American Inventors Best and Holt Rivals: Part 2

Competition between early industrialists ultimately results in birth of Caterpillar.

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C.L. Best
Patent 1,158,114 for an autotractor was granted to C.L. Best, San Leandro, Calif., Oct. 26, 1915.

In the latter part of the 19th century, two driven and ambitious young men launched successful companies in California. Over the years, diverse product offerings from each man’s company eventually funneled into a singular focus: creation of the tracked tractor that the world knows today as the Caterpillar.

In part two of Rival Forces: Best and Holt, we trace the evolution of the tracked tractor and the convergence of Holt and Best into Caterpillar Tractor Co.

Making tracks in the woods

The sheer weight of early steam engines required some means of spreading that weight over a large area. Naturally, wheels were first used, some as large as 9 feet in diameter and 5 feet wide. No matter how large, a circle has a single point of contact with a flat plane. The use of tracks to spread the weight over a larger area (reducing footprint pressure) was not, at the turn of the last century, a new idea.

The logging industry, which mainly operated in the snow-covered north woods, needed not only the flotation of tracks, but the traction they provided. The highly successful and widely copied Lombard Steam Log Hauler arrived in the Maine woods in 1900.

Although Holt concentrated on combine production, the proximity of Stockton to the Mormon Slough of the Sacramento River Delta bogland led Holt to adapt tracks to his steam engines. He tested his 25-ton machine in fields near his factory and on marshy tule land outside of Stockton.

As the giant machine “clippity-clopped” back to the factory after the successful test, a spectator commented to Benjamin Holt, “She crawls along like a caterpillar.” “Caterpillar she is!” Holt is said to have exclaimed. He later registered the name as his trademark, one that would become among the world’s most famous trademarks, even becoming synonymous with the phrase “crawler tractors.” At first, however, the marque was not without difficulty. In some languages, “caterpillar” translates to “larvae.”

Holt and Best are early adopters of internal combustion engine

In 1876, in one of the halcyon events of the century, German engineer Nikolaus August Otto invented the fourstroke-cycle internal-combustion engine. The invention was recognized as being so important that the courts of Europe ordered the patents into the public domain. Motor pioneers with the names of Daimler, Benz, Duryea, Olds and Ford took the Otto-cycle engine into the 20th century.

The first Otto-engine tractor to propel itself backward and forward was the Froelich machine of 1892. It was little more than a single-cylinder engine on a steam engine running gear. It did, however, prove the concept, and eliminated the problems of boiler explosions, fires and the steam engine’s insatiable thirst for water.

Daniel Best began experimenting with Otto-cycle en-gines as early as 1891. His first large engine was used to drive a generator to produce electricity for his factory. Soon his engines were powering various kinds of vehicles, including streetcars and automobiles, and even an automobile of his own design.

By mid-1893, the first Otto-engine tractor emerged from the Best factory. It was a conversion of one of his steamers, powered by a 4-cylinder engine with the unique feature of a clutch between cylinders two and three. For light duty, the machine could be run on just two cylinders.

The Holts also recognized the potential of the Otto engine. Benjamin reportedly bought one of the first automobiles to be seen in Stockton: a 1903 Oldsmobile. In 1905, he built a three-wheeled vehicle for use around the plant.

To avoid explanations to stockholders who favored steam, Benjamin and Pliny Holt formed Aurora Engine Co. in 1906. The new company was headquartered on Aurora Street in Stockton, and although separate from Holt Mfg. Co., its operations were well integrated. By 1908, Caterpillar tractors with Aurora engines were rolling out of the Holt factory. By 1910, there were more than 100 Holt gasoline tractors in service.

Patent infringement results in new company

Tractors built by each manufacturer were widely used in farming, logging and construction. Both Best and Holt continued to build combine harvesters for international trade as well. Intense competition between the two West Coast manufacturers inevitably led to patent infringement litigation.

