Milton Hershey made lots of chocolate, and money.
Sep 4, 2006, Vol. 11, No. 47 • By MARTIN MORSE WOOSTER
Like most probate courts, the Dauphin County Orphans' Court in Harrisburg, Pennsylvania, mostly fills its docket with small-scale disputes over wills and trusts. But in the fall of 2002 the court had to decide the fate of one of America's oldest and best-loved corporations. At issue was this question: Was the Hershey Trust Company, acting as agent for the Milton Hershey School, acting in the best interest of its client by selling a controlling interest in Hershey Foods to the William Wrigley Company?
This transaction, which outside observers estimated could increase the Milton Hershey School's endowment from $5 billion to as much as $12 billion, was deemed necessary by the Hershey School board in order to make sure that the school's endowment was not lopsidedly invested in one company's stock. But the notion of Hershey being sold to benefit an orphanage was an appealing one to journalists, who flooded the streets of Hershey, Pennsylvania to file countless stories about how a lovely small town was about to be destroyed because of the pitiless forces of rapacious capitalism.
The board's opponents, which included many disgruntled alumni of the school and Pennsylvania attorney general Mike Fisher, a Republican who was campaigning for governor (ultimately losing to Democrat Ed Rendell), gave numerous interviews to the press about how the sale would dishonor the philanthropic legacy of the chocolate tycoon. The Hershey School board mostly remained silent.
After considerable pressure, the board reversed itself. The school's president and most of its board resigned, to be succeeded by a smaller board. Over the past two years, this board has quietly sold about $2 billion of common stock back to the Hershey Company (which changed its name from Hershey Foods in 2005), diluting its holdings in the Hershey Company to a narrow majority of the shares.
The debate over the future of Hershey Foods and the Hershey School is yet another skirmish in what philanthropists call "donor intent." Donor intent is important because it is at the core of why donors give. Why start a foundation if your successors will ignore your ideas in favor of their own agenda? The worst violators of donor intent are large liberal foundations, such as the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, and the Pew Charitable Trusts, whose conservative founders either left no restrictions on what their foundations were supposed to do or (in the case of Pew) where explicit instructions were resolutely ignored.
The Hershey case presents a somewhat different problem. What happens when a donor leaves explicit instructions--and far too much money to fulfill his wishes?
Anyone who is interested in studying the life and legacy of Milton S. Hershey finds there is surprisingly little information about the man. While a few of Hershey's friends left memoirs, there's been no biography of Hershey in nearly 50 years, although several chapters of Joël Glenn Brenner's The Emperors of Chocolate (1999) are about Hershey's life. Michael D'Antonio's Hershey is thus an important book. D'Antonio is a good writer and is mostly fair in his judgments about Hershey and his family, with one glaring exception. Hershey's wife Catherine died in 1915 at age 42 of a mysterious paralysis called "locomotor ataxia." But it's far from clear what Catherine Hershey suffered from. Based on a vague statement given in an interview by one of Catherine Hershey's friends 40 years after her death, D'Antonio confidently accuses her of suffering from syphilis. D'Antonio, who admits there's no evidence that Catherine Hershey was syphilitic, should have resisted his urge to defame the dead.
Milton Hershey was born in Hockersville, Pennsylvania in 1857. His parents were poor, and moved from town to town to avoid creditors. Hershey went to seven schools in eight years, emerging with the equivalent of a fourth-grade education. He began working in 1871, at the age of 14, and never stopped. After starting and failing several times, Hershey created the Lancaster Caramel Company. By the turn of the century, Lancaster Caramel had three plants and was a million-dollar a year enterprise.
But Hershey saw that the future was in chocolate, not in caramels. At the 1893 Columbian Exposition in Chicago, he was impressed with a booth of the German manufacturer J.H. Lehmann, which turned cocoa beans into chocolate bars while fairgoers watched. Hershey bought Lehmann's equipment and began experiments in making chocolate.