===============================================================
                          UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

                          -----------
                           FORM 10-K
                          -----------

           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934
            FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997


                  Commission file number 1-6458


                  JOHN DEERE CAPITAL CORPORATION
      (Exact name of registrant as specified in its charter)

           Delaware                         36-2386361
  (State of incorporation)    (IRS employer identification number)

1 East First Street, Suite 600
        Reno, Nevada              89501         (702) 786-5527
   (Address of principal        (Zip Code)    (Telephone number)
     executive offices)

   SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class                       Name of each exchange
-------------------                        on which registered
                                         -----------------------
9-5/8% Subordinated Notes Due 1998       New York Stock Exchange
8-5/8% Subordinated Debentures Due 2019  New York Stock Exchange


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE


Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months (or 
for such shorter period that the registrant was required to file 
such reports), and (2) has been subject to such filing 
requirements for the past 90 days.  Yes  X  No __

At January 1, 1998, 2,500 shares of common stock, without par 
value, of the registrant were outstanding, all of which were owned 
by John Deere Credit Company.

The registrant meets the conditions set forth in General 
Instruction I(1)(a) and (b) of Form 10-K and is therefore filing 
this Form with certain reduced disclosures as permitted by 
Instruction I(2).
=================================================================
                         Page 1 of 47
      The Index to Exhibits appears at Pages 46 and 47.













<PAGE>
                              PART I

Item 1.  Business.

The Company

John Deere Capital Corporation (Capital Corporation) and its 
subsidiaries: Deere Credit, Inc., Deere Credit Services, Inc., 
Farm Plan Corporation, John Deere Receivables, Inc., John Deere 
Funding Corporation, Arrendadora John Deere, S.A. de C.V. and John 
Deere Credit Limited (Australia), are collectively called the 
Company. John Deere Credit Company, a wholly-owned finance holding 
subsidiary of Deere & Company, is the parent of the Capital 
Corporation.

The principal business of the Company is providing and 
administering financing for retail purchases of new and used 
equipment manufactured by Deere & Company's agricultural, 
construction and commercial and consumer equipment divisions. The 
Company purchases retail installment sales and loan contracts 
(retail notes) from Deere & Company and its wholly-owned 
subsidiaries (collectively called John Deere). These retail notes 
are acquired by John Deere through independent John Deere retail 
dealers. The Company also purchases and finances certain 
agricultural, construction and lawn and grounds care retail notes 
unrelated to John Deere. In addition, the Company purchases and 
finances recreational product retail notes acquired from 
independent dealers and marine product mortgage service companies 
(recreational product retail notes). The Company also leases 
equipment to retail customers, finances and services revolving 
charge accounts acquired from and offered through merchants in the 
agricultural and lawn and grounds care retail markets (revolving 
charge accounts), and provides wholesale financing for inventories 
of recreational vehicles, manufactured housing units, yachts, John 
Deere engines, and John Deere agricultural and John Deere 
construction equipment owned by dealers of those products 
(wholesale notes). Retail notes, revolving charge accounts, direct 
financing leases and wholesale notes receivable are collectively 
called "Receivables." Receivables and operating leases are 
collectively called "Receivables and Leases."

The Capital Corporation was incorporated under the laws of 
Delaware and commenced operations in 1958. At January 1, 1998, the 
Company had 1,044 full- and part-time employees.

Business of the Company

    The Company's operations are categorized into four primary
    divisions:

    The Agricultural Division provides agricultural market 
    financing through products such as agricultural equipment 
    retail notes and leases, Farm PlanTM (a revolving charge 
    product) and producer operating loans. In addition, the
    division provides wholesale financing to dealers for equipment
    to be used as rental equipment.


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<PAGE>

    The Commercial Division provides construction equipment 
    financing through products such as retail notes and leases. 
    The division also provides wholesale financing of construction 
    equipment, recreational vehicles, manufactured housing units 
    and other commercial equipment.

    The Consumer Division provides consumer and recreational 
    product equipment financing through products such as retail 
    notes, John Deere Credit Revolving Plan (a revolving charge 
    product), Preferred ResourceTM (an unsecured lending product), 
    YachtLineTM (a revolving charge product marketed to yacht 
    customers) and leases on lawn and grounds care equipment. In 
    addition, the Consumer Division provides wholesale financing 
    for yachts.

    The International Division provides certain financing products 
    to the Company's international markets, such as Mexico, United 
    Kingdom, Germany and Australia.

Business of John Deere

    John Deere's operations are categorized into six business 
    segments:

    John Deere's worldwide agricultural equipment segment 
    manufactures and distributes a full line of farm equipment - 
    including tractors; combine and cotton harvesters; tillage,
    seeding and soil preparation machinery; sprayers; hay and 
    forage equipment; materials handling equipment; and 
    integrated precision farming technology.

    John Deere's worldwide construction equipment segment, 
    formerly the worldwide industrial equipment segment, 
    manufactures and distributes a broad range of machines used in 
    construction, earthmoving and forestry -- including backhoe 
    loaders; crawler dozers and loaders; four-wheel-drive loaders; 
    excavators; scrapers; motor graders; log skidders; and 
    forestry harvesters. This segment also includes the 
    manufacture and distribution of engines and drivetrain 
    components for the original equipment manufacturer (OEM) 
    market.

    John Deere's worldwide commercial and consumer equipment 
    segment manufactures and distributes equipment for commercial 
    and residential uses -- including small tractors for lawn, 
    garden, commercial and utility purposes; riding and walk-
    behind mowers; golf course equipment; snowblowers; hand-held 
    products such as chain saws, string trimmers and leaf blowers; 
    skid-steer loaders; utility vehicles; and other outdoor power 
    products.

    The products produced by the equipment segments are marketed 
    primarily through independent retail dealer networks and major
    retail outlets.

Page 3













<PAGE>

    The credit segment includes the operations of the Company 
    (described herein), John Deere Credit Company and John Deere 
    Credit Inc., which primarily purchases and finances retail 
    notes from John Deere's equipment sales branches in Canada, as 
    well as recreational products and construction and 
    transportation equipment notes from independent dealers.

    The insurance segment issues policies in the United States 
    primarily for: general and specialized lines of commercial 
    property and casualty insurance; group accident and health 
    insurance for employees of participating John Deere dealers 
    and disability insurance for employees of John Deere.

    The health care segment provides health management programs 
    and related administrative services in the United States to 
    employees of John Deere and commercial clients.

John Deere achieved record worldwide net income for 1997, totaling 
$960 million, or $3.78 per share, compared with last year's income 
of $817 million, or $3.14 per share. The higher profit resulted 
from strong worldwide demand for John Deere products. Operating 
margins remained at strong levels as a result of John Deere's 
continuous improvement and quality initiatives.

John Deere's worldwide net sales and revenues increased 14 percent 
to $12,791 million in 1997 compared with $11,229 million in 1996. 
Net sales of John Deere's equipment operations increased 15 
percent in 1997 to $11,082 million from $9,640 million last year. 
International demand remained at strong levels, with export sales 
from the United States totaling $2,013 million for 1997 compared 
with $1,584 million last year. Overseas sales for the year also 
increased, rising by 11 percent compared with a year ago. Overall, 
John Deere's worldwide physical volume of sales (excluding the 
sales of the newly consolidated Mexican subsidiaries) increased 15 
percent for the year, reflecting the strong worldwide demand for 
John Deere products.

Worldwide demand for John Deere agricultural equipment remained at 
strong levels this year as a result of favorable fundamentals in 
the farm economy. Increased acres planted and favorable weather 
conditions in major producing areas of North America resulted in 
historically high levels of production. However, strong domestic 
and export demand for grains and oilseeds are expected to hold 
carryover stocks relatively low. As a result, soybean prices have 
remained at favorable levels. Overseas demand for John Deere 
agricultural equipment also remained at strong levels, reflecting 
good demand from the republics of the former Soviet Union and 
favorable market conditions in Latin America. Despite recent 
economic instability in the world's financial markets, current 
overall fundamentals are expected to remain favorable for farm 
equipment sales in 1998.

Construction equipment demand rose in 1997 due to low interest 
rates, moderate economic growth and low inflation, all of which 
should continue in 1998. These factors promoted high levels of 
consumer confidence and housing activity this past year. Housing 

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<PAGE>

starts for next year are expected to approximate this year's level 
and expenditures on highways and streets are anticipated to grow 
in 1998 when a new federal highway bill is passed. These favorable 
economic conditions should promote good construction equipment 
demand next year.

Sales of John Deere commercial and consumer equipment increased 
this year from the weather depressed levels of last year. With low 
unemployment rates, growing incomes, low interest rates, moderate 
economic growth and new product introductions, demand is 
anticipated to remain at favorable levels in 1998.

Results for John Deere's credit operations are expected to improve 
as a result of the strong demand for John Deere products and 
favorable economic conditions. The insurance operations are 
expected to maintain reasonable operating returns despite the 
continued competitive environment in commercial lines. Although 
the health care operations should continue to face margin 
pressures and a very competitive environment, substantially 
improved results are expected for next year.

Based on these market conditions, John Deere's worldwide physical 
volume of sales is currently projected to increase by 
approximately 6 percent in 1998 compared to 1997. First quarter 
physical volumes are projected to be 15 percent higher than 
comparable levels in the first quarter of 1997.

Overall, the fundamentals of John Deere's businesses remain 
favorable. Industry demand for John Deere products remains strong 
and operating margins are benefiting from continuous improvement 
initiatives. John Deere's investment in the development of new 
products and markets should further its worldwide leadership 
position. Based on these factors and John Deere's exceptional 
employees and dealer organization, another strong operating 
performance is expected next year.

Relationships of the Company with John Deere

The results of operations of the Company are affected by its 
relationships with John Deere, including among other things, the 
terms on which the Company acquires Receivables and Leases and 
borrows funds from John Deere, the reimbursement for interest 
waiver and low-rate finance programs from John Deere and the 
payment to John Deere for various expenses applicable to the 
Company's operations. In addition, the Company and John Deere have 
joint access to all of the Company's lines of credit.

The Company's acquisition volume of Receivables and Leases is 
largely dependent upon the level of retail sales and leases of 
John Deere products. The level of John Deere retail sales and 
leases is responsive to a variety of economic, financial, 
climatic, legislative and other factors which influence demand for 
its products. All of the Company's businesses are affected by 
changes in interest rates, demand for credit and competition.

Page 5













<PAGE>

The Company bears all of the credit risk (net of recovery from 
withholdings from certain John Deere dealers and Farm Plan 
merchants) associated with its holding of Receivables and Leases, 
and performs all servicing and collection functions. The Company 
compensates John Deere for originating certain retail notes and 
leases on John Deere products. John Deere is also reimbursed for 
staff and other administrative services at estimated cost, and for 
credit lines provided to the Company based on utilization of those 
lines.

The terms of retail notes and the basis on which the Company 
acquires retail notes from John Deere are governed by agreements 
with John Deere, terminable by either John Deere or the Company on 
30 days notice. As provided in these agreements, the Company sets 
its terms and conditions for purchasing the retail notes from John 
Deere. Under these agreements, John Deere is not obligated to sell 
retail notes to the Company, and the Company is obligated to 
purchase retail notes from John Deere only if the notes comply 
with the terms and conditions set by the Company.

The basis on which John Deere acquires retail and certain 
wholesale notes from the dealers are governed by agreements with 
the independent John Deere dealers, terminable at will by either 
the dealers or John Deere. In acquiring these notes from dealers, 
the terms and conditions, as set forth in agreements with the 
dealers, conform with the terms and conditions adopted by the 
Company in determining the acceptability of retail and certain 
wholesale notes to be purchased from John Deere. The dealers are 
not obligated to send these notes to John Deere and John Deere is 
not obligated to accept these notes from the dealers. In practice, 
retail and certain wholesale notes are acquired from dealers only 
if the terms of these notes and the creditworthiness of the 
customers are acceptable to the Company for purchase of these 
notes from John Deere. The Company acts on behalf of both itself 
and John Deere in determining the acceptability of the notes and 
in acquiring acceptable notes from dealers.

