The forgotten story of how thousands of Georgia’s farmers became millionaires July 13, 2009Posted by shaferfinancial in Finance, Uncategorized.
Tags: coca cola millionaires, make investing simple, my run in with coke wealth
When I was in college, I took a summer job in south Georgia coaching a YMCA swim team. Little did I know I would run right smack into an amazing story of wealth. Now years later, I recall that story for you and hope you take from it some basic wisdom.
When I took the job, they didn’t tell me they were planning to close the swimming pool down to do repairs before the end of the season. In fact, they only told me about a week before it was to happen. Meanwhile the team had several swimming meets yet to go including the championships. I was resigned to an early end of the swimmers summer when a man came up to me and suggested that we could continue swimming in his back yard pool. Now I was 18 years old at the time, and had a very limited world view and experience. This man was …..well to put it bluntly looked like he lived on the streets. Chewing tobacco, overalls, lack of teeth, and a beat up Ford pick up truck. I think to myself, “you gotta be kidding,” but tell him thanks for his invitation and I will discuss it with the parents of the kids.
Much to my surprise, there was only agreement with this arrangement from the parents. Hmmmm, what was going on here????
The following Monday I drove to this man’s house using his handwritten directions [little did I know no one else needed directions]. I made the turn into a dirt road off the main road and drove and drove and drove. Several miles later I reached the end of the driveway. Around back of this comfortable brick house was the pool, around the same size as the YMCA pool!
I know I was slow on the uptake, but even my little brain realized there was something going on here that I wasn’t aware of. At the end of the first week the man suggested I stay for lunch after swim practice, which I readily agreed too. It was here he told me the story.
“It was before the great depression and his father, a small but fairly successful farmer sat in front of a pharmacy in this small town. It was the type of place where everyone knew everyone else. The local banker wandered by and told his father to come on in and get his loan [for seed]. The banker came out and joined the group, each with their bottle of Coca Cola. The banker looked at this group of farmers and said to them, “sure do like this coca cola. Wouldn’t it be nice to be able to grow this stuff.” They all agreed as each man knew he drank several bottles a day in the long hot summer months.
The next week my host’s father went to get his seed money. The banker saw him and waved. As he sat down the banker had a real serious look on his face. He said, “look John, you need to take your financial life seriously.” Now John, was a conservative man and thought, “what is this banker up to, is he going to raise the interest rate or not give me the loan?” But the banker slid the papers over to John to sign. John looked and to his relief the loan was more than he needed to get the seeds and the interest rate remained the same as last year. That’s when the banker reminded him about their little joke. The banker said, ” you need to start growing coca cola.” Then the banker said, “I want you to go over to Hank and with that extra money buy yourself a share of the coca cola company.” Now John had never bought shares before so he was a little fearful. The banker continued, “pretty soon that share will be growing coke for you and it won’t stop even after your dead and buried.” Well John wanted to keep the banker happy, so he did as the banker advised that year and every year when he had a successful crop. By the time my host’s father died he was a millionaire. [1 share of Coca Cola stock bought in 1919, would be worth close to $4million dollars today if you reinvested dividends]. My host was living off the dividends [and quite well it appeared] from his father’s investment. I asked my host if his father ever tried his hand at buying other stocks. He said, no he spent his life farming, raising his family, and going to church. He never thought about the stock much, preferring to pay attention to more important things in his life.
Now I would find out later, my host was not alone in this. There were thousands of coca cola millionaires living in south Georgia at the time.
This is, of course, one of many examples of folks successfully investing in a local or regional company which makes them millionaires. Berkshire Hathaway has its share of Omaha millionaire stock owners. Microsoft is famous for many of its workers becoming millionaires from stock options. At the same time there are many more people who when the opportunity came by, passed.
Years later the banker was asked why he was so insistent on getting people to buy Coca Cola stock. He said, “I drank gallons of that stuff every week, so did every one I knew; figured we weren’t so different than everybody else.” And as it turned out they weren’t as now Coca Cola is drunk around the world.
Investing doesn’t have to be complex. Actually, as we now know the more complex you make it, the worse off you are probably going to do. No need for advanced statistical analysis, risk based formulas. As Warren Buffett points out just some common sense and the willingness to take a look at the profits, cash flow, price, management and some thinking about the products. Of course, Warren made a little money off of the Coca Cola company starting in the late 1980s!
Don’t make investing more complicated than it needs to be. Pay attention to the fundamentals [easily done in the computer age], forget about the mass media, be willing to admit mistakes, take your extra money, even if it is a small amount, and invest in a company!