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After completing an apprenticeship to a confectioner in 1876, Milton Snavely Hershey founded a candy shop in Philadelphia, which failed six years later. After trying unsuccessfully to manufacture candy in New York, Hershey returned to Pennsylvania, where he founded the Lancaster Caramel Company, whose use of fresh milk in caramels proved successful.In 1900, Hershey sold his caramel company for $1,000,000 and began to concentrate on chocolate manufacturing.

In 1903, Hershey began construction of a chocolate plant in his hometown, Derry Church, Pennsylvania, which later came to be known as Hershey, Pennsylvania. The milk chocolate bars manufactured at this plant proved successful, and the company grew rapidly thereafter.