The basis on which the Company enters into leases with retail 
customers through John Deere dealers is governed by agreements 
between dealers and the Company. Leases are accepted based on the 
terms and conditions, the lessees' creditworthiness, the 
anticipated residual values of the equipment and the intended uses 
of the equipment.

Deere & Company has an agreement with the Company to make income 
maintenance payments to the Company such that its consolidated 
ratio of earnings before fixed charges to fixed charges is not 
less than 1.05 to 1 for each fiscal quarter. For 1997 and 1996, 
the Company's ratios were 1.64 to 1 and 1.75 to 1, respectively, 
and never less than 1.60 to 1 for any fiscal quarter. Deere & 
Company also has committed to own at least 51 percent of the 
voting shares of capital stock of the Company and to maintain the 
Company's consolidated tangible net worth at not less than $50 
million. These arrangements are not intended to make Deere & 
Company responsible for the payment of any indebtedness, 
obligation or liability of the Company.

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<PAGE>

Description of Receivables and Leases

Receivables and Leases arise mainly from retail sales and leases 
of John Deere products, used equipment accepted in trade for them, 
and equipment of unrelated manufacturers, and also include 
revolving charge accounts receivable and wholesale notes 
receivable (including the sale to John Deere dealers for rental to 
users). The great majority of these Receivables and Leases are 
derived from retail sales and leases of agricultural equipment, 
construction equipment and commercial and consumer equipment sold 
by John Deere dealers. Receivables and Leases relating to 
equipment manufactured by John Deere's Commercial and Consumer 
segment may be financed by the Company's Commercial Division 
(construction product line) or the Consumer Division (lawn and 
grounds care product line), depending on how the equipment is 
used.

The Company offers secured financing of recreational products and 
yachts. The Company also offers Farm Plan revolving charge 
accounts which are used primarily by agri-businesses to finance 
purchases, which would otherwise be carried by the merchant as 
accounts receivable, as well as credit cards which are used 
primarily by retail customers to finance purchases of certain 
commercial and residential lawn and grounds care equipment.

Retail notes provide for retention by John Deere or the Company of 
security interests in the goods financed under certain statutes, 
including the Uniform Commercial Code, certain Federal statutes 
and state motor vehicle laws. Security interest filings are also 
made for leases. However, filings for operating leases are made 
for informational purposes only. See notes 1 and 2 to the 
consolidated financial statements.

The Company also provides retail sales financing through dealers 
of certain unrelated manufacturers of recreational vehicles and 
yachts. Recreational product retail notes conform to industry 
standards different from those for John Deere retail notes and 
often have smaller down payments and longer repayment terms. In 
addition, the acquisition volumes, margins and collectibility of 
recreational product retail notes are affected by economic, 
marketing and competitive factors and cycles, such as fluctuations 
in fuel prices and recreational spending patterns, that are 
different from those affecting retail notes arising from the sale 
of John Deere equipment. Recreational product retail notes are 
acquired from more than 650 recreational vehicle and yacht 
dealers.

Receivables and Leases are eligible for acceptance if they conform 
to prescribed finance and lease plan terms. Guidelines relating to 
down-payments and contract terms on retail notes and leases are 
described in note 2 to the consolidated financial statements.

The John Deere Credit Revolving Plan is used primarily by retail 
customers of John Deere dealers to finance purchases of lawn and 
grounds care equipment. Through its Farm Plan product, the Company 
finances revolving charge accounts offered by approximately 4,500 

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<PAGE>

participating agri-businesses to their retail customers for the 
purchase of goods and services. Farm Plan account holders consist 
mainly of farmers purchasing equipment parts and service at 
implement dealerships. Farm Plan is also used by customers 
patronizing other agri-businesses, including farm supply, feed and 
seed, parts supply, bulk fuel, building supply merchants and 
veterinarians. Preferred Resource, marketed primarily to 
executives and professionals, offers customers convenience and 
security by providing a substantial, readily-available source of 
funding for a variety of personal expenses. Additionally, 
YachtLine, introduced in 1997, is a revolving credit account which 
allows retail customers to access the equity in their vessels and 
thereby better manage their investments. See note 2 to the 
consolidated financial statements under "Revolving Charge Accounts 
Receivable."

The Company finances wholesale inventories owned by approximately 
1,200 dealers of recreational vehicles, manufactured housing 
units, yachts, John Deere engines, and John Deere agricultural and 
John Deere construction equipment. A large portion of the 
wholesale financing provided by the Company is with dealers from 
whom it also purchases agricultural, construction, recreational 
product and yacht retail notes. See note 2 to the consolidated 
financial statements under "Wholesale Notes Receivable."

The Company requires theft and physical damage insurance be 
carried on all goods leased or securing retail notes. In most 
cases, the customer may, at his expense, have the Company or the 
seller of the goods purchase this insurance or obtain it from 
other sources. Theft and physical damage insurance is also 
required on goods securing wholesale notes and can be purchased 
through the Company or from other sources. Insurance is not 
required for revolving charge accounts.

In some circumstances, Receivables and Leases may be accepted and 
acquired even though they do not conform in all respects to the 
established guidelines. Acceptability and servicing of retail 
notes, wholesale notes and leases, according to the finance plans 
and retail terms, including any waiver of conformity with such 
plans and terms, is determined by Company personnel. Officers of 
the Company are responsible for reviewing the performance of the 
Company in accepting and collecting retail notes, wholesale notes 
and leases. The Company normally makes all routine collections, 
compromises, settlements and repossessions on Receivables and 
Leases.

Finance Rates on Retail Notes

As of October 31, 1997, approximately 50 percent of the retail 
notes held by the Company bore a variable finance rate. With the 
exception of agricultural and certain yacht retail notes, retail 
notes are fixed rate notes. A portion of the finance income earned 
by the Company arises from financing the retail sales of John 
Deere equipment sold on which finance charges are waived or 
reduced by John Deere for a period from the date of sale to a 
specified subsequent date. Some low-rate financing programs are 

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<PAGE>

also offered by John Deere. See note 2 to the financial statements 
for additional information.

Average Original Term and Average Actual Life of Retail Notes and 
Leases

Due to prepayments (often from trade-ins), the average actual life 
of retail notes is considerably shorter than the average original 
term. The following table shows the average original term for 
retail notes and leases acquired and the estimated average life in 
months for retail notes and leases liquidated (in months-based on 
dollar amounts):

                                            Average      Average
                                            Original     Actual
                                              Term        Life
                                           ----------  ----------
                                           1997  1996  1997  1996
                                           ----------  ----------
Retail notes                                 66    67    25    31

 New equipment:
  Agricultural equipment                     56    56    25    25
  Construction equipment                     44    45    18    21
  Lawn and grounds care equipment            43    45    29    32
  Recreational products (excluding yachts)  174   159    47    44
  Yachts                                    217   218    32    31

 Used equipment:
  Agricultural equipment                     57    55    25    26
  Construction equipment                     41    41    23    23
  Lawn and grounds care equipment            50    49    31    34
  Recreational products (excluding yachts)  157   148    33    33
  Yachts                                    212   219    33    32

Leases                                       45    43    38    36

The average original term for recreational products and yachts is 
longer than for John Deere equipment notes because of customer 
preferences and industry convention.

Competition

The businesses in which the Company is engaged are highly 
competitive. The Company competes for customers with commercial 
banks and finance and leasing companies based upon its service and 
finance rates charged. The proportion of John Deere equipment 
retail sales and leases financed by the Company is influenced by 
conditions prevailing in the agricultural equipment, construction 
equipment and lawn and grounds care equipment industries, in the 
financial markets, and in business generally. A significant 
portion of John Deere equipment retail sales and leases during 
1997 was financed by the Company.

The Company emphasizes convenient service to customers and 
endeavors to offer terms desired in its specialized markets such 

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<PAGE>

as seasonal schedules of repayment and rentals. The Company's 
retail note finance rates and lease rental rates are generally 
believed to be in the range offered by other sales finance and 
leasing companies, although not as low as those of some banks and 
other lenders and lessors.

Regulation

In a number of states, the maximum finance rate on receivables is 
limited by state law. The present state limitations have not, thus 
far, significantly limited the Company's variable-rate finance 
charges nor the fixed-rate finance charges established by the 
Company. However, if interest rate levels should increase 
significantly, maximum state rates could affect the Company by 
preventing the variable rates on outstanding variable-rate retail 
notes from increasing above the maximum state rate, and by 
limiting the fixed rates on new notes. In some states, the Company 
may be able to qualify new retail notes for a higher maximum rate 
limit by using retail installment sales contracts (rather than 
loan contracts) or by using fixed-rate rather than variable-rate 
contracts.

In addition to rate regulation, various state and federal laws and 
regulations apply to some Receivables and Leases, principally 
retail notes for goods sold for personal, family or household use 
and Farm Plan and John Deere Credit Revolving Plan accounts 
receivable for such goods. To date, such laws and regulations have 
not had a significant adverse effect on the Company's financial 
position or results of operations.


Item 2.  Properties.

The Company's properties principally consist of office equipment 
and leased office space in Reno, Nevada; West Des Moines, Iowa; 
Madison, Wisconsin; Alameda, California; Newport Beach, 
California; Shelton, Connecticut; St. Petersburg, Florida; Ft. 
Lauderdale, Florida; Manasquan, New Jersey; and Monterrey, Mexico.


Item 3.  Legal Proceedings.

The Company is subject to various unresolved legal actions which 
arise in the normal course of its business, the most prevalent of 
which relate to state and federal laws and regulations concerning 
retail credit. Although it is not possible to predict with 
certainty the outcome of these unresolved legal actions or the 
range of possible loss, the Company believes these unresolved 
legal actions will not have a material effect on its financial 
position or results of operations.


Item 4.  Submission of Matters to a Vote of Security Holders.

Omitted pursuant to instruction I(2). 

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<PAGE>
PART II

Item 5.  Market for Registrant's Common Equity and Related 
         Stockholder Matters.

All of the Capital Corporation's common stock is owned by John 
Deere Credit Company, a finance holding company that is wholly-
owned by Deere & Company. The Capital Corporation paid cash 
dividends to John Deere Credit Company of $75 million in 1997 and 
$70 million in 1996. In each case, John Deere Credit Company paid 
a comparable dividend to Deere & Company. During the first quarter 
of 1998, the Capital Corporation declared and paid a dividend of 
$12.5 million to John Deere Credit Company which, in turn, paid a 
dividend of $12.5 million to Deere & Company.


Item 6.  Selected Financial Data.

Omitted pursuant to instruction I(2).


Item 7.  Management's Discussion and Analysis of Financial 
         Condition and Results of Operations.


Results of Operations

  1997 Compared with 1996

Consolidated net income for the fiscal year ended October 31, 1997 
was $136 million compared with $134 million in 1996. 1997 results 
reflect higher income from a larger average Receivable and Lease 
portfolio financed and higher gains from the sales of retail 
notes, partially offset by lower securitization and servicing fee 
income, narrower financing spreads and higher expenditures 
associated with several growth initiatives. The ratio of earnings 
to fixed charges was 1.64 to 1 for 1997 compared with 1.75 to 1 in 
1996.

Revenues totaled $754 million in 1997 compared to $657 million a 
year ago. Revenues increased due to a 19 percent increase in the 
average balance of Receivables and Leases financed, particularly 
related to growth in retail notes, operating leases and wholesale 
notes. Finance income earned on retail notes totaled $417 million 
in 1997 compared to $372 million in 1996. Lease revenues 
increased $50 million, to $118 million in 1997, from $68 million 
in 1996, largely due to low-rate leasing initiatives related to 
John Deere agricultural equipment. Finance income earned on 
wholesale notes increased $11 million to $49 million in 1997 from 
$38 million earned in 1996. Increases in finance income earned on 
wholesale notes was primarily a result of the continued growth in 
the financing for inventories of construction, yacht and 
manufactured housing.

