Harry Ferguson: Mechanical Genius Part III

Inventor Harry Ferguson turns to Massey-Harris in final partnership


| October 2010



Harry Ferguson

The 200,000th "Little Grey Fergie" produced at Banner Lane.

In the final installment of a three-part series, Jane Brooks concludes her look at the life and times of Harry Ferguson. In the early 1940s, the brilliant inventor turns his energies to international economics – but soon enough faces challenges close to home. Read part IRead part II. 

With the lawsuit behind him, and his American plant continuing to produce the TO-20, Harry Ferguson abandoned the life of a nomad and returned to the tranquil setting of Abbotswood, his Cotswolds haven. After his epic fight, Ferguson was finally able to concentrate on the business of tractor manufacture and promote his rather naive view of international economics.
He was very interested in the potential impact of farm mechanization on reducing poverty and hunger. In 1943, he spoke at the first United Nations Conference on Food and Agriculture, held in Hot Springs, Va. "I know many of you represent countries where the farms are very small," he told conference attendees. "The smaller the farm, the more urgent the need for mechanization. The small farmer has a life of slavery and poverty. This is all wrong. Agriculture should have been the first industry to be modernized and not the last."

Belief in low prices
In 1947, Ferguson outlined his solution to the problem in a paper titled The Price Reducing System. "My whole economic philosophy and all my efforts are guided by the knowledge that the best way to improve the total economy will be through cutting the costs of production of agricultural products, which control the cost of living," he explained. "There must be implements of an altogether new type which will produce, for the first time in history, enough food to feed all the people of the world. And, also, produce from the land – the source from which all wealth comes – a new wealth to enrich the world.
"Our plan for prosperity, security, and peace can be stated in two simple propositions," he wrote. "Make the good earth produce more than enough to keep its whole population in comfort and contentment. And what is equally vital, produce ‘more than enough' at prices which the people of the world can afford to pay. That is our ambition. That is the course to which I am wholly dedicated."
With a belief that inflation caused worldwide unemployment and poverty, which led to the rise of Communism, Ferguson's solution was lower prices, which he believed would lower inflation starting with agriculture. By mechanizing agricultural production, he reasoned, food prices would fall, reducing want and poverty and halting the rise of Communism. 
In Britain, the Labour government started a program of nationalization. American aid was vital to post-war recovery efforts. Ferguson opposed nationalization of the steel industry and, in 1949, wrote to each member of Parliament and every Conservative and Liberal peer, lobbying for his position. However, it was generally accepted that Ferguson was an idealist and his system doomed to failure. Ultimately, the only place his price reducing system was adopted was in his own company.
Ferguson's faith in his pricing system affected the company's performance, although demand for his tractors was good enough to sustain any price rises caused by additional production costs. But such increases were not passed on to the customer, resulting in insufficient profits to build up a safety net of working capital.

Looking for a buyerBy that time, the 3-point hitch had been adapted and used by other manufacturers. But the post-war boom, particularly in America, had run out of steam. By the early 1950s, demand for new tractors dropped, affecting farm machinery manufacturers throughout North America. Companies such as Ford weathered the storm, but Ferguson's position was weaker. In 1952, he decided to sell Harry Ferguson Inc. but retain the Coventry operation. He set his sights on Massey-Harris as a buyer.
At the same time, Ferguson engineers were developing a mounted combine for use behind their tractor and Massey-Harris wanted to manufacture it at its Kilmarnock factory in Scotland. In June 1953 an outline agreement was reached for manufacture of the combine, allowing Massey-Harris to use the Ferguson tractor engine in some of its harvesting equipment.
Massey-Harris President James Duncan, who guided the company to success during the late 1940s and early '50s, arranged to meet the senior management of Ferguson Ltd. to discuss the combine. In a last-minute change of plans, Duncan was invited to dine at Abbotswood. Ferguson first offered him a 50 percent partnership in his company. When Duncan declined that offer, Ferguson asked him if Massey-Harris was interested in buying his American business. Duncan said he would consider the proposal.
Duncan visited Detroit and then wrote to Ferguson, in July 1953, suggesting as a first step to a closer union that the two companies should coordinate their efforts in North America. He proposed a meeting with Ferguson in England on Aug. 4, a suggestion Harry Ferguson accepted. A new tractor, the LTX (a larger version of the TE-20) was under development in Coventry and Duncan was invited to a demonstration.
Duncan, his wife and members of the Massey-Harris team arrived in England and headed to Abbotswood, where the Duncans dined with the Ferguson family. After lunch, the two men headed to the summer house, where Ferguson stunned his guest by offering to sell his entire agricultural business to Massey-Harris. Duncan rebounded quickly. He made an immediate offer, Ferguson made some notes on the back of an envelope and the deal was done.

