Milton Hershey and his Chocolate Factory

Before Willie Wonka there was Milton Hershey. He created one of America’s most beloved chocolate and candy brands. He made milk chocolate a treat Americans and those around the world could afford. In the process, he created a fortune. Hershey used his vast wealth for philanthropy rather than personal gain.  He built an extraordinary orphanage that would not only take in poor children, but also give them a decent home, teach them lessons in character, and instruct them in how to make their way in the world.

In the Pennsylvania Dutch countryside, the Hershey Chocolate Factory provides tantalizing cocoa smells from a 2-million-square-foot production facility. Tree-lined streets with names like Chocolate Avenue are lit by street lamps shaped like Hershey Kisses. Everything in this town of about 13,000 reflects the Hershey’s Chocolate Company. Once little more than dairy farms, Hershey, PA was transformed into the headquarters of America’s largest candy maker.  The man behind that amazing transformation was Milton S. Hershey.

Milton Snavely Hershey was born 13 September 1857, on a farm outside of Derry Church, PA—a small farming community near the center of the state. Milton was the only surviving child of Henry Hershey and Veronica ‘Fanny’ Snavely. Young Milton grew up amongst the devout, frugal, and hardworking Pennsylvania Dutch. Hershey spent his formative years idolizing his father, a dreamer and drinker who was always looking for the next big opportunity. Unfortunately, Henry Hershey lacked the persistence and work ethic to make anything happen.

His family suffered because of it.

Young Milton grew up poor, with holes in his shoes and an empty belly. Later in life, when asked about his philanthropy towards orphans, Hershey simply say, “I was a poor boy myself once.” Milton started his schooling at seven, but changed schools often, as his family moved throughout the region, attending seven different ones.

By 1867, his parents separated and Hershey’s father removed himself from the picture. His mother, the daughter of a Reformed Mennonite clergyman, had given up on her husband’s numerous faults and failures. Under her upbringing, Fanny instilled in young Milton the necessity for, and an appreciation of, honest hard work; values he would keep for the rest of his life.

Due to the lack of steady schooling, he dropped out at 14 to work as an apprentice instead. Hershey took his first job, apprenticing at a small, German-language newspaper, Der Waffenlose Waechter, in Lancaster. He was not cut out for the printing business though. He hated the work and was fired when he threw the owner’s hat into the printing press!

Milton always had an interest in candy making and began apprenticing instead with a master confectioner in Lancaster. He took a job at Joseph Royer’s popular Ice Cream Parlor Garden, where he learned the basics of candy-making. Royer was impressed by the teenager and soon promoted him to candy-making duties in the kitchen.

Four years later at 19, Hershey borrowed $750 from his aunt and set up his own candy shop in the heart of Philadelphia. For five years, Hershey poured his heart and soul into his fledgling business. But he could never make a profit.  He was forced to close shop and headed west to Denver, where he worked again with a confectioner. It was there he learned about caramels. But the entrepreneur in young Hershey wasn’t content to work for someone else.

Milton Hershey struck out on his own, yet again.

By the time he was 25, he had attempted to launch two more candy businesses. Both were failures.  The bank finally confiscated his candy-making equipment after he defaulted on a loan. He used his last dollars to buy a ticket back home to Lancaster. At age 30, he was nearly bankrupt.

These many failures did not squash Hershey’s spirits, however. He set out to raise capital for yet another business.  This time however, none of his relatives would offer help. No one trusted his poor track record. In 1883, he was still convinced he could build a successful candy company.  He amassed enough money from bank loans to rent a warehouse. In addition to making caramels, he worked as a handyman to make ends meet.  His mother and aunt helped wrap the caramel candies.

Finally, Milton Hershey got lucky. An English candy importer had tasted one of his delicious “Crystal A” caramels and asked Hershey if he could sell them in England.  Milton knew his product was suited for export as it stayed fresh longer than others. This third attempt, the Lancaster Caramel Company, was finally successful.

Within a few short years, Hershey had a thriving business and was shipping caramels all over the country. By the early 1890s, he had 700 employees and three factories. Never shy of hard labor, he would roll up his sleeves and help shoveling coal or rolling candy. He became known as “Dad Hershey” to his employees, eating lunch with them each day. Orders poured in faster than he could fill them. He was now renting the whole building and bought adjacent properties.

Hershey initially used chocolate only to coat some of his candies.

