E.I. du Pont de Nemours & Company was incorporated in Delaware on October 23, 1899, as the successor to a traditional family partnership first established in Paris on April 21, 1801, that went on to become a leader in the U.S. gunpowder industry. The business underwent two reincorporations and major restructurings, the first on February 26, 1902, and the second on September 4, 1915. The first transformed a family company into a more modern departmentalized firm with significant outside stock holdings, a change that allowed it to dominate the U.S. explosives industry, replacing a cartel of small and medium-sized firms with a large, centrally-administered one. The second, a breakup of the first company under Progressive Era antitrust action against its monopoly position in explosives, had the paradoxical effect of permitting it to evolve further into a multi-divisional and later multinational manufacturer of a wide array of chemicals and chemical products. It remains one of the major players in the international chemical industry.

The first incorporation of 1899 was the work of Eugene du Pont, considered the senior member of both the firm and family. It differed little from the change from partnership to corporation undertaken by many old family firms in response to the great merger movement of the late 1890s. The seven partners received stock for their fractional interests and became stockholders rather than partners, but there was no investment by outsiders. The five senior shareholders, Eugene du Pont, Alexis I. du Pont, Francis G. du Pont (Frank) and Colonel Henry A. du Pont each held 20% of the company, while junior partners, Charles I. du Pont and Alfred I. du Pont each received 10%.

With the death of company president, Eugene du Pont on January 28, 1902, the Du Pont Company was thrown into a time of great uncertainty. At their meeting following Eugene’s funeral, none of the partners would agree to take the reins of the company (Alfred was absent from these meetings). A few were too old or too far removed to take over, and Colonel Henry A. du Pont was far more concerned with his political career. This left the young powder man, Alfred. Unfortunately, none of the other partners wished to have him at the helm of the company.

It was then decided that the company would be sold to longtime rival and competitor, the Laflin & Rand Powder Company. J. Armory Haskell, formerly the head of the Repauno Chemical Company, the explosive firm begun by Pierre S. du Pont’s father Lammot du Pont, was president of Laflin & Rand. Plans were also made at this time to turn the leadership of Du Pont over to Hamilton M. Barksdale, another successful Repauno man. Barksdale would be taxed with arranging the sale, and if a price was not agreed upon, he would then manage the company. What was not predicted by the partners at Du Pont was Barksdale’s demand that a du Pont head the firm as a condition of the sale.

The stockholders met once more and finally agreed to sell for $12 million, formally appointing Barksdale as the agent to facilitate the sale of the company to Laflin & Rand. Other options discussed were T. Coleman du Pont, a member of the Louisville branch of the family and successful in his own right in the electric streetcar railway business, coming to the company; however it was widely known that Frank du Pont would not approve. One more meeting would need to be held the next day with Alfred in attendance before all could be finalized.

The following day, Alfred arrived from the powder yards in his work clothes and listened to Frank’s proposal for selling. Alfred then proposed a motion to sell to the highest bidder, not just Laflin & Rand. The meeting concluded and it seemed settled that the company would leave family hands for the first time in a century. As the shareholders were leaving, Alfred spoke up with a plan that he would buy the company. Much discussion ensued with Frank du Pont being the most vocal dissenter, insisting Alfred could not have the company. Finally, Colonel Henry A. du Pont spoke up and gave his blessing, feeling it was his right to be able to buy Du Pont. Alfred then met with his cousin T. Coleman to discuss his plan to buy the company with Coleman’s help. Coleman agreed to go along with the proposal on two conditions. First, he would be the majority stockholder and the firm would be reorganized and, second, that his cousin Pierre S. du Pont be brought on board as the financial expert. The plan the cousins devised was to purchase the company for $12 million in bonds and issue stock which would increase in value as the company was reorganized and grew. They would issue 4% thirty year bonds to the partners in the old company, and new capital stock of $20 million to themselves for later profit. This plan was taken to the partners and approved. However, T. Coleman became concerned that the nature of the bonds as a first lien on the property included in the sale would handicap any future attempt to raise money by junior bonds. A second plan was then drawn up to replace the first lien bonds with notes that would guarantee the old stockholders 4% annual interest. In return for surrendering the first lien, they would also receive 25% of the new company’s stock. The deal was closed on February 10, 1902, and finalized on March 1, 1902. The old company would sell its entire assets at a value of $24 million, $12 million in the 4% notes, and $12 million in stock, of which Coleman received 36%, Alfred and Pierre 18% each, and the remaining 24% divided among the stockholders of the old company, including the estate of Eugene du Pont. The three cousins were now in control of the family business and free to reorganize. First, the cousins incorporated the E.I. du Pont de Nemours Company in Delaware on February 26, 1902. On March 1, it acquired all the assets of the old 1899-1902 corporation. T. Coleman du Pont became president of the new company, Alfred I. du Pont vice president and general manager, and finally Pierre S. du Pont as treasurer. With these transactions completed, the E.I. du Pont de Nemours Company took the name of the old company, E.I. du Pont de Nemours & Company. The cousins then bought control of the Laflin & Rand Powder Company on October 8, 1902, putting them in the position of being able to control the entire domestic explosives industry. However, at this stage, E.I. du Pont de Nemours & Company was primarily a holding company, with a large number of previously independent operating companies tied together only by stock ownership and trade agreements.

