Embed Size (px)
Citation preview
Chapter 9: A Third Life
What does the title mean?
Answer P. 165
• 1915 Kitty dies and Milton feels a deep loss
• Milton is not needed on a daily basis at his company nor on the development of the town.
Sugar, Sugar
The flow of sugar in the US is controlled by two firms:
1. American Sugar Refining
2. National Sugar Refining
For all intents and purposes, it was like a monopoly.
Page 161
Sugar, Sugar
Inspired by Teddy Roosevelt, Milton turns his attention to a possible
“Second empire” in Cuba.By 1906….• US invests about $200 million into the
sugar industry in Cuba and railroads to transport it.
• 60% of the rural land is owned by Americans Page 160-161
Pages 161-End
CUBA
The Plaza in Havana Cuba: The Start of
Hershey’s New Adventure
http://www.hotelplazacuba.com/Page 161
Yumiri Valley, Cuba
• One of the most beautiful places in Cuba
• Large spring-fed river provided a good water supply to the land
• A new factory & town could free Hershey of from the sugar monopolies….. Page 162
Hershey, CubaProblems:• Battle with a British railroad firm already
there• Hershey constructed the first electric line:
the Hershey Cuban Railway, but it could not link up to the city of Havana. Could only go to Casa Blanca on the Havana Bay because the British firm controlled Havana
• http://www.tramz.com/tw/la.html#CUBA
Pages 163-165
Hershey, Cuba• Hershey is 59 years old; he is more relaxed in
Cuba…no watchful Mennonite eyes. • A new adventure could distract him from the loss
of Kitty• He could produce his own sugar; lower cost with
Cuban labor
Pages163-168
Hershey’s New Adventure in Cuba
• Milton’s presence in Hershey PA greatly diminished; no one knew when he would be coming or going
• Milton oversaw construction of town and company• Enjoyed cigars, champagne, and a large amount of
gambling in casinos and racetracks…living the life of a wealthy man.
Pages 167-168
A Visit Home to Pa
November 13,
1918
Created the Trust for the Industrial School and placed ALL of the Hershey stock in it.
Page 169
Chapter 10: A Betting Man
Hershey’s Bet on Sugar• Released Hershey from the
US monopolies• Very profitable during the war
when there were sugar shortages; he had his own supply
Big Events in Chapter 10
• Sept-Dec. 1919Travels to Europe, gambles with thousands of
dollars in casinos• Returned because his mother was very sick with
pneumonia. A couple weeks later, Fannie dies and is buried next to Catherine
Hershey’s Bet on Sugar• Needed more sugar and trying to cut out the
wholesaler, like he did with milk, Milton went back and forth to NYC “traders” buying sugar contracts for future crops of sugarcane/sugar.
• Wouldn’t switch to other sweeteners as other companies did; refused to risk affecting quality of his chocolate
• Thought he knew the
“market trend” like he did with
carmels and milk chocolate
Chapter 10: A Betting Man
Pages 172-173
Chapter 10: A Betting Man
Hershey’s Bet on Sugar• Sugar Bust in 1920……• Oversupply of sugar; value of contracts nosedives• Milton in jeopardy of losing his entire company in
Hershey, PA and Hershey, Cuba• National Bank saves the company with a $20
million bond issue, a $10 million dollar mortgage, and an overseer named RJ DeCamp.
Chapter 10: A Betting Man
MS, Snyder, and Murrie
• Announced the crisis at a meeting with 50 company executives and town leaders
• MS said he wasn’t worried about his wealth, but the future of the school for the orphans
Chapter 10: Betting Man
• With renewed loyalty and focus, sales increased by 30% from 1921-1923
• In 1924, bank granted them control of the company again; employees rewarded from a newly designed profit-sharing plan
Pages 176
Post World War I
• Further emergence of marketing strategies
• National Brand Success:– Hershey for chocolate– Kellogg for cereals– Ford for cars– Ivory for soap
– Expansion of Advertising Techniques:
Utopia or Not a Utopia?
Role of the Media: Newspapers, Magazines, etc.• Promoted Hershey as a utopia: the school for orphans,
the park, the resort facilities• The Hershey Press Newspaper: Real, propaganda, both?
Page176-178
Hershey’s CompetitionEline’s Chocolate • Tries to take on Hershey
Co; About 30 employees are persuaded to go to Wisconsin and work for Eline’s.
• Company only lasts about 10 years; Hershey will not rehire employees who left.
Hershey’s Competition
Strange Alliances
Hershey struggled to create new products that excited customers…only Mr. Goodbar
Hershey Company provided bulk chocolate to bakers and other competitors…they made the chocolate coating for Reese Cups, Oh! Henry, and The Milky Way
Lawsuits
• In Harrisburg, a family named Hershey started producing Hershey Brothers Chocolates.
• In 1926, Milton sued and won, but the brothers still stayed in business and continually misrepresented itself until it went bankrupt in 1936.
