Agricultural Adjustment Act

Agricultural Adjustment Act



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On 6th April, 1917, America joined the First World War against Germany. President Woodrow Wilson appointed Herbert Hoover as head of the United States Food Administration, an agency responsible for the administration of the U.S. army overseas and allies' food reserves. The new law forbade hoarding, waste, and "unjust and unreasonable" prices and required businesses to be licensed. During this period "Hooverize" entered the dictionary as a synonym for economizing on food. (1)

One senator protested that President Wilson had given Hoover "a power such as no Caesar ever employed over a conquered province in the bloodiest days of Rome's bloody despotism". Hoover replied that, "Winning a war requires a dictatorship of some kind or another. A democracy must submerge itself temporarily in the hands of an able man or an able group of men. No other way has ever been found." (2)

Hoover's main objectives was to persuade farmers to grow more and grocery shoppers to buy less so that surplus food should be sent to America's overseas allies. Hoover established set days for people to avoid eating specified foods and save them for soldiers' rations. For example, people were told not to eat meat on Mondays. In January, 1918, Hoover announced "the law of supply and demand... had been suspended." (3)

As head of the Food Administration's Grain Corporation, he informed millers that if they did not sell flour to the government at a price he determined, he would requisition it, and he told bakers they must make "victory bread or close." In another speech Hoover argued: "The law is not sacred... Its unchecked operation might even jeopardize our success in war... It is imperative... that economic thinkers denude themselves of their procrustean forumulas of supply and demand... for in a crisis... government must necessarily regulate the price, and all theories to the contrary go by the board." (4)

As a result of these measures farmers enjoyed rising prices and profits during the final stages of the war. This led to increased output and farmers borrowed heavily to expand their acreage. For example, gross farm income in 1919 amounted to $17.7 billion. However, after the war European agriculture recovered and American farmers found it more difficult to find export markets for their goods. As a result prices began to fall and by 1921 total farm incomes amounted to only $10.5 billion.

In September 1922, the Fordney-McCumber Act was signed by President Warren Harding. These raised tariffs to levels higher than any previously in American history in an attempt to bolster the post-war economy, protect new war industries, and aid farmers. Over the next eight years it raised the American ad valorem tariff rate to an average of about 38.5% for dutiable imports and an average of 14% overall. It has been claimed that the tariff was defensive, rather than offensive. (5)

Most of American trading partners had raised their own tariffs to counter-act this measure. The leaders of the Democratic Party had opposed tariffs and argued that it was to blame for the agricultural depression that took place during the 1920s. Senator David Walsh pointed out that farmers were net exporters and so did not need protection. He explained that American farmers depended on foreign markets to sell their surplus. The price of farming machinery also increased. For example, the average cost of a harness rose from $46 in 1918 to $75 in 1926, the 14-inch plow rose from $14 to $28, mowing machines rose from $45 to $95, and farm wagons rose from $85 to $150. Statistics of the Bureau of Research of the American Farm Bureau that showed farmers had lost more than $300 million annually as a result of the tariff. (6)

Although agriculture sector had problems during the 1920s, American industry prospered. The real wages of industrial workers increased by about 10 per cent during this period. However, productivity rose by more than 40%. The farming community did not enjoy the benefits of this growing economy. As Patrick Renshaw has pointed out: "The real problem was that in both agricultural and industrial sectors of the economy America's capacity to produce was tending to outstrip its capacity to consume." (7)

Herbert Hoover and the Republicans believed the Forder-McCumber tariffs had helped the American economy to grow. William Borah, the charismatic senator from Idaho, widely regarded as a true champion of the American farmer, had a meeting with Hoover and offered to give him his full support if he promised to increase tariffs of agricultural products if elected. (8) Hoover agreed with the proposal and during the campaign promised the American electorate that he would increase the tariff. (9)

After his election Hoover asked Congress for an increase of tariff rates for agricultural goods. The Smoot-Hawley Act was passed in the Senate on a vote of 44 to 42, with 39 Republicans and 5 Democrats voting in favor of the bill. Hoover signed the bill on 17th June, 1930. The Economist Magazine argued that the passing of the Smoot–Hawley Tariff Act was "the tragic-comic finale to one of the most amazing chapters in world tariff history… one that Protectionist enthusiasts the world over would do well to study.” (10)

By 1933 agriculture in America was in a terrible state. For example, per capita farm income was one quarter that of non-farmworkers. Farm prices fell by 53 per cent from 1929 to 1932. Net farm income was down by 70 per cent. "A cow that sold for $83 in 1929 now brought $28. Cotton sold for six cents a pound. Corn in Nebraska brought thirty-one cents a bushel, Kansas wheat thirty-eight cents. By early 1933, 45 per cent of all farm mortgages were delinquent and facing foreclosure." (11)

Harry Terrell was brought up on a farm in South Carolina: "320 acres of farm land, fine land, that my uncle owned and cleared, he lost it because they foreclosed the mortgage. Some of the best in the state, and he couldn't borrow a dime. The farmers didn't have anything they could borrow on...Corn was going for eight cents a bushel. One county insisted on burning corn to heat the courthouse because it was cheaper than coal... The county was getting up in arms about taking a man's property away from him. It was his livelihood. When you took a man's horses and his plow away, you denied him food, you just convicted his family to starvation." (12)

Oscar Heline was someone who was forced into bankruptcy by the Great Depression: "First, they'd take your farm, then they took your livestock, then your farm machinery. Even your household goods. And they'd move you off... In South Dakota, the county elevator listed corn as minus three cents. Minus three cents a bushel. If you wanted to sell 'em a bushel of corn, you had to bring in three cents. They couldn't afford to handle it." (13)

Henry A. Wallace was appointed as Secretary of Agriculture. Rexford G. Tugwell, became assistant secretary. Tugwell wrote that "Since my graduate-school days, I have always been able to excite myself more about the wrongs of farmers than those of urban workers." (14) The authors of American Dreamer: A Life of Henry A. Wallace (2001) has commented: "They presented a rather odd picture together - the dapper Columbia University professor and the tousled Iowa editor - but they made a good team. They were men of ideas and shared a vision of government that was activist and progressive. Wallace knew the practical aspects of American farming in the way a sailor knew the stars. And Tugwell knew Franklin Roosevelt." (15)

Wallace and Tugwell drafted what became known as the Agricultural Adjustment Act. The plan was to raise farm income by reducing agricultural surpluses through a system of domestic allotments. Farmers would be paid directly by the government not to produce crops beyond an allotment set by the secretary of agriculture. The proposal aimed to deal with the crucial problem of depressed prices and mounting surpluses. (16)

Calvin Benham Baldwin was one of those employed by Wallace to help solve these problems. "The Agricultural Adjustment Administration (AAA) came into being shortly after I got to Washington. Its purpose was to increase farm prices, which were pitifully low. All the farmers were in trouble, even the big ones. Hog prices had just gone to hell. They were four, five cents a pound? The farmers were starving to death. It was decided to slaughter piggy sows (a pregnant pig). The AAA decided to pay the farmers to kill them and the little pigs. Lot of them went into fertilizer. You had a similar situation on cotton. Prices were down to four cents a pound and the cost of producing was probably ten. So a program was initiated to plow up cotton. A third of the crop, if I remember. Cotton prices went up to ten cents, maybe eleven." (17)

On 11th March, Henry A. Wallace commented: "The farm leaders were unanimous in their opinion that the agricultural emergency calls for prompt and drastic action.... The farm groups agree that farm production must be adjusted to consumption, and favor the principles of the so-called domestic allotment plan as a means of reducing production and restoring buying power." The conference also called for emergency legislation granting Wallace extraordinarily broad authority to act, including power to control production, buy up surplus commodities, regulate marketing and production, and levy excise taxes to pay for it all. (18)

President Roosevelt sent the first genuine New Deal measure to Congress on 16th March, 1933. It was a radical departure, suggesting government control of agricultural production, historically the most individualistic segment of the economy. Roosevelt admitted that the Agricultural Adjustment Act was a great departure from previous legislation: "I tell frankly that it is a new and untried path, but I tell you with equal frankness that an unprecedented condition calls for the trial of new means to rescue agriculture." (19)

The House of Representatives passed the Agricultural Adjustment Act without any amendments, but the Senate was not so convinced. The measure shocked conservatives and upset those who had to pay the proposed processing tax. Joseph W. Martin of Massachusetts claimed that it the bill passed it would "put America on the road to Moscow". Frank Freidel, the author of Franklin D. Roosevelt: A Rendezvous with Destiny (1990) pointed out that "others plastered a red label on Roosevelt's agricultural experts, or denounced them as professors who had no knowledge of farm realities." (20)

