| |
CHARLES DEERE
CULTIVATES A MARKETING REVOLUTION
by
John S. Wagle *
INTRODUCTION
|
Charles Deere
(1837-1907) began working in his father's firm
at the age of sixteen in 1854 (104). He was a
recent graduate of Bell's Commercial College in
Chicago where he learned bookkeeping, commercial
law, business math, and the art of detecting counterfeit
bills.
(104) It was bookkeeping that his father
John Deere (1804-1886) was especially interested
in seeing Charles learn.
Bookkeeping and other financial aspects
of business were a mystery to John and this disability
almost sank the plow manufacturer more than once
(97, 125). In Charles, John had a family member
he could trust implicitly and who was better educated.
This freed John to do what he did best, innovating
and marketing.
Charles quickly developed an understanding of
the company's books and established family control
over internal finance. Having accomplished this
he turned to selling, shortly becoming the head
of sales (104).
In 1857 Charles Deere, became a partner in a newly
formed partnership called John Deere & Co
(125). This partnership accomplished three things.
First, it assigned an ownership interest in the
company to Charles for the first time (twenty
five per cent). Second, it shifted as much cash
as possible out of the company and into the hands
of John and Charles Deere. Finally, it established
Charles Deere as the principle manager of the
company, while removing John as principle manager
(126-127). Charles was barely 21 (or possibly
20) and may not have been completely prepared
for this elevation, but external circumstances
forced the reorganization. In order to understand
Charles Deere, his early ascension, and his influence
on the John Deere Company it is necessary to begin
with John Deere and the company's emergence.
JOHN
DEERE
Somber events forged the
beginnings of John Deere & Company. In 1808
William Deere, John's father, was lost at sea
leaving his widow with four sons, two daughters,
and some heavy debts (7). These hard circumstances
must have had an impact on the character and drive
of John Deere. They certainly limited his education.
Between 1825 and 1829 John, trained as a blacksmith,
worked for several different Vermont businesses
in his trade (12). In 1829 John opened his first
blacksmith shop which failed (13). Deere moved
to Royalton, worked for someone else for awhile;
moved again to Hancock and opened a new smithy
which also mired him in debt (27). The prospect
was financial ruin and debtor's disgrace in 1835.
ALONG THE FRONTIER
A somber event also occurred in Western Illinois
in 1832. Black Hawk, chief of the Sauk and Fox
Indians, frustrated with immigrant incursions
on Indian treaty land and chafing over treaty
terms, led approximately 1000 Indians in an uprising
(Compton's, 1995). Although a newspaper sensation,
a militia of Illinois citizens had little difficulty
in the several actions of the "Black Hawk
War," which largely consisted of chasing
the Indians from place to place. Finally, at the
mouth of the Bad Axe river in Wisconsin, the Indians
were annihilated and Black Hawk captured (Bookshelf,
1994). The Black Hawk War effectively ended the
Indian peril in Western Illinois and opened up
the area to immigration. In particular, it established
the relative safety of settlers in both the Grand
Detour, Illinois and the Moline, Illinois areas
- - sites of future John Deere businesses. The
publicity also served to draw more immigrants
to the area (74-75).
In 1836 John Deere left Hancock, Vermont for Grand
Detour, Illinois. Founded in 1835 on a bend of
the Rock River in Western Illinois, the site was
chosen because it afforded the ability to make
use of the river's power. Deere left his pregnant
wife, a son (Francis Deere, born 1828), and three
daughters and took only the tools of his trade
to begin again in a wilderness (29).
GRAND DETOUR
Grand Detour lies on a bend of the Rock River
where, according to Indian legend, it found itself
so beautiful it had to turn around to look at
itself (27). While the terrain was beautiful when
John immigrated in 1836, the town was primitive
and had not greatly improved by 1838 when his
family joined him (Charles Deere was born in 1837).
One traveler, in 1839, kept awake all night by
the smells in his room and the howling of Grand
Detour wolves, provided a detailed description
of the poor food and lodging he received there,
then stated:
| "8
a.m. Jumped into stage with a light heart
& belly too...shall long remember Grand
De Tour - shall hold it up in warning to
all travelers."(58) |
While primitive, the community was nevertheless
growing and thriving. New people were moving in
regularly and everyone was involved in constructing
a home, a business or a farm. The national economy
was dismal as a result of the Panic of 1837, but
Grand Detour was not plugged into the economy
yet, and boomed with the influx of people and
their capital which often represented their life
savings. On a day-to-day basis capital wasn't
needed anyway, as a system of barter was in full
effect (56). Grand Detour and other similar settlements
grew in part because of the poor economic times,
forcing many people out of the depressed East
and into places where cash was not critical for
trade. Still, by 1842 the two general stores had
decided on a cash only policy as evidenced by
their advertisements in the short-lived Rock
River Register. The Brick Store, after listing
numerous items available for sale, closed with
the comment: "No credit will be given, NONE
NEED INQUIRE" (61). The other general store
owner stated in advertisements that he would sell
"...at the best cash prices."
The barter system was still available otherwise,
however, as the shoemakers, Palmer and Eddy, would
take wheat. The cabinet maker would take lumber
or wheat (61). This provides a brief overview
of the economy and society in which John Deere
made his real start.
THE STEEL PLOW BREAK THROUGH
Illinois soil is particularly fertile. It has
been described as a "rich black gumbo."
This was a blessing in terms of crop production,
but a curse at plowing time. Every few feet the
farmer was forced to stop plowing the land and
scrape the adhesive soil off the plow before resuming.
This added both significant time and labor to
the task, especially in the early spring (44).
As a blacksmith, both making and repairing plows,
John Deere was acutely aware of the problem.
Sometime in 1837 John found a broken steel saw
for cutting logs on the floor of the Andrus sawmill.
Obtaining the saw blade he took it back to his
blacksmith shop and converted the smooth steel
into the parts of the plow most likely to stick
in the soil. Upon testing it was found that this
plow would scour. According to Microsoft Bookshelf,
1996 - 1997 edition of The People's Chronology:
|
"Agriculture,
1837
A self-polishing steel plow fashioned by
Vermont-born blacksmith John Deere, 32,
at Grand Detour, Ill., can break the heavy
sod of the Illinois and Iowa prairie. Deere
chisels the teeth off a discarded circular
saw blade of Sheffield steel, creates a
plow with the proper moldboard curve for
breaking the sod, and saves farmers from
having to pull their plows out of furrows
for repeated cleaning with wooden paddles.
