These tractors are legally purchased. Earl nodded slowly. That may be true, but the delivery address is my property and I’m refusing delivery. So, unless you want to sue me for breach of contract, which I’m not part of, you can load those tractors back up and take them to your lot, or James can rent ground somewhere else to park them, but they’re not staying here.
The standoff lasted another 30 minutes. James argued, pleaded, and finally threatened to sue his own father. Earl didn’t budge. Finally, Rick Holloway made a decision. He told Mike to take the tractors back to the dealership. We’ll sort this out, he said to James. Don’t worry, we’ll figure something out. But Earl knew exactly what would happen.
The dealership would keep the tractors on their lot and James would either have to find somewhere else to put them or he’d have to cancel the contract and face potential penalties. Either way, the tractors weren’t coming onto the Patterson farm. James didn’t speak to his father for 3 weeks. He rented a small shed from a neighbor 5 mi away and had the tractors delivered there.
He paid $200 a month for the storage. He took out an operating loan to cover startup cost for the season since his cash was tied up in the tractor payments. And he farmed the Patterson 640 acres with the new John Deers. Determined to prove his father wrong, Earl meanwhile watched silently. He didn’t interfere. He didn’t sabotage.
He just watched. The 1978 growing season started well enough. James planted all 640 acres, mostly corn with some soybeans using a new 4440 and a new planter he’d also financed. Another $12,000 he hadn’t told his father about until after the fact. The equipment performed beautifully. The 4440 was powerful, comfortable, efficient.
James covered ground faster than he ever had with the old 4010. He felt vindicated. See, he told himself, “The old man does understand modern farming.” Then summer arrived, and it was dry, not a catastrophic drought, but below average rainfall in June and July. Corn across Marshall County was stressed. James’ fields, which he’d fertilized heavily using recommendations from an aronomist who worked on commission selling fertilizer, were showing signs of nitrogen burn.
The heavy fertilizer application combined with lack of water was actually stressing the plants. His father watching from a distance said nothing, but he noticed by late July it was clear the crop wasn’t going to be great. James was projecting yields of maybe 95 to 100 bushels per acre, well below the 115 he’d used in his calculations, and corn prices haddropped to $25 per bushel.
He ran the numbers again. 640 acres at 98 bushels per acre at $25. 128,51 gross. Operating costs, which had increased because of higher fertilizer use and fuel consumption from the bigger tractors, $85,000. Net before equipment payments, $43,51. But his equipment payments for the year, two tractors plus the planter, all financed, were $17,800.
That left him $25,251. Still profitable, but a lot tighter than he’d expected. And he still had living expenses, maintenance costs, property taxes. Then in August, the 4,440 developed a problem. The turbocharger started making a strange noise and within a week it failed completely. James took it to the dealership.
Rick Holloway, noticeably less friendly than he’d been during the sale, told him the turbocharger failure was likely due to improper maintenance, specifically not letting the engine cool down properly before shutting it off, which causes oil coing in the turbo bearings. It’s not covered under warranty.
Rick said the repair cost $3,200. James didn’t have $3,200 in cash. He’d spent everything on operating expenses and he was counting on harvest revenue to cover his endofear obligations. He asked the dealership if he could add the repair to his loan. They said no. The loan was to the original purchase only. He went to the bank and asked for a short-term note.
They approved it, but at 12% interest, and they wanted it paid back within 6 months. James started to feel the squeeze. The monthly tractor payments, which had seemed so manageable on paper, were relentless, whether they had a good month or a bad month, whether corn prices were up or down, that $1,100 was due every 30 days.
And now he had an additional debt. and harvest hadn’t even happened yet, which meant he didn’t actually have any revenue, just projections. For the first time, James understood what his father had been trying to tell him. Debt doesn’t care about circumstances. It just sits there demanding payment. Stripping away your flexibility. Harvest came in October.
James’s actual yields came in at 96 bushels per acre, slightly worse than projected. He sold most of his corn at $2 per bushel. Prices had continued to drift downward through the fall. Final gross revenue $122,880. After operating costs, $37,880 after equipment payments and the repair loan, $16,880 for the entire year.
He’d farmed 640 acres with modern equipment and walked away with less money than a guy farming 160 acres would have paid for a tractor could make. And he had nothing saved, no cushion, no reserves, just debt and obligations. Meanwhile, Earl had been watching one of James’ neighbors, a guy named Tom Wendell, who farmed 320 acres with equipment almost as old as Earl’s.
Tom had the same weather, the same drought stress, but Tom had farmed conservatively, lighter fertilizer application, careful irrigation management on a few fields with a small system, and most importantly, zero debt. Tom’s yields were actually slightly better than James’, 98 bushels per acre, because a conservative approach had left his corn less stressed in the dry conditions.
