Monsanto Company

800 N. Lindbergh Blvd.
St. Louis, Missouri 63167
U.S.A.
(314) 694-1000

Public Company
Incorporated: April 19, 1933 as Monsanto Chemical Company
Employees: 56,100
Sales: $6.879 billion
Market value: $6.077 billion
Stock Index: New York Zurich Geneva Brussels Amsterdam Frankfurt London Paris

Weight-conscious Americans at the turn of the century may have not known it, but after 1901 America was finally producing saccharin, the low-calorie sweetener. John Francisco Queeny, a purchaser for a wholesale drug house, was unable to persuade his firm to produce saccharin rather than import it from Germany. As a result, with $5000 Queeny began his own company in St. Louis, Missouri and called it the Monsanto Chemical Works after his wife’s family name. Eighty-four years later, the company returned to its roots with the purchase of G.D. Searle, a pharmaceutical company known for its extremely successful low-calorie sweetener Nutra-Sweet. Along the way, Monsanto grew from a one-product company to one of the United States’ largest corporations and one of its most important agrichemical concerns.

By 1905 John Queeny’s company, now producing caffeine and vanillin as well as saccharin, was beginning to turn a profit. In 1908 Queeny felt confident enough about his firm’s future to leave his part-time job with another drug house, and become Monsanto’s full-time president. The company continued to grow, with sales surpassing the million dollar mark for the first time in 1915.

Until the start of World War I, America relied heavily on foreign supplies of chemicals. However, with the U.S. entry into the war becoming more of a possibility with each passing year, it was clear that the country would soon need its own domestic producer of chemicals. Looking back on the significance of the war for Monsanto, Queeny’s son Edgar remarked, “There was no choice other than to improvise, to invent and to find new ways of doing all the old things. The old dependence on Europe was, almost overnight, a thing of the past.” In fact, Monsanto was forced to rely on its own knowledge and nascent technical ability. Monsanto researchers discovered that pages of technical descriptions of German chemical processes had actually been ripped out of library books. Yet Monsanto produced a number of strategic products, including phenol, used as an antiseptic, and acetylsalicyclic acid, or aspirin. Even today, Monsanto is the world’s largest producer of bulk aspirin, with plants in St. Louis, Thailand and the United Kingdom.

With the purchase of an Illinois acid company in 1918, Monsanto began to widen the scope of its factory operations. A postwar depression during the early 1920’s depressed profits, but by the time John Queeny turned over the company to Edgar the financial situation was much brighter. Monsanto had gone public, a move that paved the way for future expansion. At this time, the company had 55 shareholders, 1000 employees and owned a small company in Britain. It was under Edgar’s direction, however, that Monsanto began to substantially expand and enter into an era of prolonged growth.

At preparatory school, and later in the chemical department at Cornell University, Edgar had been an indifferent student. Because of this, according to Monsanto company historian Dan Forrestal, Edgar’s father was quite concerned about his ability to lead the firm. However, from 1928, when John Queeny stepped down after learning he had an incurable form of cancer, to 1962, Edgar directed Monsanto with a large degree of success.

Monsanto, now the Monsanto Chemical Company, began to expand rapidly during the 1930’s under Edgar’s supervision. Acquisitions expanded Monsanto’s product line to include the then new field of plastics, and to include the manufacture of phosphorus. Queeny also made significant changes in the shareholder’s reports, making them more understandable and informative. Although Queeny strongly opposed Roosevelt’s New Deal policies, he nonetheless felt it necessary to point out, in one of these reports, that the 40 hour employee work week had been a Monsanto policy since 1932.

By the time the United States entered the war in 1941, the domestic chemical industry had attained far greater independence from Europe. Monsanto, strengthened by a number of acquisitions, was also prepared and able to produce such strategic materials as phosphates and inorganic chemicals. Most importantly, however, was the company’s acquisition of a research and development laboratory called Thomas and Hochwalt. The well-known Dayton, Ohio firm strengthened Monsanto at the time, but also provided the basis for some of its future achievements in chemical technology. One of its most important discoveries was styrene monomer, a key ingredient in synthetic rubber and a crucial product for the armed forces during World War II. Another important development occurred in 1949, when Monsanto entered the synthetic fiber era. Problem after problem plagued the joint venture with American Viscose, but a later agreement with Du Pont made it into a successful operation.

