Digging Up the Past

Peterson Starts as a Partnership

Howard Peterson (C) with partner (next right) and employees in 1938

Peterson Tractor & Equipment Co. was formed as a limited partnership at Caterpillar's insistence. "When Caterpillar gave me the agency, they encouraged me to take on a partner with sales experience," recalls Howard who had spent his time welding and manufacturing iron, not selling it. "I knew LeTourneau's sales manager real well so I propositioned him to come with me into the business." At the last minute, he decided to back out of the deal unless he could own a third of it. The fact that he didn't have the necessary funds didn't deter him. "He had $7500 and Caterpillar wanted $150,000 cash to start our business. So I put up the balance of $42,500 for his third, then paid my two-thirds and we were in business."

The partnership went sour fairly fast. Howard acted as overall administrator and his partner, Carl Danielson, ran sales. When Howard started helping customers and making sales, odd things began happening. Machines that he'd taken in on trade in good shape, wound up needing new tracks or other costly repairs before they could be sold. The equipment his partner took in, invariably looked better going out then they had coming in, with mysteriously little repair work in the process. After several repeat episodes, Howard started getting suspicious. "One day some mechanics came up to me and clued me in on what was happening," recalls Howard. "They were being told to switch the worn-out tracks off other machines and put them on the tractors I brought in on trade. That way, my deals always looked like bad decisions because we'd have to hike up the price to cover the repairs." Howard ended up confronting his partner about the situation. He, in turn, went to Caterpillar and tried to convince them that Howard Peterson didn't know how to run a business and that they should give it to him instead. "He wanted them to force me out of the picture entirely, but it backfired on him because shortly after that, Caterpillar came to me and told me I better get rid of him - fast." So, in December 1938, two years after start up, Howard bought out his partner's share of the business and became sole owner. And Caterpillar's confidence was, once again, restored.