Agricultural Adjustment Act (1933, 1938)

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The Agricultural Adjustment Act (AAA) was signed into law by President Franklin Roosevelt on May 12, 1933 [1].  Among the law’s goals were limiting crop production, reducing stock numbers, and refinancing mortgages with terms more favorable to struggling farmers [2].  The Agricultural Adjustment Administration was created to implement the act, and it was initially headed by George Peek – a man, ironically, not overly enthusiastic about the New Deal [3].

Large agricultural surpluses during the 1920s had caused prices for farm products to drop steadily from the highs of the First World War, and with the onset of the Great Depression the bottom dropped out of agricultural markets.  As a consequence, millions of American farmers, tenants and sharecroppers were left destitute and hundreds of thousands of farms were abandoned.  In an effort to increase prices, New Deal policymakers sought to reduce output by destroying surpluses and taking acreage out of production [4].

In the short run, farmers were paid to destroy crops and livestock, which led to depressing scenes of fields plowed under, corn burned as fuel and piglets slaughtered.  Nevertheless, many of the farm products removed from economic circulation were utilized in productive ways.  For example: “The pork products were distributed to unemployed families…Other food products purchased for surplus removal and distribution in relief channels included butter, cheese, and flour” [5].  Even piglets too small to consume were “converted into inedible by-products such as grease and fertilizer” [6].  More important in the long run, however, were programs to pay farmers not to plant as much cotton, corn, wheat and other staples and to create marketing boards to regulate output in a range of crops.

The AAA benefitted most farmers: “Farm income in 1935 was more than 50 percent higher than farm income during 1932, due in part to the farm programs” [7].  On January 6, 1936, however, the U.S. Supreme Court ruled that key provisions of the law were unconstitutional; in particular, the majority of the Court felt that the control of agriculture was a state function not a federal one [8].  A new AAA was enacted in 1938 which remedied the problems highlighted by the court and allowed agricultural support programs to continue, while adding a provision for crop insurance.

The Agricultural Adjustment Administration ended in 1942.  Yet, federal farm support programs (marketing boards, acreage retirement, storage of surplus grain, etc.) that evolved from those original New Deal policies continued after the war, serving as pillars of American agricultural prosperity.  They still exist, administered by the U.S. Department of Agriculture’s Farm Service Agency [9].  They did not, however, reverse the long-term process of competitive elimination of small farms, tenant farms and sharecropping, the migration of the rural population to the cities, and the transformation of the old Cotton South [10].

Sources: (1) “Franklin Roosevelt, Day-by-Day,” A project of the Pare Lorentz Center at the FDR Presidential Library, http://www.fdrlibrary.marist.edu/daybyday/event/may-1933/ accessed April 17, 2015.  (2) The National Agricultural Law Center has the full text of the law at http://nationalaglawcenter.org/wp-content/uploads/assets/farmbills/1933.pdf (accessed April 17, 2015).  (3) Michael Hiltzik, The New Deal: A Modern History, New York: Free Press, 2011, pp. 105-109.  (4) Willard Cochrane, The Development of American Agriculture, Minneapolis: University of Minnesota Press, 1979.  (5) Wayne D. Rasmussen, Gladys L. Baker, and James S. Ward, “A Short History of Agricultural Adjustment, 1933-75,” Economic Research Service, U.S. Department of Agriculture, Agricultural Information Bulletin No. 391, March 25, 1976, http://naldc.nal.usda.gov/download/CAT87210025/PDF, accessed April 17, 2015, p. 3.  (6) See note 3 at p. 110.  (7) See note 5 at p. 4.  (8) United States v. Butler, 297 U.S. 1 (1936), Oyez, http://www.oyez.org/cases/1901-1939/1935/1935_401, accessed April 17, 2015.  (9) “Records of the Farm Service Agency,” National Archives and Records Administration, http://www.archives.gov/research/guide-fed-records/groups/145.html#145.1, accessed April 17, 2015.  (10) Paul Conkin, A Revolution Down on the Farm: The Transformation of American Agriculture Since 1929.  Lexington KY: University of Kentucky Press, 2008.

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