Tractor Wars

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Debra Reid: So, it really is a ground swell of interest in especially rural and agricultural America. They're ready for a tractor that is going to be lightweight and relatively dependable.

Neil Dahlstrom: And it's not until about 1913, 1914 with the introduction of the Bull tractor, the gorgeous nightmare period, as one editor called it, where there was a small tractor built for the average sized farm, that changes everything.

Christian Overland: And so, even though the tractor was a loss leader for Henry Ford, it was a value proposition that he felt the world needed to go into and he wasn't thinking about that amount of time as loss, he was thinking about that amount of time as investment.

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During the first two decades of the 20th century, a war took place among agricultural implement companies to build a tractor that would replace horses, increase productivity and grow profits. Over a 20-year span, hundreds of companies would enter the tractor market. But three companies would emerge as market leaders. Farming was moving into the power age.

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Funding for Tractor Wars was provided by Friends, the Iowa PBS Foundation, as well as generations of families and friends who feel passionate about the programs they watch on Iowa PBS.

 

From the beginning of domesticated agriculture in the Middle East 9,000 years ago, farm labor was done using the muscles of humans and animals, turning the soil to prepare for planting, eliminating weeds and bringing in the harvest.

Neil Dahlstrom: Basically, you're using horsepower, you're using oxen, you're using mule, but it's a single person, day-in, day-out drudgery, sun-up to sundown. It's just hard, backbreaking work.

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In 1837, innovation came in the form of John Deere's self-scouring plow. The new tool could slash the time needed to prepare an acre from 96 hours to as few as five. The work, however, remained the same, a combination of manual and animal labor. At the time, America was rural, the economy agrarian. As late as 1870, more than half the population called themselves farmers. Those farmers used almost five million horses and mules in every kind of job that required power. The herd swelled to over 25 million in 1920 as the prairie of the Midwest was converted into farmland. As Native Americans who had lived in the Midwest for thousands of years were displaced by Europeans moving West, the steel plow broke the prairie and crops emerged.

Christian Overland: The issue was how do you actually make it more effective growing more yield with less labor? That has always been the component, still is. And quality, quality of product. You get innovators, Yankee ingenuity, resourcefulness, the idea that you can actually make things better by actually inventing and trying things out. So, you have people like John Deere who basically was a blacksmith dealing with a problem that farmers were dealing with and that is plowing.

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But horsepower had its limits. Horses were capable of heavy work for only a few hours of the day and required food and water, whether they were being worked or not. A productive tool for much of the year, they were mostly idle in the winter. Farmer productivity soared with the steel plow. Faster plowing increased demand for other horse drawn farm implements. Discs and harrows helped smooth fields after being plowed. Seeders and planters were faster and more effective than spreading seed by hand. Horse drawn cultivators helped eliminate weeds. Many inventors over the centuries had tried to mechanize harvest. But none solved the engineering puzzle until Cyrus McCormick in 1831. A blacksmith by trade, McCormick's reaper used the drive wheel to successfully transfer animal energy into mechanical movement that replaced hand labor. The simple act of cutting grain with a horizontal bar increased productivity exponentially. Later versions of the reaper would gather the grain into piles, then bind them into shocks. Work that had required a half dozen people could now be done by a single farmer and a pair of horses. Separating the grain from the stems still remained a manual labor challenge.

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McCormick's invention of the reaper created demand for belt power to run threshing machines to produce the mechanically harvested grain. By 1847, McCormick had found enough sales momentum to move the company to Chicago. Steel plows, mowers, shellers and other machines were soon added to the McCormick catalog. McCormick Harvesting Machine Company rapidly grew into a manufacturing behemoth.

Neil Dahlstrom: At the turn of the 20th century, you're coming out of the Gilded Age, it's an era of trusts and big business and the idea is we're going to build everything, we're going to build more of it, it's more profitable for the company, in theory it's a one-stop shop for the customer. And if you're building farm implements, the idea is simple -- we want you go to our dealership and buy everything from us and if you need repairs, you're going to come to us, if you need replacement parts, you're going to come to us. And so, that is the really simple philosophy behind a full line. International Harvester is really the first company to do it and they can do it because they've got 85% market share in the harvesting business, which is by far the most profitable business if you're in the farm equipment business. And then everyone else is racing to catch up and survive.

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Cyrus McCormick died in 1884 having witnessed the mechanization of agriculture and earning vast wealth. His sons Cyrus Jr. and Harold would take control of the growing company. A merger would expand the company's footprint.

