Background
Because of the economic crisis in America, farmers had too little money due to over production and low prices. President Herbert Hoover and the Federal Farm Board wanted farmers to cut production to increase prices, however, individuals believed it best to grow as much as possible.
Why was it implemented?
The New Deal program was established by Theodore Roosevelt in the hope of restoring agricultural prosperity to America, such as was enjoyed in the “golden years” of 1909-1914. This goal was to be achieved by reducing farm production and export surpluses while also raising prices. The Department of Agriculture established the Agricultural Adjustment Administration in order to restrict agricultural production by paying farmers subsidies not to plant on part of their land and to kill off excess livestock in the hope of establishing parity. Parity was the relationship between urban and rural costs during 1910-1914. It was lead by George Peek and Chester Davis under the supervision of Agriculture Secretary Henry A. Wallace.
What were the goals and major provisions?
The goal of the AAA was to help farmers by reducing production of staple crops, which would diminish the surplus of them, and also reducing animal production, which in turn would raise farm prices and encourage more diversified farming. Congress decided that it was its job to balance the supply and demand of farm goods in order to keep prices high enough for farmers to survive. When they took action the season had already begun so many crops were destroyed and livestock killed. Farmers were asked use smaller portions of their land for growing these staple crops. In return they were offered landowners acreage reduction contracts, receiving compensation for what they would have normally gotten from their now unused land, which was rented to the government. Seven basic crops were controlled, including corn, wheat, cotton, rice, peanuts, tobacco, and milk. The money for these subsidies came from an exclusive tax on companies which processed the farm products. When the second AAA was established, after the first was found to be unconstitutional, it asked that soil-building crops be planted instead of the typical staple crops. The second AAA was funded from general taxation, allowing the Supreme Court to accept it. The Agricultural Adjustment Act of 1938 allowed the AAA to store the surplus from the “good farming” years, which could then be used during the “bad farming” years During World War II the AAA focused on increasing food production in order to meet the war needs. In 1945 its functions were taken over by the Production and Marketing Administration.
Which groups were benefited or harmed?
If a farmer refused to participate in the plan a 50% tax would be added onto his sales. Even so a few farmers did refuse to participate, not wanting the government to tell them what to do. Overall, however, the AAA majorly benefited farmers. On the other hand, those who processed the goods from the farmers had to pay a new tax to the federal government. This money was then used for the rental payments to farmers. The law at the time required that tenant farmers and sharecroppers be paid a portion of the money. This, however, was extremely hard for the government to enforce and also encouraged landlords to get rid of their tenant farmers, replacing them with wage laborers. This caused the practices of sharecropping and tenant farming to become very rare and many tenement farmers at the time were without homes or a source of income. Also, cattlemen were negatively affected. The AAA wished to reduce the number of cattle and slaughtered about two million cattle from the Texas herds alone. Finally, the emergency program was stopped due to the protests from the cattlemen. The AAA wished for them to join the New Deal controls program, but they refused.
Was the AAA successful?
Successes
Considered the first modern U.S. farm bill
Legislation remained the basis for all farming programs for the next 70 years
Established a federal role in the planning of the agricultural economy
Farmers’ incomes increased significantly during the first three years of action ($4.7 billion in 1932 to $8.7 billion in 1936 (100% parity was reached in 1943))
Consumers paid higher prices than during 1932 and 1933
Benefit payments to farmers totaled $1,500,000,000 by 1936
AAA was favored by most farmers
In the end, the demands of World War I finally reduced the farm surpluses and increased farm income
Farmers became more efficient and farming techniques improved with technology
**Overall successful because the AAA did stimulate agricultural growth and helped to revive hope in the farm communities which was the original goal of the program
Legislation remained the basis for all farming programs for the next 70 years
Established a federal role in the planning of the agricultural economy
Farmers’ incomes increased significantly during the first three years of action ($4.7 billion in 1932 to $8.7 billion in 1936 (100% parity was reached in 1943))
Consumers paid higher prices than during 1932 and 1933
Benefit payments to farmers totaled $1,500,000,000 by 1936
AAA was favored by most farmers
In the end, the demands of World War I finally reduced the farm surpluses and increased farm income
Farmers became more efficient and farming techniques improved with technology
**Overall successful because the AAA did stimulate agricultural growth and helped to revive hope in the farm communities which was the original goal of the program
Failures
Never had sufficient funding or political power
Was unable to reach poor tenant farmers and sharecroppers causing these occupations to disappear
Supreme Court case United States v. Butler of 1936 declared the Act unconstitutional (for taxing the processors and then paying the farmers). Regulation of agriculture was determined to be a state power (was later corrected by the Agricultural Adjustment Act of 1938 along with the Soil Conservation and Domestic Allotment Act)
Only seven of different crops grown by farmers were monitored
Farmers continued to produce more crops ignoring the limitations and new technologies make it possible to grow more crops on the same amount of land
The rise in commodity prices was mainly due to the severe drought conditions in 1933–36
Food remained 25% lower in price than during the years 1920-31
A Gallup Poll revealed that a majority of the American public opposed the AAA, but the majorities existed in Congress to pass it
Was unable to reach poor tenant farmers and sharecroppers causing these occupations to disappear
Supreme Court case United States v. Butler of 1936 declared the Act unconstitutional (for taxing the processors and then paying the farmers). Regulation of agriculture was determined to be a state power (was later corrected by the Agricultural Adjustment Act of 1938 along with the Soil Conservation and Domestic Allotment Act)
Only seven of different crops grown by farmers were monitored
Farmers continued to produce more crops ignoring the limitations and new technologies make it possible to grow more crops on the same amount of land
The rise in commodity prices was mainly due to the severe drought conditions in 1933–36
Food remained 25% lower in price than during the years 1920-31
A Gallup Poll revealed that a majority of the American public opposed the AAA, but the majorities existed in Congress to pass it
Was it liberal or conservative?
The plan was liberal because it supported economic equality as it was designed to help farmers recover economically, limited the opportunity of some who had to help fund the AAA, the government helped to fix the social problem and helped distribute wealth.
