next day, Lowndes (with Venable’s signature, because it had been on the original sales document) sold to Woolfolk Walker and Mrs. M. C. Dozier, for $1,200 plus the cost of the manufacturing inventory. Walker persuaded his younger sister, Margaret Dozier, to supply the $1,200 for the purchase. The ownership of Coca-Cola had become yet more fractured, with Mrs. Dozier owning two-ninths and Walker four-ninths of the total formula rights.*

  JOE JACOBS MUDDIES THE WATERS

  To confuse matters, however, Venable somehow disposed of his portion of Coca-Cola twice. At some point during the fall of 1887, he apparently gave his share of the drink to Joseph Jacobs, the owner of Jacobs’ Pharmacy. As the druggist later recalled it, “thru some business deal, I acquired Mr. Venable’s share [of Coca-Cola] in lieu of some money I had loaned him in completing his beautiful home in the West End.” Jacobs did not sell to Walker and Dozier, keeping his share well into 1888, though his memory was frustratingly hazy and contradictory. He later testified that “at the time we bought [Coca-Cola], Moxie had a large sale and we thought we would make a big thing out of [Coca-Cola]. . . . Dr. Pemberton put this on the market and I took a part ownership and I think finally all of it.”

  Soon after acquiring his share in Coca-Cola, Jacobs became annoyed with both the drink and its inventor. By his own admission, he didn’t know much about the soda fountain business, which he left entirely to Willis Venable. While Venable had continued to make Coca-Cola “in a small way,” Pemberton kept harassing Jacobs for advances on his share of the sales. “There was a clause in the original agreement,” wrote Jacobs, “in which Dr. Pemberton was to have a royalty of five cents a gallon. He seemed to be pressed for money pretty much all the time and was having money advanced constantly, based on the potential royalty. This did not please me.”

  PEMBERTON REVIVES

  In addition to plaguing Jacobs, the ailing Pemberton was not idle. Although virtually bankrupt, he placed a misleading ad in the Atlanta Constitution on October 2, 1887:

  WANTED: An acceptable party with $2,000.00 to purchase one-half interest in a very profitable and well-established manufacturing business, absolutely no risk, and guaranteed a 50 per cent profit on investment, with possibilities of much larger profits and rare opportunity to right party.

  To avoid his creditors, Pemberton’s blind ad did not give his correct address, but another house on Marietta Street, presumably a friend’s. With this bait, he snared three eager entrepreneurs, so he graciously allowed all three of them to pitch in $2,000, thus buying what would logically be 150 percent of his business.

  J. C. Mayfield, an Alabama chemist, was reassured when Pemberton answered his response to the blind ad, because he had previously sold Pemberton’s concoctions. A. O. Murphey and E. H. Bloodworth, from Barnesville, Georgia, had no experience with patent medicines but were impressed with the records Pemberton showed them. After much correspondence throughout October, November, and December, the three new partners finally moved to Atlanta in late December, ready to produce all of Pemberton’s wonderful medicines, including Coca-Cola. The good doctor had neglected to tell them that he had sold off any of his formulae.

  ASA CANDLER MAKES HIS ENTRANCE

  With the Christmas season of 1887 about to commence, the fortunes of Coca-Cola were quite uncertain. The formula was officially owned by John Pemberton, Woolfolk Walker, and Mrs. Dozier. In fact, it is clear that several others had some interest in it, including Charley Pemberton, Joe Jacobs, Frank Robinson, J. C. Mayfield, A. O. Murphey, and E. H. Bloodworth.

  One more person had almost certainly entered the picture by this point—Asa Candler, the older brother of lawyer John Candler. In his search for a savior, Frank Robinson had found his well-capitalized, industrious businessman. The epitome of the ambitious Atlanta druggist, Candler was always looking for a likely new product, but he was cautious about spending money. Robinson had a difficult time convincing Candler that Coca-Cola was a worthwhile venture, finally galvanizing him by conjuring a prophetic vision: “See that wagon going by with all those empty beer kegs? Well, we are going to push Coca-Cola until you see the wagons going by with Coca-Cola just like that.”

