Hershey: Milton S. Hershey's Extraordinary Life of Wealth, Empire, and Utopian Dreams

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Hershey

Simon & Schuster

Introduction

Tourists who travel by car -- and more than four million come every year -- often start at the landmark Hotel Hershey, which occupies a ridge that rises more than a hundred feet above the Lebanon Valley in central Pennsylvania. It's a Moorish-style fortress with ornamental towers and a green tile roof. The view from its veranda is the best one available. To the south a scene that looks like a model railroad display comes to life. Cars speed along smooth asphalt highways. Lush cornfields give way to a color-splashed amusement park with ten roller coasters, a Ferris wheel, and a snaking monorail. Beyond the neon and flapping pennants stand old factory buildings, church spires, and houses. Every once in a while a freight train will snake its way along the tracks that slice through the valley.

A drive into town on Sand Beach Road, which becomes Park Avenue, takes you along the east flank of the park. The double-track roller coaster -- ninety feet high at its tallest point -- is so close to the road that a falling cap could land on your car. Farther along, on a quieter, shady stretch of road waits a small zoo, which is set beside a pristine little creek. Park Avenue then takes a sharp turn and climbs up and over a bridge that crosses railroad tracks. On the other side you are suddenly depositedin another place and time.

In downtown Hershey, the streetlights are shaped like giant Kisses candies. A century-old factory made of soft red brick sprouts a pair of giant smokestacks decorated with the letters H-E-R-S-H-E-Y. The emerald fairways of a golf course stretch out from the factory lawn. Across the avenue, gracious old houses, some dating from 1905, occupy carefully manicured properties.

All of Hershey, including the zoo, the antique town, the amusement park, the playful streetlights, and even the factory, is clean and neat and cheerful. Even the names of the major streets -- Chocolate Avenue and Cocoa Avenue -- bring a smile to a visitor's face. And that's before he stops, gets out of the car, and realizes that the air in this Willy Wonka place smells like sweet cocoa. Hershey always smells like this. On a humid summer day when there is no breeze it's so strong you can taste it.

In this town of 13,000 souls, business people and civic boosters promote an image of kindhearted contentment. Squabbling is bad for business, and the main businesses in little Hershey -- tourism and candy -- rack up sales in excess of $5 billion per year. For this reason, the great howl of protest that erupted in Hershey in the summer of 2002 drew reporters and TV news crews from around the world.

It all started with small groups of worried citizens meeting in living rooms and kitchens. Then townspeople noticed handmade signs tacked to light poles, staked on lawns, and taped onto shop windows. Some said, "Derail the Sale." Others warned, "Wait 'til Mr. Hershey finds out!"

The object of these protests was the Milton Hershey School Trust, which held controlling interest in the famous chocolate company for the benefit of a residential school for needy children. The stock was worth as much as $10 billion and the trust was planning to sell it to the highest bidder. Fifty-seven years earlier, when founder Milton S. Hershey died, the trust guaranteed that local residents who shared a common sense of purpose and community would run the company and protect the economy of the town. If the stock was sold, the chocolate-making firm that had represented the playful and prosperous spirit of the community for a century would pass from local control.

Worried conversations about the sale quickly led to an organized opposition. Finally, on a scorching hot Friday in August, more than five hundred citizens marched through downtown waving placards and shouting while police looked on.

This being Hershey, when the people took to the streets they were careful to dress nicely and walk with care, avoiding damage to private lawns and public gardens. Younger protesters kept a kind eye on the elderly marchers to make sure they didn't suffer in the heat. Nobody cursed. Nobody threw a punch, a bottle, or a scrap of litter.

But as mild mannered as the demonstration was, it was also a sign of deeply felt worry. Never in the town's history had such a varied group united behind a single cause. The opposition included many retired Hershey company executives, including the silver-haired former chairman of the board, Richard Zimmerman, who stood to earn a fortune on his stock if the sale went forward. The retired executives were joined by union workers who stood with alumni of the Milton Hershey School. Men who once designed ad campaigns for Hershey bars developed antisale propaganda. Schoolchildren marched beside doctors, lawyers, and local politicians.

At a rally, alumni leader Ric Fouad shouted, "We're not here to mourn, we're here to mobilize!" Onlookers waved placards that read, "Power to the People!" and "Save Our Town!"

The idea of selling the Hershey company was born of good intentions. Board members of the Milton Hershey School Trust, which held a controlling interest in what was formally called the Hershey Foods Corporation, had decided that the charity's dependence on the firm's stock was unwise. American securities markets were in the middle of a long steep decline. Some major companies -- WorldCom, Enron, etc. -- were collapsing in scandal and leaving investors with pennies on the dollar. Looking at the perilous markets, the board members secretly decided to sell the trust's stake in Hershey and invest the windfall in a more diverse portfolio.

