This article was originally published in the January-February 2003 issue of “The Socialist.”
The recent announcement by the trust that operates the Hershey Industrial School that it was considering selling a large stake in the Hershey Foods Corporation set off waves of protest in the town of Hershey, PA, that eventually sunk the proposal. What kind of company town has effective veto power over its corporate benefactor’s business plans? Clearly, Hershey is a company town like know other.
To understand it better, one should place the town’s history in the context of the social reform movement of the turn of the century that formed alternative model communities founded with the aims of conquering the abject poverty and gross inequalities of the era’s great cities. The most identifiable are the socialist cooperatives like Robert Owen’s New Harmony, IN and Job Harriman’s New Llanos, CA, but socialists did not have a monopoly on alternative city building. The towns of Pullman, IL – best known now for the disastrous American Railway Union strike that turned Eugene Debs towards socialism – and Hershey, PA – best known now as the poor man’s Disneyworld – were themselves social experiments.
When the Pullman Sleeping Car Company needed to expand in 1880, initial plans had the company simply building its factory complex with the city of St. Louis. Paternalism and arrogance drove George Pullman to instead build a new city that he thought would be free of alcoholism, crime, poverty and labor strife. Ironically, it was his devotion to the city of his creation that brought on the strike of 1893. Had Pullman’s factory been located in St. Louis, he would no doubt have simply laid off thousands of employees during the national depression that was causing profits to plummet, but as it was the main employer and economic engine for a community he built and felt responsible for, the company instead embarked on a plan for work sharing. Wage rates were never cut, but weekly pay for employees was severely reduced because of reduced hours.
The conventional story of the strike is that Pullman reduced his employees’ pay without lowering rent on the company-owned homes where many employees lived. However, the vast majority of employees lived in two adjoining towns that had sprung up around Pullman, where they could own their own homes, as well as avoid the company’s overbearing meddling in their private lives and morality, and, anyway, the company never evicted a single employee during the resulting rent strike. The strike was more a result of pent-up frustration with the company’s dominant role in all aspects of life in Pullman.
The famous strike was eventually put down by the National Guard, and work resumed at Pullman’s factory, but the town was never the same. George Pullman died in 1897, resentful of his reputation as a tyrant and the reputation of his model town as an oppressive fiefdom. One year later, the Illinois Supreme Court ordered the company to sell all land not involved in the production at the factory, and the town shortly blended into the rest of Chicago, as an industrial slum.
The Sweetest Place on Earth
Amazingly, just a few years after Pullman died, another self-made businessman decided to build a model company town of his own. Friends warned Milton Hershey that the Pullman town had been a disaster and a black mark on the Pullman name, and that Pullman’s residents wouldn’t have elected George Pullman dogcatcher. “I know we’re taking chances,” replied Hershey, “but I won’t be a candidate for dog catcher: I don’t like dogs that much.”
When Milton Hershey decided to build his model town, the name “Hershey” was not yet synonymous with milk chocolate. Indeed, in 1900 the world did not yet know milk chocolate. Chocolate was a luxurious treat for the wealthy. Milton Hershey had made a fortune with a caramel business, which he sold for the unprecedented sum of one million dollars in 1900. Although he retained rights to a small chocolate subsidiary, it specialized in novelty chocolates and was something of a hobby for Hershey, who simply planned to spend his wealth and the rest of his life touring the world with his wife.
For some reason, Hershey abandoned the idea of conspicuous consumption and opulent travel and, like George Pullman, became interested in solving the problems of modern industrial life. Thus, Milton Hershey started the Hershey Chocolate Co. to support his town, not vice versa. Hershey worked on a formula for milk chocolate that could be mass-produced, to provide his town with sustainable industry.
Ground broke on the new town in 1903, near its own source of dairy farms in Pennsylvania Dutch land. The Philadelphia and Reading Railroad served Hershey, at the request of Milton Hershey. Hershey also built a trolley system.
At the center of town was a 150 acre park, featuring a band shell, golf course and a zoo. Hershey continued to add attractions, and by 1913, the park was receiving 100,000 visitors a year, giving Hershey a second industry: tourism. Hershey built banks, department stores and public schools. In addition, he built training schools like the Hershey Industrial School, a generous boarding school for orphans.
In fact, when Hershey’s wife died in 1915 he donated his entire estate – 30 years before his own death – to the Milton Hershey School Trust, which operated the Hershey Industrial School. This strange, quiet act of philanthropy had the peculiar effect of creating a corporate giant that is to this day owned by an orphanage. The result is that the town of Hershey and the Hershey Foods Corp. are more closely tied than one might believe possible in this era of free trade.
Hershey, PA is no stranger to labor strife, however. In a case of history repeating itself, Hershey was the target of a strike by a radical labor union – this time the CIO – during a depression – this time the Great Depression. Despite the fact that Hershey laid off no workers and made no wage cuts, Hershey, PA was caught up in the wave of sit down strikes and Communist agitation. In April of 1937, 600 workers took control of the factory for five days. The strike was broken not by the National Guard, but by angry farmers (who were losing 800,000 pounds of milk a day) and workers loyal to the company, who broke into the factory and beat-up and forcibly removed the strikers. Hershey eventually signed a contract with the more conservative AFL.
Despite this black mark, the town of Hershey, PA is a modest success. Though by no means the utopia Hershey envisioned, the town exists today as a successful tourist destination and the chocolate factory continues pumping out product, and providing the town with a base for industrial jobs.
It may be easy for a reader who is normally critical of the role of corporations in public life to romanticize the example of Hershey, PA. Certainly, the relationship between the Hershey Company and the town of Hershey is an admirable one when compared to Flint, MI and General Motors. Also, since the established rules of the new global economy eschew corporate-community ties, we can be pretty sure that experiments like these are a thing of the past.
In fact, it was the rule of law that nearly caused the Hershey School to sell the company this past summer. The rules of “fiduciary responsibility” that have bedeviled stockholders’ “corporate responsibility” efforts caused Pennsylvania Attorney General, Mike Fisher, to pressure the trust to diversify its holdings, the majority of which are Hershey stock. It was enough to have business observers, like the Wall Street Journal, salivating over the merger possibilities, as well as the influx of Hershey Trust cash in a soft market. It also came at a time that Hershey workers were fighting out the longest strike in company history, over proposed health plan cutbacks, proposed by the first non-Hershey resident CEO in the company’s history. Whatever respite Hershey workers and residents have won seems likely to be short-lived.