Neil Dahlstrom: In the early 20th century, after the formation of International Harvester in 1902, they're the fourth or fifth largest company in the United States. So, you're talking U.S. Steel, American Tobacco, International Harvester, farm equipment manufacturer. They're a hundred million dollar a year business. John Deere is a three million dollar a year business. We're not comparing the same thing when it comes to size or resources.

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The power output of the steam engine was revolutionizing economies around the world. Factories drew workers from the countryside into ever-growing cities. Steam power moved boats on rivers and drove trains ever further into the countryside. Steam power also reduced months of hand threshing to a single day's work. Operating a wheat thresher in 1870 required up to 13 men who could thresh 300 bushels per day. By the 1890s, giant steam-driven threshers could process 1,000 bushels per day.

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Threshing day was often a working holiday on the farm and if a photographer was hired to document the work, a photograph of the setup often did double duty as a formal family portrait.

By 1900, more than 30 firms were manufacturing 5,000 steam-powered tractors every year. The appearance of steam power required large capital, large capital required more acres and higher yields to pay the larger mortgages.

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But the downsides of steam were overwhelmed by the benefits. Continuous portable power was available for important jobs on the farm. Yet the price of steam power and specific function limited sales to only the largest of farms.

Neil Dahlstrom: So, it's not a huge booming market. It has got its role and its place. But it gives people this idea that we can do more with more power. And that is really where the idea of the gasoline or the kerosene powered tractor comes from.

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Many thought steam was the last word in engine technology. But when the auto gas engine appeared in 1877, it revealed the potential of small portable engines. It provided instant power at a time when their larger steam siblings required long warmup cycles. Auto's patent expired in 1889 and hundreds of machines powered by a portable gas engine appeared on the market.

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Neil Dahlstrom: So now that tech is available to everyone. So now all of a sudden you can have a one and a half horsepower, a three-horsepower stationary engine. Maybe it's on wheels so you can move it around. Now you can run a single hole corn sheller or a washing machine or an irrigation pump. So now you have power.

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The improvement in productivity was dramatic. The United States Department of Agriculture estimates that in 1822, 60 hours of labor could produce 20 bushels of wheat. By 1890, steam power cut the hours needed down to eight. As steam brought efficiencies to agriculture, Henry Ford considered how he could reduce the drudgery of farm work.

Debra Reid: There are a couple of things in his childhood that I think were formational or foundational. One of the things Ford sees this Nichols and Sheppard steam engine and he is fascinated by it and that prompted him to want to learn more about steam and the power of steam. He actually goes to pursue this as a career with his father's blessing. He becomes an apprentice in a machine shop. But then about 1882, he is back on the farm and that is when he repairs this Westinghouse steam engine that was used by a threshing crew in his area. And those two things give him confidence and really galvanize his efforts to become more of an industrialist or a machinist than a farmer.

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But an agrarian lifestyle did not appeal to Ford and he returned to Detroit and began working as an engineer for inventor Thomas Edison. Ford tinkered with steam and gasoline engines in his spare time. In the 1890s, farm implement manufacturers began building internal combustion engines that mimic the output of steam traction engines, but with a smaller footprint and lower cost. These machines can drive grain threshers using a belt drive in the same way as steam engines and were also capable of plowing fields in the spring, doubling their versatility on the farm.

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Neil Dahlstrom: You can maybe hook it up to run a threshing machine or something that is going to be fairly stationary, but they are built for plowing. So, it's a huge investment to make, just to plow, and then you put the tractor away for the rest of the season. So, it's not very economical in those terms. There was a short period of time on these big farms where big prairie tractors were great. It was kind of the gateway to what the industry would become.

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Iowans John Froelich built the first gasoline tractor in 1892. It successfully worked a thresher in South Dakota for 50 consecutive days in temperatures that ranged from over 100 degrees to minus three degrees below zero. It became the forerunner of the Waterloo Boy. Two engineering graduates from the University of Wisconsin, Charles Hart and Charles Paar introduced their first tractor in 1902 and by 1906 were producing half the tractors sold in the United States. In 1907, there were roughly 600 tractors on American farms, 200 were Hart-Paar.

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Dozens of other manufacturers were introducing similar vehicles to capture the demand for power farming. Many would sell a few tractors, then fall into bankruptcy, unable to harvest enough revenue to cover the enormous manufacturing costs. One company that found success at building tractors already had a track record of profitability in farm implements. The McCormick Harvesting Machine Company was a leader in the sale of farm tools and implements in 1902.