Revenues earned on revolving charge accounts amounted to $103 
million in 1997, an 8 percent increase over revenues of $95 
million earned during 1996. This increase was primarily due to a 9 

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<PAGE>

percent increase in the average balance of Farm Plan receivables 
financed in 1997 compared with 1996.

Securitization and servicing fee income totaled $30 million in 
1997 compared with $46 million during 1996, a decrease of $16 
million. The decrease in securitization and servicing fee income 
was partially the result of a 6 percent decrease in the average 
balance of retail notes previously sold. Securitization and 
servicing fee income relates to retail notes sold to other 
financial institutions or limited-purpose business trusts and 
primarily includes the interest from present value receivable 
amounts established at the time of sale, adjustments related to 
those sales and reimbursed administrative expenses received. The 
net gain on retail notes sold totaled $19 million during 1997 
compared with $14 million for 1996. Additional sales of retail 
notes are expected to be made in the future.

Total interest expense increased $53 million from $274 million in 
1996 to $327 million in 1997. The increase in interest expense was 
primarily the result of increased borrowings required to finance 
the higher average portfolio of Receivables and Leases. Average 
borrowings were $5.380 billion in 1997 compared with $4.498 
billion in 1996, an increase of 20 percent. The weighted average 
annual interest rate incurred on all interest-bearing borrowings 
increased in 1997 to 6.1 percent from 5.9 percent in 1996.

Administrative and operating expenses increased 12 percent from 
$95 million in 1996 to $107 million in 1997. These increases were 
the result of higher employment costs associated with 
administering a larger Receivable and Lease portfolio and certain 
expenses relating to the Company's growth initiatives. These 
growth initiatives include expansion of international retail 
financing, the introduction of golf and turf financing products, 
and continued efforts related to new agricultural business 
finance opportunities, such as producer operating loans. 
Operating expenses were also affected by higher depreciation of 
equipment on operating leases, which totaled $68 million in 1997 
compared to $37 million in 1996, a result of the significant 
growth in operating leases financed.

The provision for credit losses was $33 million in 1997 and $38 
million in 1996. Total write-offs of Receivables and Leases 
financed were $30 million during 1997 compared with $29 million in 
1996. The increase in write-offs during 1997 primarily related to 
a $4 million increase in lease and revolving credit write-offs and 
a $1 million increase in wholesale write-offs, offset by a $4 
million decrease in retail note write-offs. See note 2 to the 
consolidated financial statements for additional information.









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<PAGE>

  Receivables and Leases Acquired and Held

Acquisition volumes of Receivables and Leases by the Company 
during 1997 totaled $6.462 billion, an increase of 17 percent 
compared with volumes of $5.517 billion during 1996. The higher 
volumes resulted mainly from an increased volume of John Deere 
equipment retail notes, revolving charge accounts, wholesale notes 
and operating leases. Receivables and Leases held by the Company 
at October 31, 1997 totaled $6.303 billion compared with $5.624 
billion one year ago. For the 1997 and 1996 fiscal years, 
Receivable and Lease acquisition volumes and balances held were as 
follows (in millions of dollars):


                   Fiscal Year Volumes     Balance at October 31
                  ----------------------   ----------------------
                                      %                        %
                    1997     1996   Chng     1997     1996   Chng
Retail notes:     ----------------------   ----------------------
  Agricultural 
    equipment     $2,455.2 $2,154.5  14%   $2,556.2 $2,417.3   6%
  Construction 
    equipment        412.4    462.8 (11)      660.5    628.9   5
  Lawn and grounds 
    care equipment   153.9    123.9  24       215.6    182.6  18
  Recreational 
    products         340.9    233.9  46       917.1    840.8   9
                  -----------------        -----------------
     Total         3,362.4  2,975.1  13     4,349.4  4,069.6   7

Revolving charge 
  accounts         1,450.4  1,232.5  18       618.5    571.1   8
Wholesale notes    1,158.5    982.3  18       593.4    524.5  13
Financing leases     121.9    103.9  17       214.6    181.5  18
Equipment on 
  operating leases   368.4    222.8  65       527.2    276.8  90
                  -----------------        -----------------
     Total        $6,461.6 $5,516.6  17    $6,303.1 $5,623.5  12
                  =================        =================


John Deere equipment retail note volumes increased by $314 million 
in 1997 compared with last year, primarily due to an increase in 
the volumes of agricultural equipment retail notes. Volumes of 
recreational product retail notes increased 46 percent in 1997 due 
to the Company's aggressive marketing programs initiated within 
the recreational vehicle markets and a $17 million purchase of 
yacht installment notes from an unrelated third party. Revolving 
charge accounts, wholesale note and lease volumes increased 
significantly in 1997, due to the higher demand for these 
products.

The Company also securitized and sold retail notes, receiving 
proceeds of $837 million during 1997 compared to $814 million 
during 1996. Retail notes administered by the Company, which 
includes retail notes previously sold, amounted to $5.663 billion 

Page 13











<PAGE>

at October 31, 1997, compared with $5.247 billion at October 31, 
1996. The balance of retail notes previously sold was $1.314 
billion at October 31, 1997 compared with $1.177 billion at 
October 31, 1996. The Company's maximum exposure under all retail 
note recourse provisions at October 31, 1997 and 1996 was $168 
million and $186 million, respectively. See notes 1 and 2 to the 
consolidated financial statements.

Retail notes bearing variable finance rates totaled 50 percent of 
the total retail note portfolio at October 31, 1997 compared with 
43 percent one year earlier. The Company manages interest rate 
risk through the issuance of fixed-rate and variable-rate 
borrowings and the use of financial instruments such as interest 
rate swaps and interest rate caps. See "Capital Resources and 
Liquidity" and note 12 to the consolidated financial statements.

Total Receivable and Lease amounts 60 days or more past due were 
$22 million at October 31, 1997 compared with $19 million at 
October 31, 1996. These past-due amounts represented .35 percent 
of the total Receivables and Leases held on each of those 
respective dates. The balance of retail notes held (principal plus 
accrued interest) with any installment 60 days or more past due 
was $44 million at October 31, 1997 compared to $47 million at 
October 31, 1996. The balances of retail notes held on which any 
installment is 60 days or more past due as a percentage of ending 
retail notes receivable was 1.02% at October 31, 1997 and 1.16% at 
October 31, 1996. See note 3 to the consolidated financial 
statements for additional information on past dues.

Deposits withheld from dealers and merchants, representing mainly 
the aggregate dealer retail note and lease withholding accounts 
from individual John Deere dealers to which losses from retail 
notes and leases originating from the respective dealers can be 
charged, amounted to $144 million at October 31, 1997 compared to 
$135 million at October 31, 1996. The Company's allowance for 
credit losses on all Receivables and Leases financed at October 
31, 1997 totaled $86 million and represented 1.4 percent of the 
total Receivables and Leases financed compared with $87 million 
and 1.6 percent, respectively, one year earlier. The Company's 
allowance for credit losses, as a percentage of total Receivables 
and Leases, declined in 1997 due to an ongoing evaluation of loss 
experience and related estimates to insure that the allowance for 
credit losses is maintained at an adequate level.


  1996 Compared with 1995

The Company's consolidated net income for the fiscal year ended 
October 31, 1996 was $134 million compared with $114 million in 
1995. Total revenues of $657 million in 1996 were up 19 percent 
from $551 million in 1995. Revenues were affected by the higher 
average portfolio owned and increases from the securitization and 
sale of retail notes. The ratio of earnings to fixed charges was 
1.75 to 1 for 1996 compared with 1.73 to 1 in 1995.



Page 14











<PAGE>

Finance income earned on retail notes was $372 million in 1996 
compared with $333 million in 1995, an increase of 12 percent. The 
average balance of the retail note portfolio financed during 1996 
was 15 percent higher than the comparable 1995 average balance.

Revenues earned on revolving charge accounts amounted to $95 
million in 1996, a 13 percent increase over revenues of $84 
million earned during 1995. The increase was primarily due to a 20 
percent increase in the average balance of Farm Plan receivables 
financed and a 4 percent increase in the average balance of John 
Deere Credit Revolving Plan receivables financed in 1996 compared 
with 1995.

Finance income earned on wholesale notes was $38 million in 1996, 
an increase of $15 million, compared with $23 million in 1995. 
Increases in finance income earned on wholesale notes were 
attributable to the continued growth in the manufactured housing, 
construction and yacht markets.

The average net investment in financing and operating leases 
increased by 36 percent in 1996 compared with 1995. 
Correspondingly, total lease revenues increased to $68 million in 
1996 compared with $48 million in 1995.

The net gain on retail notes sold totaled $14 million during 1996 
compared with $11 million for 1995. Securitization and servicing 
fee income totaled $46 million in 1996 compared with $36 million 
during 1995. Securitization and servicing fee income relates to 
retail notes sold to other financial institutions or limited-
purpose business trusts and, prior to 1997, primarily included the 
interest earned on present value receivable amounts established at 
the time of sale, adjustments related to those sales and 
reimbursed administrative expenses received.

Gains of $6 million on the sale of leased equipment contributed to 
an increase in other income, from $4 million in 1995 to $12 
million in 1996.

Higher average borrowings in 1996 resulted in higher interest 
expense, which totaled $274 million in 1996 compared with $238 
million in 1995. Average borrowings were $4.498 billion in 1996 
compared with $3.726 billion in 1995, an increase of 21 percent. 
The weighted average annual interest rate incurred on all 
interest-bearing borrowings during 1996 decreased to 5.9 percent 
from 6.3 percent in 1995.

Administrative and operating expenses increased 22 percent from 
$78 million in 1995 to $95 million in 1996. These increases were 
attributable to the costs associated with administering a larger 
Receivable and Lease portfolio as well as higher employment costs 
relating to the increasing level of new acquisition volumes.

The provision for credit losses was $38 million in 1996 and $32 
million in 1995. Total write-offs of Receivables and Leases 
financed were $29 million during 1996 compared with $24 million in 
1995. The increase in write-offs from 1995 primarily related to a 

Page 15











<PAGE>

$4.9 million increase in equipment retail note write-offs and a 
$2.0 million increase in revolving charge account write-offs, 
offset by a $1.9 million decrease in recreational product retail 
notes write-offs.

  Receivables and Leases Acquired and Held

Acquisition volumes of Receivables and Leases by the Company 
during 1996 totaled $5.517 billion, an increase of 18 percent 
compared with volumes of $4.667 billion during 1995. The higher 
volumes in 1996 resulted mainly from an increased volume of John 
Deere equipment retail notes, leases, revolving charge accounts 
and wholesale receivables. Receivables and Leases held by the 
Company at October 31, 1996 totaled $5.624 billion compared with 
$4.922 billion at October 31, 1995. Receivables and Leases 
administered, which include retail notes and leases previously 
sold but still administered, amounted to $6.812 billion at the end 
of 1996 compared with $6.105 billion at October 31, 1995. 
Receivable and Lease acquisition volumes during the fiscal years 
ended and balances held were as follows (in millions of dollars):


                   Fiscal Year Volumes     Balance at October 31
                  ----------------------   ----------------------
                                      %                        %
                    1996     1995   Chng     1996     1995   Chng
Retail notes:     ----------------------   ----------------------
  Agricultural 
    equipment     $2,154.5 $2,083.5   3%   $2,417.3 $2,286.2   6%
  Construction
    equipment        462.8    391.2  18       628.9    511.0  23
  Lawn and grounds
    care equipment   123.9    100.1  24       182.6    162.3  13
  Recreational 
    products         233.9    288.7 (19)      840.8    865.4  (3)
                  -----------------        -----------------
    Total          2,975.1  2,863.5   4     4,069.6  3,824.9   6

Revolving charge
  accounts         1,232.5  1,050.1  17       571.1    510.2  12
Wholesale notes      982.3    607.0  62       524.5    298.1  76
Financing leases     103.9     88.5  17       181.5    149.3  22
Equipment on
  operating leases   222.8     58.3 282       276.8    139.5  98
                  -----------------        -----------------
    Total         $5,516.6 $4,667.4  18    $5,623.5 $4,922.0  14
                  =================        =================

John Deere equipment retail note volumes increased by 
approximately $153 million in 1996 compared with 1995, primarily 
due to an increase in the volumes of agricultural equipment and 
construction equipment retail notes. Volumes of recreational 
product retail notes decreased 19 percent in 1996 due to the 
aggressive pricing environment that existed in these credit 
markets. Additionally, in 1996 the Company shifted its emphasis 
relating to marine products towards the yacht market. Revolving 

Page 16











<PAGE>

charge accounts, leases and wholesale note volumes increased 
significantly in 1996, due to the higher demand for these 
products.

