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HersheyArchives@30-4 Selling the Lancaster Caramel Company

150 shares of American Caramel Company stock owned by Milton S. Hershey.

150 shares of American Caramel Company stock owned by Milton S. Hershey.

 

What’s the story behind this American Caramel Company stock certificate?  Milton Hershey’s caramel business was called the Lancaster Caramel Company.  So why did Milton Hershey own stock in a rival company?

 

The Lancaster Caramel Company dominated the United States confectionery market.  Lancaster Caramel products were distributed nationally and internationally. Even though Lancaster Caramel Company dominated the market, there were competing firms.   The American Caramel Company had been organized in 1898 following the merger of three smaller caramel businesses.  It had offices in Philadelphia and New York and its managers were very aggressive businessmen.

 

American Caramel felt that Lancaster Caramel was their only serious rival and the owners tried to persuade Milton Hershey to merge with them. American Caramel Company knew that a merger would allow them to control 95 per cent of the caramel market.

 

However, Milton Hershey was not interested in the idea of the merger. At first, American Caramel threatened to put Milton Hershey out of business, but Hershey was not intimidated.

 

Finally, the owners of the American Caramel Company approached Milton Hershey with an offer to buy his business. Milton Hershey responded with interest. Though caramels were a very popular confectionery product, Hershey believed that the caramel market was reaching the end of its popularity. “Caramels are just a fad,” he said.

 

Negotiations to sell the Lancaster Caramel Company stretched on for months. Finally, in Spring, 1900, the price was finally agreed on: Milton Hershey would sell the company for one million dollars.

 

John Snyder, legal counsel to Milton S. Hershey. ca.1915-1930

John Snyder, legal counsel to Milton S. Hershey. ca.1915-1930

 

Negotiations were not yet concluded.  The matter of how the price would be paid needed to be resolved.  Milton Hershey’s representative, his lawyer John Snyder, wanted an all cash transaction. Daniel Lafean, the American Caramel Company representative, had other ideas.

 

Throughout the spring, representatives of the two companies held negotiations.

 

Our knowledge of the negotiations comes from a 1955 oral history interview with John Myers, who was the stenographer during the talks. John Myers related:

 

The negotiations took place in Mr. Snyder’s office, 120 East King Street [Lancaster, PA]. There were present Mr. Hershey, and John Snyder; representing the other people was Congressman Lafean of York [PA] and a representative of the Providence Trust Company of Providence, Rhode Island.

                The first offer of the [American Caramel Company] people was $500,000 in cash and an equal amount in stock.  The agreed on price was a million dollars. The price was understood.  I know. I was there. I was the stenographer.

                The second offer was $750,000 in cash and $250,000 in stock.

                The third offer was $900,000 in cash and $100,000 in stock.

                Hershey had left it to Mr. Snyder because he trusted him with anything at all. But when Snyder refused that last offer, Mr. Hershey became quite angry.

 

Milton Hershey wanted to sell and he felt that $900,000 cash and $100,000 in stock was a good offer. He didn’t want the American Caramel Company to pull out at this point. And he also wanted to keep the good will of Lafean whose company might very well be customers in buying Hershey Chocolate coatings for their caramels. However, he knew that Snyder had set his heart on receiving one million dollars in cash and he wanted somehow to save Snyder’s pride.

 

So the discussion between Milton Hershey and his lawyer lasted a long time and when it was over Snyder had his way. Lafean’s third offer was refused, and the American Caramel Company agreed to pay cash for the full amount.

 

150 shares of American Caramel Company stock owned by Milton S. Hershey.  Sold 10/4/1900

150 shares of American Caramel Company stock owned by Milton S. Hershey. Sold 10/4/1900

 

But although it appeared that Hershey and John Snyder had driven a hard bargain, it was not Hershey’s way to let his opponents feel that they had been taken advantage of. Quietly, he agreed that after the one million dollar check had been handed him, he would spend a large part of it to purchase American Caramel Company stocks and bonds.

