Milton Hershey: Failure to Philanthropy—Through Chocolate

 

His deeds are his monument.

His life is our inspiration.

 

 Dedication on Hershey's statue in Founder's Hall

 

    
       Milton Snavely Hershey was devoted to philanthropy. He was an astute and foresighted businessman who carefully designed his factory, a town for his employees, a school for orphans, and the means for them to flourish long after his demise. In 1945, the year that Hershey died, Gordon Rentschler, chairman of the board of National City Bank (now Citibank) of New York, wrote: "He measured success ... in terms of a good product to pass on to the public, and still more in the usefulness of those dollars for the benefit of his fellow man."
       
       Hershey was a pragmatic philanthropist who not only believed that wealth should be used to benefit others but also that good works are good business.       

 

BITTERSWEET BEGINNINGS
       
       Whoever said "a kiss is just a kiss," didn't know Milton Hershey. Overshadowed by his reputation as a chocolate maker, his altruism is an inspiration that continues long after his death. The Hershey School is a living testament to the magnitude of his spirit.
       
       The man who perfected milk chocolate was not always a success. By the time he was forty, he had experienced a string of business failures, buoyed only by the loyalty and support of benefactors--family and friends. Hershey persevered and later rewarded those who stood by him through the failures.
       
       The roots of Hershey’s philanthropy were rooted in his childhood. Born in a fieldstone house built by his great-grandfather, the boy grew up speaking a Pennsylvania Dutch dialect in rural Pennsylvania. His father, Henry, was a reader and dreamer who never earned enough to support this family. Henry inherited his father’s tendency towards being a dreamer with the sober Mennonite bearing of his mother, Fanny, who was soured by her husband's inability to support his family. His father lived in the world of books and ideas, sometimes experimenting with innovations in breeding crops and animals. Henry lacked practical application, but he knew how to dream, and he dreamed of "doing things in a big way," as he would encourage his son. Young Milton developed the attributes that would serve him throughout his life: a charismatic personality, perseverance, vision, insistence on quality, the willingness to take calculated risks, a keenness for innovation, a profound sense of compassion, a powerful work ethic, and an abiding belief in the Golden Rule, which, as an adult, he would claim as his religion.
       
       As a boy, Milton had chores around the farm. As an adult, he recognized their value in character development, and included farm chores as part of the training for the boys in the school he would found. "Why not let other boys enjoy the experiences I had working on a farm?" he asked. "It's the happiest and best life there is."
       
       The family's frequent moves disrupted Milton's education. He attended at least a half-dozen schools before he was fourteen, when his mother and her sister, Martha Snavely (Aunt Mattie), decided that he had had enough schooling. His father apprenticed him to the editor of Der Waffenlose Waechter, a dual-language (English-German) newspaper in Lancaster County. Not long after Milton dropped a galley, spilling set type all over the floor, his hat fell into the press rollers. It was time to try something new, to "work where he could make something tangible," his mother said. He was soon and serendipitously apprenticed to Joseph Royer, a confectioner in Lancaster.
       
         At about this time that Henry sold the farm and wandered off to seek his fortune. Fanny and Aunt Mattie took rooms across the street from Royer's to stay close to Milton, a pattern they would continue for many years. At the time, there were no formal recipes for candy, so Milton learned to make candy by taste, using trial and error to divine—and improve upon—the contents of competitors' products and, later, to create high-quality milk chocolate.
       

THE CITY OF BROTHERLY LOVE AND BEYOND
       
       In 1876, when he was nineteen, Hershey was eager to set out on his own. With financial help from his mother and Aunt Mattie, the young man set up business in Philadelphia. Making penny candy at night and selling it during the day, he hawked his confections from a pushcart and hired local boys to sell them from hand baskets. But hard work and long hours were not enough to keep the business afloat. The price of sugar was high, and Hershey couldn't get credit. Even with his mother and aunt helping with the wrapping, it was difficult to produce sufficient volume to make a profit.
       
       Fanny and Mattie contributed what money they could spare to the young business. When Hershey's mother ran out of money, she took in boarders and persuaded his uncles Benjamin and Abraham to send him money.
       