With the flip of a coinThe two men agreed that Ferguson would receive book value for his company's Massey-Harris shares worth some $16 million ($130 million in today's terms) in exchange for the operating Ferguson companies. The rest was left for lawyers to settle. During the deal's closing stages, it became apparent that Ferguson's interests in France had been forgotten, undervaluing the business by $1 million. Duncan was at his limit with the offer of $16 million; Ferguson wanted $17 million.
In the end the irascible Irishman suggested they settle the matter on the toss of a coin outside the Lygon Arms at Broadway in the Cotswolds, using a coin (a half crown) supplied by John Turner, Ferguson's financial advisor. Ferguson called "tails" and lost. The coin was later mounted on a silver cigar box engraved with "The $1,000,000 Coin" and a further inscription, "To our friend and partner Harry Ferguson, a gallant sportsman."
The merger of Massey-Harris and Harry Ferguson Ltd. became official on Aug. 17, 1953, and Massey-Harris-Ferguson Ltd. came into being. Ferguson received 1,805,055 Massey-Harris shares, making him the single largest shareholder. He was named chairman of the new company and retained control over design of Ferguson equipment. Although the deal was presented as the amalgamation of two businesses, in essence, Ferguson sold his company to Massey-Harris.

Massey's proud tradition
Massey-Harris traced its start to 1847, when Daniel Massey started a farm repair and equipment business in Newcastle province of Canada West (now Ontario). Ten years later, in 1857, Alanson Harris started manufacturing farm equipment in Brantford, Ontario. Both companies became industry leaders and competed against each other in the tough Canadian machinery market for 30 years. The two companies merged in 1891, forming Massey-Harris, a formidable agricultural business. 
Within 20 years the firm had entered the power farming market. In 1917, the company sold U.S.-made Bull tractors to Canadian farmers, a short-lived arrangement in the wake of the failure of the Bull company. In 1919, Massey-Harris sold tractors based on the Parrett tractor built in Chicago. The company also marketed the Wallis 20-30 (manufactured by J.I. Case Plow Co., Racine, Wis.) under the Massey-Harris name. Massey-Harris purchased the Racine factory in 1928, and sold the J.I. Case Plow Co. name to the J.I. Case Threshing Machine Co. that same year.
Massey-Harris expanded into Europe, operating manufacturing bases in France and Germany. Massey-Harris bought an interest in the H.V. McKay Sunshine Harvester Co., near Melbourne, Australia, in 1930. In 1946, Massey-Harris began producing mowers and hay machinery at Trafford Park, Manchester, England, and in 1948 the 744 PD tractor went into production there. Based on the Canadian-built Massey-Harris 44, the English version was given the prefix "7" to denote where it was built; "PD" signified that it was fitted with a Perkins 6-cylinder diesel engine.
In the years following World War II, Massey-Harris equipment outsold Oliver, Cockshutt, Case and Minneapolis-Moline, but tractor sales were weak. Other lines' tractors were more advanced and Massey-Harris needed new technology. The offer to buy out Ferguson was a golden opportunity. With the takeover completed, Massey-Harris-Ferguson immediately became the second largest agricultural manufacturer in the world behind International Harvester and ahead of John Deere.
All the new tractors offered 3-point hitch systems, Harry Ferguson was on the new board of directors, and the company continued to produce and market completely separate lines of tractors using both Ferguson and Massey-Harris brand names. Entirely separate dealer networks were operated for the two brands, confusing dealers and customers alike, as well as causing discord among Massey-Harris and Ferguson design teams.