Bitter Chocolate (14 page)

They had names that would strike terror into the hearts of cocoa producers: “witches' broom,” “capsid,” “swollen shoot,” “black pod rot,” “cocoa wilt.” These were the vivid names of diseases that rampaged through the cocoa plantations of the Caribbean in the first half of the twentieth century. Just as Mexico had lost its advantage in cocoa production when its crop was virtually wiped out, now the new plantations in the Caribbean were facing the same fate. Disease devastated the economies of the islands and forced chocolate-makers to look elsewhere for their products. Africa became the logical choice, even for Milton Hershey.

By the 1930s, cocoa was well established in West Africa, still ruled by the European powers. France controlled Côte d'Ivoire; Nigeria was under British authority. Both produced some cocoa, but no colony was as productive as the land called the Gold Coast—also under the administrative sway of the British. The Cadburys, after the scandals of São Tomé and the Portuguese, had developed productive plantations there in partnership with independent African farmers, and the Gold Coast now led the world in cocoa production.

In 1936, there was a hiccup on the international commodities market. The global crop yield was less than anticipated. Prices for cocoa beans jumped to a record thirteen cents a pound. Milton Hershey panicked. Worried that the value of beans was
going to rise even further, he started hoarding. He was buying and stockpiling all he could get his hands on when prices tumbled in 1937. He panicked again and calculated that if he bought up even higher quantities, he could take control of the pricing mechanism by manipulating supplies. It was a brave but deeply flawed idea.

Word got around that Hershey was the only purchaser in the market, buying everything available at his own inflated price. Soon he was buried in offers to sell. It went on for months before Hershey realized that he was buying nothing. He'd played into the hands of market speculators who were gambling that Hershey would one day soon have to unload the cocoa at a significantly lower price than he had paid for it. Then they'd buy it back. It's called futures trading, a phenomenon that would now take over commodities markets like cocoa and make fortunes for those who knew how to play the game. But Milton Hershey didn't understand it, and he lost $10 million.

According to the archives of the company, Hershey was profoundly resentful that gamblers had had him. “He was not the type to show anger,” said one anonymous employee quoted in archival documents. “But he never forgot what he thought was the whole world against him. He was bitter.”

In the end it didn't matter. With war looming, the British government seized direct control of Gold Coast cocoa—and most other commodities throughout the empire—and began to regulate prices and shipments of beans for the “war effort.” The price controls were good for the manufacturers; they had a predictable supply of cheap raw materials. As always, the economic burden landed on the people at the bottom, the primary producers in distant, undeveloped lands.

Hershey and the other chocolate-makers were able to manipulate farmers in Africa, but their control at home wasn't quite so secure. The times were changing. Democracy in the marketplace, and on the factory floor, was cutting into the historic influence of
the old-style capitalist proprietors. The effect of good intentions and proprietary munificence was just about exhausted.

Workers in Europe and North America took decades to find their common voice and the means to exercise collective power. But unions were gaining strength and workers were demanding concessions as a matter of fundamental rights, not the goodwill of benevolent capitalists. Milton Hershey was at a loss to understand the strife that was becoming part of the labour-management dialogue in the United States. Workers were going out on strike, turning violent when they didn't get what they were asking for. Managers were employing goons and Pinkerton security agents to intimidate ordinary working people and to physically harm them when necessary.

Hershey had built a town for his workers; he had tried to anticipate their every material and spiritual need; he extended credit when they ran low on money, and gave them stores to spend it in; he entertained them and made sure their children grew up in a stable, moral environment. During the Depression, he used his profits to start make-work projects and keep his people busy. The residents of Hershey, Pennsylvania, hardly knew there was an economic crisis destroying people in less fortunate American communities. And so it came as a shock when Milton Hershey faced his first strike. What more could they want from him?

The answer was simple. Hershey had never allowed his town to incorporate; he had run the place virtually as his fiefdom. There was no mayor, no municipal council and no government.

It was 1937 and communists were agitating. Labour organizers from the Committee for Industrial Organization (CIO) began holding secret meetings in a neighbouring town, and before too long Hershey's workers were on the march along with everybody
else. They demanded working hours consistent with other chocolate factories (the Hershey work week was sixty hours) and contracts that specified wages and benefits. Hershey had no idea how to handle the uprising and left it up to his lawyers while he retreated to his home on the hill overlooking the town he had built from scratch. It was a lonely, silent place since his beloved Kitty had passed away. From the empty mansion, he watched what happened in horror.

