Hasbro was founded in 1923 by Henry and Merrill HASsenfeld BROthers, who had emigrated to the United States from Poland. The company originally sold textile remnants. It soon moved into manufacturing pencils and other school supplies; the first toy manufactured by the company was Mr. Potato Head in the late 1940s.
During the late 1930s the Hassenfeld Brothers began to manufacture toys, an extension of the company's line of school supplies. Initial offerings included medical sets for junior nurses and doctors and modeling clay. During World War II Henry's younger son, Merrill Hassenfeld, acted on a customer's suggestion to make and market a junior air-raid warden kit, which came complete with flashlights and toy gas masks.
By 1942, as demand for school supplies tapered off, the company had become primarily a toy company, although it continued its large, profitable pencil business. Hilal Hassenfeld died in 1943, at which point Henry Hassenfeld became CEO and his son, Merrill Hassenfeld, became president. Also during World War II, the company ventured into plastics, to support its toy-making, and was forced, due to labor shortages, to reduce employment to 75.
After the war Merrill Hassenfeld began marketing a girls makeup kit after seeing his four-year-old daughter play with candy as though it were lipstick and rouge. In 1952, the company introduced its still-classic Mr. Potato Head, the first toy to be advertised on television. In 1954 Hassenfeld became a major licensee for Disney characters. By 1960, revenues hit $12 million, and Hassenfeld Brothers had become one of the largest private toy companies in the nation.