       In 1880, Hershey hired William Henry (Harry) Lebkicher to help produce his candy. Lebkicher took to the business with alacrity, and the next year Milton's father showed up to help deliver candy. Milton tried diversifying, with products ranging from French Secrets (taffy wrapped in paper with rhymed couplets) to ice cream.
       
       Henry had his own ideas. He wanted a share of the success the Smith brothers were experiencing with their cough drops. He reckoned that cough drops were a natural investment because everyone catches colds. He convinced his son to sell a line of H.H. Cough Drops and specialty cabinets he had designed to showcase candy displays.
       
       With sugar prices remaining high, and some retailers being slow to pay, Henry declared that he was off to seek his fortune in the silver mines of Colorado. Milton gave him $350 as payment for the cabinets he had ordered. Discouraged and exhausted, Milton became ill. While he recuperated, his mother and aunt struggled to keep the business afloat.
       
       At this nadir of the business, Lebkicher's horse, which he had used to pull the candy cart, ran away, dumping the cart and its load of candy into the streets, where passersby quickly grabbed it up. That candy spill was the death knell for M.S. Hershey, Wholesale and Retail Confectioner. His thin profit margin disappeared with the candy and the horse, and Hershey closed the doors on his first enterprise. He would not forget his costly dependence on sugar wholesalers.
       
       In 1879, the young man followed his father to Denver, where Henry was involved in a silver venture. Hershey was surprised at the city's beauty and modernity, the towering mountains and electric streetlights. He was also surprised to learn that the silver mines weren't producing.
       
       Looking for work, Hershey was nearly shanghaied when he responded to a "boy wanted" sign. Finding himself locked in a room full of bedraggled boys, he realized that they were bound for forced labor. His demand that he be released was greeted with scornful laughter, until he brandished a gun he had bought for protection. Hershey considered himself lucky to have $100 in his pocket to spare him the desperation of the boys he left inside. He tucked away another lesson for future application.
       
       Serendipitously, a local confectioner was looking for an assistant. This job not only provided a livelihood, but also a key to Hershey's eventual fortune: The candy maker used milk in his recipe, which extended his caramel's freshness and improved their chewiness and texture. This secret, not silver, would be the key to the fortune Hershey sought; he just didn't know it yet.
       
       Hershey, however, was not satisfied as an employee. He had tasted what it meant to be his own boss, and he yearned to have his own business again. Besides, he wanted to continue to experiment in his quest for the perfect candy.
       
       Again he followed his father, this time to Chicago. Father and son decided to start a new candy business together, but the senior Hershey defaulted on a promissory note that he had cosigned and was penniless again. Still in his midtwenties, Hershey suffered his second bankruptcy.

 

NEXT STOP: THE BIG (CANDY) APPLE
       
       Again borrowing money from his mother and Aunt Mattie, he set out for New York City, where chocolate was enormously popular. He immediately found work with a popular candy manufacturer and raised additional capital by hawking candy he made at night in his landlady's kitchen. When he earned enough money to buy a candy boiler, Hershey moved his operations to a rented room, but he didn't like relying on the adjoining Chinese laundry for steam to power his boiler or paying $5.00 a day to do so. Seeking independence, he moved to a tiny shop on Sixth Avenue above 42d Street. However, when his original landlord refused to release him from the rent on his first shop, Hershey was again in dreadful financial straits. Once more, his mother and aunt came to help. He continued experimenting with chocolate recipes, while he spent his days peddling his candy and cough drops in the streets. Soon, his father rejoined them, hawking the candy from a basket.
       
       Hershey was desperate. His aunt had no more money to invest, and his uncles had no more faith. His father had always told him to think big, and he was in big trouble, so he signed a note for $10,000 to purchase the machinery to mass-produce cough drops.
       
       Hershey filled a rented wagon with the load of cough drops that he hoped would get him out of debt. While he made a delivery, some boys who found his horse standing quietly in the street set off firecrackers to have some fun. Hershey never saw the horse or the wagonload of cough drops again.  Once again, all of his hard work was ruined by a runaway horse.  When a burglar robbed him of everything but the clothes he was wearing and just enough money to get himself back to Lancaster, the dispirited young man used it.
       
