Something sour in Pennsylvania

Candy Man: 'Hershey,' by Michael D'Antonio

The Times: [Milton Snavely] Hershey bought those German machines and had them shipped to Lancaster. In a bold move, he sold his caramel company and began laying out plans for a chocolate factory surrounded by a residential neighborhood complete with trolley system, grand public buildings and homes complete with indoor plumbing, which itself was to be surrounded with dairy farms. "There remained one problem," notes D'Antonio. "Milton Hershey did not know how to mass-produce milk chocolate."

The research team often worked 16-hour shifts, and finally the secret - using skim milk and heating the mixture slowly - was uncovered. The business took off and the town of Hershey exploded. But it was not paradise for everybody. A minority of workers, D'Antonio writes, looked at Hershey and saw not "a benevolent creator" but "an egotistical captain of industry." For example, "he was so conscious of his status that when a junior office worker made the mistake of asking him for some water, he ceremoniously filled every glass in the room and then fired the man who had said that he was thirsty."

Sensible with money at home but extravagant when he traveled, Hershey was a gambler who was devoted to a wife with a mysterious past. The couple had no children, and in 1909 he placed much of his fortune in trust to a school that he started for orphans. By 2002, the school had an estimated endowment of $5 billion - eight times as large as that of Phillips Exeter Academy, America's next wealthiest private school. When the school's board announced plans to sell its controlling interest in the company and diversify its portfolio, the townspeople united to stop the deal at the last minute, arguing that the loss of local control could threaten the economic security of the town.

Hershey's candymaking genius was hardly consistent. He spent years trying to figure out how to "mix turnips, parsley, celery and even beets into chocolate." Even his signature product had - and still has - its critics. Compared to Swiss chocolate, D'Antonio writes, Hershey's "carries a single, faintly sour note," the result of the fermentation of milk fat, a side effect of using liquid condensed milk rather than powdered milk. This edge came to "define the taste of chocolate for Americans, who would find harmony in the sweet but slightly sour flavor."

To me, the line that jumped out at me from Benjamin Cheever's review of D'Antonio's biography is the aside about the school for orphans Hershey endowed--$5 billion?! Why haven't we heard about this school before?

Everyone, after all, has heard of Exeter--but what's this school done with its tremendous resources? What superstar students has it produced--or how many lives has it made better? As Forbes notes in an article entitled Sugar Daddy:

With money made from chocolate, Milton Hershey endowed what today is the richest grade school in the world ($7.8 billion)

Who is the biggest shareholder of the $4.8 billion (estimated 2005 sales) Hershey Co., North America's largest manufacturer of chocolate? A kindergarten through 12th-grade school in Pennsylvania's rolling countryside. The Milton Hershey School holds by far the biggest pot of securities of any primary or secondary school on the planet. At $7.8 billion its endowment dwarfs that of the second-richest (the academically elite Phillips Exeter), which has less than a tenth as much. Only six U.S. universities have endowments larger than this school's.

Wow--well, so now this school should really be judged alongside Harvard, Yale, Standford, etc.?! A quick Google search of news articles, however, shows the school only pops up with regards to its sports teams, a suit filed by the company over the cover of D'Antonio's book, and an unsuccessful attempt by the school's board to secretly sell Hershey's:

Three years ago the school's unique power over the Hershey company created a furor. The board of the trust secretly hatched a plan to sell its 78% of the company's voting shares to Wrigley for $12 billion. But residents of the company town and Hershey's workers opposed the sale and got politicians behind their movement. The anti-Wrigley mob appealed to the state's attorney general, who intervened by filing a petition in Orphans' Court, a legal relic of an earlier time that rules on whether organizations entrusted with the welfare of children are performing properly. An injunction issued by Orphans' Court was enough to thwart the merger.

Ah, Orphan Court--what's going on with the school's mission to educate orphans? A little research uncovers the Milton Hershey School's website, with its odd Harper's-like index:

-Musical instruments played by MHS students: 20 different types (pianos to piccolos)
-Animals that students can enjoy and learn to care for through animal clubs: horses, beef cattle, sheep, deer, rabbits, goats
-Percentage of students who like to sing: 23% participate in one of the 6 choral groups
-Favorite dessert served at MHS: peanut butter cake
-Percentage of students with access to bicycles: 100%

Under History, you find: "MHS first concentrates on fulfilling its in loco parentis (Latin for "in place of the parent") responsibilities to the children under its care, namely its duties to safeguard, nurture, and educate the children whom we are priveleged to serve."

Apparently proof-reading isn't a priority for the school. And, it seems, the school no longer serves its original mandate of educating orphans--under Admissions Criteria, it says "To be considered for enrollment, the child must":
-Come from a family of low income.
-Be from the ages of 4-15 years old.
-Have the ability to learn.
-Be free of serious emotional and behavioral problems that disrupt life in the classroom or the home.
-Be able to take part in the MHS program.
-Be a United States citizen.

You can tell a lot about an organization from its website--the school's feels to me more frivolous and shiny than it ought, given its weighty mission.

