JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY
          400 19TH STREET, MOLINE, ILLINOIS 61265-1390



BOB B. BROCK
Director, Customer Support
& Commercial Operations



14 July 1997



Jon D. Volkert
Senior Vice President,
Commercial & Consumer Lending Division
U.S. & Canada

Dear Jon:

This  will document the agreement between John Deere Construction
Equipment  Company  (JDCEC)  and John Deere  Capital  Corporation
(JDCC)  with  regard  to  the various  matters  addressed  below.
Essential   to   the   arrangement  being  documented   will   be
continuation of the interaction, open communication,  and  spirit
of cooperation which have characterized the parties' relationship
in the past.

1.   JDCC  Recourse to JDCEC for Losses on Wholesale  and  Retail
Financing and/or Leasing

     JDCC will have no recourse to JDCEC for losses JDCC sustains
in connection with JDCC's retail financing and/or leasing, except
to the limited extent such recourse is specifically allowed under
section  5.2  of  the  parties' 11 May 1993 Agreement  Concerning
Industrial Retail Notes (as amended 14 July 1997). JDCC will have
no  recourse to JDCEC for losses JDCC sustains in connection with
JDCC's  wholesale financing and/or leasing, except to the limited
extent such recourse is specifically allowed under sections 2, 5,
6,  and 9 of this letter. Any additional exceptions, whether  for
wholesale  or retail financing and/or leasing, will  require  the
advance written approval of JDCEC's Manager, Finance, and JDCEC's
Controller.

2.  Inventory Verification

     JDCC will conduct verifications of dealer inventories, which
will  include JDCEC collateral, when and as requested  by  JDCEC.
JDCEC  may  conduct its own verifications, which,  if  conducted,
will  include JDCC collateral. For each verification, each  party
will   be   responsible  for  the  actual  cost  of  verification
attributable  to its own collateral. JDCC and JDCEC  will  confer
and  agree on a method for allocating verification costs  between
them,  which  will  be  subject  to  future  changes  by  further
agreement of the parties.

     Verifications  will  be  conducted in  accordance  with  the
Inventory  Verification  Procedures  dated  29  August  1996  (as
amended  from  time to time by agreement of the parties),  unless
the parties agree in writing to the use of other procedures.

     The  party  conducting  an inventory  verification  will  be
responsible  for any loss which the other party  sustains  on  an
extension  of  credit  to  the  dealer  and  which  is   directly
attributable  to  a failure, by the verifying  party,  to  follow
inventory verification procedures agreed upon by the parties.

3.  Administrative Support by JDCEC

     JDCEC  will process JDCC's dealer charges and credits  using
JDCEC's  standard  dealer billing and payment  system.  For  this
service,  JDCC will pay JDCEC a monthly fee in an  amount  to  be
agreed  upon  by  the parties. The amount of  this  fee  will  be
subject to annual review and renegotiation by the parties.

     In  the event a dealer fails to make full and timely payment
of  the  Amount Due Now appearing on its John Deere Statement  of
Account,  JDCEC may reverse all JDCC-originated charges  included
in  the  Amount  Due  Now,  provided  JDCEC  reverses  all  JDCC-
originated credits (excluding any note or lease credits issued to
the  dealer  by JDCC in connection with the disposition,  by  the
dealer,  of JDCEC's collateral, to the extent of the amount  owed
by   the  dealer  to  JDCEC  for  that  collateral)  included  in
calculating the Amount Due Now. Such a reversal will be  for  the
sole  purpose of allocating charges and credits between JDCC  and
JDCEC,  and  will  not  appear on the  statement  of  the  dealer
involved.   The   dealer  will  remain  fully  liable   for   all
indebtedness owed to either party.