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A merger between the McCormick Harvesting Machine Company, the Deering Harvester Company and three smaller firms had created the International Harvester Company. The new firm was the fourth largest company in the United States and had a global reach. IHC controlled 80% of farm implement production in the United States and was vertically integrated. The company owned iron works, twine factories, huge stands of timber, sawmills, coal and iron mines. It even owned the Illinois Northern Railroad, which moved materials and finished equipment in and out of its sprawling factory complex on the south side of Chicago.

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By 1900, much of the tough prairie soil had been broken and row crop farming had become the norm across much of the Midwest. While the wheat fields of Canada and the prairie states could utilize the large steam engines for plowing and threshing, demand for a smaller tractor for smaller farms was on the rise. Rather than pulling 12 plows at once, farmers in the Midwest only needed to pull two or three plows at a time. A 1910 study of horse plowing estimated a farmer following a single horse drawn plow walked over eight miles per acre plowed. The market for a faster, less taxing method of tilling the soil was enormous.

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IHC was ready to capture this new market. Company owners put their cash, experience and designs to work in the development of gas and kerosene powered tractors. International Harvester launched the Titan and Mogul brands of tractors. The machines were lighter and more maneuverable and could pull multiple plows in most conditions. By 1910, even with the high cost of each unit, the Titan line accounted for half of the new tractors being used in the United States.

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This was also the era of populous politics and a public that was weary of large corporations. International Harvester was found guilty of using its monopoly power against its competitors in 1912. The company was forced to divest some of their subsidiary companies, sell off some alternate brands and cut parts of their dealer network. In the long run, the legal decision was a win for International. The government was only able to show damages to its industry competitors and not its customers, setting the stage for 40 years of market dominance.

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The rapid pace of tractor innovation hid a growing conflict between International Harvester President Cyrus McCormick, Jr. and John Deere President William Butterworth. Both companies were working to complete a full line of equipment for their dealers. The goal was to capture farmers' business from machines to repair to replacement parts.

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Neil Dahlstrom: Really this era for me starts with a series of meetings between William Butterworth at John Deere and Cyrus McCormick, Jr. at International Harvester. Deere is trying to build a full line. International Harvester knows it. Neither one of them wants to tip their hand and so they have a phone call, then a face-to-face meeting and Butterworth says, no we're not going to go into the harvesting business, and Harvester says, okay, but if you do, we're going to go into the plow business, basically destroying a 70-plus year kind of gentleman's agreement between the two companies. Well, we know that Deere is going into the harvesting business and we know that International Harvester has already bought a plow company just in case.

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Many late 19th century tractor designs mimicked popular implements that placed the farmer behind horses. Engineers at a company that was eventually absorbed by International Harvester mounted an 1891 Deering engine on a new ideal mower. It became the first self-propelled implement. While it wasn't a tractor, what became known as a motor cultivator was an early step in that design.

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Before the development of Henry Ford's assembly line, industry had been hobbled by a lack of standards and precision. Each part was unique to each machine, making fabrication inconsistent and repairs difficult. The assembly line forced standardization of parts manufacturing. International Harvester took a page from Ford's book and put the practices to work. The race to introduce a practical tractor brought a variety of machines to market. An early success was the Bull. Introduced in 1913, its three-wheeled design helped make the machine light and cheap. It was an immediate hit with farmers and nearly cornered the tractor market.

 

Sales of IH tractors plummeted 76%. While the Bull was underpowered and could roll over on hills, it proved there was a market for lighter, more agile tractors. But the early success for Bull was overtaken by manufacturing problems and new competitors. By 1918, the Bull had been driven into bankruptcy.

 

The Fordson, Henry Ford's entry, was exponentially more successful.

Debra Reid: In 1916 when Ford is still trying to get this Fordson released to meet more demand, there are about 124 companies producing about 30,000 tractors a year and those companies are all more or less operating with farm implement frame of mind. And that means they're not individually developed, but they're constantly trying to figure out okay, how do we lighten it with still retaining the structure? With all due respect, they're like blips on a screen because none of them have the capital to invest in the research and development that Ford has. And that research and development pay off in this product that transforms the entire tractor industry. Making tractors is harder than it looks financially. When you've got a company like International Harvester leading in the ag equipment business and their brand comes through reapers and other agricultural technologies. But yes, International Harvester was maybe one of 124, but it was leading in the ag implement business.

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Sales at International Harvester rebounded as Bull tractor sales fell. By 1916, IH had taken back its 40% market share. That year, those 124 companies sold a combined 63,000 machines.

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But horses still dominated the farm economy. The 1920 farm census showed 246,000 tractors on American farms, but 26 million horses still did the majority of the work. The USDA estimated that buying a tractor saved a farmer around 250 hours of horse care per year. The math was now shifting towards power farming.

