The National Museum in Canberra has paid $250,000 for a vintage McDonald 'Imperial' EB tractor made in Melbourne.
It is believed to be one of the earliest surviving tractors made locally in 1912 which experts say provides the missing link between steam power and the diesel-powered production-based tractors which followed.
The museum says the six-tonne McDonald tractor features the "transformation of Australia's agricultural industry".
The tractor is one of only three complete examples manufactured in Australia by A.H. McDonald and Co. in Bridge Road, Richmond.
An anonymous benefactor helped support the purchase which was also funded by the Federal government.
The tractor was originally bought brand new by Frank William Chilcott for his (163 hectare, 403 acre) farm on windswept French Island in Victoria's Western Port Bay.
Museum curators believe the oil-fired tractor was used on Mr Chilcott's Lillesdon Park to prepare for chicory - a prolific industry on French Island until the mid-1960s.
Chicory was commonly used as an additive in coffee but was also a top crop for dairy cattle.
The arrival of the tractor on the isolated island required a police escort.
Local Ruth Gooch said when Mr Chilcott's nephew (Garth Bennetts) saw it arriving over a local hill "he took fright, ran inside, and hid under the bed".
Mr Chilcott passed away in 1919, and the tractor passed to his brother-in-law, Richard Bennetts.
The museum said its survival was a testament to local enthusiasts committed to preserving important early agricultural machinery.
The museum acquired the tractor two years ago and it is only now going on display in the museum's Gandel Atrium until July 23.
The tractor was built by innovative Melbourne engineers Alfred and Ernest McDonald.
Alfred McDonald had established his own engineering workshop in 1903 and in 1908, the pair produced the first Australian-made, oil-powered tractor, known as the EA.
The McDonald's upgraded their design to the EB in 1912.
The pair continued to innovate and became one of the first firms to begin the manufacture of diesel engines in Australia.
Their firm produced many stationary engines used in shearing sheds, dairies and for general farm use around Australia.
The Victorian museum also has McDonald engines in its collection which are also a favourite among private collectors.
Museum director Dr Mathew Trinca said the tractor represented a theme of Australian innovation in a revolutionary era for engineering.
"This acquisition represents our agricultural history, and we are thrilled to share it with Australia," Dr Trinca said.
Curator Dr Ian Coates, who coordinated the purchase, said it has historic significance because of its association with Australia's first tractor manufacturer.
"Perhaps the most remarkable aspect of the early tractors produced by AH McDonald & Co was the relative sophistication of their engineering."
Dr Coates said their design included coil ignition, a three-speed gearbox and automotive rack-and-pinion steering.
To cool the engine, water was pumped up and over vertical steel mesh sheets mounted on the bonnet.
This reflects Alf McDonald's capacity to improve the contemporary design of imported American tractors, Dr Coates said.