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The Best and Holt companies had been engaged in litigation against one another during the period from 1907 to 1918. It has been reliably estimated that the total cost of litigation during that period was roughly $1.5 million, at a time when the dollar had real value. The lawyers and the results of their work had nearly bled the companies dry.
C.L. Best and Benjamin Holt were leaders in their industry. But the fellow who next changed the landscape of "crawler" tractor manufacturing was Harry H. Fair of the bond brokerage house of Pierce, Fair & Company of San Francisco. Fair was the gentleman who had arranged financing for C.L. Best to purchase his father's shops in San Leandro in 1916. Fair was also a significant shareholder in the C.L. Best Tractor Co., and was on its board of directors. Ultimately, Fair was approached by several key Holt shareholders who wished Fair's bond firm to handle future financing of the Holt company. Fair was engaged by the Holt company, and quickly became aware of its precarious financial condition. Fair proposed that the Best and Holt companies consolidate together, as it was possible that they would both go out of business if they did not.
Best had the better financial status, more advanced tractor designs, and the beginnings of a better dealer group. Holt offered its worldwide reputation and name, bigger factories, a 40-year old combined harvester line, and the Caterpillar trademark. The shareholders of both companies accepted the proposal to consolidate together, and in legal maneuvering that occurred in April and May 1925, the Caterpillar Tractor Co.© was formed and the consolidation was effected. The Best factory in San Leandro, California, became the first headquarters location for the new company and limited production was continued at the plant for a number of years. The Holt's factory in East Peoria, Illinois, became the main manufacturing plant for the company. In 1930, the headquarters was officially moved from San Leandro to East Peoria in order to fulfill the terms of the merger.
C.L. Best was named chairman of the board of directors, and Raymond C. Force, Best's attorney, was named president of the company. A consolidation of the companies was intended to lead to more efficiency, a reduction in the combined number of employees, a reduction in models offered, a reduction in plant capacity, and the elimination of duplicate dealerships in the same geographic area, all resulting in what economists refer to as "increasing economies of scale". Indeed, soon after the consolidation in 1925, the product offering of "crawler" tractors was rationalized.
The new company's first product line had only five track-type tractors - the 2-Ton, 5-Ton, and 10-Ton from The Holt Manufacturing Company's former product line and the Thirty and Sixty from the C. L. Best Tractor Co.'s former product line. The 10-Ton and 5-Ton were discontinued in 1926. In 1928, the 2-Ton was discontinued.
Fair's vision was correct, and the shareholders in the consolidated company were rewarded. Between 1926 and 1929, sales more than doubled, and profits roughly tripled. At the same time, the efficiencies of the consolidated operations led to consumer price reductions in the Caterpillar Thirty and Sixty models: from $3,665 to $2,475 for the Caterpillar Thirty, and from $6,060 to $4,300 for the Caterpillar Sixty.