Generally considered a low profile company in the public eye, Monsanto’s early attempts to directly market consumer goods were beset with difficulties. However, attempts to refine a low-quality detergent led to important developments in grass fertilizer. The postwar housing increase had created a strong market of homeowners eager to have perfect lawns.

Monsanto undertook two substantial ventures in the mid-1950’s, and a major reorganization in 1954. One of these ventures involved urethane foam which was flexible and easy to use; it later became crucial in making automobile interiors. With the acquisition of Lion Oil in 1955, the second of the company’s ventures, Monsanto assets increased more than 50%. Stockholders during this time numbered 43,000.

Having finally outgrown its downtown headquarters, Monsanto moved to the suburban community of Creve Coeur in 1957. And, in 1960, Edgar Queeny turned over the chairmanship of Monsanto to Charles Thomas, one of the founders of the research and development laboratory so important to Monsanto. Charlie Sommer, who joined the company in 1929, became president. Under their combined leadership Monsanto saw a number of important developments, including the establishment of the Agricultural Chemicals division, created in order to consolidate Monsanto’s diverse agrichemical product lines. European expansion occurred as well, with Brussels becoming the permanent overseas headquarters in 1962.

In 1964 Monsanto changed its name to Monsanto Company, a long overdue acknowledgement of the current diversity of the company’s product line. Monsanto now consisted of eight divisions, ranging from petroleum and fibers to building materials and packaging.

According to Monsanto historian Dan Forrestal, “Leadership during the 1960’s and early 1970’s came principally from... executives whose Monsanto roots ran deep.” In 1964 Edward O’Neal became chairman. O’Neal came to Monsanto in 1935 with the Swann Corporation acquisition. He was the first chairman in company history who had not first held the post of president. Another company leader was Edward J. Bock, who had started working at Monsanto in 1941 as an engineer. He rose through the ranks to become a member of the board of directors in 1965, and president in 1968. Bock was the first president to rule “Queenyless” when Edgar Queeny, who left no heirs, died in 1968.

Although Bock had a reputation for being a committed company executive, a number of factors contributed to his volatile term as president. High overhead costs and a sluggish national economy led to a dramatic 29% decrease in earnings in 1969. Sales were up the following year, but Bock’s implementation of the 1971 reorganization caused a significant amount of friction among members of the board and senior management. In spite of the fact that this move was widely praised by security analysts, in which Monsanto separated the management of raw materials from the company’s subsidiaries, Bock resigned from the presidency in February of 1972.

The acceptance of Bock’s resignation led to another major problem for Monsanto. Since there was no immediate replacement for Bock, indications of a lack of management developed in Monsanto. This feeling ended in 1972 when, after a nine month search, John W. Hanley, a former executive with Procter and Gamble, was chosen as president. Hanley also took over as chairman in 1975.

Under Hanley, Monsanto more than doubled its sales and earnings between 1972 and 1983. Toward the end of his tenure, Hanley put into effect a promise he had made to himself and to Monsanto when he accepted the position of president, namely, that his successor would be chosen from Monsanto’s ranks. Hanley and his staff chose approximately 20 young executives as potential company leaders and began preparing them for the head position at Monsanto. Among them was Richard J. Mahoney. When Hanley joined Monsanto, Mahoney was a young sales director in agricultural products. In 1983 Hanley turned the leadership of the company over to Mahoney. Wall Street immediately approved this decision with an increase in Monsanto’s share prices. Mahoney is currently listed as Monsanto’s chief executive officer.

Public concern over the environment began to escalate during the 1960’s. Ralph Nader’s activities and Rachel Carson’s book Silent Spring were two important influences in increasing the U.S. public’s awareness of activities within the chemical industry. Monsanto responded in a number of ways to the pressure. In 1964 the company introduced biodegradeable detergents and later, in 1976, Monsanto announced plans to phase out production of polychlorinated biphenyl (PCB).