The Deere plow will permit efficient farming
in vast areas that have defied earlier efforts
(see 1839)."
 |
By John Deere's own reckoning,
he made 1 steel plow in 1837, 2 in 1838, 10 in
1839, 40 in 1840, 75 in 1841, and 100 in 1842
(50). The John Deere plow was beginning its diffusion
process, although as late as 1842 documents indicate
he was still considered the town blacksmith rather
than as the plow manufacturer (53). Diffusion
of the steel plow and other new agricultural tools
was slowed to some extent by a widespread belief
held at the time that iron and steel could damage
the land when it came into contact with it, making
the land impure (Hofstadter, Miller and Aaron,
1964). In the end, the plow saved so much time,
labor, and back breaking effort this objection
was overcome.
In 1843 a partnership dedicated
to plow manufacturing was formed as Deere and
Andrus. This company became Deere, Andrus &
Payne in 1844 followed by Andrus, Deere &
Lanthrop in 1846 and then evolved into Andrus
& Deere in 1847. These organizational changes
appear to be largely financial and are apparently
based on two factors: the infusion of additional
capital or materials and the growing distrust
of Andrus by Deere. The personal papers of John
Gould, a close associate, suggest that Deere did
not understand bookkeeping very well and may have
suspected that Andrus was not always forthcoming
in his explanations of money flows (70). In 1846
most of these issues were solved by the entry
of Francis Deere (aged 18) to the firm, in the
role of bookkeeper.
Sadly, Francis lived for only two more years dying
suddenly and from unknown causes on January 13,
1848. This galvanized John Deere into dissolving
the partnership and moving out of Grand Detour
to Moline, Illinois. The move away from Grand
Detour was probably related to Francis' death
and the earlier business difficulties with Andrus.
The selection of Moline appeared to be based on
business issues such as better transportation,
available labor, available resources, and some
clever community marketing on the part of a few
Moline residents.
In 1848 Andrus & Deere was dissolved in Grand
Detour and Deere & Tate was created in Moline.
From July to September a plow manufacturing plant
was built in Moline and 10 plows had been manufactured
by September 26 (75).
The weakness of the new Deere & Tate partnership
soon became apparent. Both of the men were skilled
at production and neither had much knowledge of
marketing or bookkeeping (John and Charles were
both naturally skilled in marketing, but this
was not clear until later in the company history).
On a series of trips back to Moline to visit his
family, John Deere gradually convinced John Gould,
a friend from Grand Detour and a partner in a
retail store there, to become a third partner
and take over the financial operations of the
firm. The addition of a skilled financial executive
was so important to the firm that Gould, a full
partner, was asked to provide very little capital
with the largest portion of that capital lent
to Gould by Deere at approximately half the currently
going interest rate.
Gould's first two acts justified Deere's confidence.
First, he reviewed, updated, and corrected the
Deere & Tate books which were still intermingled
with those of Andrus & Deere's books. Part
of the dissolution had involved more than $8,000
of accounts receivable that moved from Deere &
Andrus to Deere & Tate. Having caught up the
accounts, Gould proceeded to adopt an innovative
and somewhat mysterious business practice for
the Illinois frontier. He developed a double entry
system of bookkeeping for Deere & Tate. As
Gould said:
| "It
was well known that Deere and Tate had a
double entry system of bookkeeping, which
seemed to be a curiosity to the other merchants
and businessmen. They frequently came into
the office to see the system." (81) |
The firm became Deere, Tate & Gould and returned
its attention to production, adding new machinery
in 1849 which allowed total production for the
year to increase to 2,136 plows. By February,
1850 three hundred forty seven plows were being
produced a month. Having solved the basic accounting
and production issues of plow manufacturing the
firm began to focus on marketing. None of the
partners knew much about it, but John Deere &
Company was destined to become one of the most
sophisticated marketing operations in the country.
There were two basic issues which drew the attention
of the partners to marketing. As the firm's sales
force (known initially as guerrillas, softened
to drummers, and finally to travelers) moved into
Iowa the first issue emerged. The channel of distribution
(made up of farm implement dealers and general
stores) was resistant to taking on a new brand
of unknown plow. The farmers were also skeptical,
especially when the dealers were not advocating
the Deere plows. This situation forced the second
problem which would soon prove very costly to
the company. To get more dealers to take on the
plow Deere & Tate allowed the dealers to stock
on consignment. Numerous orders for Deere plows
read "payment due when sold." Even a
sale to a farmer was not a guarantee of payment
by a dealer because many dealers sold to farmers
on credit. It was not unusual for a dealer to
pay part of his total outstanding bill to a plow
manufacturer as the farmers gradually paid the
dealer. As stated by Gould dealers would tell
the company:
| "We cannot afford
to advance the money. We have sold them
to the farmers and got notes...you can wait
until we collect." (87)
|
| Gould
reported the personal cost of this situation
to himself: |
"Many
nights I have gotten out of bed and walked
the floor knowing that I had some money
to pay in a few days and did not know where
I could get it. My brain felt as though
I had a swarm of bees in it."  (87) |
Farm implement manufacturers were
forced throughout the frontier to supply their
products, through dealers, to farms on credit.
This worked in a strong economy, although it was
not a perfect solution as can be seen by Gould's
comments.
Another marketing uncontrollable
was the inadequate transportation system. The
Mississippi and its tributaries were the center
of the entire system. The "travelers"
would voyage by any means possible. Most often
they would begin at the river and then spread
out by buggy to visit and sell to the farm implements
dealers. The plows sold in this way were loaded
onto steamboats at Moline and off- loaded near
their final destination by teamsters. The teamsters
would make their deliveries to the farm implement
dealers, then they would take any surplus and
sell door-to-door to the farmers. This caused
some territory disputes with both the dealers
and the travelers, but no serious issues seem
to have arisen.
The flaw in the system was its dependence on good
weather. The rivers froze. The roads became impassible
in spring mud. Sometimes this also occurred in
fall and summer with apparently impassible mud
in wet weather and choking dust in dry weather.
Finally, in 1854 the first train made it to Rock
Island, Illinois from Chicago. By 1856 the Chicago
and Rock Island Railroad had thrown a bridge across
the Mississippi (to the enmity of the ferry operators)
(89). Although the transportation problems were
far from solved, dramatic progress was being made.
Communications also began to slowly improve. By
1853 there were direct telegraph lines from Chicago
through Rock Island and Moline to St. Louis. (But
not at Grand Detour. It is likely that the selection
of Moline as the Deere & Tate site was largely
driven by John Deere's ability to project the
location of the telegraph and railroad developments
near Moline.)