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International continued to drive much of the industry's growth. Their MD 8-16 featured three forward speeds and an optional power takeoff for powered implements. It was the first IH tractor built on an assembly line. But production problems kept the model from meeting demand. The company knew Ford was gaining ground and rather than compete with the Fordson directly, they moved towards a higher quality machine that was easy to maintain and promised a long working life.

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The primary enemy of tractors was dust. Bearings and transmissions were mostly unsealed. The average life of some models was only 12 months. Farmers would buy a tractor for $1,000, about $30,000 today, and end up paying as much as $400 for maintenance, a little more than $12,000 today. Despite paying nearly one-third of the purchase price in repair costs, tractor sales skyrocketed from 21,000 in 1915 to 200,000 in 1920.

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The year before the Bull's demise, Henry Ford put his Fordson on the market. The four-wheeled tractor found immediate success. But the Board of Directors was dismayed with Ford's single-minded obsession with his tractor project.

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Christian Overland: Henry Ford who had his little prototype going in the Piquette plant is now running the Highland Park plant in Detroit, making automobiles and Model Ts at that point. He gave up on the other things and just became singular-minded and his Board tells him no. The Dodge Brothers were on his board too and they said, no, no, they're cool to that one. It's like, stay the line, we're making money, Henry, build the Model T. So, what does Henry do? He makes his own company and he calls it Ford and Son.

Ford was over a decade in on his automotive assembly line as he targeted the tractor business.

Debra Reid: Ford was always looking for that next effort. But he has had the tractor in his mind this whole time, that notion of putting things on wheels that are self-propelled. So, he is experimenting with tractors before the Model T is finalized and Ford actually calls the tractor the automotive plow. They use a Model B, as in boy, engine and an automotive radiator and back wheels of a grain binder and front wheels of a steam engine and put this piece together. And they're constantly trying to figure out, can you use an automotive engine to move this automotive plow? It takes them a decade before they figure out that no, the tractor needs a different engine, a different frame, but it is ultimately an automotive assembly line process.

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In 1915, Ford secretly purchased 2,000 acres near Dearborn, Michigan with the idea of building the world's largest industrial complex. He hoped that what eventually became his River Rouge facility would build a million vehicles per year. Ford wanted to cut out suppliers and middle men. Every element of the car and tractor would be created on site. The reception of the Fordson was based more on its reputation than the merits of the machine. Gas Powered magazine wrote in 1916, nothing spectacular or unusual in its performance. Most would have taken the machine without question just because it was built by Henry Ford.

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While the market was ready for a new tractor, Ford still wanted to experiment and refine. His tinkering was stopped by the U.S. declaration of war in 1917. An outspoken pacifist, Ford had campaigned for an end to the war. His Ford Motor Company had refused to build war materials for any country engaged in the conflict. However, once America entered the war, Ford Motor Company's factories supported the effort and the contracts that came with it. Tanks, trucks and other vehicles streamed off the assembly lines until the Armistice was declared 18 months later.

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The power of the Ford name had already been seen in a contract signed with the United Kingdom. Britain had been fighting in Europe for three years with no resolution in sight. The country was desperate for tractors after millions of farmhands went to France and Belgium to fight. The British Ministry of Munitions ordered 6,000 Fordson's sight unseen in 1917.

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Debra Reid: They're munitions tractors, so M-O-M is the term that they go by and those went exclusively to Great Britain. But Henry Ford does not release for U.S. domestic purchase until early 1918. Sometimes farms adopted the farm engines before they purchased an automobile and sometimes they did both before they purchased a tractor and sometimes they purchased them all together. So, it really is a ground swell of interest in especially rural and agricultural America. They're ready for a tractor that is going to be lightweight and relatively dependable.

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The Fordson presented a compelling financial picture to farmers. Compared to a team of horses, plowing was 40% cheaper with a tractor, and the job could be completed in one-quarter of the time. In April of 1918, the 7,000 Fordsons were delivered to the United Kingdom. Henry Ford then opened sales to the U.S. market and nearly double the orders flowed in. Over 50,000 tractors were delivered worldwide by June of that year. Priced at $795, the Fordson was well above the planned and announced $200 goal. The Fordson nameplate was chosen because the Ford Motor Company Board of Directors still hadn't signed off on the project. In order to focus on the tractor business, Henry Ford surprised his board by stepping down from the presidency of the Ford Motor Company in December 1918. Ford then ran his tractor business with the same narrow margins that he used for his Model T. Volume and market share mattered over profits. 80,000 tractors were quickly sold in the first two years and farmers began to push the limits of their new machines. Other tractor manufacturers avoided direct competition with the Fordson, positioning themselves as different in some way, better at plowing, more durable, or able to do more jobs on the farm.

