Milton S Hershey

CoverPurpose, etc.ContentsIntroChaptersGlossaryAppendices

Milton S. Hershey

“His Deeds are His Monument

His Life is Our Inspiration”

Second Printing, Spring 2005

John F. Halbleib

Picture 1: Milton S. Hershey in 1941 ^[1]

THIS BOOK IS DEDICATED TO:

JEANNE M. DUFFY, my loving Wife

COLLEEN, ALISON, JOSHUA & JACOB, my loving Children

Veronica Halbleib, my loving Mother

MILTON AND CATHERINE HERSHEY

THE MILTON HERSHEY SCHOOL FAMILY

MILTON HERSHEY SCHOOL

THE MILTON HERSHEY SCHOOL ALUMNI ASSOCIATION

MAYER, BROWN, ROWE & MAW LLP

And

THE TENS OF THOUSANDS OF CHILDREN WHO WILL BECOME MEMBERS OF THE MILTON HERSHEY SCHOOL FAMILY

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SPECIAL THANKS TO:

MILTON hERSHEY sCHOOL, for authorizing use of photos in this book

Amanda Beldo, for her assistance in editing this book

^[1]Photo Courtesy of Milton Hershey School, Historical Records

Statement of Purpose

The purpose of this book, primarily, is to serve as research and educational material, with the overall objective of sharing knowledge of a great man and the philanthropy to which he and his wife gave birth. Its content is intended to provide facts as written and understood by those closest to the Hersheys’ philanthropy. This book was not written for commercial purposes. Rather, I view it as a noncommercial educational work. It is my sincere hope that this book will serve to educate those who desire to understand the Hersheys’ philanthropy, whether as a member of the School Family, a resident of the town of Hershey, Pennsylvania or one who has an interest in children’s homes or philanthropy in general.

Comments designed to enhance the value of this work as research and educational material are welcome. Please contact the author at JohnHalbleib@JohnFHalbleib.com.

Picture 2: Milton Hershey and the Boy ^[2]

Milton S. Hershey His Deeds are his Monument, His Life is Our Inspiration, is the inscription on this now famous statue, “Milton Hershey and the Boy.” This statue was presented by the alumni to the school in honor of Milton Hershey during the 50^th Anniversary of The Hershey Industrial School Trust.

Acknowledgements

From the late 1980’s, alumni and other members of the Milton Hershey School Family have dedicated themselves to the preservation of the philanthropy of Milton and Catherine Hershey. I joined this effort in 1998. In January 1999, I became a director of the Milton Hershey School Alumni Association. December 2002 brought my term as a director to an end a year after scheduled; this end followed the reconstitution of the Board of Managers of the Milton Hershey School Trust and the Board of Directors of Hershey Trust Company. My law firm, Mayer, Brown, Rowe & Maw LLP,^[3]represented the Alumni Association on a pro bono basis during this period. During the period I was a director, the Alumni Association sought to understand the Hersheys’ philanthropy. Through the unselfish efforts of countless alumni and other members of the Milton Hershey School Family, together with Mayer, Brown, Rowe & Maw LLP, this group has reviewed volumes of documents, interviewed hundreds of key individuals, located and reviewed long-forgotten material, and otherwise performed an extensive review of available information related to the Hersheys’ philanthropy. Our efforts in this have been extraordinarily time-consuming and expensive, and have been paid for solely from our own pockets and from those of our pro bono attorneys. This resulted from a widespread, shared sense of duty and loyalty on the part of the School Family.

Following 2002, I independently continued my research and analysis. I have continued this project at the request of many alumni, as well as my own desire to understand more fully that which the Hersheys intended.

Milton S. Hershey His Deeds are his Monument, His Life is Our Inspiration, is the inscription on a now famous statue, “Milton Hershey and the Boy.” This statue was presented by the alumni to the school in honor of Milton Hershey during the 50^th Anniversary of the Milton Hershey School Trust. Reflecting on the enormous effort that has been invested in the preservation of the Hersheys’ philanthropy, this single statement well describes how most, if not all, alumni and other members of the Milton Hershey School Family feel about Milton S. Hershey, as well as how truly unique he and the Hersheys’ philanthropy are.

Terminology and Nomenclature

The overall objective of this book is to share knowledge of a great man and the philanthropy to which the Hersheys gave birth. In order to achieve this objective, one needs to understand the various stages of Milton Hershey’s life, as well as the stages of the Hersheys’ great philanthropy. Moreover, to develop an understanding of the Hersheys’ philanthropy that is nearest to Milton S. Hershey’s own experience and as precise as possible, this book uses both

(1)   the nomenclature used by the Hersheys,

(2)   as well as other terms that are defined in the Glossary of Terms.

Some of the original nomenclature is substantive and thus informative when used. This facilitates a better understanding of important topics such as the Trust, the School, Derry Township, Hershey, Hershey Estates and the Hershey Chocolate Company – an understanding more in line with that of Milton Hershey. For example, this book uses the name The Hershey Industrial School rather than the current name, Milton Hershey School. While perhaps not obvious, these names convey different messages and one of the objects of this book is to communicate Milton Hershey’s message.

Another example of conveying a message reflective of that time is that many individuals called Milton Hershey “M.S.” during his life time and for a long time thereafter. In particular, the students of The Hershey Industrial School referred to Milton Hershey, and remember him today, as “M.S.”

As you read, keep these two facts in mind. First, many things have changed in America over the last 100 years, particularly as relates to the Hersheys’ philanthropy – The Hershey Industrial School, which includes the “ideal community” of Hershey, Pennsylvania. Second, such philanthropy has no parallel today through which we might derive more immediate familiarity. These weigh in favor of definitions. In those cases where precision is helpful to understanding the Hersheys’ philanthropy, the use of definitions facilitates the desired precision.

Anticipating that it might be difficult to quickly remember the meaning of specific terms, an Index of Terms and a Glossary of Terms are provided. Defined terms note changes that have occurred in the meaning of such term when modified by court ordered revisions to the Deed of Trust, for example.

In the case of cited authority, the year of publication is often noted. Generally speaking, sources published when M.S. was alive, or soon after his death, tend to reflect a view more in line with that of M.S. A possible reason for this tendency is that M.S. maintained control over the Hersheys’ philanthropy until the day he died through his retained right to vote Hershey Trust Company stock. This retained control would have facilitated consistency of messages regarding the philanthropy, particularly from those directly involved in such philanthropy and thus likely to have been influenced by M.S. As the date of publication follows M.S.’s death in 1945, what is written is likely to reflect influences other than those informed by Milton Hershey.

As you begin to review this book, there are some unique concepts to understand. To enhance your understanding and enjoyment of the Hersheys’ philanthropy as you read this book, you should learn these concepts first. To do this, consider reading the Glossary of Terms before reading the text of this book.

Certain concepts you will want to understand at the start. First, the Hersheys had a plan for the development of The Hershey Industrial School, which includes their “ideal community.” Their plan is designated the Hersheys’ Children’s Home Development Plan. It refers to the wise step-by-step development process that the Hersheys pursued to build The Hershey Industrial School. Appendix I: Development of The Hershey Industrial School illustrates this plan by providing a chronology organized around the three basic components of Community, Business and Education that make up The Hershey Industrial School. The Hersheys established a children’s home for the full development of the whole person, according to their respective attributes; that is, tastes, capacity, intelligence and adaptability, interests and commitment by providing them with, among other things, a real home and family that engendered a deep sense of belonging to a family and community. This was achieved, but it was no small task. To achieve their objectives, the Hersheys pursued their philanthropy through the Hersheys’ Children’s Home Development Plan. Section 2.1 Early Vision of the School and Overview of the Plan has more detail on this point. Once the viability of each component had been validated by, and to the satisfaction of, the Hersheys, they set about making such component more permanent. To accomplish this permanence, they chose the Trust.

Pursuant to the Trust, the Hersheys created a permanent institution which they named The Hershey Industrial School. In the Deed of Trust, they also designated such permanent institution the “School.” Chapter 3 The Hershey Industrial School Trust will have more detail on this topic. The School (which includes the “ideal community”) is sometimes also referred to as the “Hersheys’ Children’s Home” because while the Deed of Trust simply uses “School,” this term greatly understates the unique attributes of Hersheys’ Children’s Home. The School includes, among other things, the Hersheys’ Children’s Home Campus (including Hershey, Pa.), Hershey Estates, the Hershey Chocolate Company and its successors, the School Family, The Hershey Industrial School Alumni Association, and the school.

It is the whole of these parts that is described in the story of the Hershey Chocolate Town; there it is said, “for Mr. Hershey’s purpose, and this became evident to the least discerning, was to build a town to be run by and for orphan boys, a community suggested by the words of the Messiah.”^{^[4]}

The term “school,” on the other hand, means the residential, educational and other related facilities and employees that directly serve the Resident Beneficiaries and the Non-Resident Beneficiaries, which comprise a major component of the School but are distinguished from the School. The “school” is part of the “School.” Keeping this distinction clear in one’s mind will facilitate the development of an understanding of the Hersheys’ philanthropy.

Finally, inasmuch as this book is written about Milton S. Hershey and his deeds, the focus is on that which occurred prior to Milton Hershey’s death in 1945. Consequently, some of the changes to the Hersheys’ philanthropy have not been reflected in this book. To be clear, this is not to question the modification of admission requirements such as elimination of racial and gender restrictions. Rather, these and other topics simply are not addressed here; this book seeks only to help others understand what the Hersheys intended.

In the end, this book will demonstrate that M.S.’s actions were in accordance with, and pursuant to, the express terms of Milton Hershey’s Deed of Trust.

Foreword

The publication of this book has not been sponsored by the Board of Managers of Milton Hershey School, the Senior Administration of the Milton Hershey School, the Board of Directors of the Milton Hershey School Alumni Association, nor the law firm of Mayer, Brown, Rowe & Maw LLP. In fact, this book reflects my independent research and analysis, and not necessarily the policies, views or opinions of others. Please note also, that no one has sought to prohibit its publication; it is simply appropriate for me to point out that my research and analysis was not commissioned by any of these groups. I wish to avoid any implication that this book reflects the point of view, policies, or opinions of the Board of Managers of Milton Hershey School, the Senior Administration of the Milton Hershey School, the Board of Directors of the Milton Hershey School Alumni Association, or Mayer, Brown, Rowe & Maw LLP.

I want to also avoid leaving you with the impression that I have not inquired of other knowledgeable individuals in this area. To the contrary, before publishing this book, I circulated it to a limited number of individuals who either had first hand knowledge of some topic covered in this book or was otherwise knowledgeable about the Hersheys philanthropy. The substantive feedback I received was complimentary and supportive. ^[5] Here are some examples of thoughts from other knowledgeable individuals.

“Needless to say, you have something here that is of great value and it needs to be finished and made available as a reference work for the researcher as well as for the interested person who just wants to have a better understanding of the history of the school and the man who is behind it all. […] I think what you have here is very complete and is of great value.”

Joseph Brechbill

“Your conclusion […] ‘All things considered, to conclude that the Hersheys intended that the religious and moral education required by Milton Hershey’s Deed of Trust be based on any faith other than Christianity would be unreasonable. As M.S. said, “I am a Christian in the only sense that Christ wished anyone to be, sincerely attached to his doctrine in preference to all others.”’ is powerful. […] You have done a masterful job, in my opinion. Well done!”

Rev Michael Wagner

“Your thesis that Milton Hershey had a broader concept of the School than we recognize, namely that the town and Hershey interests (Foods, Trust, HERCO, Foundation) are all intertwined by original design, is well taken.”

Kathryn S. Taylor, Attorney at Law

^[2]Photo Courtesy of Milton Hershey School, Historical Records

^[3]Mayer, Brown, Rowe & Maw is a combination of two limited liability partnerships, each named Mayer, Brown, Rowe & Maw LLP, one established in Illinois, USA and one incorporated in England.

^[4]1963 Hershey Chocolate, p. 29. Also refer to 1957 Snavely, p. 355.

^[5]One person who reviewed an earlier draft of this book suggested, and I have heard others in Hershey, PA suggest, that M.S. “did whatever he wanted to do.” That is true, particularly when one considers that he did so because the Original Deed of Trust had been written in contemplation of exactly what M.S. planned to do, and did do. Thus, it is factually accurate, especially when one reconciles M.S.’s actions and decisions with the express terms of Milton Hershey’s Deed of Trust. However, if one seeks to use such statement to suggest that M.S. would intentionally violate his own Deed of Trust, then such a suggestion without more suffers from lack of supporting rationale.

    Rather, it makes much more sense to conclude that (1) M.S. viewed the Community, Businesses, and Education components as part of The Hershey Industrial School (which includes his and Catherine’s “ideal community”), which is referred to at the beginning of the Deed of Trust as the permanent “institution” and intended for the benefit of the Beneficiaries of the Trust, and (2) he knew this was to be the case before the Original Deed of Trust was written in 1909.

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Table of Contents

Table of Contents

List of Appendices

List of Charts

List of Diagrams

List of Pictures

List of Tables

Statement of Purpose

Acknowledgements

Terminology and Nomenclature

Foreword

Introduction

Chapter 1. The “Ideal Community” and the Hersheys’ Children’s Home

1.1 The Ideal Community

1.2 Milton S. Hershey – Philanthropist

Chapter 2. The Hershey Industrial School – Significant Events

2.1 Early Vision of the School and Overview of the Plan

2.2 Phase 1: Building and Determining the Long Term Viability of the Business in Lancaster (1893 to 1901)

2.3 Phase 2: Building and Determining the Long Term Viability of the Community and the Business in Derry Township (1901 to 1908)

2.3 (a) Hershey, Pennsylvania - Overview

2.3 (b) Derry Township

2.3 (c) Hershey’s View of the “Ideal Community”

2.3 (d) Economic Depressions and Other Challenging Events Encouraged Hershey to Make Things More Permanent

2.4 Phase 3: The Trust and Education (1909 to 1918)

2.5 Phase 4: Placing all Components of the “Ideal Community” into a Permanent Structure (1918 to 1923)

2.6 Phase 5: The Great Expansion (1920s and 1930s)

2.6 (a) The Expansion of the 1920s (1924 to 1929)

2.6 (b) The Great Depression and the Expansion of the 1930s (1930 to 1939)

2.6 (b) (i) The Great Depression

2.6 (b) (ii) Overview of the 1930s Expansion

2.7 Structural Refinements

2.7 (a) 1919 Incorporation of the Managers

2.7 (b) 1927 Hershey Estates, Hershey Chocolate Corporation

2.7 (c) 1929 Proposed Merger With Kraft and Colgate-Palmolive-Peet

2.7 (d) 1930 The Hershey Industrial School Alumni Association

2.7 (e) 1933 Modification of the Original Deed of Trust

2.7 (f) 1935 M.S. Hershey Foundation

2.7 (g) 1938 Hershey Junior College

2.7 (h) 1939 An HIS Graduate Becomes a Manager

2.7 (i) 1945 Testamentary Trust

2.8 1937 Labor Strike and Related Labor Activities

2.9 1937 Stroke of Milton Hershey

2.10 1938 Death of George Copenhaver

2.11 1940 to 1945 – World War II Dominates

2.12 1944 Milton Hershey Resigns Leadership Positions

2.13 1945 Milton Hershey Died

Chapter 3. The Hershey Industrial School Trust

3.1 Introduction

3.2 The Hersheys’ Children’s Home Development Plan and the Trust

3.3 Deed of Trust

3.4 Trust Structure and Governance

3.4(a) Trustee

3.4(b) Managers and Board of Managers

3.4(c) Preservation of Control and Interpretation During Milton Hershey’s Lifetime

3.4(d) The “institution” Designated the “School”

3.4(e) The “school”

3.4(f) Beneficiaries of the Trust

Chapter 4. Beneficiaries of the Trust and Their Benefits

4.1 Determining Who is a Beneficiary – Requirements for Admission

4.2 Indenturing

4.2(a) Indenturing is Required by Milton Hershey’s Deed of Trust

4.2(b) Indenturing Changes Legal Relationships

4.2(b)(i) Parent, Guardian or Other Competent Authority and Minor

4.2(b)(ii) Parent, Guardian or Other Competent Authority and Managers

4.2(b)(iii) Minor as Third Party Beneficiary and a Direct Party

4.2(b)(iv) Minor and the Managers Under the Indenture and Milton Hershey’s Deed of Trust

4.2(b)(v) Minor and Paragraph 20 of Milton Hershey’s Deed of Trust

4.2(c) The Substance of Each Indenture

4.3 Defining the Beneficiaries of the Trust

4.4 Benefits Under Milton Hershey’s Deed of Trust and the Indentures

4.5 Term of Current Beneficiaries

4.5(a) Admitting Current Beneficiaries

4.5(b) Terminating Current Beneficiaries

4.5(c) End of Term as a Current Beneficiary

4.6 Benefits After Reaching Age 18

4.7 All Benefits are Free

Chapter 5. Hersheys’ Children’s Home

5.1 Overview of the Hersheys’ Children’s Home

5.2 The Hersheys’ Children’s Home Component: “Hershey” or Community

5.3 The Hersheys’ Children’s Home Component: “Industrial” or Business

5.4 The Hersheys’ Children’s Home Component: “School” or Education

5.5 The School Includes Hershey Improvement Company and Hershey Estates which Operate the Hersheys’ Children’s Home Campus

5.6 The School Includes The School Family and The Hershey Industrial School Alumni Association

Chapter 6. Direct Trust Benefits & the “school”

6.1 The “school”

6.2 First and Foremost a Children’s Home

6.3 The Guiding Principles

6.4 Environment of the School: A School Family and A Rural, Agrarian Campus

6.4 (a) Creating and Maintaining a Home and a Family - The School Family

6.4 (b) A Rural, Agrarian Campus

6.4(b)(i) Deed of Trust and Historic Analysis

6.4(b)(ii) Rationale for a Large Rural Campus

6.5 Programs of the “school”

6.5 (a) Full Development of the Whole Person

6.5 (b) Work Ethics

6.5 (c) Recreation and Other Natural Resources

6.5 (d) Religious and Moral Education

6.5(d)(i) Deed of Trust and The Hersheys’ Intent

6.5(d)(ii) The Religious and Moral Education Program

6.5(d)(ii)(A) General

6.5(d)(ii)(B) The Program

6.5 (e) Farm and Vocational

6.5(e)(i) Deed of Trust

6.5(e)(ii) Rationale for the Farm and Vocational Programs

6.5 (f) Certain Benefits Continue Beyond Age 18

Chapter 7. The School Family

7.1 Origin of the School Family—Milton Hershey’s Deed of Trust, Indentures and the Constitution

7.2 Defining the School Family

7.3 The School Family’s Role and Purposes in the Trust

7.4 Historic Recognition and Verification of the School Family

Chapter 8. Milton Hershey’s Alumni Association

8.1 Hershey Industrial School Alumni Association – What the Hersheys’ Intended

8.1 (a) General

8.1 (b) The Constitution of Milton Hershey’s Alumni Association

8.1 (c) Creating and Maintaining a Home and a Family - The School Family

8.1 (d) Certain Benefits are to Continue Beyond Age 18 and Beyond High School

8.1 (e) Original Alumni Association Members of Milton Hershey’s Alumni Association Succeed the Hersheys as the Senior Members of the School Family

8.2 The Alumni Association’s Institutional History

8.2 (a) Formation and Formalities

8.2 (b) Use of Trust Assets and Milton Hershey’s Intent

8.3 Milton Hershey’s Alumni Association Purposes and Excellent History of Service

8.3 (a) Service to the “school” and Its Students

8.3 (b) Service to Alumni

8.3 (c) Service to the School Family

8.3 (d) Service to the “Permanent Institution” – the School

Index of Terms

Glossary of Terms

List of Appendices

Appendix I: Development of The Hershey Industrial School

Appendix II: The Hershey Industrial School - Significant Events

Appendix III: Development of Derry Township & HIS Education System

Appendix IV: The Hershey Industrial School - Student & Student Home Growth

Appendix V: Deed of Trust - Original

Appendix VI: Deed of Trust - As of Milton S. Hershey's Death in 1945

Appendix VII: Deed of Trust - As of Date of Publication in 2005

Appendix VIII: Form of Indenture as of Milton S. Hershey's Death in 1945

Appendix IX: Certificate of Incorporation of the Managers and 1933 Amendment

Appendix X: 1918 Conveyance of Non-Chocolate Assets to Hershey Chocolate Company

Appendix XI: 1918 Transferred Hershey Chocolate Company Stock Certificate

Appendix XII: 1918 Letter to Hershey Chocolate Company

Appendix XIII: 1919 Decree

Appendix XIV: 1919 Petition

Appendix XV: 1930 Constitution

Appendix XVI: 1933 Decree

Appendix XVII: 1933 Petition

Appendix XVIII: 1933 M.S. Hershey Declaration and Joinder

Appendix XIX: 1933 Paul Reed Memo

Appendix XX: 1935 The M.S. Hershey Foundation

Appendix XXI: 1935 Living Trust of Milton Hershey

Appendix XXII: 1944 Milton Hershey Will & 1945 Residual Derry Township School District Trust

Appendix XXIII: Milton Hershey's Deed of Trust & the Ideal Community

Appendix XXIV: The Words of Milton S. Hershey

List of Charts

Chart 1: The Hershey Industrial School - Significant Events (1909 - 1918)