On 27th April at Le Mars in Plymouth County, a mob of six hundred farmers marched on the local courthouse. A spokesman for the group asked the judge to promise that he would not sign any more foreclosure orders. Judge Charles C. Bradley said he had as much sympathy for the farmers who had lost their property, but that he did not make the laws. The men did not like this answer and dragged Bradley of his courtroom and taken to a crossroads outside of town, where his trousers were removed and he was threatened with mutilation. A noose was pulled tight around his neck, and the mob demanded that the strangling judge promise no further foreclosures. The sixty-year old Bradley bravely replied: "I will do the fair thing to all men to the best of my knowledge." Bradley was just about to be hanged when he was saved by a local newspaper editor who had just arrived in his car. (21)

At the same time, some radicals, such as Burton Wheeler and Lynn Frazier, argued that the farmer deserved nothing less that government guarantee of his "cost of production". Tugwell observed: "For real radicals such as Wheeler, Frazier, etc., it is not enough; for conservatives it is too much; for Jefferson Democrats it is a new control which they distrust. For the economic philosophy which it represents there are no defenders at all. Nevertheless, in spite of everything, it will probably become law." It was passed on 10th May, 1933. (22) An editorial in The New York Herald Tribune argued: "Seldom, if ever, has so sweeping a piece of legislation been introduced in the American Congress". (23)

John C. Culver and John C. Hyde, the authors of American Dreamer: A Life of Henry A. Wallace (2001) have pointed out: "The sense of urgency was hardly theoretical. A true crisis was at hand. Across the Corn Belt, rebellion was being expressed in ever more violent terms. In the first two months of 1933, there were at least seventy-six instances in fifteen states of so-called penny auctions, in which mobs of farmers gathered at foreclosure sales and intimidated legitimate bidders into silence. One penny auction in Nebraska drew an astounding crowd of two thousand farmers. In Wisconsin farmers bent on stopping a farm sale were confronted by deputies armed with tear gas and machine guns. A lawyer representing the New York Life Insurance Company was dragged from the courthouse in Le Mars, Iowa, and the sheriff who tried to help him was roughed up by a mob." (24)

Most farmers were very pleased by the passing of the Agricultural Adjustment Act. Harry Terrell claims: "Henry Wallace and his granary was the man who saved the farmer... They took this corn and paid for it and stored it. They put a price on it that was above the miserable going price." (25) Oscar Heline agrees "It was Wallace who saved us, put us back on our feet. He understood our problems." Heline was in a group of farmers who went to see Henry A. Wallace: "He made it clear to us he didn't want to write the law. He wanted the farmers themselves to write it... He would always give his counsel, but he never directed us. The program came from the farmers themselves." (26)

The American Communist Party were active in rural areas, including Ella Reeve Bloor, who according to one historian "set up shop in hard-hit rural areas and began dispensing doughnuts and Marxist ideology". However, the main problem for Wallace was Milo Reno, the leader of the Farmers' Holiday Association. He had not been invited to Wallace's emergency farm conference and instead he led some three thousand disgruntled farmers on a march to the state capitol in Des Moines, where he issued a sweeping list of demands and vowed to mount a nationwide farm strike if they were not met. (27)

The Farm Credit Administration was established on 27th March, 1933. It was a merger of government farm loan agencies under the control of Henry Morgenthau. On 16th June, 1933, Congress passed the Farm Credit Act, attempted to deal with the problem of farm mortgages. Over the next eighteen months it would refinance a fifth of all farm mortgages. (28)

Roosevelt later recalled that the establishment of the Farm Credit Administration was a great success as they needed to action to prevent people losing their farms. "We saved farms from foreclosure through the Home Owners' Loan Corporation and the Farm Credit Administration. I suppose some people today would like to repeal all that and go back to the conditions of 1932, when the people out West mobbed a Federal Judge because he was trying to carry out the existing law of the land in foreclosing a farm." (29)

Wallace controversially agreed that hog farmers should be allowed to slaughter pigs weighing less than one hundred pounds instead of allowing them to reach their usual market weight of two hundred pounds. It was argued that pigs would be reduced by five or six million, prices would rise, and the edible portions of the pigs could be used to feed the hungry. William E. Leuchtenburg, has pointed out: "Wallace reluctantly agreed to a proposal of farm leaders to forestall a glut in the hog market by slaughtering over six million little pigs and more than two hundred thousand sows due to farrow. While one million pounds of salt pork was salvaged for relief families, nine-tenths of the yield was inedible, and most of it had to be thrown away. The country was horrified by the mass matricide and infanticide. When the piglets overran the stockyards, and scampered squealing through the streets of Chicago and Omaha, the nation rallied to the side of the victims of oppression, seeking to flee their dreadful fate." (30)

Newspapers denounced Wallace's plan as "pig infanticide". Wallace was surprised by the criticism as it is "just as inhumane to kill a big hog as a little one". Wallace added: "To hear them talk, you would have thought that pigs are raised for pets. Nor would they realize that the slaughter of little pigs might make more tolerable the lives of a good many human beings being dependent on hog prices." Some one million pounds of pork, and pork by-products, such as lard and soap, was distributed to poor. Wallace pointed out: "Not many people realized how radical it was - this idea of having the Government buy from those who had too much, in order to give to those who had too little." (31)

Roosevelt attempted to placate conservatives by appointing George N. Peek as head of the Agricultural Adjustment Administration (AAA). He also appointed Jerome Frank as general council to the AAA. Peek clashed with both Wallace and Frank. John C. Hyde, the authors of American Dreamer: A Life of Henry A. Wallace (2001) have argued that Peek never liked Jerome Frank and wanted to appoint his own general council: "Crusty and dogmatic, Peek still seethed with resentment over Wallace's appointment as secretary, a position he coveted... Frank was liberal, brash, and Jewish. Peek loathed everything about him. In addition, Frank surrounded himself with idealistic left-wing lawyers... whom Peek also despised." (32) This group of left-wing idealists included Frederic C. Howe, Adlai Stevenson, Alger Hiss, Lee Pressman, Hope Hale Davis and Gardner Jackson. Peek later wrote that the "place was crawling with... fanatic-like... socialists and internationalists." On another occasion he called the men "Lenin chicks". (33)

The conflict between Peek and the young liberals in the AAA continued. Peek's main objective was to raise agricultural prices through cooperation with processors and large agribusinesses. Other members of the Agricultural Department such as Jerome Frank were primarily concerned to promote social justice for small farmers and consumers. On 15th November, 1933, Peek demanded that Wallace should fire Frank for insubordination. Wallace, who agreed more with Frank than Peek, refused. Peek was also hostile to Rexford Tugwell, who believed that Peek was an anti-Semite." (34)

George Peek became completely disillusioned with the Agricultural Adjustment Act (AAA). He wrote in his autobiography, Why Quit Our Own? (1936): "There is no use mincing words... The AAA became a means of buying the farmer's birthright as a preliminary to breaking down the whole individualistic system of the country." However, it was clear that President Franklin D. Roosevelt supported Wallace over Peek and decided to resign from the AAA on 11th December, 1933. (35)

Peek was replaced by Chester R. Davis. He also came into conflict with these young radicals. In February 1935, Davis insisted that Jerome Frank and Alger Hiss should be dismissed. Wallace was unable to protect them: "I had no doubt that Frank and Hiss were animated by the highest motives, but their lack of agricultural background exposed them to the danger of going to absurd lengths... I was convinced that from a legal point of view they had nothing to stand on and that they allowed their social preconceptions to lead them to something which was not only indefensible from a practical, agricultural point of view, but also bad law." (36)

Chester R. Davis told Jerome Frank : "I've had a chance to watch you and I think you are an outright revolutionary, whether you realize it or not". Wallace wrote in his diary: "I indicated that I believed Frank and Hiss had been loyal to me at all times, but it was necessary to clear up an administrative situation and that I agreed with Davis". According to Sidney Baldwin, the author of Poverty and Politics: The Rise and Decline of the Farm Security Administration (1968), Wallace greeted Frank with tears in his eyes: "Jerome, you've been the best fighter I've had for my ideas, but I've had to fire you... The farm people are just too strong." (37)

Rexford Tugwell attempted to protect Frank and Hiss and received support from Louis Howe and Harry Hopkins: "I went and talked to Harry Hopkins who was outraged, to Louis Howe who was sympathetic, to Henry Wallace who was red-faced and ashamed, and to the President. My first impulse was to resign... I made up my mind that Jerome must have justice." (38) Roosevelt refused to let him go and agreed to appoint Frank as a special counsel to the Reconstruction Finance Association. (39)

Beginning in the Carolinas and extending clear into New Mexico are fields of unpicked cotton that tell a mute story of more cotton than could be sold for enough, even to pay the cost of picking. Vineyards with grapes still unpicked, orchards of olive trees hanging full of rotting fruits and oranges being sold at less than the cost of production.