HOME AGAIN
       
       Because his family did not have a place for him to stay, he sought out his erstwhile employee, Harry Lebkicher, who welcomed him into his home and paid the transportation charges for Hershey's equipment.
       
       Before long, the indomitable entrepreneur was peddling his candy on the streets of Lancaster. He rented lodgings for his mother and himself and a small room as a candy factory. As soon as he was able, Hershey moved his candy business to larger quarters, this time with its own boiler. He hired a friend to transport his equipment and supplies to the new facility, promising to pay as soon as he could. A month later, he paid his debt—the entire fifty cents.
       
       In his new quarters, Hershey rehired two loyal former employees--his mother and Aunt Mattie--who resumed their wrapping duties, and he returned to spending his nighttime hours producing candy to sell during the day. Now, though, he also carried five gallons of milk from a farm to his candy works every day.
       
       Profits grew, and Hershey traded his handbasket for a pushcart. (He had learned his lesson about horses.) Rival street vendors resented his intrusion, and the established business community scorned him. As the familiar shadow of failure loomed, a visiting candy importer tasted his caramels and wanted to export them to England in quantity, if Hershey could produce enough of them. This could be the realization of Hershey's dreams. After all the failures, he saw a chance of success, but he could not possibly produce the volume the importer required.
       
       Having exhausted his family's savings and goodwill, Hershey walked into Lancaster National Bank and, with his aunt's house as collateral, applied for a $700 loan, then a considerable amount of money. An employee named Brenneman granted the loan for ninety days.
       
       Unfortunately, Hershey defaulted. There had been little likelihood that he would turn a $700 profit in three months. He asked for another $1,000. Certain that the bank officers would never approve a larger loan for a customer who had just defaulted, Brenneman cosigned the note himself. Hershey's enthusiasm could be contagious.
       
       Less than two weeks before his second loan was due, Hershey received the first £500 payment from England. He ran all the way to the bank with it, with his apron still on. This was the turning point of Hershey's career.
       
       
       When Hershey eventually asked for a loan of more than $100,000, more than the small bank could handle, Brenneman suggested that Hershey try a New York bank and wrote a personal note supporting the application. The bank lent him $250,000.

 AT LONG LAST, SUCCESS
       
       Hershey's caramels were a sensation, and he invested every dollar he made in expanding his business. By 1889 he was buying additional properties in Lancaster and Reading, Pennsylvania, as well as Chicago and--probably with some sense of vindication--New York City. Hershey continued to improve his recipes. He experimented with novelty and holiday shapes. He handsomely rewarded employees who made useful suggestions; if they were found wanting, he patiently modeled how the work should be done. Hershey had two factors in his favor: an uncompromising commitment to quality, which he called "the best kind of advertising in the world," and his faithful adherence to the Golden Rule, which gained him the loyalty and devotion of those who knew him.
       
       At the 1893 World's Columbian Exposition in Chicago, Hershey saw a German chocolate-making machine. With his customary vision, he bought the machine and had it delivered to his caramel factory in Lancaster. Hershey continued developing his own recipes, often tasting the products of successful competitors and using the ingredients he detected as the basis for his own improved version. He strove to create the perfect chocolate, which, if mass-produced and affordable, would be an enduring product, since caramels, he thought, were a fad.
       
       By 1894, a local publication referred to Hershey as a complete success, adding that "no man stands higher in business and social circles in the city of Lancaster" than this former pushcart peddler.
       
       In 1898, Hershey married Catherine (Kitty) Sweeney, a shopgirl from New York City. They indulged their mutual passion for gardening, traveled through Europe, and entertained lavishly in their elegant mansion, with songbirds in the sunroom and large, colorful birds in the flower garden. Hershey brought Kitty fresh flowers every day. The one void in their lives was their childlessness.
       