Chart 2: Student & Student Homes of the "school" Growth (1910 - 1918)

Chart 3: The Hershey Industrial School - Significant Events (1918 - 1923)

Chart 4: Student & Student Homes of the "school" Growth (1919 - 1923)

Chart 5: Student & Student Homes of the "school" Growth (1924 - 1929)

Chart 6: Student & Student Homes of the "school" Growth (1930 - 1939)

Chart 7: The Hershey Industrial School - Significant Events, Structural Refinements (1919 - 1945)

Chart 8: Student & Student Homes of the "school" Growth (1940 - 1945)

List of Diagrams

Diagram 1: The "Ideal Community" of The Hershey Industrial School (1901 - 1909)

Diagram 2: Control of The Hershey Industrial School Trust – 1910

Diagram 3: The Hershey Industrial School: 1910 – 1918

Diagram 4: The Hershey Industrial School: 1918

Diagram 5: The Hershey Industrial School: 1927

Diagram 6: The Hershey Industrial School: 1930

Diagram 7: The Hershey Industrial School: 1935

Diagram 8: The Hershey Industrial School: 1938

Diagram 9: The Hershey Industrial School: 1945

Diagram 10: Relationships Resulting from Indenturing

Diagram 11: Scholars Versus Orphans Under Milton Hershey's Deed of Trust

Diagram 12: Benefits Under Milton Hershey's Deed of Trust

Diagram 13: 1950 Houseparent Handbook Diagram of HIS

Diagram 14: School Family and Milton Hershey's Alumni Association: 1930

List of Pictures

Picture 1: Milton S. Hershey in 1941

Picture 2: Milton Hershey and the Boy

Picture 3: H.I.S. Junior/Senior High School

Picture 4: Homes on Caracas Avenue, Hershey, Pennsylvania

Picture 5: Chocolate Factory viewed from the Community Center Building Circa 1933

Picture 6: Student Farm Home Brookside in 1908

Picture 7: Student Farm Home Apple Hurst (Farm No. 39)

Picture 8: The Community Center Building, Built in 1933

Picture 9: The Board of Managers of The Hershey Industrial School in 1944

Picture 10: John Snyder, Legal Architect of The Hershey Industrial School

Picture 11: The Boys Admitted to The Hershey Industrial School in 1914

Picture 12: 1940 Map of The Hershey Industrial School

Picture 13: Derry Township Schools Circa 1933

Picture 14: H.I.S. Junior Senior High School, Opened in 1934

Picture 15: Library and Other Facilities of Hershey Junior College, Opened in 1938

Picture 16: George Copenhaver, the First Superintendent of The Hershey Industrial School

Picture 17: Prudence Copenhaver, George Copenhaver’s Wife

Picture 18: Family Home Life

Picture 19: Recreation is a Core Component of the Program

Picture 20: Veronica "Fanny" B. Hershey, M.S.'s Mother

Picture 21: Henry Hershey, M.S.'s Father

Picture 22: Milton S. Hershey in 1938

Picture 23: Catherine S. Hershey in 1910

Picture 24: The Ten Commandments and Golden Rule as Published in Student Homes

Picture 25: Members of the Early School Family

Picture 26: Broad Acres, Unit No.1, “H. I. S. Alumni Memorial Home”

List of Tables

Table 1: Hershey is a United States Postal Service Area

Table 2: Statistics Regarding Age at Time of Student’s Discharge

Table 3: Counties and Townships in Which HIS Units Were Located

Table 4: Students Who Became Alumni in Derry Township 1908-1945

Table 5: Number of school Graduates Compared to Other Derry Township Graduates

Table 6: Land Ownership By The Various Hershey Interests

Table 7: Indenture and Deed of Trust References to "home" and "residence"

Table 8: Resident Beneficiaries Who Died While a Student at HIS

Table 9: Constitution of The Hershey Industrial School Alumni Association

Table 10: Benefits Through Milton Hershey's Alumni Association

Table 11: Comments on Alumni Association Constitution

Table 12: Analysis of Former Student, Former Good Student, Former Commendable Student, & Others Eligibility, Status and Benefits

Table 13: Alumni Managers Who Served as a Manager During or Prior to 1984 Had Served as the President of the Alumni Association

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Milton S. Hershey

“His Deeds are His Monuments

His Life is Our Inspiration”

John F. Halbleib

Introduction

By the end of 2002, I had invested more than four years and approximately 8,000 hours in research regarding the Milton Hershey School Trust, formerly known as The Hershey Industrial School Trust. Throughout this time, and even more in subsequent years, I have been asked to write all I have learned. This book is the beginning of my efforts to do that.

I have wrestled with various ideas regarding what the focus of this book should be. Given that M.S. lived to his 88^th birthday and achieved many great things, I ruled out more ambitious ideas. I ruled them out primarily because many of their attributes added complexity that often required much effort on the part of the reader to understand that complexity and gave rise to too many moving parts of the story. This would have added risk of confusion.

In the end, I decided to focus on what most who have written about M.S. have not adequately addressed. A number have sought to write about the chocolate business, or fragmented moments in M.S.’s life, the development of Hershey or Hershey Junior College. As I read most all of this material, I began to see a much clearer picture of what I believe was the Hersheys’ understanding of what they intended; that being their “ideal community” and The Hershey Industrial School.

To do justice to the Hersheys’ intent to develop and make permanent their “ideal community” and The Hershey Industrial School, I have limited the focus of this book to the Hersheys’ “ideal community,” The Hershey Industrial School, the Trust, the Beneficiaries of the Trust, the Hersheys’ Children’s Home, direct Trust benefits, the “school,” the School Family, and Milton Hershey’s Alumni Association. All these topics relate to the permanent institution created by the Deed of Trust, which includes their ideal community. What made it “ideal” was that all who played a role within the “permanent institution” benefited from being part of it; while at the same time, the Beneficiaries of the Trust were in turn served by the “permanent institution.” Thus, Hershey – the “ideal community” – was a significant part of the “permanent institution,” along with the land, business and other assets of the Trust.

It is important to remember, great philanthropy does not just happen. There usually is a plan. In the case of M.S., his plans began much earlier than one would guess. Inasmuch as Hershey itself is a large component of the “ideal community,” his plans for that community were forming long before he returned to the family Homestead in Derry Church, Pennsylvania. M.S.’s physician, Herman Hostetter, helps put this lengthy timeline into perspective:

I do not think the country, or even the community, has caught up with the brilliant thinking of Mr. Hershey. To me, he was one of the greatest of all independent thinkers; expressing his ideas simply, yet with extraordinary originality, as well as with courage and boldness.^{^[1]}

^[1]1971 Hostetter, p. 6-7.

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Chapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8

Chapter 1. The “Ideal Community” and the Hersheys’ Children’s Home

The purpose of this chapter is two fold. First, to provide a short overview of M.S.’s plan, what he meant by “an ideal community,” as well as the role of the ideal community in the Trust; second, to provide a view of M.S. and his words.

Appendix XXIV: The Words of Milton S. Hershey provides a composition of quotes. This composition provides even greater insight into his thinking on many subjects explained in this book. His words illustrate his plan, his intent, and the man himself.

1.1 The Ideal Community

M.S. was a deeply religious man whose personal view of an ideal community paralleled his Christian views. His ideal community shared much in common with the Bible’s New Testament. Not only did the community of Hershey evolve out of, or was based upon, his Reformed Mennonite Christian upbringing, the entire community (businesses and all) was designed to serve the poor through the Trust, the beneficiaries being male orphans born in America. In fact, Hershey, PA is included within the institution referenced in Milton Hershey’s Deed of Trust and it was developed so that in the end it would serve the poor as Christ contemplated. By configuring the core components of this ideal community, the Hersheys’ established an interdependent and wholly self-reliant philanthropy that truly could exist in perpetuity as a community of mutual interests.

Section 2.1 will provide specific information regarding M.S.’s plan, while Chapter 3 will provide the details of the Trust.

1.2 Milton S. Hershey – Philanthropist

It is commonly believed that M.S. was a man of few words. Instead of making grand speeches, M.S. would let his philanthropy speak for him. In the extensive research done for this book, many sources were found to suggest this belief was not exactly true; M.S. was not a man of few words. M.S. merely chose to use his words to the best advantage.

Take, for example, the fact that during M.S.’s life he had control over all attributes of the Trust and the town of Hershey by virtue of his ability to select the members of the Board of Directors of the Hershey Trust Company through exercise of the voting rights of his Hershey Trust Company stock. Managers could be selected only from the members of the Hershey Trust Company’s Board of Directors. Thus, the text of significant documents (e.g. the Constitution, the form Indenture, etc.) is appropriately attributed to M.S. due to his retained control and the facts as he puts them: “I am carrying out the terms of my will while living, and I want to make a good job of it.” ^[1]

In the article, “Mr. Hershey Gives away his Fortune,” Hershey is quoted as saying, “Well, I have no heirs – that is, no children, so I decided to make the orphan boys of the U.S. my heirs.”^{^[2]} He is also quoted as saying that an ambition he had for the School is that, “Someday, maybe one of our Homeboys will come down the hill and take charge of the whole works down there.”^{^[3]} In these quotes M.S. uses his words to express his philanthropic objectives. The first objective is that the boys he aids are his family, his heirs; the second, that his heirs will one day take over for him and continue his legacy. In this continuance, M.S.’s philanthropy would live on into perpetuity.

M.S.’s words regarding his heirs and carrying out the terms of his will while living are echoed many times over in recollections of friends and family members. It wasn’t enough for M.S. to create a place for orphan boys to live; M.S. wanted to give the boys something more. He believed it isn’t what you leave your children but how you leave them.^[4] When asked about the cost of his community and the riches he had, often his remarks ran along the lines of, “The value of our good is not measured by what it costs, but by the amount of good it does to the one concerned.”^[5] In Joseph R. Snavely’s A Chat with Mr. Hershey, M.S. says of riches:

When a man gets very rich he either gets very selfish, or his money worries him. He has usually been so busy getting it that he hasn’t had time to figure what he should do with it. It’s a strange thing – but I got rich very soon after I had given up the idea of getting a lot of money! When I was young I was very ambitious and anxious to get money, and I failed, repeatedly. When I settled down to really make a good job of caramel making, I began to make money.^[6]

M.S. was close to his family, his mother, Fanny B. Hershey, in particular. It was his mother who introduced him to the Mennonite religion and the Bible. Fanny would read to M.S. every Sunday from “one portion of the Bible and in her humble way explain it to [him].” It was his mother’s advice, of “when you tackle a job stick to it until you have won the battle,” that spurred him on to continue with many of his business ventures and his ideal community.^[7]

When M.S. began his chocolate factory, many asked him how he was planning to make a profit with a factory built in the middle of the country? M.S.’s response was, “I’m not trying to make more money.” ^[8] “What I want to do is to find a practical use for what I have and put it to work in a way that will benefit others.”^{[9] [10]} The benefit he was attempting to provide included his ideal community. Everything in his life revolved around that goal.

In M.S.’s mind, there was no question of the boys at the School being his heirs. When asked if he would do anything different if he did have children, M.S.’s response was,

I think that I would have given them what they needed and turned the rest over to the [orphan] boys. Too much money is an evil influence for a boy. I am certain I would have felt that way about my own. Money spoils more men than it makes […] Yes, I think if I had had those sons you mention I still would have wanted the poor boys to get the business, or most of it.^[[11]] Because they are our boys, you know, after all, whether we happen to be their dads or not.”^[12]

It was M.S.’s belief that lack of opportunity was the trouble of the world. ^[13] He believed that he was successful in business and life because he was afforded opportunities; he was determined to make opportunities for boys who started poor. ^[14]

When M.S. envisioned his home for orphan boys, he said,

[I had an] idea of having a farm for boys in the old homestead. I didn’t know then how much the business was going to expand. I thought of having perhaps 100 boys, and giving them a chance. But the business grew faster than I thought. I began to make money just when I thought of having perhaps 100 boys; when everything was going so well I thought I had better start the orphan school.^{^[15]}

M.S. visited many orphanages in an attempt to learn from institutions already in place.^[16] After viewing these institutions, M.S. decided he “wanted to get away from the idea of institutions and charity and compulsion, and to give as many boys as possible real homes, real comforts, education, and training, so they would be useful and happy citizens.^[17]M.S.’s religious feelings permeated every part of the School’s plan, right down to the clothes and food the boys would be given: “all orphans admitted to the School shall be fed with plain, wholesome food; plainly, neatly and comfortably clothed, without distinctive dress, and fitly lodged.”^[18]

He felt so strongly on this point that he wrote the terms into his Deed of Trust. Much of the verbiage in the Deed of Trust, and many of the documents associated with The Hershey Industrial School, and the town of Hershey, comes from Milton Hershey.^[19] Even with this fact in evidence, M.S. believed that “the only unusual thing about this school is the fact that [he is] carrying out the terms of [his] will while [he was] still alive.” ^[20]

M.S. had a card that hung on the wall over his desk: “Business is a Matter of Human Service.” This saying permeates every action of M.S.’s in his life. It reflects his beliefs in religion, business, and humanity. In seven words, we are shown the definition of M.S.’s philanthropy.

^[1] 1963 Hershey Chocolate, p. 29. Also refer to 1957 Snavely, p. 355.

^[2] Fortune, “Mr. Hershey Gives Away His Fortune,” 1934.

^[3] Refer to 1983 Castner.

^[4] 1971 Hostetter, p. 23.

^[5] 1971 Hostetter, p. 16.

^[6] 1932 Snavely, p. 3-4.

^[7] 1939 Murrie, p. 42.

^[8] 1932 Snavely, p. 6.

^[9] 1932 Snavely, p. 6.

^[10] 1939 Murrie, p. 100.

^[11] In fact, in stating that “I still would have wanted the poor boys to get the business, or most of it,” M.S. was reflecting his view that his employees were his partners to whom he paid 25% of the profits of the Hershey Chocolate Company, with the remaining 75% going to the shareholder(s), which were the “poor boys.” See Chapter 5 Hersheys’ Children’s Home for more detail. Refer to “Mr. Hershey’s $60,000,000 Gift Amazes Entire World.” The Hershey Press, 15 Nov. 1923. In this article, such partnership with his employees is described. This article and the above quoted article were published at the same time.

Later, profit sharing was suspended at the request of employees and the labor union resisted profit sharing. [1939 Murrie, p. 119]

^[12] “Unique Philanthropist, His Munificent Gift to Orphan Boys a Long Cherished Idea,” New York Times. November 18, 1923.

^[13] “Unique Philanthropist”

^[14] 1939 Murrie, p. 125-126.

^[15] “Chocolate Millions For Charity,” The Literary Digest, Vol. LXXIX, No. 9, December 1, 1923, p. 34-35.

^[16] 1957 Snavely, p. 309-310.

^[17] Alexander Stoddart, “Private Papers, Duplicate Materials – No. 4, n.p. (MSS in possession of Nella Stoddart). Refer to 1962 Rudisill, p. xv.

^[18] Paragraph 17 of Milton Hershey’s Deed of Trust

^[19] Refer to Appendix XXIV: The Words of Milton S. Hershey.

^[20] 1957 Snavely, p. 309-310.

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Chapter 2. The Hershey Industrial School – Significant Events

In the following sections, the significant events that gave rise to, or otherwise affected, the permanent institution or School (which includes the “ideal community”) known as The Hershey Industrial School are of reviewed. Events that affected the School are laid out to facilitate a greater appreciation the timing of these various significant events.

2.1 Early Vision of the School and Overview of the Plan

To understand what the Hersheys had in mind when forming the rural community of Hershey, Pennsylvania, and developing Derry Township (as well as other land that was adjoining or conveniently near to School property) as the Hersheys’ Children’s Home Campus, we turn to a few important facts. The first fact is from Chapter 1, where M.S. is described as having the ambitions for the School for many years before the actual founding. Some accounts suggest that he first began to visualize the School when he was a child. The article in The Literary Digest specifies that Milton Hershey began thinking about the School in 1886, which is seventeen years prior to 1903, the year during which most would say Hershey, Pennsylvania was formed.^[1]

That M.S. conceived of The Hershey Industrial School prior to, or in tandem with, his vision of the unincorporated town of Hershey and the chocolate factory is confirmed in the article M.S. Hershey Gives $60,000,000 Trust for an Orphanage, which states, “[M.S.] conceived of the idea of the orphanage about the time his immense chocolate plant and the town of Hershey were taking shape.”^{^[2]} Thus, long before Hershey, PA was given its name, M.S. had visualized The Hershey Industrial School and the “ideal community.”

In these facts, confusion might occur. Today, it is commonly held that the community of Hershey, the various businesses, the education system in Derry Township and the Milton Hershey School (the current name of The Hershey Industrial School) are wholly separate from one another. However, this separation was not how the Hersheys viewed it. Instead, the Hersheys’ view was that each were simply parts of a whole – with the “ideal community” as part of the “permanent institution” created within the Trust and known as “The Hershey Industrial School.” In other words, Hershey was developed as a part of, not separate from, The Hershey Industrial School.

The formation of the Trust in 1909 was the first step taken to insure The Hershey Industrial School would be permanent. Here are some facts to consider.

First, Hershey, PA exists only as an unincorporated community within, and outside of, Derry Township. It has no formal existence. Also, Bachmanville, Derry Church, Palmdale, S. Londonderry, Sandbeach, Swatera Station, and Union Deposit, Pennsylvania (the communities that were succeeded by the community referred to as “Hershey”) existed long before M.S. built the chocolate factory. This larger community became known as Hershey, PA only after satisfying a formal requirement associated with naming the Federal post office, which served this larger group of communities. And so, these communities within, or near, Derry Township became known as Hershey, PA after the new post office and its service area. Then and today, Hershey, PA is a community within, and near, Derry Township without any formal legal existence of its own.

Next, that M.S. had viewed the community as part of his philanthropic plan is clearly evidenced by his words and deeds in 1918. As further developed in Sections 2.3 and 2.5, the Hersheys formed The Hershey Industrial School long before they started the process of making it the subject of a permanent structure – the Trust, and before they publicly named it. This conclusion is supported by the following events. In early 1918, M.S. entered into the 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company, which included the conveyance of certain land. In regards to the land, the instrument of conveyance stated “Whereas, the Hershey Chocolate Company has acquired and is taking over by conveyance from M.S. Hershey certain lands, being the town of Hershey, Pa. [...].” On November 13, 1918^[3], M.S. executed the 1918 Endorsement of the 1918 Transferred Hershey Chocolate Company Stock Certificate, which made the 1918 Contribution of Hershey Chocolate Company Stock to the Trust and caused substantially all of the outstanding Hershey Chocolate Company stock to be owned and controlled by the Trust - ultimately controlled by M.S. through his ownership of the Hershey Trust Company.^[4]

The day following M.S.’s 1918 Contribution of Hershey Chocolate Company Stock to the Trust, he wrote a letter to the Hershey Chocolate Company in which he stated that “for some years past [certain property (including real estate)] belonged to the Hershey Industrial School, and has been operated, managed, and controlled solely by it, the legal title to the real estate being held by me in trust only to make conveyance for its use, benefit, or interest, which conveyance as of January 1, 1918, is about to be made to you.”^{^[5]} He makes clear to the Hershey Chocolate Company that full and continued ownership of the land that constitutes Hershey, PA., whether owned by M.S., Hershey Chocolate Company or the Trust has at all times been held in trust for The Hershey Industrial School. While the Trust did not exist as a separate legal entity when M.S. first began his acquisition of the land that later became known as the town of Hershey, he stated that he was holding such land in trust for the Hersheys’ philanthropic endeavour – the Hersheys’ Children’s Home, also known as The Hershey Industrial School.

Prior to moving to the Homestead, M.S. had additional children’s home related events, such as the fact that his grandfather, Jacob Hershey (of Derry Township), a Bishop of the Reformed Mennonite Church, and John Snyder, with whom M.S. began his association in 1891 (only five years following 1886, the year in which his plan for the School began to take shape), both served on the board of the Emaus Trust. The Emaus Trust was a children’s home located in Middletown, PA formed by George Frey. Snyder is the legal architect that M.S. used to, among other things, make his philanthropy (including the “ideal community”) permanent.^{^[6]} There is some overlap in M.S.’s and Snyder’s knowledge of children’s homes through the Emaus Trust and Girard College in Philadelphia.

After considering a number of facts, including M.S.’s and Snyder’s statements that M.S. first conceived of The Hershey Industrial School in 1886, and various events that took place between 1886 and 1918, it is clear that M.S. went through a well planned, 32 year development process. During this period, the Hersheys methodically proved that each component of the infrastructure of The Hershey Industrial School would work and that each component would function in perpetuity as part of the permanent institution within the Trust. The Hershey Industrial School is comprised of three major components, each of which is reflected in its name.^[7]

Hershey represents the community of Hershey, PA. It includes Derry Township and certain surrounding land.^[8] This component of The Hershey Industrial School is referred to as Community.
Industrial represents the various businesses, including the Hershey Chocolate Company which the Hersheys created.^[9] The funding for the businesses came primarily from the Hersheys and the Trust. This component of The Hershey Industrial School is referred to as Business.
School represents the education system which the Hersheys created within Derry Township, including those that were public and those that were not. The funding for these resources came primarily from the Hersheys and the Trust, as well as the community of Hershey, primarily through taxes. This component of The Hershey Industrial School is referred to as Education.

