The history of Caterpillar started in a way that most businesses do; there was a great demand for this type of machinery. At the turn of the century, farmers in California faced the problem of using steam engines to plow the land of the San Joaquin valley. The problem aroused when the huge tires of the steam engine machines sank deeply into the soil putting a halt to the plowing. In 1904, this problem was solved when Benjamin Holt replaced the heavy steam engine with a gasoline engine, which led to more mobility as well. He nicknamed the tractor "Caterpillar", and by 1915 they were sold in 20 countries.
Not only were they used agriculturally, but the crawler tractors were first used by the military in the establishment of armor tank in World War I. In 1925, the Holt Company merged with another California firm, the Best Tractor Company, to form Caterpillar (Cat). They were the first to introduce the diesel engine on a moving vehicle. During World War II, Caterpillar served as the primary supplier of bulldozers to the US Army; its sales tripled between 1941 and 1944.
Demand for Caterpillar products exploded shortly after the war had ended. Cat's equipment was used to rebuild Europe, build the US interstate highway system, reconstruct the giant dams of the Third World, and lay out the major airports of the world. The company differentiated itself from its competitors by producing reliable, durable, and high quality equipment, offering a quick after-sales service, and providing speedy delivery of parts. Because of this, Caterpillar had emerged as the uncontested leader of the heavy construction equipment industry.
Also, Caterpillar's distribution and dealership network also contributed to the company's worldwide success. From the get-go, the company's marketing relied greatly upon these close-knit networks of independent dealers who sold and serviced Cat equipment. These were located throughout the world who invested their own capital in their business.