Financial issues caused a short-lived crisis for
Deere, Tate & Gould in 1850. Start-up costs
had eliminated much of the partnership's capital.
Granting credit to dealers limited incoming revenues.
In addition, reliable money was in very short
supply. Lurking in the background was John Deere's
general inability to grasp monetary issues. (Gould
had to correct John's personal and business finances
on occasion.) At this moment in time the partnership
was in a very low cash position and the visit
from "the credit man" of Lyon, Shorbe,
& Company was a serious problem. Deere, Tate
& Gould owed them several thousand dollars,
apparently for iron and steel. The credit man
asked to see the partnership's private books,
to which Gould acceded. After examining the books
he looked at Gould and said:
"Mr Gould, I don't
see why you cannot pay your
debts." |
Deere, Tate & Gould owed fairly
large amounts to two other companies and if any
one of them demanded payment the other two probably
would as well. This would have ended the business.
After considerable discussion between the three
partners and some negotiation with Lyon, Shorbe,
& Company, the latter settled for some fairly
large chattel mortgages at 6% on the land and
buildings of Deere, Tate & Gould. This caused
some hard times until August of 1853 (99).
Beginning in 1851, perhaps
due partly to the financial stress, the partners
began to be dissatisfied with the partnership.
Another cause of stress worth mentioning was a
difference in philosophy between Deere and Tate.
Apparently, John Deere was always trying to improve
the product line, trying new techniques and adopting
new innovations. Tate, on the other hand, thought
the farmers should take the products as they were.
After all, it was one of the better manufactured
line of farm implements available. The partnership
became untenable. It was terminated sometime in
1851 or 1852. Gould spent from April to November
of 1852 traveling the country, collecting and
closing out the business. In March, 1852 John
Deere ran an advertisement under the name John
Deere as "successor to Deere, Tate, and Gould."
In 1854 Charles Deere joined the firm.
Charles began his career as a bookkeeper and as
a member of "...a rather easygoing force"
(104). After a time, however, he began to attend
more closely to business. Once he became familiar
with the financial aspects of the business he
was moved to sales, often demonstrating the equipment
to customers in the fields himself. He was soon
advanced to head of sales.
During this early period of Charles' training
the new John Deere company prospered. Plows produced
jumped from 4,000 in 1852 to 8,000 in 1855, between
13,400 to 15,000 in 1856, and 13,400 in 1857 (105).
The number of employees grew from twenty to sixty
eight. Internal documents are lacking, but a newspaper
reported John Deere sales from March 1852 to March
1853 as $88,000 and in the neighborhood of $140,000
in 1856 (124). Sales were one thing, but collections
began to lag and an economic downturn called the
Panic of 1857 began to grip the nation. Before
turning to the Panic, however, it is important
to present the promotion mix methodology which
was initially developed by John Deere and refined
by Charles throughout his tenure as company chief
executive.
PROMOTIONAL STRATEGY
The years 1848 - 1857 were called "The Golden
Age" by some, especially the press. Although
the company's financial crisis of 1850 caused
some problems, The Golden Age was a time of important
growth and sustained prosperity for the new John
Deere company. Several factors lead to this consistent
expansion. The background economy, that all-important
marketing uncontrollable, slid from moderate growth
to strong growth. Prices for agricultural products
increased steadily. Farmers began to look for
(and were able to afford) improved agricultural
implements. With some experimentation John Deere,
"successor to Deere, Tate & Gould,"
was able to present a promotional strategy that
made the Deere plow one of the most sought-after
in the industry. Over time, the elements of this
strategy became the promotion mix used by both
John and Charles Deere.
PERSONAL SELLING
One of the basic sales techniques of the company
was the sales demonstration. This served two
purposes. First, it showed the capabilities of
the plow when it was used by an expert. Second,
it provided the company with valuable information
for product improvement. As the farmers discussed
the plow with John, Charles, and the travelers
the Deere representatives were able to evaluate
and incorporate new ideas and needs into their
product line.
Charles
reported:
"I used to accompany our wagons
in delivering plows through the country
and learned to be quite proficient in hitching
to and running a plow. Driving horses came
naturally to me, whether a plow team or
a trotter, and this has always been one
of my most pleasant recreations." (105)
|
The product demonstration appears
to have been associated with the earliest beginnings
of the company. One of the two extant versions
involving the sale of the very first plow has
John Deere plowing the first furrow on Lewis Crandall's
land (described as gumbo suprema) to see
how well his plow would work (45). Various accounts
put John Deere, the travelers, and Charles Deere
behind plows working out problems and product
innovations with farmers. This technique evolved
into using the demonstration to win awards for
the company plows and seeders at fairs and competitions.
The Deere archives have a photo of Charles Deere
in 1905 (aged around 67 or 68) demonstrating the
techniques of driving a walking plow (306).
SALES PROMOTION, PUBLIC RELATIONS, AND PUBLICITY
The medieval fair was probably the origin of today's
sales promotion device known as the trade show.
In agriculture during the middle 1800's the trade
show most often took the form of the city, county,
or state fair. Farm implements were shown at these
fairs as competitions between specific companies'
products were developed. This opportunity was
not overlooked by John and Charles. In 1853 the
John Deere company won a two dollar prize for
the best center draft plow at the First Annual
Rock Island County Fair. By 1855 the John Deere
company was competing in Iowa fairs as well. The
company won both a first and second place for
cultivators at the Iowa State Fair of 1855. Part
of the competition was to run the plows of different
manufacturers against one another over the same
ground. In one such competition the John Deere
subsoil plow won first prize at the Illinois State
Fair of 1855. The Chicago Tribune reported
that the Deere plow was the finest the writer
had ever seen. These victories accomplished three
things. First, they backed up the basic advertising
claim that John Deere had been making for years
on behalf of his plows. Second, they provided
copy for future advertising. Most important, they
provided publicity and source credibility - -
independent confirmation of the advertising claims
from high credibility sources. Numerous magazines
and newspapers of the day reported local and state-wide
results of the competitions in the fairs.
These competitions continued throughout the Charles
Deere years, culminating in the Paris Exhibition
of 1878 at Petit-Bourg, France (202). The Deere
entry, a riding gang plow,  won
the competition handily. This resulted in advertising
copy, but also in a laudatory article in the September
21, 1878 issue of Scientific American, a
significant publicity coup.
The Gilpin sulky plow,
patented in 1875, was a single blade riding plow
and won prizes in local, state, and international
fairs also It was an enormously popular Deere
product. It too performed in the Paris Exhibition
and its prizes provided fodder for numerous advertisements.