Six hundred workers seized the factory building and chained its doors. Within days, the labour action turned violent, with Hershey loyalists and supporters physically beating the striking workers. The first effort to unionize failed when the Hershey labour force decided the CIO was too left-wing and “un-American” for their taste, but shortly after, they joined the kinder, gentler Bakery and Confectionery Workers International Union. They continued to profess deep loyalty to their boss, but union leaders persuaded them that the days of authoritarian management and company towns were past. They had nothing against Milton. He'd proven his decency and commitment many times over. But he was mortal. They'd be foolish to expect that his altruistic values would live on after him.

Disgruntled workers noted that Milton Hershey spent more money on each of his orphans than they could spare for their own children with the wages they were earning. Hershey was a benevolent dictator. His subjects wanted both the benevolence and a union.

The company eventually signed a labour agreement with the American Federation of Labor, while the Bakery and Confectionery Workers International Union won the right to represent the Hershey workers. These were the dying moments of paternalism in the labour force and the end of an unsustainable experiment in benevolent capitalism. The world was changing, and Hershey felt less and less a part of it. After the strike, he spent much of his time in Cuba, where he had a palatial home and
where, at least for the time being, men with money could still thrive and call the shots, a simple world with simple, undemanding people.

Milton Hershey was tired and dispirited in the war years. Cutthroat commodities traders dominated the market, and his own labour force—his children—had turned against him. Hershey's president, William Murrie, gradually took charge of the business.

For fifty years, Murrie had been the loyal man-in-the-shadows of the Hershey empire. Hershey was dreamy and preoccupied with his social engineering projects, while Murrie was a solid manager of day-to-day affairs. Murrie, like Hernán Cortés centuries before, saw the caloric value of chocolate and persuaded the authorities in Washington that it had strategic value for the war effort. Chocolate became part of the soldiers' survival kit, as it had once been for both Aztecs and conquistadors. During the 1940s, most of Hershey's production went to war department contracts, and a billion chocolate bars were packaged for the soldiers. The chocolate was for nutrition, but also for morale. What could better lift the warrior spirit on a distant battlefield than a familiar Hershey's Kiss? The sweet deal with the U.S. government allowed Hershey to thrive throughout the war years and to maintain a monopoly over American cocoa. The Hershey company had all the quotas while other chocolate-makers had to make deals with Hershey.

It was Murrie, not Milton, who was at the president's desk the day the Hershey head offices had a strange, uninvited visitor. For years, Hershey had provided the chocolate coating for Frank Mars's Milky Way bar, Three Musketeers and Snickers. But there was a new Mars in town—Frank's boy, Forrest Mars. He was back from Britain with an idea: a chocolate that would “melt in your mouth and not in your hand.” Forrest Mars showed up in Murrie's
office with small round candies in all the happy hues of the rainbow. They were filled with chocolate. He'd discussed the candy with the British Rowntree people, who called them Smarties. He, of course, would come up with a better name.

Forrest Mars wanted Hershey to produce the chocolate for this new line of candy in the United States but he needed Hershey's access to cocoa. And he wanted something else. Forrest Mars asked that William Murrie's son, Bruce, become his associate in the business. It was a great opportunity for the young business school student though Bruce Murrie would figure out only much later that Forrest Mars was using him as a conduit to his dad. By then Hershey had become Mars's principal supplier and Bruce was deeply involved with what most of the chocolate world came to know as the industry tyrant.

An abusive and self-centred man, Forrest Mars also happened to be a brilliant businessman. Claiming to have the U.S. licence to produce Smarties, he created M&Ms—the two M's representing Mars and Murrie. And Mars, Inc. would go on to make billions of dollars, eventually eclipsing the Hershey legacy.

Milton Snavely Hershey died in 1945. Typically, most of his shares in the company were left in trust for the operation of the Hershey orphanage. Thousands came to pay their last respects to an industry giant and a capitalist anomaly. Milton Hershey had become a sad, reclusive man in his eighties, a relic from another age, unprepared by nature for the cutthroat industry that Forrest Mars would thrive in.

Following the war years, chocolate companies became deeply secretive and highly competitive. An age of innovation and invention was overtaken by one of acquisition and merger. J.S. Fry & Sons was folded into Cadbury Brothers, which eventually merged with the soft drink empire Schweppes. The last
member of the Cadbury family to sit on its board of directors retired from the position in 2000.

The Rowntree family at first resisted merger. The patriarch of the empire, Joseph, once wrote a memorandum stating that his company was not a mechanism to generate money but a trust, given by God, to be in the service of others. Such ideas went out with garden cities, and by the 1930s there were no Rowntrees running the affair. Professional executives replaced the family. Rowntree merged with the toffee manufacturer McIntosh, then the whole lot was acquired in a “dawn raid” by Nestlé.