AGRICULTURAL ADJUSTMENT ACT

The Agricultural Adjustment Act was signed into law on May 12, 1933, and was a crucial part of the New Deal recovery program of the First Hundred Days. It passed Congress after many weeks of debate between the Roosevelt administration, farm organization leaders, and agrarian militants and their representatives in Congress. Led by Secretary of Agriculture Henry A. Wallace, the administration wanted a farm program based on voluntary production controls. Farmers who agreed to curtail production would receive a benefit payment financed by a tax on agricultural processors, such as flour millers. The amount the farmers would curtail production would be determined by a decentralized system of farmer committees in cooperation with the Department of Agriculture. This system, Wallace and his advisers hoped, would reduce the massive surpluses glutting American markets and engage farmers themselves in the administration of the new farm program. Farm leaders wanted a price-raising measure to boost prices and incomes, but they were reluctant to endorse production controls for fear such measures would entail a large bureaucracy. Agrarian militants also opposed production controls and demanded some form of currency inflation and the power for government-mandated prices to bring about immediate increases in farm income. While Congress debated the bill, frustrated farmers in the Midwest launched farm strikes and mortgage foreclosure protests that sometimes turned violent.

In its final form, Title I of the act authorized the secretary of agriculture to create a production control program for eight major commodities and to impose a tax on the processors of these commodities. It also authorized the secretary to establish marketing agreements among producers of other commodities, such as dairy goods, in order to permit greater control over production and distribution. It committed the Department of Agriculture to raising farm prices to a level that would gain farmers the same purchasing power they had enjoyed for the years 1909 to 1914 in order to achieve "parity" between the farm and non-farm economies. Title II became the Emergency Farm Mortgage Act, which authorized emergency mortgage loan refinancing. Title III, introduced by Senator Elmer Thomas, a Democrat from Oklahoma, granted the president discretionary power to undertake currency inflation and to reduce the gold content of the dollar. The act became the basis for the Agricultural Adjustment Administration. On January 6, 1936, the Supreme Court ruled the processing tax and production control features of the Agricultural Adjustment Act unconstitutional in the Butler decision.

The act advanced farm policy beyond the failed actions of the Hoover administration's Federal Farm Board, made possible programs that contained farm protest movements, and initiated a fundamental change in the role of the federal government in the American farm economy.

See Also:AGRICULTURAL ADJUSTMENT ADMINISTRATION (AAA); FARM POLICY; HUNDRED DAYS.

BIBLIOGRAPHY

Fite, Gilbert C. George N. Peek and the Fight for Farm Parity. 1954.

Hamilton, David E. From New Day to New Deal: American Farm Policy from Hoover to Roosevelt, 1928–1933. 1991.

Perkins, Van L. Crisis in Agriculture: The Agricultural Adjustment Administration and the New Deal, 1933. 1969.

Romasco, Albert U. The Politics of Recovery: Roosevelt's New Deal. 1983.

David Hamilton