Agricultural Adjustment Act (1933-1936)
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The decade of the 1920s was a time of unprecedented prosperity that turned into one of the worst economic downturns in history before the decade was out.
During WWI, farmers experienced significant economic growth, manifested in record breaking numbers of livestock and crops. Unfortunately, this prosperity was unsustainable, and the farmers' economic standing soon took a turn for the worse into the decade of the 20s when the rest of the country was at its peak. Prices soon fell and in response, many farmers increased food production to repay their debt, resulting in even lower prices that put most farmers in dangerous financial situations. Many farmers went bankrupt and lost their farms, leading to a violent backlash on local judicial systems (4). It was clear that something had to be done.
During WWI, farmers experienced significant economic growth, manifested in record breaking numbers of livestock and crops. Unfortunately, this prosperity was unsustainable, and the farmers' economic standing soon took a turn for the worse into the decade of the 20s when the rest of the country was at its peak. Prices soon fell and in response, many farmers increased food production to repay their debt, resulting in even lower prices that put most farmers in dangerous financial situations. Many farmers went bankrupt and lost their farms, leading to a violent backlash on local judicial systems (4). It was clear that something had to be done.
In May of 1933, Franklin Roosevelt signed the Agricultural Adjustment Act into law. The act was an omnibus bill, with separate pieces of legislation involved, all attempting to remedy the agricultural crisis affecting the whole nation. The Administration formed to run the program, and was headed by Secretary of Agriculture, Henry Wallace. The goal was to bring about a rise in prices for farm products, using a 'domestic allotment' plan that subsidized farmers for cutting their production (3) of the 7 basic commodities (wheat, cotton, corn, hogs, rice, tobacco,and dairy) (1). The AAA subsidized farmers to parity, or in other words gave them enough money to have the same purchasing power they had between 1909 and 1914, which was dubbed a time of "comparative stability" (3).
The Agricultural Adjustment Act most benefited large farmers, though it was popular with most. But the AAA was bad news for tenants, field hands, and sharecroppers, largely due to the fact that the subsidized reduction of land drove these people out of work or off the land, and there were no pay regulations (2).
In January of 1936, the Supreme Court ruled that the AAA was unconstitutional, arguing that the government had no place telling farmers how much they could produce. However, within a few weeks the administration had passed the Soil Conservation and Domestic Allotment acts that gave subsidies for conserving land and preventing erosion. These acts accomplished similar goals of the AAA and other secondary goals (1).
The Agricultural Adjustment Act most benefited large farmers, though it was popular with most. But the AAA was bad news for tenants, field hands, and sharecroppers, largely due to the fact that the subsidized reduction of land drove these people out of work or off the land, and there were no pay regulations (2).
In January of 1936, the Supreme Court ruled that the AAA was unconstitutional, arguing that the government had no place telling farmers how much they could produce. However, within a few weeks the administration had passed the Soil Conservation and Domestic Allotment acts that gave subsidies for conserving land and preventing erosion. These acts accomplished similar goals of the AAA and other secondary goals (1).
Despite its short life, the AAA did have a noticeable impact on the country's agriculture. Farm income increased doubled from 1932-1936, and the agricultural economy emerged more stable and prosperous, though some attributed this to drought conditions during this period (3). Overall, farmers saw the AAA as beneficial. The administration's benefit payments totaled 1.5 billion from its inception to its close.
Though the AAA seemed to be a long term recovery project, it was reduced to a relief effort with smaller range due to its overruling. WWII would prove to be necessary to finally reduce accumulated surpluses and raise farm income significantly (3).
This project was more liberal in nature due to its expansion of governmental authority (that led to its removal as legislation) and favor towards farmers who formed union-like groups to combat foreclosures.
Though the AAA seemed to be a long term recovery project, it was reduced to a relief effort with smaller range due to its overruling. WWII would prove to be necessary to finally reduce accumulated surpluses and raise farm income significantly (3).
This project was more liberal in nature due to its expansion of governmental authority (that led to its removal as legislation) and favor towards farmers who formed union-like groups to combat foreclosures.