Grain was being burned. It was cheaper than coal. In South Dakota, the county elevator listed corn as minus three cents a bushel. If you wanted to sell them a bushel of corn, you had to bring in three cents. We had lots of trouble on the highway, people were determined to withhold produce from the market - livestock, cream, butter, eggs, what not. If they would dump the produce, they would force the market to a higher level. The farmers would man the highways and cream cans were emptied in ditches and eggs dumped out. They burned the Trestie Bridge, so the trains wouldn't be able to haul grain.

The New Deal was an uneasy coalition. Fights developed very early between two factions: one, representing the big farmers, and the other, the little farmers. The Agricultural Adjustment Administration (AAA) came into being shortly after I got to Washington. All the farmers were in trouble, even the big ones.

Hog prices had just gone to hell. Then a great cry went up from the press, particularly the Chicago Tribune, about Henry Wallace slaughtering these little pigs. You'd think they were precious babies.

You had a similar situation on cotton. Cotton prices went up to ten cents, maybe eleven.

I rejected the schemes of economic planning to regiment and coerce the farmer. That was born of a Roman despot 1400 years ago and grew into the AAA. I refused national plans to put government into business in competition with its citizens. That was born of Karl Marx. I vetoed the idea of recovery through stupendous spending to prime the pump. That was born of a British Professor (John Maynard Keynes).

Economic Prosperity in the United States: 1919-1929 (Answer Commentary)

Women in the United States in the 1920s (Answer Commentary)

Volstead Act and Prohibition (Answer Commentary)

The Ku Klux Klan (Answer Commentary)

Classroom Activities by Subject

(1) Charles Rappleye, Herbert Hoover in the White House: The Ordeal of the Presidency(2017) page 11

(2) William Leuchtenburg, Herbert Hoover (2009) page 36

(3) Herbert Hoover, speech (January, 1918)

(4) Herbert Hoover, speech (April, 1918)

(5) John Rothgeb, U.S. Trade Policy (2001) pages 32-33

(6) Edward E. Kaplan, American Trade Policy, 1923–1995 (1996) pages 8-10

(7) Patrick Renshaw, Franklin D. Roosevelt (2004) page 64

(8) Charles Rappleye, Herbert Hoover in the White House: The Ordeal of the Presidency(2017) page 88

(9) The Economist Magazine (18th December, 2008)

(10) The Economist Magazine (20th June, 1930)

(11) Jean Edward Smith, FDR (2007) page 241

(12) Harry Terrell, interviewed by Studs Terkel, in Hard Times: An Oral History of the Great Depression (1970) page 248

(13) Oscar Heline, interviewed by Studs Terkel, in Hard Times: An Oral History of the Great Depression (1970) page 252

(14) Rexford G. Tugwell, diary entry (31st December, 1932)

(15) John C. Hyde, American Dreamer: A Life of Henry A. Wallace (2001) page 114

(16) Rexford Tugwell, The Battle for Democracy (1935) page 109

(17) Calvin Benham Baldwin, interviewed by Studs Terkel, in Hard Times: An Oral History of the Great Depression (1970) page 294

(18) Henry A. Wallace, memorandum (11th March, 1933)

(19) Franklin D. Roosevelt, speech to Congress (16th March, 1933)

(20) Frank Freidel, Franklin D. Roosevelt: A Rendezvous with Destiny (1990) page 103

(21) John C. Wallace (2001) page 118

(22) Rexford Tugwell, diary entry (31st March, 1933)

(23) The New York Herald Tribune (11th May, 1933)

(24) John C. Wallace (2001) page 115

(25) Harry Terrell, interviewed by Studs Terkel, in Hard Times: An Oral History of the Great Depression (1970) page 250

(26) Oscar Heline, interviewed by Studs Terkel, in Hard Times: An Oral History of the Great Depression (1970) page 254

(27) John C. Wallace (2001) page 118

(28) Arthur M. Schlesinger, The Coming of the New Deal (1958) pages 44-45

(29) John Gunther, Roosevelt in Retrospect (1950) page 316

(30) William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal (1963) page 73

(31) Henry A. Wallace, Democracy Reborn (1944) page 104

(32) John C. Wallace (2001) page 123

(33) William E. Roosevelt and the New Deal (1963) page 73

(34) Joseph P. Lash, Dealers and Dreamers (1988) page 219

(35) George N. Peek, Why Quit Our Own? (1936) page 21

(36) John C. Wallace (2001) page 154

(37) Sidney Baldwin, Poverty and Politics: The Rise and Decline of the Farm Security Administration (1968) page 82

(38) Rexford Tugwell, diary entry (10th February, 1935)

(39) Rexford Tugwell, diary entry (27th February, 1935)


Agricultural Adjustment Act - History

The Agriculture Committees of Congress are among the oldest established in 1820 in the House and 1825 in the Senate. Today, the marquee legislative responsibility of these committees is a comprehensive package of agriculture, conservation, rural development, research, and food assistance known as the farm bill. Below is a title-by-title history and guide to this policy, which affects every single American and global citizen in the most fundamental of ways.

Title I: Commodities

Since the nation’s beginnings, we have had policies to incentivize the production of staple crops – wheat, corn, cotton, etc. – that are essential to society. Prior to the 1930s, this policy consisted largely of granting land to pioneer families, offering credit and supporting them through research colleges known as land-grant institutions.

The mechanical revolution of the early 1900s revolutionized the world market for staple crops, and also gave farmers the ability to multiply their output by farming more ground. In the United States, as prices for goods plummeted, farmers plowed more ground to try to make up for lost income. This reality, coinciding with a terrible drought affecting the Heartland and the Great Depression affecting our cities, set the stage for the first farm bill: the Agricultural Adjustment Act of 1933.

Realizing that the land was our most precious resource and the economic incentive for any single farm family was to produce more, the original farm bill provided incentives for individual farmers not to over-produce, thereby seeking to stabilize the marketplace. The Agriculture Stabilization and Conservation Service was established in virtually every county in the nation to catalog our nation’s farmland, and work with farm families to increase productivity and take care of the land.

Today, Title I is designed to provide specific forms of income assistance without interfering with the market, and is compatible with our free trade goals and obligations under the World Trade Organization. Crops covered include barley, corn, pulse crops, rice, sorghum, soybeans, wheat, and minor oilseeds. Dairy and sugar also have provisions under Title I.

Under the most recent 2014 Farm Bill, several significant changes were adopted. Income assistance is only provided in cases of significant yield losses in an area or deep price-based losses. Cotton was eliminated as a program crop. Dairy was transitioned to a margin protection program, and livestock producers were given additional protections.

Spending on Title I programs is far less than it has been historically and for the last 10 years has been less than one-quarter of percent of our federal budget. Americans enjoy the most stable and least expensive food supply of any people in the history of mankind, and have not experienced a major disruption in the food supply in our history.

Title II: Conservation

As noted, conservation was one of the primary purposes of the original farm bill as incentives were created to allow farmers to cut back on their acreage. Starting in the Dust Bowl days of the 1930s, the United States Department of Agriculture (USDA) Natural Resource Conservation Service (NRCS) organized and worked with locally led Soil and Water Conservation Districts to help farmers with terraces, shelterbelts, and other conservation techniques. In the 1950s, a “soil bank” was created to put the most highly erodible ground back into grass or other conservation uses. In the 1970s, new authorities were created to help farmers as other laws like the Clean Water, Clean Air, and the Endangered Species Acts came into existence.

The 1985 Farm Bill created, for the first time, a conservation title with the Conservation Reserve Program (CRP) and the Wetlands Reserve Program (WRP). Since 1996, the conservation title has focused more on working lands cost-share assistance through programs such as the Environmental Quality Incentives Program (EQIP), the Wildlife Habitat Incentives Program (WHIP), and the Conservation Security Program (CSP).

Spending on conservation programs has grown to roughly $5 billion per year. These programs are important tools for farmers, as often conservation practices do not translate to profit. From its desperate beginnings in the Dust bowl, the NRCS has worked with farm families to create the most sustainable and efficient agricultural industry in history.

Title III: Trade

Trade is essential to agriculture, and the export of goods like tobacco and cotton were essential to our nation’s beginning. Most of the jurisdiction of trade matters lies in other committees of Congress, such as the Ways and Means Committee in the House and the Finance Committee in the Senate, where agriculture still represents one of our nation’s strongest trade sectors.