Although Monsanto did make an effort to respond to public concerns about pollution, the past came back to haunt the company in 1979 when a suit was filed against Monsanto and other manufacturers of Agent Orange, a defoliant used during the Vietnam War. Agent Orange contained a highly toxic chemical known as dioxin, and the suit claimed that hundreds of veterans had suffered permanent damage because of the chemical. In 1984 Monsanto and seven other manufacturers agreed to a $180 million settlement, immediately prior to the beginning of the trial. With the announcement of a settlement Monsanto’s share price, depressed because of the uncertainty over the outcome of the trial, rose substantially.

Also in 1984, Monsanto lost a $10 million antitrust suit to Spray-Rite, a former distributor of Monsanto agricultural herbicides. The U.S. Supreme Court upheld the suit and award, finding that Monsanto had acted to fix retail prices with other herbicide manufacturers.

In August of 1985, Monsanto purchased G.D. Searle, the “Nutra-Sweet” firm. Nutra-Sweet had generated $700 million in sales that year. Monsanto needed what Searle had to offer, namely, a marketing and a sales staff, and a real profit potential. Since the late 1970’s the company had sold nearly 60 low margin businesses and, with two important agriculture product patents expiring in 1988, a major new cash source was more than welcome. What Monsanto didn’t count on, however, was Searle’s Intrauterine Device called the Copper 7.

Soon after the acquisition, disclosures about hundreds of law suits over Searle’s IUD surfaced and turned Monsanto’s takeover into a public relations disaster. The disclosures, which inevitably led to comparisons with those about A.H. Robins, the Dalkan Shield manufacturer that eventually declared Chapter 11 bankruptcy, raised questions as to how carefully Monsanto management had considered the acquisition. In early 1986 Searle discontinued IUD sales in the United States, but the matter remains far from resolved.

In the next decade Monsanto will face continued challenges from a variety of sources, including government and public concern over harzardous wastes, fuel and feedstock costs, and import competition. At the end of the 99th Congress, President Reagan signed a $8.5 billion, five-year cleanup Superfund reauthorization act. Built into the financing is a surcharge on the chemical industry created through the new tax reform bill. Biotechnology regulations are only just now being formulated and Monsanto, which already has types of genetically engineered bacteria ready for testing, can be expected to be an active participant in that field.

In keeping with its strategy to become a leader in the health field, Monsanto and the Washington University Medical School entered intc a five year research contract in 1984. Monsanto provided the school with $23.5 million for research focusing on proteins and peptides. Two-thirds of the research is to be directed into areas with obviously commercial applications; one-third of the research is to be devoted to theoretical work. One particularly promising discovery involves the application of the bovine growth factor, a way to greatly increase milk production.

In the burgeoning low-calorie sweetener market, challengers to Nutra-Sweet are putting pressure on Monsanto. Pfizer Inc., a pharmaceutical company, is hoping to soon market its product, called alitame, which it claims is far sweeter than Nutra-Sweet and suitable for baking.

In an interview with Business Week, senior vicepresident for research and development Howard Schneiderman said, “To maintain our markets—and not become another steel industry—we must spend on research and development.” Monsanto, which has committed 8% of its operating budget to research and development, far above the industry average, may emerge in the 1990’s as one of the leaders in the fields of biotechnology and pharmaceuticals that are only now emerging from their nascent stage.

Principal Subsidiaries

Bolgen NV Collagen Corp.; Fisher Controls International, Inc, Monsanto PLC; Monsanto Canada Inc.; Monsanto Electronic Materials Co.; Monsanto Enviro-Chem Systems Inc.; Monsanto Europe S.A.; Monsanto International Sales Co., Inc.; Monsanto Oil Co.; Monsanto (Suisse) S.A.; Nutra Sweet Co.; Polyamide Intermediaries Ltd. (50%); RDI Inc.; G.D. Searle & Co.

Further Reading

Faith, Hope, and $5,000: The Story of Monsanto: The Trials and Triumphs of the First 75 Years by Dan J. Forrestal, New York, Simon and Schuster, 1977.