In 1941, Forrest Mars Sr., of the Mars candy company, struck a deal with Bruce Murrie, son of famed Hershey president William Murrie, to develop a hard shelled candy with chocolate at the center. Mars needed Hershey's chocolate because he anticipated there would be a chocolate shortage in the pending war, which turned out to be correct.
As such, the deal gave Murrie a 20% stake in the newly developed M&M; this stake was later bought out by Mars when chocolate rationing ended at the end of the war, in 1948.
The name thus stood for "Mars & Murrie" the co-creators of the candy.
http://bitsofwisdom.org/2010/05/26/what-the-ms-stand-for-in-mms/
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