The U.S. today has the lowest tariffs and trade protections on agriculture goods of any nation in the world. This is because most nations use a collection of import tariffs, export subsidies, and other trade barriers to protect their farmers. This is not surprising as no country wants to be dependent upon imports, but it does put U.S. farmers at a distinct disadvantage in the world marketplace.

In the 1960s, 70s, and 80s, a series of programs were developed for humanitarian and trade development purposes and these have been amended in Title III of recent farm bills. The Food for Peace program is the primary means by which we ship U.S. staple commodities to the world’s most needy, which serves diplomatic, humanitarian, and market development purposes.

Title III also includes a Market Access Program (MAP) to help U.S. branded goods get established in foreign markets, and various credit authorities for making sales in certain foreign countries. All Title III programs are discretionary accounts funded by yearly appropriations.

Title IV: Nutrition

Commonly known as “food stamps,” today’s Supplemental Nutrition Assistance Program (SNAP) is the largest component of the farm bill. The federal program was first created in the mid-1960s as part of the “great society” acts of the Johnson Administration. It was first included in the farm bill in 1973.

Nutrition programs are 78 percent of all mandatory spending in the farm bill today. Its cost has increased over time. It was 53 percent of the 2002 Farm Bill and 66 percent of the 2008 Farm Bill. These programs generally qualify people for vouchers or cash assistance for qualified food purchases based on income and asset tests. In FY2014, roughly 46.5 million Americans were receiving SNAP benefits, averaging $125 per person per month.

Title V: Credit

Farmers are typically land rich, but cash poor, so credit has long been an essential part of the agricultural enterprise. Often though, because of the cyclical nature of farm businesses, that credit is too risky for private commercial lending. The Farm Credit Service was created in 1916. It was later known as the Farmers Home Administration (FmHA) and was consolidated into one of the functions of the Farm Service Agency (FSA). FSA offers direct loans and also guarantees loans with partner banks and farm credit institutions to farmers.

These loan programs are funded through annual appropriations. The authorities, along with the Title VI rural development authorities, were only first included in a farm bill in the 1990s. In the 2014 Farm Bill, new provisions were included to help Beginning Farmers and Ranchers.

Title VI: Rural Development

This title uses many of the same authorities as the credit title, but supports rural business and community programs, including rural electric and telecommunications services, rural water, and sewer infrastructure, rural hospitals and healthcare, among other programs.

The loan and some small grant programs under this title operate at a relatively low cost and are all funded by annual appropriations. The assistance is justified by the cost of infrastructure per person (sewer lines, power lines, etc.), which is so much higher in rural areas.

A prominent example: prior to the Rural Electrification Act (REA) of 1936, commercial providers had no economic incentive to stretch their lines into more sparsely populated areas. Post REA, a network of Rural Electric Cooperatives and later Rural Telephone Coops (under a 1949 Act), have brought lines to virtually all rural areas. This in turn has facilitated other types of development and investment.

Title VII: Research and Extension Title

This title is among the oldest and most far reaching in the modern farm bill, emanating from the Morrill Land Grant Act of 1862. The original purpose was to establish and fund research in land grant institutions in every state. Today, these are among our most prominent research institutions, including MIT, Cornell, Cal Berkeley, Ohio State, and Texas A&M to name a few.

The mission of the land-grant universities was expanded by the Hatch Act of 1887, which provided federal funds to states to establish a series of agricultural experiment stations under the direction of each state’s land-grant college. In 1890, a second Morrill Act provided cash grants for historically black colleges and universities.

The outreach mission was further expanded by the Smith-Lever Act of 1914 to include cooperative extension — the sending of agents to spread the results of agricultural research to the farmers. Beyond the original land grants, each college receives annual federal appropriations for research and extension work on the condition that those funds are matched by state funds.

Like the credit and rural development titles, the research title first started appearing as part of farm bill reauthorizations in the 1990’s. In 2008, a substantial change was made to consolidate certain USDA research functions into the National Institute for Food and Agriculture (NIFA), which coordinates and funds research and extension among the land grants and other qualifying research institutions. In the 2014 Farm Bill, a program was established to provide training, education, outreach and technical assistance to beginning farmers and ranchers.

Title VIII: Forestry

The 2002 Farm Bill created the first forestry title. The Agriculture Committees have jurisdiction of the U.S. Forest Service, which is part of USDA, but the Department of the Interior has jurisdiction of most federal land and forestry programs. The forestry title is a small part of the farm bill, but other forestry programs appear in other titles, especially conservation. Forestry programs are subject to appropriations.

Title IX: Energy

Increased interest in renewable and domestic sources of energy led to the creation of the energy title in the 2002 farm bill. The U.S. ethanol industry, which produces around 15 billion gallons per year, was facilitated by different laws, including the Clean Air Act, certain tax provisions, and the Energy Policy Act of 2005, but the farm bill energy title has played a significant role toward the development of advanced biofuels, as well as promoting energy efficiency and carbon capture. Some mandatory funds have been used in the energy title, but today all programs in this title are subject to appropriations.

Title X: Horticulture

The horticulture title first appeared in the 2008 Farm Bill. It supports specialty crop and organic farming operations with provisions that provide trade promotion and risk management assistance that is comparable to those delivered in Title I for traditional staple crops. Funding for pest and disease management and disaster prevention were specifically increased in the 2014 farm bill. According to USDA, sales of specialty crops account for nearly one-third of U.S. crop cash receipts and one-fifth of U.S. agricultural exports.

Title XI: Crop Insurance

The Federal Crop Insurance Act permanently authorized Federal crop insurance. But due to its increasing prominence as the primary risk management tool for farmers, crop insurance policy has been amended in both the 2008 and 2014 farm bills. More than 100 crops are insurable under the 2014 Farm Bill with the adoption of two new programs. Since cotton is no longer included as a program crop under Title I, a policy called Stacked Income Protection Plan (STAX) was made available to cotton producers. Additionally, Supplemental Coverage Option (SCO) was introduced to address a portion of losses not covered by individual crop insurance policies. A provision to help beginning farmers and ranchers have access to crop insurance was also included. Federal crop insurance remains a crucial tool for farmers to protect against losses in yield, crop revenue, and whole farm revenue. Without federal involvement, multi-peril crop insurance would not be affordable for producers. Without multi-peril crop insurance, many farmers would be unable to gain the financing needed to operate.

Title XII: Miscellaneous

The miscellaneous title of the 2014 Farm Bill contains provisions to address various issues such as livestock production, job training to socially-disadvantaged and limited-resource producers, and outreach and technical assistance to military veteran farmers and ranchers.


“Black Cotton Farmers and the AAA”

One of the greatest complaints made by rural blacks toward the Agricultural Adjustment Administration was the effect that its policies had on southern – largely African-American – sharecroppers. The AAA had been formed under the 1933 Agricultural Adjustment Act its purpose was to implement a “domestic allotment” plan to raise the price of farm products by paying farmers to produce less. This proved a great deal for farmers who owned their own land. However, for those who lived and worked on land owned by others – particularly black sharecroppers in the South – the results were often disastrous, as landowners simply informed them that their labor was no longer necessary, and evicted them from the land. A few members of the AAA tried to fight this, but were soon dismissed after encountering objections from southern Democrats. Black journalist E.E. Lewis took to the pages of Opportunity to express his dissatisfaction with the AAA. (Opportunity was the magazine of the National Urban League, an organization founded in 1910 to defend the interests of urban African-Americans.) Lewis acknowledges the racial prejudice affecting black sharecroppers, but emphasizes the underlying economic and technological conditions of southern agriculture affecting both blacks and whites.

Source: Opportunity: A Journal of Negro Life, 13:3 (March 1935), p. 72. Available at http://newdeal.feri.org/opp/opp3572.htm.

The avowed aim of the new deal is to enhance the well being of the masses, but matching this aim with the actual achievements of the Administration is not a very happy occupation. Nowhere is the discrepancy between aim and achievement more disconcerting than in the case of the Negro cotton producer. The natural reaction of those interested in the economic problems of the Negro is to pass judgment upon the personal character of the individual members of the Administration. A much wiser plan is to forget personalities and concentrate our attention upon basic social and economic forces which are so largely responsible for the present federal program and for the present and probable changes in the cotton growing industry itself. In so doing one is likely to make a shrewder guess as to the future, and hence it is in these terms that I should like to respond to Mr. Carter’s 1 request for comment on the prospect of the Negro agricultural worker.

While the agricultural “adjustment” program is, broadly speaking, the result of a very real need for some form of farm relief, the specific program in force represents the government’s response to a particular kind of political pressure. The fundamental fact to bear in mind in examining the present set-up (or in fact the whole story of agrarian revolt from the days of Greenbackism 2 to Mr. Hoover’s Federal Farm Board 3 ) is that the “farmer” for the purpose of politics is not simply an individual cultivating the soil but the independent business man in agriculture. The independent farm owner and the richer farm tenant are and always have been the vocal element in our farm population, and hence the class to obtain concessions from the government. The character of the farmer lobby is of fundamental importance in understanding the present program.