As early as 1905, Best sued Holt for usurping his patents on the steam-powered auxiliary motor used to power combine cutting and threshing mechanisms. Legal maneuvering went on for three years. In the end, Daniel Best sold out to Benjamin and Charles Holt for $800,000.

The deal included an arrangement where C.L. Best, Daniel Best’s son, was given one-third of the stock in Best Mfg. before the sale. This gave C.L. Best a substantial interest in the combined company (to be called Holt Mfg. Co.). The Holts, however, would have majority control.

C.L. Best chafed under the arrangement. He stayed with Holt Mfg. Co. for less than two years. Although he lost his investment in Holt when he left the company, with financial help from his father, he soon launched C.L. Best Gas Traction Engine Co. in Elmhurst, California. He established a steel castings plant near his factory to make engine blocks and other tractor parts and began building a line of wheel tractors ranging in size from 20hp to 80hp.

Best immediately set out to make a crawler tractor as well, using the “Tracklayer” trademark. The new business prospered to the point where more manufacturing space was needed. In mid-1916, he purchased the old San Leandro plant that his father had built and transferred operations there.

Formation of Holt Caterpillar Co. resets competition

Increasing sales of both crawler tractors and combines led Holt Mfg. Co. to consider expansion eastward. The vast prairies of the Great Plains were being planted with wheat and large farms were being developed from the Canadian provinces to Kansas and Oklahoma and all the way to the Rockies. Benjamin Holt dispatched his nephew, Pliny Holt, to seek a new manufacturing site for crawler tractors to cover this burgeoning market. Combines would be shipped from Stockton, at least at first.

Pliny chose Minneapolis, a booming metropolis on the Mississippi River, where he acquired factory space and hired a staff. Early in 1909, parts shipments from Stockton began and assembly of Caterpillars got underway. The eastern operation was a separate company known as Northern Holt Co., led by Pliny Holt as president. A Canadian branch was added to Northern Holt shortly thereafter.

The first two Caterpillars were sold by the end of 1909, bringing in about $7,000. Expenses for the year, however, were $12,000. With no further capitalization in the offing, it seemed that Holt’s eastern expansion might be a bust.

In a most fortuitous occurrence, Peoria, Illinois, implement dealer Murray M. Baker got word to Pliny Holt of the availability of the then-defunct Colean Mfg. Co. facilities in East Peoria. Colean was one of the many steam tractor builders that failed to make the switch to gasoline engines. The failure of Colean had hurt the Peoria area, and local financiers were anxious to get the factory going again.

Favorable terms were offered, and Baker even put in his own money to seal the deal. Not only was a fully functional workspace acquired, but having such an asset on the books allowed development of further financing. Because Baker had impressed the Holts with his aggressive and optimistic spirit, he was named vice president and general manager of the Peoria operation, now called Holt Caterpillar Co.

Thus, by 1916, everything had changed, but nothing had changed. The two old rivals, Holt and Best, were again in direct competition. Holt was considerably larger, but Best had some good products, both wheeled and tracked, and was ahead in gas engine development. Looming legal battles would consume much of both companies’ energies over the next decade.

Best pushes his luck with Caterpillar name

C.L. Best had built several versions of round-wheel tractors, but in 1912, he came out with a 75hp crawler that was much the same as the current Holt machine. As though looking for a fight, Best audaciously used the name “caterpillar” in his advertising. Holt sued for patent and trademark infringement, and a hot legal battle followed.

Fortunately for Best, the Holts had failed to acquire the patents taken out by inventor Alvin Lombard for his famous steam log hauler. Best’s lawyer went to Lombard and struck a deal for two of the most important patents.

With the Lombard patents in hand, Best was able to prevail in the patent lawsuit – but was barred from using the term “caterpillar” in the future. Not only that, but he was able to sell rights to the Lombard patents to Holt for enough money to get his company on its feet. Best, of course, retained the rights to use them himself.