Although other charities held big stakes in corporations, the situation in Hershey was unusual. For one thing, the trust was devoted to a single enterprise: an eleven-hundred-pupil residential school for needy children. For another, the value of the trust was enormous. Estimated at $5 billion, it was already eight times larger than the endowment of Phillips Exeter Academy, the nation's next-richest school. Indeed, only six universities held larger endowments, which meant that the Milton Hershey School was richer than Cornell, Columbia, or the University of Pennsylvania.

But as big as it was, the trust was unusually vulnerable because a crash in one company's stock price would do enormous damage to its portfolio. The diversification that a sale would make possible would reduce this risk. It could also produce a onetime windfall. Bidders would recognize that Hershey's many brands, which included Reese's, York, and Jolly Ranchers candies, had been underexploited. Properly managed, which might mean breaking the company into pieces, the whole lot might be worth not $5 billion but closer to $10 billion.

From a fiduciary standpoint, selling the company was in the interest of the trust and the Milton Hershey School. And the timing was right. The big global companies that dominated the candy business -- Nestlé, Cadbury-Schweppes, Kraft -- were in a buying mood. If the trust board didn't consider selling, it would fail to meet its duty to the institution and its students.

As much as the residents of Hershey cared about the needy children at the school, they had a hard time believing that a sale was necessary. Even without maximizing its investment, the trust's income far exceeded the board's ability to spend it every year. Not that they didn't try. They had built lavish facilities, expanded enrollment, and hired top-notch staff. With the cost of building maintenance factored in, they spent about $100,000 per year per child. And still the excess revenues piled up. How much more could the school need?

With the trust already rich, opponents of the sale thought the board was asking the community to make an unnecessary sacrifice. Roughly six thousand people held jobs in the company, including about three thousand unionized factory workers. A new owner was likely to see that bigger profits could be had if manufacturing were consolidated in other places, where wages, taxes, and other costs were lower. If the factories were moved, the jobs would be very difficult to replace. The change would also affect tourism and the very identity of the community. What's a chocolate town without a chocolate plant?

The town of Hershey had been created first in the imagination of the chocolate industrialist Milton S. Hershey, who then made it real in a place where there had been little more than a few farmhouses and acres of corn. The chocolate factory, the school, and the town were supposed to make up a self-perpetuating little utopia of capitalism and charity, and all three had thrived for ninety-nine years by adhering to his vision.

The idealism of Milton S. Hershey was cited over and over again by those who tried to stop the sale. With no real authority in the matter -- private trusts are not required to answer to the public -- they appealed to state officials and the court of public opinion. To do this, they put together a story that described the trustees as greedy and heartless outsiders who didn't understand the destruction they would visit on the town. They then welcomed the national media.

The reporters who came to Hershey saw a tableau of small-town America that was as appealing as the dream M.S., as he was known, held in his mind when he created his factory and his community. And like so many visitors before them, they agreed with the writer who, in the midst of the Great Depression, observed the town of Hershey's stubborn prosperity and isolation and declared it "a 10,000 acre world of its own."

Not one journalist missed the opportunity to flavor the story with references to the town's peculiarities and charming asides about chocolate. By the time the press was through, the entire nation would understand that a uniquely benevolent and impossibly cute village, which called itself "the Sweetest Place on Earth," was being bullied out of its dreamy existence by coldhearted money managers.

"They're threatening to tear the soul out of this community," one community leader told The Washington Post.

In the months-long struggle that took place after the Hershey Trust board acknowledged its plans to sell control of the company, most of the talk was focused on the future. Those who worried about the Hershey School and the children it served noted that other charities had recently lost billions of dollars as their stock holdings declined during the end of the bull market. The enormous David and Lucille Packard Foundation had seen half its money disappear as the price of Hewlett-Packard company shares fell. The Ford Foundation lost one-fifth of its value, and the Annie E. Casey trust fell 13 percent in the same bad market.

Opponents of the sale could argue using their own examples. When Tyco International bought AMP Manufacturing of nearby Harrisburg, it quickly laid off two thousand workers and shut its headquarters facility. Looking further afield, the Hershey sale opponents saw that in town after town where lumber companies, textile plants, and steel mills were sold, communities soon suffered enormous job losses. Smaller companies that supplied goods and services went bankrupt. Downtown business districts became ghost towns with plywood-covered storefronts, property values crumbled, and public services from schools to police withered for lack of tax dollars. Perhaps the best example of this pattern was Gary, Indiana, a prosperous center for steelmaking that became a nationally known symbol of urban blight when the mills shut down.

In Hershey, the competing predictions raised by the trustees and their opponents -- one side saw disaster, the other a smooth transition -- left little middle ground and forced people to take a stand. Almost every person the opponents approached, from Milton Hershey School alumni to former company executives and even the governor of Pennsylvania, came out against the sale. Governor Mark Schweicker said that the sale would imperil the state's economy and announced that keeping the company independent was one of his top priorities.

