Chapter 32: The First Twist: The Sugar Rumor (November 1940)
The quiet days of October were over. November began with a loud, sudden shock.
For weeks, the Continental Investment Bank had been working in the dark. Arthur Vance, Elias Thorne, and the small team in the Wall Street office felt like secret agents. They were slowly executing their plan: buy Coca-Cola stock bit by bit, using the $\$150,500$ in income earned from the Boeing deal. They had spent most of that initial capital and were quietly sitting on about 3% of the company's shares.
Then, the market started to shake.
It began subtly, with a small article in a minor New York paper. The article, buried near the back, mentioned a new bill being discussed in Washington. The bill wasn't about the war; it was about rationing.
The article suggested that Congress was preparing to ration basic goods—things like rubber, oil, and, most importantly, sugar.
The Panic Begins
Within 24 hours, the small article turned into a massive, city-wide rumor. The telephones on Wall Street started ringing non-stop, turning the careful, quiet trading floor into a nervous mob.
Sugar rationing. The two words were like a bomb hitting the stock market.
The investors who owned Coca-Cola stock went into a sudden, deep panic. They didn't think about the global war. They didn't think about military contracts. They only thought about one thing: Coca-Cola cannot be made without sugar.
The general belief was simple: if the government cuts off the sugar supply, Coca-Cola's product disappears, the company fails, and the stock becomes worthless.
The selling began immediately. It wasn't the slow, careful selling Arthur had practiced. It was a waterfall. Every investor who had been worried about the war finally found a specific, terrifying reason to sell, and they sold fast.
In the Continental Bank's S&T office, the atmosphere changed completely. Frank and his team, who had been focused on quiet buying, now watched the stock ticker with wide eyes.
"Sir, it's falling!" Frank yelled over the chaotic phone noise. "Coca-Cola is down two points! Everyone is dumping their shares!"
Two points might not sound like much, but for a major company like Coca-Cola, a two-point drop in a single day was a disaster. It meant millions of dollars of value were disappearing, and the price was still sinking fast.
Financial Status Check
Arthur, standing calmly in the center of the room, felt a thrill. This was the moment of chaos he had been waiting for. This was when the amateurs lost their nerve and gave the professionals their chance.
However, the bank's current position was affected:
Income Spent (on Coca-Cola Stock): The team had spent nearly all of the initial $\$150,500$. They now owned their 3% stake, but its market value was sinking quickly.
Paper Loss: The shares they bought for, say, $40 a share, were now trading at $38. Their initial small paper profit of about $\$500$ had instantly turned into a paper loss of over $\$5,000$.
New Problem: The original plan was to buy slowly. Now, the price was dropping so fast that Continental's small team couldn't buy enough shares to make a difference before the price stabilized again.
"Stop all buying!" Arthur commanded the S&T team. "Hold the line. Do not buy a single share."
Frank looked confused. "But sir, it's cheap! We should buy more!"
"No," Arthur said firmly. "We don't buy when everyone else is selling until we know the bottom. The price is falling because of fear. We must wait until fear is at its peak."
He knew that the current paper loss was meaningless. The only thing that mattered was the secret—the military sugar deal—which guaranteed Coca-Cola's future. The market was making a mistake, and that mistake was the key to Continental's success.
Arthur's Calm
Elias Thorne came rushing into the Wall Street office from the headquarters uptown. He was pale and agitated.
"Arthur! Look at the tape! We are losing money! That 3% stake—it's down over five thousand dollars! Our shareholders, the trust... they are going to panic!"
Elias sounded exactly like the thousands of other investors panicking that day.
Arthur remained calm. He had lived through a 2025 financial crisis where trillions of dollars disappeared in a single week. A $\$5,000$ loss was nothing but a rounding error.
"Elias, sit down," Arthur said quietly. "Look at the big picture. We didn't buy Coca-Cola because we thought the stock was cheap. We bought it because we know a secret that the market does not."
"But the rumor is everywhere! What if it's true?" Elias pleaded. "What if the Washington deal falls apart? That's $\$5,000$ of our operating profit gone in a day!"
Arthur leaned into Elias. "Do you remember the moment in the Boeing deal when their board told us 'no' for the first time? You panicked. But that 'no' was the start of our victory."
"This rumor is the same thing," Arthur explained. "It is a gift. It is pure market emotion. Emotion drives the price down far lower than it should ever go. The greater the panic, the cheaper we can buy the shares. This is not a loss; this is a massive opportunity to increase our future income."
He knew he needed to stop the staff from panicking, but he also needed the panic to get worse.
The New Mission
Arthur turned to the Research Division. Mr. Davies and Mr. Bell were watching the market news, looking overwhelmed.
"Davies," Arthur said, his voice cutting through the noise. "This sugar rumor is the single most important event of the year for us. It will determine if we reach our 10% goal or not."
"What do you need, sir?" Davies asked, grabbing a pencil.
"I need the truth, faster than anyone else on this street can get it," Arthur commanded. "You have your network. You have your phone lines. I want you to make every call possible to Washington D.C., and every call to the highest ranks of Coca-Cola leadership. Find out if the military deal is still secure. Is the sugar supply truly guaranteed?"
"It will be a very difficult question to ask, sir. People won't talk about a classified military agreement."
"Then you find the people who can't afford not to talk," Arthur said. "You don't ask about the agreement. You ask about the production schedule. You ask about the shipping logs. You ask if they have started building the new bottling plants near the military training camps."
"We will find the truth," Davies promised, understanding the urgency.
Arthur looked back at Elias, whose breathing was slowing down. "We will not sell, Elias. We will not worry about a few thousand dollars of paper loss. We will use this panic to crush the rival buyer who was holding the price steady. But first, we must confirm the secret. Go find the truth!"
The Research team rushed out, their mission clear. The S&T team sat frozen, waiting for the order to buy. Arthur stood alone, watching the stock price continue to plummet. The market was giving him a discount, and he just needed the word from Washington to start spending.