Retail notes receivable increased primarily from retail note 
acquisition volumes exceeding collections during 1996. However, 
the Company also securitized and sold retail notes, receiving 
proceeds of $814 million during 1996 compared to $726 million 
during 1995. Additional information is presented in note 2 to the 
consolidated financial statements. Retail notes administered by 
the Company, which includes retail notes previously sold, amounted 
to $5.247 billion at October 31, 1996, compared with $4.987 
billion at October 31, 1995. The balance of retail notes 
previously sold was $1.177 billion at October 31, 1996 compared 
with $1.162 billion at October 31, 1995. The Company's maximum 
exposure under all retail note recourse provisions at October 31, 
1996 and 1995 was $186 million and $180 million, respectively.

Retail notes bearing variable finance rates totaled 43 percent of 
the total retail note portfolio at October 31, 1996 compared with 
52 percent at October 31, 1995.

Total Receivable and Lease amounts 60 days or more past due were 
$19 million at October 31, 1996 compared with $14 million at 
October 31, 1995. These past-due amounts represented .35 percent 
and .29 percent of the total Receivables and Leases held at those 
respective dates. While past due amounts, as a percentage of total 
Receivables and Leases held, increased in 1996, these amounts 
compare favorably with historical levels. See note 3 to the 
consolidated financial statements for additional information on 
past dues.

Deposits withheld from dealers and merchants, representing mainly 
the aggregate dealer retail note and lease withholding accounts 
from individual John Deere dealers to which losses from retail 
notes and leases originating from the respective dealers can be 
charged, amounted to $135 million at October 31, 1996 compared to 
$127 million at October 31, 1995. The Company's allowance for 
credit losses on all Receivables and Leases financed at October 
31, 1996 totaled $87 million and represented 1.6 percent of the 
total Receivables and Leases financed compared with $84 million 
and 1.7 percent, respectively, one year earlier. The Company's 
allowance for credit losses, as a percentage of total Receivables 
and Leases, declined in 1996 due to an ongoing evaluation of loss 
experience and related estimates to insure that the allowance for 
credit losses is maintained at an adequate level.

Capital Resources and Liquidity

The Company relies on its ability to raise substantial amounts of 
funds to finance its Receivable and Lease portfolios. The 
Company's primary sources of funds for this purpose are a 
combination of borrowings and equity capital. Additionally, the 
Company periodically sells substantial amounts of retail notes in 
the public market and in private sales. The Company's ability to 
obtain funds is affected by its debt ratings, which are closely 

Page 17











<PAGE>

related to the outlook for and the financial condition of Deere & 
Company, and the nature and availability of support facilities, 
such as its lines of credit. For information regarding Deere & 
Company and its business, see Exhibit 99.

The Company's ability to meet its debt obligations is supported in 
a number of ways. All commercial paper issued is backed by bank 
credit lines. The assets of the Company are self-liquidating in 
nature. A strong equity position is available to absorb unusual 
losses on these assets. Liquidity is also provided by the 
Company's ability to sell these assets. Asset-liability risk is 
managed to minimize exposure to interest rate fluctuations.

The Company's business is somewhat seasonal, with overall 
acquisition volumes of Receivables and Leases traditionally higher 
in the second half of the fiscal year than in the first half, and 
overall collections of Receivables and Leases traditionally 
somewhat higher in the first six months than in the last six 
months of the fiscal year.

The aggregate net cash provided by operating and financing 
activities was primarily used to increase Receivables and Leases. 
Net cash provided by operating activities was $262 million in 
1997. Financing activities provided $507 million during the same 
period, resulting from a $582 million net increase in total 
borrowings which was partially offset by dividend payments 
totaling $75 million to John Deere Credit Company. Net cash used 
for investing activities totaled $736 million in 1997, primarily 
due to Receivable and Lease acquisitions exceeding collections by 
$1.621 billion, which was partially offset by the $837 million of 
proceeds from the sale of receivables. Cash and cash equivalents 
increased $33 million during 1997. See "Statements of 
Consolidated Cash Flows."

Over the past three years, operating activities have provided $646 
million in net cash. In addition, the sale of receivables provided 
$2.377 billion and an increase in total net borrowings provided 
$2.129 billion. These amounts were used mainly to fund Receivable 
and Lease acquisitions, which exceeded collections by $4.878 
billion, and to pay $200 million in dividends.

The Company is naturally exposed to various interest rate and 
foreign currency risks. As a result, the Company enters into 
derivative transactions to hedge certain of these exposures that 
arise in the normal course of business, and not for the purpose of 
creating speculative positions or trading. Similar to other large 
credit companies, the Company manages the relationship of the 
types and amounts of its funding sources to its Receivable and 
Lease portfolios in an effort to diminish risk due to interest 
rate fluctuations, while responding to favorable financing 
opportunities. Accordingly, from time to time, the Company enters 
into interest rate swap and interest rate cap agreements to hedge 
its interest rate exposure in amounts corresponding to a portion 
of its borrowings. The Company also has a foreign exchange swap 
related to a long-term borrowing. The credit and market risks 
under these interest rate and foreign currency agreements are not 

Page 18











<PAGE>

considered to be significant. See note 12 to the consolidated 
financial statements for further details.

Total interest-bearing indebtedness amounted to $5.470 billion at 
October 31, 1997, compared with $4.898 billion at October 31, 
1996, generally corresponding with the level of Receivables and 
Leases financed and the level of cash and cash equivalents. Total 
short-term indebtedness amounted to $3.387 billion at October 31, 
1997 compared with $3.098 billion at October 31, 1996. Total long-
term indebtedness amounted to $2.083 billion at October 31, 1997 
and $1.800 billion at October 31, 1996. The ratio of total 
interest-bearing debt to stockholder's equity was 6.7 to 1 and 6.5 
to 1 at October 31, 1997 and 1996, respectively.

The Company maintained unsecured lines of credit with various 
banks in North America and overseas. See note 4 to the 
consolidated financial statements.

During 1997, the Capital Corporation issued $200 million of 6% 
notes and $200 million of 6.30% notes, both due in 1999, and 
retired $100 million of 7.20% notes due in 1997. In 1997, the 
Capital Corporation also issued $750 million and retired $589 
million of medium-term notes.

The Company has developed plans for the completion of systems 
changes related to year 2000. The cost is not expected to have a 
material effect on the Company's financial position or results of 
operations.

The Capital Corporation paid cash dividends to John Deere Credit 
Company of $75 million in 1997 and $70 million in 1996. In each 
case, John Deere Credit Company paid a comparable dividend to 
Deere & Company. During the first quarter of 1998, the Capital 
Corporation declared and paid a dividend of $12.5 million to John 
Deere Credit Company which, in turn, paid a dividend of $12.5 
million to Deere & Company.

Item 8.  Financial Statements and Supplementary Data.

See accompanying table of contents of financial statements.

Item 9.  Changes in and Disagreements with Accountants on 
         Accounting and Financial Disclosure.

None.


PART III

Item 10.  Directors and Executive Officers of the Registrant.

Omitted pursuant to instruction I(2).

Item 11.  Executive Compensation.

Omitted pursuant to instruction I(2). 

Page 19











<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners and 
          Management.

Omitted pursuant to instruction I(2).

Item 13.  Certain Relationships and Related Transactions.

Omitted pursuant to instruction I(2).


PART IV


Item 14.  Exhibits, Financial Statement Schedule, and Reports on 
          Form 8-K.

(a)  (1)  Financial Statements

     (2)  Financial Statement Schedule

            See the table of contents to financial statements and 
            schedule immediately preceding the financial 
            statements and schedule to consolidated financial 
            statements.

     (3)  Exhibits

            See the index to exhibits immediately preceding the 
            exhibits filed with this report.

(b)  Reports on Form 8-K

     Current Report on Form 8-K dated August 12, 1997 
     (Items 5 and 7).























Page 20











<PAGE>

SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the 
Securities Exchange Act of 1934, the registrant has duly caused 
this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.

                            JOHN DEERE CAPITAL CORPORATION

                             /s/ Hans W. Becherer
                            --------------------------------
                            By:  Hans W. Becherer
                                 Chairman

Date:  22 January 1998

Pursuant to the requirements of the Securities Exchange Act of 
1934, this report has been signed below by the following persons 
on behalf of the registrant and in the capacities and on the date 
indicated.

       Signature            Title                      Date
       ---------            -----                      ----

/s/ Hans W. Becherer    Director, Chairman      ) 
----------------------  and Principal           ) 
    Hans W. Becherer    Executive Officer       ) 
                                                )
/s/ J. W. England       Director                )22 January 1998
----------------------                          )
    J. W. England                               ) 
                                                )
/s/ Bernard L. Hardiek  Director                )
----------------------                          )
    Bernard L. Hardiek                          )
                                                )
/s/ James R. Heseman    Director                )
----------------------                          )
    James R. Heseman                            )
                                                )
/s/ James A. Israel                             )
----------------------  Director                )
    James A. Israel                             )
                                                )
/s/ F. F. Korndorf      Director                )
----------------------                          )
    F. F. Korndorf                              )
                                                )
/s/ Robert W. Lane      Director, Vice President) 
----------------------  and Principal Financial )  
    Robert W. Lane      Officer                 )
                                                ) 




Page 21











<PAGE>


/s/ Pierre E. Leroy     Director                )
----------------------                          )
    Pierre E. Leroy                             )
                                                )
/s/ Michael P. Orr      Director and President  )22 January 1998
----------------------                          )
    Michael P. Orr                              )
                                                )
/s/ Jon D. Volkert      Director                )
----------------------                          )
    Jon D. Volkert                              )
                                                )
/s/ Steven E. Warren    Director, Vice President)
----------------------  and Principal Accounting)
    Steven E. Warren    Officer                 )









































Page 22











<PAGE>



[Deloitte & Touche Letterhead]


INDEPENDENT AUDITORS' REPORT

John Deere Capital Corporation:

We have audited the accompanying consolidated balance sheets of 
John Deere Capital Corporation and subsidiaries as of October 31, 
1997 and 1996 and the related statements of consolidated income 
and retained earnings and of consolidated cash flows for each of 
the three years in the period ended October 31, 1997. These 
financial statements are the responsibility of the Company's 
management. Our responsibility is to express an opinion on the 
financial statements based on our audits.

We conducted our audits in accordance with generally accepted 
auditing standards. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether 
the financial statements are free of material misstatement. An 
audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating 
the overall financial statement presentation. We believe that our 
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present 
fairly, in all material respects, the financial position of John 
Deere Capital Corporation and subsidiaries at October 31, 1997 
and 1996 and the results of their operations and their cash flows 
for each of the three years in the period ended October 31, 1997 
in conformity with generally accepted accounting principles. 



DELOITTE & TOUCHE LLP
Chicago, Illinois

November 25, 1997















Page 23











<PAGE>


Table of Contents


                                                             Page

Financial Statements:

  John Deere Capital Corporation and Subsidiaries:

  Statements of Consolidated Income and Retained Earnings
    for the Years Ended October 31, 1997, 1996 and 1995........25

  Consolidated Balance Sheets, October 31, 1997 and 1996.......26

  Statements of Consolidated Cash Flows for the Years Ended
    October 31, 1997, 1996 and 1995............................27

  Notes to Consolidated Financial Statements...................28




SCHEDULES OMITTED

The following schedules are omitted because of the absence of 
conditions under which they are required or because the required 
information is included in the Notes to the Consolidated Financial 
Statements:

    I, II, III, IV, and V.


