 

The sale of the Lancaster Caramel Company was finally completed on August 10, 1900. Milton Hershey surrendered the factory, the machinery, the stock in hand, his formulas, and the “Crystal A” trademark. He also agreed not to make caramels in Lancaster. But he retained the ownership of the Hershey Chocolate Company and he kept all his chocolate-making machinery. He also rented a wing of the caramel factory from the new owners in which he continued to make chocolate.

 

On October 10, 1900, Milton Hershey sold 150 shares of his American Caramel Company stock to Weeden & Co.

Reverse side of stock certificate. On October 10, 1900, Milton Hershey sold 150 shares of his American Caramel Company stock to Weeden & Co.

 

While Milton Hershey agreed to purchase American Caramel Company stock with sale monies, he had no intention of keeping the stock as a long term investment.  He directed John Snyder to sell the American Caramel stock as soon as was prudent.  Just a few months later, the first of Milton Hershey’s American Caramel Company stock was sold.*

 

*It turned out Milton Hershey was right in his assessment of the future of caramels in the confectionery market.  By the 1920s, the American Caramel Company was faltering and a few years later collapsed in bankruptcy.

HersheyArchives@30-3 “I am going to make chocolate.”

 

Milton Hershey ordered four pieces of equipment from the J.M. Lehmann Company's New York office. January 11, 1894

Milton Hershey ordered four pieces of equipment from the J.M. Lehmann Company’s New York office. January 11, 1894

 

Milton Hershey made his fortune with caramels but he made history with chocolate. In 1893, while attending the Columbian Exposition in Chicago, Hershey told Frank Snavely, “Caramels are a fad but chocolate is permanent. I am going to make chocolate.”

 

Milton Hershey was a reader of newspapers and an astute businessman. The increasing demand for chocolate in the United States would not have escaped his notice. In 1883, the United States imported 9,000,000 pounds of cocoa beans; in 1893, 24,000,000 pounds.

 

After examining the J. M. Lehmann exhibit of chocolate making machinery at Chicago’s 1893 Columbian Exposition, Hershey made up his mind to invest in chocolate. After the exposition closed, two pieces of Lehmann machinery from the exhibit were shipped to Lancaster, Pennsylvania. This document, an order for additional chocolate making machinery, details Hershey’s subsequent purchases and signifies the beginning of Hershey manufacturing chocolate in 1894.

 

The principal machines required to manufacture chocolate are roasters, hullers, mills to crush the beans, melangeurs (chocolate grinding machine) to mix the chocolate paste and sugar, cocoa butter presses to separate cocoa butter from cocoa solids, and steel rollers to refine the chocolate. Having acquired the melangeur and steel roller from the exhibit at the exposition, this purchase of equipment fulfilled Hershey’s needs. By 1895, the Hershey Chocolate Company was producing cocoa and semi-sweet or dark chocolate for retail sale.

 

Catalog; page 4. Image of a J.M. Lehmann Roasting Machine; Roaster; Catalog; J.M. Lehmann Dresden-Loebtau, 1902 edition

Catalog; page 4. Image of a J.M. Lehmann Roasting Machine; Roaster; Catalog; J.M. Lehmann Dresden-Loebtau, 1902 edition

 

When Hershey decided to make chocolate, he committed to the idea fully. Comparing the invoice found at the top of this story to a slightly newer (1902) J. M. Lehmann catalog indicates Hershey purchased machinery capable of producing large quantities of chocolate. The purchased roaster had a capacity of 9oo pounds. The local newspaper reported that Hershey’s melangeur was the second-largest in the United States, second only to one used by Walter Baker & Company. From the start, Hershey intended to transform and dominate the chocolate market in the United States.

Home, Sweet Home

Milton S. Hershey, 1887 (age 30)

Milton S. Hershey, 1887 (age 30)

 

Milton Hershey’s rise from poverty to wealth, after he returned to Lancaster, Pennsylvania in 1886, was almost meteoric.  Just five years after he had returned to Lancaster, basically penniless, to establish the Lancaster Caramel Company, he was emerging as one of the city’s most successful businessmen.

