Hershey: Milton S. Hershey's Extraordinary Life of Wealth, Empire, and Utopian Dreams - Softcover

Tourists who travel by car -- and more than four million come every year -- often start at the landmark Hotel Hershey, which occupies a ridge that rises more than a hundred feet above the Lebanon Valley in central Pennsylvania. It's a Moorish-style fortress with ornamental towers and a green tile roof. The view from its veranda is the best one available. To the south a scene that looks like a model railroad display comes to life. Cars speed along smooth asphalt highways. Lush cornfields give way to a color-splashed amusement park with ten roller coasters, a Ferris wheel, and a snaking monorail. Beyond the neon and flapping pennants stand old factory buildings, church spires, and houses. Every once in a while a freight train will snake its way along the tracks that slice through the valley.

A drive into town on Sand Beach Road, which becomes Park Avenue, takes you along the east flank of the park. The double-track roller coaster -- ninety feet high at its tallest point -- is so close to the road that a falling cap could land on your car. Farther along, on a quieter, shady stretch of road waits a small zoo, which is set beside a pristine little creek. Park Avenue then takes a sharp turn and climbs up and over a bridge that crosses railroad tracks. On the other side you are suddenly deposited in another place and time.

In downtown Hershey, the streetlights are shaped like giant Kisses candies. A century-old factory made of soft red brick sprouts a pair of giant smokestacks decorated with the letters H-E-R-S-H-E-Y. The emerald fairways of a golf course stretch out from the factory lawn. Across the avenue, gracious old houses, some dating from 1905, occupy carefully manicured properties.

All of Hershey, including the zoo, the antique town, the amusement park, the playful streetlights, and even the factory, is clean and neat and cheerful. Even the names of the major streets -- Chocolate Avenue and Cocoa Avenue -- bring a smile to a visitor's face. And that's before he stops, gets out of the car, and realizes that the air in this Willy Wonka place smells like sweet cocoa. Hershey always smells like this. On a humid summer day when there is no breeze it's so strong you can taste it.

In this town of 13,000 souls, business people and civic boosters promote an image of kindhearted contentment. Squabbling is bad for business, and the main businesses in little Hershey -- tourism and candy -- rack up sales in excess of $5 billion per year. For this reason, the great howl of protest that erupted in Hershey in the summer of 2002 drew reporters and TV news crews from around the world.

It all started with small groups of worried citizens meeting in living rooms and kitchens. Then townspeople noticed handmade signs tacked to light poles, staked on lawns, and taped onto shop windows. Some said, "Derail the Sale." Others warned, "Wait 'til Mr. Hershey finds out!"

The object of these protests was the Milton Hershey School Trust, which held controlling interest in the famous chocolate company for the benefit of a residential school for needy children. The stock was worth as much as $10 billion and the trust was planning to sell it to the highest bidder. Fifty-seven years earlier, when founder Milton S. Hershey died, the trust guaranteed that local residents who shared a common sense of purpose and community would run the company and protect the economy of the town. If the stock was sold, the chocolate-making firm that had represented the playful and prosperous spirit of the community for a century would pass from local control.

Worried conversations about the sale quickly led to an organized opposition. Finally, on a scorching hot Friday in August, more than five hundred citizens marched through downtown waving placards and shouting while police looked on.

This being Hershey, when the people took to the streets they were careful to dress nicely and walk with care, avoiding damage to private lawns and public gardens. Younger protesters kept a kind eye on the elderly marchers to make sure they didn't suffer in the heat. Nobody cursed. Nobody threw a punch, a bottle, or a scrap of litter.

But as mild mannered as the demonstration was, it was also a sign of deeply felt worry. Never in the town's history had such a varied group united behind a single cause. The opposition included many retired Hershey company executives, including the silver-haired former chairman of the board, Richard Zimmerman, who stood to earn a fortune on his stock if the sale went forward. The retired executives were joined by union workers who stood with alumni of the Milton Hershey School. Men who once designed ad campaigns for Hershey bars developed antisale propaganda. Schoolchildren marched beside doctors, lawyers, and local politicians.