Charles Deere also utilized
catalogs as a method of marketing the company
product line. The term "catalog" seems
to have included several different kinds of promotion
including a product line catalog aimed primarily
at dealers, separate catalogs targeting farmers,
pamphlets directed to promoting one or two specific
products, and other kinds of communication aimed
at branch houses, dealers, travelers, and customers.
Another sales promotion device was a useful booklet
circa 1879 measuring 3 inches by 6 inches. It
was called the Farmer's Pocket Companion and
contained some farm-related business laws, weights
and measurers, postal regulations, a notes and
memos section, two pages to record bookkeeping
notes on "owed" and "receivables,"
and twenty pages of advertising both front and
back covered with illustrations of Deere products
and testimonials from loyal farmers. A copy of
the Pocket Companion can be found in the
closed reference section of the Chicago Historical
Society.
During Charles' tenure as managing executive the
company also used newspaper interviews with Charles
as a public relations method of enhancing the
firm's public image. These interviews were used
to explain the Deere position on the Grange, on
company labor problems, on the "plow trust"
and on the proposed buy-out of John Deere, Inc.
towards the end of the century. The skillful use
of these interviews allowed Charles to present
his views in support of the company's policies.
ADVERTISING
John Deere used advertising to promote his plows
as soon as he could afford to do so. Throughout
the John and Charles Deere years the advertising
often appeared to be written by the principals
themselves, although the art work was not. The
earliest advertisements that included art work
probably used the art work of plows manufactured
by competing companies. (114) The advertisements
became increasingly sophisticated with respect
to art work and with respect to the product line
advertised. The basic advertising theme or creative
platform, once established, appeared throughout
both John and Charles' tenure. The Deere advertisement
would make a company identification appeal: Deere
& Andrus, Andrus & Deere, Deere &
Take, John Deere, John Deere & Company, and
so forth. The trademark would be presented, if
one was being used at the time. For many years
the trademark was "The Moline Plow."
Sometimes the trademark appeared on the product
itself, sometimes it was presented next to the
product's art work. The product advertised would
be presented in a line drawing. A quality claim
would accompany the product line drawing. Quality
claims were primarily of three types: a prize
claim from a fair would accompany the copy, or
a product improvement claim would be made, or
the copy would extol the popularity of the product
with farmers. Some advertisements skipped the
art work altogether and concentrated on information
advertising, describing the product line (usually
within a single product class, such as plows)
in detail. Some advertisements touted the interchangeability
of John Deere product parts, making repairs easier.
Some advertisements also included warranties of
various kinds, including warranties that the repair
parts would interchange with the basic piece of
machinery. It was unclear from the advertisements
whether a basic product warranty or guarantee
of satisfaction was offered.
Apparently because the company name changed so
often in the early years after the move to Moline,
the company officers selected "The Moline
Plow" or "The Moline Plow Works"
as the basic trademark until it was determined
in court that they would not be allowed to have
exclusive use of these phrases.
The quality of the product coupled with the advertising
and the successes at the fairs established the
John Deere product line. John Deere stated in
one Deere & Company advertisement that the
"IMPROVED CAST STEEL CLIPPER PLOW" was
so good that it was acknowledged by farmers to
be "...the very best plow in use. We challenge
the world to make a better one!" It was
probably Deere's ability to mix promotional communications
and to deliver his quality message convincingly
that set the company apart from its competitors,
as other manufacturers could usually duplicate
the quality of the product.
THE PANIC OF 1857
Unlike the Panic of 1837, which had little effect
on western Illinois, the Panic of 1857 was devastating
to many in the area. Ironically, from the Deere
point of view, its underlying cause was over-investment
in U.S. production facilities and manufacturing
(Hofstadter, Miller and Aaron, 1964). By 1857
more than a billion dollars had been invested
in production capital nation-wide. Another billion
had been pumped into railroads. A large percentage
of the investments were speculative. While earlier
panics had been a result of over speculation in
land values, the new panic was largely caused
by token down payments made on manufacturing and
rail securities. Even these minimal down payments
were often obtained by borrowing high interest
loans from large eastern banks. These banks also
acted as the bankers to the country banks, so
much so that 70% of the country's bank reserves
were deposited in New York banks alone. In times
of financial need, the country banks called in
their deposits from the eastern banks. The eastern
banks then required payment on the speculation
loans. If the speculators failed to pay, the big
banks, followed by the country banks, followed
by the businessmen, followed by the farmers were
pushed to the wall (Hofstadter, Miller and Aaron,
1964).
On August 24, 1857 the largest bank in Ohio was
forced to close its doors after finding most of
its money had been embezzled by its treasurer.
Its parent bank then failed. This caused a run
on the New York banks which began to close. The
failures left the country creditor banks nearly
insolvent (Hofstadter, Miller and Aaron, 1964).
The farm implement manufacturers, financed by
the easy credit in the first place, found their
own loans being called in and discovered themselves
unable to collect their accounts from either their
dealers or the farmers (who, in turn, could not
get their money out of their own banks, assuming
they had any money in the banks).
In September, in an attempt to alleviate some
of the cash shortages, investors shipped three
tons of gold from California to the east coast
on the steamship S.S. Central America. The
ship foundered in a hurricane 200 miles east of
Charleston losing 420 of 600 passengers and crew.
The gold was also lost, increasing the nation's
financial crisis (The People's Chronology,
1996).
| "A
frequent aftermath of the financial panic,
which refers only to the violent stage of
a financial debacle, is the decline in real
output that ensues as business firms, banks,
and consumers attempt to retrench. Loans
are made with greater caution, spending
declines, unemployment increases, and general
economic depression follows." (Grolier,
1992) |
The John Deere company was not exempt from these
economic uncontrollables. In particular, the company
owed large sums of money to the steel suppliers
Singer, Hartman in Pittsburgh and Naylor &
Co. in England. While the debts would not have
been of serious concern in a good economy, the
situation became threatening enough for the Deere
company lawyer to recommend a change in business
organization. Effective July 1, 1857 John Deere
became John Deere & Company with four partners:
John, Charles, Luke Hemenway and David Bugbee.
The partnership had a capital stock of $32,000
with each partner sharing equally. Bugbee apparently
plowed $6,178 of capital into the company, for
which he received a mortgage (126). More financial
stratagems accompanied these developments, perhaps
the most significant of which was that Charles
Deere purchased a quarter of the plow shop for
$10,000 and John and Charles jointly sold the
real estate on which the factory was built to
the new partnership for $35,000 for a series of
notes coming due at different times over the next
five years. Broehl (1984) suggests two primary
reasons for these maneuvers: First, the agreements
put some of the assets in the personal names of
the Deere family and moved more assets out of
the partnership and into family hands over a period
of time, protecting them against personal bankruptcy
in the event the business failed. Second, and
Broehl views this as the most important, the agreements
appear to remove John Deere from principal manager
of the company and put Charles in that role (126).
