Part Two of October on the Road.
In 1903, Milton S. Hershey made a decision that baffled his peers. Against all conventional business wisdom, he chose to build the world’s largest chocolate factory not in a bustling city with ready access to labor and markets, but on a rural patch of Pennsylvania farmland. His contemporaries saw isolation and risk. Hershey saw something else entirely: a centuries-old convergence of cultural values, agricultural resources, and human capital that would transform his audacious gamble into one of America’s most enduring industrial success stories.
The Land That Time Prepared
The story of Hershey, Pennsylvania begins long before Milton Hershey was born. It starts in the 17th and 18th centuries, when waves of German-speaking immigrants – fleeing religious persecution and economic hardship in the war-ravaged Rhineland – arrived in William Penn’s colony seeking religious freedom and fertile land. Between 1727 and 1775, approximately 65,000 Germans landed in Philadelphia, eventually spreading across southeastern Pennsylvania. By 1790, these “Pennsylvania Dutch” (a corruption of “Deutsch,” meaning German) constituted 40 percent of the region’s population.
These weren’t ordinary settlers. Many were religious dissenters – Mennonites, Anabaptists, Lutherans, and Reformed Christians – who brought with them not just their faith but a distinctive approach to life and labor. They had fled regions devastated by the Thirty Years War, where up to 40 percent of the population had perished, and they had escaped inheritance laws that divided family farms into ever-smaller, unsustainable parcels. In America, they found what they had been denied in Europe: abundant land and the opportunity to secure it permanently.
This history shaped everything that followed. The Pennsylvania Germans developed an almost sacred commitment to land stewardship and permanent settlement. Unlike colonists who might exhaust soil and move westward, these farmers painstakingly improved their holdings. Mennonite farmers, in particular, distinguished themselves through relentless soil amendment, meticulously collecting and applying manure when other farmers would simply purchase new land. Their pacifist beliefs meant they relied on intensive family labor rather than hired hands or enslaved workers, fostering self-sufficiency and agricultural innovation.
The result was remarkable. Southeastern Pennsylvania earned the title “breadbasket of America,” its fertile fields yielding abundance through advanced farming techniques and tireless diligence. More importantly for Hershey’s future, these communities were stable, rooted, and deeply resistant to the transient lifestyle common in industrial America. The Pennsylvania Germans had found their promised land, and they weren’t leaving.
From Grain Fields to Dairy Dominance
By the mid-19th century, the region’s agricultural economy was transforming. Lancaster County, initially known for grain and livestock, began specializing in commercial dairy production. This shift was driven by technological advances: improved animal husbandry, factory processing of butter and cheese, condensed milk production, and crucially, refrigerated railroad transportation. The region’s established network of hardworking farmers, combined with historically productive farmland, made it ideal for this emerging dairy industry.
Enter Milton Hershey, born in nearby Derry Township in 1857. After early business failures in Philadelphia and New York, he found success in Lancaster with his caramel company, founded in 1886. The key to his caramels’ popularity was fresh milk – a technique he’d learned while working in Denver. The Lancaster Caramel Company thrived, employing over 1,300 workers and achieving annual revenues exceeding $1 million by the early 1890s.
In 1900, Hershey sold his caramel empire for $1 million – equivalent to tens of millions today. This capital was essential for what came next: his obsession with transforming milk chocolate from an expensive European luxury into an affordable American treat. But this required something unprecedented: a massive, reliable supply of fresh milk, a notoriously perishable commodity.
Hershey developed a proprietary process, slowly boiling milk at low heat in a vacuum with concentrated sugar to create a condensed milk base that blended smoothly with cocoa. This innovation was brilliant, but it demanded proximity to dairy farms. Transportation costs and spoilage could destroy his cost-leadership strategy before it began. He needed to build his factory where the milk was – and where the milk was, in southeastern Pennsylvania, there happened to be something even more valuable: the perfect workforce.
