The strange legacy of Henry Wallace.

The strange legacy of Henry Wallace.

The strange legacy of Henry Wallace.

Moneybox
Commentary about business and finance.
Jan. 8 2004 11:42 AM

Seed Money

Henry Wallace's company and how it grew.

Illustration by Mark Alan Stamaty

Monsanto and Pioneer Hi-Bred, the two largest seed companies in the world, are busily denying reports that they conspired in the 1990s to fix prices on genetically engineered corn and soybean seeds. The allegations sound straight out of the darkest fantasies of populist left-wingers like William Jennings Bryan—or Ralph Nader. Two giant companies—Pioneer Hi-Bred is a unit of Dow component DuPont—stand accused of plotting to squeeze profits out of unsuspecting farmers in the heartland by fixing the price of the genetically mutated seeds they need in order to survive.

But history throws some mean curveballs. If the charges against Pioneer Hi-Bred turn out to be true and if collusion boosted the company's profits, the largest single beneficiaries may have been the descendants of one of the most lionized left-wing politicians of the 20th century. What's more, by engaging in serious intervention in the agricultural markets, the company would be holding true to the socialist legacy of its founder.

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If you thought the most successful commercial enterprise founded by a former New Republic editor was Slateor Andrewsullivan.com, think again. Henry Wallace—farmers' advocate, agriculture secretary and vice president to Franklin Delano Roosevelt, New Republic editor, and Progressive candidate for president in 1948—founded the Hi-Bred Corn Co. in 1926. In fact, he was perhaps the greatest socialist capitalist of the 20th century.

Wallace had a remarkable career. (Here's a good online biography of Wallace, and here's a good dead-tree biography.) Born in Iowa, he edited the magazine founded by his family, Wallaces' Farmer, and started the company that became among the first to genetically engineer hybrid corn strains to produce greater-yielding crops. As FDR's agriculture secretary, he developed the Agricultural Adjustment Administration, which installed a system of price supports. In 1940, Wallace was elevated to vice president, but in 1944 was bumped in favor of Harry S. Truman and became secretary of commerce.

In 1946, Wallace broke with Truman and the Democratic Party when he attacked Truman's hard-line anti-Communist posture in a famous Madison Square Garden speech. He edited the New Republicbriefly, and in 1948 ran for president on the Progressive ticket. Against the Cold War, in favor of nuclear disarmament, and willing to accept the support of Communists, Wallace was a sideshow in the turbulent 1948 campaign. He won about a million votes, but his stances earned him the enmity of former allies like Truman—"A vote for Wallace is a vote for all the things for which Stalin and Molotov stand"—and of thinking leftists. The sainted socialist intellectual Irving Howe referred to Wallace as a "completely contrived creature of Stalin."

Defeated and discredited, Wallace left politics in the 1950s and focused on his business. His company, which changed its name to Pioneer Hi-Bred, continued to grow and thrive after Wallace's death in 1965. It provided the basis not just for a family fortune but for a legacy of philanthropy and advocacy. In 1959, Wallace gave shares of Pioneer to start the Wallace Genetic Foundation, which supports agricultural research. Today it counts assets of about $80 million and is run by his daughter, Jean Wallace Douglas. His son, Robert B. Wallace, who died in 2002, founded the Wallace Global Fund, which supports sustainable development and now has assets of about $110 million. Grandson H. Scott Wallace, who sat on Pioneer's board throughout the 1990s, was a longtime executive at the National Legal Aid and Defender Association.

In 1997, DuPont acquired a 20 percent stake in Pioneer Hi-Bred. And in 1999, it moved to acquire the remaining 80 percent for $40 a share. At the time, Jean Wallace Douglas controlled an 8.1 percent stake valued at $770 million, while Robert B. Wallace controlled a 6 percent stake worth $573 million.

Henry Wallace has long been a polarizing, even contradictory figure. And it seems that history has neatly compartmentalized his business and political activities. Today, Wallace's business career is conveniently left out of the version of his biography posted on left-leaning sites, like this one, just as his now-embarrassing politics are left out of the brief biography that DuPont has on its Web site. A man who went down in political history marked as a Communist dupe was a hard-nosed and brilliant businessman. And if it turns out that a little meddling in the market helped his successors continue to keep the company thriving, perhaps you could say Wallace's socialist lineage lives on.