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CORRESP
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03/23/05 reply to 12/22/04 SEC letter

March 23,
2005

Via
Federal Express and Facsimile

Mr. David
Ritenour

Special
Counsel

Division of
Corporation Finance

United States
Securities and Exchange Commission

450 Fifth Street,
NW.

Mail Stop
3-6

Washington, D.C.
20549

      Re:

      Caterpillar
      Inc.

      Registration
      Statement on Form S-4

      Filed
      December 6, 2004

      File
      No. 333-121003

Dear Mr.
Ritenour:

We
have received your comment letter dated December 22, 2004. Caterpillar’s
responses to each item follow each comment.

General

    1.

      Please
      note that all outstanding comments on your Form 10-K must be resolved
      prior to requesting acceleration of the effective date of the Form
      S-4.

Response:

      In a letter
      dated March 8, 2005, the staff indicted that all outstanding comments on
      our Form 10-K have been resolved.

    2.

      We
      note the inclusion of an early participation payment to holders who tender
      into the offer prior to a certain date and the termination of withdrawal
      rights for holders who tender prior to the early participation date. What
      consideration was given to the potential coerciveness of this provision
      and the application of the general anti-fraud provisions of Section 14(e)
      which prohibit any fraudulent, deceptive or manipulative acts or practices
      in connection with any tender offer? As part of your analysis, please
      provide us with more details about the payment including the timing of the
      early participation date in relation to the expiration of the offer and
      the size of the payment as it compares to the amount of total exchange
      price. Currently, it is unclear from the
    disclosure.

-1-

Response:

Sullivan &
Cromwell, LLP, counsel to the dealer managers, has advised us that their firm’s
understanding, based on discussions with Mr. Nicholas Panos of the staff, is
that the structure reflected in the initial filing is in fact consistent with
Section 14(e) and the rules thereunder. The offering seeks
to encourage all holders to tender early. However, given the change in timing,
we have revised the terms of the exchange offer to give all holders the right
to withdraw their tenders at any time prior to the expiration date of the
offering, regardless of the time of tender. While all holders are offered the
same opportunity, holders will only receive an early participation payment if
they tender before the early participation period closes and do not withdraw
prior to the expiration date of the offering. We
will disclose the early participation date on the cover page of the prospectus
and expect that it will be the date 10 business days before the expiration date.
The amount of the early participation payment for the old debentures of any
series is expected to be equal to $50 per $1,000 principal amount of old
debentures tendered (or 5%). Since the
total exchange price will be determined at the price determination time, we are
unable to provide the percentage in relation to the total exchange price at this
time.

    3.

      We
      note that the aggregate principal amount of the new debentures will not
      exceed $500,000,000 and further, that the amount of old debentures
      accepted for exchange will be reduced if, under the terms of the exchange
      offer, in excess of $500,000,000 new debentures would be issued. The
      reduction in the amount of old debentures to be accepted in such
      circumstances would appear to be a reduction in the amount sought
      requiring that ten days remain in the offer pursuant to Rule 14e-1(b).
      Please advise.

Response:

The Company
acknowledges the staff’s comment. We have revised the terms to make the exchange
offer subject to the condition that the aggregate amount of new debentures to be
issued will not exceed $500,000,000. In light of the expected participation and
current interest rate levels, we believe it is unlikely that the $500,000,000
limit will be reached. If during the pendency of the exchange offer, we
determine that the limit may be reached or the condition is in fact triggered,
we may, based on the circumstances at that time, decide to reduce the principal
amount of one or both series of old debentures accepted for exchange. In any
such case, we would announce the new terms, and if necessary, extend the
expiration date of the exchange so that the exchange offer would remain open for
at least 10 business days from the date of such announcement. Since in the
prospectus we reserve the right to amend the exchange offer at any time, and
since we do not in fact expect that the condition will be triggered, we do not
believe that additional disclosure (which would necessarily be speculative)
would be necessary or helpful to investors.

-2-

Cover
Page

    4.

      Please
      include a brief statement summarizing the principal differences between
      the new debentures and the old debentures, including, in particular, the
      fact that the old debentures may be redeemed by the issuer at any
      time.

Response:

We
have amended the cover page of the prospectus accordingly.

