He Went Broke Twice Before Breakfast: The Spectacular Failures That Built the Hershey Empire

The town of Hershey, Pennsylvania smells like chocolate. Literally. The processing plants release a faint cocoa sweetness into the air that tourists notice the moment they roll down their windows on Route 422. There are streetlights shaped like Hershey's Kisses. The roads are named Chocolate Avenue and Cocoa Avenue. There is an amusement park, a luxury hotel, a medical center, and a school — all funded by an endowment so large it has outgrown every attempt to spend it down.

It is, by any measure, one of the more surreal places in America.

And it was built by a man who, by his mid-thirties, had failed so completely and so repeatedly that his own family had largely given up on him.

The Milton Hershey that gets commemorated in the Hershey Story Museum — the one with the warm portraits and the philanthropist's glow — is real enough. But it's the earlier Milton, the one with creditors at the door and flour on his hands and absolutely no idea what he was doing, who is far more interesting. Because that Milton is the one who actually built the instincts that made the later story possible.

The First Disaster: Philadelphia

Milton Snavely Hershey was born in 1857 in Derry Township, Pennsylvania — the same stretch of central Pennsylvania farmland where he would eventually build his empire, a geographic irony he apparently appreciated. His childhood was unsettled. His father, Henry Hershey, was a charming, restless dreamer who moved the family repeatedly in pursuit of schemes that never quite materialized. Milton watched his father fail, over and over, with a kind of helpless front-row seat that you might expect to produce either extreme caution or a compulsive need to swing for the fences.

It produced the latter.

At 18, with minimal formal education and an apprenticeship under a Lancaster, Pennsylvania confectioner as his primary credential, Milton Hershey moved to Philadelphia and opened a candy shop. He made taffy and caramels and worked himself to exhaustion. He also had no real business sense, no capital reserve, and an almost touching faith that quality product would be sufficient to overcome every structural disadvantage.

After six years, the Philadelphia shop collapsed under its own debt. Hershey was 24, broke, and back in Lancaster with nothing to show for half a decade of work except a thorough education in what not to do.

His family absorbed the loss with the weary resignation of people who had watched Henry Hershey do this sort of thing for years. The apple, they seemed to feel, had not fallen far.

The Second Disaster: New York City

A reasonable person might have pivoted. Hershey pivoted — directly into the same wall.

He moved to New York City, talked his way into a job with a local confectioner to rebuild his skills and his savings, and within a few years had enough momentum to open another shop, this time in Manhattan. He brought his mother and his aunt down to help. He hired staff. He had a real location in a real city with real foot traffic.

The New York operation lasted roughly as long as the Philadelphia one. The details of its collapse are somewhat murky — Hershey himself was not a man who dwelt extensively on his failures in later interviews — but the combination of undercapitalization, competition, and Hershey's stubborn insistence on making his product from scratch rather than cutting corners proved fatal. By the early 1880s, he was broke again.

He was in his mid-twenties. He had failed in two of America's largest cities. His father, who had joined him in New York with characteristic optimism, had been no help at all. His aunt returned to Pennsylvania. His mother, Fanny, who believed in her son with a ferocity that bordered on the irrational, stayed.

That loyalty may have been the single most important business decision in the history of American candy.

The Education Nobody Planned For

What the Philadelphia and New York failures actually gave Hershey was something no success could have provided: a granular, bone-deep understanding of where candy businesses broke down.

He knew how supply chains failed when you scaled too fast. He knew how retail locations could look promising and perform catastrophically. He knew the difference between a product people admired and a product people bought repeatedly. He knew, perhaps most importantly, that charm and quality were not business plans.

After New York, he spent time in Denver — where he worked for a caramel maker who taught him a crucial technique: using fresh milk in caramel production rather than the paraffin-based shortcuts common at the time. The resulting product was richer, softer, and dramatically better. Hershey filed this away with the intensity of a man who had paid for every lesson twice.

He tried again in Chicago. It didn't work. He tried in New Orleans. That didn't work either. By the time he finally returned to Lancaster, Pennsylvania, in the late 1880s, he had failed in four cities across roughly fifteen years and had accumulated, in lieu of money, an almost encyclopedic knowledge of the American candy business and its pressure points.

He was also, finally, about to get lucky — though "lucky" undersells the degree to which he had positioned himself to recognize and exploit the opportunity when it arrived.

The Caramel That Changed Everything

Back in Lancaster, Hershey started the Lancaster Caramel Company using the fresh-milk technique he'd learned in Denver. An English importer tasted the product at a trade show and placed a large order. The order provided the cash flow to scale. The scaling worked. Within a few years, Hershey's caramels were selling across the country, and the Lancaster Caramel Company was generating the kind of revenue that made the previous two decades feel like a fever dream.

But Hershey was not particularly interested in caramel.

At the 1893 World's Columbian Exposition in Chicago, he encountered German chocolate-making machinery and became, by every account, immediately and completely obsessed. He bought the equipment on the spot. He began experimenting with milk chocolate — at the time largely a Swiss and European luxury product — and applying the same fresh-milk instincts that had made his caramels exceptional.

In 1900, he sold the Lancaster Caramel Company for one million dollars — an almost unimaginable sum — and went all-in on chocolate.

The Town He Built for Everyone Else

What followed is the part of the story that gets told most often, and it's genuinely extraordinary: Hershey returned to Derry Township, built a chocolate factory in the middle of the Pennsylvania farmland, and then — because he needed workers and there was nothing nearby — built a town around it.

Not a company town in the grim, exploitative tradition of the era. A real town, with parks and a trolley system and good housing and a school and an amusement park, because Hershey believed, with the sincerity of a man who had spent fifteen years on the wrong end of economic precarity, that workers deserved to live somewhere decent.

When he and his wife Catherine found they could not have children, they founded the Hershey Industrial School in 1909 — later renamed Milton Hershey School — for orphaned boys, eventually placing the majority of his company stock into a trust to fund it permanently. Today that trust is worth over twelve billion dollars and educates thousands of low-income children annually.

The man who couldn't keep a candy shop open in Philadelphia built one of the most durable philanthropic institutions in American history.

What the Failures Actually Built

It would be too neat to say that Hershey's failures made him successful. The truth is more specific than that. Each collapse taught him something precise — about cash flow, about product quality, about the gap between what customers wanted and what he wanted to make them. The Denver caramel lesson alone, absorbed during what must have felt like just another humiliating detour, became the technical foundation of his entire fortune.

More than that, the years of failure gave Hershey something rarer than skill: proportion. He had seen the bottom. He knew what it felt like to lose everything and start again. When the money finally came, he didn't hoard it or perform it. He used it to build something that would outlast him — a town, a school, an institution — with the quiet urgency of a man who understood, more viscerally than most, that circumstances could reverse themselves at any time.

The chocolate bars are the famous part. But the real Hershey story is the fifteen years before them — the failed shops, the borrowed money, the family members who gave up, the cities that didn't work out. That's where the actual ingredients were assembled.

Everything else was just adding milk.