The Coke Machine - Michael Blanding [12]
At the darkest hour, however, the United States Supreme Court came to Coke’s rescue. In a December 1920 ruling that Coke executives love to quote to this day, judicial lion Oliver Wendell Holmes, Jr., essentially declared that whatever its past practices, Coca-Cola had transcended its own name to become “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 the name the drink.” In other words, Coke was so popular that no one in his right mind would consider its name as merely describing its two main ingredients. Therefore, any beverage with a similar name was merely riding Coke’s coattails. In one fell swoop, the U.S. government had ensured Coke’s right to exist, clearing the field of virtually anyone who would oppose it.
Dobbs’s aggressive strategy of taking on all comers had paid off, setting the stage for the continued rapid growth of the company. Sales of the drink by 1920 were now in the tens of millions of gallons, leading to more than $4 million in annual net profit. As the money poured in, Candler bought up skyscrapers in Kansas City, Baltimore, and New York, each of which he inevitably named the Candler Building. Meanwhile, as Dobbs amassed power, Robinson’s star waned. In a tiff over advertising, Candler sided with his nephew, making him head of advertising and sales, as well as his de facto successor. As the company grew bigger and more successful, however, there was one person who remained unsatisfied, even appalled, by the growth—Asa G. Candler.
The strict Methodist upbringing that made Candler frugal and austere also made him feel guilty about the obscene profits he made from such an ephemeral product, and envy his brothers Warren, a Methodist bishop, and John, a state judge. Asa had always run in two modes—manic and depressed—and finally as the decade turned, depression got the best of him. He fretted about his legacy and his four sons, who were almost universally disappointing to him. (The most entertaining of the lot, Asa Jr., eventually became an eccentric drunk, who kept a menagerie of zoo animals in his mansion and created a minor scandal when his baboon scaled a fence and ate $60 out of a woman’s purse.) The only one of his sons who showed any promise was Howard, who followed him into the company. But while Howard showed aptitude in the technical side of the soda business, he lacked his father’s vision and management skill.
Candler’s disappointments came to a head in 1913, when he suffered a nervous breakdown and took a prolonged tour of Europe to “steady his nerves.” As much as anything, the cause of his breakdown was financial. Over the years, Candler had treated Coca-Cola as his personal piggybank, intertwining his finances with the company’s. Progressive changes in tax laws in 1913, however, prevented businesses from holding on to large cash reserves, requiring that they distribute dividends to shareholders instead. Candler bitterly resented parting with any of it. Fine with allowing the government to protect his profits against would-be competitors, he wasn’t about to let Uncle Sam tell him how he had to distribute those same profits to investors.
After this “forced liquidation,” wrote his son Howard, “he was ready to quit trying to make money and entirely willing to relinquish to others the task of conducting the affairs of the corporation.” At the same time, he tossed out vast sums to philanthropic causes, assuaging his conscience, increasing his stature in Atlanta, and earning a healthy tax write-off in the bargain.