Page 24











<PAGE>
        John Deere Capital Corporation and Subsidiaries
    Statements of Consolidated Income and Retained Earnings
                      (dollars in millions)
                                         For the Year Ended
                                             October 31
                                   -----------------------------
Revenues                              1997      1996      1995
  Finance income earned
    on retail notes                 $ 417.4   $ 372.4   $ 333.5
  Lease revenues                      118.0      67.7      48.0
  Revolving charge account income     102.6      95.1      84.3
  Finance income earned on 
    wholesale notes                    48.9      37.7      23.1
  Securitization and servicing 
    fee income                         29.7      46.0      35.5
  Net gain on retail notes sold        18.8      14.4      11.4
  Interest income from short-term 
    investments                        10.2      11.4      11.3
  Other income                          8.7      12.0       3.8
----------------------------------------------------------------
    Total revenues                    754.3     656.7     550.9
----------------------------------------------------------------
Expenses            
  Interest expense:            
    On obligations to others          325.3     271.2     234.6
    On notes payable to 
      Deere & Company                   1.6       2.5       3.8
----------------------------------------------------------------
        Total interest expense        326.9     273.7     238.4
----------------------------------------------------------------
  Operating expenses:            
    Administrative and 
      operating expenses              106.5      95.0      77.6
    Provision for credit losses        33.2      38.2      32.3
    Fees paid to Deere & Company        8.3       6.1       5.3
    Depreciation of equipment on 
      operating leases                 68.2      37.1      21.9
----------------------------------------------------------------
        Total operating expenses      216.2     176.4     137.1
----------------------------------------------------------------
        Total expenses                543.1     450.1     375.5
----------------------------------------------------------------
Income of consolidated group 
  before income taxes                 211.2     206.6     175.4
Provision for income taxes             74.0      72.5      61.3
----------------------------------------------------------------
Income of consolidated group          137.2     134.1     114.1
Equity in losses of 
  unconsolidated affiliates            (1.4)     --        --
----------------------------------------------------------------
Net income                            135.8     134.1     114.1
Cash dividends declared               (75.0)    (70.0)    (55.0)
Retained earnings at 
  beginning of the year               644.4     580.3     521.2
----------------------------------------------------------------
Retained earnings at end of year    $ 705.2   $ 644.4   $ 580.3
================================================================
Ratio of earnings to fixed charges      1.64      1.75      1.73
================================================================
        The accompanying Notes to Consolidated Financial
       Statements are an integral part of this statement.
Page 25








<PAGE>
          John Deere Capital Corporation and Subsidiaries
                    Consolidated Balance Sheets 
                       (dollars in millions) 
                                                October 31
                                         ------------------------
                                            1997         1996
Assets                                   ------------------------
  Cash and cash equivalents              $   204.4    $   171.0
  Receivables and leases:
    Retail notes                           4,349.4      4,069.6
    Revolving charge accounts                618.5        571.1
    Wholesale notes                          593.4        524.5
    Financing leases                         214.6        181.5
      Total receivables....................5,775.9      5,346.7
    Equipment on operating leases - net      527.2        276.8
      Total receivables and leases.........6,303.1      5,623.5
    Allowance for credit losses              (85.9)       (87.4)
      Total receivables and leases - net...6,217.2      5,536.1
  Other receivables                          157.9        189.9
  Investments in unconsolidated 
    affiliates                                12.8          6.3
  Other assets                                66.8         67.8
----------------------------------------------------------------
Total Assets                             $ 6,659.1    $ 5,971.1
=================================================================
Liabilities and Stockholder's Equity        
  Short-term borrowings:        
    Commercial paper                     $ 1,991.9    $ 1,689.9
    Deere & Company                          349.9        544.8
    Current maturities of  
      long-term borrowings                 1,042.5        863.7
    Other notes payable                        2.4         --
      Total short-term borrowings..........3,386.7      3,098.4
  Accounts payable & accrued liabilities:
    Accrued interest on senior debt           39.2         35.9
    Other payables                           188.3        144.8
      Total accounts payable and 
        accrued liabilities..................227.5        180.7
  Deposits withheld from dealers 
    and merchants                            144.2        135.4
  Long-term borrowings:        
    Senior debt                            1,782.9      1,649.5
    Subordinated debt                        300.0        150.0
      Total long-term borrowings...........2,082.9      1,799.5
      Total liabilities....................5,841.3      5,214.0
  Stockholder's equity        
    Common stock, without par value (issued
      and outstanding - 2,500 shares owned 
      by John Deere Credit Company)          112.8        112.8
    Retained earnings                        705.2        644.4
    Cumulative translation adjustment          (.2)         (.1)
      Total stockholder's equity.............817.8        757.1
----------------------------------------------------------------
Total Liabilities & Stockholder's 
  Equity                                 $ 6,659.1    $ 5,971.1
=================================================================
         The accompanying Notes to Consolidated Financial 
        Statements are an integral part of this statement.
Page 26











<PAGE>
        John Deere Capital Corporation and Subsidiaries
             Statements of Consolidated Cash Flows
                         (in millions)

                                 For the Year Ended October 31 
                              ----------------------------------
                                 1997        1996        1995
Cash Flows from Operating     ----------------------------------
Activities:  
  Net income                  $   135.8   $   134.1   $   114.1

  Adjustments to reconcile 
  net income to net cash 
  provided by operating 
  activities:        
    Provision for credit losses    33.2        38.2        32.3
    Provision for depreciation     71.2        39.5        23.8
    Provision (credit) for 
      deferred income taxes          .8         1.7        (2.0)
    Equity in losses of 
      unconsolidated affiliates     1.4         ---         ---
    Other                          19.6         8.9        (7.0)
      Net cash provided by
        operating activities......262.0       222.4       161.2
----------------------------------------------------------------
Cash Flows from Investing 
Activities:            
  Cost of receivables 
    and leases acquired        (6,461.6)   (5,516.6)   (4,667.4)
  Collections of receivables    4,840.3     3,888.8     3,038.5
  Proceeds from sales of 
    receivables                   836.5       814.0       726.3
  Acquisitions of businesses       (8.1)       (7.4)        ---
  Other                            57.1        41.6         5.2
       Net cash used for   
       investing activities......(735.8)     (779.6)     (897.4)
----------------------------------------------------------------
Cash Flows from Financing 
Activities:            
  Increase (decrease) in   
    commercial paper              302.0      (296.8)      405.9
  Change in receivable/payable 
    with Deere & Company         (183.4)       84.7       357.5
  Increase in other notes payable   2.4         ---         ---
  Proceeds from issuance of 
    long-term borrowings        1,150.0     1,190.0       775.0
  Principal payments on 
    long-term borrowings         (688.8)     (344.0)     (625.8)
  Dividends paid                  (75.0)      (70.0)      (55.0)
      Net cash provided by 
      financing activities........507.2       563.9       857.6
----------------------------------------------------------------
Net increase in cash and 
  cash equivalents                 33.4         6.7       121.4
Cash and cash equivalents 
  at the beginning of year........171.0       164.3        42.9
Cash and cash equivalents 
  at the end of year          $   204.4   $   171.0   $   164.3
================================================================
        The accompanying Notes to Consolidated Financial
       Statements are an integral part of this statement. 
Page 27








<PAGE>

         John Deere Capital Corporation and Subsidiaries
           Notes to Consolidated Financial Statements


Note 1.  Summary of Significant Accounting Policies

The following are significant accounting policies in addition to 
those included in other notes to the consolidated financial 
statements.

Corporate Organization

John Deere Capital Corporation (Capital Corporation) is a wholly-
owned subsidiary of John Deere Credit Company, a finance holding 
company which is wholly-owned by Deere & Company. The Capital 
Corporation and its subsidiaries, Deere Credit Services, Inc., 
Farm Plan Corporation, Deere Credit, Inc., John Deere 
Receivables, Inc., John Deere Funding Corporation, Arrendadora 
John Deere, S.A. de C.V. and John Deere Credit Limited 
(Australia) are collectively called the Company. Deere & Company, 
together with its subsidiaries and affiliates, are collectively 
called John Deere.

Retail notes, revolving charge accounts, direct financing leases, 
and wholesale notes receivable are collectively called 
"Receivables."  Receivables and operating leases are collectively 
called "Receivables and Leases."

The risk of credit losses applicable to John Deere retail notes 
and leases, net of recovery from withholdings from John Deere 
dealers, is borne by the Company. During 1997, John Deere was 
compensated by the Company for originating certain retail notes 
and leases on John Deere products. John Deere is also reimbursed 
by the Company for staff support and other administrative 
services at estimated cost, and for credit lines provided by John 
Deere based on utilization of the lines.

In 1997, the Company's subsidiary, Farm Plan Corporation, entered 
into a partnership to offer certain financing products in Germany 
under the trademark John Deere Credit. Along with the Company's 
existing joint venture in the United Kingdom, these operations 
support John Deere and independent John Deere retail dealers by 
offering financing products specific to the European markets. 
Both investments are accounted for under the equity method of 
accounting.

Principles of Consolidation

The consolidated financial statements include the financial 
statements of the Capital Corporation and its subsidiaries.

The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to 
make estimates and assumptions that affect the reported amounts 
and related disclosures. Actual results could differ from those 
estimates. 

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<PAGE>

Accounting Changes

In 1997, the Company adopted the Financial Accounting Standards 
Board (FASB) Statement of Financial Accounting Standards No. 121, 
Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of. This Statement had no material 
effect on the Company's financial position or results of 
operations. In 1997, the Company adopted FASB Statement No. 125, 
Accounting for Transfers and Servicing of Financial Assets and 
Extinguishments of Liabilities. This Statement had no material 
effect on the Company's financial position or results of 
operations.

In 1997, the FASB issued Statements No. 130, Reporting 
Comprehensive Income, and No. 131, Disclosures about Segments of 
an Enterprise and Related Information, which must be adopted by 
fiscal year 1999. These Statements will have no effect on the 
Company's financial position or results of operations.

In 1997, the Securities and Exchange Commission amended its rules 
to require certain disclosure concerning derivatives and other 
financial instruments. This information is included in Note 12 - 
Financial Instruments and Supplemental Information (Unaudited) on 
page 44.

Reclassifications

Certain amounts for prior years have been reclassified to conform 
with 1997 financial statement presentations.

Note 2.  Receivables and Leases

Retail Notes Receivable

The principal business of the Company is providing and 
administering financing for retail purchases of new and used 
equipment manufactured by John Deere's agricultural, construction 
and commercial and consumer equipment divisions. The Company 
purchases retail installment sales and loan contracts (retail 
notes) from John Deere. These retail notes are acquired by John 
Deere through independent John Deere retail dealers. The Company 
also purchases and finances certain agricultural, construction and 
lawn and grounds care retail notes unrelated to John Deere. In 
addition, the Company purchases and finances recreational product 
retail notes acquired from independent dealers and marine product 
mortgage service companies (recreational product retail notes). 











Page 29











<PAGE>

Retail notes receivable by product category at October 31 are as 
follows (in millions of dollars):

                                         1997         1996
                                      -----------------------
Agricultural equipment - new          $ 1,607.1    $ 1,581.9
Agricultural equipment - used           1,464.5      1,318.4
Construction equipment - new              626.4        587.9
Construction equipment - used             128.7        134.6
Lawn and grounds care equipment - new     226.8        193.4
Lawn and grounds care equipment - used     22.6         20.5
Recreational products                   1,507.0      1,351.3
-------------------------------------------------------------
    Total                               5,583.1      5,188.0
-------------------------------------------------------------
Unearned finance income:        
  Equipment                              (643.8)      (608.0)
  Recreational products                  (589.9)      (510.4)
-------------------------------------------------------------
    Total                              (1,233.7)    (1,118.4)
-------------------------------------------------------------
    Retail notes receivable           $ 4,349.4    $ 4,069.6
==============================================================

Retail notes acquired by the Company during the year ended 
October 31, 1997 had an estimated average original term (based on 
dollar amounts) of 66 months. During 1996 and 1995, the estimated 
average original term was 67 and 71 months, respectively. 
Historically, because of prepayments, the average actual life of 
retail notes has been considerably shorter than the average 
original term. Average actual life for retail notes in 1997, 1996 
and 1995 were 25, 31 and 29 months, respectively.




