The Agricultural Adjustment Act (AAA) was a United States federal law of the New Deal era designed to boost agricultural prices by reducing surpluses. The government bought

livestock Livestock are the domesticated animals raised in an agricultural setting to provide labor and produce diversified products for consumption such as meat, eggs, milk, fur, leather, and wool. The term is sometimes used to refer solely to ani ...

for slaughter and paid farmers subsidies not to plant on part of their land. The money for these subsidies was generated through an exclusive tax on companies which processed farm products. The Act created a new

agency Agency may refer to: Organizations * Institution, governmental or others ** Advertising agency or marketing agency, a service business dedicated to creating, planning and handling advertising for its clients ** Employment agency, a business that ...

, the Agricultural Adjustment Administration, also called "AAA" (1933-1942), an agency of the U.S. Department of Agriculture, to oversee the distribution of the subsidies.Hurt, R. Douglas, ''Problems of Plenty: The American Farmer in the Twentieth Century'', (Chicago: Ivan R. Dee, 2002), 69. The Agriculture Marketing Act, which established the Federal Farm Board in 1929, was seen as an important precursor to this act. The AAA, along with other New Deal programs, represented the federal government's first substantial effort to address economic welfare in the United States.

Background

When President Franklin D. Roosevelt took office in March 1933, the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

was in the midst of the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

.Hurt, R. Douglas, ''Problems of Plenty: The American Farmer in the Twentieth Century'', (Chicago: Ivan R. Dee, 2002), 67. "Farmers faced the most severe economic situation and lowest agricultural prices since the 1890s." " Overproduction and a shrinking international market had driven down agricultural prices."Hurt, R. Douglas, ''Problems of Plenty: The American Farmer in the Twentieth Century'', (Chicago: Ivan R. Dee, 2002), 68. Soon after his inauguration, Roosevelt called the Hundred Days Congress into session to address the crumbling economy. From this Congress came the Agricultural Adjustment Administration, to replace the Federal Farm Board. The Roosevelt Administration was tasked with decreasing agricultural surpluses. Wheat, cotton, field corn, hogs, rice, tobacco, and milk and its products were designated as basic commodities in the original legislation. Subsequent amendments in 1934 and 1935 expanded the list of basic commodities to include rye, flax, barley, grain sorghum, cattle, peanuts, sugar beets, sugar cane, and potatoes.Rasmussen, Wayne D., Gladys L. Baker, and James p. Ward, "A Short History of Agricultural Adjustment, 1933-75." Economic Research Service, United States Department of Agriculture, Agriculture Information Bulletin No. 391 (March 1976), pg. 2. The administration targeted these commodities for the following reasons: # Changes in the prices of these commodities had a strong effect on the prices of other important commodities. # These commodities were already running a surplus at the time. # These items each required some amount of processing before they could be consumed by humans.

Goals and implementations

"The goal of the Agricultural Adjustment Act, restoring farm purchasing power of agricultural commodities or the fair exchange value of a commodity based upon price relative to the prewar 1909–14 level, was to be accomplished through a number of methods. These included the authorization by the Secretary of Agriculture (1) to secure voluntary reduction of the acreage in basic crops through agreements with producers and use of direct payments for participation in acreage control programs; (2) to regulate marketing through voluntary agreements with processors, associations or producers, and other handlers of agricultural commodities or products; (3) to license processors, association, and others handling agricultural commodities to eliminate unfair practices or charges; (4) to determine the necessity for and the rate or processing taxes; and (5) to use the proceeds of taxes and appropriate funds for the cost of adjustment operations, for the expansion of markets, and for the removal or agricultural surpluses."Rasmussen, Wayne D., Gladys L. Baker, and James S. Ward, "A Short History of Agricultural Adjustment, 1933-75." Economic Research Service, United States Department of Agriculture, Agriculture Information Bulletin No. 391 (March 1976), pg. 2. "

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...

declared its intent, at the same time, to protect the consumers interest. This was to be done by readjusting farm production at a level that would not increase the percentage of consumers' retail expenditures above the percentage returned to the farmer in the prewar base period." The juxtaposition of huge agricultural surpluses and the many deaths due to insufficient food shocked many, as well as some of the administrative decisions that happened under the Agricultural Adjustment Act. For example, in an effort to reduce agricultural surpluses, the government paid farmers to reduce crop production and to sell pregnant sows as well as young pigs. Oranges were being soaked with kerosene to prevent their consumption and corn was being burned as fuel because it was so cheap. There were many people, however, as well as livestock in different places starving to death. Farmers slaughtered livestock because feed prices were rising, and they could not afford to feed their own animals. Under the Agricultural Adjustment Act, "plowing under" of pigs was also common to prevent them reaching a reproductive age, as well as donating pigs to the Red Cross. In 1935, the income generated by farms was 50 percent higher than it was in 1932, which was partly due to farm programs such as the AAA.Rasmussen, Wayne D., Gladys L. Baker, and James S. Ward, "A Short History of Agricultural Adjustment, 1933-75." Economic Research Service, United States Department of Agriculture, Agriculture Information Bulletin No. 391 (March 1976), pg. 4. The Agricultural Adjustment Act affected nearly all of the farmers in this time period. (Around 99%).

