For decades, William Butterworth, John Deere’s third president, has been the scapegoat, the person to blame for Deere’s “late” entrance into the tractor business. I think it’s time to let him off the hook.
Deere’s tractor development program began in 1912. The industry at that time was nascent. There were thirty-one manufacturers with industry sales of 11,500 machines, most in the 20,000 pound class. This was up from twenty manufacturers and sales of 7,000 machines in 1911, and would slide back to 7,000 in 1913. By then, Deere engineer Charles Melvin had designed Deere’s first experimental, and Max Sklovsky had started work on his experimental A-2.
In 1913-14, the industry was jolted by the introduction of the Bull, a small, lightweight, and inexpensive tractor that racked up unprecedented sales over the next few years. Then it failed because it could not stand up to farm work. The company was bankrupt by 1918, a cautionary tale not uncommon in the industry.
Sometimes being first is not all it’s made out to be.
Meanwhile, at Deere, Joseph Dain began work on what became the All-Wheel Drive tractor while Theo Brown, Walter Silver and others began development of a series of motor cultivator concepts.
Were none of these tractors to Butterworth’s liking? Let’s go back to the 1912 Board of Director’s resolution for the answer (I added the bold).
- RESOLVED, That in view of the inevitable future use by farmers for diverse purposes of gasoline and kerosene tractors… having in view constantly, that the success of the same would be enhanced if not assured, were it possible to divorce the tractor from the plow and to thus make it available for general purpose.
To get to the end, sometimes you have to go back to the beginning. First, Deere was focused on development of a gasoline or kerosene tractor. This was not a surprise, as the industry had clearly shifted from steam power. (By 1918 Deere focused on kerosene due to rising gasoline costs). Second, and perhaps most important, was that they wanted to design a general-purpose tractor, a multi-purpose machine that could “divorce the tractor from the plow.” To date, tractors were designed for belt work to power other equipment, or to pull a field plow. At the same time manufacturers were arguing that a tractor could replace a team of horses. But who would do the rest of the farm work when the plowing was done? Horses of course. Butterworth was not convinced that a tractor was yet a cost effective replacement to a team of horses, only a supplement.
Deere’s engineers just did not yet know how to build a multi-purpose tractor that would offer a true alternative.
The Case for Butterworth
In reality, Butterworth’s perspective on tractor development was more a matter of “when” than “if.” The case for his opposition comes primarily from one letter in 1916, in which he plainly tells fellow board member Burton Peek, “I am opposed to any steps being taken looking towards the manufacture by any of our factories of a tractor. I have acquiesced in the experimental work which has been done but I am beginning to feel that we are wasting the stockholder’s[sic] money in going any further with it.”
Butterworth was a lawyer, and spent his first ten years with Deere as its treasurer. Running a financially cyclical business, he was a proponent of strong cash reserves—just in case. And historically, they had needed it on more than one occasion. Remember, this is an era where the country suffered a severe economic depression every fifteen to twenty years.
Finances were Butterworth’s expertise, and he understood the impact of the recent acquisitions and Deere’s entry into the harvesting business. The moves tripled the size of the company over only a few year period, but at great expense. Historian Wayne Broehl called this period the “birth of the modern Deere & Company.” The effort created a full-line of tillage, planting and harvesting equipment to take on International Harvester.
The new organization also had shareholders, and as a result, operations were scrutinized like never before. Butterworth was well aware that Deere’s quarterly dividend had fallen from an average of twenty-percent a decade before to scarcely more than one-percent in 1915, while factory and product line integration continued.
As part of their efforts to deliver a full line, Deere built two new factories in East Moline, the Harvester Works and the Marseilles Works. At the moment, they could not afford to build and outfit a new tractor factory. Cash was tied up, and shareholders were expecting a return on their initial investments.
The company’s banking partners were also unwilling to loan money for tractor development, as they watched early manufacturers like the Bull Tractor Company emerge, and just as quickly, fail. An industry survey in 1920 showed that by then still only one of four bankers considered a tractor a profitable investment for the farm, and that the same percentage considered tractors to still be in the experimental phase
Toe the Line
Let’s go back and dissect what Butterworth wrote to Peek. “I am opposed to any steps being taken looking towards the manufacture by any of our factories of a tractor.”
Point taken. Don’t build a factory to produce tractors.
And bankers won’t loan us money, and shareholders want a return on their investment. That’s understandable. Let’s work around that by incrementally investing in internal research and development. In fact, the long-time company treasurer agreed to more than $250,000 (more than $4 million today) over a six-year period, culminating in approval to build up to one-hundred All-Wheel Drive tractors.
Was Deere “late” the tractor business? I could argue either way. But the reality is that they entered in the way that they could enter considering other demands, market opportunities, and their own objectives for doing it the right way.
The All-Wheel drive was mechanically advanced, but it was not what Deere set out to create. It was not a general-purpose tractor. But by now, Butterworth and his colleagues knew that they could no longer wait for the machine they thought farmers needed. By the end of 1918, there were 142 tractor manufacturers with sales exceeding 130,000 tractors. They also knew the Fordson would enter the U.S. market that year, and they could no longer wait. (That’s because they had been working with Henry Ford for at least three years already!)
The March 1918 acquisition of the Waterloo Gasoline Engine Company checked many of the boxes Deere had set out to accomplish. It ran on kerosene, was durable, and did not require a new factory. The Waterloo Boy N tractor was not quite the general-purpose tractor that Deere envisioned in 1912, but with sales of 5,643 tractors in 1918, it was a critical entry point.
Was William Butterworth an opponent of John Deere’s entry into the tractor business? If you call hundreds of thousands of dollars in expenditures, six years of research and development, consumption of factory space, tools, time, and labor, and the $2.25 million acquisition of the Waterloo Gasoline Engine Company as opposition, then yes, he was adamantly opposed.
Butterworth did get his general purpose tractor in 1928, his final year as Deere & Company’s president. They called it the GP.
William Butterworth, who left Deere to become the president of the United States Chamber of Commerce, also got the last laugh. Perhaps Deere was “late” because they were so far ahead in their 1912 vision to “divorce the tractor from the plow and to thus make it available for general purpose.” In 1935, seventy-five percent of all tractors sold in the United States were general purpose tractors.