That changed in 1893. Milton visited the World Columbian Exposition in Chicago.  There he viewed the equipment of J. M. Lehmann from Dresden, Germany. Lehmann had built a full-scale chocolate-manufacturing plant for the expo – from roasting-ovens to forming-presses. Hershey eyes popped as he saw his future … in chocolate, not caramel.  He impulsively paid $20,000 to buy every piece of equipment Lehmann had on display!

“Caramels are only a fad. Chocolate is a permanent thing.” – Milton Hershey

Milton Hershey had always been far too busy to consider marriage.  At 41, he was traveling through New York state on business when he stopped in Jamestown to visit a local confectionary, one  frequented by 27 year old Catherine “Kitty” Sweeney.  The two met and a relationship began. Jamestown became a regular stop on Hershey’s travels.

Hershey proposed and they married in 1898. At issue with his family was that Hershey was raised Mennonite, and Sweeney was Irish Catholic. They were wed in the rectory of New York’s St. Patrick’s Cathedral.  They loved each other deeply and she became as important in his life as chocolate. Sadly, the couple were never able to have any children.

In 1900, the American Caramel Company, his chief competitor, offered $1 million ($24 million today) to buy Crystal A caramels.  With such money Milton would be finally able to fully pursue chocolate. Hershey accepted the offer.  “This was the best business deal I ever made,” he later said.

Hershey now focused on perfecting the formula for mass-produced milk chocolate. With his new liquidity, he could finally build a proper chocolate factory. Hershey began looking for a new place. He decided against major cities and picked a spot instead next to his hometown, Derry Church. The site was near many dairy farms, which he would need.  Three years later in 1903, he broke ground. Hershey began building a mammoth, modern candy-making facility.

The Hershey Chocolate Company opened in 1905.

Hershey did not discover milk chocolate. What he discovered was how to mass produce it at an affordable price. He achieved this through efficiency, technology and design, resulting in a steep cut in cost to him, and price for consumers.  Before Hershey, milk chocolate was an expensive European delicacy. After Hershey, a milk chocolate bar could be enjoyed by anyone, for just a nickel.

During construction, Milton played with a new formula for making milk chocolate. He spent months experimenting with powdered milk, as the Swiss did, then switched to fresh cream. During many long days of experimenting, the heating temperature, cooking time and order of ingredients were all worked on.

The breakthrough finally came from an employee, John Schmalbach. He found the “sweet-spot” combination that Hershey was looking for, yielding “The Hershey Process.”   It would form the basis for the company’s production for decades. Hershey Chocolate, although tasting different than Swiss chocolate, was accepted by Americans as the taste for their chocolate. His winning ideas continued with the famous Hershey Kiss in 1907.  Milton named them himself for the way in which the chocolate applicator kissed the conveyor belt.

In its first year of operations, the company netted $1 million; five years later, profits topped $2 million.  As his wealth grew and new workers were hired, Hershey set about accommodating them properly. He boldly planned to build an entire new town around his chocolate factory. His plan called for “a natural, American town, where right living and well-paid workers lived in safe, happy homes.“

Experience had taught Milton that employees appreciated being treated fairly and worked harder for him. In the town that came to be Hershey, Pennsylvania, he allowed them to live independent of his company.  He built parks, churches, schools, stores, trolleys and a fire department. Homes had modern electricity, indoor plumbing and central heating.

He sponsored a nationwide contest to come up with a name for the town. The winner was Hershey, PA, aka “Chocolate Town USA.” Hershey oversaw most every aspect of the town’s construction, from its tree-lined streets to its public transportation and first-rate schools. In 1907, he opened an amusement park (Hershey Park today). In 1915, he built the nation’s largest, free zoo.

Hershey’s greatest philanthropic accomplishment was his orphanage.

At his philanthropical side was his devoted wife, Kitty. Unable to have children of their own, the Hershey’s devoted a great portion of their wealth towards orphaned kids. Hershey deeded 486 acres of farming land to the Hershey Trust Company for the construction of a school for orphaned boys.

In 1909, the couple opened the Hershey Industrial School. It became a landing spot for orphaned girls as well, in the 1970’s and is now known as the Milton Hershey School. It surrounded Milton and Kitty Hershey with the children they were never able to have. In 1918, Hershey secretly placed all of his shares of the Hershey Chocolate Company into the Trust.

In 1912, Milton Hershey was in London and almost boarded the RMS Titanic during its fateful maiden voyage.  But a last-minute business emergency made him change travel plans. In 1915, a tragedy of a different type struck.  Kitty Hershey was hospitalized in Philadelphia with extensive neuropathy in her limbs. When Hershey arrived, his wife smiled weakly and asked for a glass of champagne to lift her spirits. When Milton returned with a bottle, she had already passed.  On the day of the funeral, a grieving Hershey gave all his employees the day off.