Within eight months the financial crisis appeared
to be over. Although it was a short period of
time it determined the ultimate survival of the
company. The partnership was dissolved in March,
1858 and the company returned to its original
legal position of July, 1857. Charles noted: "The
business fell back into no Deere's hands."
(128). One would normally assume that, with the
return of ownership, management and control would
also have fallen back into John Deere's hands,
as well. Broehl (1984), however, argues determinedly
that control had permanently passed to Charles
(129). Still, Charles was barely twenty one, and
not so long ago (in his own words), an "easygoing
force." Two more evolutions of the company
organization soon developed. In December of 1858
the company added Christopher Webber as a partner.
Webber's role was unclear and he was not kindly
portrayed by the financial agency destined to
become Dun and Bradstreet:
| "...his reputation
as a bus. man is decidedly bad, for tho
he may be responsible, he is not prompt
to pay - but prompt to collect." (132)
|
That description could, however,
have described a number of reasonably good businessmen
during the period. John Deere himself was, for
the first time, discussed unfavorably in the same
publication (135). Both John Deere and Christopher
Webber seemed to hang over the company as a threat
to its continued survival. Webber was out by 1860
and one would conclude that Charles was definitely
managing the company as its chief executive by
1860 at the very latest, except that another financial
maneuver of 1864 confounds the issue once more.
In July, 1864 the company was again reorganized
as Deere & Company. John and Charles shared
equally in the business, both contributing $70,000
in stock, buildings, and machinery. According
to Broehl:
| "It was a simple,
one-page partnership agreement and the realities
of the operating situation were little changed
from that of the 1858 takeover by the son."
(150) |
Yet John Deere became President when the company
incorporated in 1868, and remained so until his
death in 1886. A public relations brochure printed
and distributed by John Deere & Company, Inc.
in 1963 and available at the Chicago Historical
Society implied that John was the chief executive
of the company until his death.  Although
the exact date that Charles took over the company
is ultimately unresolvable, it is important to
lay the facts out and to try, because whoever
ran the company between 1857 and 1864 is the executive
that deserves the credit for the recovery, and
probably the survival, of John Deere & Company.
Three facts were available to suggest that Charles
was really that executive. The first was a report
by John Gould some years later in which Gould
said that John Deere was out financially although
"...he has always given his personal attention
to the establishment, and has been about the works."
(129). The second fact was also a personal remembrance
by Stephen H. Velie, one of John Deere's sons-in-law:
| "The
commercial convolution of 1857 came very
near to bankrupting him [John Deere] and
the management of the business was in 1858
turned over to his son Chas. H. Deere, then
21 years old, who has ever since been acknowledged
head of the concern." (129) |
A third fact came from the social environment,
another marketing uncontrollable. A generation
gap of business philosophy existed at that time,
according to Hofstadter, Miller, and Aaron (1964).
An industrialist of this period hoped to carry
the business load only long enough to pass it
on to sons or sons-in-law and then turn his own
attention to philanthropy or civic affairs. Those
sons were businessmen "with the future on
their side." They were corporation executives
who looked for profits to come (unlike the previous
generation), not from invention or speculation,
but from:
"...strict attention
to management, from cautious financing,
careful bookkeeping enhancement of labor
productivity, adaptability to changing markets."
(Hofstadter, Miler, and Aaron, 1964 p. 560). |
These philosophical differences
describe the actual behavior of John and Charles
Deere beginning sometime between 1857 and 1860.
These differences are almost perfectly descriptive
of their future lives. John Deere began his public
life during this period, becoming a well known
abolitionist, philanthropist and civic leader.
Charles, on the other hand, showed on numerous
occasions the "strict attention to management"
of the careful corporate executive, also beginning
during this time period. These facts together
suggest that Charles' ascension was not later
than 1860, and probably, as Broehl argues, two
to three years earlier. Nevertheless, John was
definitely "about the works." For example,
he obtained two patents on his own inventions
in 1864 and another in 1865.
PRODUCTS AND PRICES
Over time the John Deere product line became extensive.
Both John and Charles were looking for improvements
and new products, as evidenced by the patents
and expanding product lines. Expansion also occurred
regularly within product categories. On many occasions
an improvement made in Deere's shop lead to the
obsolescence of previous Deere product lines.
Extensive records are lacking, however, and only
glimpses of the product lines and pricing are
available.
Sales were $88,000 in 1853 jumping to $140,000
by 1856. In 1868 - 1869, the first year of incorporation,
41,133 plows, harrows, and cultivators were sold
for gross sales of $646,563. Net profit on this
revenue was $198,437 (162). Aggregate sales were
$710,640 in 1869 - 1870, dipping to a low of $548,605
in 1870 - 1871. From this time sales climbed steadily
to $1,167,849 in 1874 - 1875 (793). Sales stayed
above a million dollars from that point on, gradually
growing to $2,144,570 in 1899 - 1900 which is
the latest figure available to us during the Charles
Deere years.
Profits did not always follow sales directly.
They climbed steadily, however, from a low of
$28,130 in 1872 - 1873 (previous years had higher
profits) to $511,711 in 1898 - 99. (797) (Sales
and profits continued to climb after Charles.
In 1914, for example, profits of $2,085,000 against
sales of $29,000,000 were recorded.) (798)
The product line has to be sketched based
on occasional company records and advertisements.
In 1853 - 1854 an internal document records plows
described as two horse steel landslides [sic]
at $11.00 retail and $8.00 wholesale and plows
that were two horse iron landslides 
[sic] at $10.00 retail or $7.25
wholesale. A "B" or twelve inch plow
was listed at $6.50 cash or $7.00 when paid in
full by October 1 (wholesale) or $9.00 retail
with "10% added" when paid in full by
October 1. The "C" plow was a ten inch
plow and retailed for $8.00 and wholesaled at
$6.00 on the same terms for cash or partial credit.
Breakers were plows that could cut through "the
heavily matted, grass-rooted, virgin soil,"
and allow the first shallow furrows to be planted.
Once a field (or furrow) was broken, less powerful
plows could be used in future seasons. Sometimes
farmers had to hire a team of "breakers,"
men driving eight to twelve oxen using breaker
plows (Hofstadter, Miller, and Aaron 1964). In
the 1853 - 1854 product list John Deere sold breakers
for $15.00 (cash only) and "Extra rigging
for breakers full" at $10.00 (106).
