The Agricultural Adjustment Administration (AAA) was created by Public Law 73-10 on May 12, 1933 and signed by President Franklin D. Roosevelt. The purpose of the administration was to oversee farm policy, and the pricing of seven farm commodities: cotton, tobacco, wheat, hogs and hog products, milk, and rice. The agency continued to function until 1945.
During the 1932 presidential election the Democratic Party promised to help the nation’s farmers and increase the prices of farm commodities. At the time, the Federal Farm Board had accomplished little in their efforts to reduce the surpluses, and farm prices were so low that purchasing power was less than 1909 levels. Representative Marvin Jones, chairman of the House Committee on Agriculture and Forestry, had a proposal in Congress during the 1932–33 session that passed the House by a vote of 203–150 but failed to pass after amendment by the Senate. In his address on March 16, newly elected president Roosevelt called for Congressional action on a farm bill. The resulting legislation was a combination of the original Jones Farm Bill and an administration proposal offered by Secretary of Agriculture Henry A. Wallace with input from the major farm organizations. Roosevelt signed the act on May 12, 1933.
The Agricultural Adjustment Act of 1933 created the Agricultural Adjustment Administration, as a new agency under the Department of Agriculture (USDA). This agency was initially coadministrated by George N. Peek and Charles J. Brand, who would both resign before the end of 1933 and be replaced by Chester C. Davis, who had initially served as chief of production. As part of the Department of Agriculture, the agency had a legal division and its personnel and budget were independently administered. Initially the Extension Service agents in each county provided education and staffing for the AAA offices.
The AAA was charged with limiting production of staple crops and encouraging farmers to diversify the crops they planted. At the time, farmer purchasing power had reduced to half of the pre-World War I levels. Through the legislation the government sought to reduce surpluses in cotton, wheat, cotton, tobacco, rice, milk, and hog products to the level of demand which would bring the prices back up to 1909–14 levels. The law also provided benefit payments for those farmers who produced the seven commodities and also cooperated with the plan to reduce production; farmers who continued to produce the commodities would not receive benefit payments from the government. In time the government would make agreements with producers, processors, and distributors of farm products to control the amounts of the seven commodities on the market.
The AAA addressed each of the commodities individually, starting with cotton. In 1932 cotton ranged from 4 to 5 cents a pound and the country had a surplus of 26 million bales when the program began working to reduce the amount of acreage under cultivation by 10 million acres. Farmers who signed contracts received $11 per acre, plus the option to buy cotton from the government for 6 cents a pound. The cotton program managed to increase the price of cotton and made loans available to cotton farmers at 10 cents a pound for future crops.
The AAA found the tobacco farmers in similar straits. In 1933 the country had a surplus of 750 million pounds of tobacco. Tobacco farmers included large producers, tenant farmers, and sharecroppers, who produced 25 different types of tobacco. Production was reduced in an effort to bring prices up to 1919–29 levels. By 1935 over 95 percent of tobacco acreage fell under government production contracts.
The remaining commodities had minimal reductions in comparison to tobacco and cotton. Dairy farmers were given benefit payments if they reduced their production up to 20 percent; however, most dairy farmers opposed the plan. Corn and hog producers had to reduce their corn acreage by between 20 and 30 percent of their 1932–33 acreage and the number of hogs by 25 percent. Wheat producers had to belong to a production control association and reduce their acreage to less than 20 percent of their average acreage between 1930 and 1932. One major weakness of the AAA was that its funding programs aided large farmers, but did little to help struggling tenant and sharecropping farmers.
From the inception of the AAA, producers challenged the processing tax assessed on those who chose to continue production of the commodities rather than take compensation. In the 1936 Supreme Court decision U.S. v. Butler, this section of the act was declared unconstitutional because it controlled production. As a result Congress had to appropriate $296 million dollars to the AAA to meet payments to farmers who received money in the adjustment programs because the ruling prohibited the collection of processing taxes. Soon after the ruling, Davis resigned from his position and was replaced by Howard R. Tolley.
As a result of the decision the focus of the administration changed from production to conservation with the passage of the Soil Conservation and Domestic Allotment Act of 1936 (SCDAA). Under this legislation, the farmers received compensation if they planted soil-conserving or soil-building crops and reduced the amount of soil-depleting crops. The SCDAA was superseded by the Agricultural Adjustment Act of 1938 which continued the soil conservation efforts, and empowered the AAA to grant loans to farmers and retain a surplus of crops for low yield years.
During World War II, the AAA oversaw increased wartime food production and in 1942 was renamed the Agricultural Adjustment Agency. In 1945 AAA functions became part of the Production and Marketing Administration.
See also Butler v. United States; First Hundred Days.
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