Retail note installments at October 31 are scheduled as follows 
(in millions of dollars):
                                    1997         1996
        Due in:                  ______________________
           0-12 months           $ 1,379.1    $ 1,278.7
          13-24 months             1,207.6      1,117.9
          25-36 months               978.6        932.0
          37-48 months               691.2        690.9
          49-60 months               438.9        435.9
          61-72 months               211.9        177.5
          Over 72 months             675.8        555.1
        -----------------------------------------------
            Total                $ 5,583.1    $ 5,188.0
        ===============================================







Page 30











<PAGE>

Company guidelines relating to down payment requirements and 
contract terms on retail notes are generally as follows:

                                      Down       Contract
                                     Payment       Terms
                                     -----------------------
  Agricultural equipment 
    (new and used):
      Seasonal payments                  30%    4-8 crop years
      Monthly payments                   20%      48-96 months
  Construction equipment:       
      New                                20%      48-60 months
      Used                               20%         36 months
  Lawn and grounds care equipment 
    (new and used):
      Seasonal payments                  10%         3-6 years
      Monthly payments                   10%      36-72 months
  Recreational products 
    (excluding yachts):        
      New                                10%        180 months
      Used                               10%        144 months
  Yachts (new and used):                 20%        240 months


During 1997, 1996 and 1995, the Company received proceeds of $837 
million, $814 million and $726 million, respectively, from the 
sale and securitization of retail notes. The Company acts as 
agent for the buyers in collection and administration of all the 
notes it has sold. All retail notes sold are collateralized by 
security agreements on the related equipment sold to the 
customers. The Company's estimated maximum exposure under all 
retail note recourse provisions at October 31, 1997 and 1996 was 
$168 million and $186 million, respectively. At October 31, 1997, 
1996 and 1995, the balance of all retail notes previously sold by 
the Company was $1.314 billion, $1.177 billion and $1.162 
billion, respectively. Additional sales of retail notes are 
expected to be made in the future.

Finance income is recognized over the lives of the notes on the 
effective-yield basis. During 1997, the average effective yield 
on retail notes held by the Company was approximately 9.5 
percent, compared with 9.7 percent in 1996. Unearned finance 
income on variable-rate notes is adjusted monthly based on 
fluctuations in the base rate of a specified bank. Costs incurred 
in the acquisition of retail notes are deferred and recognized 
over the expected lives of the notes on the effective-yield 
basis.

A portion of the finance income earned by the Company arises from 
financing of retail sales of John Deere equipment on which 
finance charges are waived or reduced by John Deere for a period 
from the date of sale to a specified subsequent date. The Company 
generally receives compensation from John Deere equal to a 
competitive interest rate for periods during which finance 
charges have been waived or reduced on retail notes and leases. 
The portions of the Company's finance income earned that were 

Page 31











<PAGE>

received from John Deere on retail notes containing waiver of 
finance charges or reduced rates were 19 percent in 1997, 20 
percent in 1996 and 19 percent in 1995.

A deposit equal to one percent of the face amount of certain John 
Deere agricultural and commercial and consumer equipment retail 
notes originating from each dealer is withheld by the Company 
from that dealer. Any subsequent retail note losses are charged 
against the withheld deposits. To the extent that a loss on a 
retail note cannot be absorbed by these deposits withheld from 
the dealer from which the retail note was acquired, it is charged 
against the Company's allowance for credit losses. At the end of 
each calendar year, the balance of each dealer's withholding 
account in excess of a specified percent (currently 3 percent) of 
the total dealer's balance is remitted to the dealer. At the end 
of the Company's fiscal year, any negative balance in the dealer 
withholding account is written off and absorbed by the Company's 
allowance for credit losses. There is no withholding of dealer 
deposits on John Deere construction equipment retail notes or 
recreational product retail notes.

The Company requires that theft and physical damage insurance be 
carried on all goods leased or securing retail notes and 
wholesale notes. In most cases, the customer may, at his own 
expense, have the Company or the seller of the goods purchase 
this insurance or obtain it from other sources.

Revolving Charge Accounts Receivable

Revolving charge account income is generated primarily by three 
revolving credit products:  Farm Plan, the John Deere Credit 
Revolving Plan and Preferred Resource. Farm Plan is primarily 
used by farmers and ranchers to finance day-to-day operating 
expenses, such as parts and service labor. Merchants offer Farm 
Plan as an alternative to carrying in-house accounts receivable, 
and can initially sell existing balances to the Company under a 
recourse arrangement. Farm Plan income includes a discount paid 
by merchants for transaction processing and support and finance 
charges paid by customers on their existing account balances. The 
John Deere Credit Revolving Plan is used primarily by retail 
customers of John Deere dealers to finance lawn and grounds care 
equipment. Income includes a discount paid by dealers on most 
transactions and finance charges paid by customers on their 
outstanding account balances. Preferred Resource (an unsecured 
lending product) is used primarily by executives and 
professionals, and offers customers convenience and security by 
providing a substantial, readily-available source of funding for 
a variety of personal expenses. In 1997, the Company introduced 
YachtLine, a secured line of credit, which allows customers 
access to the equity of their vessel.

Revolving charge accounts receivable at October 31, 1997 totaled 
$619 million compared with $571 million at October 31, 1996. 
Account holders may pay the account balance in full at any time, 
or make payments over a number of months according to a payment 
schedule. A minimum amount is due each month from customers 
selecting the revolving payment option. 

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<PAGE>

Direct Financing Leases and Equipment on Operating Leases

The Company leases agricultural, construction, lawn and grounds 
care and certain other equipment directly to retail customers. At 
the time of accepting a lease that qualifies as a direct 
financing lease under FASB Statement No. 13, Accounting for 
Leases, the Company records the gross amount of lease payments 
receivable, estimated residual value of the leased equipment and 
unearned lease income. The unearned lease income is equal to the 
excess of the gross lease receivable plus the estimated residual 
value over the cost of the equipment. The unearned lease income 
is recognized as revenue over the lease term on the effective-
yield method. Rental payments applicable to equipment on 
operating leases are recorded as income on a straight-line method 
over the lease terms. Operating lease assets are recorded at cost 
and depreciated on a straight-line method over the terms of the 
leases. Lease acquisition costs are accounted for in a manner 
similar to the procedures for retail notes. Residual values 
represent estimates of the value of the leased assets at the end 
of the contract terms and are initially recorded based upon 
appraisals and estimates. Residual values are continually 
reviewed to determine that recorded amounts are appropriate. 
Financing leases receivable by product category at October 31 are 
as follows (in millions of dollars):
                                            1997       1996
                                          -------------------
    Agricultural equipment                $  62.2    $  65.0
    Construction equipment                  100.0       73.1
    Lawn and grounds care equipment          37.7       10.6
    Other equipment                          23.7       31.0
  -----------------------------------------------------------
      Total                                 223.6      179.7
  Estimated residual values                  26.2       31.7
  Unearned finance income                   (35.2)     (29.9)
  -----------------------------------------------------------
    Financing leases receivable           $ 214.6    $ 181.5
  ===========================================================

Residual values represent the amounts estimated to be recoverable 
at maturity from disposition of the leased equipment.

Initial lease terms for financing leases range from 12 months to 
72 months. Payments on financing leases receivable at October 31 
are scheduled as follows (in millions of dollars):

                                  1997       1996
                                ------------------
            Due in:        
               0-12 months      $  84.4    $  64.8
              13-24 months         65.6       51.1
              25-36 months         43.2       36.1
              37-48 months         22.2       19.8
              Over 48 months        8.2        7.9
            --------------------------------------
                Total           $ 223.6    $ 179.7
            ======================================

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<PAGE>

Deposits withheld from John Deere dealers and related losses on 
leases are handled in a manner similar to the procedures for 
retail notes. In addition, a lease payment discount program, 
allowing reduced payments over the term of the lease, is 
administered in a manner similar to finance waiver on retail 
notes.

Equipment returned to the Company upon termination of leases and 
held for subsequent sale or lease is recorded at the lower of net 
book value or estimated market value of the equipment.

The cost of equipment on operating leases by product category at 
October 31 is as follows (in millions of dollars):

                                              1997       1996
                                            -------------------
     Agricultural equipment                 $ 403.9    $ 221.3
     Construction equipment                   181.9       96.4
     Lawn and grounds care equipment           25.1        7.5
     Other equipment                           16.2        6.9
     ----------------------------------------------------------
       Total                                  627.1      332.1
     Accumulated depreciation                 (99.9)     (55.3)
     ----------------------------------------------------------
       Equipment on operating leases - net  $ 527.2    $ 276.8
     ==========================================================

Initial lease terms for equipment on operating leases range from 
12 months to 72 months. Rental payments for equipment on 
operating leases at October 31 are scheduled as follows (in 
millions of dollars):

                                    1997       1996
                                  ------------------
            Due in:        
               0-12 months        $ 113.1    $  54.7
              13-24 months           85.6       47.8
              25-36 months           41.4       21.6
              37-48 months           19.3       12.0
              Over 48 months          5.1        3.1
            ----------------------------------------
                Total             $ 264.5    $ 139.2
            ========================================

Wholesale Notes Receivable

The Company finances wholesale inventories of recreational 
vehicles, manufactured housing units, yachts, John Deere engines, 
John Deere agricultural and John Deere construction equipment 
owned by dealers of those products. Wholesale finance income is 
generally recognized monthly based on the daily balance of 
wholesale receivables outstanding and the applicable effective 
interest rate. Interest rates vary with a prevailing bank base 
rate, the type of equipment financed and the balance outstanding. 
Wholesale receivables are secured by equipment financed.



Page 34











<PAGE>

Wholesale notes receivable on John Deere equipment owned by the 
dealers, recreational vehicles, manufactured housing units and 
yachts totaled $593 million at October 31, 1997 compared with 
$524 million at October 31, 1996. Generally, the maximum maturity 
for wholesale notes is 12 months.

Other Receivables

The Company has sold retail notes to limited-purpose business 
trusts and to private third parties, which utilized the notes as 
collateral for the issuance of asset-backed securities. Other 
receivables related to securitizations are recorded at net 
present value and relate to payments to be received for retained 
interests and deposits made pursuant to recourse provisions under 
asset-backed securities sales agreements. These receivables are 
subsequently carried at estimated fair value with unrealized 
gains or losses, if any, recorded directly in equity similar to 
available-for-sale marketable securities. Securitization and 
servicing fee income includes the interest earned on and realized 
adjustments related to these receivables and reimbursed 
administrative expenses.

Concentration of Credit Risk

Receivables and Leases have significant concentrations of credit 
risk in the agricultural, construction, lawn and grounds care and 
recreational product business sectors as shown in the previous 
tables. On a geographic basis, there is not a disproportionate 
concentration of credit risk in any area in which the Company 
operates. The Company retains as collateral a security interest 
in the goods associated with Receivables and Leases other than 
certain revolving charge accounts.

Note 3. Allowance for Credit Losses, Delinquencies and Write-offs

Allowance for Credit Losses

Allowances for credit losses on Receivables and Leases are 
maintained in amounts considered to be appropriate in relation to 
the Receivables and Leases outstanding based on estimated 
collectibility and collection experience.

An analysis of the allowance for credit losses on total 
Receivables and Leases follows (in millions of dollars):

                                           1997    1996    1995
                                         -----------------------
Balance, beginning of the year           $ 87.4  $ 84.2  $ 80.1
Provision charged to operations            33.2    38.2    32.3
Amounts written off                       (29.7)  (29.0)  (23.7)
Transfers related to retail note sales     (5.0)   (6.0)   (4.5)
----------------------------------------------------------------
Balance, end of the year                 $ 85.9  $ 87.4  $ 84.2
================================================================



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<PAGE>

The allowance for credit losses represented 1.4 percent, 1.6 
percent and 1.7 percent of Receivables and Leases financed at 
October 31, 1997, 1996 and 1995, respectively. In addition, the 
Company had $144 million, $135 million and $127 million at 
October 31, 1997, 1996 and 1995, respectively, of deposits 
withheld from John Deere dealers and Farm Plan merchants 
available for certain potential credit losses originating from 
those dealers and merchants.

