Fraud in the tractor industry was rampant in the competitive pre-1920s era
Before 1920, the tractor industry was in flux. Competition was fierce among the 200 tractor companies trying to sell their products, so to attract customers, some of them stretched the truth.
Sometimes these truth-stretchings were relatively innocuous, like Eagle's claim their tractors ran as well on kerosene or gasoline, which testing proved was not so. Or Liberty Tractor Company's claim that "The fine adjustment of bearings makes the Liberty Tractor so light in draft that it can be pushed back and forth on the sample (showroom) floor with one finger." (Later amended to read "one hand.") These were not earth-shattering or fraudulent claims.
But the same could not be said for other tractor companies interested in making a quick buck. As C.H. Wendel writes in the Encyclopedia of American Farm Tractors, "For a few years, the tractor industry was a helter-skelter assortment of big companies, small operators, and outright charlatans."
Ford Tractor Company of Minneapolis, Minn., had nothing to do with Henry Ford of Ford Motor Company, Dearborn, Mich.; and yet everything to do with it.
The point of the Ford tractor manufactured by Ford Tractor Company of Minneapolis in 1916 was to take advantage of the reputation of the Ford name, piggy-backing on the success of Henry Ford and his Model T automobiles. Nothing legally wrong with that: no Ford tractor existed at the time. However, the methods of Ford Tractor Company of Minneapolis clearly blurred ethical lines, and became fraud.
Henry Ford wanted to manufacture a tractor, but the success of his automobile kept him so busy W. Baer Ewing beat him to the Ford name in 1915.
Ewing had planned his scam carefully. He found Paul B. Ford – no relation to Henry – and asked him to design a "Ford" tractor.
In reality, Paul B. Ford didn't know the difference between a tractor and a trampoline. A Better Business Bureau document of the time explains that Ewing found Ford's name in the city directory. They met for the first time and made an agreement which allowed the company to use Paul Ford's name, for which he would "receive certain definite compensation ..."
Ford Tractor Company claimed: "Mr. Paul B. Ford, inventor and designer of the Ford Tractor, has devoted years of his life to its study. He nurtured his idea until he found men who were willing and able to convert his idea into a reality. He conceived the idea of a light, servicable (sic) farm tractor."
But Ford, who was employed by a heating company, knew nothing of tractor design. Ewing wanted Ford solely because of his last name. The tractor had been designed by a Mr. Kinkaid.
Ewing claimed the company was making two tractors a day in its Ford Plant, and when the night shift was started, it would produce five a day. He said orders with the $75 deposit were pouring in from all over the world, and the tractors were being sold quicker than they could be produced. The company was making money.
In fact, at the time of the claims, no Ford tractors were being made at all. A few Ford tractors were eventually made in a building called the Ford Plant, which Ewing did not own. All the other claims were plucked out of thin air.
As months passed, the Ford Tractor Company web began to unravel. Paul Ford admitted the deceptions to the Twin City Reporter, saying he wished he had never been part of it. The newly-formed National Vigilance Committee gathered evidence on W. Baer Ewing and Ford Tractor Company of Minneapolis, and published a booklet titled "Facts About Advertising of Stock in The Ford Tractor Company, Inc." Robert P. Matches, overseer of sales of FTC stock, was besieged by stockholders screaming for monetary returns. Farmers yelled for their promised tractors, which were to have been shipped C.O.D. minus the initial $75 deposit; $10,130 of new-tractor deposit money had been spent by the company, with nary a tractor shipped.
To complicate matters, Ewing had illegally used a previous company, Federal Securities Company, which was already being investigated for fraud, as collateral for FTC. A Minneapolis-St. Paul newspaper said in a story about Ewing: "A scheme for obtaining money under false pretenses that would put the ordinary gold-brick artist to shame has been worked in Minneapolis for some time past and is still being put across when the proper kind of a sucker gets into the toils of the manipulators of the scheme." Of FTC, the Twin Cities Reporter wrote, "Everything is in large figures except the cash on hand and in bank."
Finally the house of cards tumbled; fewer than a hundred – perhaps only 30 – Ford tractors were ever sold, not thousands as the company claimed. Ford Tractor Company of Minneapolis went into bankruptcy.
On Oct. 21, 1918, all the property of the company was sold to pay judgments against it. Although Robert Matches was convicted of conspiracy to defraud investors in another case, it reflected his behavior in the FTC fiasco, "...and Ewing," Wendel writes, "was reported to have organized a tractor company in Canada." While the Ford Tractor Company of Minneapolis met its proper fate, farmers and investors got nothing, and fate of W. Baer Ewing, the perpetrator of one of the greatest frauds in tractor history, is unknown.
The story of the Pan tractor is a story of oddities and peculiarities, as well as downright fraud. Why Samuel Pandolfo Jr., and his Pan Motor Company of St. Cloud, Minn., wanted to get into tractors is a curiosity in itself. Beginning in 1917, orders for more than 7,000 Pan automobiles flooded in, and it was quickly apparent his company would not be able to meet that demand. Nevertheless, he turned to the manufacture of tractors, even though he had no background in farming – he had been a school teacher and an insurance salesman for many years.
And yet he chose to make the Pan Tank-Tread Tractor, as well as its compatriot, the "King of the Field" tractor, which looked suspiciously like a Fordson tractor.
The St. Cloud Times of Feb. 27, 1918, said "Without a question the Pan Tank-Tread Tractor proved the biggest sensation at the National Tractor Show (at Kansas City) from the moment it went into action until the closing hour of the show." The paper went on to say that other tractor men could not conceal their surprise and admiration when they inspected the "Farmer's War Tank."