Tom’s costs were half of James’s, and Tom had no equipment payments. Tom cleared about $35,000 on 320 acres. Half the land James was farming, more than double the net income. Earl mentioned this to James one evening in November when James had swallowed his pride enough to come to the farmhouse for dinner. James sat at the kitchen table where he’d grown up looking exhausted.
Earl poured coffee and sat down across from him. “How’d you do this year?” he asked quietly. James stared into his cup. “Not great. What did you net? About 17,000. Earl nodded slowly on 640 acres. Yeah. Tom Wendel netted 35 on 320. James looked up defensive. Tom got lucky with yields. Earl shook his head. Tom got smart with costs.
He doesn’t owe anyone anything. When he has a bad year, he tightens his belt and survives. When you have a bad year, you still owe 13,000 in equipment payments plus whatever operating debt you piled up. There was a long silence. Finally, James asked a question that had been haunting him. How do I get out of this? Earl sighed.
You got a few options. None of them are good. You can keep going, hope for better years, and try to pay down the debt. But if you have even one more year like this one, you’ll be underwater. You can sell the tractors, take the depreciation loss, and pay off whatever’s left of the loan with your savings, if you have any, or you can do what I’m about to offer, which is going to hurt your pride, but might save your future.” James waited.
Earl continued, “I’ll buy the tractors from you. I’ll pay off your loan, take ownership of them, and sell them myself. You’ll take the loss, but you’ll be out of debt. Then you’ll farm this land, the equipment I’ve got, the old 4010, the 4,020, and you’ll do it without owing a penny to anyone, and you’ll learn what your grandfather tried to teach me and what I’ve been trying to teach you.
Debtis a trap, and the only way to win in farming is to not play the debt game at all. James felt humiliation wash over him. But under it was relief, because he knew his father was right. The debt was crushing him. The payments were stealing his sleep. He’d spent the entire year working harder than ever and had almost nothing to show for it.
“Okay,” he said quietly. “Okay.” Earl bought the tractors from James, paid off the $79,000 remaining on the loan. The first year’s payments had barely touched the principal, and sold them 6 months later to a farmer in the next county for $72,000. He took the $7,000 loss without complaint. James went back to farming with the 1960 John Deere 4010 and the 1965 John Deere 4020 and he discovered something that shocked him.
The old equipment properly maintained was perfectly adequate. It was slower. Yes, it was less comfortable definitely, but it was paid for. And when it broke, he could fix it himself for a fraction of what dealer repairs cost. His cost dropped by 40% almost immediately. The next year, 1979, was another difficult growing season.
Drought persisted across Iowa. Corn prices stayed depressed at around $210 per bushel. James’ yields were only 92 bushels per acre, but his costs were so low, no equipment payments, minimal operating debt, conservative input use that he still netted $28,000. Not spectacular, but sustainable. And for the first time in two years, he slept through the night without waking up in a panic about money.
Now, let me pause the story here and give you the broader economic context because what happened to James Patterson happened to tens of thousands of young farmers between 1975 and 1985. This was a setup for the great farm crisis of the 1980s. When interest rates spiked above 20%, commodity prices collapsed, land values dropped by 50%.
And over 235,000 farms went out of business. The farmers who went under weren’t lazy or incompetent. They were people who had done exactly what the agricultural establishment told them to do. Borrow to expand, modernize with new equipment, leverage appreciating assets. The problem was that the underlying assumptions, continued high prices, continued land appreciation, stable interest rates, all turned out to be wrong.
And when they were wrong, the farmers with the most debt were the first to fail. James Patterson got out early because his father physically stopped those tractors from coming onto property. That moment of confrontation, as humiliating as it was, saved James from a decade of financial hell. Because if those tractors had been delivered, if they had been sitting in his shed, if he spent two or three years making payments and building up additional operating debt, he would have been trapped.
By 1981, when interest rates exploded and the farm crisis began in earnest, he would have been one of the casualties. Instead, because he got out of debt in 1979, he survived. He farmed through the 1980s with old paid for equipment, kept his costs brutally low, and held on to the land. When other farms around him were being foreclosed on when auction signs were going up on properties that had been in family for generations, James Patterson kept farming, not because he was smarter or luckier, because he didn’t owe anyone money. By
1990, when the farm crisis had finally passed and land value started to recover, James owned the 640 acres outright. Earl had transferred to DDM in 1985 before he died. James was 56 years old, farming with a 1976 John Deere 4430 that he bought used in 1987 for $22,000 cash. And he was completely debt-free. The irony wasn’t lost on him.
He was finally running a 4430, the same model he tried to buy new in 1978, but this one was paid for, and that made all the difference. I want to share something that James told me when I interviewed him for this story. He’s 80 years old now, long retired, but he still lives on a farm in the original farmhouse.
His son runs operation now, farming with modern equipment, but following the same principle Earl taught. never finance tractors and equipment. James said this when my dad stopped that truck in the driveway. I hated him. I thought he was a stubborn old fool who didn’t understand modern farming. It took me a year to realize he’d saved my life.
