Milton Hershey: Sweet Dreams of Helping Others

While the name "Hershey" is all but synonymous with chocolate, the sweet treat is not Milton Hershey's greatest legacy. That distinction arguably belongs to the Milton Hershey School, founded in 1909 as a trade school for orphaned boys, funded solely by Hershey himself.

Now a co-ed, K-12 boarding school that sends some 90% of its students to college, the school was born of the chocolate magnate's belief in the power of education, his memories of his own disadvantaged youth, and his sense of obligation to provide for others.

Despite the wealth he created, Hershey died with relatively little to his estate beyond his home and personal belongings. “I could never 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,” Hershey once said.

During his life, he donated the shares of his company to fund the school and later established the M.S. Hershey Foundation in 1935 to support local educational and cultural charities in the town of Hershey. His approach to philanthropy can be seen as almost a blueprint for the Giving Pledge, a contemporary promise signed by such prominent billionaires as Warren Buffett, Bill and Melinda Gates, and Sarah Blakely to give away the majority of one’s wealth either during their lifetime of upon their death.

Milton Hershey was lauded in his lifetime for his innovations and vision both as a businessman and as a humanitarian. But creating the fortune that made Hershey’s vision possible was elusive for almost half of his life. Born poor in rural Pennsylvania in 1854, Milton found himself an apprentice to a candy-maker at age 15—after being fired from his apprenticeship at a newspaper.

By the time he was 25, he had failed with two businesses: a cough-drop company and a candy company. In 1876, he sought his fortune by capitalizing on the centennial of the United States; selling candy in Philadelphia. That, too, was unsuccessful from a financial perspective and Milton then traveled to Denver, New York, Chicago, and New Orleans. In Denver, he worked with a candymaker and discovered the difference of using fresh milk to make caramels—a lesson that would serve him well later as he perfected a recipe for milk chocolate.

Armed with his caramel-making skills and knowledge, Milton found his first commercial success in the Lancaster Caramel Company, started in 1886, in Lancaster, Pennsylvania. By the early 1890s, he had hundreds of employees, several factories, and a reputation as one of Lancaster’s most successful businessmen. But a visit to the 1893 Chicago World’s Fair led Milton to think that his future and fortune lay elsewhere.

At the exhibition, he saw a set of German chocolate-making machinery that did everything from roast the cacao bean to turning it into edible chocolate. Milton bought the equipment and installed it in Lancaster, where he started producing a wide variety of chocolate confections. In 1900, he sold his Lancaster Caramel Company to competitors for $1 million and used that capital to invest more heavily in the manufacturing of chocolate. That same year, he produced the first Hershey bar.

Milton’s genius lay as much in marketing chocolate as in making it. He understood that chocolate, a luxury item, would have mass appeal if it could be economically manufactured, sold for an affordable price, and packaged in small enough amounts to be a portable treat. Milton streamlined his offerings to produce simple chocolate bars—which he was committed to selling for five cents—as well as cocoa and candy coatings.

His vision extended to realizing that by opening his factory in the Pennsylvania farm country, rich with freshwater and milk and an eager workforce, he needed to create a place for workers to live. In contrast to mill towns and company towns that provided the bare minimum for employees—numerous in Pennsylvania’s coal country—Milton created a town that had such amenities as tree-lined streets, a school, a bank, churches, parks, golf courses, a zoo, and eventually a trolley to accommodate workers who lived elsewhere.

He broke ground in 1903, and ran a contest to name the new, model town. Among the entries were “Ulikit,” “Etabit,” “Chocolate City”, and “St. Milton.” The Post Office deemed the winner, “Hersheykoko,” too commercial. As a result, the town would bear the name of its founder and the company that put it on the map.

During the Depression, Milton ensured that a building boom that included the construction of a hotel, two commercial theaters, an extension of the school, the Arena, and an air-conditioned office building, offered ample employment. One of Milton’s—and the town’s—claims to fame that no one in Hershey was laid off during the Depression.

Yet Milton’s best-known philanthropic achievement was his school. In 1918, he ensured its longevity by placing all of his shares in the Hershey Chocolate Company in a trust to benefit the school in perpetuity. (Milton didn’t reveal the move for five years; sharing his secret in an interview with The New York Times.) At the time the trust was established, the shares were worth some $60 million. By comparison, that same year Coca-Cola sold for $25 million.

In 2015, the endowment was worth approximately $13.7 billion, and the school remains one of the wealthiest in the country. It provides tuition-free education to more than 1,800 disadvantaged students every year. “I was a poor boy myself once,” Milton said of his desire to help others. He sweetened his own life and the lives of countless people thanks to a fortune built on persistence—and 5-cent candy bars.