Prospectus
Summary - Page 1

    5.

      Please
      revise to highlight the fact that noteholders may not know at the time
      they tender the amount of debentures they will receive in the exchange.
      Also highlight the fact that early participants will not be able to
      withdraw their tender after the total exchange price is determined on the
      second business day preceding the expiration date of the tender
      offer.

Response:

We
have amended the prospectus summary on page 3 accordingly. The terms of the
exchange offer have been modified to allow early participants to withdraw their
tenders at any time prior to the expiration of the exchange offer.

    6.

      Please
      revise to provide an example of the total exchange price based on the
      yield of the U.S. Treasury reference security as of the most recent
      practicable date.

Response:

We
have amended the prospectus summary on page 4 to include a
reference to the illustrative example on page 12 and page A-2. We believe that a
summarized version of the illustrative example would not provide meaningful
information.

Summary
of the Exchange Offer - Page 2

Certain
U.S. Federal Income Tax Consequences - Page 5

    7.

      Please
      revise to indicate the facts upon which the qualification of the early
      participation payments as additional consideration received by the holder
      as a part of the exchange depends, and when these facts will become known.
      Provide similar disclosure with regard to the facts upon which the
      qualification of the exchange as a recapitalization depends, and when
      those facts will become known. Finally, briefly identify the matters upon
      which tax counsel has opined, and discuss the reasons why the tax
      consequences relating to the exchange and the early participation payments
      are uncertain.

-3-

Response:

The tax treatment
of the early participation payment is subject to a degree of uncertainty under
federal income tax law. We have revised the prospectus summary on page 4 to
alert the holders to that uncertainty. Please refer to our response to comment
17 for a more detailed response with respect to the tax treatment of the early
participation payment.

Regarding the
qualification of the exchange as a recapitalization, the treatment of the
exchange of old debentures for new debentures as an exchange for federal income
tax purposes is based on a facts and circumstances analysis. If interest rates
remain at levels similar to those of today, the exchange of 8% debentures where
no early participation payment is received and of 9⅜% debentures will be treated
as an exchange for federal income tax purposes. Based on the terms of the new
debentures, the exchange of the 8% debentures where an early participation
payment is received (and the other old debentures even if interest rates change
by an amount sufficient to alter the prior conclusion) should be treated as an
exchange for federal income tax purposes. It is possible, because there is no
law directly on point and the inquiry is factual in nature, that the Internal
Revenue Service could assert that such new debentures are the same instrument as
the old debentures for which they were exchanged. Because we view it as the more
reasonable and likely treatment, we have revised page 28 of the prospectus to
explain the foregoing analysis and to clarify that we consider the exchange to
be an exchange for federal income tax purposes, and, that in such case, the
exchange will qualify as a tax-free recapitalization under Section 368(a)(1)(E)
of the Internal Revenue Code.

We
will receive an opinion of tax counsel that, to the extent the section entitled
“Certain U.S. Federal Income Tax Consequences” commencing on page 27 of the
prospectus discusses matters of law and legal conclusions, such discussion is
correct in all material respects. The disclosure on page 27 of the prospectus
has been revised to describe such opinion of tax counsel. Therefore, we
respectfully suggest that a description of the matters upon which tax counsel
has opined is not necessary in the prospectus summary.

Risk
Factors - Page 10

    8.

      Please
      add risk factors that discuss the
following:

    ·

      The
      fact that noteholders may not know the total exchange price at the time
      they tender, and that the total exchange price will not be set until
      second business day prior to expiration of tender
      offer;

Response:

We
have added a risk factor to alert the holders to the fact that the total
exchange price will be based on a yield that reflects general interest rate
movements and other factors and thus cannot be predicted. In addition, the terms
have been revised to allow all tendering holders to withdraw at any time prior
to the expiration date, including subsequent to the price determination
time.

-4-

    ·

      The
      fact that early participants will not be able to withdraw their tenders
      after the total exchange price is set, since the early participation date
      is prior to the price determination time;
and

Response:

The terms of the
exchange offer have been revised to allow all tendering holders (including early
participants) to withdraw their tender at any time prior to the expiration date.
As a result, the fact that an increase in the yield prior to the price
determination time adversely affects the total exchange price does not result in
a risk to the holders because all tendering holders will have the option to
withdraw their tenders.