 

In 1891 Milton Hershey was invited to join the Hamilton Club, a private men’s club for some of Lancaster’s most prominent business and political leaders.  Milton Hershey’s membership was a sure sign of his growing prominence in Lancaster’s business circles.

 

222 South Queen Street, Lancaster, PA. ca.1900

222 South Queen Street, Lancaster, PA. ca.1900

 

That same year he decided he needed to upgrade his residence.  On October 22, 1891 Milton Hershey purchased a house located at 222 South Queen Street, Lancaster, PA.  The purchase price was $15,000.

 

The deed that was recorded in Deed Book W-13-305 described the property:

 

All that certain lot of ground situated on the West side of South Queen St. between German (Farnum) and Conestoga St. containing in front on S. Queen St. 129 ft. 2 in. & extending in depth westward 252 ft. to a fourteen feet wide alley & containing in width along said alley 127 ft. 9 in.  Bounded on the North by property of John P. Schaum and on the South by property of E.E. Snyder being two lots of ground one of which Thomas Hays and wife by deed August 28, 1865 recorded in Book L-9_199 conveyed unto Jacob Bowers and the other which Louis F. Voigt admin. of Sarah Voigt dec’d by deed—1868 recorded in Book P-9-617 conveyed to Jacob Bowers by will. – October 1, 1889

 

We have a wonderful collection at the Archives, created by Paul Wallace, a Lebanon Valley College history professor.  Dr. Wallace was hired in 1954 by Milton Hershey School to research and write a biography of Milton Hershey.  Dr. Wallace was well-organized and his research files were turned over to Hershey as part of his contract.  The finding aid for the collection can be viewed here.

 

Dr. Wallace located and organized a variety of  paper records that document Milton Hershey’s life. These records not only illuminate Milton Hershey’s business life but also highlight his personal life.  In particular there are some wonderful letters written to Milton Hershey later in his life where the writer shares his/her memories of Milton Hershey during the years he lived in Lancaster.  The letters where the writer shares their childhood memories of when Milton Hershey and later his wife, Catherine, lived at 222 South Queen Street are particularly charming.  Here are some excerpts:

 

1935-August 22:  Mrs. Blanche Arnold Chambers to MSH

 

914 North 63rd Street Philadelphia PENNA

My dear Mr. Hershey

 I have put personal on the envelope in the hope that this chat on paper about old times will get by even a watchful secretary.  First I think I ought to explain who I am.  My grand-mother was Mrs. Gideon W. Arnold my mother was Ada Arnold. Altho I was born and always lived in Philadelphia I spent many happy hours in Lancaster at Grandma’s big house at 202 S. Queen St.  When you bought the old Bowers’ mansion and remodeled it I made the acquaintance of your aunt Mattie Snavely thru Mrs. Lebkichers—Henry’s Mother.  After that my greatest joy was to slip thru the side fence from Uncle Frank Arnold’s yard and skip over to your house to help Aunt Mattie play the electric piano—at least she allowed me to operate it and was greatly amused at the enjoyment it gave me—whe and I became great friends.  Later I met your wife and admired her very much—she gave me a lovely photograph of herself taken at Kueblers in Philadelphia.  I attended her funeral at Bairs and later at the Chapel of the Cathedral.  I remember I met one of the Hager brothers there and he escorted me home.  It was a lovely warm Saturday afternoon—if my memory does not fail me—the next day Palm Sunday we had a blizzard.  One more Lancaster memory.  I think Grandma’s brother, Uncle Jacob Gable owned the building at S. Duke and Church Sts where you first started in business successfully.