Over at John Deere, Butterworth watched Ford's rising market share and grew concerned about his competitor's success.

Neil Dahlstrom: Fordson was very scary to American tractor manufacturers at this period in time. And we see this, Ford debuts his tractor at a farm show in Freemont, Nebraska in 1916 and immediately after that we see letters from William Butterworth of, alright, let's slow down, I'm opposed to this tractor business. What he means is, we're not going to build tractors, we're not going to invest in a new factory because we're not going to compete with Henry Ford on things like price, on volume. And so, it kind of changes Deere's perspective on things, which is how do we build and design something that doesn't directly compete with the Fordson? We want something that maybe pulls three plows. So, it's a different segment of the market. We're going to carve out a different niche so we're not directly competing.

Debra Reid: It outsells International Harvester, which had led in tractor sales up to that point.

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Despite early farmer approval, the Fordson had drawbacks. Like most tractors, it was too low to the ground to cultivate cotton or corn and had no power takeoff to drive harvesting implements.

Debra Reid: Farmers are seeking something to replace the labor needed on the farm, dependable power source and affordable operation. All those things require a transition on the farm, but this is the time when farmers need it. Every horse that was replaced by a tractor allowed the farmer to put five more acres into arable production. So, Ford claimed that the Fordson tractor was really a three to four horse replacement. And suddenly you've got 10, 15, 20 more acres. It is also standardized as a two-plow tractor. And for expanding row crop agriculture, it satisfied an intense need.

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Fordson sales put IHC on the ropes and quickly devoured their market share. By 1923, 100,000 Fordson tractors were rolling off the line annually. And Fordson commanded a 76% share of the market. But by 1925, sales of the Fordson were beginning to slide. At the same time, the Model T, essentially unchanged since its debut 18 years earlier, was fading against its competitors. Ford and Fordson both had to change.

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For John Deere, the way to a full line had been one of small steps. The John Deere Board had approved its preliminary designs for a three-wheeled project called the tractor plow in 1912. Company engineer C.H. Melvin produced the first units the same year. By 1914, it became apparent to the John Deere Board that it had three options in the tractor business, start a new company or division, contract with or buy an existing tractor company, or contract to buy the various components and assemble tractors under the John Deere name. As the board considered its options, Joseph Dain, another of the company's engineers spearheading tractor development, added the B-2 to the Deere design menu. In what would eventually become a mainstay for Deere, his first Model B was even smaller than Melvin's machine and utilized a one-cylinder engine.

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Neil Dahlstrom: There's a lot of experiments going on at John Deere. I've often been asked, why was Deere so late getting into the tractor business? So, there's a lot going into the mix here and Deere just couldn't quite figure out where they wanted to build that machine and what it was going to look like.

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The Deere Board of Directors knew that the early prototypes were going to be expensive to manufacture and sell. They also knew they would struggle to compete directly with the lighter, cheaper, Bull-style tractors and motor cultivators already on the market. Rather than cut corners, Deere chose to take the high-quality route, regardless of price and hoped that the reputation for durability would win the day.

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Deere engineers took inspiration from past designs, looking closely at various motor cultivators and the Moline Plow Company's Moline Universal. The Deere Board approved the building of 25 machines based on motor cultivators and called them tractivators. Design and testing of these prototypes revealed the sale price would be $475. The machine did offer a savings on labor, the but numbers revealed no real savings over horses.

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Neil Dahlstrom: There were a couple of really loud voices at John Deere that were advocates for the farm tractor. One was Willard Velie. So, this is John Deere's grandson. He is the CEO of a very successful automobile company, the Velie Automobile Company. He thinks the tractor is the future. You've got George Mixter who is the Superintendent of Factories at John Deere. Deere builds a full line, buys all of these companies and you’ve got to get them all to work together and he is doing this and he is a huge advocate. So, you've got these pockets. But then you have someone like our CEO William Butterworth who says, yes tractors are the right track, but I can't convince any bankers to loan us any more money for development. And also, they know that Henry Ford is coming and that scares everybody because he has resources and capital and all the things that John Deere doesn't have as a company.