4.  Provisional Credits

     JDCC will be responsible for any loss sustained by JDCEC  in
connection with a provisional credit which is taken by  a  dealer
and not charged back to the dealer within 15 days (or such lesser
number of days as the parties may agree upon in writing) after it
was taken. Further, for each provisional credit for which JDCC is
at  risk by virtue of the preceding sentence, JDCC will pay JDCEC
interest,  at the prime rate (as defined in JDCEC's Dealer  Terms
Schedule, as amended from time to time by JDCEC), for:

     (1)   the  period beginning on the sixteenth day  after  the
credit was taken and continuing to, but not including, the  first
day for which JDCEC charges the dealer involved past-due interest
on account of the credit, and

     (2)   any  periods  thereafter for which JDCEC  charges  the
dealer  involved past-due interest on account of the  credit  but
does not collect such interest from the dealer.

5.  Subordination Agreements

     All requests for subordination affecting both JDCEC and JDCC
collateral will be processed by JDCEC, in consultation with JDCC.
Any   subordination  agreement  affecting  both  JDCEC  and  JDCC
collateral must be executed by JDCEC.

     JDCC  and  JDCEC  will confer and agree  on  procedures  for
processing  requests for subordination. After such  agreement  is
concluded,  JDCEC  will be responsible for any  loss  which  JDCC
sustains  on  an  extension of credit to a dealer  and  which  is
directly  attributable to a failure, by JDCEC,  to  consult  with
JDCC, in accordance with such procedures, regarding a request for
subordination affecting both JDCEC and JDCC collateral.

6.  Financing Statement Filings

     All  financing statement filings concerning JDCEC's  dealers
will  be  processed by JDCEC and indicate JDCEC's Moline address.
JDCC  and JDCEC will confer and agree on a collateral description
to be used in such filings.

    If approved by counsel for the parties, JDCEC will:

     (1)   mend  the existing JDCEC "blanket" dealer  filings  to
conform to the agreed-upon collateral description, and

     (2)   allow  the existing JDCC "blanket" dealer  filings  to
lapse.

      As   JDCEC   receives  purchase  money  security   interest
notifications  from other creditors of dealers, it  will  provide
JDCC  with a copy of each notification that pertains to a  dealer
then financed by JDCC.

     JDCC  and  JDCEC  will confer and agree  on  procedures  for
transitioning from the current "dual filing" arrangement  to  the
"single filing" arrangement agreed upon in this letter. Once  the
transition is completed, JDCEC will be responsible for  any  loss
which  JDCC  sustains on an extension of credit to a  dealer  and
which is directly attributable to:

     (1)  an error or omission committed by JDCEC, following  the
transition, in filing or continuing a dealer financing  statement
(unless the particular act or omission is approved in advance  by
JDCC), or

    (2)  a failure, by JDCEC, to provide copies of purchase money
security interest notifications as agreed in this letter.

7.  Equipment Remarketing Services Fees and Expenses

     For  each  sale  which Equipment Remarketing Services  (ERS)
conducts  on JDCC's behalf, JDCC will pay ERS a commission  equal
to  4%  of  the  sale price and reimburse any direct,  reasonable
expenses  incurred by ERS in connection with the equipment  sold.
The  amount  of this commission will be subject to annual  review
and renegotiation by the parties.

8.  Repossession of Dealer Collateral

     Each  party  will  notify the other before repossessing  any
dealer  assets.  If  one party proceeds with  a  repossession  of
dealer  assets, it may take possession of the other's collateral,
but  will have no obligation to do so. If the repossessing  party
does  take  possession of the other party's collateral,  it  will
hold  that  collateral until disposal instructions  are  received
from the other party, and each party will be responsible for  the
actual costs of repossession and storage attributable to its  own
collateral.

     Each  party will have the prerogative and responsibility  to
dispose of its own collateral, unless the parties agree otherwise
following  the repossession. Any such agreement will  include  an
allocation of costs and potential risks (such as the  risk  of  a
challenge  to  the  manner  of disposition)  acceptable  to  both
parties.

