Old photo of Hathorne School

I have found my cousin's photocopy of an old newspaper photo of the Hathorne School. He thinks this appeared in the Salem News in 1937 or 1938.

The caption on the photo is intriguing:

"SCENE OF THE CONTROVERSY The Hathorne School, on Newburyport Turnpike. Considered a Menace to Children Attending It."

Does anyone know the story?

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