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After gathering their resources and making a few designs, the tractor plan suffers setback. In 1917, Dain, the chief architect of the B-2, died from pneumonia he contracted while testing his tractor. Visionary company engineer Theo Brown is transferred off the program and into military manufacturing. The tractor project was in peril and without momentum. Knowing that Ford was on his way to dominating the market, the board of directors finally committed to building a tractor of their own. By June of 1918, the first 50 Dain tractors were completed. Velie was still concerned the tractor program was too timid and pushed to either go big or get out.

Neil Dahlstrom: So basically, the people who are controlling the purse strings are saying, we have to be very careful how we go about this because we can't lose everything for this speculative new technology and that is the way they viewed it. So, William Butterworth I think was in both camps. He was saying, let's do it, let's put the brakes on until the time is right. And that was the scary part, which is there's not a huge market, now all of a sudden we go from 10 companies building tractors to 100 and we don't think a lot of those are very good. And so that is detrimental to the industry as well and we don't want to be another one.

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Even as the board members argued about the direction of the tractor program, they were not shy about seizing the moment. Deere purchased the Waterloo Gas Engine Company and its popular Waterloo Boy Model N in 1918. The purchase price was over $2 million, an acquisition that made sense to the board.

Neil Dahlstrom: The Waterloo Boy tractor kept coming up in these field tests where they said, oh that's a good tractor, yep, we're hearing good things about that, okay we're going to test one and that's good. They weren't necessarily in the market to acquire a tractor manufacturer. But in 1918, the opportunity came up. It seems like a very quick acquisition, which is in a period of a few months and there is a lot going on behind the scenes of shareholders saying, we're for sale, but if you don't decide tomorrow we're pulling our stock and we're not going to be for sale and you have six or seven years of development under your belt, you know what you're looking for, you know it's really hard to do and you see an opportunity, they took it and all of a sudden John Deere was full-fledged in the tractor business, buying a company that was selling over 5,000 tractors a year.

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The Waterloo Boy burned kerosene, which was cheaper than gasoline, and it had a simple two-cylinder engine that was more durable than the four-cylinder engines Deere had been using in its prototypes. And as a three-plow tractor, it didn't compete directly with the two plow Fordson. Deere management believed the Waterloo Boy did 50% more work per day than other tractors, which justified the higher price of $1000 per unit. But in 1919, Deere was splitting its focus between horse implements and machine power. For many farmers, a tractor was viewed as being an expensive option because 90% of the farm's power still came from horses.

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Tractors brought pluses and minuses to farm production. They offered a chance to put more land into use. Typically, one-quarter of a farm's acres were devoted to feeding horses. Practical application had already proven a tractor could plow up to 75% more acres per day than horses. Once those acres were released into production, they contributed to a crop surplus, reducing the prices paid to farmers. Tractors also reduced the need for farm labor. The children of farmers were freed up to choose between remaining on the farm or seeking work in the cities. A steady depopulation of rural America that had begun during the Civil War was further fueled by the increase in mechanization.

Neil Dahlstrom: The next couple of years are really fascinating. So, Deere buys Waterloo in 1918 and it's not only tractors but stationary engines. And the company is selling thousands of stationary engines. That is seen as more of a long-term business. The tractor business was still a bit of an unknown. And it's going to get really scary in 1921 where there is an economic recession and sales fall to 79 tractors. And there is a price war and there's a lot of competition and a lot of bankruptcies and folks at Deere are looking around going, did we make a mistake? It's going to take Deere seven years to turn a profit in the tractor business. So, there was a lot of worry and concern whether or not they made a huge mistake and put the entire company at risk. But at the end of the day, the Waterloo Boy is everything they wanted it to be.

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In late 1917, the Deere Board of Directors authorized the production of a newly-designed all-wheel drive tractor.

Neil Dahlstrom: Really, what the board said was, we've invested so much, we've got to do something, we've got to have it in our back pocket in case we don't come up with something better. So now Deere has two tractors. Not a lot happens with the all-wheel drive. We don't know exactly what happened to most of them. Probably 90 to 100 were built. And the Waterloo Boy is the workhorse of the company. So, it becomes a very, very different competitive market.

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John Deere was also looking for a design that could compete with the Fordson, if not directly challenging its place in the market. Requests from engineers to experiment with four-cylinder engines were denied as Deere lacked the cash flow for testing and development. Deere repurposed the Waterloo Boy two-cylinder engine and made it the heart of what became the John Deere Model D. Three decades of production of the iconic tractor started in 1923. The new tractor competed with both the McCormick Deering 10-20 and the Fordson, but was aimed at wheat country, where farmers were less concerned with cultivating corn and more with plowing huge farms and driving a wheat binder in the field. Deere aimed to produce 1,000 Model Ds in Waterloo, Iowa by 1924.