Tenant farming

Tenant farming characterized the cotton and tobacco production in the post-Civil War South. As the agricultural economy plummeted in the early 1930s, all farmers were badly hurt but the tenant farmers and

sharecroppers Sharecropping is a legal arrangement with regard to agricultural land in which a landowner allows a tenant to use the land in return for a share of the crops produced on that land. Sharecropping has a long history and there are a wide range ...

experienced the worst of it. To accomplish its goal of parity (raising crop prices to where they were in the golden years of 1909–1914), the Act reduced crop production. The Act accomplished this by offering landowners acreage reduction contracts, by which they agreed not to grow cotton on a portion of their land. By law, they were required to pay the tenant farmers and sharecroppers on their land a portion of the money; but after Southern Democrats in Congress complained, the Secretary of Agriculture surrendered and reinterpreted section 7 to no longer send checks to sharecroppers directly, hurting the tenants. The farm wage workers who worked directly for the landowner suffered the greatest unemployment as a result of the Act. There are few people gullible enough to believe that the acreage devoted to cotton can be reduced one-third without an accompanying decrease in the laborers engaged in its production. Researchers concluded that the statistics after the Act took effect "indicate a consistent and widespread tendency for cotton croppers and, to a considerable extent, tenants to decrease in numbers between 1930 and 1935. The decreases among Negroes were consistently greater than those among whites." Another consequence was that the historic high levels of mobility from year to year declined sharply, as tenants and croppers tended to stay longer with the same landowner.Fred C. Frey and T. Lynn Smith, "The Influence of the AAA Cotton Program Upon the Tenant, Cropper, and Laborer," ''Rural Sociology'' (1936) 1#4 pp. 483–505 at pp. 501–
online
/ref> According to researchers Frey and Smith, "To the extent that the AAA control-program has been responsible for the increased price

f cotton F, or f, is the sixth letter in the Latin alphabet, used in the modern English alphabet, the alphabets of other western European languages and others worldwide. Its name in English is ''ef'' (pronounced ), and the plural is ''efs''. Hist ...

we conclude that it has increased the amount of goods and services consumed by the cotton tenants and croppers area." Furthermore, the landowners typically let the tenants and croppers use the land taken out of cotton production for their own personal use in growing food and feed crops, which further increased their standard of living. Another consequence was that the historic high levels of turnover from year to year declined sharply, as tenants and croppers tend to stay with the same landowner. These researchers concluded, "As a rule, planters seem to prefer Negroes to whites as tenants and croppers." However, according to researcher Harold C. Hoffsommer, many landlords were concerned that aid given directly to tenant farmers would have a "demoralizing effect." An article appearing in the St. Louis Dispatch in 1935, quoted Hoffsommer's survey conducted for the Federal Emergency Relief Administration.

Tenant demoralization from relief had either one or both of two meanings to the landlord. In the first place, it might have been a fear that the tenant would escape from under his influence. It it probably not too much to say that the cropper system can only be maintained by the subordination of the tenant group. If the cropper were to become self-directing and take over his own affairs, the system would necessarily crumble. Hence anything that disrupts dependence is demoralizing. In the second place, the landlords were influenced by the belief that when members of any group are given privileges to which they are unaccustomed, they are likely in their inexperience to abuse them for a time. There can be no question that a considerable number of the sharecroppers reacted in this fashion, when under the Civil Works Administration, for example, they received more cash in a single week than they had been accustomed to receiving in an entire year. In their inexperience the money was spent foolishly and from this standpoint the outcome war demoralizing.

Delta and Providence Cooperative Farms The Delta and Providence Cooperative Farms were started in Bolivar County, Mississippi, in 1936; and Holmes County, Mississippi, in 1939, respectively. The farms were founded and run by missionary evangelist and author Sherwood Eddy, and Reverend ...

in Mississippi and the

Southern Tenant Farmers Union The Southern Tenant Farmers Union (STFU) (1934–1970) was founded as a civil farmer's union to organize tenant farmers in the Southern United States. Originally set up in July 1934 during the Great Depression, the STFU was founded to help sh ...

were organized in the 1930s principally as a response to the hardships imposed on sharecroppers and tenant farmers. Although the Act stimulated American agriculture, it was not without its faults. For example, it disproportionately benefited large farmers and food processors, with lesser benefits to small farmers and sharecroppers. With the spread of cotton-picking machinery after 1945, there was an exodus of small farmers and croppers to the city.