After Catherine’s unexpected death, Hershey quietly transferred much of his wealth, including his stocks and ownership stake in the Hershey Chocolate Company, to The Hershey Trust, which funds the school to this day. The stock was worth roughly $60 million at the time. In 1919, the Hershey’s Company had earned $58 million ($273 million today).

During World War I, sugar prices skyrocketed, but could not topple Hershey’s chocolate factory. His company ran a deficit and a bank mortgaged the property.  Milton Hershey instead decided to increase production and returned Hersheys Chocolate Company to the black by 1921.

During the Great Depression, he launched a risky building campaign to keep townsfolk employed.

More than 600 men worked to build the Hershey Hotel, sports arena, and community theater. All these new sights also created further jobs in maintaining them. In 1935, Hershey gave $20,000 to each of the town’s churches, to help them relieve the hunger of their members. He also established the Hershey Foundation, to support educational and cultural charities. The Foundation created the famous Hershey Gardens in 1942.

He did not reveal the School’s Trust to the public until 1923. “I am 66 years old and do not need much money. I have no heirs, so I decided to make the orphan boys of the U.S. my heirs. The school provides a thorough education, supplemented by instruction in useful trades and a way to make a living.”

Milton Hershey always credited Kitty with the idea for the orphan school. Kitty noted that they now had more money than they could possibly spend in a lifetime and no children. The school also taught the boys to budget and put half of their earnings into a savings account. Upon graduation, Hershey sent them out into the world with $100 cash, a huge amount during the Great Depression.

“I have always worked hard, lived rather simply, and tried to give every man a square deal.” – Milton Hershey.

Jack Kerstetter, one of the thousands who attended the school, described the place as “not one with a white a stone wall around it, but an invisible curtain founded by a man who had an idea and shared his love”.  

During World War II, Hershey’s supplied American troops in Europe and the Pacific with more than a billion chocolate bars.  He provided special “Ration D” bars and “Tropical bars,” which did not melt in the hot Pacific theater.  Parts of the chocolate factory in Hershey were even dedicated to the production of munitions for the war effort.

An introverted and reserved man, Hershey had a demeanor that contrasted greatly with that of the equally wealthy Rockefeller’s and Vanderbilt’s. As he had been forced to leave school early, Hershey was driven to make sure those around him received a solid education. His outward display of wealth was rather modest. His chocolate factory and the community he’d created with Kitty meant everything to him.

Milton Hershey kept busy in his old age.

He continued having business lunches with his managers, keeping close tabs on the company. He made regular appearances at his chocolate factory.  On his 80th birthday, 6,000 Hershey’s employees threw him a spectacular party at the ice hockey arena, complete with a 3-foot-tall cake, and all the current and most of the former children from his Hershey School.

Following his Kitty’s death, Hershey never remarried, carrying a picture of her wherever he traveled. Hershey continued to work well into his 80s. Milton Hershey died of a heart attack at age 88 in Hershey on 13 October 1945.  He is buried next to his wife and mother. His legacy as a businessman and philanthropist continues to this day. The man often proclaimed, “Business is a matter of human service.” In 1963, $50 million was diverted from the Foundation to create the Milton S. Hershey Medical Center in Hershey, of course.

The Milton Hershey School currently serves about 1,900 students each year, Thanks to his Trust, the school is one of the wealthiest in the world, with about $66 billion in assets. The M.S. Hershey Foundation funds educational and cultural activities across the country. The Hershey Chocolate Company has endured as one of the world’s greatest candy makers.

A new era, without its long-time leader, brought new challenges. Other rival candy giants, Mars and Nestlé, posed new threats to Hershey Chocolate. Even with fierce competition, the Hershey Company rose to the challenge. The company led active development of new candies for the new century and new generations.

The Hershey brand expanded beyond its Kisses and iconic flat chocolate bars with such names as Twizzlers, Icebreakers, Reese’s, Cadbury, Almond Joy, Milk Duds, Mr. Goodbar, and Bubble Yum. Besides becoming the largest chocolate maker on the continent, the Trust continues to run the Hershey Bears hockey team at the arena, the popular Hersheypark, and Hershey Stadium, all situated, of course, in the town of Hershey, PA.

Milton Hershey died with very little personal wealth, mostly the mansion he once shared with his beloved Kitty. Unlike other billionaires, he had given away everything else. “I never could see what happiness a rich man gets from contemplating a life of acquisition only, with a cold and legal distribution of his wealth after he passes away.” 

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