By specifying the kids not have serious problems, it seems to me the school's turned its back on Hershey's initial intent of serving the worst-off of our society.

Something really seems odd here. There's nothing wrong with providing services to underprivileged kids--but with a $5 billion endowment, you'd really expect to have heard about the organization; besides which, what about the orphans? Why aren't they mentioned?

Some more digging turns up a 2000 report by the Milton Hershey Alumni Association:

Over the last two years, the Milton Hershey School Alumni Association ("MHSAA")2/ has devoted itself to seeking an understanding of the history of the Milton Hershey School Trust (the "Trust"), the Deed of Trust (the "Deed"), and our own history. In this endeavor, MHSAA has utilized the expertise of the tradesmen and professionals who graduated from our school and who comprise our organization. While we are in a sense a ragtag army of volunteers, we count amongst our numbers seasoned attorneys, accountants, construction and real estate experts, educators, childcare experts, and members of many other professions. Through the unselfish efforts of countless of our members, particularly those who have unique knowledge related to the matters at issue, MHSAA has reviewed warehouses full of documents, combed the public records, interviewed hundreds of keywitnesses, unearthed long-forgotten and dusty files, traced witnesses across America, and otherwise undertaken an exhaustive review of all available evidence related to the matters at issue. MHSAA believes that no other comparable research project has ever been undertaken....


What our study unearthed was shocking even beyond the worst suspicions of the most avid critics of the Board. MHSAA's study revealed that the Deed of Trust had been reconstructed by the Board over an extended period of time, along lines explicitly rejected by Mr. Hershey while he was alive. We also discovered that court petitions amending the deed had been filed in flagrant disregard of Pennsylvania law, without notice to the public or any public hearings, and which resulted in the illegal transfer of substantial assets to uses which the Trust's own counsel understood to be illegal under the terms of this Trust. Most disturbing, we discovered that Mr. Hershey would never have supported the Board's various actions, having expressly rejected each during the time that he was alive.5/ Finally, we came to believe that had the court and the Attorneys General been adequately apprised of the long-term plans of the various Boards undertaking these actions, they would not have countenanced the changes obtained by these Boards, which changes are now of concern to MHSAA.

It's a long, detailed report; the conclusion states:

MHSAA has observed for years the degeneration of the values of the school which Mr. Hershey founded and has reluctantly entered the fray in defense of those values. This process began in the early 90's, when relations between MHSAA and the Board deteriorated, because MHSAA openly opposed actions which we believed to be in violation of the Deed, and at a time when the Board was engaged in changes of school presidents and policies that made no sense whatsoever from the perspective of the interests of the school's children. Last year, when MHSAA was seeking to bridge the distance between itself and the Board through informed discussions of the Deed in historic context, the Board sought leave of the Orphans' Court to direct but another $30 to $50 million to a project premised on the absurd notion that there weren't enough dependent and at-risk children in America to adequately utilize the assets of the Trust.

MHSAA thus opposed this effort by the Board. In opposing this effort -- in the so-called CHILD cy pres petition -- MHSAA uncovered evidence of the most unconscionable acts imaginable, including flat-out misappropriation of orphan assets to build the Penn State medical school, in violation of Pennsylvania law, and in derogation of the needs of millions of American orphans. What's worse, MHSAA also uncovered a pattern of consistent abuse of discretion over time, which was coupled with a deliberate and insidious dismantling of the ideals of Mr. Hershey, through a steady duping of the local courts and the public. This process was at times abetted by the Pennsylvania authorities themselves, or countenanced by these authorities since they themselves appear to have been misled by the various Boards over time.

Early this year, MHSAA demanded that these issues be addressed, lest MHSAA be forced to seek relief from the Orphans' Court. These demands led to the appointment of Dick Thornburgh and K&L [Kirkpatrick & Lockhart LLP], to undertake what was represented would be an independent investigation. On the basis of this representation, MHSAA reined in its more outspoken members, tabled its plans for seeking relief directly from the court, and cooperated fully with the K&L investigation. MHSAA was confident that any independent review would demonstrate the merit of our contentions and thus aid in beginning to set aright the course of the school -- including rectifying past grossly illegal changes to the Deed. While waiting for the K&L investigation to conclude, the Board accelerated its effort to transform the school -- destroying old farmhouses, directing more land to non-school uses, and quietly changing admissions criteria to permit ever-rising income levels among newly-admitted students, while increasingly closing the door to full orphans, wards of the court, and foster care children.

Wow, quite an indictment--and coming from the school's own alumni.

Probably the most damning section of the report comes before the conclusion, in a section called Changing Demographics of the School:

Taking together all of the various acts of successive Boards, at the core of MHSAA's concerns is an effort by these Boards to slowly erode the role of the Trust as a caretaker institution for the specific group of children whom Mr. Hershey originally sought to aid -- poor, dependent and at-risk children -- in favor of a new role, as a kind of "prep school" for less affluent albeit not desperate children. While this has not been accomplished yet, it is slowly occurring, in such an insidious way that its prevention now will only be achieved with the direct intervention of such outside authorities as the Pennsylvania Governor and Attorney General.