The Hershey Industrial School is built upon an infrastructure comprised of these three components made permanent through the Trust.^[10]

Picture 3.png

Picture 3: H.I.S. Junior/Senior High School ^[11]

The location and use of this Junior/Senior High School reflects the all encompassing role of The Hershey Industrial School. This facility serves junior and senior high school students of the school, contains the Board Room of the Board of Managers and welcomes visitors to Hershey, Pennsylvania. It, together with Hotel Hershey, is located at the highest, and a nearly central, point in Hershey. From here, one can view the Hersheys’ Children’s Home Campus, as well as the full extent of the Hersheys’ philanthropy, for miles in every direction.

As part of the “permanent institution,” the Community of Hershey, the industrial businesses, and the education system benefited on a regular basis as M.S. and/or the Trust consistently made improvements to this infrastructure. Separate from this phenomenon, the beneficiaries of The Hershey Industrial School Trust are the Beneficiaries of the Trust.^[12] Though the Beneficiaries are the only beneficiaries of the Trust, the overall design and day to day operation of The Hershey Industrial School benefits a broad group, including the individuals who are part of The Hershey Industrial School. However, benefiting from the existence or operation of the Trust^[13] does not cause those who derive indirect benefit to become the beneficiaries of the Trust.

Community, Business, and Education serve as the core components of the Hersheys’ Children’s Home and its campus, The Hershey Industrial School. By so configuring these core components of the School, the Hersheys established an interdependent and wholly self-reliant philanthropy that could exist in perpetuity, which includes a “community of mutual interests”^[14] or the “ideal community.”

The Hersheys pursued a wise plan through which they built The Hershey Industrial School.^[15] Their end was achieved, but the achievement was no small task. To achieve their objectives, it was prudent for the Hersheys to pursue their philanthropy in the following sequence:

The philanthropy required a profit driven economic engine to fund it. Thus, the Hersheys created, and verified the economic viability of, the Business component (e.g. Hershey Chocolate Company, which serves as the profit driven economic engine that funds the philanthropy), while at the same time providing employment and stability to the Community (which is the Home of each Current Beneficiary).
To build a permanent “ideal community,” they would need a large land area. Inasmuch as Lancaster (the original site of operation of Lancaster Caramel Company and Hershey Chocolate Company) was somewhat already developed, Lancaster would not suffice. Thus, the Hersheys had to locate a large area of land well suited to producing chocolate, serving as an “ideal community,” and operating the Hersheys’ Children’s Home. They found Derry Township and the surrounding area rural and well suited to such other requirements.
To create an “ideal community,” the Hersheys would need to build and verify the long term viability of the Community, as well as the additional Businesses that operate the Community. This Community must serve as the Home of the Current Beneficiaries, as well as those who play some role in delivering the benefits of the Trust to the Current Beneficiaries (whether, for example, as a teacher, houseparent, worker, or community member).
Once the viability of the Hershey Chocolate Company and the Community was sufficiently validated by the Hersheys, the Hersheys then set about to establish, and improve, the Education system in Derry Township. This system serves to educate the Current Beneficiaries, as well as those who are members of the Community.

Once the viability of these components had been sufficiently validated, the Hersheys then set about to make their “ideal community” permanent within The Hershey Industrial School. For this permanence, they chose the Trust. The timing of when to make the overall structure, or portions thereof, permanent is driven by both the timing of when to bring the Beneficiaries into the development plan and the confidence that the overall structure has proven its effectiveness and viability in perpetuity.

When one considers the full scope and implications of The Hershey Industrial School, 32 years for designing the plan, determining the viability of each component, fully implementing such design, and making The Hershey Industrial School subject to a permanent structure makes sense. This well thought out, step-by-step development plan is referred to as the Hersheys’ Children’s Home Development Plan.

Now to focus on an important, but often overlooked, fact: M.S. formed the intent to build the Hersheys’ Children’s Home long before beginning the process of conceiving, designing, and building the community, businesses, and other assets that constitute components of the Hersheys’ Children’s Home. Thus, whether the assets were owned outright by the Hersheys, the Hershey Chocolate Company, or the Trust, they were created, owned, and controlled since the late 1800s for the benefit of the Beneficiaries through M.S. In fact, during M.S.’s lifetime he maintained control over these assets, even while they were in the Trust, through his retained right to vote the stock of the Hershey Trust Company. Consequently, one must always bear in mind the distinction between

the philanthropic plan – the fact that the community, businesses, and other assets that constitute the Hersheys’ Children’s Home were created, owned, and controlled since the late 1800s for the benefit of the Beneficiaries through the ownership and control thereof by the Hersheys, the Hershey Chocolate Company and the Trust, and
the legal means deployed to make such philanthropic plan permanent – the fact that the 1905 Formation of Hershey Trust Company (HTC), the 1908 Incorporation of Hershey Chocolate Company, the 1910 Formation of the Trust, the 1918 Contribution of Hershey Chocolate Company Stock, the 1927 Formation of Hershey Chocolate Corporation, the 1927 Formation of Hershey Estates, and the 1935 Living Trust of Milton Hershey each served to establish the legal attributes of the Trust in perpetuity and were designed to best insure the viability of the Hersheys’ Children’s Home in perpetuity.

While the formation of a legal entity is an observable event, such event is not the substantive reason why an entity is formed nor does it necessarily change the nature of the activities carried on before and after formation of the legal entity. Rather, the substantive reasons that give rise to the formation of legal entities and the activities that are carried on after formation are usually the same as before the formation of the legal entity. An example is the incorporation of the Hershey Chocolate Company in 1908. M.S. did not begin to make chocolate upon the incorporation of the Hershey Chocolate Company. The incorporation of the Hershey Chocolate Company instead changed the legal nature of the entity that operated the chocolate business – it in no way changed the chocolate business itself. Likewise, it is true that the formation of the Trust did not mark the commencement of the Hersheys’ philanthropy that constitutes the Hersheys’ Children’s Home. The commencement of the Hersheys’ philanthropy began long before they moved to Derry Church. The commencement of the philanthropy that constitutes the Hersheys’ Children’s Home began with M.S.’s first conception of the Hersheys’ Children’s Home in 1886 upon his return to Lancaster and was realized as the Hersheys’ built each major component of the Hersheys’ Children’s Home.

The formation of the Trust merely marks the moment when the Hersheys believed it was time to make the overall project more permanent. Hershey’s statement in 1918 that he was holding assets (including the town of Hershey) in trust for the Hersheys’ Children’s Home confirms this belief.^[16] That is, though there were no Current Beneficiaries until 1910, as M.S. was holding assets in trust there were Beneficiaries of the Trust pursuant to which he was holding such assets whether or not a deed of trust had been executed. This approach to making their philanthropy permanent parallels the incorporation of the Hershey Chocolate Company as a means of making the chocolate business more permanent. Incorporation did not cause the chocolate business to exist – it already existed as did the Hersheys’ philanthropy before the formation of the Trust.

The trust, the legal entity that is utilized to make the Hersheys’ philanthropy (including the “ideal community”) permanent, which has come to be known as The Hershey Industrial School Trust, was formed on April 14, 1910. While the Hersheys signed and dated it November 15, 1909, April 14, 1910 was the date on which all the other parties to the Original Deed of Trust executed such document. The name of the Trust (The Hershey Industrial School) reflects the overall composition of the “permanent institution” or the “School” (which includes the “ideal community”) formed pursuant to the Original Deed of Trust.

2.2 Phase 1: Building and Determining the Long Term Viability of the Business in Lancaster (1893 to 1901)

Phase 1 of the Hersheys’ Children’s Home Development Plan occurred from 1893 to 1901 and was the period during which Hershey determined the economic viability of the Business component of The Hershey Industrial School, also considered the Hershey Chocolate Company. Though there are other business components of The Hershey Industrial School, the Hershey Chocolate Company is essential to the success of the overall philanthropy due to its profit driven business plan, which reaches far outside the Community for funding through the sale of its products. During Phase 1, M.S. built, tested, and verified the long term economic viability of this core profit driven business, upon which the other two components are dependent for a steady source of funding, employment, and other stabilizing economic attributes. M.S. also began to focus more intensely on his family and on the impending development of Derry Township.^[17]

In 1886, M.S. fundamentally changed the way he approached business upon his return to Lancaster and his mother. He became less focused on immediate success and more focused on becoming effective in “making a good job.” This introduces more careful planning and taking things one step at a time. The process of planning and implementing in a deliberate and properly ordered step–by–step fashion became M.S.’s consistent approach following his return to Lancaster.

Soon after M.S. conceived of the School, the chocolate company became the profit-driven, economic engine that would fund the Hersheys’ philanthropy. If the process of planning and implementing in a deliberate and properly ordered step-by-step manner became M.S.’s consistent approach, then his purchase of J.M. Lehmann’s German chocolate making machinery (exhibited at the World’s Columbian-Exposition in Chicago, Illinois) in 1893 marks the beginning of an early phase in his planning of The Hershey Industrial School.

Looking at Phase 1, we should consider that one of America’s Six Depressions^[18] occurred between 1893 and 1897. These six depressions are considered the worst since detailed records of economic data started to be kept (around 1867). This economic depression increased the difficulty M.S. experienced in his pursuit of business success. But at this stage in his business experience, not even one of America’s Six Depressions could prevent his success.

The Hershey Chocolate Company began production of chocolate products on January 1, 1894. Following the incorporation of the Lancaster Caramel Company on February 8, 1894, the Hershey Chocolate Company was named, and operated, as an unincorporated affiliate of the Lancaster Caramel Company.^[19]

After operating the Hershey Chocolate Company for two years, M.S. acquired land in Derry Township and took steps to bring his family closer to him. On September 12, 1896, the day before his 39^th birthday, M.S. purchased the Homestead Farm. Legal title of the Homestead was transferred to M.S. on April 1, 1897. In April 1898, M.S. had his father, Henry Hershey, live in the Homestead upon Henry’s return from Colorado. Henry’s move into the Homestead marks one of M.S.’s first steps toward moving his family back to Derry Township.

M.S.’s increased focus on family is further manifested a month later through his marriage to Catherine Sweeney on May 25, 1898 and that Catherine and M.S. first lived with his mother. Four months later M.S.’s mother moved into her own house, not far from the Hersheys’ home. By September 1898, M.S.’s entire family lived in three separate homes that he owned, which were in close proximity. As a result, M.S. was, for the first time, surrounded by three great loves of his life – his father, mother, and new bride.

About the same time, on August 1, 1898, the unincorporated Hershey Chocolate Company adopted, and used, the trademark “Child in the Cocoa Bean Pod,” which was used until 1968 when the company was reorganized as Hershey Foods Corporation. While reuniting with his family, and forming a new family with Catherine, he adopted a trademark that associates a child with his chocolate products. This act is not surprising considering he began to form his ideas regarding the School in 1886. Thus, by 1898, M.S. had begun to manifest the first stages of planning regarding the School, Derry Township, the Hershey Chocolate Company, and his family, marked by his verification that the Hershey Chocolate Company had long term economic viability.

Shortly after he initiated these steps, he began to implement them. In 1899, negotiations for the sale of the Lancaster Caramel Company began, and on August 10, 1900, the Lancaster Caramel Company, excluding the Hershey Chocolate Company, was sold for $1,000,000. In his book, A Chat with Mr. Hershey, Snavely revealed that M.S. could give up the caramel business now. He had carried it through despite everything. There were new worlds for him to conquer. By selling out at the height of his success – which great numbers of business men are not wise enough to do – he obtained a million dollars that enabled him to pursue his other objectives relating to The Hershey Industrial School.

A description of what M.S. was thinking upon the sale of his caramel business, beginning with his reflection back to its creation, was captured by Snavely.^[20] The following description is informative (M.S.’s words are in quotes):

“Then I went back to Lancaster and started over again. This was in 1886. At that time caramels were my specialty. The Lancaster business went well from the very start, and it wasn’t long before I was selling caramels faster than I could make them.”

[…Thirteen] years later several large caramel manufacturers proposed to Mr. Hershey that he join them in a consolidation, and when he refused they offered him a million dollars in cash for his business.

M.S. then sold his Lancaster Caramel Company. He received a million dollars, which enabled him to pursue his other objectives relating to the Hersheys’ “ideal community,” which was made permanent as part of The Hershey Industrial School.

“When a man gets very rich - he either gets very selfish, or his money worries him,” Mr. Hershey continued. “He has usually been so busy getting it that he hasn’t had time to figure what he should do with it. It’s a strange thing – but I got rich very soon after I had given up the idea of getting a lot of money! When I was young I was very ambitious and anxious to get money, and I failed, repeatedly. When I settled down to really make a good job of caramel-making, I began to make money.

“When I sold out the caramel business, Mrs. Hershey and I thought it might be a good idea for me to retire from active business enterprise. I was not interested in accumulating any more money, and so we decided to take a trip around the world. Traveling in those days wasn’t like it is at the present time, and when we got as far as Mexico Mrs. Hershey said to me, ‘If you call this having a good time, it is more than I do, and I would welcome going back home.’ As these were exactly my sentiments, we cancelled the round-the-world trip and returned to Lancaster.”

“I had always had an idea that people wanted more chocolate in various ways, and so I made the decision to go into business again — not for money, but for the satisfaction of doing something interesting. These valleys of eastern Pennsylvania have been splendid dairy regions for centuries, and it seemed to me it was a good idea to bring the milk chocolate factory right into the milk producing country.” ^[21]

Following his sale of the caramel business, M.S. was already planning Hershey (which includes Derry Township and certain surrounding land). By now, his focus had become even clearer. To help understand what the Hersheys had in mind when forming the school and its expansive rural campus, here are a few relevant facts that are not well known today. M.S. shared his thoughts with Snavely, who recorded them.^[22]

For the site of the new enterprise Mr. Hershey went back to the scene of his birth, selecting the farms adjoining Derry Church, whose history reaches back into the 17th century […] Here work was begun in the early part of 1903. The land was 1,200 acres, of which 600 were taken for the factory and the town, 150 were set aside for a park and the rest was cultivated. Subsequent purchases increased the real estate for all purposes - factory, town, park and farms - to over 10,000 acres. […]

“But how are you going to make any money out of such a large chocolate factory built in the country,” he was asked as the factory began to rise and his associates saw the magnitude of his plans.

“I’m not trying to make more money,” was his reply. “What I want to do is to find a practical use for what I have and put it to work in a way that will benefit others.”

“A million dollars is too much money to put in a factory in a cornfield,” he was told: “In the first place you will not be able to secure sufficient employees to run it, and you will never be able to sell enough chocolate to make the factory self-supporting. It will eat its head off.” “Take a look at the place,” said Mr. Hershey, pointing proudly toward the factory and the town. “It looks like a real home town, doesn’t it?” ^[23]

M.S.’s reflective observations describe those matters that were important to him. He responded to his critics by saying, “I’m not trying to make more money. What I want to do is to find a practical use for what I have and put it to work in a way that will benefit others.” M.S. understood in his own mind that his efforts subsequent to 1900 were to be philanthropic – that is, in M.S.’s words, to “benefit others.” The desire of M.S., reflected in his own words, has its roots in his Mennonite beliefs.^[24]

The Hersheys, particularly M.S., thoroughly researched children’s homes prior to signing the Deed of Trust. That research included visiting many other children’s homes. M.S. stated: “Before I founded the school I visited a number of orphan institutions so that I might learn things at first hand.” “What impressed me most about these schools was the lack of home atmosphere.” M.S. also stated: “These boys must grow up with a feeling that they have a real home.”^[25] “The only unusual thing about this school is the fact that I am carrying out the terms of my will while I am still alive.” “If I passed away tomorrow, everything would go right ahead, and there would be no one to step in and upset things. Everything would go on as though I were here.” ^[26]

In 1901, M.S. began the next phase. In this year, sales for the Hershey Chocolate Company, which was still operating out of Lancaster, totaled $622,000. This total was sufficient validation of the long term economic viability of the Hershey Chocolate Company such that in that same year, M.S. began Phase 2 of the Hersheys’ Children’s Home Development Plan.

2.3 Phase 2: Building and Determining the Long Term Viability of the Community and the Business in Derry Township (1901 to 1908)

Phase 2 of the Hersheys’ Children’s Home Development Plan involves the Hersheys’ building and determining the long term viability of the Community and Business in Derry Township.^[27] In 1901, M.S. built a factory, milk condensing plant, and an experimental dairy barn at the Homestead farm.^[28]

Phase 2 went from 1901 to 1908 and validated the long term viability of the second component of The Hershey Industrial School – the Community of Hershey. Hershey, PA serves as the Hersheys’ Children’s Home Campus. During Phase 2, the Hersheys acquired land in Derry Township, moved the Hershey Chocolate Company to Derry Township, and developed the early infrastructure for the Hersheys’ Children’s Home Campus. This Phase involved acquiring, building, and testing the rural community based campus, as well as integrating the business component with the newly established Hersheys’ Children’s Home Campus.

Picture 4.png

Picture 4: Homes on Caracas Avenue, Hershey, Pennsylvania ^[29]

The Hershey Improvement Company, and later Hershey Estates, built many homes in, as well as provided utilities and other services to, the “ideal community” of Hershey, Pennsylvania, as part of The Hershey Industrial School. M.S. required that these homes not be identical.

Picture 5.png

Picture 5: Chocolate Factory viewed from the Community Center Building Circa 1933 ^[30]

2.3 (a) Hershey, Pennsylvania - Overview

To understand the full importance of Phase 2, one should understand what is “Hershey, Pennsylvania.” One area of ambiguity in the origin of The Hershey Industrial School is the function or role of Hershey, PA. Some believe that Hershey as the “model town” or “ideal community” was the Hersheys’ greatest philanthropy and that The Hershey Industrial School came later. Some believe that the town of Hershey is entitled to benefit from The Hershey Industrial School Trust. These beliefs are “half-truths.” The following are facts that one must consider when faced with these “half-truths.”

First, Hershey, Pennsylvania does not exist as a legal entity. Hershey, Pennsylvania is a United States Postal Service (USPS) area. Consistent with convention that existed before and following 1906, the name “Hershey” served to name the post office as well as the surrounding area that such post office served. Beginning on July 1, 1963 (the date on which the ZIP ^{^[31]} Code was first instituted) the same postal service area was designated Zip Code 17033. In fact, the Web site for the USPS,^{^[32]} informs that the following cities or towns are associated with ZIP Code 17033, which historically was, and remains, Hershey, Pennsylvania:

Table 1: Hershey is a United States Postal Service Area

ZIP Code 17033 is associated with the following Cities/Towns:
City	State	City/Town Status
Hershey	PA	Acceptable (default)
Bachmanville	PA	Not acceptable – use Hershey
Derry Church	PA	Not acceptable – use Hershey
Palmdale	PA	Not acceptable – use Hershey
S. Londonderry	PA	Not acceptable – use Hershey
Sandbeach	PA	Not acceptable – use Hershey
Swatara Station	PA	Not acceptable – use Hershey
Union Deposit	PA	Not acceptable – use Hershey

Bachmanville, Derry Church, Palmdale, S. Londonderry, Sandbeach, Swatara Station, and Union Deposit were communities with their own respective postal service before Hershey, Pennsylvania became the name of the much larger USPS area now serving their communities. As the Web site makes clear, these communities are to use “Hershey” as the mailing address.

There was a Hershey Industrial School Unit or “Student Home” in each of these eight communities designated ZIP Code 17033^[33]. This location made the Campus of The Hershey Industrial School coextensive with Hershey, PA and the related postal service area. In an October 2002 news article regarding a possible name change for Hershey, PA, Martha Raffael writes,

It’s hard to believe that the hometown of the nation’s largest candy maker doesn’t share its name. But although it's known worldwide as Hershey, Pa., the headquarters of Hershey Foods Corp. technically exists only as a ZIP code inside the municipality of Derry, founded about 170 years before Milton S. Hershey started building his first chocolate factory in 1903. [...] “I have not heard a compelling argument for making this change. I don't understand why they want to do it. Derry Township has been in existence since 1729,” said Kathleen Lewis, a lifelong resident and president of the Derry Township Historical Society. “I just can't imagine Nestle or anyone else coming in and saying that the name of the town has to change.” ^[34]

Even the story that Hershey, PA was originally Derry Church and then changed its name to Hershey is a half truth. It does not appear that Derry Church ever formally ceased to exist.^[35] Instead, what is more accurate is that Derry Church once had a USPS post office (and related service area) referred to as “Derry Church.” As was custom at that time, the community of people served by such post office listed Derry Church as part of their mailing address and viewed this as the place where they resided. It appears from the USPS Web site that the service area formerly designated “Derry Church” was succeeded by the Hershey Post Office.