 

and this letter written 1940-September 29, from Mrs. Florence C. Mathes to MSH:

 

Catherine Hershey standing in the driveway for 222 South Queen Street, Lancaster, PA.  ca.1900

Catherine Hershey standing in the driveway for 222 South Queen Street, Lancaster, PA. ca.1900

 

Dear Mr. Hershey:
 The name of Hershey in the news recently has brought something to my mind of my childhood in which Mrs. Hershey played an important part, unknown to herself, when you live on S. Queen St.
 When I was a little girl of about ten, I lived on German Street (now Farnum) in Lancaster and I used to walk through Beaver St. just to look at Mrs. Hershey.  I used to stand there looking through the fence waiting for her to come out.  If you remember the swing was toward the back of the house and the parrots on their perches and she would stroll out to the swing in the lovely gown and red slippers (which I shall never forget) and I thought she was the most beautiful lady I had ever seen and I would stand there by the hour.
 My father still lived in Lancaster, is a year older than you and still in excellent health.
 I have lived in Philadelphia nearly twenty-five years now and still trying to get something out of life…
   Yours very truly,
   (Mrs.) Florence C. Mathes

 

These letters and others can be read in their entirety at the Archives.

 

 

 

Hershey Chocolate Company: On the Road

Hershey Chocolate Company introduced the motor car to Lancaster, Pennsylvania with this Riker delivery car. 1900

 

In February, 1900, some months before the sale of the Lancaster Caramel Company, Milton Hershey brought the first automobile to Lancaster, and used it to advertise his product.  The arrival of the machine was announced in the Lancaster New Era, February, 13, 1900:

 

“The Hershey Chocolate Company will have the distinction of having introduced the automobile into Lancaster, and for business purposes, too.  One was received here this morning from the Riker Electric Vehicle Company, and it will be put in shape for operating tomorrow, and be used in the delivery service.  It will haul a load of about 2,000 pounds and has a storage battery with sufficient power to carry the machine 30 miles.”

 

            After running around Lancaster for a few days – and nights, because the young clerks liked to drive it after hours – it set off on a tour of the cities of Pennsylvania, visiting Allentown, Bethlehem, Scranton, Wilkes-Barre, Pottsville, and other centers.  With it was a crew of salesmen under F.W. Delori.  The “operator” was R.C. Orndorff of Baltimore.

            Reporters in the various cities through which it passed noted that it had won a $1,500 prize at New York’s recent Madison Square Gardens Automobile Show, that it cost $2000 (some said $2500), weighed 3,500 pounds, had four storage batteries (each weighing 300 pounds), and was equipped with electric lights, an electric bell, a brass “steering apparatus,” and brakes.

            Its top speed was nine miles an hour.  

 

Even though the car was such an attraction, the only image of the Riker electric motor car in the Archives’s collection is this print of a wood engraving, executed by J. J. Hensel, a Lancaster, PA engraver.  It would be wonderful to find an actual photograph of the vehicle somewhere, some day.

Learning a trade

Milton Hershey (right) poses with another worker at Royer's Ice Cream Parlor and Garden in Lancaster, PA.  ca. 1873

Milton Hershey (right) poses with another worker at Royer's Ice Cream Parlor and Garden in Lancaster, PA. ca. 1873

Many of us are not  familiar with the story of Milton Hershey’s youth; before his financial success. This Milton Hershey was the teenager who first discovered his gift for candy-making at Royer’s Ice Cream Parlor and Garden, Lancaster, Pennsylvania.

Milton Hershey’s first job was not as a confectioner but as a printer’s devil in 1871 for a German language newspaper in Gap, PA, called Der Waffenlose Waechter or the Weaponless Watchman. Milton’s father, Henry Hershey, thought working for a newspaper would make Milton a “man of letters.” Unfortunately Milton hated the work and was considered clumsy when handling printing type with his farmer fingers. After spending a few months as a printer’s devil, Milton was eventually fired for his ineptitude.