The economic value of the candy company's presence was easy to grasp, but if one listened to what the most impassioned people on both sides had to say, other powerful concerns emerged. Time and again people spoke of the town as an idyllic, nearly perfect place where citizens felt happier, safer, and more secure than people on the outside. Beyond the issues of jobs and money, they were fighting about the concept of community, and the ultimate purpose of corporations, which, after all, are human enterprises that generate wealth through the efforts of flesh and blood people.

Bruce Hummel, business agent for the local union, spoke for many when he declared without a touch of irony that "Hershey is a utopia" worth fighting for. But the statement that was heard most often sounded an even more peculiar ring. Time and again people wondered aloud, "What would Mr. Hershey do?"

As the conflict over the town's future raged, former employee Monroe Stover, age 102, told the local paper that "Mr. Hershey would never have considered" the proposed sale.

For their part, backers of the school trust's proposed sale reminded others that M.S. had himself considered selling the business before the stock market crash of 1929. Needy children were his first concern, they argued, and he would sell if it were in their best interest. For support, they cited Hershey's will in the way that fundamentalist preachers quote Scripture, pointing to a passage that invests in the trustees "full power and authority" to manage the vast fortune that M.S. left in their hands in any way they "may consider safe."

At the height of the furor, an outsider who arrived in Hershey might have believed that M.S. Hershey, dead since 1945, had risen from the grave. The local papers published his picture on a regular basis. His name was spoken in coffee shops and in taverns, in schools and in offices. Everywhere people tried to put themselves in Milton Hershey's place, to imagine what would be in his heart and mind. Most of those who lived in the town of Hershey decided that the eccentric millionaire would favor keeping everything just as it was.

The most remarkable aspect of the great conversation that occurred around Milton Hershey's ideals was that it happened at all. In his life, which ran from before the Civil War, through the Gilded Age, the Great Depression, and World War II, Hershey's wealth, if not his fame, was exceeded by contemporaries such as Carnegie, Rockefeller, and Ford. Indeed, scores of men accumulated fortunes greater than Hershey's and built charities and institutions that became monuments to their achievements. But try to name a great person of Hershey's era who, in 2002, would preoccupy the imagination of an entire community, and thousands of people beyond it, as a great controversy raged. Where and when would anyone ask, "What would Andrew Carnegie (or Cornelius Vanderbilt or Henry Ford) do?"

M.S. Hershey inspired this kind of reverence because he had created not just a great business and an enormous charity, but a complete, prosperous, and self-sustaining community that reflected his idealistic attitudes about everything from commerce to education and architecture. And unlike other model towns of its era, Hershey succeeded and continued to grow long after its founder was gone. Indeed, even as they were fighting over the future, the people of Hershey were preparing to celebrate in 2003 the one hundredth anniversary of the town's founding and a full century of prosperity that was unbroken, even during the Great Depression. The plan envisioned a series of events, culminating in a parade on Milton's birthday, September 13.

The power of Hershey's legacy was plain to see in the ways that people rallied around his memory and his creations. Some people actually described the place as a little kingdom where the monarch's ideals continued to rule long after his demise. "If Milton Hershey were alive there's no way he'd want the Hershey Trust to sell the company," said Kathy Lewis, head of a local historical society. "He created a benevolent dictatorship. Selling Hershey is like selling the soul of a unique community."

At first the quality of Hershey, Pennsylvania's devotion to its founder can strike a visitor as strange, almost cultlike. The American ideal doesn't generally offer room to the notion of a dictatorship on U.S. soil, even if it is a happy and benevolent one. Americans are more comfortable with an ethic that emphasizes individuality and autonomy. We prefer stories of utopias that failed because we believe that human nature abhors an egoist's grand designs.

But a close examination reveals that Milton S. Hershey's creations -- the company, the town, and the school -- were more a reflection of his values than his ego. Though he possessed a strong will and could be imperious, M.S. was often shy and sentimental. Despite his great wealth he lived in relative modesty, except when traveling abroad. And he held to common values, including respect for others, fair dealing, and honest effort. These were the values that were raised by those who protested the Hershey Trust's sale of the company.

Ultimately, the most compelling aspects of the Hershey story lay not in the immediate conflict but in the history that brought people together in support of an ideal personified by a man. From a modest beginning, M.S. created a model community powered by a highly successful corporation that was devoted to the welfare of its people. Alone among the special places built in an era of big dreams, Hershey has withstood every economic, social, and political challenge. At a time when many Americans feel isolated in their communities, insecure in their jobs, and confused about the nature and purpose of wealth, the Hershey story offers answers, cautions, and inspiration.

Copyright 2006 by Michael D'Antonio

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Excerpted from Hershey by Michael D'Antonio Copyright © 2007 by Michael D'Antonio. Excerpted by permission.
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