As quoted by Snavely, M.S. said in describing Hershey, PA:

A community of mutual interests, because its heartbeat is in the chocolate factory, and all who live there are directly interested in it. The other enterprises include banking, merchandising, farming, dairying, building, and the street car, electric, telephone, water and sewage disposal systems, in all a score of undertakings employing approximately three thousand people.[…]

Hershey does not have any town government, and is a town in name only; in fact, it is a part of Derry Township, and the only surveillance that it has is that given by the Derry Township constable. ^[36]

Hershey, PA is a post office with a postal service area now best described as the ZIP Code 17033. In fact, the post office did not exist until February 7, 1906. The process of applying for authority to operate, name, and commence the operation of the Hershey Post Office lasted from 1904 through February 7, 1906.^{^[37]}As was the custom in 1906 and for many years thereafter, the community of people served by such post office listed Hershey, Pennsylvania as part of their mailing address and viewed this as the place where they reside. Through use and custom Hershey became the name of the “community of mutual interests.” M.S. himself drew the relationship between the notion of an ideal community and Hershey, PA when he uses the phrase, “if we built an ideal community [...].”^[38]

It is this community of mutual interests that is the “ideal community” which merits study in order to learn its intended role relative to the Trust. Again, while this community of mutual interest derives benefit from the Trust, it is not a beneficiary of the Trust. That said, so long as such community continues to play its intended role vis-à-vis the Trust, it would continue to derive benefit from the Trust through employment, improvements made to the Hersheys’ Children’s Home Campus, and the economic stability The Hershey Industrial School brings to its Community. Its role is to serve as a central part of the Hersheys’ Children’s Home Campus, providing the Home of the Current Beneficiaries.^[39]

2.3 (b) Derry Township ^[40]

Consistent with the Hersheys’ Children’s Home Development Plan, the period from 1901 to 1908 was dedicated to building and proving the long term viability of the Business and Community components of the Hersheys’ philanthropic model in Derry Township. Shortly after his 45^th birthday, on September 18, 1902 M.S. purchased siding and quarry in the Derry Church area. During the early years of Phase 2 or Phase 1, Snavely tells us that M.S. had acquired at least 1,200 acres of land in Derry Township.

In January 1903, surveying began in the Derry Church area and a charter was granted to the Hummelstown-Campbelltown Street Railway. In March and July of 1903, ground was broken for the chocolate factory, the first telephone line was installed in Derry Church, land was set aside for the future park and surveys were made for High Point Mansion and adjacent area. 1903 represents the beginning of a process that contemplates planning for a number of land uses scheduled for a subsequent date. Moreover, M.S. anticipated the need for the trolley system from the very start, confirming he expected that some of his workers would decide not to live in Hershey or Derry Township because they already had a home or for other reasons.

The trolley from Hummelstown to Palmyra began operation in October 1904. In 1904, a contest for naming a proposed Federal Post Office began. This process began when Mrs. T.K. Doyle of Wilkes-Barre received $100 for suggesting the name “Hershey Koko,” a name to which Catherine Hershey and others objected. M.S. put the matter in his lawyer’s, Snyder’s, hands. Snyder attained authorization, and advertised for a name. A prize of $100 was offered. In the end, more than 2000 contestants proposed “Hershey.”^{^[41]} This process took place from 1904 until early 1906.

1905 was an important year marked by a number of key events. M.S. and Catherine moved from Lancaster into the Homestead^[42] following his father’s death. The Homestead served as their home until High Point Mansion was completed in 1908. The Homestead was remodelled and expanded. The new factory for the Hershey Chocolate Company was completed and the chocolate manufacturing machinery was moved from Lancaster to the new factory. The Hershey Trust Company was formed.^[43] The Hershey Park Dance Hall opened. “Cocoa House” was built on the Northeast corner of Chocolate and Cocoa Avenues, the first floor of which housed the Bank/Trust Company, the Post Office, and the General Store; the second floor contained boarding rooms. The McKinley School, the first school building built by M.S. for the Derry Township school system, was built on the Southeast corner of Chocolate and Cocoa Avenues. The Hershey Volunteer Fire Company was organized.

In 1906, the name of the “ideal community” became “Hershey.” M.S. purchased Kinderhaus (which became a Hershey Industrial School student home in 1912) from Israel Hershey. The Hershey Post Office delivered its first mail with Ezra Hershey serving as its first Postmaster. The Hershey Park theatre opened.

In 1907, the Hershey Park opened for its first official season. Also in this year another of America’s Six Depressions^[44] occurred. An interesting parallel exists between the incorporation of the Lancaster Caramel Company and the Incorporation of the Hershey Chocolate Company. Both businesses were incorporated during a depression. Similarly, each of these two events, the formation of the Trust, as well as the $60,000,000 1918 Contribution of Hershey Chocolate Company Stock to the Trust occurred during or immediately following a depression or a World War. This parallel is not surprising because each act added an element of permanency to a significant achievement of M.S. Adding permanency eliminated some risk associated with the adverse affects of economic depressions and war.

In 1908, M.S. and Catherine moved into High Point Mansion. The Hershey Laundry opened for business. 1908 marks a critical restructuring just prior to establishing The Hershey Industrial School Trust.^[45] M.S. transferred ownership of the chocolate business assets, including the chocolate factory, to the newly formed corporation, Hershey Chocolate Company, which M.S. owned. M.S. owned and controlled most everything in Derry Church/Hershey in his individual name up to 1908, including the Hershey Chocolate Company. This being the case, the interdependence of the various activities in Derry Township (e.g., community, education, business, etc.) grew to become clearer through the Hersheys’ ownership and control of such activities. As it had now become time to make a major component of the Business more permanent, in 1908 M.S. continued this central control and ownership through the creation of one corporation that would own many of the various enterprises he created including the Hershey Chocolate Company, the Hershey Improvement Company, and others. We learn through the 1918 Letter to Hershey Chocolate Company that Milton Hershey’s First Trust was the first trust he formed through his ownership of land (including the town of Hershey), businesses and other assets in trust as part of the Hersheys’ Children’s Home but not yet contributed to the Trust, as acknowledged in his 1918 Letter to Hershey Chocolate Company.^[46]

Having conceived, planned, developed, and proved the long term viability of the Business and Community components of The Hershey Industrial School, 1909 became a transition year. In Diagram 1: The "Ideal Community" of The Hershey Industrial School (1901 - 1909), the structure of all the various components of the School (including the “ideal community”) in 1909 is illustrated and explained:

Diagram 1: The "Ideal Community" of The Hershey Industrial School (1901 - 1909)

Diagram 1.png

2.3 (c) Hershey’s View of the “Ideal Community”

It is helpful to remember that at all times either M.S.,^[47] or the Trust, for the benefit of the Beneficiaries, owned directly, or the beneficial interest in, substantially all of Hershey, PA and the various enterprises that operate Hershey. This ownership is particularly important during the often misconstrued period from 1903 (the year many claim that Hershey, PA was formed) to 1910 (the year the Trust was formed). In fact, we learn that M.S. viewed the town of Hershey as an asset he owned and conveyed in 1918 to the Hershey Chocolate Company and he expressly said so in such conveyance.^[48]

The Hershey Chocolate Company as part of The Hershey Industrial School served the Current Beneficiaries directly by, among other things, funding the philanthropy, stabilizing the Community as a key profit driven employer, and providing training and jobs for the students and alumni of the school. Likewise, the Community and Hershey Estates (and its predecessors) as part of The Hershey Industrial School served the school and its students and alumni by, among other things, (1) accepting and living by certain rules the Hersheys had created for those who lived in the Community or worked in the Businesses (e.g., following the Ten Commandments, the Golden Rule, and company rules), (2) welcoming the Current Beneficiaries into the Community through various activities and the Derry Township school system, (3) providing a real home for the boys, and (4) providing work in the various Businesses that serve the Current Beneficiaries (e.g., Hershey Chocolate Company and Hershey Estates (and its predecessors)). In fact, M.S. viewed his employees as partners to whom he paid 25% of the profits of the Hershey Chocolate Company, with the remaining 75% going to the shareholder(s).^[49]

When considering Phase 2, note the use of mass transit to facilitate travel for those who worked in the factory but had not decided to become members of this ideal community. Regarding how this overall plan was conceived and why mass transit was deployed from the beginning, Snavely quoted M.S. as saying,

Originally it was my thought that if we built an ideal community all our people would want to live here. We soon found that some of them preferred to live in the surrounding towns, either because they already owned homes there, or for other reasons. So we built a trolley line to accommodate them. ^[50]

As described above, M.S. viewed the community of Hershey as part of greater Derry Township and the “business” of, and comprising a part of, The Hershey Industrial School. He did not view the community of Hershey as separate from Derry Township or the business of the School. It was for this reason that some “normal operating costs” such as streets and sanitation, education, etc. would be incurred by the Trust as a cost of operating the School. However, to be clear, this was not because the Community was a beneficiary of the Trust. Rather, it was because the Community was unincorporated, part of the Hersheys’ Children’s Home Campus and an important component of providing a real home for the Current Beneficiaries. It was part of the “permanent institution” created before, and by 1918 fully included within, the Trust. The Community was benefited by various maintenance and improvement activities or projects of The Hershey Industrial School.

2.3 (d) Economic Depressions and Other Challenging Events Encouraged Hershey to Make Things More Permanent

The formation of The Hershey Industrial School Trust (which is another permanent entity) came shortly after the 1907 – 1908 depression and marks the beginning of the Hersheys’ philanthropy becoming more permanent.^[51] In a similar way, the death of his wife in 1915 and the end of World War I in 1918 likely added to M.S.’s incentive to make the Hersheys’ philanthropy permanent through a combination of the early 1918 contribution of assets to Hershey Chocolate Company and the later 1918 contribution of substantially all of the stock of the Hershey Chocolate Company (then estimated to be worth $60,000,000) to The Hershey Industrial School Trust.

2.4 Phase 3: The Trust and Education (1909 to 1918)

Chart 1: The Hershey Industrial School - Significant Events (1909 - 1918)

Year

The Hershey Industrial School – Significant Events

1910

The Hershey Industrial School Trust is formed

Beneficiaries come into existence under Original Deed of Trust

1915

Catherine Hershey died on March 25

1918

Non-Chocolate Assets and Land (“being the town of Hershey”) are transferred to Hershey Chocolate Company

Substantially all of the Hershey Chocolate Company stock ($60,000,000) is transferred to the Trust

Milton Hershey confirms Milton Hershey’s First Trust

1909 became the year to make certain attributes of the Hersheys’ Children’s Home more permanent; add Current Beneficiaries; conceive, develop, and prove the long term viability of the Education component; and commence their effort to further develop and prove the long term viability of their intended philanthropy – The Hershey Industrial School serving the Beneficiaries of the Trust. That is, Phase 3 marks the creation of The Hershey Industrial School Trust (which gives rise to Current Beneficiaries) and the further development of the Education component of The Hershey Industrial School.^[52] It established the long term viability of the education system, or “School,” in the context of both Derry Township and the “school.”^[53] During this period the Hersheys built and tested a new education system in Derry Township that was shared by residents, including the Resident Beneficiaries and other children residing in Derry Township. The Hersheys also developed, analyzed, and refined certain elements of the school. 1909 marked the creation of The Hershey Industrial School Trust, which introduced some permanency to the existing structure^[54], as well as introducing Current Beneficiaries. By the end of Phase 3, the Community, the Business, and Education components of the Hersheys’ Children’s Home had been built and their respective long term viability established to the satisfaction of the Hersheys. Events of 1918 marked the final proof of concept for The Hershey Industrial School. At the end of Phase 3, M.S. made the 1918 Contribution of the Hershey Chocolate Company Stock to the Trust, valued at the time at $60,000,000.

As observed earlier, M.S. had developed an interest in forming The Hershey Industrial School early in his life. Some accounts suggest that he first began to visualize the school when he was a child. The account by The Literary Digest specifies that M.S. began thinking about the School in 1886, seventeen years before 1903 – the year during which many incorrectly assert Hershey, PA was formed. There are some accounts that state the origin of the idea for the School was Catherine. The reality that must not be overlooked is that M.S.’s intent to form the School originated in (or before) 1886, while some of the specifics (e.g., the initial children eligible for admission being limited to white males between the ages of 4 and 8 who had lost their father) could have come from Catherine or might have been jointly developed by the Hersheys as they discussed these matters. That is, the statements that M.S. first formed his idea to form the School in (or before) 1886 and that some aspects might have been Catherine’s idea can both be true.

Up to 1909, the Hersheys had primarily focused on, and developed, the Business and Community components of the Hersheys’ Children’s Home, with the only exception being that the McKinley School (the first school building built by M.S. for the Derry Township school system) was built in 1905, the same year the Hersheys moved into the Homestead. By 1909, two additional aspects of their philanthropy remained: Add Current Beneficiaries and develop and prove the efficacy of the third major component – Education. Neither of these was particularly appropriate until the long term viability of the Business and Community had been established to the Hersheys’ satisfaction. Of course, to add Current Beneficiaries, the Hersheys were wise to establish a permanent structure through which to do so and the various relationships contemplated by the Original Deed of Trust.^[55] Thus, in early 1910, The Hershey Industrial School Trust took its legal and perpetual form – a trust.

Upon forming the Trust, the Hersheys conveyed 486 acres of farm land to endow the School. During the early years (i.e., Phase 2 and Phase 3), the Hersheys funded some School expenses out of their own funds. However, given the existence of Milton Hershey’s First Trust and the Trust, the Hersheys would not view the source of funds as having any particular import. M.S. owned everything that constituted the Hersheys’ Children’s Home, including the funds used to operate The Hershey Industrial School. It was only a matter of time until all assets constituting The Hershey Industrial School would be owned by the permanent Trust, and no longer owned by M.S. personally (in trust for the benefit of The Hershey Industrial School).^[56]

It is worth noting here that the first comprehensive law regarding high school education was passed in 1911. Attendance at “common schools” for students aged 8-16 was compulsory. (Pa. St. ‘20, Section 5043.) Common schools had been established in Pennsylvania since at least 1883. High schools were classified according to the number of years students were required to attend before graduating: two, three, or four years. (Pa. St. ‘20, Section 5099.) Anyone under the age of 21 could be admitted but only upon passing a qualification examination. (Pa. St. ‘20, Section 5101.) This program seems comparable to colleges today.

Another important consideration as we review Phase 3 is that World War I began in August 1914 and lasted until November 1918, and the United States of America became active on April 6, 1917 when Congress declared war against Germany and expanded its role on December 7, 1917 when Congress declared war against Austria-Hungary.[57] And finally, Catherine Hershey died on March 25, 1915.During Phase 3, the student population at the school increased from 5 students in October 1910 to 79 students in October 1918, and there were four student homes. Three student homes were full service and one served students who were in poor health.^[58] Student growth during this period demonstrates a consistent pattern of above average growth in one year (that is, 1911, 1913, 1915, and 1917) followed by a year of assimilation and modest student growth (that is, 1912, 1914, 1916 and 1918).^[59] The following chart, Chart 2, reflects the growth in student population and student homes of the school from 1910 through 1918:

Chart 2: Student & Student Homes of the "school" Growth (1910 - 1918)

Year

Students Last Year

(October)

“A”

New Alumni

“B”

Students This Year

(October)

“C”

New Students

“D” = (C+B) - A

New Student Homes

1910

0

0

5

5

1

1911

5

0

17

12

0

1912

17

0

20

3

1

1913

20

0

37

17

0

1914

37

0

40

3

1

1915

40

0

58

18

0

1916

58

0

62

4

1

^[60]

1917

62

0

71

9

1

^[61]

1918

71

0

79

8

0

The contribution of $60,000,000 in Hershey Chocolate Company stock to the Trust in November 1918 (which includes among its assets the town of Hershey, PA) confirms M.S.’s determination that during Phase 3 he verified the long term viability of the school as a core component of the Hersheys’ philanthropy – the School.

The next three diagrams help one visualize certain key developments brought about through and at the end of Phase 3: Diagram 2: Control of The Hershey Industrial School – 1910; Diagram 3: The Hershey Industrial School: 1910 – 1918; and Diagram 4: The Hershey Industrial School: 1918.

Diagram 2: Control of The Hershey Industrial School Trust – 1910

Diagram 2.png

Diagram 3: The Hershey Industrial School: 1910 – 1918

Diagram 3.png

Diagram 4: The Hershey Industrial School: 1918

Diagram 4.png

2.5 Phase 4: Placing all Components of the “Ideal Community” into a Permanent Structure (1918 to 1923) ^[62]

Chart 3: The Hershey Industrial School - Significant Events (1918 - 1923)

Year

The Hershey Industrial School – Significant Events

1918

Non-Chocolate Assets and Land (”being the town of Hershey”) are transferred to Hershey Chocolate Company

Substantially all of the Hershey Chocolate Company stock ($60,000,000) is transferred to the Trust

Milton Hershey confirms Milton Hershey’s First Trust

1923

In late 1923, the public learns for the first time of the 1918 contribution of $60,000,000 of Hershey Chocolate Company stock to the Trust

Having, by the end of 1917, established the long term viability of each component of The Hershey Industrial School, including the “ideal community” and certain elements of the school, it was now time to place all the components into the permanent structure the Hersheys had created in 1909 for this purpose – the Trust. Two major events occurred in 1918 in fulfillment of the Hersheys’ intent.

First, effective January 1, 1918, M.S. transferred to the Hershey Chocolate Company the Hershey Transit Company, Elizabethtown and Deodate Street Railway Company, Deodate and Hershey Street Railway Company, Hershey Electric Company, Hershey Water Company, Hershey Bell Telephone Company, Hershey Cuban Railway Company, Campania Agraria Cubana, Hershey Corporation, and the businesses operated as the planing mill, printery, laundry, stable, garage, and other miscellaneous businesses. The recital in the document of conveyance states,

Whereas, the Hershey Chocolate Company has acquired and is taking over by conveyance from M.S. Hershey certain lands, being the town of Hershey, Pa., and certain dairies, farms, and the equipment thereof, more particularly described in a schedule thereof prepared and to be annexed hereto, with the income thereof from January 1, 1918, […] and also certain personal property consisting of shares of stock, […] of the several companies and businesses hereinafter named, which have been and are being operated in connection with the Hershey Chocolate Company.^[63]

In a letter dated November 14, 1918, M.S. states that certain land (and related assets) had “for some years past belonged to the Hershey Industrial School, and has been operated, managed, and controlled solely by it, the legal title to the real estate being held by me in trust.”^[64]

Second, later in 1918, M.S. contributed shares^[65] of Hershey Chocolate Company stock worth $60,000,000 into the Trust. This contribution involved the transfer of Stock Certificate Number 7 dated March 4, 1915 evidencing four thousand nine hundred and sixty eight (4,968) shares of the common capital stock of the Hershey Chocolate Company, incorporated under the laws of the State of Pennsylvania issued to M.S. Hershey as owner, signed by Ezra Hershey as Treasurer of Hershey Chocolate Company, and William Murrie as President of Hershey Chocolate Company. The 1918 transfer of Hershey Chocolate Company stock to the Trust was made effective by endorsement on the reverse side of Hershey Chocolate Company Stock Certificate Number 7.^[66]

There are a few noteworthy points to make here. First, at the time of the 1918 contribution to the Trust, Hershey Chocolate Company then owned and controlled all the businesses that ran Hershey. Thus, substantially all of the ownership and control of these interests were simultaneously transferred to the Trust. Thinking back to the 1918 contribution, an article in the The New York Times, on Friday, November 9, 1923, confirms that there was an intended interrelationship between the business and the school when it states: “all the rest of the earnings of all the companies go either into the betterment of the business or the school – which is to be the same thing in the end.”

The 1918 contribution to the Trust marks the beginning of the first stage of a completed legal structure that joined all components of the Hersheys’ philanthropic model under one permanent legal structure – the Trust.

Other than these important events, not much else occurred in Hershey from 1919 to 1923. ^[67] In part, this is likely due to the depression that occurred from 1920 to 1921, the financial challenges the Hershey Chocolate Company suffered during Phase 4, and the presence of R.J. deCamp on the Board of Managers. In 1920, Hershey Chocolate Company suffered financially following heavy losses due to investments in sugar futures. The sugar market collapse, resulting losses, and economic depression created serious financial repercussions. This crisis forced M.S. to borrow a large sum of money, mortgage the Hershey Chocolate Company, and accept a representative of the lender, National City Bank, as a Manager. R.J. deCamp, the representative of National City Bank, served as a Manager in 1921. The Hershey Chocolate Company repaid the borrowed money and freed itself of all related obligations to the National City Bank by June 1922.

During Phase 4, the student population at the school increased from 79 students in October 1918 to 116 students in October 1923 (with a high of 123 students in October 1921), and there was one new student home built during this Phase. The consistent pattern of student growth from 1910 through 1918 continued during 1919 and the 1920s, except that student population growth during the early 1920s was inhibited by adverse financial conditions and the presence of R.J. deCamp on the Board of Managers during this period. A total of 16 HIS students became alumni of The Hershey Industrial School and of the public high school for Derry Township as members of the classes of 1921, 1922, and 1923 during Phase 4.

The following chart reflects the growth in student population and student homes of the school from 1919 through 1923:

Chart 4: Student & Student Homes of the "school" Growth (1919 - 1923)

Significant improvements and expansion to the Community and Education components commenced in 1924. 1924 marks the beginning of the next Phase of the Hersheys’ Children’s Home Development Plan.^[68]

2.6 Phase 5: The Great Expansion (1920s and 1930s)

Once the 1918 Contribution of Hershey Chocolate Company Stock became known to the public and the Hershey Chocolate Company had again become profitable, M.S. began a great expansion of the Hersheys’ Children’s Home and the school. At this point the entirety of the “ideal community” is inside the Trust as part of the “permanent institution” known as The Hershey Industrial School, and therefore subject to all of the express charitable trust obligations imposed through the Deed of Trust. As a consequence, there now begins an increased focus on the “ideal community” as part of the Hersheys’ Children’s Home.^[69]

Phase 5 of the Hersheys’ Children’s Home Development Plan involves the great expansion of the “ideal community”^[70] and other components of the School. This great expansion occurred roughly from 1924 through 1939. Because of the fundamentally different economic environment that followed the 1929 Stock Market Crash, as well as the changes that occurred in work force in Hershey during the period that followed the 1929 Stock Market Crash, this period of great expansion is broken into two separate sections by decade.