"Hundreds of farmers," the paper said, "who had visited the show at Kansas City the first three days – before the Pan tractor arrived – came back to see the Pan. That it made a decidedly favorable impression was evident by their remarks. Many showed their disappointment when they found they could not have a 'Tank-Tread' delivered at once."
The article said the tractor would revolutionize farming and the tractor industry. Much the same high praise was found in Western Magazine, April 1, 1918.
But the grass roots rumor-mill began saying the tractor not only had not been made by Pan Motor Company, but that it didn't even possess an engine. So it didn't run, which ran counter to articles and discussions about it.
To scotch those rumors, Pan Motor Co. held a parade for the tractor in St. Cloud on Oct. 7, 1919. A big Pan trailer bus carrying band members was prominently drawn by the Pan tractor. A next-day article in the St. Cloud Times said "The famous Tank Tread Tractor which is so strongly attacked in the suit against the Pan Motor Company to be heard in Chicago on the 23 inst. as being impracticable and a physical impossibility, appeared on the streets of St. Cloud this afternoon on its own power."
"In spite of everything that has been said against us because of our claims for the Tank Tread Tractor, it is running and it is a success," said President Pandolfo. "It is not only a success, but it is the best caterpillar tractor so far designed and developed."
But trouble was brewing. People discovered that Pandolfo himself had planted the information about the success of the tractor in Kansas City, and had paid for the highly-positive article in Western Magazine.
A pamphlet by the National Vigilance Committee said "Only one model of this much-promoted Pan Powered Tank-Tread Tractor has ever been built ... This model – politeness only could concede it to be a real tractor – was built by the Progressive Machine & Model Works, Minneapolis."
The pamphlet said the information given out at the Kansas City show was certainly optimistic, since the tractor was not running at the time, but was there merely for show.
In 1920, the company went broke, leaving 70,000 investors in the lurch to the tune of $10,000,000. Pandolfo himself went almost non-stop into court, where he was finally indicted and sentenced to ten years in prison for mail fraud.
As John Dominik writes in Wizard of Progress, "At the time of his indictment in Chicago ... some – including a judge or two – insisted that he was one of the sharpest con men in the country; others closer to him claimed that he was cast in the mold of America's pioneer entrepreneurs, the business tycoons whose boundless energy and single-minded pursuit of power and money compelled them to establish large and successful enterprises."
Nevertheless, proof is clear that people were defrauded of money, and that the company made claims that could never be substantiated. No models of the proposed "King of the Field" tractors were ever made, and it was no surprise to discover that this tractor's moniker was not original to Pan; the Happy Farmer had been using the name for years.
The Lion Tractor Company of Minneapolis had a fun motto for their Lion tractor: "Strong as a lion, made of steel, sensation of the world, never tired, never hungry, never sick."
The Lion tractor hit the market in late 1914, and an uproar followed.
The Bull Tractor Company of Minneapolis claimed patent infringement, saying that the tractor was actually theirs. Farm Implements Magazine of Nov. 25, 1914, said that the Bull Tractor Company had hired tractor designer D. M. Hartsough in January 1914, to make a better (and cheaper) Bull Tractor. Hartsough accepted the commission, patented the tractor, and instead of giving it to Bull, sold it to the Lion Tractor Company.
Also, according to Farm Implements, the legal complaint against Lion Tractor Company "... alleged that this name (Lion) was selected in order to mislead purchasers into believing it was a machine sold by P.J. Lyons, a stockholder in the Bull Tractor Company. A restraining order is asked, prohibiting the manufacture or sale of the new tractor by the defendant (Lion) company."
The Lion Tractor Company ignored the restraining order, and was subsequently found in contempt of court by Judge Booth of United States District Court, and was fined. The Lion Tractor Company claimed, in a letter in Farm Implements Feb. 29, 1916, that "The (Hartsough-designed) machine was tried out by the Lion Company and abandoned as worthless. The Lion Company never manufactured the machine or sold it ..." That was an odd statement, considering that the new Bull/Lion tractor would have been cheaper than any other tractor on the market, a huge selling point at the time.
However, they did not say that they were using part of Hartsough's "worthless" design, "being a differential brake steering device identical in all particulars with the differential brake steering device embodied in the machine designed and invented by D. M. Hartsough," court papers said. Then, midway through the first year of production of the Lion tractor, the company also abandoned the differential brake steering device. The overall result was an increase in the cost of the tractor, from $350 to $475, which put the Lion in the price range of every other tractor on the market, certainly no way to attract market share.
Perhaps both sides discovered the public fighting wasn't helping either one of them: Bull Tractor Company already had their albatross of the Little Bull hanging around its neck, and could ill afford more bad publicity. And Lion Tractor Company was young and needed to sell tractors. So on Aug. 28, 1916, the companies settled the fight; no terms were announced, but Lion Tractor Company gained the rights to make the Lion tractor they had so lately disdained.
But it was too late; within a year and a half, the Lion Tractor Company and the Lion tractor (as well as the Bull Tractor Company) were history.
The frauds resulted in changes in the tractor industry: Advertising became more heavily scrutinized; the Nebraska Tractor Tests were initiated, assuring farmers that tractors they bought would work; poor tractor companies went out of business; and one of the most successful tractors ever built was named because of the fraud of another company – the Fordson, so-named because Ford Tractor Company of Minneapolis had co-opted the Ford tractor name. Maybe the farmers and investors who had been bilked wouldn't agree, but something good did emanate from these tractor frauds. FC
Bill Vossler writes on a variety of collectible farm equipment, and is the author of Toy Farm Tractors.