The Monte Carlo is a variation of both the classic Manhattan and the Old Fashioned.
Max Seaman is the general manager of The Varnish in Los Angeles describes the history of the Monte Carlo this way:
"There is no cocktail more classic than an Old Fashioned. In fact, when it was created, it was known simply as a ‘cocktail’ — liquor, sugar and bitters, maybe with some ice and a twist if you were wealthy. As the drink became popular it spawned many variations. So, if you walked into a bar in the 19th century and wanted simply liquor, sugar and bitters, you would order an ‘old fashioned cocktail.’
After the repeal of Prohibition, there was a rush to publish and archive the recipes for many of the golden-age drinks. The recipe for a Monte Carlo was published in The Fine Art of Mixing Drinks by David Embury in 1948, but the recipe may be older. It is a very simple variation on a rye Old Fashioned with Benedictine liqueur used to sweeten the drink in place of sugar. Benedictine is an amazing herbal liqueur said to have been created by Norman monks; it adds layers of herb and spice to the woody nature of the rye whiskey.”