The basic purpose of agricultural adjustment as conceived by the present administration runs in terms of farm prices, if we leave aside the supplementary credit program (the farmer’s R. F. C.). 4 Increase the value of farm products (by raising prices) and add to these market prices certain benefit payments – that is to say, enhance the total income on individual farms, but take no thought concerning the distribution of these increased returns. Now this is a business man’s solution of farm relief whereas a program aimed at the relief of our farm population as a whole would run thus: Increase the total income of each individual farm, and see to it that both farm capital and farm labor benefit from the same individual, receives the entire increased income [as in the original].

As a matter of fact, these two programs come to about the same thing under certain conditions. If American agriculture were carried on entirely by small independent farmers, owning their land or renting on some equitable basis, and performing most of the labor, then a program such as we have would be truly “democratic.” For if . . . the same family, receives the entire farm income we should have no reason to worry about the division of benefits as between profits and wages. No doubt one can explain much of the inconsistencies between the apparently sincere expressions of “good will” emanating so frequently from members of the Agricultural Adjustment Administration and the actual concentration of benefits by the fact that Mr. Wallace 5 and his aides have in mind just this type of farm organization. But, the program as formulated at present is truly democratic only if and where agriculture is so organized.

Taking the Cotton Belt 6 as a whole, however, we find a sharp degree of economic stratification. It is best illustrated by the large plantations with their concentration of wealth and power in the hands of the planter, but the plantation system also colors the relationship between the tenant and landlord on non-plantation land, and for that matter the small farmer (renter or owner) and the credit-granting merchant or banker generally. This is not to say, of course, that there are no truly independent small farmers in the South, but simply that concentration of control is very much more prevalent there than elsewhere.

What happens when a program designed merely to increase the total income of each individual producing unit is applied to a section where the control over these producing units is concentrated in a relatively few hands? Just what is happening in the South today. Any other result would simply indicate that Southern planters, unlike the rest of us, are not actuated by self-interest. If the government were really bent on a democratic type of rehabilitation for all cotton producers, it would be compelled by one means or another to put its power behind the Southern share-cropper to force a more favorable division of benefits. The principle that force must be met with force in economic as well as military affairs is one to which the Administration has paid at least lip service in the case of labor relations in industry, but not in agriculture – a fact attested by the complete exclusion of the farm laborer from the program and the highly unsatisfactory provisions affecting share-croppers.

With respect to the agricultural program as a whole, this is, as has been said, a reflection of the type of political interests behind the farm relief program. With respect to the Cotton Belt itself, there are further complicating factors. To begin with, cheap labor has been the life-blood of the plantation system and an attack on low labor incomes in the South would be interpreted by the Southern planters not as merely one more thorn in the flesh, but as a mortal blow. The aristocracy of the South is not going to put up with any nonsense about share-croppers’ unions and the like. Moreover, it happens that the present national administration is Democratic – in party if not in policy – and must rely to a large extent upon the support of the dominant class of the South. If one expects the Roosevelt administration to “smash” the Southern labor system or to modify it appreciably, one is leaving out of the picture some of its most essential details.

An additional complicating circumstance in the Cotton Belt is the existence of the race issue, both as it appears today and as it reflects the unique historical forces which have shaped the Southern system. For the bi-racial character of the labor force of the Cotton Belt on the one hand renders more stubborn the resistance to any sort of economic change, and on the other makes the resistance so much the more effective. A concession to the share-cropper class is not only one to labor but one to the Negro as well. And such a concession is thereby made more distasteful, and less necessary.

One may disagree perhaps that the race issue fits in here, for it seems to imply that the race issue is relatively minor. In a sense it is just that, and it will be well to examine the question rather carefully. When we look at the problem of the Negro farmer, the feature which stands out most sharply is his handicaps as compared with his white neighbor. Sources of credit available to the white man are closed. The credit that he does get is much more expensive than that of the white man. Legal redress in matters of contracts are beyond his reach. One may cite any number of difficulties which he encounters solely because of his race. All this is most unjust, and any fair-minded observer will immediately conclude that these racial differentials ought to be wiped out. And yet, if all these matters of racial discriminations could be eliminated, a real question would remain. How much would the lot of the Negro farmer actually be improved if he were put on a par with the white man? Is the small white farmer living in an economic paradise? To one familiar with the facts, the answer to the last question is all too obvious. Whether we like it or not, the basic problem of the South is fundamentally economic and not racial – the problem of the poor man (white and black) and not the problem solely of the underprivileged Negro. Any program of economic betterment of the mass of cotton producers must run in terms of a general economic reorganization of cotton production as a whole, and not merely in terms of a purely racial program aimed at eliminating the differentials between Negro and white. The latter type of program is of course most desirable as far as it goes, but after all an intelligent traveller makes sure not only that he is headed in the right direction but also that he has the proper means of really getting to his destination. Thus, if we regard the race question, not just as a matter of discrimination against the colored man, but in its broader aspects as a deterrent to effective reorganization of Southern agriculture, we are likely to be guided into a much more serviceable program for the colored man himself in the long run.

If we look beyond the immediate government program, we find certain other forces which are likely sooner or later to change the entire situation of the small cotton producer of either race. Traditionally, cotton farming has postulated a supply of extremely cheap labor, for the picking and hence most of the other operations, must be done purely by hand. But the shift to mechanized production through the introduction of the mechanical picker, if not just around the proverbial corner, seems at least definitely in the offing, awaiting the development of favorable economic conditions. Now cotton raising through the use of a mechanical picker is likely to be much more efficient than the old “hand” methods, because picking cost itself will be reduced, and also because the introduction of machinery at this point will make it profitable to use mechanical power down the whole line of pre-picking operations. As a result, the competition of mechanized plantations is likely to prove fatal to the older kind of cotton farming. What will this mean for the mass of workers in the Cotton Belt?

Obviously, the old story of “technological unemployment” will be repeated in the South – the planter who cultivates a thousand acres in cotton by machinery will need fewer workers than he needs now. But the introduction of the mechanical picker will mean more than this. In the first place it will mean a substantial change in location of cotton farming. Experts tell us that the use of a mechanical picker is much more feasible on flat lands such as one finds in the western part of the Cotton Belt, than in the hilly country of Georgia and surrounding states – indeed it is extremely doubtful that the mechanical picker can be used to any great extent in this territory. The shift to mechanization will be a shift to the West. And this in turn will be a shift from the Negro, for there is plenty of non-Negro labor in the West to meet the demand of mechanized production. The same holds true of course with respect to white labor east of the Mississippi River.

But why cannot the Negro follow this trend and go in for mechanized cotton production himself? Such a development would take care of only a small proportion of our present agricultural population, but at least it would be an item on the other side of the ledger. This brings us to the second feature of the change to mechanical picking – namely, that cotton farming will necessitate larger capital outlays than at present. Not only will the machinery itself be more expensive, but its use will involve much larger tracts of land. For the machinery will not pay for itself unless the farm is sufficiently large so that the machine is occupied to a maximum degree. (An idle tractor in the barn eats up profits as effectively as an idle mule.) This means that the new type of cotton farm will become inaccessible to the man of small means. In this respect the Negro takes his place beside the vast majority of white men – the days of the “little fellow” (white or black) seem to be numbered.

If the present administration seems such a poor source of immediate benefit, and if the longer prospects in the Cotton Belt are even darker, one is perhaps tempted to accept the defeat and be done with it. For after all, Southern agriculture has in the past been a place of refuge (however shabby) for the Negro American, and the prospects of curtailed opportunities in this field must certainly be “viewed with alarm.” Without minimizing the serious dangers inherent to the situation, however, one may still find . . . a flicker of light ahead. Certainly we have in this country the material basis for a good life for all our population, white and black, and who knows but that we shall turn the trick! It is in that happy consummation that hope lies for the vast majority of Negroes and whites. Just where that larger problem will lead us is another story, but the first chapters seem pretty clear and they concern such things as social security, shorter hours, collective bargaining, and related programs. It is primarily along such lines that those interested in the welfare of the Negro must direct their efforts. Once these broader objectives are set, the purely racial elements in a program for Negro betterment become really significant. For if the standard of living of workers in general is being substantially raised, the fight against racial discrimination in matters of pay and other working conditions will mean real improvement for the Negro himself. The achievement of these ends involves something more than a reformulation of aims on the part of the Negro. It necessitates as well among both Negroes and whites a deeper realization of the community of their interests and of the necessity of cooperative action.

