Milton S. began construction on what would become the center of his chocolate empire on March 2, 1903. Hershey had developed a superior formulation for milk chocolate with some of the proceeds from the sale of his Lancaster Caramel Company several years earlier and had selected his Pennsylvania hometown of Derry Church as the site of his milk chocolate plant because of its proximity to dairy farms. Hershey became the first chocolatier to market a mass-produced milk chocolate — a costly luxury in those days — when construction finished two years later.
The Hershey Company (NYSE:HSY) grew rapidly, as you already know. The Hershey’s Kiss came out in 1907, and by this point the company’s expansion was already transforming Derry Church into Hershey, Pa., a “company town” that’s grown to include a full-fledged amusement park and both indoor and outdoor sporting arenas. By 1927, Hershey decided to go public and was initially valued at $61.5 million, which translates to more than $800 million today.
The early death of Milton Hershey’s wife pushed him further into his philanthropy, and by 1918 he’d transferred most of his assets to the trust overseeing his private boarding school. Today, the Milton Hershey School has one of the richest endowments of any primary education institution in the country. At $7.8 billion in 2008, it can easily cover the $110,000 cost of each of 1,850 students’ educations per year for nearly four decades without having to worry about raising more funds. Not that it necessarily should be worried — a single share from Hershey’s IPO is now worth 360 shares, and that first-day holding has gained 7.5% per year for 86 years.
A strong day in a dark time
The Dow Jones Industrial Average made one of its strongest rebounds of the early Great Depression on March 2, 1932, rising 5.4% on news that Britain would be paying off most of the outstanding credit it had received from American banks half a year earlier. The Washington Post wrote of the bounce: “This evidence of reviving vigor in a nation whose financial troubles only last fall had caused widespread concern carried constructive implications. … [T]rades apparently hastened to express their approval in a practical way.” The Dow’s 20% gain since the start of 1932 was finally starting to give investors hope that the worst was behind them.
Unfortunately, there was farther to fall. The Dow ended up 52% lower than its March 2 close when it bottomed out that July, despite having already endured a 77% loss since the peak of the Roaring ’20s. The remainder of that slide was extraordinarily volatile — the Dow suffered through an average absolute daily change of 2.4% from March 2 to the July bottom. By comparison, the Crash of 1929 (from the peak to the end of the year) resulted in an average change of 2.6% per day.