At a rally, alumni leader Ric Fouad shouted, "We're not here to mourn, we're here to mobilize!" Onlookers waved placards that read, "Power to the People!" and "Save Our Town!"

The idea of selling the Hershey company was born of good intentions. Board members of the Milton Hershey School Trust, which held a controlling interest in what was formally called the Hershey Foods Corporation, had decided that the charity's dependence on the firm's stock was unwise. American securities markets were in the middle of a long steep decline. Some major companies -- WorldCom, Enron, etc. -- were collapsing in scandal and leaving investors with pennies on the dollar. Looking at the perilous markets, the board members secretly decided to sell the trust's stake in Hershey and invest the windfall in a more diverse portfolio.

Although other charities held big stakes in corporations, the situation in Hershey was unusual. For one thing, the trust was devoted to a single enterprise: an eleven-hundred-pupil residential school for needy children. For another, the value of the trust was enormous. Estimated at $5 billion, it was already eight times larger than the endowment of Phillips Exeter Academy, the nation's next-richest school. Indeed, only six universities held larger endowments, which meant that the Milton Hershey School was richer than Cornell, Columbia, or the University of Pennsylvania.

But as big as it was, the trust was unusually vulnerable because a crash in one company's stock price would do enormous damage to its portfolio. The diversification that a sale would make possible would reduce this risk. It could also produce a onetime windfall. Bidders would recognize that Hershey's many brands, which included Reese's, York, and Jolly Ranchers candies, had been underexploited. Properly managed, which might mean breaking the company into pieces, the whole lot might be worth not $5 billion but closer to $10 billion.

From a fiduciary standpoint, selling the company was in the interest of the trust and the Milton Hershey School. And the timing was right. The big global companies that dominated the candy business -- Nestlé, Cadbury-Schweppes, Kraft -- were in a buying mood. If the trust board didn't consider selling, it would fail to meet its duty to the institution and its students.

As much as the residents of Hershey cared about the needy children at the school, they had a hard time believing that a sale was necessary. Even without maximizing its investment, the trust's income far exceeded the board's ability to spend it every year. Not that they didn't try. They had built lavish facilities, expanded enrollment, and hired top-notch staff. With the cost of building maintenance factored in, they spent about $100,000 per year per child. And still the excess revenues piled up. How much more could the school need?

With the trust already rich, opponents of the sale thought the board was asking the community to make an unnecessary sacrifice. Roughly six thousand people held jobs in the company, including about three thousand unionized factory workers. A new owner was likely to see that bigger profits could be had if manufacturing were consolidated in other places, where wages, taxes, and other costs were lower. If the factories were moved, the jobs would be very difficult to replace. The change would also affect tourism and the very identity of the community. What's a chocolate town without a chocolate plant?

The town of Hershey had been created first in the imagination of the chocolate industrialist Milton S. Hershey, who then made it real in a place where there had been little more than a few farmhouses and acres of corn. The chocolate factory, the school, and the town were supposed to make up a self-perpetuating little utopia of capitalism and charity, and all three had thrived for ninety-nine years by adhering to his vision.

The idealism of Milton S. Hershey was cited over and over again by those who tried to stop the sale. With no real authority in the matter -- private trusts are not required to answer to the public -- they appealed to state officials and the court of public opinion. To do this, they put together a story that described the trustees as greedy and heartless outsiders who didn't understand the destruction they would visit on the town. They then welcomed the national media.

The reporters who came to Hershey saw a tableau of small-town America that was as appealing as the dream M.S., as he was known, held in his mind when he created his factory and his community. And like so many visitors before them, they agreed with the writer who, in the midst of the Great Depression, observed the town of Hershey's stubborn prosperity and isolation and declared it "a 10,000 acre world of its own."

Not one journalist missed the opportunity to flavor the story with references to the town's peculiarities and charming asides about chocolate. By the time the press was through, the entire nation would understand that 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.

"They're threatening to tear the soul out of this community," one community leader told The Wash...