Study Questions

A. How, according to Lewis, has the Agricultural Adjustment Administration disadvantaged black farmers? What special “handicaps” does the black farmer face that his white counterpart does not?

B. Taken together with Black Labor and the Codes, why might African-Americans have had reason to be disappointed with the New Deal thus far? Why do you think they supported Roosevelt regardless? How does this criticism of the AAA compare with those put forward in United States v. Butler?


Agricultural Adjustment Act (1933, Reauthorized 1938)

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.


Its Alive? The Agricultural Adjustment Act Rises from the Grave! (8/21/2020)

In the previous Friday Footnote, we learned about the Agricultural Adjustment Act of 1933. We ended the Footnote with a Supreme Court ruling in 1936 that invalidated the Act. The Court ruled that a special tax paid by food processors to fund the Act was unconstitutional.

Figure 1: Agricultural Adjustment Act ruled unconstitutional.

So, what should President Roosevelt and Congress do? The response was to rewrite the Act and fix the problems. This Footnote focuses on the actions of the government after the Agricultural Adjustment Act of 1933 was nullified by the Supreme Court.

The Supreme Court ruling declaring the 1933 Act unconstitutional was announced on January 6, 1936. Less than two months later (Feb. 29, 1936) the AAA resurfaced as part of the Soil Conservation and Domestic Allotment Act of 1936. This Act served two purposes – it amended the Soil Conservation Act that had been passed in 1935 (which primarily supported soil conservation demonstrations) and created a new plan for handling the overproduction of certain crops. In my opinion, combining the two acts was genius.

Instead of paying farmers NOT to grow certain crops where there was a surplus such as peanuts, tobacco, and cotton, this new act provided an incentive to take land out of crop production and apply soil improvement and conservation practices to the land. Farmers received payments for growing legumes and grasses on former cropland. This conserved the soil and reduced the acreage of certain crops. Farmers received payments to terrace fields, contour farm, apply lime plus other soil amendments, and establish mechanical erosion control practices. Nearly 53 million acres were taken out of crop production using this approach AND soil was conserved on the farms. The money to support the program came out of the U.S. Treasury, not from food processors.

Figure 2: An example of the results of the Soil Conservation and Domestic Allotment Act

When President Roosevelt signed the original Agricultural Adjustment Act in 1933 he stated we are taking “a new and untrod path.” That was certainly true. That Act was ruled unconstitutional and was then combined with other legislation. Finally, after a five-year period of trial and error, President Roosevelt called the national agricultural leadership to a conference in Washington to develop a plan for the future of agriculture. Jointly, the national agricultural leadership in coordination with Congress developed the Agricultural Adjustment Act of 1938.

When President Roosevelt signed the Act on February 16, 1938 he stated:

The Agricultural Adjustment Act of 1938 represents the winning of one more battle for an underlying farm policy that will endure. Therefore it is historic legislation. It is not perfection, but it is the constructive product of the able and sincere work of many men. I believe the overwhelming majority of the people will commend members of Congress and others who have devoted themselves to the making of this law. As we go ahead under the new Act, let us resolve to make it an effective instrument to serve the welfare of agriculture and all our people.

Roosevelt’s words were prophetic. Today the 1938 Act is considered “permanent” legislation. Lipton and Pollack write (1996, p. 128):

The 1938 Act is considered part of permanent legislation. Provisions of this law are often superseded by more current legislation. However, if the current legislation expires and new legislation is not enacted, the law reverts back to the 1938 Act (along with the Agricultural Act of 1949).

The legality of the 1938 Act was challenged in the Wickard vs. Filburn case which reached the Supreme Court. The law was upheld as being constitutional.

The 1938 Act was designed “to provide for the conservation of natural soil resources and to provide an adequate and balanced flow of agricultural commodities in interstate and foreign commerce and for other purposes.” The Act contains five titles (sections):

  • Title I – A continuation of the Soil Conservation and Domestic Allotment Act
  • Title II – Authorized the Secretary of Agriculture to work with the Commerce Commission regarding freight rates on agricultural commodities, established four regional research laboratories to find new uses and new markets for agricultural commodities, and continued the distribution of surplus agricultural commodities for relief purposes.
  • Title III – Created price supports (based on the concept of parity) for selected agricultural commodities and established marketing quotas for certain agricultural products to keep the supply in line with market demand. Also established a loan program.
  • Title IV -Cotton Pool Participation Trust Certificates
  • Title V – Established the Federal Crop Insurance Corporation (FCIC)

The law was 46 pages in length and Title III contained numerous subsections addressing specific crops. If you want to read the Act it can be found at https://nationalaglawcenter.org/wp-content/uploads/assets/farmbills/1938.pdf. Numerous agricultural acts have been enacted since 1938, however, the precedents established by this legislation still influence agricultural policy today.

Figure 3: An AAA representative in his New Mexico office in 1941. Note the conservation emphasis. Image from Irving Rusinow, Photographer (NARA record: 5307166) – U.S. National Archives and Records Administration, Public Domain, https://commons.wikimedia.org/w/index.php?curid=17221315

What’s in a Name?

The administrative mechanism for implementing the Agricultural Adjustment Act is still in place today. However, over time, the name of the government group responsible for implementing these agricultural policies has changed several times.

Following is a listing of the various names and agencies within the USDA from 1933 until today:

  • Agricultural Adjustment Administration (1933-42)
  • Agricultural Adjustment Agency, Agricultural Conservation and Adjustment Administration (1942)
  • Agricultural Adjustment Agency, Food Production Administration (1942-43)
  • Agricultural Adjustment Agency, Administration of Food Production and Distribution (1943)
  • Agricultural Adjustment Agency, War Food Administration (1943-45)
  • Production and Marketing Administration (PMA, 1945-53)
  • Commodity Stabilization Service (CSS, 1953-61)
  • Agricultural Stabilization and Conservation Service (1961-94)
  • Consolidated Farm Service Agency (1994-today)

The various names can be confusing and hard to keep up with. In the summers of 1967 and 1968 I was an intern with the USDA Soil Conservation Service (SCS) in Gatesville, Texas. The Extension Service offices were in the same building as the SCS along with the Agricultural Stabilization and Conservation Service (ASCS). Since two of the groups had “Conservation Service” as part of their name, this led to confusion.

I finally figured out a way to explain which office was which to people who inquired. The Soil Conservation Service worked with farmers to establish soil and water conservation plans and we provided technical expertise to design farm ponds, terraces, waterways, and other conservation structures. If the farmer needed financial assistance to implement our plans, then they would go down the hall to the ASCS office because this group had the money. The ASCS office handled crop quotas, crop subsidies, government farm payments, and other financially related matters.

Figure 4: The Farm Service Agency of today is a descendent of the Agricultural Adjustment Administration

The Farm Service Agency (FSA) replaced the ASCS in 1994 and remains in operation today. In 1994 the functions of the Farmers Home Administration were placed in the FSA portfolio. The list below includes the current services provided by the FSA. If you are not familiar with some of the programs or acronyms, you might want to check them out. They do have a youth loan program for 4-H and FFA members. They also have a loan program for Minority and Women Farmers and Ranchers. FSA Services include:

Concluding Remarks

Many years ago, a graduate student wrote a Master’s thesis about the importance of agriculture teachers working with the extension service and other agricultural groups. When asked to identify the local extension agent, this student was not able to do so. Talk about embarrassing!

You don’t want something like this to happen to you. As an agricultural leader in your community, you really do need to know and work with groups like the Extension Service, the Natural Resources Conservation Service, Farm Credit, the Farm Service Agency, plus others. If you have not visited your local Farm Service Agency please consider doing so. You might consider having a representative speak to a class or FFA Meeting.

Figure 5: The goal of U.S. Farm Policies (image from the Alicia Patterson Foundation)

F. F. R. (1938). The Agricultural Adjustment Act of 1938. Virginia Law Review, 24(8), 914-919. doi:10.2307/1068087


Agricultural Adjustment Administration

The Agricultural Adjustment Act of 1933, which provided for the Agricultural Adjustment Administration to adjust production of dairy products, wheat, corn, cotton, hogs, and rice, was declared unconstitutional by the United States Supreme Court in January 1936. Prior to the Supreme Court ruling, 237 out of 254 Texas counties had complied with AAA production quotas. The 1936 Soil Conservation and Domestic Allotment Act was supplemented in 1938 by a new Agricultural Adjustment Act providing compensation to producers who adjust the acreage of their soil-depleting crops, parity of price adjustments to those who do not overplant, federal crop insurance, and other benefits. The two programs combined provided Texas farmers with $292,821,000 in direct payments. In 1948 the only payments being made were those to assist farmers in carrying out soil-conservation practices the Texas allocation for that purpose was $11,130,000. Between 1936 and 1946 Texas farmers engaged in thirty types of conservation, including terracing, construction of dams, contouring, pasture sodding, and tree planting. In 1938 county offices were set up, and the farmers in each community elected a committee of three to administer the program and a delegate to the county convention. The county convention chose a committee of three to direct the county program. The secretary of agriculture appointed a state director and a state committee of five farmers. The Agriculture Stabilization and Conservation Service replaced the Agricultural Adjustment Administration in 1945 when the AAA was absorbed by the Production and Marketing Administration of the United States Department of Agriculture.

