The War Was Over, but These 3 Companies Were Just Getting Started


On this day in economic and business history...

The largest war in human history finally - almost - drew to a close on May 8, 1945, with the formal and unconditional surrender of Nazi Germany to the Allied Powers. It was not the end, as Japan would fight on until August before it could fight no more, but it was an end, and much of the world celebrated while it could. The work of rebuilding the world would need to begin soon.

"Germany's crowning tragedy is that it took her so long to surrender," wrote Merlo Pusey in The Washington Post when the news broke, and the ruin of Germany showed it to be the truth. In 2009, Margaret MacMillan wrote in The Guardian:

At the end of the First World War it had been possible to contemplate going back to business as usual. However, 1945 was different, so different that it has been called Year Zero. The capacity for destruction had been so much greater than in the earlier war that much of Europe and Asia lay in ruins. And this time civilians had been the target as much as the military. The figures are hard to grasp: as many as 60 million dead, 25 million of them Soviet. A new word, genocide, entered the language to deal with the murder of six million of Europe's Jews by the Nazis.

Germany was at first heavily occupied, but as American policies shifted toward European reconstruction, the partitioned Western Germany was granted greater autonomy and financial assistance, particularly during the disbursement of Marshall Plan funding. Many of Germany's top scientists were brought to the United States shortly after capitulation (some went to the Soviets as well), where some formed the core of the American space program.

The two Germanies that emerged after the end of the war took divergent paths, with the Western partition becoming a peaceful industrial power and the Eastern partition suffering under Soviet dominion. By the time the two halves reunited in 1990, West Germany would have to bear the cost of rebuilding the East, much as the Allies had borne the cost of rebuilding the West following the war. Now, nearly seven decades after war's end, Germany is again the leading economic power of Europe. Its old scars still show - across Germany, artificial hills of wartime wreckage loom in many cities and towns, and few buildings remain from pre-war times. Few things can compel a nation to reject its past quite like the wholesale annihilation of a large part of it.

A more refreshing piece of history
Coca-Cola was invented by Atlanta pharmacist and Civil War veteran John Pemberton on May 8, 1886. Wired tells the story:

After the war, Pemberton settled in Atlanta, where he began work on a beverage combining coca leaves and cola nuts. His objective was to create a pain reliever but when his lab assistant accidentally mixed the concoction with carbonated water on May 8, 1886, the two men tasted it, liked it, and decided it might make a profitable alternative to ginger ale and root beer.

Pemberton sold the rights to Coca-Cola (twice, actually, but that's another story) as his behavior became more erratic. He died only two years after his accidental invention and only a few months after the Coca Cola Corporation was incorporated.

The accidental multinational almost never came about. It was only thanks to Asa Candler, who was behind the first (short-lived) Coca-Cola Company, incorporated in 1888, and is credited as the founder of the modern Coca-Cola in 1892, that the fizzy drink lived to conquer the world. Candler was one of the early marketing geniuses, and under his guidance Coke went national before the turn of the century. You can read more about this legendary company's origins and its later growth by following the two links in this paragraph.

A true original
Only two film companies have ever gained a spot on the Dow Jones Industrial Average in over a century of the index's existence. The first, which found its place all the way back in 1925, got its start a mere 13 years earlier, on May 8, 1912, as the Famous Players Film Company. It operated for only four years before merging with a competitor to become Famous Players-Lasky. This new company used a familiar name to release its films: Paramount Pictures.

Lasky, under the guidance of Famous Players founder Adolph Zukor, grew quickly into a production and distribution powerhouse in an era that offered few serious rivals. By the 1920s, the company's Public Theatres subsidiary was a nationwide chain of over 1,000 screens. The industry-straddling Famous Players-Lasky (soon to be renamed Paramount Famous Lasky) joined the Dow in 1925, and it would remain a component until 1932. By this point the Great Depression had nearly killed Paramount, and a year later it fell into receivership, hanging on for another two years before collapsing into bankruptcy.

Paramount's post-bankruptcy recovery was so impressive that the company soon regained the vanguard of the motion-picture industry, from which it used its vertically integrated model (production, distribution, and screening) to control much of what the American public saw when it went to theaters. This dominant position made Paramount the first named defendant in the federal government's landmark antitrust case against seven major motion picture studios. This case, decided in 1948, separated Paramount from its theater chain and ended the era of the big studio.

Paramount declined in the post-antitrust era, and was bought out in 1966. This marked a revival for the company as a producer of quality films, as the years following its buyout saw the release of smash hits The Godfather, Chinatown, and Saturday Night Fever, among others, and also began Paramount's successful foray into television when owner Gulf + Western acquired Lucille Ball's Desilu, gaining the Star Trek franchise in the process. By the 1990s, Paramount was firmly (re)established as a top production company, which led to a bidding war eventually won by Viacom in 1993.

The right prescription for growth
The first CVS opened in Lowell, Mass., on May 8, 1963. It was initially known as "Consumer Value Stores," hence the CVS acronym, and was a health and beauty retail chain until 1968, when the first pharmacy departments popped up in some of the company's 40 locations. That same year, the Melville Corporation (a leading shoe retailer) acquired CVS, which made the drugstore chain only a small part of a very large retail organization. In 1974, CVS made up less than 15% of Melville's total sales, despite operating over 200 stores, of which 45 contained pharmacy departments.

Melville and CVS grew through the 1980s, and by 1989 the parent company accounted for 23% of its revenue from shoe stores, but drugstores (which included other brands at the time) comprised 28%. However, the 1990s brought some difficulties - all of CVS' California locations were sold in 1992. After further retrenchment and restructuring, Melville decided to refocus on CVS, which it merged with its Peoples Drug Stores brands in the mid-90s to create a 1,350-store chain generating $4.3 billion in annual sales in 1994.

After spinning off most of its other retail outlets, Melville adopted the CVS name as its corporate identity in 1996. By the turn of the century, CVS had bought two competing drugstore chains, and by 2004 it had also acquired a bankrupt rival and most of Eckerd's pharmacies. CVS continued to acquire smaller rivals throughout the decade, and by the time the company was ready to celebrate its 50th birthday - that's today, by the way - CVS had grown into the largest pharmacy chain in the United States, with over 7,400 stores that help fill or manage over one billion prescriptions each year.

Coca-Cola's wide moat has helped provide its shareholders with superior gains in the past, but the company faces some new threats to its continued market dominance. The Motley Fool recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!

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