I found a copy of Dr. Spock (1969 edition) on the shelf in my parents' basement. In it, he gives the "formula" for making bottles using milk, sugar, and water. Evaporated milk like Carnation is suggested because it is cheaper. You had to mix the ingredients together in a certain proportion and boil for 20 minutes. That made enough formula for the next 24 hours or so. Then you had to do it again. (Why THIS was easier than breastfeeding is beyond me!)
So when people say they were fed on Carnation, that is probably what they mean. It wasn't until the late 1960s that commercial formulas appeared on the market; Dr. Spock mentions them in the book as being an expensive new development. Therefore, I guess it was the 1970s before they took off. Before that all formula-fed babies were fed on the boiled-Carnation style formula. I don't know how far back that goes; I know my grandmother saved the tag from my mother's hospital bassinet in her baby book and it had a Carnation ad on the back.
And that was 1950. I'm guessing that the milk/sugar/water formula started in the days of even worse milk substitutes, like straight cows' milk or rice water.
Anyway, I found the Dr. Spock book fascinating. It was the first time it occurred to me that the word "formula" used to refer to a formula for a bottle that parents had to mix themselves.
Health effects? I would guess that some of the early studies about breastfed vs. formula fed infants were done during this time period, with similar results to later studies. That's just a guess, though. I don't have any knowledge about the history of formula vs. breastfeeding studies. And keep in mind that we have been fortunate in the last half-century to have a sum total of health advances which have meant that *most* babies survive and thrive no matter how they were fed. So, sure, many people are perfectly healthy although they were fed with Carnation. And many of us survived the 70s even though we rode without car seats. Et cetera. One particular person's experience doesn't prove anything scientifically; it's only in the aggregate that we can see the trends of what's healthier.