Thursday, January 19, 2006

Chocolate city.

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How a tough-minded businessman and philanthropist catered to the nation's sweet tooth.

By Jonathan Yardley

Sunday, January 15, 2006; BW02

During the Gilded Age of the late 19th and early 20th centuries -- the age of rapacious corporate bullies characterized by Theodore Roosevelt as "malefactors of great wealth" -- Milton S. Hershey was a man apart. The candy that he manufactured in idyllic, small-town Pennsylvania made him a millionaire many times over, he could be exceedingly tough in his dealings with competitors and employees, and he liked to live the high life during his frequent overseas jaunts. Yet he was a member of the "progressive crusade" that formed in reaction against the robber barons, and, as Michael D'Antonio puts it, he "had a strong sense of morality and responsibility" as well as firm convictions "about the purpose of wealth and the promise of American life."

These convictions led him to do some remarkable things. When he moved his business from the lovely old city of Lancaster into the Pennsylvania countryside, he built an entire town -- Hershey, of course -- that was "neat and inviting," in which modern houses were made available to employees at reasonable prices and numerous civic amenities were provided. For many years he gave employees generous bonuses; if in part these were aimed at scaring off unions, they also reflected a belief that labor as well as management had a stake in private enterprise. Perhaps most remarkably, he established the Milton Hershey School for the housing and training of orphan boys and eventually turned over to it what amounted to his entire fortune.

D'Antonio, a Pulitzer prize-winning journalist, begins his biography with events that occurred in 2002, nearly 60 years after Hershey's death. Members of the Milton Hershey School Trust, which oversees the school -- which by then had grown to "an eleven-hundred-pupil residential school for needy children" -- and controls the Hershey Foods Corporation, "decided that the charity's dependence on the firm's stock was unwise." The trust's $5 billion portfolio was immense, but the trustees believed that diversification was in the school's best interests. Therefore they proposed to sell the Hershey Foods Corporation to the highest bidder and to spread the portfolio among numerous blue-chip investments.

The school scarcely needed more money, but from a purely fiduciary point of view, the decision made sense; the trustees merely proposed to act in the trust's best interests, which is what trustees are supposed to do. But the people of Hershey didn't see it that way. They feared that a new owner might move the candy-making operation elsewhere, putting 6,000 townspeople out of work, and that their picture-postcard town would no longer be a prime tourist attraction. So they appealed to the press (this newspaper included), which sent in reporters who heard their message: "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."

That was oversimplification, of course, but it did arouse a lot of sympathy elsewhere, including in the governor's office -- eventually the trustees caved in, though not happily -- and it served as a reminder that the company, the town and the school were the legacy of a remarkable and unusual man. Hershey is scarcely so well known as many of his approximate contemporaries -- Rockefeller, Carnegie, Morgan et al. -- but to just about every American, his name is synonymous to this day with chocolate, and at a moment when too many of the Gilded Age's corporate excesses are being repeated in 21st-century style, it is useful to contemplate his far more modest example.

Hershey was born in Lancaster in 1857, the son of Henry Hershey and the former Fanny Snavely, a name right out of W.C. Fields's "The Fatal Glass of Beer." His father was an amiable ne'er-do-well who was better at dreaming than working, while his mother came from a comparatively prosperous family and expected her son (there was also a daughter, who died young) to make a mark on the world. Milton's education ended when he was 12, and when he was 15 he got a job downtown at Joseph P. Royer's Ice Cream Parlor and Garden. It was there that he began to learn the fine art of candy-making, to which he brought his father's penchant "for playful schemes and big ideas."

He soon set out on his own. Bankrolled by the Snavely exchequer, he opened his own candy shops, first in Philadelphia, then in New York. Both failed, but he learned a lot -- not just about making candy but also about the lives of the "poor, neglected, and abused boys and girls" he observed in New York. He returned to Lancaster determined "to make a candy no one else produced in the East -- Denver-style caramels." This time the Snavelys said they'd lost enough on him: "Years later he would say, with a hint of pride, that he realized he had become, like his father, a 'black sheep' in the eyes of his Snavely uncles. This rejection was a great motivator." Indeed it was. He figured out a formula for making caramel candy that would "keep fresh for weeks and perhaps months" and got a big order from a British buyer. He was on the way:

"After so much struggle it was strange that one big break -- an order from an importer who happened to pass through town -- would make Milton Hershey a success. The classic script would call for, at the very least, some minor setbacks and skirmishes with tough competitors. But none of those things happened. Instead, Hershey's sales abroad increased steadily, giving him a secure base for his business. He also exploited his recipe, and the advantages of his location, to build his business at home."

He called the company Lancaster Caramel. By the early 1890s, it was in a 450,000-square foot building in Lancaster, then in satellite factories elsewhere in Pennsylvania and in Chicago. He had more than 1,400 employees and a burgeoning bank account. He also had, by the turn of the century, the sense that caramel's day was done, that milk chocolate -- successfully produced in Europe and England but not in the States -- was the next big thing. He sold Lancaster Caramel for $1 million, bought up about 4,000 acres between Lancaster and Harrisburg, and began to build his factory and town.

He did all this without having lit upon a formula for mass-producing milk chocolate, but with the help of an old hand from the Lancaster factory he came up with one. It had -- and has -- "a distinctive flavor," sweet, of course, but with "a single, faintly sour note" that soon came to "define the taste of chocolate for Americans, who would find harmony in the sweet but slightly sour flavor." The flavor is so familiar, so part of the American grain, that I can taste it as I type these words.

You know the rest of the story, at least the most famous part of it. The candy on which Hershey put his own name was a colossal success. M.S., as he was by then known, soon had the money to indulge his taste for luxury; a wife, Catherine, with whom to share it; and the home (established in 1910) for boys who were known locally as "replacements for the children the couple could not have on their own." It was a time when "wayward, needy and orphaned children, whose ranks increased with every epidemic, war, and natural or man-made disaster, were a great social concern." It "was fashionable to worry about these children," but Hershey actually did something about them.

The remaining three decades of his life were devoted to spending as much time as possible with Catherine, who died in 1915 after a long illness, and to following various other business ventures. He got into sugar production in Cuba for a while, weathered the Depression thanks to the low cost of candy bars, and during World War II made "millions of bars per week for the armed services." The "Hershey chocolate that traveled with the troops was a sweet reminder of home and it became an icon of Americanism for the people who were liberated by U.S. forces," all of which was very good for business.

Hershey was no saint. As a businessman he "was controlling . . . and would not share power with anyone. He squeezed wages and resisted workers' attempts to form unions," though finally, in 1937, they got the better of him. He had a temper, and his kindness, though very real, was unpredictable; he "could be both generous and short-fused." Within Hershey, though, both the company and the town, his legend was clear: "He was tough-minded but fair. He wanted his workers and their families to live in dignity." To an impressive degree, he accomplished precisely that.

D'Antonio's biography is thorough and fair. He's a better reporter than writer, but there's nothing unusual about that. Hershey is a valuable addition to the literature of American business and philanthropy. ·

Jonathan Yardley is The Washington Post's book critic. His e-mail address is yardleyj@washpost.com.

© 2006 The Washington Post Company

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