Nancy Blanpied, ed., Farm Policy: The Politics of Soil Surpluses and Subsidies (Washington: Congressional Quarterly, Inc., 1984). Donald Blaisdell, Government and Agriculture: The Growth of Federal Farm Aid (New York: Farrar and Rinehart, 1940). Robert A. Calvert and Arnoldo De León, The History of Texas (Arlington Heights, Illinois: Harlan Davidson, 1990). Van L. Perkins, Crisis in Agriculture: The Agricultural Adjustment Administration and the New Deal (Berkeley: University of California Press, 1969).


Agricultural Adjustment Administration

Agriculture Secretary Henry Wallace described the wholesale destruction of crops and livestock as “a cleaning up of the wreckage from the old days of unbalanced production.” Wallace, of course, had special insight into precisely what quantity of production would bring things into “balance.”

Shortly after the Agricultural Adjustment Act (AAA) was passed, the Department of Agriculture released the findings of its study of the American diet during these difficult years. The study constructed four sample diets: liberal, moderate, minimum, and emergency (below subsistence). It found that America was not producing enough food to sustain its population at the minimum (subsistence) diet. It took a special kind of mind to conclude that the best approach to this disaster would be to make food more expensive.

Meanwhile, the evidence proving that FDR’s approach was fundamentally flawed continued to mount. In 1936, the Bureau of Agricultural Economics reported that in the case of cotton, farm income would have been at least as high and perhaps even higher in the absence of the AAA. The following month, Cornell University’s James E. Boyle argued in the Atlantic that the AAA had been responsible for the joblessness of at least two million Americans, especially sharecroppers and farm laborers. And although the AAA was intended to increase farm income, historian Jim Powell observes that farmers “actually found themselves worse off because FDR’s National Recovery Administration had been even more successful in forcing up the prices that consumers, including farmers, had to pay for manufactured goods.”

A similar program was the National Industrial Recovery Act (NIRA), which established the National Recovery Administration, was an enormous contradiction. On the one hand, it sought to keep wage rates high to give the consumer greater “purchasing power.” On the other hand, it established hundreds of legally sanctioned, industry-wide cartels that were allowed to establish standard wages, hours of operation, and minimum prices. The minimum prices meant that businesses would be largely prevented from underselling each other everyone’s price had to be at least the prescribed minimum. The artificially high wages meant continuing unemployment, and the high prices meant hardship for nearly all Americans. Some strategy for recovery.


Agricultural Adjustment Act

The experimental Agricultural Adjustment Act (AAA) was the cornerstone farm legislation of President Franklin D. Roosevelt’s New Deal agenda and was steered through the U.S. Senate by Joe T. Robinson, Arkansas’s senior senator. In Arkansas, farm landowners reaped subsidy benefits from the measure through decreased cotton production. Arkansas sharecroppers and tenant farmers did not fare as well, bringing about the establishment of the Southern Tenant Farmers’ Union (STFU).

Upon taking office in 1933—during the fourth year of the Great Depression, on the heels of the Drought of 1930–1931, and amid the full force of the Dust Bowl—Roosevelt promised “a new deal for the American people” centered on “relief, recovery, and reform.” Counseled by advisors dubbed the “brain trust,” Roosevelt fashioned a farm leaders’ conference drawing on Henry A. Wallace, Rexford G. Tugwell, and George N. Peek. Utilizing their best proposals, he brought about the Agricultural Adjustment Act of 1933 with the fundamental goal of achieving farmer stability by raising the value of crops, which necessitated reducing crop surplus. Roosevelt appointed Wallace secretary of agriculture, Tugwell an undersecretary, and Peek administrator of the newly created Agriculture Adjustment Administration, the agency overseeing implementation of the AAA.

The AAA called for payments, or subsidies, to farmers to reduce certain crops, dairy produce, hogs, and lambs. Funding was derived from a tax on food processors of these same products. Reductions would eliminate surpluses, thereby returning farm prices to a reasonable level and allowing farmers recovery through economic relief and reform of the agricultural market. The year prior to the act, for example, cotton sold at the lowest price on record since the turn of the century, 5.1 cents a pound, having fallen from eighteen cents per pound in April 1929.

Although seven basic crops were controlled by the legislation, cotton was the dominant concern of Arkansas farmers. Arkansas’s cotton crop of 2,796,339 acres was already planted by the time the act passed. The Agricultural Adjustment Administration had to persuade Arkansas farmers to destroy a portion of the crop. Secretary Wallace announced a plow-up operation. The agency allocated Arkansas cotton farmers a crop reduction of thirty percent based on 1931 cotton production, when Arkansas cotton farmers planted 3,341,000 acres. Farmers needed to reduce 1,002,300 acres.

The agency had neither time nor labor to create a workforce to administer the new program. Cully A. Cobb—director of the Agricultural Adjustment Administration’s Cotton Division, a former Mississippi state extension official—approved the use of Agricultural Extension Service (AES) agents to oversee execution of the plow-up. University of Arkansas Cooperative Extension Service (UACES) director T. Roy Reid directed program implementation in Arkansas. The agency authorized farmer and citizen committees to help administer the program. Extension agents selected members to “county committees.” The largest and wealthiest farmers, together with bankers and merchants, were selected.

Reid and Dan T. Gray, dean of the College of Agriculture at the University of Arkansas (UA) in Fayetteville (Washington County), called a statewide meeting in Little Rock (Pulaski County) to explain the program’s elements to extension agents and county committee members. These individuals were to establish local committees for the groundwork and educate farmers at local gatherings on the basics of the program. The local committees would be responsible for the tasks of “enrolling farmers, inspecting pledged acreage, making yield estimations, and checking compliance with the plow-up agreements. The extension agents and county committeemen were to verify that local committees made reasonable estimates of the producer’s average yield, insure that all paperwork was completed correctly, and investigate and settle complaints,” according to Keith J. Volanto. AES agents also received and distributed subsidy checks.

“Cotton Week” kicked off the campaign. With enormous publicity, officials hoped for farmers’ acceptance with relatively little or no unwillingness to participate. Reluctance did surface, as did unanticipated complications—principally, a shortage of sign-up forms. Furthermore, some farmers disagreed with committeemen on estimated acreage yield, which would determine the amount of subsidy checks. In the end, 99,808 Arkansas farmers guaranteed 927,812 acres for destruction, twenty-five percent of the total Arkansas cotton acreage, consequently curtailing an estimated 395,480 cotton bales.

AAA achieved some success. Reduced production drove the price of cotton to more than ten cents per pound, a one-hundred-percent increase. Arkansas cotton farmers received $10.8 million in cash subsidies. Nevertheless, unanticipated results evolved from the program. With less cotton planted and subsidies paid to landowners, deceitful landowners were able to redirect their tenants and sharecroppers to day labor and seasonal workers, which forced some to migrate to big cities. Failing to receive a fair and evenhanded treatment, some tenants and sharecroppers formed the STFU in response. Cotton farmers also used empty land to test less labor-intensive crops and used subsidy checks to purchase tractors and other mechanical equipment, adding to the prospect of less-labor-intensive farming in the future. Farmer morale rose, increasing faith in government, and more farmers were exposed to the resources of the extension service.

In 1936, the Supreme Court declared the AAA unconstitutional by a vote of 6–3 in the case United States v. Butler, which centered upon a Massachusetts cotton mill that refused to pay the tax. The legislation failed in part because it taxed one farmer to pay another. Despite that setback, Congress found an acceptable solution and passed a second AAA in 1938 with funding coming from general taxation. The AAA emerged as the origin for farm subsidies and programs still in effect today.

For additional information:
Alexander, Donald Crichton. The Arkansas Plantation, 1920–1942. New Haven, CT: Yale University Press, 1943.

Agricultural Adjustment Administration Annual Reports. Washington DC: Government Printing Office, 1933–1946.

Baker, J. A., and J. G. McNeely. Land Tenure in Arkansas IV. Fayetteville, AR: Agricultural Experiment Station, 1940.

Farm Tenancy: Report of the President’s Committee. Washington DC: Government Printing Office, 1937.