This great expansion was funded by the Trust. Funding by the Trust further demonstrates that the Community, Business, and Education components were intended to be part of the “permanent institution,” or the School^[71] (which includes the “ideal community”). The Honorable Judge Warren G. Morgan states on page 7 of the 1999 Adjudication, that “In two separate provisions, one dealing with the Trustee and one dealing with the Managers, the Hersheys directed that neither the principal nor the income of the trust shall ever be applied to any other purpose or purposes than those set forth in the deed of trust.” ^[72] The improvements made to the Community, Education, and other components after 1927 where funded from income of the Trust which came from Hershey Corporation. This could only be so if they were being applied to the purposes set forth in the Deed of Trust.

2.6 (a) The Expansion of the 1920s (1924 to 1929)^{^[73]}

This expansion period is marked by continued investment in the Education component of the Hersheys’ Children’s Home; and less investment in Community and Business (other than reinvestment in the expansion of the existing businesses). Now that M.S. was satisfied the School had demonstrated its long term viability and all components of the “ideal community” were within the permanent Trust structure, the School entered into a period of rapid expansion. ^[74] Following the announcement of the 1918 contribution to the Trust, a number of important events occurred. In the following paragraphs, the information is broken down into Community, Business, Education, and the school. ^{[75] [76]}

Community – the Trust further developed this component by adding:

in 1924,

a Modern Sewage Disposal System

Hershey Hospital (with Dr. Herman Hostetter heading the new Hershey Hospital and serving as Milton Hershey’s personal physician)

Pennsylvania State Police Training School

and American Legion Women's Auxiliary

in 1928, Hershey Fire Hall, and
in 1929, Hershey Park Golf Club and Hershey Park Swimming Pool

Business – the Trust further developed this component by:

in 1925, adding Hershey National Bank,
in 1927, Hershey Chocolate Company reorganizing as the Hershey Chocolate Corporation, Hershey Chocolate Corporation made an initial public offering of shares, and Hershey Estates established to handle all "non-chocolate business" with offices in the Hershey Trust Company Building, and Hershey Corporation established to own all Cuban operations, and
in 1929, adding Hershey Estates Dairy.

Education - during Phase 5 and the 1920s, the boys who were admitted to the School (as students of the school) attended the Derry Township Junior-Senior High School facilities. Thus, their growth is set forth in the next section but relevant to this section as well. During Phase 5 in the 1920s, the Education component grew as follows:

In 1924, the M.S. Hershey Junior-Senior High School for Derry Township (that is, including HIS boys), and the Pennsylvania State Police Training School commenced operation.
In 1927, the Fanny B. Hershey Memorial Building for HIS boys was built.
In 1929, the Hershey Vocational School for Derry Township (that is, including HIS boys) was opened.

Current Beneficiaries and the “school”

As stated above, during Phase 4 the student population at the school increased from 79 to a high of 123 and a total of 16 HIS students became alumni of The Hershey Industrial School and of the public high school for Derry Township as members of the classes of 1921, 1922, and 1923. The 1920s marked a consistent growth in number of students from 79 in October 1918 (which is prior to the $60,000,000 contribution of Hershey Chocolate Company stock) to 242 students in October 1929. Student growth during this period (1918 through 1929) demonstrates a consistent pattern of above average growth in one year (that is, 1919, 1921, and 1924) followed by a year of assimilation and modest student growth (that is, 1920, 1922, and 1925), except that student population growth during the early 1920s was inhibited by adverse financial conditions and the presence of R.J. deCamp on the Board of Managers during this period and that beginning in 1926 there began a pattern on continued student population growth each year.

Phase 5 marks the beginning of a rapid expansion of the HIS student body, together with the development of extensive School infrastructure improvements (including those used exclusively by students of the school). The student population at the school increased from 116 in October 1923 to a high of 242 in October 1929 and another 32 became alumni of The Hershey Industrial School and of the public high school for Derry Township as members of the classes of 1924 through 1929. The 48 HIS students that graduated through the HIS Class of 1929 (and the subsequent 63 students who became alumni of The Hershey Industrial School and of the high schools for Derry Township through the class year of 1934) also became members of the Derry Township Alumni Association. There were a total of seven new student homes built during the first part of Phase 5. While agriculture, horticulture, and gardening had long been included in the curriculum of the school, the success of the first two decades of the school gave rise to the “farm home” program in 1929. In 1929, 3 farm homes were built. ^[77]

The following chart reflects the growth in student population and student homes of the school from 1924 through 1929:

Chart 5: Student & Student Homes of the "school" Growth (1924 - 1929)

Year

Students Last Year

(October)

“A”

New Alumni

“B”

Students This Year

(October)

“C”

New Students

“D” = (C+B) - A

New Student Homes

1924

116

4

167

55

0

1925

167

4

175

12

0

1926

175

7

191

23

3

1927

191

7

202

18

1

1928

202

9

214

21

0

1929

214

1

242

29

3

Picture 6.png

Picture 6: Student Farm Home Brookside in 1908 ^[78]

This is a farm home in 1908. This farm home later became Student Farm Home Brookside.

Picture 7.png

Picture 7: Student Farm Home Apple Hurst (Farm No. 39) ^[79]

This is Student Farm Home Apple Hurst (Farm No. 39).

2.6 (b) The Great Depression and the Expansion of the 1930s (1930 to 1939)

2.6 (b) (i) The Great Depression

The Great Depression was an economic period representing two economic contractions separated by an incomplete expansion, which began with the 1929 Stock Market Crash and ended with the United States’ entry into World War II in December 1941. The 1929 Stock Market Crash is generally referred to as “Black Thursday,” and it marks the Crash of October 24, 1929.^[80] The first contraction began in 1929 and continued to 1933; the second began in May 1937 and continued to 1938 between these two there was an incomplete economic recovery. This period was marked by widespread unemployment.^[81] World War II, which began in September 1939 upon Germany’s invasion of Poland and lasted until September 2, 1945 upon the surrender of Japan, saw America in action on December 8, 1941 – one day after Japan’s attack on Pearl Harbor.^[82] While this period marked a great expansion of the School, the entire period is part of the Great Depression!

2.6 (b) (ii) Overview of the 1930s Expansion

Even during a war and the Great Depression, this period is marked by continued investment in the Community, Business, and Education components of the Hersheys’ Children’s Home. ^[83] In the following paragraphs, the information is broken down into Community, Business, Education and the school. ^{[84] [85]}

Community – the Trust further developed this component by:

in 1930, adding the Juvenile Golf Club, the Hershey Country Club (with High Point Mansion as the Club House), the Multi-Color Water Fountain, and Sunken Gardens, Hershey Park;
in 1931, the first hockey game was played in the Convention Hall/Ice Palace, and the Hershey Civic Club was organized;
in 1932, opening the new Hershey Community Hospital on the fifth floor of the Community Building;

Picture 8.png

Picture 8: The Community Center Building, Built in 1933 ^[86]

in 1933^[87], moving the Hershey Men’s Club to the Community Center Building, holding the first invitational Golf Tournament, and opening the Community Center Building (on the site of the former McKinley School/Hershey Central Theatre);
in 1934, beginning publication of Hotel Hershey Highlights;
in 1935, M.S. presenting each of the five churches in Hershey with a gift of $20,000;
in 1936, opening the Rose Garden to the public; and
in 1938, formally dedicating the Rose Garden by the American Rose Society.

Business – the Trust further developed the Business component by tripling the work force and

in 1933, opening Hotel Hershey,
in 1934, opening Hotel Hershey Golf Course,
in 1935, adding the Hershey “B’ars” (Hershey “Bears” ice hockey team),
in 1936, opening the Sports Arena,
in 1938, opening the Soap Factory, and
in 1939, opening the new Hershey Stadium, and the Baking and Candy Making Experimental Kitchen.

Education – the Trust further developed this component as follows:

In 1931, 7^th & 8^th grade HIS students went to classes in new classrooms in the Community Building.
In 1932, the Hershey Evening School began, 7^th & 8^th grade HIS students went to classes in classrooms in the Community Building, and 9^th grade HIS students began attending the Derry Township public schools.
In 1933, the American Indian Museum and Hershey Community Theatre were opened, 7^th & 8^th grade HIS students went to classes in classrooms in the Community Building, and 9^th grade HIS students attended the Derry Township public schools.
In 1934, Hotel Hershey Highlights began, 7^th & 8^th grade HIS students went to classes in classrooms in the Community Building, 9^th grade HIS students attended the Derry Township public schools, and the HIS Junior/Senior High School commenced operation on Pat’s Hill.
In 1935, the M.S. Hershey Foundation was formed.
In 1936, the Rose Garden was established.
In 1938, the Hershey Junior College, which derived funding from the M.S. Hershey Foundation, commenced operation.

Current Beneficiaries and the “school”

During the 1930s, the school grew rapidly. The student population consistently increased during the 1930s until World War II served to limit growth in the number of total students. These patterns in student population growth are mirrored in the growth of student homes. From 1929 through 1939, the student population grew from 242 in October 1929 to a high of 1,018 in October 1939 and substantially all of the 41 new student homes built during this period were “farm homes” for students in grades 6 through 12. ^[88]

The following chart reflects the growth in student population and student homes of the school from 1930 through 1939:

Chart 6: Student & Student Homes of the "school" Growth (1930 - 1939)

Year

Students Last Year

(October)

“A”

New Alumni

“B”

Students This Year

(October)

“C”

New Students

“D” = (C+B) - A

New Student Homes

1930

242

10

308

76

3

1931

308

3

378

73

3

1932

378

13

464

99

5

1933

464

7

604

147

8

1934

604

30

740

166

4

1935

740

50

880

190

7

1936

880

71

941

132

4

1937

941

70

1002

131

1

1938

1002

122

958

78

2

1939

958

71

1018

131

1

2.7 Structural Refinements

Chart 7: The Hershey Industrial School - Significant Events, Structural Refinements (1919 - 1945)

Year

The Hershey Industrial School – Significant Events

1919

The Managers are incorporated as The Hershey Industrial School, a Pennsylvania nonprofit corporation.

1927

Hershey Chocolate Company reorganized as the Hershey Chocolate Corporation

Hershey Chocolate Corporation made an initial public offering of shares

Hershey Estates was established to handle all "non-chocolate business" with offices in the Hershey Trust Company Building

Hershey Corporation was formed to own all Cuban operations

G

R

E

A

T

D

E

P

R

E

S

S

I

O

N

W

W

I

I

W

W

I

I

1929

Proposed merger with Kraft and Colgate-Palmolive-Peet

1930

The Hershey Industrial School Alumni Association is formed as part of the School

1933

The Original Deed of Trust was revised by the Court’s 1933 Decree.

1935

M.S. Hershey Foundation is established to provide educational opportunities for Derry Township residents.

M.S. Hershey establishes the 1935 Living Trust of Milton Hershey

1937

Strike at Hershey Chocolate Corporation

80^th Birthday Celebration for Milton Hershey

Milton Hershey suffers a stroke

1938

Hershey Junior College opened

George Copenhaver died

Paul Witmer was appointed Superintendent

1939

Arthur Whiteman (HIS Class of 1927) becomes a Manager

1944

Milton Hershey resigns leadership positions in

Hershey Chocolate Corporation

The Hershey Industrial School

Hershey Trust Company

He retains membership on their respective boards.

1945

Milton Hershey died

1945 Residual Derry Township School District Trust

Now that we have covered the five major Phases of the Hersheys’ Children’s Home Development Plan, let’s review the structural changes that occurred during these Phases. As one might expect, combining Community, Business, and Education in a permanent philanthropic structure that facilitates the best use of each component and well serves the Beneficiaries of the Trust is not without complexity. Thus, over a long period of time, M.S., through his retained control of the Hershey Trust Company, implemented structural refinements to insure the use of the best permanent structure for the Hersheys’ philanthropy.

2.7 (a) 1919 Incorporation of the Managers

Paragraph 28 of the Original Deed of Trust provided that the Managers could be incorporated under specified conditions. Thus, the Hersheys must have believed that while it was not necessary upon forming the Trust, it would nonetheless become appropriate at some point in the future. The timing of the incorporation of the Managers demonstrates the difference between when it was not necessary to incorporate (when the Trust was formed) and when it became appropriate.

Upon forming the Trust the Hersheys conveyed 486 acres of farm land to endow the School. During the early years, the Hersheys funded some School expenses out of their own funds. However, given the existence of Milton Hershey’s First Trust and the Trust, the Hersheys would not view the source of funds as having any particular import. M.S. owned (or controlled through the Trust) everything that constituted the Hersheys’ Children’s Home, including the funds used to operate The Hershey Industrial School. It was only a matter of time until all assets constituting The Hershey Industrial School (including the “ideal community”) would be owned by the permanent Trust (but controlled by M.S. through such Trust), and no longer owned by M.S. personally (in trust for the benefit of The Hershey Industrial School). Thus, though prior to 1918 some assets were owned by the Trust, the vast majority of the assets that would become part of The Hershey Industrial School within the Trust remained outside the Trust, but owned by M.S. (subject to Milton Hershey’s First Trust). The Trust, of course, gave rise to Beneficiaries as a matter of law. Therefore, prior to proving the long term viability of all components of the Hersheys’ Children’s Home, only a relatively small part of the Hersheys’ wealth was subjected to the legal interests of the Beneficiaries.

Just after adding $60,000,000 in assets to the Trust and just prior to the great expansion in the school student population that occurred during the 1920s and 1930s, it was the perfect time to seek to limit the exposure of the Trust’s assets to claims of negligence or breach of contract claims that might arise against the Managers in their capacity as the operating fiduciaries of the Hersheys’ Children’s Home and under the Indentures. There is and has been a legal distinction between the various entities that have some role through the Trust. For instance, Joseph Gumpher refers to the Managers as the “corporate fiduciary” in contrast with the School which he refers to as the “charitable institution.”^[89] As had always been the case with the Trustee (the Hershey Trust Company), claims against the Managers would not necessarily be claims against assets of the Trust. Consequently, effective December 30, 1919, the Managers were incorporated and “Managers,” as that term is used in Milton Hershey’s Deed of Trust, commenced to mean The Hershey Industrial School, a Pennsylvania nonprofit corporation,^[90] as successor in interest to the individual Managers pursuant to Paragraph 28 of the Deed of Trust and the 1919 Decree.^[91]

2.7 (b) 1927 Hershey Estates, Hershey Chocolate Corporation

Below, from a description authored by the Hershey Community Archives, we learn that the non-chocolate assets or interests contained assets that served some Community, Business, or Educational purpose of The Hershey Industrial School. Here is a table that groups the list provided by the Hershey Community Archives by its primary purpose consistent with the name The Hershey Industrial School:^[92]

Hershey = Community

Industrial = Business

School = Education

Hershey Cemetery

Hershey Community Building

Hershey Community Inn

Hershey Community Theatre

Hershey Country Club and Juvenile Course

Hershey Electric Company

Hershey Hospital

Hershey Park

Hershey Park Golf Club

Hershey Rose Garden

Hershey Sewerage Company

Hershey Telephone Company

Hershey Transit Company

Hershey Water Company

Hershey Baking Company

Hershey Cold Storage

Hershey Dairy

Hershey Department Store

Hershey Experimental Candy Kitchen

Hershey Feed and Grain

Hershey Farms

Hershey Farming Implements

Hershey Filling Station

Hershey Garage

Hershey Greenhouse and Nursery

Hershey Laundry

Hotel Hershey

Coal
Real Estate

Hershey Community Theatre

Hershey Museum

Hershey Rose Garden

Hershey Zoo

Hershey Conservatory

Hershey Public Library

Hershey Central Theatre

Hershey Evening School

American Indian Museum

Hershey Community Theatre

M.S. Hershey Foundation

Hershey Junior College

Until late 1918, these businesses and ventures were funded, when necessary, by M.S. as a private concern (subject to Milton Hershey’s First Trust). From the Hersheys’ perspective it was all part of The Hershey Industrial School.

In early 1918, M.S. entered into the 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company, which also included the conveyance of certain land (“being the town of Hershey”). In regards to the land, the instrument of conveyance stated “Whereas, the Hershey Chocolate Company has acquired and is taking over by conveyance from M.S. Hershey certain lands, being the town of Hershey, Pa. […].” On November 13, 1918^[93], Hershey executed the 1918 Endorsement of the 1918 Transferred Hershey Chocolate Company Stock Certificate, which made the 1918 Contribution of Hershey Chocolate Company Stock to the Trust and caused substantially all of the outstanding Hershey Chocolate Company stock to be owned and controlled by the Trust (and ultimately M.S. through his retained voting control of the Hershey Trust Company stock).^[94] The day following M.S.’s 1918 Contribution of Hershey Chocolate Company Stock to the Trust, M.S. wrote a letter to the Hershey Chocolate Company in which he stated that certain land (and related assets) had “for some years past belonged to the Hershey Industrial School, and has been operated, managed, and controlled solely by it, the legal title to the real estate being held by me in trust.”^{^[95]} This then demonstrates the continued ownership of the land that constituted the “town of Hershey, Pa.,” whether owned by M.S., Hershey Chocolate Company or the Trust, as being owned as part of The Hershey Industrial School – that is, the Hersheys’ Children’s Home. Thus, while the Trust did not exist as a separate legal entity when M.S. first began his acquisition of the land that became the town of Hershey, he states that he was holding such land in trust for the Hersheys’ philanthropic endeavour – the Hersheys’ Children’s Home, named The Hershey Industrial School.

By 1927, it became clear that there was a better way to structure the various Hershey Interests so as to separate the Community non-profit-driven Businesses from those that were profit-driven. In October 1927, the non-chocolate assets were transferred to Hershey Estates, which then was likewise owned by the Trust. As noted by the Hershey Community Archives, in 1927 three separate companies were formed but remained wholly controlled by the Trust through ownership: Hershey Chocolate Corporation, which acquired all the chocolate profit-driven properties; Hershey Corporation, which acquired the profit-driven sugar interests in Cuba; and Hershey Estates, which carried on the work of the old Hershey Improvement Company, administering all the non-chocolate interests in town.

This restructuring in 1927 had three objectives: liquidate the financial obligations still pressing from the 1920 sugar futures crash, get more money for future expansion, and separately identify and manage investment in Hersheys’ Children’s Home Campus improvements. The restructuring also made the Hershey Chocolate Corporation a publicly traded company subject to further Federal and state securities regulation. The sugar crisis, coupled with the Depressions in 1920 and 1921, illustrated the vulnerability of the Businesses to economic and other event risk. While The Hershey Industrial School (including the Hershey Chocolate Company) came out of this period successful, the experience demonstrated the vulnerability of the Community and Business. The 1927 restructuring was the first step in protecting against such risks in the future.

Though the proposed 1929 Merger with Kraft and Colgate-Palmolive-Peet was not consummated, it nonetheless serves as the best evidence of how M.S. would further protect against these risks while maintaining control over the core profit-driven Business component of the Hersheys’ Children’s Home, upon which the other two components are dependent for a steady source of funding, employment, and other stabilizing economic attributes. Section 2.7(c) will discuss the proposed merger in more detail.

The next diagram helps one visualize the changes that resulted from this 1927 reorganization (reflected in the assets and Industrial component) and other events from 1918^[96] through 1927.^[97]

Diagram 5: The Hershey Industrial School: 1927

Diagram 5.png

2.7 (c) 1929 Proposed Merger With Kraft and Colgate-Palmolive-Peet

The Hersheys were driven to design, implement, prove the long term viability of, and maintain the self-reliant Hershey Industrial School, which was made permanent within the Trust. An essential component of a self-reliant Hershey Industrial School would be the Business that serves as the economic engine funding the Hersheys’ philanthropy, while at the same time providing employment and stability to the Community; the Community serves as the Home of the Current Beneficiaries, as well as those who play some role in delivering the benefits of the Trust to the Current Beneficiaries. It would be near impossible to create a self-reliant philanthropic structure without this economic engine or business component. The self-reliant Hershey Industrial School called for economic stability in the Community. Hershey Chocolate Corporation came to serve as that core component, but it was not the sole business that made up such component. Other components of the School (e.g., the school, Hershey Estates, and etc.) also provide economic and employment stability, but without the same profit objectives. To continue a self-reliant philanthropic structure, one would not consider changes pursuant to which control of such profit driven economic engine might be lost. This very issue presented itself in 1929.

As one might expect, there are benefits to be derived from the Trust having diversified investments. These benefits must be balanced against the need for a stable Community. M.S.’s efforts to balance the benefits of investment diversification with the need for a stable Community within The Hershey Industrial School were manifested in a 1929 proposed merger among the Hershey Chocolate Corporation, Kraft, and Colgate-Palmolive-Peet.

