The Agricultural Adjustment Act (AAA) was a

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of the

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era designed to boost agricultural prices by reducing surpluses. The government bought

livestock Livestock are the Domestication, domesticated animals that are raised in an Agriculture, agricultural setting to provide labour and produce diversified products for consumption such as meat, Egg as food, eggs, milk, fur, leather, and wool. The t ...

for slaughter and paid farmers

subsidies A subsidy, subvention or government incentive is a type of government expenditure for individuals and households, as well as businesses with the aim of stabilizing the economy. It ensures that individuals and households are viable by having acce ...

not to plant on part of their land. The money for these subsidies was generated through an exclusive tax on companies that processed farm products. The Act created a new agency, 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 The Agricultural Marketing Act of 1929, under the administration of Herbert Hoover, established the Federal Farm Board from the Federal Farm Loan Board established by the Federal Farm Loan Act of 1916 with a revolving fund of half a billion do ...

, 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 Franklin Delano Roosevelt (January 30, 1882April 12, 1945), also known as FDR, was the 32nd president of the United States, serving from 1933 until his death in 1945. He is the longest-serving U.S. president, and the only one to have served ...

took office in March 1933, the

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was in the midst of the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

.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

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, 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 Federal Farm Board was established by the Agricultural Marketing Act of 1929 from the Federal Farm Loan Board established by the Federal Farm Loan Act of 1916, with a revolving fund of half a billion dollars 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. 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." "

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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 around 99% of farmers in this time period.

Tenant farming

Tenant farming A tenant farmer is a farmer or farmworker who resides and works on land owned by a landlord, while tenant farming is an Agrarian system, agricultural production system in which landowners contribute their land and often a measure of operating Ca ...

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 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 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 is 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 was demoralizing.

Delta and Providence Cooperative Farms in Mississippi and the Southern Tenant Farmers Union 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. In his criticisms of the Act, Henry Wallace's assistant Paul Appleby described it as "an organization whose function had to do with the more successful farmers by and large." 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 of

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, 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

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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

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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

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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 affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

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

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

Ruled unconstitutional

On January 6, 1936, the

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decided in '' United States v. Butler'' that the act was

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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 ...

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, and Nathaniel Weyl.

Footnotes

External links

As codified in 7 U.S.C. chapter 26
of the

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from LII
As codified in 7 U.S.C. chapter 26
of the

from the

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Agricultural Adjustment Act
as amended
PDFdetails
in the GPObr>Statute Compilations collection

Agricultural Adjustment Act
as enacted from the St. Louis Fed * http://www.u-s-history.com/pages/h1639.html * https://web.archive.org/web/20080409194401/http://newdeal.feri.org/texts/browse.cfm?MainCatID=34
A Message from FDR to Congress on the AAA
*
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{{Authority control 1933 in American law 73rd United States Congress New Deal legislation United States federal agriculture legislation