C.L. Best painted his tractors black with gold letters. Holt’s were painted brown with yellow trim. From a short distance it was difficult to tell them apart. In black-and white photos, it was even harder to make the distinction. Best reportedly even used pictures of Holt machines in his advertisements.

Looming debt burdens cloud prospects for Holt and Best

Not until 1915 did the U.S. War Department agree to test the Holt 75, and then only after Holt mentioned that more than 1,000 Caterpillars had been ordered by Britain, France and Russia. The War Department remained firm in its belief that only animal power was reliable enough for war use.

In 1916, however, the U.S. Army purchased 27 Holt Caterpillars, which were soon pressed into service when General John J. “Black Jack” Pershing pursued Pancho Villa into Mexico in a punitive foray against the Mexican revolutionary and guerilla leader. Caterpillar tractors were instrumental in conveying troops and supplies some 350 miles into then-roadless Mexico. Pershing’s resounding praise for the Caterpillars gave them credibility with the Army.

Between the general’s influence and a pipeline into the congressional appropriations committee (Murray Baker’s cousin held an influential committee position), Holt eventually sold hundreds of Caterpillars to the U.S. Army. Best, on the other hand, was completely shut out of Army business.

Instead, C.L. Best concentrated on developing relationships with the farmers, loggers and the burgeoning road building industry. This put Best in a much better position when military buying ended in 1918. In fact, the Army collected all of their Holts in France, shipped them home and sold them as surplus at very low prices, decimating Holt’s new equipment sales.

The burden of debt dogged both Holt and Best after World War I. Routine operating capital was regularly obtained through lines of credit from financial institutions. It was common practice to re-finance these loans periodically, sometimes by borrowing from other institutions, but in a post-war economic recession, those lines were drying up.

Both companies had considerable excess manufacturing capacity, especially Holt in Peoria. The Holt company sustained a body blow when Benjamin Holt, its president and founder, died suddenly in December 1920. Then, in 1920, came the Agricultural Depression, greatly affecting farm
machinery sales.

Together again

Holt and Best had financed their credit lines through large banking houses. Best used the San Francisco firm of Pierce, Fair & Co. Holt mainly financed through the Boston firm of Bond & Goodwin. Each firm was represented on Holt’s and Best’s boards of directors. Following the death of Benjamin Holt, Bond & Goodwin banker Thomas Baxter was elected by the Holt board to Holt’s position of president, pushing aside heir apparent Murray Baker of the Peoria factory.

Harry Fair of Pierce, Fair & Co., had a seat on the Best board. Fair had also invested personal funds in Best Tractor Co., and was rightly concerned about his (and his company’s) money in the wake of the market downturn and excess manufacturing capacity.

Making secret overtures to Pliny Holt and Murray Baker, Fair proposed a consolidation of the two manufacturers. He pointed out that there was ample business for one firm, and Pierce, Fair & Co. could provide ample funding for one. The Holt board called a meeting and laid out the plan.

All stock would be transferred to a new entity that included Pierce, Fair & Co. and “associates.” The associates were the Holt family, Murray Baker and Holt Corp. This group then transferred their assets to a new corporation, Caterpillar Tractor Co. The owners of the Best Gas Tractor Company did the same at a meeting in San Leandro.

Thus, in 1925, Caterpillar Tractor Co. was born. Neither Best nor Holt had sold out, and it was not really a merger in the proper sense. It was a consolidation in which the two firms reorganized and combined their financial ownership. The decision to join forces was proven a sound one through improving sales and profits from then until the effects of the Great Depression were felt in 1932.

And John Sutter? The frenzied gold rush of 1849 brought both fame and ruin to Sutter, on whose land gold was discovered. He died a pauper. Marshall, the carpenter, and Sutter’s other employees all bolted to seek gold. The sawmill, which could have made Sutter a fortune, was never finished. Instead, thousands of forty-niners overran and despoiled his holdings. Marshall also died in poverty, having searched in vain for a strike all across the Sierra Mountains. FC

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