An advertisement for "Moline Plows,"
most of them called "Clippers," of around
1857 listed eight variations on plows being sold.
The differences were based on the size of the
cut (14 inches or 12 inches), whether the mold
board was made of German Steel or American Steel,
and the designs of the plows which were specialized
for different tasks. One plow was, for example,
"...universally esteemed for plowing in heavy
stubble." While another was for "...old
ground plowing." The twelve inch plows were
"...got up to meet the objection sometimes
made that the 14 inch clippers were too large
for an ordinary team;" this last is classic
Deere product improvement and advertising technique
(107).
More improvements were made in plows and other
agricultural machinery during the Civil War. Farmers
who opened new farms in the 1840s and 1850s typically
started with a farm of forty acres. With the improved
machinery farms of sixty to seventy acres of crops
became common. However, the investment in farm
machinery jumped from $10 to $20 dollars in the
1840s to $120 in the 1860s. Charles continued
the tradition of product improvement and product
line expansion during this period. In 1860, for
example, he expanded the catalog to thirty pages
from twenty four pages in 1859. (140) One of his
earliest notes was to investigate a Corn Sheller
made in Chicago (134).
In 1864 the company and the product line got a
significant long-term boost when Gilpin Moore
came to work for the company. Moore's best known
invention, a riding plow called the Gilpin Sulky,
became a mainstay of the John Deere, Inc. product
mix. By the time he retired in the 1890s, Gilpin
Moore held thirty one patents in his own name
and four other patents with shared ownership.
John Deere obtained the firm's first two patents
in 1864 relating to the casting of the steel plow.
In 1865 he obtained a much more complicated patent
with a methodology for securing the parts of a
plow so they were held together more firmly, but
at the same time had a more detachable assembly.
(149)
In 1863 the company added a new product line,
the Hawkeye riding cultivator used to loosen the
soil and destroy weeds. This was the first riding
product in the Deere product mix. The Hawkeye
was considered a major innovation and won the
first premium at the Iowa State Fair of 1863.
(149) Five hundred Hawkeyes were sold in 1864.
More than 2,000 were sold in 1865. (150)
The primary Deere products in the second half
of the Nineteenth century fell into five classes.
The first was plows, including walking or wheeled
plows which came as either single bottom (cut)
or as gang plows. A second product line was cultivators,
also either walking or wheeled. Harrows, defined
below, were a third product line. Harrow - A farm
implement consisting of a heavy frame with sharp
teeth or upright disks, used to break up and even
off plowed ground.
The fourth product line was drills and planters.
The fifth consisted of a variety of wagons and
buggies. In the 1890s bicycles were added. (200)
Charles Deere continued in the tradition of his
father, constantly looking for new improvements
for all of the product lines. For example, in
1881 the Gilpin Sulky Plow was greatly improved
by a device called a "power lift" that
allowed the farmer to pull the plow from the soil
after one revolution by putting hand pressure
on a catch. (203) John Deere & Company, Inc.
offered to add this feature to the older Gilpins.
The gang plow was improved in 1884 and 1885 by
the addition of a level that allowed the farmer
to vary the depth of the plow while the plow was
still running. (206)
Both John Deere in the late 1850s and Charles
Deere in the early 1890s attempted to put together
a steam engine and a large gang plow to create
a steam plow. (120, 206) Steam engines applied
to agricultural equipment failed to develop into
successful products, however.
Also in the John Deere tradition, Charles was
quick to utilize improvements made by other manufacturers.
One example was the three wheeled gang plow (The
Deere New Deal Gang borrowed from the Moline Plow
Company's Flying Dutchman). Another example was
the staggered wheel model of the gang plow introduced
by the Oliver Chilled Plow Works adapted for the
Deere Gazelle Plow. (205 - 206)
In 1877 Charles Deere and Alvah Mansur formed
a separate corporation to manufacture corn planters.
This rotary drop machine saved significant time
and effort in planting corn. (213) The company's
first year profits were $10,000 and were $48,000
in 1882. (212) Additional labor saving planters
were developed and placed on the market in 1881.
In 1879 Deere & Mansur introduced a stalk
cutter and in 1885 a sulky hay rake. According
to a company historian, the reason Deere &
Mansur was kept completely separate from John
Deere, Inc. was so that only one major farm implement
would be manufactured by any one plant. John Deere,
Inc.'s major implement was, of course, the plow,
while the planter was the major implement of Deere
& Mansur. (218)
Another company that began as a separate entity
was The Moline Wagon Company which supplied many
of the wagons sold by Deere. This company was
eventually bought out by John Deere, Inc. in the
early 1900s.
Deere & Webber, one of the "branch houses,"
began the bicycle business at John Deere &
Company, Inc. By 1894 Deere and Webber had ordered
1,000 bicycles for resale. By 1895 the branch
house was having three brands of bicycles manufactured
under the Deere name. (225)
Both John and Charles Deere showed considerable
skill in developing new products and improving
old ones. In addition, both men were able to market
and sell, and had an innate understanding of the
marketing concept in the century preceding its
development. John was probably not a great inventor
in the Thomas A. Edison sense of invention and
Charles was apparently not interested in that
aspect of his company. However, Charles innovation
of the branch house form of distribution channel
was his own invention, based on his understanding
of marketing organization, his product line, and
the value of personal incentive. It probably could
not have been duplicated by his father.
CHANNELS OF DISTRIBUTION
Even the original John Deere plows were technologically
advanced enough to require some demonstration.
As John Deere & Company, Inc. moved farther
into the Nineteenth Century the agricultural machines
became more and more complex, and more specialized.
The new machines required professional demonstrations,
complex and expert servicing, and continuing post
sale follow-up. (175) General stores, often distributors
of the original John Deere plow, gradually dropped
out of the distribution channel.
Most of the machine companies of the period solved
the problems of complexity, specialization, service,
and follow-up by setting up company owned branch
stores. Broehl (1984) cites International Harvester,
I.M. Singer sewing machines, E & T Fairbanks,
the scale company, and typewriter manufacturers
as examples of the wholly owned branch operation.
(175) Charles Deere, however, invented his own
system of branch organization which had some very
positive benefits throughout the distribution
channel.
The Deere method of branch organization was a
partnership, which Broehl calls the manager operated
branch house. The first of these organizations
was made up of executives of John Deere, Inc.
acting in a partnership independent of John Deere,
Inc. with Alvah Mansur in Kansas City in 1869.