In The Chocolate King, The Story of M.S. Hershey, commissioned by The Hershey Industrial School in the 1950s, Paul Wallace dedicates an entire chapter to the 1929 proposed merger.^[98] This dedication was fitting as it marked perhaps the only time M.S. took any overt action that might, over time, have adverse consequences for the employees of the Hershey Chocolate Corporation and the Community component. By agreeing to a merger, there was the risk that Hershey, PA would someday not be the headquarters of the chocolate operation and the resulting adverse economic and employment consequences of that on the Community. With avoiding adverse economic and employment consequences in mind, the International Quality Products Corporation was to be created as a result of the merger as a giant holding company of which the Hershey Chocolate Corporation would be the keystone and over which the Trust would have ultimate voting control. ^[99]

The proposed merger was terminated by the 1929 Stock Market Crash, which was immediately followed by the Great Depression. On the other hand, the Great Depression opened the way for M.S., through the Trust, to give the Community (the Hersheys’ Children’s Home Campus) its greatest period of expansion. This opening is an important fact often not addressed when writers talk about M.S. and the expansion of the Community. The funding of this expansion came from the Trust – as an expansion of, and further investment in, the Hersheys’ Children’s Home rural campus. Frankly, after 1918 the story of Hershey as an “ideal community” continues not as the story of Hershey, PA or Milton Hershey. Rather, the story of The Hershey Industrial School, as controlled by Milton Hershey, becomes more obvious. In particular, the “ideal community” is expressly made a part of The Hershey Industrial School. This is how M.S. intended it. It is paradoxical that very little has been written about The Hershey Industrial School and all that it has done for the Community – the home of the Current Beneficiaries and a core component of The Hershey Industrial School (that is, the Hersheys’ Children’s Home).

To summarize the proposed 1929 merger of the Hershey Chocolate Corporation with Kraft and Colgate-Palmolive-Peet we need to look at it in two steps. The intended result of the first step was that the Trust would (1) retain 40% of the Hershey Chocolate Corporation and (2) receive 40% of a newly formed holding company – International Quality Products Corporation – in return for a 60% interest in the Hershey Chocolate Corporation. Each of Kraft and Colgate-Palmolive-Peet would get 30% of the newly formed holding company, and each of the three companies would remain independent of the others and be run as a separate business. The second step contemplated an infusion of additional capital into the International Quality Products Corporation through a separate stock offering pursuant to which the Trust had the right to purchase 70% of that offering. Each offer – the first and second steps was for the same aggregate number of shares such that each step constituted 50% of the total offering of shares by the new holding company. After giving effect to both steps, the Trust would own 55% (that is, (40% + 70%)/200% or (40% x .5, plus 70% x .5)) of, or a controlling interest in, the International Quality Products Corporation.

As a result of the proposed merger, the Trust would have diversified its holdings by adding two companies. At the same time, the Trust would have owned the controlling interest in the newly formed, diversified holding company. Moreover, the Hershey Chocolate Corporation would continue to be operated by the same management. In return, M.S. would agree not to become involved in the management of the new holding company, although the Trust would have owned the controlling interest. A shareholders’ agreement/voting trust was to be formed to memorialize the agreements.

The terms of the proposed merger emphasize the fact that control of the “Industrial” component of The Hershey Industrial School is fundamental to the continued success and viability of The Hershey Industrial School, as well as to the continued success and viability of each of the other core components and that M.S. fully understood and intended this fact. Should The Hershey Industrial School loose control of the “Industrial” component, surely the success and viability of the Hersheys’ Children’s Home would be threatened.

2.7 (d) 1930 The Hershey Industrial School Alumni Association

In 1930, The Hershey Industrial School Alumni Association was formed as a part of the School and the School Family. While it is natural to envision how the School includes physical assets, we should not overlook the fact that the School also includes people – particularly the School Family. The School Family was created as, and is, a core component of the School. Those who understand the importance of their own biological family will not find it difficult to understand the unique and essential role the School Family plays in the Trust. The importance of the School Family is fully defined in Chapter 7. Once the School Family and its various roles are explained, it is easier to understand how essential it is to the short and long term success of the Trust, the Beneficiaries, and the other members of the School Family.^[100]

Likewise, inasmuch as the School Family includes The Hershey Industrial School Alumni Association, the School also includes Milton Hershey’s Alumni Association. Within the general and the specific terms of the Constitution, all former students, and other members of the School Family witnessed the broad scope of responsibility undertaken by Milton Hershey’s Alumni Association as well as the fact that it was viewed as a part of the Trust constituting a part of the School, just as Hershey Estates is part of the School.^[101]

By way of illustration, in 1936 George Copenhaver (who was then the Superintendent of the school) wrote to alumni in the November issue of The School Industrialist:

You should be very proud of your Alma Mater because of the progress she has made and the friendly hand she extends to those still under her care, as well as to those who are now out, engaged in life’s endeavors. […] The number of students is not the criteria. Only the development of manhood counts. The annual number of graduates is not half so important as the annual contribution toward advancing citizenship and standards of living, brought about by the members of the Alumni Association.^[102]

This message was directed at the Alumni with respect to the work or contribution Milton Hershey’s Alumni Association was making in the lives of other Alumni. In that same issue of The School Industrialist, page 7, Earle Markley, the Director of Vocational Education from 1934 until he retired in 1959, wrote:

We who print this paper, along with all other departments of the Trade School Division, extend greetings to the Hershey Industrial School Alumni Association. Your recent meeting at the school showed the kind of spirit from which a strong and worthwhile organization can be built. Much good can come from such an association, [...] we hope to be able to support it in every way possible [,… and] give the meeting more publicity next year and make bigger plans than ever. […] You have another set of good, live officers; support them and help your association to grow and become an important part of the school. United effort can attain important objectives.^[103]

As reflected in his remarks, Markley viewed Milton Hershey’s Alumni Association as “part of the school,” which merits “support in every way” and should become an important part of the school. In the same issue of The School Industrialist, Henry J. Stump wrote the following regarding Milton Hershey’s Alumni Association: “It is my belief that, if this organization is properly handled, it will be an asset to the school, the students, and the public.”^[104] The remarks of Copenhaver, Markley, and Stump all confirm that when created, Milton Hershey’s Alumni Association was viewed as a Trust asset, constituting part of the School, which asset was created for the benefit of the students, the school, alumni, and others members of the School Family.

The Alumni Association was created to enhance the effectiveness of the School just as Hershey Estates was created to enhance the School’s effectiveness in certain other respects. Thus, Milton Hershey’s Alumni Association was M.S.’s next formal step in the development of the School following M.S.’s creation of Hershey Estates in late 1927. However, unlike Hershey Estates, Milton Hershey’s Alumni Association’s role was geographically broader and was uniquely suited to enhancing the effectiveness of discharging the Trust’s School Family Obligations. Upon creating Milton Hershey’s Alumni Association in 1930, the School was expanded to include Milton Hershey’s Alumni Association.

The Alumni Association, as part of the School, serves the School Family and the “school” by being responsible for the development and continued excellent health of the School Family and serving to identify and develop future leaders of the Trust, the School, and the School Family by selecting from its Original Alumni Association Members (that is Former Commendable Students selected by Original Alumni Association Members) those that will lead in such capacities. Thus, the overall purpose of Milton Hershey’s Alumni Association: “This association is organized for the purpose of looking after the general welfare of those who were formerly students at the Hershey Industrial School and left there with a good record.”

The involvement of the Alumni Association was so fundamental to the achievement of the Hersheys’ philanthropic endeavor that (i) the Managers and School Administration participated in formal activities of Milton Hershey’s Alumni Association at all times while M.S. was alive and for decades thereafter and (ii) the Managers and Milton Hershey’s Alumni Association had overlapping boards at all times after 1939 (the year that Arthur Whiteman, HIS Class of 1927, first went on the Board of Managers) through M.S.’s death in 1945. During this same time frame, particularly the early years, a representative of the Managers would sit in on many meetings of the Alumni Association and the School Superintendent often attended many of the meetings that occurred as often as six times a year. This is fully consistent with descriptions made during this time frame that Milton Hershey’s Alumni Association was part of the School. ^[105]

Here is a diagram of the Trust and the School, as of this moment in 1930, which reflects The Hershey Industrial School Alumni Association as an asset constituting part of the Hersheys’ Children’s Home:

Diagram 6: The Hershey Industrial School: 1930

Diagram 6.png

2.7 (e) 1933 Modification of the Original Deed of Trust

The 1933 Petition arose largely due to concern that the Trust fund was growing at a rate greater than the rate at which income could prudently be spent to serve the class of needy children identified in the Original Deed of Trust.^[106] The 1933 Petition argued, and the 1933 Decree concluded, that a deviation was in order as to age and the identity of surviving parent so as to better achieve the Hersheys’ original intent – to admit as many children as the income and other resources would permit.

As a result of the 1933 Petition, the Court’s 1933 Decree (1) modified the Original Deed of Trust to expand the class of orphans served by the school, as follows: (a) the maximum age range for admission of poor, healthy, white male orphans was expanded from between four and eight years of age to between four and fourteen years of age; and (b) otherwise qualified boys whose mothers were deceased but whose fathers were still living were made eligible for admission and (2) added this provision, “No person employed by the school, in any capacity, in connection with which any compensation or expenses are directly or indirectly paid, shall at the same time serve as a member of the Managers of The Hershey Industrial School,” as Paragraph 29 of the Deed of Trust; M.S. joined in said 1933 Petition.^[107]

New Paragraph 29 of the Deed of Trust emphasizes the distinction between (1) the “permanent institution” known as The Hershey Industrial School referenced and designated as the “School” in the first recital of the Deed of Trust, (2) the “school” referenced and also named The Hershey Industrial School in Paragraph 11 of the Deed of Trust, and (3) the incorporated Board of Managers, likewise named The Hershey Industrial School (a Pennsylvania nonprofit corporation) in Paragraph 28 of the Deed of Trust.^[108] It is commonly believed today that the addition of Paragraph 29 of the Deed of Trust was added to protect the “school” from certain conflicts. Based on the timing of the 1933 Decree, the 1933 Paul Reed Memo, the 1935 M.S. Hershey Foundation, and the 1936-37 labor activities, it seems likely that this provision could have been added to protect the entirety of the “School” from domination by those at the school, who were closest to the Current Beneficiaries. Moreover, the Managers already owed their fiduciary duties to the Beneficiaries.

Refer to Sections 3.4 (d) and (e) for a detailed analysis of the “School” and the “school” and the various documents that demonstrate the school’s separate existence from the “School.”

2.7 (f) 1935 M.S. Hershey Foundation

In 1935, M.S. established the M.S. Hershey Foundation and entered into the 1935 Living Trust of Milton Hershey.^[109] The purposes of the M.S. Hershey Foundation, as stated in the Agreement of Trust which established it, were three:

To establish and maintain “one or more educational institutions in Derry Township.”
To support the public schools of Derry Township and to improve and elevate “the standard of education” -- indicating a “higher” level of instruction than provided by the secondary school.
To advance “the vocational, cultural or professional education of any resident of Derry Township.”

The Trust Company became trustee for the Hershey Junior College when it was created in 1938, and seven men were appointed as managers of the M.S. Hershey Foundation:

M.S. Hershey

S.C. Stecher

Ezra Hershey

P.N. Hershey

William F.R. Murrie

William Earnest

P.A. Staples

These seven men also constituted the entire Board of Managers. Thus there was a one to one matching of Managers of the Trust to managers of the M.S. Hershey Foundation.

The M.S. Hershey Foundation was endowed with five thousand shares of Hershey Chocolate Corporation common stock. To meet future needs, he authorized the Trustees, with the approval of the managers of the M.S. Hershey Foundation, to accept any further gifts that might be made to the Foundation.

From this authorization, together with the fact that funding for the M.S. Hershey Foundation came from the Trust or an entity controlled by the Trust, one could conclude that the interests of the Hershey Junior College and that of the School were viewed as fully consistent and that the Hershey Junior College was, in fact, part of the School. This complete, identical overlap of membership on the boards, together with the fact that funding for the M.S. Hershey Foundation came from the Trust or an entity controlled by the Trust, makes easy the conclusion that the M.S. Hershey Foundation was viewed as part of the Trust and that the M.S. Hershey Foundation was, in fact, part of the School. This conclusion demonstrates a function in parallel with those of Hershey Estates, which is also owned and controlled by the Trust, and part of the School. Each performed a function within the Trust that while part of and serving the Hersheys’ Children’s Home also benefited all of the individuals who are part of The Hershey Industrial School, whether through employment, being a community member, or as a Current Beneficiary.

Further supporting this analysis is the fact that from 1935 (the year of its creation) through 1945, the Boards of The Hershey Industrial School (that is, the Managers), the Hershey Trust Company (that is, the Trustee) and the M.S. Hershey Foundation (that is, the 1935 HJC Trust) were identical:

William Earnest: 1935 – 1958

S.C. Stecher:      1935 – 1939

Ezra Hershey: 1935 – 1949

Charles Ziegler:       1936 – 1957

M.S. Hershey: 1935 – 1945

William Crouse:       1937 – 1945

Paris Hershey: 1935 – 1956

J.R. Hoffman:     1938 – 1944

William Murrie:         1935 – 1947

Arthur Whiteman: 1939 – 1974

P.A. Staples:     1935 – 1956

Oscar Bordner: 1940 – 1948

Diagram 7, on the next page, shows the structure of The Hershey Industrial School in 1935. It reflects both the creation of the M.S. Hershey Foundation, as well as the role of the 1935 Living Trust of Milton Hershey (which was created the same year).

Diagram 7: The Hershey Industrial School: 1935

Diagram 7.png

2.7 (g) 1938 Hershey Junior College

On September 14, 1938, the Hershey Junior College was opened in the Community Building. The original plan was to make the Hershey Junior College a division of The Hershey Industrial School.^[110] While it was administered by the public school system, the Hershey Junior College did become part of The Hershey Industrial School, but was not limited to the “school.” This opening of the Hershey Junior College started a return to the earlier plan of students of the public school system and students of the school receiving their last years of formal education together. This combination continued for more than twenty years. On August 1, 1938, Dr. Breidenstine was appointed Dean of the Hershey Junior College. One hundred and twenty-eight students registered on September 12 and 13, 1938, with classes beginning the next day.

Paul Wallace, in his unpublished work, noted the uniqueness of the Hershey Junior College. It was unique in that it was administered by the public school board. The principal of the Junior-Senior High School is quoted in Wallace as saying:

Mr. Hershey got a great thrill, […] out of doing something unusual. That was one reason why he started the Junior College in the way he did. It was the first of its kind, at least in Pennsylvania; a junior college under the jurisdiction of the public school officials. It was a unique set-up. Mr. Hershey thrived on the unique. ^[111]

The Hershey Junior College was part of the Education component of the School and in Milton Hershey’s Deed of Trust it is understood that as time goes on, the requisite level of education that society will require will go up. Thus, M.S. would not have thought it unique. While it may have been unique as compared to other school districts, it was fully consistent with his approach to Education in Derry Township. Any facility that provided formal education in Derry Township was either part of the Derry Township public school system or part of the school. Furthermore, while Hershey Junior College was administered by the public school board, its employees were employed by Hershey Estates. Following the 1934 opening of the Junior-Senior High School on the Hill, Hershey Junior College served as the definitive return to a joint public school to which residents of Derry Township and Current Beneficiaries would learn and develop together and form lasting relationships. By making it free to all Derry Township residents, M.S. gave each non-Current Beneficiary Derry Township resident an economic incentive to go to higher education with Current Beneficiaries who were Scholars and therefore, likely to become leaders in the School Family and possibly within the Hershey Interests. As one would expect from M.S.’s clever idea to create this shared experience, Wallace reports “The true distinction of Hershey Junior College is in the spirit it displays of M.S. himself, as manifested in the happy student-faculty relationship.”

Wallace continues, in the following passage, to note the shared characteristics of the School and the Hershey Junior College:

A tradition of earnest hard work, as Mr. Hershey would have wished, pervades the place. The students are given heavy assignments. There are no football holidays. The teaching year is two weeks longer than in most institutions. It is not a place for playboys.

Mr. Hershey’s spirit is seen in another characteristic of the College in its care for the individual student through a “tailored curriculum.” It is a small institution, admission being limited to the children of chocolate plant employees or other residents of Derry Township. The staff is, in consequence, small. It is impossible to catalogue a wide variety of courses. But when a student’s aptitudes are discovered, and his plans for the future known, instructors are assigned to give him grounding in whatever subjects he may need, whether he intends to enter a university or go straight into his vocation. If, for instance, a boy who wants to be an engineer is found deficient in mathematics, he is given special tutoring in the subject. Such tailoring to individual needs demands hard work from the instructors, each of whom may be called upon to teach a wide variety of subjects. Though this rules out specialization, it keeps minds flexible; and the record made by graduates of Hershey Junior College at the larger colleges and universities shows that the system works well.^[112]

This description demonstrates M.S.’s consistent application of his Mennonite beliefs in the unique nature of each individual and the goal of fully developing each individual according to their own unique attributes, interests and commitment throughout the lives of his boys. Diagram 8: The Hershey Industrial School: 1938 reflects the fact that the Hershey Junior College became part of the Education assets of The Hershey Industrial School in 1938.

Diagram 8: The Hershey Industrial School: 1938

Diagram 8.png

2.7 (h) 1939 An HIS Graduate Becomes a Manager

To place the important event of Arthur Whiteman becoming a Manager, mentioned earlier, into context, remember M.S.’s intent for his heirs, the orphan boys: that one day one of the “Homeboys” would come and take charge of the whole operation.^{^[113]} Whiteman was picked by M.S. when he was only 15, and still attending the school and living on the Hersheys’ Children’s Home Campus, to work at the Hershey Trust Company. This meant that Whiteman worked at the Hershey Trust Company before he was discharged from the custody and control of the Managers under his Indenture. Whiteman (HIS Class of 1927 and the first President of Milton Hershey’s Alumni Association (1930 to 1932) and Past President from 1933 to 1936) was made a Manager in 1939 at 30. The average age of M.S.’s other trusted advisers on the Board of Managers was twice that. Through M.S.’s control of the voting rights of the Hershey Trust Company stock, he added Whiteman as part of the Hersheys’ Children’s Home Development Plan, which was as mentioned throughout this book, among other things, “to build a town to be run by and for orphan boys […].”[^114]

Whiteman provided the knowledge and insight of a Former Commendable Student^[115] and leader of the School Family, which provided invaluable information to the Managers in connection with their operation, management, and control of the School. He was simultaneously on the Board of Managers and the Milton Hershey’s Alumni Association Board for many of the same reasons. He was a member of Milton Hershey’s Alumni Association’s Board from its creation in 1930 through 1953, and from 1976 through 1979, and during 1981, 1983 through 1985, 1987 and 1988. Whiteman was the first recipient of the Alumnus of the Year. He died in 1988. Whiteman, as well as other Scholars such as Joseph Gumpher, Kenneth Hatt, William Dearden and others who came later, personified the Hersheys’ design. Milton Hershey’s Alumni Association was designed by M.S. as the entity that in perpetuity would continue to groom other Scholars to follow and continue to fulfill the Hersheys’ design, as well as to serve students, Alumni, the School, the School Family and the Trust.

2.7 (i) 1945 Testamentary Trust

As concluded in Sections 2.4 and, later, in 5.4, Education is a core component of the Hersheys’ Children’s Home. The Deed of Trust requires, “That the parties of the first part, with the purpose of founding and endowing in perpetuity an institution to be known as ‘The Hershey Industrial School,’" hereinafter designated as the School, to be located in Derry Township […],”^[116] as well as on land adjoining or conveniently near School property. All of the uses contemplated by the M.S. Hershey Foundation were likewise limited to Derry Township and its residents for educational purposes. Thus, the scope of geographic reach of said institution and the benefits of the M.S. Hershey Foundation to residents were both focused on Derry Township, with the M.S. Hershey Foundation dedicated to, and focused on, the third core component of the permanent institution – Education.

Likewise, in 1945 upon M.S.’s death a residual trust was formed pursuant to Milton Hershey’s 1944 Final Will through which M.S. bequeathed all of the rest and residue of his estate,

to Hershey Trust Company, of Hershey, Pennsylvania, in trust, nevertheless, to hold, invest and reinvest in such securities as may seem best in the judgment of the Directors of said Trust Company, and order and direct my said Trustee to pay the income thereof in semi-annual installments to the School District of Derry Township, Dauphin County, Pennsylvania, for the use of said School District, particularly for the purpose of assisting such Township to relieve the tax burden for the upkeep and maintenance of the public school in said District.