Building Chocolatetown: Infrastructure Meets Ideology
Derry Township in 1903 was hardly an obvious choice for industrial development, but Hershey saw past the surface. The location had a critical advantage: a station on the Philadelphia and Reading Railway, enabling the importation of cocoa beans and sugar from global markets and the distribution of finished products nationwide. To handle local logistics – particularly milk delivery and worker transportation – Hershey sponsored the Hummelstown & Campbellstown Street Railway, which began trolley service in 1904.
But Hershey’s vision extended far beyond a factory. He purchased 200 acres and planned an “ideal twentieth century town,” establishing the Hershey Improvement Company to create a complete community from scratch. His philosophy, which he summarized as “Business Is a Matter of Human Service,” manifested in remarkable ways. The company laid out roads, sidewalks, water, sewer, electric, and gas lines – state-of-the-art infrastructure for the era.
Most strategically, Hershey built attractive, modern homes featuring indoor plumbing and electricity and offered them for purchase to workers. This was genius. By appealing directly to the Pennsylvania German population’s deep cultural commitment to land ownership and permanence, he effectively locked in his workforce for generations. He wasn’t just offering jobs; he was validating centuries-old values.
The town included free public schools, libraries, playgrounds, gymnasiums, and Hersheypark amusement area, opened in 1906. These weren’t mere amenities – they were calculated tools for labor retention, offering a quality of life that typical industrial centers couldn’t match. The approach worked because it aligned perfectly with the cultural environment. Hershey’s emphasis on family values, stability, and education resonated with the traditional, settled population in ways that similar paternalistic ventures elsewhere – like Hershey’s own failed attempt in Cuba – could not replicate.
The company’s control over infrastructure created total economic integration. The factory furnished power for the trolley system; the Improvement Company controlled all utilities. During sales downturns, rather than lay off workers, Hershey paid employees to work on town improvements, reinforcing the stability that attracted the rooted population in the first place.
The Perpetual Machine
In 1909, Milton and his wife Catherine established the Hershey Industrial School for orphaned boys, funded through a trust. Following Catherine’s death in 1915, Milton transferred his entire fortune and company ownership to this trust in 1918. Today, the Hershey Trust Company owns a controlling stake in The Hershey Company and Hershey Entertainment and Resorts, with the Milton Hershey School serving as the economic anchor of the entire ecosystem.
This structure ensures perpetual survival – a fitting legacy for a venture built on the Pennsylvania German value of permanence. Even the school served the paternalistic framework, training students who often entered the factories or related businesses, creating a company-aligned labor stream.
The Lesson of Convergence
The story of Hershey is often told as one man’s visionary achievement, and Milton Hershey certainly possessed extraordinary foresight. But his success came from recognizing and leveraging forces set in motion centuries before his birth. The Pennsylvania Germans had spent generations creating exactly what he needed: a stable, diligent workforce committed to place, and an agricultural infrastructure capable of delivering massive quantities of fresh milk.
Hershey’s $1 million in capital, his technical innovation in milk processing, and his carefully calibrated welfare capitalism were the catalysts, but the fuel had been accumulating since 1683. His peers saw empty farmland; he saw cultural capital that no amount of money could replicate elsewhere. To this day, the vast majority of milk used by The Hershey Company comes from within a 100-mile radius of the original factory.
The transformation of rural Derry Township into “Chocolatetown, U.S.A.” wasn’t just a business decision. It was a masterpiece of historical convergence – a demonstration that industrial success sometimes requires not innovation alone, but the wisdom to recognize where innovation will find the richest soil in which to grow.
Part of a regular series on 27gen, entitled Wednesday Weekly Reader.
During my elementary school years one of the things I looked forward to the most was the delivery of “My Weekly Reader,” a weekly educational magazine designed for children and containing news-based current events.
It became a regular part of my love for reading, and helped develop my curiosity about the world around us.
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