Fite, Gilbert C. Cotton Fields No More: Southern Agriculture 1865–1980. Lexington: University of Kentucky Press, 1984.

———. George N. Peek and the Fight for Farm Parity. Norman: University of Oklahoma Press, 1945.

Grubbs, Donald H. Cry from the Cotton: The Southern Tenant Farmers’ Union and the New Deal. Chapel Hill: University of North Carolina Press, 1971.

Nourse, Edwin G., Joseph S. Davis, and John D. Black. Three Years of the Agricultural Adjustment Administration. Washington DC: Brookings Institution, 1937.

Peek, George N., and Samuel Crowther. Why Quit Our Own. New York: Van Nostrand Co., 1936.

Perkins, Van L. Crisis in Agriculture: The Agricultural Adjustment Administration and the New Deal, 1933. Los Angeles: University of California Press, 1969.

Richard, Henry I. Cotton under the Agricultural Adjustment Act: Developments up to July 1934. Washington DC: Brookings Institution, 1934.

U.S. Senate. Payments Made under the Agricultural Adjustment Program. Seventy-Fourth Congress, Second Session, Document 274. Washington DC: Government Printing Office, 1936.

Venkataramani, M. S. “Norman Thomas, Arkansas Sharecroppers, and the Roosevelt Agricultural Policies, 1933–1937.” Arkansas Historical Quarterly 24 (Spring 1965): 3–28.

Volanto, Keith J. “The AAA Cotton Plow-Up Campaign in Arkansas.” Arkansas Historical Quarterly 59 (Winter 2000): 388–406.

Woodruff, Nan Elizabeth. As Rare as Rain: Federal Relief in the Great Southern Drought of 1930–31. Urbana: University of Illinois Press, 1985.

———. “The Failure of Relief during the Arkansas Drought of 1930–1931.” Arkansas Historical Quarterly 39 (Winter 1980): 301–313.

Whayne, Jeannie M. A New Plantation South: Land, Labor, and Federal Favor in Twentieth-Century Arkansas. Charlottesville: University Press of Virginia, 1996.


Agricultural Adjustment Act - History

For the first time, Congress declared that is was "the policy of Congress" to balance supply and demand for farm commodities so that prices would support a decent purchasing power for farmers. This concept, outlined in the AAA, was known as "parity."

AAA controlled the supply of seven "basic crops" – corn, wheat, cotton, rice, peanuts, tobacco and milk – by offering payments to farmers in return for taking some of their land out of farming, not planting a crop.

LeRoy Hankel says there only a few farmers who refused to take the government payments. "There's a few that said, 'The government isn't going to tell me what to do.' There was a few of them. Now, I don't think there was too many." Most farmers couldn't afford not to take the government payments.

In 1937, the Supreme Court ruled that the AAA was unconstitutional, but the basic program was rewritten and again passed into law. Even critics admitted that the AAA and related laws helped revive hope in farm communities. Farmers were put on local committees and spoke their minds. Government checks began to flow. The AAA did not end the Depression and drought, but the legislation remained the basis for all farm programs in the following 70 years of the 20th Century.

This idea of supporting farmers by limiting supply has also produced controversy. Some critics point out that only seven of the hundreds or thousands of different crops grown by farmers are eligible for payments. No livestock producers are included. Farmers also continue to produce more and more despite the limitations the government imposes. New technologies make it possible to grow much more on the same amount of land.

Written by Bill Ganzel of the Ganzel Group. First written and published in 2003.


Tag: Agricultural Adjustment Act

Over time, SCOTUS has proven itself to be as imperfect as any other institution. There have only been 112 justices in the history of the court. Some of them have been magnificent human beings, and some of them cranks.

Article III of the Constitution establishes the Supreme Court of the United States (SCOTUS), and “such inferior Courts as the Congress may from time to time ordain and establish”.

There’s no mention of the number of justices. The first Congress passed the Federal Judiciary Act on September 24, 1789, creating a six-justice Supreme Court.

Twelve years later, the presidency of John Adams was coming to an end. As a Federalist, Adams wanted nothing more than to stymie the incoming administration of Democratic-Republican Thomas Jefferson. Toward that end, Adams appointed the infamous “midnight judges” in the last hours of his administration: 16 Federalist Circuit Court judges and 42 Federalist Justices of the Peace.

The incoming Jefferson administration sought to block the appointments. Jefferson ordered then-Secretary of State James Madison to hold those commissions as yet undelivered, thus invalidating the appointments. One of the appointees, William Marbury, took the matter to Court.

The case advanced all the way to the Supreme Court, which ruled in Marbury v. Madison that the provision of the Judiciary Act enabling Marbury to bring his claim, was unconstitutional. Marbury had lost his case, but the principle of judicial review, the idea that the court could preside, Godlike, over laws passed by their co-equal branch of government, has been the law of the land, ever since.

In the early days of the Great Depression, Federal agricultural officials conceived the hare brained idea that artificially introducing scarcity would increase prices, and therefore wages, in the agricultural sector. Six million hogs were destroyed in 1933. Not harvested, just destroyed and thrown away. 470,000 cattle were shot in Nebraska alone. Vast quantities of milk were poured down sewers, all at a time of national depression when malnutrition was widespread.

With the Agricultural Adjustment Act of 1938, Washington began to impose production quotas on the nation’s farmers. Ohio farmer Roscoe Filburne was ordered to grow 223 bushels of wheat in the 1941 season. Filburne grew 462.

Article 1, Section 8 of the Constitution permits Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”. On this flimsy basis, the Federal Government took Roscoe Filburne to court.

The farmer argued that the “surplus” stayed on his farm, feeding his family and his chickens. Lower Courts sided with Filburne. The government appealed all the way to the Supreme Court, arguing that, by withholding his surplus, Filburne was effecting interstate market conditions, thereby putting him under federal government jurisdiction.

Intimidated by the Roosevelt administration’s aggressive and illegal “court packing scheme“, SCOTUS ruled against the farmer. Ever since, what you don’t do can be held against you in a court of law. Get it? Neither do I.

Over time, SCOTUS has proven itself to be as imperfect as any other institution. There have only been 17 Chief Justices and 101 Associate Justices in the entire history of the court. Five Chiefs having previously sat as Associate Justices, there are only 113 in all.

Some of them have been magnificent human beings, and some of them cranks. There have been instances of diminished capacity ranging from confusion to outright insanity. One justice spent part of his term in a debtor’s prison. Another killed a man. There have been open racists and anti-Semites.

There is no official portrait of the 1924 court because Justice James C. McReynolds wouldn’t stand next to Louis Brandeis, the court’s first Jewish Justice. One Justice was known to chase flight attendants around his quarters, while another spent his time in chambers watching soap operas.

There’s the former Klan lawyer turned Justice who took a single phrase, “separation of church and state”, from a private letter of Thomas Jefferson, and turned the constitutional freedom OF religion into an entirely made up freedom FROM religion.

The Supreme Court reinforced chattel slavery with the Dred Scott decision. The Korematsu ruling gave us the forced incarceration of Americans of Japanese descent. Buck v. Bell gave American women the gift of forced sterilization, and Stenberg v. Carhartt enshrined the constitutional “right” to the hideous and detestable “procedure” known as partial birth abortion. From “Separate but Equal” to the “rights” of terrorists, SCOTUS’ rulings are final, inviolate, and sometimes imbecilic.

Chief Justice John Roberts, who once said “remember that it’s my job to call balls and strikes, and not to pitch or bat,” invented a whole new definition of taxation, enshrining the “Affordable Care Act” as the law of the land.

The framers gave us a Constitutional Republic with co-equal branches of government, with power diffused and limited by a comprehensive set of checks and balances.

They gave us two distinct means to amend that Constitution, should circumstances require it.

Traditionally, Congress proposes amendments, submitting them to the states for ratification. The problem is that many believe Congress itself to be part of the problem, and a broken institution is unlikely to fix itself.

Article V gives us a way to amend the constitution, if we would take it. Instead of Congress proposing amendments, an Article V convention of state legislatures would propose amendments, to take effect only if ratified by a super majority of states. We could start with an amendment permitting 2/3rds of the People’s representatives in Congress, to overturn a SCOTUS decision. Then we could term limit these people.

Unless, that is, you believe it’s fine for the Federal Government to prohibit a farmer from growing wheat for his own use, that one man in a black robe can force you to buy a product you don’t want and call it a “tax”, or you believe that “established by the state” means by the state or federal government, at the sole discretion of the man who says, “I’m from the Government. I’m here to help”.


Watch the video: - INFOGRAPHIC ANIMATED HISTORY - The Agricultural Adjustment Act of 1933