Neil Dahlstrom: And ultimately when Deere comes out with the Model D tractor, it's because they were focused on wheat growing parts of the country, whereas International Harvester and their Farmall tractor, which was the first really true general-purpose tractor, was focused on corn growing parts of the country.

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The 1918 victory by the allies in Europe was followed by an economic depression in the early part of the 1920s. During the war, there was a worldwide shortage of grain, horses and hired hands. Farmers were spending twice as much on labor compared to just a decade earlier. The farm sector, which had planted fence row to fence row to feed America and Europe now found itself awash in grain and choked with livestock. From July 1920 to November 1921, the price of oats and corn fell 72%. Livestock prices were cut in half.

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Tractor manufacturers found themselves buried in canceled orders and mounting debt. In 1921, International cut prices for its popular 10-20 and 8-16 models. With $41 million in canceled orders, the company went on the offensive. Dealers held demos to compare IH tractors with the Fordson. They managed to claw back 12% of the market during the downturn. Ford responded to slowing sales by slashing prices of the Fordson from $790 to $395 a unit.

Debra Reid: International Harvester says, we've got to meet it. And for about five years these two companies are selling below production costs and Ford has the capital, even though they're losing money.

Christian Overland: And the tractor wars are hitting an economic issue because it's tough on everybody. And why Henry Ford does it is he's trying to control the market. But he has a system that he can do it with. He has kind of built the whole assembly line system, figured out an employee base that builds these things, and he was actually moving forward into a new world about how can I actually invest in the values of agriculture and keep farm life sustained? And so, even though the tractor was a loss leader for Henry Ford, it was a value proposition that he felt the world needed to go into and he wasn't thinking about that amount of time as loss, he was thinking about that amount of time as investment.

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In a battle for its existence, John Deere lost money. Sales of tractors in 1922 were only 40% of the previous year. Deere factories were closed for months waiting for the inventory backlog to clear dealerships. Other manufacturers with deep pockets tried to enter the battle looking for a win. General Motors purchased the Samson Tractor Company in 1918. The automobile giant lost $33 million over the next four years and exited the tractor business after learning an expensive lesson in tractor economics. While the short-lived Depression put multiple tractor companies into bankruptcy, the resulting price war put tractors on farms that had not been able to afford them previously, yet many farmers still believed that as long as they had horses, you might as well keep them for every job on the farm. If tractors wanted to compete against centuries of tradition, they would have to prove they could do more than just cultivate row crops.

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Just as the economic Depression of the early 1920s was brewing, International Harvester engineer Bert Benjamin developed a new design. He had reversed the motor-cultivator form, placing the bigger wheels in the back of the tractor, and dubbed the creation, the Farmall. It was designed to serve more than one purpose by pulling both planting and harvesting equipment. Rapid sales of the Fordsons began pushing IH management towards a decision on future tractors. Internal company resistance to an all-purpose tractor began to fade when it became obvious the Fordson was a success.

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A handful of Farmalls were sent to Texas in 1924 and farmers loved them. A test drive became a successful sales ploy. Texas dealers loaned out Farmalls to hesitant farmers. None were returned to the dealership. An IH dealer in Houston wrote the company after receiving a shipment of prototypes, if you don't adopt the Farmerall for production, we will organize a company in Houston and build it down here. IH marketing promoted the tractor's versatility on the farm. A Farmall could operate 11 common implements with one operator. Research showed the new machine saved cotton farmers $27.70 per bale, making U.S. cotton the world's cheapest to grow. It was estimated that 300,000 Farmall tractors could replace 250,000 mules. The performance of the Farmall won over farmers before many boardroom executives. Yet production was limited, so as not to hurt the sales of the still popular McCormick Deering 10-20. The $825 price tag of the Farmall was competitive in the marketplace. But the company was building the innovative tractor at a loss.

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By 1927, production had grown to 60 tractors per day. Internally, there were still concerns that the Farmall would kill off the MD 10-20. In 1928, it did. Farmall sales exploded to 25,000 tractors that year and the 10-20 was retired.

Neil Dahlstrom: Well, you have this huge transition in kind of the American landscape. 1920 is the first time that more people live in the city than on the farm. You have labor shortages. So, you're trying to produce more with less. And that is where the tractor starts to become an investment that makes sense because long-term you are going to be more profitable. You also see with the automobile that now I can raise more than my family needs. And that is the major transition. Instead of growing for my family, now I can raise more and I can go sell it and I can go travel a little further and distribute. And this is what Henry Ford calls, the business of raising food. And that is really the major transition that takes place, largely driven by mechanization and power farming, as they called it.