Delinquencies

Generally, when retail notes become 120 days delinquent, accrual 
of finance income is suspended, the collateral is repossessed or 
the account is designated for litigation and the estimated 
uncollectible amount, after charging the dealer's withholding 
account, if any, is written off to the allowance for credit 
losses. Accrual of revolving charge account income is suspended 
generally when the account becomes 120 days delinquent. Accounts 
are deemed to be uncollectible and written off to the allowance 
for credit losses when delinquency reaches 180 days for a Farm 
Plan account, 150 days for a John Deere Credit Revolving Plan 
account and 120 days for both Preferred Resource and YachtLine 
accounts. When a lease account becomes 120 days delinquent, the 
accrual of lease revenue is suspended, the equipment is 
repossessed or the account is designated for litigation, and the 
estimated uncollectible amount, after charging the dealer's 
withholding account, if any, is written off to the allowance for 
credit losses. When a wholesale account becomes 60 days 
delinquent, accrual of finance income is suspended, the 
collateral is repossessed or the amount is designated for 
litigation, and the estimated uncollectible amount is written off 
to the allowance for credit losses. Although amounts are not 
withheld from dealers to cover uncollectible wholesale 
receivables, there are usually repurchase agreements with 
manufacturers for new inventories held by dealers.

Total Receivable and Lease amounts 60 days or more past due, by 
product and as a percentage of total balances held were as 
follows (dollars in millions):

                         Oct 31, 1997  Oct 31, 1996  Oct 31, 1995 
                         ------------  ------------  ------------
                         Dollars   %   Dollars   %   Dollars   %
Retail notes:            ------------  ------------  ------------
Agricultural equipment   $ 6.8   .27%  $ 4.4   .18%  $ 4.1   .18%
 Construction equipment    2.0   .31     2.5   .39     1.2   .23
 Lawn and grounds care 
  equipment                 .6   .28      .7   .38      .6   .38
 Recreational products      .3   .03      .3   .03      .2   .1
                         -----         -----         -----
  Total retail notes       9.7   .22     7.9   .19     6.1   .16
Revolving charge accounts  8.3  1.34     8.9  1.57     7.1  1.40
Wholesale notes            2.0   .33     1.0   .17      .1   .02
Leases                     2.0   .27     1.7   .38      .8   .28
                         -----         -----         -----
 Total Receivables 
  and Leases             $22.0   .35   $19.5   .35   $14.1   .29
                         =====         =====         =====
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<PAGE>

Write-offs

Total Receivable and Lease write-off amounts, by product and as a 
percentage of total balances held were as follows (dollars in 
millions):
                             1997          1996          1995
                         ------------  ------------  ------------ 
                         Dollars   %   Dollars   %   Dollars   %
Retail notes:            ------------  ------------  ------------
Agricultural equipment   $ 1.5   .05%  $ 2.4   .10%  $  .3   .02%
 Construction equipment    3.7   .58     5.3   .93     2.2  1.36
 Lawn and grounds care 
  equipment                 .2   .12      .3   .17      .6   .38
 Recreational products     8.0   .90     9.6  1.11    11.5  1.33
                         -----         -----         -----
  Total retail notes      13.4   .30    17.6   .45    14.6   .38
Revolving charge accounts 11.3  2.08     9.7  1.93     7.6  1.49
Wholesale notes            2.0   .39     1.0   .25      .4   .14
Leases                     3.0   .51      .7   .20     1.1   .36
                         -----         -----         -----
 Total Receivables 
  and Leases             $29.7   .49   $29.0   .56   $23.7   .48
                         =====         =====         =====

Note 4.  Short-Term Borrowings

On October 31, 1997, short-term borrowings were $3.387 billion, 
$1.992 billion of which was commercial paper. Short-term 
borrowings were $3.098 billion on October 31, 1996, $1.690 
billion of which was commercial paper. The Capital Corporation's 
short-term debt also includes amounts borrowed from Deere & 
Company, which totaled $350 million and $545 million at October 
31, 1997 and 1996, respectively. The Capital Corporation pays a 
market rate of interest to Deere & Company based on the average 
outstanding borrowings each month. The weighted average interest 
rate on total short-term borrowings, excluding current maturities 
of long-term borrowings, was 5.5 percent during both 1997 and 
1996.

At October 31, 1997, the Capital Corporation, Deere & Company, 
John Deere Limited (Canada) and John Deere Credit Inc. (Canada), 
jointly, maintained $4.007 billion of unsecured lines of credit 
with various banks in North America and overseas, $1.329 billion 
of which was unused. For the purpose of computing unused credit 
lines, total short-term borrowings, excluding the current portion 
of long-term borrowings, of the Capital Corporation, Deere & 
Company, John Deere Limited (Canada) and John Deere Credit Inc. 
(Canada), were considered to constitute utilization. Included in 
the total credit lines is a long-term commitment credit 
agreement, expiring February 25, 2002, for $3.500 billion. The 
credit agreement has various requirements of the Company, 
including the maintenance of its consolidated ratio of earnings 
before fixed charges to fixed charges at not less than 1.05 to 1 
for each fiscal quarter (as described below) and the Company's 
ratio of senior debt to total stockholder's equity plus 
subordinated debt may not be more than 8 to 1 at the end of any 

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<PAGE>

fiscal quarter. "Senior debt" consists of the Company's total 
interest-bearing obligations, excluding subordinated debt, but 
including borrowings from John Deere. The Company's ratio of 
senior debt to total stockholder's equity plus subordinated debt 
was 4.6 to 1 at October 31, 1997 compared to 4.4 to 1 at October 
31, 1996. An annual facility fee on the credit agreement is 
charged to the Capital Corporation based on utilization.

Deere & Company has an agreement with the Capital Corporation to 
make income maintenance payments to the Capital Corporation such 
that its consolidated ratio of earnings before fixed charges to 
fixed charges is not less than 1.05 to 1 for each fiscal quarter. 
For purposes of these calculations, "earnings" consist of income 
before income taxes, the cumulative effect of changes in 
accounting and fixed charges. "Fixed charges" consist of interest 
on indebtedness, amortization of debt discount and expense, an 
estimated amount of rental expense under capitalized leases which 
is deemed to be representative of the interest factor and rental 
expense under operating leases. The Company's ratio of earnings 
to fixed charges was 1.64 to 1, 1.75 to 1, and 1.73 to 1 in 1997, 
1996 and 1995, respectively. Deere & Company also agreed to 
maintain the Capital Corporation's tangible net worth at not less 
than $50 million and to own at least 51 percent of Capital 
Corporation's voting capital stock. This arrangement is not 
intended to make Deere & Company responsible for the payment of 
any indebtedness, obligation or liability of the Company or any 
of its direct or indirect subsidiaries.






























Page 38











<PAGE>

Note 5.  Long-Term Borrowings

Long-term borrowings of Capital Corporation at October 31 
consisted of the following (in millions of dollars):

                                             1997         1996
Senior Debt:                              ----------------------
  Medium-term notes due 1998-2007:
    Average interest rate of 6.7% 
    as of year end 1997 and 1996          $ 1,284.5    $ 1,402.0
  Floating rate notes due 1998 
      (federal funds rate):
    Swapped to an alternative 
    variable interest rate of 
    5.6% as of 1996                           ---          150.0
  5% Swiss franc bonds due 1999:
    Swapped to U.S. dollars and a 
    variable interest rate of 6.1%
    as of year end 1997 and 6.0% 
    as of year end 1996                        97.5         97.5
  6.30% Notes due 1999                        200.0        ---
  6% Notes due 1999                           200.0        ---
----------------------------------------------------------------
    Total senior debt                       1,782.0      1,649.5
    Unamortized debt premium                     .9        ---
----------------------------------------------------------------
    Net senior debt                         1,782.9      1,649.5
----------------------------------------------------------------
Subordinated Debt:    
  9-5/8% Subordinated Notes due 1998:
    Swapped to variable interest rate
    of 6.1% as of year end 1997
    and 6.0% as of year end 1996              150.0        150.0
  8-5/8% Subordinated Debentures 
      due 2019*                               150.0        ---
----------------------------------------------------------------
    Total subordinated debt                   300.0        150.0  
----------------------------------------------------------------
    Total                                 $ 2,082.9    $ 1,799.5
================================================================

* Reclassified to short-term borrowings in 1996 because the 
obligation was callable by the creditors in 1997. Swapped to 
variable interest rate of 5.3% as of year end 1996.


The approximate amounts of long-term borrowings maturing and 
sinking fund payments required in each of the next five years, in 
millions of dollars, are as follows: 1998 - $1,043, 1999 - 
$1,048, 2000 - $365, 2001 - $140 and 2002 - $280.

Note 6.  Common Stock

All of Capital Corporation's common stock is owned by John Deere 
Credit Company, a wholly-owned finance holding subsidiary of 
Deere & Company. No shares of common stock of the Company were 

Page 39











<PAGE>

reserved for officers or employees or for options, warrants, 
conversions or other rights at October 31, 1997 or 1996. At 
October 31, 1997, the Company had authorized, but not issued, 
10,000 shares of $1 par value preferred stock.

Note 7.  Dividends

The Capital Corporation paid cash dividends to John Deere Credit 
Company of $75 million in 1997 and $70 million in 1996. In each 
case, John Deere Credit Company paid an identical dividend to 
Deere & Company.

Note 8.  Pension and Other Retirement Benefits

The Company participates in the Deere & Company salaried pension 
plan, which is a defined benefit plan in which benefits are based 
primarily on years of service and employee compensation. This 
plan is funded according to the 1974 Employee Retirement Income 
Security Act (ERISA) and income tax regulations. Plan assets 
consist primarily of common stocks, common trust funds, 
government securities and corporate debt securities. Pension 
expense is actuarially determined based on the Company's 
employees included in the plan. The Company's pension expense 
amounted to $1.6 million in 1997, $1.7 million in 1996 and $1.4 
million in 1995. The Company generally provides defined benefit 
health care and life insurance plans for retired employees 
through participation in the Deere & Company's plans. Health care 
and life insurance benefits expense is actuarially determined 
based on the Company's employees included in the plans and 
amounted to $.8 million in both 1997 and 1996 and $.9 million in 
1995. Further disclosure for these plans is included in the notes 
to the Deere & Company 1997 annual report.

Note 9.  Income Taxes

Taxes on Income and Income Tax Credits

The taxable income of the Company is included in the consolidated 
United States income tax return of Deere & Company. Provisions 
for income taxes are made generally as if the Capital Corporation 
and each of its subsidiaries filed separate income tax returns.
















Page 40











<PAGE>

Deferred Income Taxes

Deferred income taxes arise because certain items are treated 
differently for financial accounting than for income tax 
reporting purposes. An analysis of deferred income tax assets and 
liabilities at October 31 are as follows (in millions of 
dollars):
                              1997                 1996
                       -------------------- --------------------
                       Deferred  Deferred   Deferred  Deferred
                         Tax        Tax       Tax        Tax
                        Assets  Liabilities  Assets  Liabilities
                       --------------------  -------------------
Allowance for 
    credit losses       $ 35.1               $ 34.3    
Deferred lease 
    income                        $  6.8               $  4.6
Deferred retail note 
    finance income                   9.3                  8.9
Accrual for retirement 
    and other benefits     4.2                  2.5    
Securitization income      2.7                  3.6    
Miscellaneous accruals 
    and other                         .2                   .3
-------------------------------------------  -------------------
  Total deferred income 
    tax assets and 
    liabilities         $ 42.0    $ 16.3     $ 40.4    $ 13.8
===========================================  ===================

The provision for income taxes consisted of the following (in 
millions of dollars):
                                       1997      1996      1995
                                      -------   -------   -------
Current                               $ 73.1    $ 70.8    $ 63.3
Deferred                                  .9       1.7      (2.0)
-----------------------------------------------------------------
  Total provision for income taxes    $ 74.0    $ 72.5    $ 61.3
=================================================================

Effective Income Tax Provision

A comparison of the statutory and effective income tax provisions 
and reasons for related differences follows (in millions of 
dollars):
                                      1997      1996      1995
                                     ---------------------------
United States federal income 
  tax provision at a statutory 
  rate of 35 percent                 $ 73.8    $ 72.3    $ 61.4
Municipal lease income not taxable     (1.1)      (.5)      (.3)
Other adjustments - net                 1.3        .7        .2
----------------------------------------------------------------
  Total provision for income taxes   $ 74.0    $ 72.5    $ 61.3
================================================================


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<PAGE>

Note 10.  Cash Flow Information

For purposes of the statements of consolidated cash flows, the 
Company considers investments with original maturities of three 
months or less to be cash equivalents. Substantially all of the 
Company's short-term borrowings mature within three months or 
less.

