Hi Sandra - I got this off .. the internet! there are heaps of sites on the topic.
fred

Druggist John Smyth Pemberton (1831-1888), was the inventor of Coca-Cola
Pemberton was wildly excited by reports of the virtues of the coca plant. The coca plant had been chewed by the natives of Peru and Bolivia for over 2,000 years and was reputed to act as a stimulant, aid to digestion, aphrodisiac and life-extender Accordingly, he decided to attempt to base his new drink around it. Indications that the cocaine found in the coca-leaf could prove addictive were generally ignored. Even the renowned psychologist Sigmund Freud enthused about the virtues of the leaf in his essay ber Coca, a 'song of praise to this magical substance".
Pemberton began researching obsessively for a formula for a new "temperance" drink based on the coca leaf and kola nut, but replacing the wine by an assortment of essential oils. This tasted too bitter, however, and he tried adding sugar - but this resulted in a sickly sweet taste. The addition of citric acid counteracted this effect, and resulted in a palatable drink.
from Business Heroes, July 1998

According to Snopes (myth busting site) Coca-Cola did used to contain cocaine. Coca-Cola was named back in 1885 for its two "medicinal" ingredients: extract of coca leaves and kola nuts. Just how much cocaine was originally in the formulation is hard to determine, but the drink undeniably contained some cocaine in its early days. How much cocaine was in that "mere trace" is impossible to say, but we do know that by 1902 it was as little as 1/400 of a grain of cocaine per ounce of syrup. Coca-Cola didn't become completely cocaine-free until 1929, but there scarcely any of the drug left in the drink by then:

http://www.snopes.com/cokelore/cocaine.asp
http://cocaine.org/coca-cola/