In the early 20th century, Milton S. Hershey faced a vulnerability common to industrial titans: a reliance on volatile global supply chains. As World War I disrupted Atlantic trade routes and the domestic "Sugar Trust" — the consortium of refiners that controlled much of the U.S. sugar processing market — tightened its grip on supply and pricing, Hershey confronted a strategic question that went beyond procurement. The answer he arrived at was not a new supplier contract but an entire industrial territory, built from scratch on Cuban soil.
Beginning in 1916, the Hershey Corporation acquired vast tracts of land in the province of Matanzas, east of Havana. Under the legal framework of the Platt Amendment — the 1901 provision that granted the United States broad rights of intervention in Cuban affairs and effectively made the island a sphere of American economic influence — Hershey established five sugar plantations, five modern mills, and a refinery. The scale was deliberate. Rather than depend on intermediaries, Hershey sought to control every link in the chain from raw cane to refined sugar, eliminating the pricing leverage that middlemen and monopolists had wielded against him.
Vertical Integration as Infrastructure
The centerpiece of the Cuban operation was not the sugar mill or the plantation but the electric railway system that connected them. The Hershey Electric Railway represented a conscious departure from the steam-powered narrow-gauge lines that were standard across Caribbean sugar operations at the time. Hershey built an oil-fired power plant to generate electricity, then used that power to run a rail network linking company towns, substations, mills, and port facilities.
The logic was circular by design. The power plant fed the railway; the railway moved the cane; the mills processed the cane into sugar; the sugar fed the Pennsylvania chocolate factories. Each component existed to serve the others, creating what amounted to a closed-loop industrial ecosystem on foreign soil. The railway also carried passengers and general freight, effectively providing a transit backbone that surpassed much of Cuba's existing public infrastructure in reliability and modernity.
This model of vertical integration was not unique to Hershey in principle — the United Fruit Company had pursued a similar strategy across Central America with its railroad and steamship networks — but the electrical dimension set it apart. Electrification gave Hershey's system a degree of operational efficiency and centralized control that steam-dependent competitors could not easily match. It also reflected a broader industrial trend of the era: the belief that private enterprise could and should build its own utilities when public infrastructure proved inadequate or politically compromised.
The Company Town, Exported
Hershey's Cuban venture mirrored the paternalistic company-town model he had already established in Pennsylvania. The town of Hershey, Cuba — later renamed Central Camilo Cienfuegos after the revolution — featured worker housing, schools, and recreational facilities, all built and managed by the corporation. The electric railway served as the connective tissue of this planned community, binding residential areas to industrial sites in a geography shaped entirely by corporate purpose.
The arrangement raises questions that remain relevant in contemporary discussions about corporate infrastructure in developing economies. When a private company builds the roads, generates the power, and runs the transit, it acquires a form of sovereignty that sits uneasily alongside the nominal authority of the host state. The Platt Amendment made this tension explicit in Cuba's case, but the underlying dynamic — foreign capital constructing parallel systems of governance through infrastructure — has recurred in contexts from mining concessions in sub-Saharan Africa to special economic zones in Southeast Asia.
Hershey sold his Cuban holdings in 1946, a little over a decade before the revolution that would nationalize the island's sugar industry entirely. The railway, however, survived. It continued to operate under Cuban state management for decades, a durable artifact of an industrial logic that prioritized total control over supply chains above all else. Whether that logic is read as visionary efficiency or as an expression of economic imperialism depends largely on where one stands — and which end of the railway one is looking from.
With reporting from IEEE Spectrum.
Source · IEEE Spectrum