Milton’s mother, Fanny Hershey, believed that her son should learn a trade where he would make something useful. When Milton expressed an interest in the confectionery trade, Fanny arranged for him to work as an apprentice in Royer’s Ice Cream Parlor and Garden located on 50-52 West King Street in Lancaster, Pennsylvania in 1872.

Advertisement for Joseph Royer's Ice Cream Parlor and Garden, Lancaster, PA  ca. 1870

Advertisement for Joseph Royer's Ice Cream Parlor and Garden, Lancaster, PA ca. 1870

His father did not approve of Milton entering this line of work, as he felt confectionery work was “woman’s work.” Henry and Fanny’s disagreement about their son’s future was one of many they had during the course of their marriage. Henry soon left Lancaster and moved west to seek fortune in Chicago and Colorado.

During his apprenticeship Milton Hershey and his mother resided in a number of locations in the city. There is mention of the two living at Frederick Cooper’s Red Lion Hotel at 35-37 West King Street, across the street from Royer’s. There is also a record of them living on the 200 block of Prince Street.

Royer’s was a popular destination in town and was perhaps best known for its ice cream garden. The garden was located behind the shop and was enclosed with bushes, trees and vines, creating a cool and pretty place to relax and enjoy an ice cream. Royer’s sold a heaping plate of their own ice cream for ten cents. Their most popular dish was a plate of ice cream with lemon squares. The confectionery store’s popularity was noted in a 1909 article in the Reading Eagle newspaper:

Every student who has been at Franklin and Marshall College remembers Joe Royer. It was his confectionery with ice cream garden attached that the students visited and to which they took their girls.

Joseph P. Royer, the proprietor of Royer’s,  was a true confectioner of his time, making not just ice cream, but all kinds and varieties of candy. The confectionary treats at Royer’s included caramels, cough drops, bon-bons, rock and sugar candies, as well as ice cream and lemon pastries. Chocolate at this time was not widely available. Any chocolate confections at Royer’s would probably have been limited to chocolate coated and flavored candies.

Milton did not learn the candy trade immediately. As a new apprentice, Milton waited on tables, took orders at the counter, and delivered ice cream and treats to customers’ houses. His first jobs in the kitchen seemed to revolve around washing dishes and ice cream cans. The hardest job he was assigned was turning the handle of the big ice cream freezer. It wasn’t until his mother intervened and offered more money to Royer that Milton began to work in the kitchen. At this time Royer began to teach his apprentice the art of candy making. He soon discovered that his pupil had a gift for mixing ingredients and creating candies. Candy made in the 1870s was created through experimentation and with traditions passed down from generation to generation. Recipes were very vague, consisting of ingredients and some general instruction. Many were not written down but created from memory. Milton Hershey had to learn how to combine ingredients, and to understand the role of heat and time. He had to learn how to feel the crack of the candy, the right moment to remove a batch from the kettle. With this process of trial and error, there were often blunders along with success. Later in his life Milton Hershey recounted the time at Royer’s when he was given responsibility for roasting peanuts for peanut fudge. Friends encouraged him to come with them to go view a show in the Fulton Opera House, located around the corner from the confectionery shop. While enjoying the show Milton began to smell burnt peanuts. Reminded of his responsibilities, he left the theatre and was greeted by a shower of peanut shells falling onto the street and Royer’s ice cream garden. In his haste to get to the show, Milton had forgotten to turn the blower off and the burned shells were coming up the flu and blowing around like leaves.

Milton Hershey worked for Joseph Royer for almost four years. In 1876, with his apprenticeship completed, he left Lancaster to establish his own candy business in Philadelphia.

While Royer’s had developed Milton Hershey’s innate gifts for candy-making, Milton still had much to learn about the confectionery business. The next ten years would provide him with hard and important lessons about suppliers and customers, product lines and marketing. It would not be until Milton Hershey returned to Lancaster in 1886 that he would finally achieve financial success as a confectioner. In spite of his early business struggles, the early lessons learned at Royer’s provided Milton Hershey with the confectionery skills that would form the foundation of his future success.