I&#039;m sure it is sand, or just finely broken down dirt particles.  You gotta remember what these toys of our did for a living, what they were built for.  Plowing through dirt all day long, every day, for as long as it could. 
Those old oil bath air filters were ok, but not the best, and I wonder how many of them were cleaned as often as they should have been, especially when the tractor got to be a few years old.