To explain, beginning with the announcement in 1976 that the children of divorced parents would thereafter be considered "social orphans" and so meet an expanded criteria for admission to the school, there has been a steady expansion of the target class of child beneficiaries, in derogation of the needs of the most desperate of America's children. Thus, when the Board was commencing its planning of the campus "centralization" scheme and the end to vocational training in the early 1990's, the Board sent teams to observe the elite prep schools in the country, and then sought to model the school along those lines. This resulted in the introduction of a radically different view of the school, as merely the provider of an education to children somewhat better than the education available in their own neighborhoods, and with a corresponding drift away from the view of the school as a home for children who desperately need one.

Indicia of this shift include a radical decrease in the number of full orphans, wards of the court, and foster care children in the school today, with the trend accelerating every day, to a point where the trend will soon be irreversible. To illustrate this in concrete terms, the school today is apparently prevented by law from accepting even a single foster care child into its care, because the Board has not obtained the appropriate license to do so. Other indicia include rising income levels of the families of newly admitted students, such that last year, some 50% of these families were from above the poverty level, in a nation where some 30 million children live below the poverty level. This year, the Board simply declined to disclose these statistics in their annual report, even refusing written requests from graduates to provide the information -- a fact which underscores how deliberate and insidious this effort has been.

Glossing over this issue, K&L mentions that the Board -- again, in the absence of legal authority to do so -- decided last year that their new admissions criteria would simply multiply the federal poverty rate by 150%, and use that standard to determine what class of children should be admitted to the school. This is notwithstanding that there are some 500,000 children in foster care, and for which children the federal poverty guidelines are meaningless, because their income is zero.

K&L does suggest, absurdly, that the "number of orphans in America has declined" since Mr. Hershey set out to save these children, as though to provide an endorsement of the Board's continued drift away from Mr. Hershey's wishes. In this, the K&L Report's authors are either engaging in intentional misstatement, or else they have genuinely never heard of AIDS -- a disease which by itself has created an explosion in America in the number of physically healthy orphans who need a home such as that provided by the school. Similarly, K&L must also be completely unaware of all of the other facts mentioned in this Response, such as the number of children who have lost parents for a multitude of socioeconomic reasons, including the drug epidemic, the explosion in the prison population, and the failure of the American economic boom to reach the lowest strata of society.

All of these trends in the increase of orphan children are compounded by a corresponding decrease in the number of quality orphanages remaining in existence today, the latter of which results solely from the fact that quality residential care for dependent children is just so expensive that most dependent children will never have the opportunity to receive this kind of care, but will instead be consigned to such inferior alternatives as foster care and group homes.49/ In short, K&L's unsupported statement notwithstanding, the number of children whom the school can serve today under the criteria established by Mr. Hershey is at an all-time high absent any expansion of the applicant pool. Furthermore, expansion of the applicant pool in the manner sought by the Board results in closing the school to the children at the bottom of the barrel, in favor of less difficult (and less needy) children at the top.

I think it's problematic when richly-endowed institutions take on a life of their own, and go against the desires of their founder. Sure, decades down the road, times change--so make minimal changes and try to interpret the spirit rather than the letter of the original deed, like we try to do with the U.S. Constitution.

But for crying out loud, don't do anything that fails to pass the smell test. It seems to me Mr. Hershey wanted his school to do the best job it could of helping orphans. The school as constituted today doesn't do that--as the report notes, its Board seems more intent on creating a posh boarding school and expanding its social standing, than fulfilling the mandate under which it exists.

There's nothing wrong with creating a posh private school--just don't do it with money intended for orphans. If you're going to accept the money of a founder, realize it may come with strings, and abide by them.

It all reminds me of the Barnes Foundation, another Pennsylvania institution--in this case a school specifically deeded by its founder to educate art students--that's strayed pretty far afield from its mission.

In the Barnes' case, the board won its battle, and was able to blatantly disregard the will of its founder and move the school's collection of artwork from the countryside to a brand new museum in Philadelphia.

(It's odd that there isn't more of an outcry from Republicans who usually are first at the barriers on any sortof eminent domain issue, where the nebulous 'public good' is used to justify takings from individuals.)

Sure, lots more people will now be able to be 'educated' by the artwork--but that's not what Barnes wanted. He wanted a small, quiet school where students could immerse themselves in art; the works are purposefully 'displayed' crammed on the walls of the house, meant to reward long-term study, rather than cursory gallery tours.

Destroying his intention in order to try and chase after a different social good is paternalistic and insulting to his memory in the extreme. He knew what he wanted--if the current trustees think they know better, they should go endow their own multimillion dollar foundation.

Likewise, the Hershey school's board should go find their own sugar daddy if they're so unwilling to fulfill M.S. Hershey's mission of helping orphans.

Image of Amedeo Modigliani's 1918 painting The Boy, from the collection of the Barnes Foundation, via Webmuseum.