       In 1900, after a long negotiation, Hershey sold his caramel works for a million dollars. Keeping only his chocolate-making machine, he rented a wing of his former factory, where he concentrated on developing and mass-producing the best milk chocolate the world had known, at prices ordinary people could afford.
       

TRIUMPHANT RETURN
       
       It is no accident that Hershey, Pennsylvania, is a well-maintained company town situated amid dairy farms. When Hershey decided to build a factory to produce milk chocolate, he thought of the milk produced by dairy farms in his native Derry County, which also offered an ample water supply and "the most wonderful workforce anybody ever had." He thought of Derry Church, where the tiny school he briefly attended still stands. The region even provided the limestone to build his factory. On March 2, 1903, he broke ground for his new chocolate factory.
       
       Hershey acted on his beliefs that good works are good business and that wealth should be used to help others. He did not intend for his employees, the people of the land where he had grown up, to know the privation he had experienced as a child. Having made good, he was determined to do good. What he had lacked in his youth, he gave to others in his adulthood. Because he had moved from house to house, he provided his employees a planned community, where they could buy affordable homes. He insisted that the houses have character: no tract housing, no little boxes made with ticky-tacky; every employee should be able to buy a home with a unique style. Those who did not choose to buy were offered affordable rent.
       
       Because he had not himself been afforded a solid education, Hershey provided schools for the children of his employees. He created an endowment for the continued support of the local public schools. He also provided a fire department and served as a volunteer, and saw to the construction of tree-lined streets, recreational facilities, a bank, a store, new churches, and a trolley system that reached thirty miles, so that workers could venture out of town without vehicles of their own. (The cost? Five cents, the same as a Hershey bar.) He paid off the mortgages for all of the town's existing churches and established a zoo, a golf course, and Hershey Park.
       
       To run the plant he hired William Murrie, who had been an outstanding salesman for his caramel business. (And the second M in M&Ms, but that is another story.) As his secretary, he hired Lebkicher, who had given him a place to sleep when no one else would. Hershey had also ensconced Lebkicher with Henry at the Homestead, his childhood home, where the chocolate business was conducted while the factory was being built.
       
       For himself, Hershey built an experimental kitchen--a reproduction now stands in the Hershey Museum--and he supervised every aspect of the construction of his chocolate factory and the town he was building to support it. He led by example, sweeping floors and lending a hand wherever it was needed. He treated his employees with warmth and compassion. He believed not only in the Golden Rule but also in its corollary: the good you do will return to you.
       

A LEGACY RICHER THAN CHOCOLATE
       
       Because the Hersheys were accumulating wealth beyond imagining, the childless Kitty suggested that they establish a home for unfortunate boys. They settled on a residential school for boys who had lost one or both parents. In November 1909, the Hersheys deeded nearly five hundred acres to the Hershey Trust Company, which they had established to endow the Hershey Industrial School, as Hershey School was originally known, in perpetuity.
       
       In 1910, the first four boys moved into the Homestead. Recalling Hershey's youth, it is not surprising that the mission of the school was to train the boys in useful trades to provide for their livelihood. In The Emperors of Chocolate, Jo‘l Glenn Brenner reports that he "wanted the boys to have everything he lacked in his own childhood--a sense of security, stability, and an education."
       
       Hershey Industrial School offered orphan boys a sound education, wholesome food, neat clothes, suitable lodging, medical care, exercise, and recreation. The boys enjoyed fresh air and open spaces, and built their own beds and clothes chests in woodshop. Regular chores around the house and, as they outgrew the Homestead, the barn, helped them develop a sense of responsibility.
       
       Enrollment soon outgrew the Homestead, and a barn was converted into additional classroom space. Over time, more buildings were added as instructional space, and surrounding farms were purchased to increase the size of the grounds.
       
       Hershey and his wife were devoted to each other throughout their marriage. Fanny, however, resented her, and Hershey bought her a home a short distance away from Highpoint, the mansion where he and Kitty lived. Henry was delighted with his vivacious daughter-in-law.
       
       Within a few years of their marriage, Kitty began to suffer a debilitating muscular disease that would lead to her premature death in 1915. Hershey lived almost thirty years after Kitty's death, carrying her picture to the day he died.
       