  Though Asa Candler does not appear in any Coca-Cola documents until 1888, he insisted in later testimony that he had become involved the previous year: “I had the whole control of it [Coca-Cola], as far as the business was concerned, in 1887.” Curiously, however, he added, “I don’t know whether I had bought it or not at that time,” explaining that he acquired the drink in return for debts owed him by certain “gentlemen.” Later, he “intervened into the affairs of this Pemberton Chemical Company.” While vague about exactly how he became involved with Coca-Cola, Candler was positive about one thing: “Robinson had manufactured it, collected it all, and did everything else before 1888. Robinson might have been called my agent.”

  Candler’s muddy statement becomes clearer when we compare it with his last courtroom testimony in 1924. In it, he said he thought he had purchased the Coca-Cola formula from Joe Jacobs, but added “I am not certain about it.” What he was absolutely clear about was that Frank Robinson had given him the actual formula. Obviously, after Robinson brought him the directions for manufacturing Coca-Cola, Candler then had to obtain legal possession—a process that would be not only confused but highly suspicious.

  With the opening of the soda fountain season in March of 1888, Candler officially began to take control of Coca-Cola. During that spring, Joe Jacobs complained to his friend Asa Candler about Pemberton’s constant requests for money. Candler, without appearing too eager, offered to take the drink off his hands in return for some stock in a glass factory and “odds and ends such as bed pans, pewter syringes, wooden pill boxes, and empty bottles,” according to Jacobs. The uninsured glass factory burned soon afterward. Though Jacobs kicked himself for the stupid barter in subsequent years, he remained lifelong friends with Candler.

  CHARLEY PEMBERTON STAKES HIS CLAIM

  Meanwhile, Mayfield, Bloodworth, and Murphey had settled in,
and on January 14, 1888, they had formed a copartnership with Pemberton called the Pemberton Medicine Company, in which Pemberton specifically gave them the rights to all of his patented products, including Coca-Cola and his new Lemon and Orange Elixir. After moving to a better location on Pryor Street, the partners commenced production, naively unaware of the disintegration of the Pemberton Chemical Company or the sale of Coca-Cola. Mayfield ran the laboratory, Bloodworth took to the road as a traveling salesman, and Murphey kept the books. The only discordant note seemed to be Mayfield’s rather stormy marriage—Diva Mayfield often helped her husband in the laboratory, and their arguments made Murphey and Bloodworth uncomfortable.

  Within a few months, however, trouble appeared in the person of Charley Pemberton, who had returned from a drug firm in Louisville, Kentucky, to claim his birthright. He demanded that Mayfield relinquish the manufacturing job to him. Mayfield refused. Charley was “disgruntled, dissatisfied and made it up for the old man, Dr. Pemberton,” Mayfield said later. “The doctor came to us and told us that he would have to give—that the son contended that he had promised him the Coca-Cola business. Of course, it was a bomb in our camps.”

  Charley, whom Mayfield regarded as “disagreeable, a drinking kind of boy,” began throwing tantrums, boozing, wheedling, and putting his father in an awkward position. Dr. Pemberton finally told the partners he had signed the rights to Coca-Cola over to Charley some time previously but hadn’t remembered it until then. He blamed his lapse of memory on his morphine habit. For a while, there was no resolution to the matter. “We ran along there quite a little while thereafter undecided just what to do,” Mayfield remembered. As matters simmered, the partners were further disillusioned with Pemberton when they discovered that Asa Candler had quietly maneuvered to gain legal control of Coca-Cola, forming a new company with Charley Pemberton and Dr. Pemberton’s former salesman, Woolfolk Walker. In addition, as the soda fountain season opened, Candler’s company was brewing Coca-Cola faster than they were and pushing it hard.