Agricultural Adjustment Acts
The Agricultural Adjustment Acts (AAA) were significant pieces of legislation implemented in the United States during the Great Depression to address the economic distress faced by farmers. The first act, introduced in 1933 as part of Franklin D. Roosevelt's New Deal, aimed to stabilize agricultural prices by controlling production levels and removing surplus crops from the market. This approach included measures such as paying farmers to reduce their acreage and imposing taxes on food processors to fund these initiatives. However, the AAA faced criticism for creating artificial scarcity and was deemed insufficient in alleviating the hardships of many farmers and the general population, who were suffering from unemployment and hunger.
In 1936, parts of the first AAA were ruled unconstitutional by the Supreme Court, leading to the passage of a second act in 1938. The revised legislation sought to better control production while promoting soil conservation, allowing farmers to receive loans in exchange for adherence to crop quotas and the practice of leaving land fallow. The AAA primarily benefited larger commercial farmers, but its principles set the stage for U.S. agricultural policy throughout much of the 20th century. Overall, while the Agricultural Adjustment Acts aimed to bolster farm income and stabilize the agricultural sector, their effectiveness varied and they sparked ongoing discussions about government intervention in agriculture.
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Agricultural Adjustment Acts
Identification Federal legislation that provided government subsidies to farmers
Also known as AAA
Date First law enacted on May 12, 1933; second law enacted on February 16, 1938
In an attempt to balance the surplus of agricultural goods that was an effect of the Great Depression, the first Agricultural Adjustment Act (AAA) created agricultural scarcity by plowing under crops and destroying livestock. It also authorized the president to adjust currency prices. The act was greeted by widespread criticism, but agricultural prices rose in response. After the Supreme Court declared the Agricultural Adjustment Act unconstitutional in 1936, Congress passed a second law that reinstated many of the subsidies and other aspects of the first Agricultural Adjustment Act.
The United States officially entered the Great Depression in 1929 with the crash of the stock market. Farmers, who earlier had been encouraged to expand their crop production, had suffered from dropping commodity prices during the decade following World War I. Their plight was exacerbated by the onset of the Depression, as thousands of farmers could not meet the debt on their mortgaged properties. In 1933, more than 5 percent of the nation’s farms were foreclosed because the farmers could not pay the taxes on their property. In 1931, midwestern farmers organized the Farmers’ Holiday Association in an attempt to force prices up. They withheld grain and livestock from the market, and dairy farmers dumped thousands of gallons of milk in Iowa and Wisconsin to protest the price drop to $0.02 a quart. Furthermore, farmers across Oklahoma, Texas, Kansas, Colorado, and New Mexico suffered an extended drought, and resulting dust storms caused the topsoil in the region to blow away. Thousands of “Okies” packed their meager belongings and left for the West Coast, where they hoped to find work.
One of the first laws passed during Franklin D. Roosevelt’s New Deal was the AAA. The Emergency Farm Mortgage Act was passed with the AAA in an effort to forestall the many foreclosures of farms across the United States. The Agricultural Adjustment Administration under Secretary of Agriculture Henry A. Wallace used four methods designed to raise farm income: restricting farm production and removing surpluses from the market, paying farmers for taking acreage out of production, charging a tax on food processors to raise funds to pay for farm benefits, and creating agreements between farm co-ops and the food processors.
Under the provisions of the law, Wallace ordered the destruction of more than 10 million acres of cotton and the slaughter of 6 million baby pigs. However, many people in the nation were unemployed and hungry; therefore, they criticized the AAA for its creation of artificial scarcity. While farm prices rose somewhat, the AAA was not a cure-all. Farmers were never required to reduce acreage, and many took government payments for not planting portions of their land while continuing to plant and harvest their best acres.
On January 6, 1936, the Supreme Court declared portions of the AAA unconstitutional because some of its production control measures abrogated the powers of the states. The court especially targeted the processing taxes. According to the decision of the Court, only the legislative branch of government has the power to levy taxes. In 1938, Congress passed a second Agricultural Adjustment Act that was designed to control production and conserve the soil. Farmers were paid to grow crops that would not damage the soil and to allow land to lay fallow. Quotas were set on certain crops and, in return, farmers could receive commodity loans. As Congress had removed the processing tax from this law, the Supreme Court raised no objection.
Impact
The first Agricultural Adjustment Act did little to ease the plight of the farmer, although farm prices rose. The AAA benefited the large commercial farmer, but the demand for more production during World War II brought a return of prosperity to both large and small farmers. The principles established by the second AAA, tightening government control over production, were to determine agricultural policy for most of the remainder of the twentieth century.
Bibliography
Badger, Anthony J. The New Deal: The Depression Years, 1933-1940. Chicago: Ivan R. Dee, 2002.
Leuchtenberg, William E. Franklin D. Roosevelt and the New Deal, 1932-1940. New York: Harper Perennial, 2009.
McElvaine, Robert S. The Great Depression: America, 1929-1941. New York: Times Books, 1993.