    Each party may apply the entire proceeds of its collateral to
the  indebtedness owed it by the dealer involved  before  sharing
any  of the proceeds with the other party. However, to the extent
permitted  by law, any credit balance remaining after application
of collateral proceeds to the indebtedness owed to one party will
be  applied  to  the indebtedness of the dealer involved  to  the
other party.

9.  Approval of JDCC Repossessions by JDCEC

     JDCC  will  seek JDCEC's approval before proceeding  with  a
repossession of dealer assets, and JDCC will not proceed  with  a
planned  repossession of dealer assets if JDCEC  disapproves  the
repossession  in  writing. If a dealer is in  default  under  its
agreements  with JDCC and JDCC desires to conduct a repossession,
but  does  not  do so due to JDCEC's disapproval, JDCEC  will  be
responsible for any loss which JDCC sustains on its extension  of
credit  to the dealer as a result of diminution in the value,  or
sale out of trust, of the collateral JDCC would have repossessed,
but  only to the extent the diminution in value or conversion  of
sale  proceeds  occurs  during the period  beginning  when  JDCEC
disapproves JDCC's planned repossession and ending:

     (1)  when JDCC makes a new advance to the dealer involved,

     (2)  when the dealer has cured its default with JDCC and has
remained  current thereafter with both JDCC and JDCEC  for  three
consecutive months, or

     (3)   upon  such other date or event as JDCC and  JDCEC  may
agree upon in writing, whichever occurs first.

10. 11 May 1993 Agreement Concerning Industrial Retail Notes

     The  parties'  11  May 1993 Agreement Concerning  Industrial
Retail  Notes  (as amended 14 July 1997) shall continue  in  full
force and effect.

Please acknowledge your agreement to the foregoing by signing  in
the  space  provided  below  and return  this  letter  to  me.  A
duplicate original is enclosed for your files.


JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY

By:   /s/ Bob B. Brock
      --------------------------
      Bob B. Brock
      Director, Customer Support
      and Commercial Operations

Acknowledged and agreed to:
JOHN DEERE CAPITAL CORPORATION

By:   /s/ Jon D. Volkert
      --------------------------
      Jon D. Volkert
      Senior Vice-President

Date: 29 July 1997

                          AMENDMENT TO
          AGREEMENT CONCERNING INDUSTRIAL RETAIL NOTES


John Deere Construction Equipment Company ("Sales Company"),  its
successors  and  assigns;  and  John  Deere  Capital  Corporation
("Capital  Corporation") its successors  and  assigns;  agree  as
follows:

                           Section 1.

Section  2.3 of the AGREEMENT CONCERNING INDUSTRIAL RETAIL  NOTES
dated  11  May  1993,  is  hereby deleted  and  replaced  by  the
following.

2.3   Purchase  Price.  The purchase price  of  any  Retail  Note
accepted  by the Capital Corporation shall be the face amount  of
the  Retail  Note less both the finance charge and any separately
stated insurance premiums.

                           Section 2.

Section  2.5 of the AGREEMENT CONCERNING INDUSTRIAL RETAIL  NOTES
dated  11  May  1993,  is  hereby deleted  and  replaced  by  the
following.

2.5  Time of Payment.  The purchase price shall be payable to the
Sales  Company  upon acceptance by the Capital Corporation  under
Section 2.1.

                           Section 3.

The  parties mean for this Amendment to be construed  broadly  to
give effect to their intent.

                           Section 4.

This Amendment shall be effective as of 1 November 1994.

Dated as of 14 July 1997.

JOHN DEERE CONSTRUCTION            JOHN DEERE CAPITAL
EQUIPMENT COMPANY                  CORPORATION

By:    /s/ Bob B. Brock            By:    /s/ Jon D. Volkert
       -----------------------            ---------------------
       Bob B. Brock                       Jon D. Volkert
Title: Director, Customer Support  Title: Senior Vice President
       and Commercial Operations