The Executive Committee of E. I. du Pont de Nemours & Company was formed on February 4, 1903 as part of the reorganization and modernization of the company undertaken by its new officers. It was initially composed of the president and department heads. The committee became the principal body for coordinating the work of the various departments of the rapidly growing company, establishing company organizational structure and policy, approving capital expenditures and contracts, and fixing salary levels, bonuses, and other compensation. The Executive Committee would later become responsible for a bonus system as early as 1908, when the company began to give bonuses of stock to researchers for outstanding contributions to the company. Later in 1911, the Committee adopted a two-class bonus system to reward exemplary work. The “A” Bonus Awards were presented for inventive and conspicuous service while the “B” Bonus Awards were given for outstanding service to the company.

Formation of the new E.I. du Pont de Nemours & Company was merely the first step in the cousins’ plan to reorganize and integrate the entire explosives industry, replacing the many small operating companies with their interlocking stock holdings and sales agreements with a single organization directing operations, sales and research. They incorporated the E.I. du Pont de Nemours Powder Company under the laws of New Jersey on May 19, 1903, and transferred to it most of the individual explosives company stocks owned by E.I. du Pont de Nemours & Company on August 1, 1903, and received the stock of the Powder Company in return.

For reasons not entirely clear, a second intermediate company, the E.I. du Pont de Nemours Company, was incorporated in Delaware on May 18, 1903, and on August 19, 1903, it too acquired some of the explosive companies’ stocks from E.I. du Pont de Nemours & Company in return for its own shares. On December 26, 1906, it changed its name to the E.I. du Pont de Nemours Powder Company (Del.), and on July 3, 1907 sold all of its assets to the New Jersey Company of the same name. Both companies had continued to purchase the stocks of explosives companies not previously associated with the du Ponts, often involving an exchange of its own shares. Gradually, these companies sold their assets or merged into the E.I. du Pont de Nemours Powder Company (N.J.), so that by the end of the process, the Powder Company emerged as a single operating entity organized into functional departments, with E.I. du Pont de Nemours & Company as the controlling holding company. In 1911, the Powder Company’s three Operating Departments, Black Powder, High Explosives, and Smokeless Powder, were placed under a single general manager, completing the separation of operations from policy-making.

By 1907, Du Pont had assumed a structure rather similar to that of other industrial combinations such as United States Steel Corporation, with an overarching holding company and a primary operating subsidiary and some lesser ones. The primary difference was that most of the great industrial mergers had been orchestrated by leading investment banks such as J.P. Morgan & Company or syndicates of financiers, while Du Pont was self-financed and remained under the control of family members and a small circle of expert advisers and administrators without banker representation in its highest circles.

In the Progressive Era, such concentration did not go unnoticed, and in 1907, the Justice Department filed suit claiming that E. I. du Pont de Nemours & Company was in violation of the Sherman Antitrust Act. The federal courts handed down a final decree of dissolution on June 13, 1912, similar to contemporary ones that broke up the Standard Oil Companies and the American Tobacco Company. Under this decree, the holding company E.I. du Pont de Nemours & Company (the 1902-1912 firm) was dissolved on November 14, 1912. The E.I. du Pont de Nemours Powder Company was forced to divest certain of its properties to two new independent companies, the Hercules Powder Company and the Atlas Powder Company, to restore three-firm competition in the explosives industry. The Executive Committee was reconstituted on September 19, 1914, with Pierre’s brother Irénée du Pont, Sr., as Chairman, and later that year, T. Coleman du Pont announced his intention to sell his shares, which were eventually purchased by Pierre and other close family members through an investment company that later became the Christiana Securities Company.

As a result of these changes, the present E.I. du Pont de Nemours & Company was incorporated in Delaware on September 4, 1915. It then purchased all the assets of the E.I. du Pont de Nemours Powder Company, becoming the sole parent company. The Powder Company continued to exist as a corporate shell until 1926. After this reorganization Pierre Samuel du Pont was named president and chief executive officer. Alfred I. du Pont was ousted from the company in a family dispute in 1916, leaving Pierre and his allies in complete control of the management. During the First World War the Du Pont Company became the largest supplier of munitions for the Allies.

The forced divestiture of much of its explosives business actually left the reorganized Du Pont Company free to expand into other product lines, both by purchasing existing companies and patent rights and by internal research and innovation. The first and most logical path was to exploit the company’s long experience with cellulose chemistry in the manufacture of smokeless powder into early cellulose-based plastics and varnishes. Du Pont’s first foray outside the explosives business was the December 1915 purchase of the Arlington Company, a maker of pyroxylin plastics and lacquers. In the 1920s the company used its wartime profits to diversify, as it established its presence in the dyestuffs, paints, plastics, cellophane and synthetic textile fibers markets. During this period the Du Pont Company invested its surplus capital in General Motors and by the mid 1920s it had obtained a controlling interest. In 1922 the company established a Fundamental Research Program as it set up laboratories devoted to physical, polymer, and organic chemistry. In 1937 the polymer chemistry laboratory, under the leadership of Dr. Wallace Carothers, developed nylon.

Rapid expansion across multiple product lines pushed Du Pont into pioneering what is known as the decentralized, multidivisional or M-form of corporate management beginning about 1919. Each division came to act as a semi-independent firm or profit center, with the central headquarters mostly responsible for planning, fact-gathering and resource allocation. Through Du Pont money and influence, the same arrangements were also implemented and refined at General Motors, bringing both firms leadership in their respective industries for another half-century.