This form of distributorship worked well enough
that its basic form was copied in other cities
by Charles Deere between 1869 and 1889. The cities
included St. Louis, Council Bluffs, Minneapolis,
and San Francisco. Mansur retained his partnership
in the Kansas City branch and moved to St. Louis
in 1875 and set up a second branch house with
Charles Deere there. In each of these cases resident
managers were hired and given part of the profits.
(182)
In Minneapolis one of the John Deere, Inc. distributors,
W. J. Dean, began the branch house in partnership
with Charles Deere and C.C. Webber (the son of
the John Deere partner of the late 1850s derided
by the precursor firm of Dun & Bradstreet).
Stephen Velie, a John Deere, Inc. executive soon
joined a reorganized partnership.
The partners in the Council Bluffs branch house
started in 1881 included John Deere, Charles Deere,
and Stephen Velie from John Deere & Company,
Inc. for a one third share. Another third share
was taken by The Moline Wagon Company. A final
third was acquired by the branch manager, Lucius
Wells. The partnership went by the name of Deere,
Wells, & Company.
In California the original branch organization
was again made up of a distributor (Marcus C.
Hawley & Co.), Charles Deere, and the manager
Frederick Vaughan. Unlike the other branches,
the California house was incorporated. This branch
was to prove troublesome, but the pattern of the
branch house worked over time even there.
The purpose of the branch houses was to make the
marketing organization more responsive. The rest
of the company remained centralized, but marketing
had grown too big for the needs of the numerous
dealers and the vast numbers of customers. (177)
The branches provided a mostly autonomous management
of their respective territories. Because of their
organization they brought invaluable individualistic
styles, views, and contributions to the Moline
power base. The strength of the semi-independent
branches was also something of a trial. Because
of the branches' independence the regional and
local needs of the customers, both farmers and
distributors, were much more likely to be met.
At the same time, channel conflict between the
centralized manufacturing and financing operation
and the branches was certain to emerge, which
it did. Because of the mutually shared ownership
interest between the far-flung branches and the
Moline-based executives very careful thought to
resolve the conflicts was (usually) ensured. Because
they were partners in the branches it was in the
best interest of the Moline executives to look
at any issues raised by the branch houses from
the branch perspective, as well as from the needs
of the central office.
The branch organization developed by Charles had
other advantages as well. First, the basic goal
of decentralization from Moline was met, that
of better communication with the distributors
and customers through the branch houses. Also,
because the managers were rewarded based on profitability
their personal incentive was enlarged. This was
not a typical arrangement at this point in business
history. Another strength of the branch houses
was the fulfillment of the transportation and
storage function of wholesalers. Large quantities
of products could be shipped and stored in advance
of sales to the branch houses.
New product development was very much controlled
by Charles Deere and by Stephen Velie.
Nevertheless, a letter from Velie to Deere during
one of Charles' field trips reveals some of the
branch influence on the Deere product line:
| "In
the conduct of our business in the past
we have, I believe, been more disposed to
cater to the wishes of our customers as
made known to us through our own traveling
men and those of the branch-house than perhaps
any of our competitors...with the draw-
back however of having to carry a larger
stock ... possibly carried to excess in
some direction." (186) |
Velie also acknowledged that the
company had "...taken on a larger volume
of business than we otherwise would have done."
as a result of listening to the travelers and
the branch houses.
Branch house pricing and pricing to retail distributors
both became problems that had to have constant
attention. First, the dealers, even though getting
the same price from the branch house or from Moline,
were quite competitive and were somewhat suspicious
that other dealers might be getting a better price.
When the dealers cut prices against one another
they demanded lower prices from the branch houses.
The branch houses themselves were often working
on John Deere & Company, Inc. to increase
their discounts. Because the product line was
so large and the depth of many of the lines was
extensive price reductions for specific models
were often possible. When one branch was able
to get a special price, however, the news quickly
spread to the other branches who would then often
demand the same price. Warranties, repairs and
other costs faced by the branches were probably
made more complicated than in a centrally owned
organization as the branches negotiated each of
these issues with Moline. The end result was,
however, a company that was much more responsive
to local conditions and much more careful of its
markets that would otherwise have been the case.
Territorial rights were also a problem between
the branches. No specific territory lines had
been drawn in the partnership agreements and so
some disputes over territory were guaranteed to
occur. In addition, some individual dealers refused
to go through the branch houses and ignored any
attempts at territorial restrictions.
Even with the problems associated with the semi-independent
branches, the system worked very well from both
the profit perspective of the partners and from
the point of view of maintaining the John Deere
& Company, Inc. market position and share.
Long before the marketing concept, Charles Deere
developed a channels organization that guaranteed
the economies of a wholesaling-like middleman
to the channel, but which also ensured customer
feedback would be presented to the manufacturing
offices of the company in a straightforward and
forceful way. This was accomplished at a time
when advances in manufacturing and production
processes, transportation, and finance were the
central concerns of business executives. Just
a few years earlier the detection of counterfeit
paper money and coins qualified a person as a
sophisticated bookkeeper and a blacksmith shop
was an adequate start for a production process.
THE PLOW TRUST
During this period of American history the manufacturing
firms and producers were able to grow larger and
larger thanks to technological innovation and
significant growth in demand as more immigrants
moved into the country. But entry into production
and manufacturing was still relatively easy and
it could be done with fairly small capital reserves.
The result was competition and every successful
manufacturing industry had a lot of competitors.
The plow industry was particularly prone to competition
and the natural result was for the companies to
try to find a method of consolidating, or a method
of fixing prices.
In 1864 fifteen plow manufacturers met in Chicago
and formed a "plow makers' society."
By this time Illinois ranked highest in the nation
in plow production and fourteen of the manufacturers
were Illinois businesses.
The topic of the plow makers' meeting was the
manufactures' concern over rising prices in the
iron, steel, and paint and varnish industries.
This would increase the over-all production cost
per plow around $1.00 each. That was against plow
retail prices of eleven to sixteen dollars depending
on the type of plow and the manufacturer. The
plow makers agreed that they should agree to move
prices up together to reflect their increased
costs. (150) They recognized that if they continued
to compete as vigorously as in the past, a significant
profit squeeze was likely to result.
On June 30, 1864 the group had a second meeting
and created the Northwestern Plow Makers Association.
Charles Deere was elected secretary. By December
1864 steel, iron, and paint prices had continued
to increase and the Association voted another
"moderate" plow price increase. (151)
Over a number of years the Northwestern Plow Makers
Association operated in this fashion, agreeing
on prices, setting warranty policies, and working
out other issues. But it was much more a lose
confederation of a minority of plow makers, rather
than an organization which could dictate or sanction
misbehavior (259). In the late 1890s, after the
Sherman Act, the Northwestern Plow Makers Association
and other manufacturers attempted to combine in
order to get more control over the cost pressures
of their suppliers and the downward pressures
on prices they experienced from their competitors.