Thomas Amendment

Attached as Title III to the Act, the Thomas Amendment became the 'third horse' in the New Deal's farm relief bill. Drafted by Senator

Elmer Thomas John William Elmer Thomas (September 8, 1876 – September 19, 1965) was a native of Indiana who moved to Oklahoma Territory in 1901, where he practiced law in Lawton. After statehood, he was elected to the first state senate, representing the L ...

of Oklahoma, the amendment blended populist easy-money views with the theories of the New Economics. Thomas wanted a stabilized "honest dollar," one that would be fair to debtor and creditor alike.David Webb, "The Thomas Amendment: A Rural Oklahoma Response to the Great Depression," in ''Rural Oklahoma'', ed. Donald E. Green (Oklahoma City
Oklahoma Historical Society
, 1977). The Amendment said that whenever the President desired currency expansion, he must first authorize the Federal Open Market Committee of the

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

to purchase up to $3 billion of federal obligations. Should open market operations prove insufficient, the President had several options. He could have the U.S. Treasury issue up to $3 billion in greenbacks, reduce the gold content of the dollar by as much as 50 percent, or accept 100 million dollars in silver at a price not to exceed fifty cents per ounce in payment of

World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

debts owed by European nations. The Thomas Amendment was used sparingly. The treasury received limited amounts of silver in payment for war debts from World War I. On 21 December 1933, Roosevelt ratified the London Agreement on Silver (adopted at the World Economic and Monetary Conference in

London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...

on 20 July 1933). At the same time, Roosevelt issued Proclamation 2067, ordering the United States mints to buy the entire domestic production of newly mined silver at 64.5 ¢ per ounce. "Roosevelt's most dramatic use of the Thomas amendment" came on 31 January 1934, when he decreased the gold content of the dollar to 15 5/21 grains (0.98741 grams) .900 fine gold, or 59.06 per cent of the previous fixed content (25 8/10 grains, or 1.6718 grams). "However, wholesale prices still continued to climb. Possibly the most significant expansion brought on by the Thomas Amendment may have been the growth of governmental power over

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...

. The impact of this amendment was to reduce the amount of silver that was being held by private citizens (presumably as a hedge against

inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...

or collapse of the financial system) and increase the amount of circulating currency.

Ruled unconstitutional

On January 6, 1936, the Supreme Court decided in '' United States v. Butler'' that the act was unconstitutional for levying this tax on the processors only to have it paid back to the farmers. Regulation of agriculture was deemed a state power. As such, the federal government could not force states to adopt the Agricultural Adjustment Act due to lack of jurisdiction. However, the

Agricultural Adjustment Act of 1938 :''This is an article about the "Agricultural Adjustment Act of 1938". For the act by the same name in 1933, see Agricultural Adjustment Act.'' The Agricultural Adjustment Act of 1938 () was legislation in the United States that was enacted as an ...

remedied these technical issues and the farm program continued.

Ware Group

The following employees of the AAA were also alleged members of the Ware Group, named by Whittaker Chambers during subpoenaed testimony to HUAC on August 3, 1948: Harold Ware, John Abt, Lee Pressman, Alger Hiss, Donald Hiss, Nathan Witt, Henry Collins, Marion Bachrach (husband Howard Bachrach was also an AAA employee),

John Herrmann John Theodore Herrmann (November 9, 1900 – April 9, 1959) was a writer in the 1920s and 1930s and is alleged to have introduced Whittaker Chambers to Alger Hiss. Biography Herrmann was born in Lansing, Michigan in 1900. He lived in Paris i ...

, and Nathaniel Weyl.

Footnotes

External links

Bill in its entirety
* http://www.u-s-history.com/pages/h1639.html * https://web.archive.org/web/20080409194401/http://newdeal.feri.org/texts/browse.cfm?MainCatID=34
Public Law 73-10, 73d Congress, H.R. 3835, Agricultural Adjustment Act of 1933

A Message from FDR to Congress on the AAA
*
Encyclopedia Britannica

National Archives

New Georgia Encyclopedia

North Carolina History Project

Texas State Historical Association

Encyclopedia of Arkansas

Cato Institute

The Living New Deal

Encyclopedia of the Great Depression
{{Authority control 1933 in law 73rd United States Congress New Deal legislation United States federal agriculture legislation