       In 1918, Hershey donated the bulk of his wealth--$60 million, including 500,000 shares of stock in the Hershey Chocolate Company--to the Hershey Trust for the support of the school.
       

 HERSHEY INDUSTRIAL SCHOOL FLOURISHES
       
       In 1976, Hershey School opened its doors to girls and nonorphans. It is open to all United States citizens from families with limited income, at least average ability, and no serious emotional or behavioral problems. Today, Milton Hershey School is the largest prekindergarten through grade 12 boarding school in the United States, with almost 1,250 students on a beautifully manicured campus of more than 2,500 acres.
       
       While they still receive the basics Hershey set forth when he founded the school, today's students enjoy a comprehensive educational program on grounds that include ponds with arched bridges, an ice-skating rink, lighted tennis courts, a 7,000-seat football stadium, soccer and field hockey fields, a baseball diamond, indoor swimming pools, an art museum, and an Olympic-size track. They also enjoy a visual arts center, state-of-the-art computers, radio and television studios, a performance gym, a student center, an agriculture and environment center, and nearly 120 group homes.
       
       The standards-based curriculum is paired with the school's own "13 Desired Results," which include, among others, aesthetic experience; school activities and community service; healthy lifestyle; spiritual, ethical, and moral decision making; goal setting; critical thinking; job preparation; interpersonal relations; respect, cooperation, and self-discipline; and other people and cultures. Writing in "Legacy," a MHS publication for alumnae, Ruthanne Herzing noted, "All student work--whether it's a class assignment or a community service project--is linked to at least one standard and one of the 13 Desired Results." Within this framework students set their own personal and academic goals each marking period; they proceed at their own pace, moving on to a new objective as each is met.
       
       Like the first students at the Homestead, today's youngsters have chores around their homes, and some maintain part-time jobs. All full-time staff members are required to perform at least forty hours of community service a year. Each week, students must wear their Sunday best to attend mandatory, nondenominational chapel services, which focus on values such as obedience or helpfulness. Any students who wish to attend additional denominational services off campus are welcome to do so.
       
       Hershey stipulated that every graduate would receive $100, the amount that had meant the difference between freedom and forced labor in his Denver days. Now graduates also receive a laptop computer, clothes and tools for their chosen trade, or financial assistance for continuing their education. Of the just over one hundred students from the class of 2001, ninety are attending colleges or universities. Many Hershey graduates remain in the area to work for one of the entities in the Hershey empire. MHS graduates Bruce McKinney and Ken Hatt have served as CEOs of Hershey Resorts and Entertainment, and William Dearden as the CEO of Hershey Foods.
       
       According to Brenner: "Hershey profits translated into dividends for the Trust, providing food, shelter, and education for the hundreds of orphans of the Hershey Industrial School. Hershey executives always knew that the company had a nobler mission than simply maximizing shareholders' wealth."
       
       Hershey planned and executed his intentions with care. His success resulted from giving his heart, mind, and spirit to whatever enterprise he undertook. When he founded Hershey School, he provided for its perpetual financial support. By contributing his fortune in Hershey stock to guarantee its continued existence, he managed to combine his great loves by allowing thousands of children to forever reap the benefits of the chocolate business that was his life's work.
       
       Hershey's intentions didn't change. Brenner notes: "The relationship of the two entities has a deep influence on the management of the company."
       
       His will contained only three parts: (1) he reiterated his gift to the school, (2) he left the remainder of his estate to the Drury Township School District, and (3) he named the executors.
       
       With an endowment that exceeds five and a half billion dollars, the Milton Hershey School provides an extraordinary, well-rounded education for thousands of deserving students, at no cost to their families.

 

This, more than the chocolate business that is usually associated with Milton Hershey, is his legacy.     

       The author wishes to acknowledge the assistance of the Hershey Museum, the Milton Hershey School, and Milton S. Hershey, a biography written by Katherine B. Shippen and Paul A.W. Wallace in 1959 to mark the Hershey School's fiftieth anniversary.