Cash payments by the Company for interest incurred on borrowings 
in 1997, 1996 and 1995 were $346 million, $271 million and $225 
million, respectively. Cash payments for income taxes during 
these same periods were $68 million, $77 million and $64 million, 
respectively.

Note 11.  Legal Proceedings

The Company is subject to various unresolved legal actions which 
arise in the normal course of its business, the most prevalent of 
which relate to state and federal laws and regulations concerning 
retail credit. Although it is not possible to predict with 
certainty the outcome of these unresolved legal actions or the 
range of possible loss, the Company believes these unresolved 
legal actions will not have a material effect on its financial 
position or results of operations.

Note 12.  Financial Instruments

The fair values of financial instruments which do not approximate 
the carrying values in the financial statements at October 31 are 
as follows (in millions of dollars):
                                 1997                1996  
                           ------------------  -----------------
                           Carrying   Fair     Carrying   Fair
                            Value     Value     Value     Value
                           ------------------  ------------------
Receivables financed       $ 5,776   $ 5,750   $ 5,347   $ 5,329
=============================================  ==================
Long-term borrowings 
 and related swaps:                  
  Long-term borrowings     $ 2,089   $ 2,127   $ 1,816   $ 1,844
  Interest rate and 
   foreign currency swaps       (6)      (19)      (17)      (30)
---------------------------------------------  ------------------
    Total                  $ 2,083   $ 2,108   $ 1,799   $ 1,814
=============================================  ==================

Fair Value Estimates

Fair values of the long-term financing receivables with fixed 
rates were based on the discounted values of their related cash 
flows at current market interest rates. The fair values of the 
remaining financing receivables approximated the carrying 
amounts.

Fair values of long-term borrowings with fixed rates were based 
on discounted values of their related cash flows at current 
market interest rates. Certain long-term borrowings of the 

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<PAGE>

Company have been swapped to current variable interest rates and 
United States dollars. Fair values of these swaps were based on 
quotes from dealers.

Fair values and carrying values of the Company's other interest 
rate swaps and caps associated with short-term borrowings and 
foreign exchange forward contracts were not material.

Derivatives

The Company enters into derivative transactions only to hedge 
exposures arising in the normal course of business, and not for 
the purpose of creating speculative positions or trading. The 
following notional or contract amounts do not represent amounts 
exchanged by the parties and, therefore, are not representative 
of the Company's risk. The net amounts exchanged are calculated 
on the basis of the notional amounts and other terms of the 
derivatives such as interest rates and exchange rates, and 
represent only a small portion of the notional amounts. The 
credit and market risks under these agreements are not considered 
to be significant since the counterparties have high credit 
ratings and the fair values and carrying values are not material.

Interest Rate Swaps and Caps

The Company enters into interest rate swap and interest rate cap 
agreements related to its borrowings in order to more closely 
match the type of interest rates of the borrowings to those of 
the assets being funded. The differential to be paid or received 
on all swap and cap agreements is accrued as interest rates 
change and is recognized over the lives of the agreements in 
interest expense. Premiums are amortized to interest expense over 
the lives of the agreements.

At October 31, 1997 and 1996, the total notional principal 
amounts of interest rate swap agreements related to short-term 
borrowings were $490 million and $346 million, having rates of 
5.6 to 6.3 percent and 5.2 to 7.4 percent, terminating in up to 
12 months and 12 months, respectively. There were no interest 
rate cap agreements at October 31, 1997 or 1996.

The Company has entered into interest rate swap agreements with 
independent parties that change the effective rate of interest on 
certain long-term borrowings. See the table in Note 5 - Long-Term 
Borrowings, which reflects the effective year-end variable 
interest rates relating to these swap agreements. The notional 
principal amounts and maturity dates of these swap agreements are 
the same as the principal amounts and maturities of the related 
borrowings. The Company also has interest rate swap agreements 
associated with medium-term notes. Note 5 - Long-Term Borrowings 
also includes a table which reflects the interest rates relating 
to these swap agreements. At October 31, 1997 and 1996, the total 
notional principal amounts of these swap agreements were $380 
million and $520 million, terminating in up to 116 months and 113 
months, respectively.


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<PAGE>

Foreign Exchange Swaps

At October 31, 1997 and 1996, the Company had a foreign exchange 
swap agreement maturing in 15 months and 27 months, respectively, 
for $97 million to hedge the currency exposure of the 5% Swiss 
Franc Bonds due in 1999. The foreign exchange swap gains and 
losses are accrued as foreign exchange rates change and offset 
the equal and opposite gains and losses on the related bonds.

Supplemental Information (Unaudited)

Quarterly Information

Supplemental quarterly information for the Company follows (in 
millions of dollars):
                       First   Second    Third   Fourth   Fiscal
                      Quarter  Quarter  Quarter  Quarter   Year
                      ------------------------------------------
1997:                    
  Revenues            $163.5   $179.1   $200.3   $211.4   $754.3
  Interest expense      71.5     78.6     86.6     90.2    326.9
  Operating expenses    45.7     55.4     55.4     59.7    216.2
  Provision for 
    income taxes        16.1     15.8     20.2     21.9     74.0
  Equity in losses of 
    unconsolidated 
    affiliates            .5       .3       .3       .3      1.4
----------------------------------------------------------------
  Net income          $ 29.7   $ 29.0   $ 37.8   $ 39.3   $135.8
================================================================
          
1996:                    
  Revenues            $150.7   $167.6   $158.7   $179.7   $656.7
  Interest expense      66.3     67.6     66.8     73.0    273.7
  Operating expenses    34.7     41.8     42.2     57.7    176.4
  Provision for 
    income taxes        17.4     20.3     17.4     17.4     72.5
----------------------------------------------------------------
  Net income          $ 32.3   $ 37.9   $ 32.3   $ 31.6   $134.1
================================================================          

Sensitivity Analysis

The following is a sensitivity analysis for the Company's 
derivatives and other financial instruments which have interest 
rate risk. The gains or losses in the table below represent the 
changes in the financial instrument's fair values which would be 
caused by increasing the interest rates by 10 percent of the 
current market rates at October 31, 1997. The fair values were 
determined based on the discounted values of their related cash 
flows. The gains or losses in fair values at October 31, 1997 
would have been (in millions of dollars): 





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<PAGE>

                                        Fair Value
                                      Gains (Losses)
                                      --------------
         Financing receivables            $ (36)
  
         Long-term borrowings 
             and related swaps:  
           Long-term borrowings              27
           Interest rate and 
               foreign currency swaps        (7)
         -------------------------------------------
             Total                        $ (16)
         ===========================================

Dividend

On December 5, 1997, the Capital Corporation declared a $12.5 
million dividend, to be paid to John Deere Credit Company on 
December 16, 1997. John Deere Credit Company, in turn, declared a 
$12.5 million dividend to Deere & Company, also payable on 
December 16, 1997. 




































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<PAGE>
                       Index to Exhibits

 2.   Not applicable.

 3.1  Certificate of Incorporation, as amended (Exhibit 
      3.1 to Form 10-K of the registrant for the year 
      ended October 31, 1994*).

 3.2  Bylaws, as amended (Exhibit 3.2 to Form 10-K of the
      registrant for the year ended October 31, 1994*).

 4.1  Credit agreements among registrant, Deere & Company,
      various financial institutions, and Chemical Bank, 
      The Chase Manhattan Bank (National Association), 
      Bank of America National Trust and Savings 
      Association, Deutsche Bank AG, and the Toronto-
      Dominion Bank as Managing Agents, dated as of April 
      5, 1995 (Exhibit 4.1 to Form 10-Q of Deere & Company
      for the quarter ended April 30, 1995, Securities and
      Exchange Commission file number 1-4121*).

 4.2  Senior Indenture dated as of June 15, 1995 between 
      the registrant and The Chase Manhattan Bank 
      (National Association), as Trustee (Exhibit 4.1 to 
      Form 10-Q of the registrant for the quarter ended 
      July 31, 1995*).

 4.3  Subordinated Indenture dated as of June 15, 1995 
      between the registrant and First National Bank of 
      Chicago, as Trustee (Exhibit 4.2 to Form 10-Q of the 
      registrant for the quarter ended July 31, 1995*).

 4.4  Form of certificate for common stock (Exhibit 4.3 to
      Form 10-Q of the registrant for the quarter ended 
      April 30, 1993*).

      Certain instruments relating to long-term debt 
      constituting less than 10% of the registrant's 
      total assets may not be filed as exhibits herewith 
      pursuant to Item 604(b)(4)(iii)(A) of Regulation 
      S-K. The registrant will file copies of such 
      instruments upon request of the Commission.

 9.   Not applicable.

10.1  Agreement dated May 11, 1993 between the registrant
      and Deere & Company concerning agricultural retail 
      notes (Exhibit 10.1 to Form 10-Q of the registrant 
      for the quarter ended April 30, 1993*).

10.2  Amendment dated November 4, 1994 between the 
      registrant and Deere & Company concerning 
      agricultural retail notes. (Exhibit 10.2 to Form 
      10-K of the registrant for the year ended October 
      31, 1995*).

10.3  Agreement dated May 11, 1994 between the registrant
      and Deere & Company concerning lawn and grounds care 
      retail notes (Exhibit 10.2 to the Form 10-Q of the 
      registrant for the quarter ended April 30, 1993*).

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<PAGE>

10.4  Amendment dated November 4, 1994 between the 
      registrant and Deere & Company concerning lawn and 
      grounds care retail notes. (Exhibit 10.4 to Form 
      10-K of the registrant for the year ended October 
      31, 1995*).

10.5  Agreement dated January 26, 1983 between the 
      registrant and Deere & Company relating to 
      agreements with United States sales branches 
      on retail notes (Exhibit 10.4 to Form 10-Q of the 
      registrant for the quarter ended April 30, 1993*).

10.6  Insurance policy no. CL-001 of Sierra General Life
      Insurance Company providing insurance on lives of
      purchasers of certain equipment financed with 
      receivables (Exhibit 10.5 to Form 10-Q of the 
      registrant for the quarter ended April 30, 1993*).

10.7  Agreement dated October 15, 1996 between the 
      registrant and John Deere Construction Equipment 
      Company relating to fixed charges ratio, ownership 
      and minimum net worth (Exhibit 10.7 to Form 10-K of 
      the registrant for the year ended October 31, 1996*).

10.8  Agreement dated July 14, 1997 between the registrant
      and John Deere Construction Equipment Company 
      concerning construction retail notes.

11.   Not applicable.

12.   Computation of Ratio of Earnings to Fixed Charges 
      for each of the five years in the period ended 
      October 31, 1997.

13.   Not applicable.

16.   Not applicable.

18.   Not applicable.

21.   Omitted pursuant to instruction I(2).

22.   Not applicable.

23.   Consent of Deloitte & Touche LLP.

24.   Not applicable.

27.   Financial Data Schedule.

99.   Parts I and II of the Deere & Company Form 10-K 
      for the fiscal year ended October 31, 1997 
      (Securities and Exchange Commission file number 
      1-4121*).

----------------
*  Incorporated by reference. Copies of these exhibits are
   available from the Company upon request.

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