This final testament further evidences M.S.’s focus on Derry Township as the core or central focus of the Hersheys’ Children’s Home Campus Education.^[117] Whiteman, as quoted by Richard Klotz, wrote of M.S.’s focus and one of M.S.’s final maneuverings to ensure the Hersheys’ philanthropy’s longevity in Derry Township:

[…] Derry Township School District is the sole beneficiary of this trust, and the Trustee is required to pay the income to it. Should Derry Township School District cease to exist, and be superceded by a new and different school district, embracing additional areas, there would immediately arise a serious legal question whether the Trustee would have the legal power, under Mr. Hershey’s will, to pay the income to the new’ school district, not only because the identity of the beneficiary would have changed but because the benefits would then be extended well beyond the residents of Derry Township, in whose interest alone the trust was established. It appears that only a court decision could settle this question. Conceivably, substantial litigation might be involved. ^[118]

In the final analysis, one must conclude that The Hershey Industrial School Trust, the M.S. Hershey Foundation, and the 1945 Residual Derry Township School District Trust share the Hershey Trust Company as a common Trustee, and the managing fiduciary of each of which is controlled by the Directors of the Hershey Trust Company. The Managers must be selected from among the Directors of the Hershey Trust Company. The Directors of the Hershey Trust Company are the managing fiduciaries of the 1945 Residual Derry Township School District Trust. All of the uses contemplated by the M.S. Hershey Foundation were likewise limited to Derry Township and its residents and the “managers” of the M.S. Hershey Foundation are to be selected in the same manner as the Managers – that is, by the Trustee from its own Directors. In essence, all three entities were controlled by the Managers. That is, the M.S. Hershey Foundation and the 1945 Residual Derry Township School District Trust are like subsidiaries or affiliates within the Trust and part of the “permanent institution” (which includes the “ideal community” also known as the “community of mutual interests”), similar to Hershey Estates but in a different legal form. As the following diagram indicates, the M.S. Hershey Foundation and the 1945 Residual Derry Township School District Trust are assets that constitute part of the Hersheys’ Children’s Home, The Hershey Industrial School, or the School (which includes the “ideal community”), which are one and the same.

Diagram 9: The Hershey Industrial School: 1945

Diagram 9.png

2.8 1937 Labor Strike and Related Labor Activities ^[119]

In light of the dramatic impact of the Great Depression, the activities of labor unions during the 1920s and 1930s and the fact that Hershey, PA experienced a tripling of work force during the 1930s, few will be surprised to learn that the labor unions at the Hershey Chocolate Corporation served as one of the influences most injurious to the philanthropy of the Hersheys. The competition between the laborers for increased wages and the Trust’s need for income to fund the operation of the School has been at the heart of many decisions that have altered the Hersheys’ philanthropy. While M.S. allocated 25% of the Hershey Chocolate Company’s profits to the worker’s as additional compensation, it was not considered enough.^[120] This subject was so important to the labor union that it pursued a closed shop from 1937 until it finally achieved a closed shop status. Eventually, the labor union’s efforts to achieve higher wages and a closed shop served to work increased hardship on the Hersheys’ philanthropy as time went on. Here are just a few examples of the hardships created:

modification of the original Hershey Junior College program such that the Current Beneficiaries were not allowed to do internships within the Hershey Interests,
termination of Indenturing in 1953 without permission from the Orphans Court,
substitution of an employee scholarship program to replace Hershey Junior College, and
a policy of discrimination against the Current Beneficiaries such that they were discouraged from living or working in Hershey, Pennsylvania, including a policy that has led to very few graduates holding management level positions in any of the Hershey Interests.

The May 1, 1937 issue of Forbes captured the growing strain between the M.S. Hershey loyalist and the Hershey community men through the eyes of a striker:

You ask why we want a union? Well, I’ll tell you. This here is a one-man town. Hershey owns the whole place. He runs the entire works as he wants to, and he tries to run us as he pleases. It don’t make no difference whether we’re working in the plant or are off duty. He wants to run us twenty-four hours of the day. […] Sure that’s a good park, but what good does it do us? That zoo down there – that’s the largest private zoo in the country. They keep those animals down there in good clean cages, Hershey treats the animals a damn sight better than he treats us!

After the striker complained that the community amenities were good to have for tourists and that the workers could not afford to utilize such amenities, he went on to state: “But are they free to workers? I should say not!”

The “loyalists,” on the other hand, said:

The thing I can’t understand is the way these strikers are talking. Look at Old Man Hershey and what he has done for us. He built these public buildings, over 700 houses, and look at this park and that hotel up there on the hill. Ain’t that a beauty? And then look at the Industrial School up there near the hotel. They teach about a thousand orphans up there. The kids learn a trade, get some real schoolin’, and when they get out, Hershey gives them a job, a hundred dollars, and new clothes. He’s turned over the whole works to that school.^[121]

Both the striker’s statements and the loyalist’s statements support the understanding that the unincorporated town of Hershey was part of the School as M.S. and his Managers sought to control those who worked or lived on the Hersheys’ Children’s Home Campus and the Community’s understanding that “He’s turned over the whole works to that school.”^[122]

But, it wasn’t the money or lack of jobs that the strikers were angry about, continuing on from the Forbes article, the strikers go on to say:

Sure, I like my wages and I like my job […] I got a good job, and good pay. That’s not what I’m striking for. Hershey thinks he can run the whole place. Take me, for example: I live in Palmyra, see – down the road about a mile. I got a car and I drive to work every day. Do you think I can give my neighbor a ride to the factory? No! I have to drive alone, and he has to take the street car. Hershey owns the street cars and they aren’t paying so well. So if I give my friend a ride I get called on the mat the next day. They tell me I can’t do it. […] How about personal rights? Ain’t this a free country?^[123]

Moreover, another striker recounts that if caught drinking to a state of inebriation, management calls him in and the striker observes: “If it happens again, we get fired. How do they know what we do outside the factory? They’ve got spies, dirty stool-pigeons, who run to the company every time they learn something.” The first striker adds: “What it comes down to is this, Hershey regulates our wages, hours, and working conditions – and even our morals.”^[124] A third striker states: “Sure I join the union. I been here twenty years and I have a wife and kids and a good home. But when any trouble comes up and I go to my boss, he says: ‘All right. Get out if you don’t like it.’ How the hell can I get out? Where can I go? I’m just a slave here, and the Old Man is owner.” The conclusion of the article states that,

the feeling still remains in the hearts of many Hershey workers that a lot of things have got to be changed. […] The workers of this “ideal” industrial community now feel that they would rather fight for a little than get a lot from a paternalistic employer. No longer do they want to be treated as children of a kindly father. They want to be treated as grown-up individuals, capable of handling their own problems in their own way […]; workers now want a hand in matters that vitally concern them.^[125]

The tension revolved around control over one’s life, particularly while no longer on the job. M.S., on the other hand, viewed everything as part of the whole and, as such, sought to control its every attribute. Management’s view confirms this when they state: “All right. Get out if you don’t like it.” M.S. himself stated “There has never been any effort to get our employees to live here.”^[126] The non-effort issue is addressed by a Mr. Zoll, an employee at Hershey Improvement Company, quoted by Snavely as stating the following:

Mr. Hershey doesn’t ask anybody to live here if they don’t want to. Let’s look at the facts. […] At the present time the Hershey Chocolate Corporation employs 2,662 persons, and the Hershey Estates, 1,925, making a total of 4,587 employees. […] Of the 2,662 employed by the Hershey Chocolate Corporation only 985 live in Hershey, and of the 1,925 employed by the Hershey Estates only 661 live here. In other words, the greater number of employees of the Hershey Chocolate Corporation and the Hershey Estates live elsewhere than in Hershey.^[127]

Zoll makes a point of remarking on the type of employees striking:

“It wasn’t the townspeople, nor the older employees living in the adjoining towns, who staged the strike, but the newcomers, spurred on by the labor organizers, all for their own ulterior purpose,” said Zoll, replacing his papers in the file cabinet. “What gets me is the fact that the ones who stirred up the trouble came to Hershey without a cent to their names and who begged for a job.”^[128]

Zoll, who had been at Hershey Improvement Company in the earlier years, was at the Employment Bureau at the time of these 1937 statements. In regards to the strikers’ remarks regarding M.S.’s regulation of their morals, remember that the Deed of Trust requires that those employed by the School be “of established moral character.”^[129] Good moral character was at the heart of the Hersheys’ philanthropy.

In 1939, Richard Wallace Murrie, the son of William F. R. Murrie, a former President of the Hershey Chocolate Company and former Manager, made the following observations regarding Hershey, PA:

This, then, is the Utopia that chocolate built; and up until 1937 it received nothing but praise from the press. But the strike which occurred in April, 1937, caused some people to wonder whether Hershey was really a paradise after all. Even the critics admitted that the community possessed marvelous facilities for the employees to enjoy themselves, but they argued all these improvements have been made by Mr. Hershey without consulting his employees. A far better plan would have been to distribute increasing profits in increased wages and then allow the workers to spend their own money as they desired. Mr. Hershey’s model town is paternalistically benevolent at best. The town is unincorporated, and the people have no say in their affairs. ^[130]

Murrie made these observations in a thesis that is a rich account of the dissent and controversy that had developed in Hershey, PA. He responds to the comments of critics regarding the lack of profit sharing by mentioning that it was abandoned at the request of employees who preferred increased wages as opposed to an indefinite and varying bonus. ^[131]

Murrie addresses the critics of the Trust and M.S.’s philanthropy who suggest that the charity is misguided. He mentions the objection to the perpetuity clause, which critics say is the “most uncertain thing in the world.” And on the subject of all profits going to the school: “Mr. Hershey [should] modify the charter of the School to allow the Trustees a little more latitude in spending the income from the endowment.” Murrie mentions also the feeling that some believe an orphan school is a bad idea, and that M.S.’s School is too expensive and too inefficient for raising orphan boys. ^[132]

The spring of 1937 brought the end of 34 years of peace and quiet. The striking workers brought the strike because of two things: they did not have (i) any real sense of security of employment, and (ii) any actual voice in the determination of wages and hours.^[133] Although M.S. had escaped the blow of the Great Depression, he did not escape Unionism, which “was once more on the march during the eventful years 1936-1937.”^[134]

Keeping Murrie’s dates in mind, 1936-1937, we should take into account a speech given the year before the strike by William Earnest, a Manager of the School. In his speech he encouraged the town of Harrisburg to give jobs to graduates of HIS. Fifty-one boys were then from Harrisburg. Although only 80 boys had graduated from HIS, 95 former students were employed by the Hershey Interests at that time. This speech seems to mark a turning point in the Trust’s history pursuant to which there must have been pressure on M.S. to hire fewer graduates of the school. It is a matter of fundamental economics that the constant infusion of graduates of the school into the Hershey employment market would lead to further job insecurity and lower wages based on a purely economic model, and local concern that favoritism might be shown to graduates of the school.^[135] Whether or not this really did happen is not as important as the community’s concern that inasmuch as the Trust owns the businesses, there might be favoritism. Every time a graduate got promoted, perhaps those who were in contention for the same position felt that the graduate had an “intangible” going for them. In fact, Murrie emphasized: “Fundamentally, the worker before 1937 had neither security against discriminatory discharge nor a determining voice in the fixation of wages and hours.”^[136]

The Strike of 1937 had far reaching repercussions. As Klotz observed after the Hershey Junior College was opened, a junior college where boys from the school and the public school were to attend together, a change was made in January of 1939 to the cooperative plan.^[137] The original plan was to have all students work together at various Hershey Interests. Instead, the students were separated and the HIS Junior College boys went back to the Hershey Industrial School, and the public school students were sent to vocational shops. In a report to the Board of Derry Township Public School Director of Vocational Education, complaints were made “asking that especially boys from the Industrial School be excluded from the shops [of the Hershey Interests] on account of taking work away from some working men.” [Derry Township Public Schools, “Board Minutes,” January 12, 1939.] ^[138]

2.9 1937 Stroke of Milton Hershey

In September of 1937, M.S. suffered a stroke. It occurred in the early hours of the morning following his 80^th birthday (September 13, 1937). Most believed he had suffered a fatal stroke. An historian, Charles Castner, wrote in One of a Kind: Milton Snavely Hershey^[139]:

The town was stunned. Some people tried to lay the blame on the excitement and its effect on the tired old man. Others recalled that he had appeared to have been ailing for several months, and that happened to be true. It all went back to April and the strike - a time when some of them had behaved like fools.^[140]

In this passage Castner addresses the regret some town members had toward the strike during the spring. He goes on to relate that the year past with very little news of M.S. reaching the town:

Very little news was coming from the Mansion […] and yet all the news about him was received secondhand, and that in itself was disquieting. […] As December faded and the year drew to a close, almost everyone in the plant and around town, […] began to talk about how things had changed and how much they missed him. In other years whenever the holidays approached, Milton Hershey had been a familiar sight as he bustled around town shopping for gifts and, more often than not, he had usually mingled with his people so he could wish them the joy of the season.[…]^[141]

In the months following the strike and his stroke, M.S., it seems, withdrew from things for a while.^[142]

2.10 1938 Death of George Copenhaver

When M.S. set about setting up the School (including his ideal community), he set out to create a family. In this endeavor he visited many orphanages and reflected on his own childhood for inspiration. When considering the influences on a boy’s life he believed:

The biggest influence in a boy’s life is what his dad does. […] Every boy, good or bad, high or low, feels that his dad is the model of life he should follow. I wish every dad could get that idea into his mind and see what it would do for him. And when a boy doesn’t happen to have any sort of dad he is a special mark for destiny. ^[143]

Richard Rudisill, in Milton Hershey School, The First 50 Years, remarked that “time and again [George] Copenhaver’s written words reveal that he possessed in abundance all of the characteristics needful in a father and in a teacher. He represented an ideal of manhood which young boys could respect and emulate.” ^[144] Copenhaver served the Hersheys, The Hershey Industrial School, the Current Beneficiaries, and the School Family from 1909 through to his death on February 11, 1938.^[145]

Moreover, Copenhaver was one of the most knowledgeable and trusted individuals through which M.S. was carrying out the terms of his will. For instance, Rudisill writes that the expectation that the Managers should have an active role in influencing the operation and direction of the School had been observed as early as September 1, 1913 and was forever held high as an objective by Copenhaver.^[146] However, the need for their input was less in those days because Copenhaver and M.S. were constantly discussing the related issues.^[147] In fact, the Managers had complete confidence in Copenhaver’s work.^[148] Most importantly, M.S. himself recognized this in Copenhaver and M.S. wrote:

Much of the credit for the success of the lives of the students of the school was due and is due to the splendid work of Mr. and Mrs. Copenhaver. They have been real parents to all the boys who have come under their loving and thoughtful care. Mr. Copenhaver did a fine work in all the years he devoted to these young men, and his influence for good will continue in the many years ahead of the students whose lives he touched.^[149]

Not only was he one of the key individuals through which M.S. carried out the terms of his will, Copenhaver maintained a “big grey book” – the book in which was recorded the entire school history and great detail regarding each boy – and Milton Hershey’s Alumni Association books and records (kept in a separate smaller book) from 1930 to 1938. Thus, he was not only part of the School’s history; he maintained a record of that history.

In the following list are key events that illustrate how Copenhaver aided the Hersheys in achieving their permanent institution or School (including the “ideal community”):

In 1926, he developed a written description of the proposed new senior division of the school.
In 1930, he initiated and developed Milton Hershey’s Alumni Association and drafted the original Constitution.
In 1934, he revealed his opinion to the Board of Managers that the school now had at its disposal the finest facilities known at the time “[…] trade, academic, commercial and occupational opportunities unsurpassed by any and equaled by very few indeed. Now what will be made of these opportunities remains to be seen.”^[150]
In 1936, he was commissioned to prepare a survey of junior colleges for the purpose of learning how the various schools were operated and what courses were offered.^[151]

W. Allen Hammond, the first principal of the Junior-Senior High School wrote: “With the sole exception of the founder […] no one can ever be a truer embodiment of the purposes and ideals of the school than Mr. George E. Copenhaver, its first superintendent and life-long friend.”^[152]

The death of George Copenhaver marked a great loss to the school, the School Family, and to M.S. The Hershey Industrialist devoted an entire issue to George Copenhaver.

2.11 1940 to 1945 – World War II Dominates

World War II began in September 1939 upon Germany’s invasion of Poland and lasted until September 2, 1945 upon the surrender of Japan. The United States of America became active on Japan’s attack on Pearl Harbor on December 7, 1941, which was immediately followed by the United States of America’s declaration of war on Japan on December 8, 1941. Germany and Italy declared war on the United States of America on December 11, 1941.^[153]

World War II ended on September 2, 1945, just 11 days prior to M.S.’s 88^th birthday and just prior to his death in October 1945. During the War period, all of America turned its attention to the War. The School well served is patriotic duty. World War II required that most of America’s resources be dedicated to the War effort. Consequently, this period is marked by profound reallocation of resources, with many individuals being called into the military and related service of America and America’s economy likewise sharing the responsibility. The School was no exception.

Here are some examples of events in Hershey influenced by World War II:

Trolley lines were discontinued between Hershey and Elizabethtown (1940)
Hershey Hospital was combined with the school hospital (1941)
Hershey Chocolate Corporation received five Army-Navy “E” awards for producing the “D” Ration Bar (1942)
The U.S. State Department interned Vichy French Ambassador and staff at the Hotel Hershey (1942)
Hotel Hershey was closed to the public by the U.S. Government until October 1, 1943 (1942-1943)
The Governors’ conference was held at Hotel Hershey (1944)

The additions to the School from 1940 through 1945 included the Hershey Rotary Club (1943), the Hershey Lions Club (1944), and the Hershey Airpark (1944).

During this period, the school student population was reduced from 1,018 in October 1939 to 620 in October 1945. No new student homes were built, and Rest Home was discontinued. The following chart reflects the reduction in student population and student homes of the school from 1940 through 1945:

Chart 8: Student & Student Homes of the "school" Growth (1940 - 1945)

Year

Students Last Year

(October)

“A”

New Alumni

“B”

Students This Year

(October)

“C”

New Students

“D” = (C+B) - A

New Student Homes

1940

1018

131

1004

117

0

1941

1004

126

982

104

0

1942

982

115

858

(9)

0

1943

858

^[154]

120

770

32

0

1944

770

105

699

34

0

1945

699

106

620

27

0

The school served America well. In 1943 for example, out of a student body of 800, 250 Hershey Industrial School boys who remained subject to Indenturing were in the Armed Forces of the United States of America. The details are:

124 Army
56 Air Force
43 Navy
27 Marines

Moreover, 9 teachers and members of the staff also served.

As of July 31, 1943, there were 473 Hershey Industrial School boys (that is, both students and alumni of the school) in the service of the United States of America. On June 10, 1943, a class of 25 female students began training as mechanics at The Hershey Industrial School; they were later employed by the Army Air Force at the Middletown Air Base. By the end of the war in 1945, 16 school faculty and staff members were in the armed forces.

2.12 1944 Milton Hershey Resigns Leadership Positions

In 1944, M.S. resigned his position as Chairman on various Boards. While M.S. still retained control over the composition of the Boards through his retained voting control over the stock of the Hershey Trust Company, certain changes began to occur that reflect the fact that M.S.’s resignation may have been beyond his control. One theory is that his health was failing him. Or there was increased public and/or private pressure for him to allow others to prepare for the future of The Hershey Industrial School (including the ideal community) without Milton Hershey. The exact cause is not clear. For whatever the reason, when M.S. resigned his leadership positions, a few changes occurred.

D. Paul Witmer was one of those changes. He served the Trust from 1936 to 1959, excepting only that Witmer was neither on the Board of Managers nor the Hershey Trust Company Board of Directors while he was the Superintendent of the school from 1939 until 1944. Witmer, as Superintendent of the school, was prohibited from being a Manager, due to the addition of Paragraph 29 of the Deed of Trust in 1933. Even though Witmer continued to serve as the Superintendent of the school until November 1, 1951, he returned to the Board of Managers in 1944 and served as a Manager until 1959.^[155]

It is worth noting that J. Robert Hoffman resigned on October 4, 1944 just prior to Witmer’s return to the Board of Managers. Moreover, in less than a year after Witmer returned to the Board of Managers, Wellington S. Crouse, a more than 12 year member of the Board of Managers, also resigned. Crouse was hand-picked by M.S. to succeed Snyder. Snavely, in An Intimate Story of M.S. Hershey, states that M.S. decided in June 1944 to let Crouse go because M.S. believed him to be ineffective in negotiating with the labor unions. It is no surprise that he would resign in June of the following year as the fiscal year of the Trust was from August 1 through July 31. Snavely reports that M.S. retained Sterling G. McNees, of Harrisburg, to assist him regarding the labor union. Once McNees was hired, Snavely states, “Progress was quickly made, and a contract was signed. The union won most of their demands, but lost out on the closed shop issue.”^[156]

2.13 1945 Milton Hershey Died

On September 13, 1945, M.S. celebrated his 88th birthday at the Homestead in the room where he was born. On October 13, 1945, M.S. died at 10:00 AM in the Hershey Hospital. He was laid to rest beside his wife, Catherine, and his mother and father, in the family plot in the Hershey Cemetery, overlooking Derry Township. On October 17, 1945, M.S.’s will was probated in Dauphin County Court. On December 17, 1945, an auction of M.S.’s estate was held in the Community Center over 2 days.

Picture 9.png

Picture 9: The Board of Managers of The Hershey Industrial School in 1944 ^[157]

Board of Managers in 1944: Seated Left to Right: P.A. Staples, Milton S. Hershey, and William Murrie; Standing Left to Right: D. Paul Witmer, William Earnest, Arthur Whiteman, P.N. Hershey, William Crouse, Ezra Hershey, Oscar Bordner, and Charles Ziegler.

Picture 10.png

Picture 10: John Snyder, Legal Architect of The Hershey Industrial School ^[158]

In 1891, M.S. formed his association with John Snyder. Snyder, as well as M.S.’s grandfather, Jacob Hershey (of Derry Township), a Bishop of the Reformed Mennonite Church, both served on the board of the Emaus Trust. The Emaus Trust was a children’s home located in Middletown, PA formed by George Frey in the early 1800s. Snyder is the legal architect that M.S. used, among other things, to make his philanthropy (including the “ideal community”) permanent.^{^[159]} John Snyder remained primary legal counsel to all Hershey Interests and M.S. up until his death on December 20, 1934.