    ·

      Any
      volatility, if material, in the U.S. Treasury reference security yield
      rate.

Response:

We
have added a risk factor to reflect that the total exchange price will be based
on a yield that reflects general interest rate movements and other factors and
thus cannot be predicted.

    9.

      Include
      a risk factor that discusses the risks regarding the tax consequences of
      participating in the exchange, as well as any distinct risks of
      participating as an “early participant” in the exchange. Also, to the
      extent that there is uncertainty regarding the tax consequences, add risk
      factor disclosure regarding that
uncertainty.

Response:

We
do not believe that there is a material risk that the Internal Revenue Service
will recharacterize the exchange offer as a fully taxable transaction, but have
included risk factors to
address (a) the risk that if the principal amount of the new debentures exceeds
the principal amount of the old debentures, holders may be required to recognize
gain in excess of the cash they will receive in the exchange, and
(b) the risk that the
early participation payment will be treated by the Internal Revenue Service as
ordinary income.

    10.

      Include
      a risk factor that alerts investors to the fact that you may redeem the
      new debentures at any time.

Response:

The redemption
feature of the new debentures is a standard feature in the majority of debt
offerings and is fully disclosed throughout the prospectus including in the
description of the new debentures on pages 20 and 21. We do not believe that the
redemption feature involves any material risk to the holders because the
redemption price includes a redemption “make-whole” premium of the sort commonly
found in comparable debt issues. Accordingly, we respectfully suggest that such
a risk factor is not needed.

-5-

    11.

      Include
      a risk factor that indicates to holders considering early participation
      that if the aggregate principal amount of old debentures tendered and not
      withdrawn exceeds $500,000,000, then there will be a pro
      rata
      reduction in the principal amount of old debentures accepted, without
      regard to whether those debentures were tendered before or after the early
      participation date.

Response:

As
discussed in the response to comment 3 above, the terms have been revised to the
effect that, if we determine that the $500,000,000 limit may be reached, we may
decide to reduce the principal amount of one or both series of old debentures
accepted for exchange. In any such case, we would announce the new terms, and if
necessary, extend the expiration date of the exchange so that the exchange offer
would remain open for at least 10 business days from the date of such
announcement. Since all tendering holders can withdraw at any time prior to
expiration, we do not believe the tendering holders will be subject to any
material risk in this respect.

The
Exchange Offer - Page 12

Expiration,
Amendment and Termination of Exchange Offer - Page 14

    12.

      Please
      confirm that the exchange offer will be in compliance with Rule 14e-1(a)
      and open for at least twenty full business days. Because the offer expires
      at 5:00 p.m. instead of midnight on what may ultimately be the twentieth
      business day following commencement of the exchange offer, it is unclear
      whether the offer will be open for the full twenty business days. See
      Question and Answer Eight in Exchange Act Release No. 16623 (March 5,
      1980).

Response:

We
have revised the prospectus to clarify that the exchange offer will expire at
5:00 p.m., New York City time, of the 21st business day after commencement of
the offering in accordance with Rule 14e-1(a).

Conditions
to the Exchange Offer - Page 15

    13.

      Stating
      that an offer condition may be satisfied in the sole judgment of the
      company amount to a waiver of that condition. If the company waives a
      material offer condition, five business days must remain in the offer.
      Revise the first condition to include a standard of reasonableness in
      place of sole judgment.

Response:

We
have amended the first condition to the exchange offer accordingly.

-6-

    14.

      We
      note that you may terminate the offer in the event a condition is
      triggered “regardless of the circumstances (including any action by [the
      company]) giving rise to any such condition.” Allowing acts or omissions
      by the company to trigger a condition to the offer may render the offer
      illusory in that the circumstances giving rise to the existence of a
      condition are within the control of the company. Please
      revise.

Response:

We
have amended the conditions to the
exchange offer accordingly.

Procedures
for Tendering Old Debentures - Page 16

    15.

      We
      note your disclosure on page 13 that you may “waive any defects or
      irregularities or conditions of the exchange offer… either before or after
      the expiration date.” We believe that your disclosure improperly suggests
      that conditions to t