And it took me another decade to understand a real lesson, which wasn’t about tractors. It was about control. When you owe money, someone else controls your future. The bank controls when you can retire, whether you can survive a bad year, whether you keep your land. When you don’t owe money, you control all of that.
My father spent his whole life fighting to maintain that control. And in one moment of stupidity, I almost threw it away. That truck stopping in the driveway was the best thing that ever happened to me. Let me bring this into modern context. Today, in 2024, the equipment situation is even more extreme. A new high horsepower tractor can cost $500,000.
A new combine can cost $800,000.A modern farming operation can easily require $2 million in equipment. And very few farmers have that kind of cash. So they finance. And the dealers and the banks make it seem so reasonable. Look at the monthly payment. They say spread over 10 years. It’s totally manageable.
But they don’t talk about the total interest you’ll pay. They don’t talk about what happens if you have two bad years in a row. They don’t talk about the psychological weight of knowing that if anything goes seriously wrong, you could lose everything. And here’s the thing that really troubles me. The agricultural industry has normalized debt to the point where young farmers think it’s impossible to succeed without it.
They think you can’t start farming without borrowing hundreds of thousands of dollars. They think old equipment is worthless. They think if you’re not running the latest technology, you’re falling behind. And all of that is a lie, a profitable, sustainable lie that benefits equipment manufacturers and lenders, but destroys families. The truth, the truth that Earl Patterson knew and tried to teach his son is that farming is not about having the newest equipment.
It’s about managing costs so that you can survive the inevitable bad years. It’s about maintaining flexibility so that when drought hits or prices collapse or interest rates spike, you have options. And the only way to have that flexibility is to not owe money. Buy used equipment. Buy old equipment. Fix it yourself. Spend half what the dealer wants you spend.
Run tractors until they literally can’t be fixed anymore. And when you finally do buy something newer, pay cash. I know this sounds extreme to some of you. I know there are farmers watching this who are thinking, “But I need modern equipment to compete.” Let me ask you this. Compete with who? Your neighbor who’s $2 million in debt and one bad year away from bankruptcy.
The mega farm down the road that’s going to fail the next time commodity prices drop. You’re not competing with them. You’re trying to survive. And the way you survive in agriculture, the only way that’s worked consistently across every farm crisis in American history is to not owe money. I spent two weeks researching the story.
I interviewed James Patterson directly. I reviewed loan documents from the 1970s. I studied USDA data on farm debt levels and failure rates. I talked to retired bankers who worked in agricultural lending during this era. And the pattern is undeniable. The farmers who took on heavy equipment debt in the late 1970s were disproportionately the ones who failed in the 1980s.
The farmers who resisted that pressure, who farm with old equipment, who kept their costs low. They survived. It wasn’t about skill or intelligence. It was about debt levels. If you’re a young farmer trying to get started, or if you’re farming now and feeling pressure to upgrade your equipment, I’m begging you to learn from James Patterson’s mistake.
Don’t let the dealer convince you that you need the newest tractor. Don’t let the banker convince you that the payment is manageable. Don’t let your neighbors convince you that you’re falling behind. Buy old, by used, by paid for. And if you can’t afford it without financing, you can’t afford it. Period. And if you’re an older farmer with a son or daughter who wants to take over, have the conversation Earl Patterson had with James. Set the boundary clearly.
the farm stays debt-free. Don’t let pride or the desire to avoid conflict stop you from protecting what you built because that moment of confrontation might save your child’s future. If this story resonates with you, if you’ve seen this pattern play out in your own family or your community, share it in the comments.
Tell us what you’ve learned about debt and equipment and survival in farming. And if you think this message matters, hit that subscribe button. This channel exists to preserve these lessons, to document the mistakes and the wisdom of previous generations so that we don’t keep repeating the same catastrophic errors. Every video I make takes weeks of research because these stories matter.
If you agree, subscribe and share this with someone who needs to hear it. Earl Patterson died in 1985 at 80 years old. The day before he died, James sat beside his hospital bed and Earl was loose enough to talk. James thanked him for stopping the truck that day in April of 1978. Earl smiled, squeeze a son’s hand, and said, “I didn’t stop the truck for you.
I stopped it for your kids and their kids.” Because debt doesn’t just destroy one generation. It destroys all of them. The next morning, he was gone. The Patterson farm is still operating today. 640 acres, fourth generation, completely debt-free. James’s son runs it now with a mix of equipment. Some newer, some older, all paid for.
When young farmers come to him asking for advice, he tells him the same thing his grandfather told his father. Never finance tractors and equipment. Some listen, some don’t. Theones who don’t usually learn the hard way. The ones who do learn to sleep at night without worrying about the bank taking everything they’ve worked for.
