[AT] 430V - now Deere and The Great Depression

[Stephen Offiler]

John raises a really interesting point about repossesions.  I'm not an
accountant, and I have no idea what the tax laws were like in the 1930's,
but I do know that inventory increases can have negative tax consequences,
and it seems that Deere would somehow have to count those repo tractors as
an inventory asset.  On the flip side, bad debts can have positive tax
consequences.  This is an interesting, tricky business decision on Deere's
part that combined a variety of factors from the trustworthiness of farmers
all the way to the tax man and back to future brand loyalty concerns.

SO


On Tue, Sep 19, 2017 at 1:04 PM, John Slavin <chaunceyjb at sbcglobal.net>
wrote:

> Dean:
>
> Great story.  Always enjoy to hear stories of our ancestors.  And Bill,
> your comment makes sense too.  I suspect Deere’s decision was not
> altogether altruistic, though.  They knew most of their customers were not
> deadbeats and if they could pay, they would.  The probably figured that
> with time, assuming the economy turned around, they would get paid. The
> reality though was that they probably knew they would take a haircut on
> repossessions.  I asked my mother one time about what it was like to live
> in the depression because you always hear the stories about soup kitchens
> etc, and she said, “We always had plenty to eat because everything we ate,
> we raised or grew.  And we just entertained ourselves.  The only thing we
> bought at the general store was salt and maybe a little coffee.  NOBODY had
> any money.”  I know one guy never trusted the banks and kept all his money
> in coffee cans.  When land was being foreclosed, he went to the courthouse
> steps with his coffee cans in tow and bought land for a song.
>
> So I rather suspect Deere thought there was no way to recoup the loans and
> that was the main reason they decided what they did.
>
> John
>
> > I thought I had heard of a general policy at the time regarding this,
> and found it in Broehl's book, John Deere's Company, page 504: "The
> company's decision ...  was to carry the farmer as long as necessary to
> amortize the debt."  The book goes on to speak of the credit worthiness of
> the farmer and states that before the depression Deere had a .009 ratio of
> uncollectables to total sales!  If I interpret the sentences that followed
> correctly, by the end of the depression that ratio had climbed to only
> about .01.  "The farmers' loyalty to Deere products, always strong, was
> greatly strengthened during the period of the Great Depression.  The
> company's belief in the farmer was reciprocated by a farmer response that
> gave Deere a priceless asset for the future."
> >
> > Bill Brueck
> > Pine Island, MN
>
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