Charles Deere was reported in the press to be
the president of this developing American Plow
Company - - which would begin its life with $60,000,000
in capital and was made up of the largest plow
manufacturers. (279) However, there was never
enough agreement within the industry to put together
the series of mergers that would have made the
company possible. The two principle causes of
the failure were that the prices the manufactures
wanted for their companies were excessive and
labor unrest about the consolidation too great
for the consolidation to work. (286)
In 1889 a British group of investors began negotiations
to purchase outright Deere & Company, Deere
& Mansur (the manufacturing company, not the
branch, apparently specific branches were to be
purchased by Deere & Company as part of the
deal), and their competitor, The Moline Plow Company.
This company would have been a powerful organization,
the equivalent of a large merger which would hopefully
result in some economies of scale. Deere &
Company were not able to put the deal together
in time enough to suit the British investors because
The Moline Plow Company could not agree on a price
for their firm with the Deere interests. Deere
& Company then attempted to put the deal together
without Moline Plow with a different set of investors,
but nothing except a large amount of work appears
to have come of this venture. (260 - 270)
THE GRANGE
While the plow manufacturers believed their suppliers
wanted too much money and were too well organized
for the taste of the plow makers, the farmers
felt the same way about their suppliers and the
middlemen they faced. The farmers' suppliers included
the plow manufacturers.
In December 1867 the Order of Patrons of Husbandry
was formed with the purpose of "...social
improvement and enlightenment of the agricultural
classes." (162) "The Grange's"
agenda was more specific than the statement of
purpose, however. The Grange grew slowly at first
but in 1873 another Panic hit the banking industry
and in 1874 a grasshopper invasion throughout
all Midwestern and Plains states pushed the farmers
ever closer to economic ruin. The leaders of The
Grange decided to become more militant in support
of their membership, and the farmers suddenly
found they had a friend in The Grange.
After the Civil War farm prices for farm products
had declined but the cost of farm machinery had
increased. Overextended credit purchasing encouraged
by the banks, the farm implement manufacturers,
and the farm implement dealers placed the farmer
in a hard position in the mid- 1870s. Catering
to the needs of its membership, The Grange began
to look for targets. The railroads and the coal
companies came in for their share of criticism,
but agriculture-specific businesses were bound
to be singled out the most.
The target of greatest opportunity appeared to
be the farm implements middleman. If only the
middleman, who didn't actually do anything
but add an extra 30% to 50% to the final price
of farm equipment, could be removed from the system
then farmers could buy directly from the farm
implement manufacturers at considerable savings.
And, wasn't it the farm implement manufacturers
who had set up the middlemen in the first place?
The middleman was a "parasite," a "dead
weight on society," and "a leach on
the purse of the producer." (164)
"The
smooth-tongued gentleman who calls on us
with his matched grays and fine carriage
and persuades us that we need a reaper...must
be paid for his visit." (164) |
The most expensive farm implement was the reaper
and Cyrus McCormick became a much-discussed and
abused target. His answer to The Grange was:
| "When
we are approached by...[Grange] agents with
propositions for the purchase of our machines
for cash on delivery, and in considerable
numbers, we shall, of course, be pleased
to meet them...to deal directly at our city
office, or indirectly through our agents,
with farmers or their agents..."
(165) |
In other words, a deal could be
made with the farmers or The Grange that would,
in effect, include a volume discount for large
orders, provided they were for cash. Looking more
closely at the detail of what McCormick said the
farmers learned that the total price would be
the same for a specific volume of reapers whether
the farmers dealt with McCormick's offices in
Chicago or his agents in the field. (165) The
farmers turned their attention to the plow manufacturers.
The Northwest Plow Manufacturers
Association met in 1873 to decide how they should
respond to the demand for direct sales. They decided
they would sell to farmers directly only at retail
prices, but that their retailers would be encouraged
to sell at rates "much reduced" when
the offer was for cash. The farmers were not pleased
with this answer from the "Plow Ring"
and began to put pressure on the individual manufacturers
to break free from the Northwest Plow Manufacturers
Association agreement (seven of the twenty eight
manufacturers had refused to sign the agreement
in the first place). (166)
In January of 1874, Charles Deere was interviewed
on the issues by the Chicago Tribune. The
questions and answers were reported verbatim and
they provide some significant information about
the man and his views.
Charles began by supporting
The Grange as it "...was
rightly directed and much good will come
of it."
(166) |
However, the farmer was basically
the cause of his own problems for two reasons.
First, the individual farmer wanted to overproduce
to maximize his own sales, which drove prices
down because it increased total supply. This caused
farmers to want to put more acreage into production,
so they bought more land on credit from the banks.
More land forced the farmers to buy more farm
implements, also on credit. The greatest evil
was the credit system "...the abuse of which
has involved not only farmers, but others, beyond
their present ability to extricate themselves."
(166) During the Civil War good crops and good
agricultural prices had made the credit system
less necessary, but after the Civil War "...
the great competition and the anxiety to sell
have led to lengthened credits, by which the farmer
has been involved in debt for much that he could
more profitably have got along without."
(166) Many farm implement manufacturers were in
roughly the same position as before 1857 with
respect to overextended credit (but not Deere
& Company, Inc. - - not under Charles' management).
The solution to the entire channel's problem;
the farmers' problem, the farm implement dealers'
problem, and the implement manufacturers' problem
was the adoption of the cash system. (Charles
was speaking of an "ideal" system. If
credit was what it took to make a sale that had
a good chance of payment, Charles had Deere &
Company take it.) But, if the cash system were
to have been adopted then farmers would take better
care of their farm equipment and fewer purchases
would be necessary.
As
to the importance of middlemen, Charles
said they were the:
"...outgrowth
of necessity and have taken their position
...with the encouragement of farmers...who
prefer to make their selections from stocks
kept on hand for their accommodation, just
when they have need of a particular implement,
and who find it very handy, in case of breakage
to go to the same middleman and get the
necessary repairs."(168)
In
his defense of middlemen Charles reversed
himself briefly on the issue of credit sales:
"When the poor
emigrant has secured a homestead and, with
the last vestige of his means, has put
up a little shanty, he finds that he needs
implements to till the soil. He goes to
the middleman, tells him he has nothing
left, and asks to be trusted for the things
which are indispensable to his success.
| | | |