[1] The author of “Chocolate Millions For Charity,” wrote “The ambition of a man to help fatherless boys – an ambition treasured through the years from apprenticeship to manufacturer – has resulted in one of the “most magnificent acts of philanthropy” on record.” Milton Hershey stated “I have wanted to do something for orphans for many years.” and “I always had the idea of having a farm for boys in the old homestead. I was born in a farmhouse, a mile across country, and for ten years or more I have thought of filling it up with orphan boys.” Milton Hershey went on to say “I returned to Lancaster in 1886. I was up to that time in the caramel business exclusively. When I came back to Lancaster I had about made up my mind I would never be rich. But my experience had done me good.” The author of this article states “It was then [, Mr. Hershey’s 1886 return to Lancaster,] that Mr. Hershey began thinking about the school.” [p. 34]

[2] “Chocolate Millions For Charity,” p. 34. Also see New York Times 9 Nov. 1923.

[3] The 1918 Endorsement occurred two days after the World War I Armistice, November 11, 1918

[4] The remaining modest number of shares that were not owned directly by the Trust appear to have been owned in 1918 by M.S. and a few of his trusted officers. Ownership of these shares outside of the Trust was of little consequence because Milton Hershey owned most of them and he controlled his own shares as well as those in the Trust by virtue of his control of Hershey Trust Company. Those who were officers and owned shares were likewise controlled by M.S. because their continued employment and involvement in the Trust was likewise controlled by M.S. through his control of the Hershey Trust Company. Refer to Appendices X, XI, and XII

[5] See letter dated November 14, 1918 from M.S. Hershey to the Hershey Chocolate Company. Refer to Appendix XII: 1918 Letter to Hershey Chocolate Company.

[6] This is understood to be the same John Snyder that served on the Emaus Trust board prior to 1906. In 1886 John E. Snyder, author of the Deed of Trust, was admitted to the Lancaster County Bar. Refer to The Chronicles of Middletown, Hutchinson-1906.

[7] Hershey founded an orphan school, the “Hershey Agricultural School,” in Cuba. The philanthropy in Cuba revolved around the sugarcane plantation and related agrarian efforts. Refer to Hershey Archives Web site at: http://www.hersheyarchives.org/part1/her%20cuban/hercub.html (July 8, 2004).

[8] In 1918, M.S. conveyed Hershey, PA to the Hershey Chocolate Company, and then transferred ownership and control of the Hershey Chocolate Company to the Trust. In 1927, Hershey, PA was transferred to Hershey Estates, which was wholly owned by the Trust. The funding for many of the improvements to Hershey, PA (e.g., the Community Building) came primarily from the Hersheys and the Trust

[9] In 1918, M.S. first transferred ownership and control of all other businesses to the Hershey Chocolate Company. Then, he transferred ownership and control of the Hershey Chocolate Company to the Trust. In 1927, all of the non-chocolate businesses (other than those in Cuba) were transferred to Hershey Estates, which was wholly owned by the Trust.

[10] This can be observed by reviewing Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around these three components. This model is described in greater detail in Chapter 3 The Hershey Industrial School Trust and Chapter 5 Hersheys’ Children’s Home.

[11] Photo Courtesy of Milton Hershey School, Historical Records

[12] Refer to Chapter 4 Beneficiaries of the Trust and Their Benefits for more detail on this subject.

[13] Some examples of benefiting from the existence or operation of the Trust include the following: benefiting as an individual through employment by one of the businesses, or the Community benefiting from improvements that were made to the Hershey Children’s Home Campus, such as the Community Building or the Hershey Park.

[14] We learn in Chapter 4 that the beneficiaries of this community of mutual interests are the Beneficiaries.

[15] Appendix I: Development of The Hershey Industrial School illustrates this plan by providing a chronology organized around the three components of Community, Business and Education. Subsequent Chapters explain that the Hersheys established a children’s home for the full development of the whole person, according to their respective attributes (that is, tastes, capacity, intelligence and adaptability), interests and commitment by providing them with, among other things, a real home and family that engendered a deep sense of belonging to a family and community.

[16] Refer to 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company (Appendix X) and the 1918 Letter to Hershey Chocolate Company (Appendix XII).

[17] This can be observed by reviewing Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around the three components of Community, Business and Education.

[18] This can be observed by reviewing Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around the three components of Community, Business and Education.

[19] 1996 Hershey Chronology

[20] M.S. shared his thoughts with his cousin, Joseph Richard Snavely, who recorded M.S.’s words. Dr. Rudisill confirms that Mr. Hershey shared his thoughts with his cousin and that MS’s words were recorded by Snavely. [1962 Rudisill, p. 261-262] Moreover, Snavely published several works regarding Milton Hershey. Two of them are A Chat with Mr. Hershey, published before Milton Hershey’s death, and An Intimate Story of Milton S. Hershey.

[21] 1932 Snavely, p. 3-4.

[22] 1962 Rudisill, p. 261-262.

[23] 1932 Snavely, p. 4-6.

[24] Refer to Section 6.5(d) Religious and Moral Education for more detail.

[25] 1932 Snavely, p. 14.

[26] 1957 Snavely, p. 309-310.

[27] This involvement can be observed by reviewing Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around the three components of Community, Business and Education.

[28] Note that his first steps were at the Homestead, a property that was then serving as the home of his father, and later served the school since Hershey’s acquisition of the Homestead in 1897.

[29] Photo Courtesy of Milton Hershey School, Historical Records

[30] Photo Courtesy of Milton Hershey School, Historical Records

[31] ZIP is an acronym for Zone Improvement Plan. Each ZIP Code identifies a specific geographic delivery area. Refer to http://www.usps.com for more detail. The date on which the ZIP Code was first used is listed under frequently asked questions.

[32] Refer to http://www.usps.com for more detail. Go to Frequently Asked Questions.

[33] Some Student Homes and farms of The Hershey Industrial School were outside of Derry Township but within the Hershey postal service area and located on land contiguous with, or conveniently near to, Derry Township, which is provided for in the Deed of Trust. Based on Map No. 1351 (March 1935) of “Locations of Hershey Industrial School Units,” some examples of the Student Homes include Green Hill (No. 7), Manada (No. 8A), Venice (No. 3B), Union, and Borderland (No. 45) and some examples of HIS Farms include Farm No. 3A, and Farm No 60.

[34] Raffael, Martha. “Hershey for real? Voters will decide Town’s name change on Nov. 5 ballot.” The Associated Press. 15 October 2002, http://www.post-gazette.com/localnews/20021015hershey1015p9.asp

[35] Rather, the United States Postal Service lists Derry Church and states that it is 0.7 miles from the Hershey, Pennsylvania United States Post Office and 2.6 miles from the Hummelstown, Pennsylvania United States Post Office.

[36] 1932 Snavely, p. 8-10, 15, and 17-18.

[37] 1950 Wallace, p. 107-108.

[38] 1932 Snavely, p. 8-10.

[39] Refer to Chapter 5 Hersheys’ Children’s Home and Chapter 7 The School Family.

[40] “For the site of the new enterprise Mr. Hershey went back to the scene of his birth, selecting the farms adjoining Derry Church, whose history reaches back into the 17th century. […] Here work was begun in the early part of 1903. The land was 1,200 acres, of which 600 were taken for the factory and the town, 150 were set aside for a park and the rest was cultivated. Subsequent purchases increased the real estate for all purposes-factory, town, park and farms-to over 10,000 acres.” [1932 Snavely, p. 4-6]

[41] 1950 Wallace, p. 107-108.

[42] Henry Hershey had lived in the Homestead from 1898, shortly following M.S.’s purchase of the Homestead, until Henry’s death in 1904.

[43] “The sole corporate purpose for Hershey Trust Company, by the way, as stated in its original charter was to provide title insurance for real estate.” See Our Hershey Heritage, December 7, 1992, The Lawyer John Snyder, by Robert M. Reese, Assistant General Counsel, Hershey Foods Corporation, Hershey Heritage, Judge John Snyder, p. 4, included in compilation entitled Our Hershey Heritage, by the Rotary Club of Hershey, November – December 1992.

[44] Refer to America’s Great Depression, April 25, 2001, at http://www.amatecon.com/greatdepression.html.

[45] “By 1908, sales were $2 million a year. Hershey Chocolate was incorporated, with Milton as Chairman of the Board and Bill Murrie as its 35 year-old president, a position he was to hold for an astounding 39 years.” [William Franklin Reynolds Murrie, for Milt Matthews, Hershey Chocolate U.S.A., to Hershey Rotary Club November 9, 1992 (from a speech by Gary W. McQuaid. November 7, 1983), p. 3, included in compilation entitled Our Hershey Heritage, by the Rotary Club of Hershey, November -- December 1992]. “In 1908 [Milton Hershey] incorporated the Hershey Chocolate Company which took title to all of Mr. Hershey’s business assets, including both the chocolate factory and the town of Hershey.” [Our Hershey Heritage, December 7, 1992, The Lawyer John Snyder, by Robert M. Reese, Assistant General Counsel, Hershey Foods Corporation, Hershey Heritage, Judge John Snyder, page 4, included in compilation entitled Our Hershey Heritage, by the Rotary Club of Hershey, November – December 1992.] Note that this quoted source recognized that “the town of Hershey” became “business assets” of Hershey Chocolate Company. Later, when we cover the various 1918 transfers, we learn that M.S. did expressly transfer Hershey to the Hershey Chocolate Company. Refer to Appendix X: 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company, Appendix XI: 1918 Transferred Hershey Chocolate Company Stock Certificate, and Appendix XII: 1918 Letter to Hershey Chocolate Company.

[46] Refer to Appendix X: 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company, Appendix XI: 1918 Transferred Hershey Chocolate Company Stock Certificate, and Appendix XII: 1918 Letter to Hershey Chocolate Company.

[47] Refer to the definition of Milton Hershey’s First Trust.

[48] See Chapter 5 Hersheys’ Children’s Home for more detail. Also, refer to Appendices X, XI, and XII.

[49] See Chapter 5 Hersheys’ Children’s Home for more detail. Refer to “Mr. Hershey’s $60,000,000 Gift Amazes Entire World.” The Hershey Press, 15 Nov. 1923. In this article, such partnership is described.

[50] Refer to 1932 Snavely, p. 8-10, 15, and 17-18, which also reports (with M.S. quotes in quotes):

Hershey is a community of mutual interests, because its heartbeat is in the chocolate factory, and all who live there are directly interested in it. The other enterprises include banking, merchandising, farming, dairying, building, and the street car, electric, telephone, water and sewage disposal systems, in all a score of undertakings employing approximately three thousand people.

Upon asking Mr. Hershey how the town is governed he stated that Hershey does not have any town government, and is a town in name only; in fact, it is a part of Derry Township, and the only surveillance that it has is that given by the Derry Township constable.

“We haven’t any town government,” Mr. Hershey explained. “The Hershey Estates manages the town, takes care of the streets, supplies the water and gas--and that’s all there is to it. We haven’t any politics and our employees don’t have to live here if they don’t want to. A lot of them don’t. We have a trolley line that takes them to nearby towns for just a nickel.

“When a street is to be paved or something is required to be done in the town,” Mr. Hershey continued, “somebody always notices the need before it becomes imperative. If he happens to be passing our offices he walks in and tells us, or else he passes the word along through a third party. I am informed if I am in town, and we go ahead with the work. If I am not here we go ahead anyhow.

“You might liken this business to that of a vast farm – and when I speak of the business I include the community.” […]

The recognition of the family as the social unit runs through the whole business, as well as through the community work done by the Hershey Estates.[…]

“Any plan for the welfare of employees which fails to consider the women and children as parts of the family is likely to stir up discord at home,” Mr. Hershey remarked. “If it does that it defeats its own purpose. Therefore, we try to keep the whole community in mind in what we do, whether all of its members are employed by us or not. There has never been any effort to get our employees to live here. We have built many dwellings which are rented at prices sufficient to pay the carrying charges. We do not attempt to make a profit out of the operation. Anyone, employee or otherwise, may buy his home on convenient terms, but there is no sales effort whatsoever in that direction.”[…]

[Mr. Hershey] has this motto card hanging on the wall over his desk, “Business Is a Matter of Human Service.” He is on the most cordial relations with his employees and has never had a strike in his factory. Indeed, an unseen force of good-will and fellowship seem to permeate the town and factory.

“We have greatly needed a better understanding of the worker. I tried to build here a place where people could be happy and contented while they work, and live in pleasant surroundings.”

“Cities never seemed natural to me, and I have never learned to like them […]. It is easier to get back to first principles in the country.”

[51] As we look at the end of Phase 2, one should reflect again on the fact that one of America’s Six Depressions [Refer to America’s Great Depression, April 25, 2001, at http://www.amatecon.com/greatdepression.html.] occurred between 1907 and 1908. This increased the difficulty M.S. experienced in his venture to achieve business success. In fact, there exists an interesting parallel between the incorporation of the Lancaster Caramel Company and the incorporation of the Hershey Chocolate Company. Both businesses were incorporated during one of America’s Six Depressions. The incorporation of each of these businesses served to make more permanent the business each incorporated.

[52] For more detail, review Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around the three components of Community, Business and Education.

[53] Generally, “School” means the “institution” founded and endowed in perpetuity pursuant to the Trust, known as “The Hershey Industrial School” from November 15, 1909 until December 16, 1951 and as the “Milton Hershey School” from and after December 17, 1951, and designated as the “School” in the first recital of the Deed of Trust, “to be located in Derry Township.” Generally, “school” means the residential, educational and other related facilities and employees that directly serve the Resident Beneficiaries and Non-Resident Beneficiaries and expressly referenced in Paragraph 11 and also named The Hershey Industrial School. Refer to Section 3.4(e) and Appendix XXIII.

[54] Refer to Diagram 1: The "Ideal Community" of The Hershey Industrial School (1901 - 1909)

[55] Refer to Chapters 3-5 for detail.

[56] Refer to the definition of “Milton Hershey’s First Trust.” Generally, this refers to the first trust he formed with his ownership of title to land being in trust for the benefit of The Hershey Industrial School, but not yet contributed to the Trust, as acknowledged in his 1918 Letter to Hershey Chocolate Company.

[57] Refer to America’s Great Depression, April 25, 2001, at http://www.amatecon.com/greatdepression.html.

[58] Refer to Appendices I and IV.

[59] This consistent pattern continued during 1919 and the 1920s, except that student population growth during the early 1920s was inhibited by adverse financial conditions and the presence of R.J. deCamp on the Board of Managers during this period. The 1920s marked a consistent growth in number of students from 79 in October 1918 (which is prior to the $60,000,000 contribution of Hershey Chocolate Company stock) to 242 students in October 1929. While agriculture, horticulture, and gardening had long been included in the curriculum of the school, the success of these first two decades of the school gave rise to the “farm home” program in 1929. In 1929, 3 farm homes were built. By the 1930s, the student population consistently increased until World War II served to limit growth in the number of total students. These patterns in student population growth are mirrored in the growth of student homes. From 1929 through 1939, the student population grew from 242 in October 1929 to a high of 1,018 in October 1939 and substantially all of the 41 new student homes built during this period were “farm homes” for students in grades 6 through 12. Refer to Appendix IV: The Hershey Industrial School – Student and Student Home Growth.

[60] Note that when Buena Vista was opened as a student home in 1916, students were moved out of the Homestead and into Buena Vista. Thus, there were only three student homes used as full service student homes.

[61] Note that when Purity Hall was opened as a student home in 1917 it was used to quarantine students who were in poor health from those who were in good health. Thus, there were still only three student homes used as full service student homes.

[62] For more detail, review Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around the three components of Community, Business and Education.

[63] Refer to Appendix X: 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company.

[64] See letter dated November 14, 1918 from M.S. Hershey to the Hershey Chocolate Company. A copy of this document was obtained through the Hershey Trust Company. Refer to Appendix XII: 1918 Letter to Hershey Chocolate Company.

[65] Though some accounts of the transfer mention 500,000 shares, Gumpher says that the number of shares was only 5,000. [1950 Gumpher, p. 6] Moreover, Stock Certificate Number 7 provides the specific details. Refer to Appendix XI: 1918 Transferred Hershey Chocolate Company Stock Certificate.

[66] Note that the transferred number of shares was ten less than the total of such Certificate. Refer to Appendix X: 1918 Conveyance of Non Chocolate Assets to Hershey Chocolate Company, Appendix XI: 1918 Transferred Hershey Chocolate Company Stock Certificate, and Appendix XII: 1918 Letter to Hershey Chocolate Company.

[67] Refer to Appendices I through IV.

[68] Refer to Diagram 4: The Hershey Industrial School: 1918 to visualize what the permanent structure looked like in 1918 and throughout Phase 4.

[69] However, given the existence of Milton Hershey’s First Trust and the Trust, the Hersheys would not view the “ideal community” in any other respect even before Phase 4. M.S. owned everything that constituted the Hersheys’ Children’s Home, including the funds used to operate The Hershey Industrial School. It was only a matter of time until all assets constituting The Hershey Industrial School would be owned by the permanent Trust, and no longer owned by M.S. personally (with legal title to the land held in trust for the benefit of The Hershey Industrial School).

[70] For more detail, review Appendix I: Development of The Hershey Industrial School, which provides a chronology organized around the three components of Community, Business and Education

[71] Milton Hershey said: Originally it was my thought that if we built an ideal community all our people would want to live here. [1932 Snavely, p. 8-10.]

“For Mr. Hershey’s purpose, and this became evident to the least discerning, was to build a town to be run by and for orphan boys, a community suggested by the words of the Messiah, ‘Suffer little children to come unto me.’[…] Mr. Hershey expressed his idea thus, ‘I am carrying out the terms of my will while living, and I want to make a good job of it.’” [1963 Hershey Chocolate, p. 29. Also refer to 1957 Snavely, p. 355. “Well, I have no heirs – that is, no children, so I decided to make the orphan boys of the U.S. my heirs.” [Fortune, “Mr. Hershey Gives Away His Fortune,” 1934.]

After 1927, Hershey Corporation profits resulting from the Cuban operations funded the large construction projects. Hershey Corporation was owned by the Trust. This confirms that substantially all improvements after 1927 were funded by the Trust as improvements to the School, not by M.S. personally.

In 1918, substantially all of Hershey Chocolate Company was owned by the Trust. Prior to 1927, the sugar and related assets in Cuba were owned by Hershey Chocolate Company pursuant to the 1918 Conveyance of Non-Chocolate Assets to Hershey Chocolate Company. In 1927, Hershey Corporation was established to own these assets, and was owned by the Trust. “To accomplish these goals Hershey Chocolate Company was dissolved and three separate companies were created: Hershey Chocolate Corporation, which acquired all the chocolate properties; Hershey Corporation, which acquired the sugar interests in Cuba; and Hershey Estates, which carried on the work of the old Hershey Improvement Company, administering all the non-chocolate interests in town: including the department store, the nursery and greenhouse, water, electricity, Hershey Park, and public buildings. The new businesses were held together by the Hershey Trust Company who as Trustee for the School owned and operated all three companies.” [Hershey Archives, at http://www.hersheyarchives.org/part1/corhistory/corhis.html, 10 July 2004)]

[72] 1999 Adjudication, p. 7, and Deed of Trust.

One person who reviewed an earlier draft of this book suggested, and I have heard others in Hershey, PA suggest, that M.S. “did whatever he wanted to do.” That is true, particularly when one considers that he did so because the Original Deed of Trust had been written in contemplation of exactly what M.S. planned to do, and did do. Thus, it is factually accurate, especially when one reconciles M.S.’s actions and decisions with the express terms of Milton Hershey’s Deed of Trust. However, if one seeks to use such statement to suggest that M.S. would intentionally violate his own Deed of Trust, then such a suggestion without more suffers from lack of supporting rationale.

Rather, it makes much more sense to conclude that (1) M.S. viewed the Community, Businesses, and Education components as part of The Hershey Industrial School (which includes his and Catherine’s “ideal community”), which is referred to at the beginning of the Deed of Trust as the permanent “institution” and intended for the benefit of the Beneficiaries of the Trust, and (2) he knew this was to be the case before the Original Deed of Trust was written in 1909.

[73] 1996 Hershey Chronology

[74] Refer to the definitions of “School” and “school,” Sections 3.4(d) and (e), and Appendix XXIII for explanations.

[75] Refer to the definitions of “School” and “school,” Sections 3.4(d) and (e), and Appendix XXIII for explanations.

[76] Refer to Appendix I: Development of The Hershey Industrial School.

[77] For additional detail for the period from 1924 through 1929, refer to Appendices I through IV.

[78] Photo Courtesy of Milton Hershey School, Historical Records

[79] Photo Courtesy of Milton Hershey School, Historical Records

[80] Refer to America’s Great Depression, April 25, 2001, at http://www.amatecon.com/greatdepression.html.

[81] Refer to America’s Great Depression, April 25, 2001, at http://www.amatecon.com/greatdepression.html.

[82] Refer to America’s Great Depression, April 25, 2001, at http://www.amatecon.com/greatdepression.html.

[83] For additional detail for the period from 1930 through 1939, refer to Appendices I through IV.

[84] Refer to the definitions of “School” and “school,” Sections 3.4(d) and (e), and Appendix XXIII for explanations.

[85]