Continued Growth in PA
Hershey went on a building spree in Hershey PA…
• Junior-Senior High school given to town
• Hospital
• Hershey Park gets kiddie rides
• Convention Hall gets ability to turn into an Ice Palace for winter skating and hockey
Continued Growth in PA
Industrial School gets Fanny B. Hershey Memorial Building as an elementary center.
Continued Growth in Cuba
• Purchased 3 more mills and brought in labor from Haiti and Jamaica because they would work at a lower wage– Helped the company recover from the sugar
contract debacle– Got him in trouble with the Cuban authorities
Hershey always proud of what he had accomplished and welcomed visitors to his properties and promoted them as tourist attractions.
In the 1920 and beyond…
Pamphlets were distributed offering package tours-train fare, lunch, golf, and a factory tour…all for $4.00
Still Building & Experimenting…
• Spent hours and hours above the mill in Hershey conducting experiments on sugar
• Built a orphanage/school in Cuba
Generous, But Controlling
• Squeezed wages at times
• Resisted workers’ attempts to unionize in Cuba and in Pennsylvania
• “Hershey reserved every decision about how and where to invest his fortune and would not be pressured into anything.”
Page 189
Generous, But Controlling
Labor Issues in Cuba
• Employees of Cuba Railroad threatened to strike; Hershey threatened to end his business in Cuba
• Fired those employees who did go on strike
• In the end, he gave a 10% raise, but stopped the annual profit-sharing
Page 188-189
Reorganization
In 1927, Hershey created three distinct
Corporations:
• Hershey Chocolate Corporation
• Hershey Estates
• Hershey Corporation
Pages 190-191
Hershey Chocolate Corporation
The Hershey brand products“A cash cow for the industrial school trust”
Pages 190-191
Hershey Estates
The infrastructure: electricity, water, sewers, trolleys,retailers, real estate, Hershey Park, a mill, a quarry, etc.
Pages 190-191
Hershey CorporationThe Cuban Businesses
Pages 190-191
Stanley Russell’s Plan
US Economy was Expanding and Booming
• Vice President of National Bank
• Watches the General Foods Corporation form from the merger of more than a dozen companies…”a conglomerate”
• Wants to do the same with Hershey at its center; approached Campbell, Heinz, Swift
Pages 191-195
• Russell will make tens of millions of dollars if deal was successful
• Works on the deal for 2 years
• Grow overconfident, goes on vacation, and almost loses the deal to a competitor from Chicago
Stanley Russell’s Plan
Pages 191-195
Stanley Russell’s Plan
Russell meets with Milton (72 years old),
Murrie, and Snyder
• National City will pay half a million dollars for a 6-month option to buy half a million shares
• If National City lines up all the other companies, the option would be exercised and National City would control Hershey Chocolate
Pages 191-195
Stanley Russell’s Plan
• Hershey agrees and signs the paperwork for the option
• Collects $500,000
• Stanley goes to organize the other companies and create the conglomerate
Pages 191-195
Stanley Russell’s Plan
• Gathers agreements from Colgate-Palmolive and Kraft
• Forms “Quality Products Corporation”
• Works on lining up more companies
Pages 191-195
Stanley Russell’s Plan
Late September Dow Jones Industrial Average
drops 13% in one month
October 24Panic Beginning…crisis feared
October 29Stock Market crashes and the Dow plummets; $30 billion to $60 billion lost
Pages 191-195
Stanley Russell’s Plan
• The plan to incorporate Hershey into the “Quality Product Corporation” conglomerate crashes with the Stock Market
• Hershey Chocolate keeps the $500,000
• School Trust retains control of Hershey Chocolate
Pages 191-195
Years Later…..Hershey quotes
…it was “the best thing that ever happened”
…a merger would have put
the company under
“outsider control” and
“made a big difference to the town.”
Page 195
The Great Depression
“No money, no banks, no nothing…”
~Will Rogers
Except for MS Hershey and
Hershey PA….
Producer of milk and sugar
Producer of a 5¢ chocolate bar
Pages 196-197
The Great Depression
New Hershey Products in the 1030’s
• Mild and Mellow • Not-So-Sweet• Aero Bar, a British
chocolate bar, under a license granted by Rowntree of Great Britain
Page 198
The Great Depression
Milton gives his mansion to the Hershey County Club and moves into two rooms on the upper floor.
The Great Depression
Employs hundreds of workers full-time for
six years in an extensive building program:
• A luxury hotel
• A sports arena
• A modern office building
• A new school
The Great DepressionA six story high
Community Building
with
murals, bronze statues, marble fountains,
a gym, a library,
a swimming pool,
a hospital,
a 2,000 seat theater, and 130 dorm rooms
Pages 199-200
The Community Building:
“A social hub for the Town”
The Great DepressionThe Hershey Hotel:
•Other millionaires played with yachts
•His hobby had been the dream of building a luxury hotel
•Dreamed about it since he first bought land in Derry Church
•Planned various designs over the years with Catherine
The Hershey Hotel
~A Dream Come True~
The Great DepressionThe Sports Arena:
•Designed by Anton Tedesko
The Sport Arena in Hershey
~An Engineering Marvel~