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Henry Ford was struggling to keep the Fordson competitive. The Farmall was coming into the market and stood to push the Fordson out.

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Neil Dahlstrom: Henry Ford was incredibly stubborn, which is putting it mildly. But he said the Model T was a perfect automobile, we never need to improve it. He said, the Fordson was the perfect tractor and we never need to improve it. Of course, he has got economies of scale. He's got the assembly line. He's got a low price point. He's selling hundreds of thousands of Fordson. But there's no improvement made on the Fordson tractor. And there’s some drawbacks. It has a tendency to overheat. It can tip over, especially backwards if you're pulling a plow under load. But really no incremental improvement. And what happens is machine forms start to change. So, you have the D, you have the Farmall, you've got a lot of other competitor machines that are listening to feedback from customers who are saying, well, it's great for plowing, but I want it to do this, I want it to do this, I want it to do this. Henry Ford says no, like, this is what you get. And so, all of a sudden, the Fordnson is outdated and everyone starts planning for the demise of the Fordson, but also assuming there's just going to be a new version of the Fordson, which ultimately never comes.

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With Ford standing his ground and refusing to make any improvements, the innovative model was left behind.

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Neil Dahlstrom: The Fordson was a good entry-level machine, had a good price point, it did what I needed it to do. But now I'm ready to move on. What's available? So, the Fordson started to be left behind by 1925, 1926.

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In 1926, Fordson produced almost 94,000 units. But its market share had dropped below 50% for the first time in eight years. International went on to surpass Ford and dominated sales with a 55% share of the market.

Neil Dahlstrom: The big question for competitors is, is there going to be a new Fordson? And initially they thought yes, because the Model T is replaced by the Model A against Henry Ford's will. So, then you're thinking about what does the replacement of a Fordson look like? And then you start to wonder, is the Fordson going away?

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In January 1928, the Fordson line at River Rouge had stopped for retooling. But it never restarts. Even with the Fordson logo on two-thirds of the tractors in America, the sun had set on the iconic brand and the mighty automaker exited the market. Henry Ford moved all Fordson work to Cork, Ireland. Limited production continued in Ireland and England and the last unit rolled off the assembly line in 1933.

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Neil Dahlstrom: Farmers are incredibly progressive. They have always been that way. The other side of it is, these things take a long time to kind of incubate and come to fruition and work themselves out. Horses outnumber tractors on America farms until the early 1950s. And tractors keep getting bigger and bigger and bigger and horsepower continues to expand and implements get bigger.

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By 1929, only 33 tractor makers were still operating in the United States. By the end of the 1920s, International Harvester and Deere stood alone among tractor manufacturers. Both would continue to battle for market dominance for another 50 years. The adoption of technology in rural America had been thorough. In a 1925 survey of Illinois farms, 80% had a car, 12% had electricity, 6% had indoor plumbing and 30% had a tractor.

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Despite the rise of mechanized farming, total horsepower from tractors did not exceed horsepower from horses until 1945.

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Today, John Deere is the only company to have survived the tractor wars into the 21st century. The International name faded into history in 1985 when the automotive parts company Tenneco bought the agricultural division and merged it with their J.I. Case line. J.I. Case was eventually purchased by CNH Industrial, an Italian-American corporation. The agricultural giant continues to build and sell J.I. Case designs.

Debra Reid: If you define tractors wars of the 20s as this fight to the death over market share, Ford steps out, International Harvester does not necessarily win even though it has, with its Farmall, taken over the market share, but it's a company that had to rebuild itself more or less in the image and likeness of that automotive assembly line to compete with that new upstart tractor.

Neil Dahlstrom: I think it's really hard to wrap it up in a bow. But I always go back to this phrase, tractor wars. This was a fundamental shift in the history of agriculture and I think that's what this period is about, which is now we can expand. It's about doing more with less. It's about getting more out of the land. It's about greater yields. It's about profitability for farm businesses. But it's about what's next. It's about new technology and regardless of the decade or the century, this is a technology story, which doesn't feel like it because it's on the farm.

Debra Reid: That's the lasting consequence of that war, automotive assembly line mentality in tractor production. And then I find it fascinating because the numbers of farmers is not increasing, it's not like people on the road. There's a shrinking sales pool constantly for this business, that consolidation of production in fewer and fewer companies really factors into the changes in rural America that I think have lasting consequences today.

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Funding for Tractor Wars was provided by Friends, the Iowa PBS Foundation, as well as generations of families and friends who feel passionate about the programs they watch on Iowa PBS.