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Agricultural Adjustment Act (1933, Reauthorized 1938)

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Agricultural Adjustment Act (1933, Reauthorized 1938)

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The Agricultural Adjustment Act helped farmers by raising the prices of crops and paying them for land not used. Roosevelt wanted farmers to reduce how much of their land they farmed on and the U.S. government paid farmers directly for the money they would have made if they farmed the vacant land.

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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.

The AAA benefitted most farmers: "Farm income in 1935 was more than 50 percent higher than farm income during 1932, due in part to the farm programs" [7]. On January 6, 1936, however, the U.S. Supreme Court ruled that key provisions of the law were unconstitutional; in particular, the majority of the Court felt that the control of agriculture was a state function not a federal one [8]. A new AAA was enacted in 1938 which remedied the problems highlighted by the court and allowed agricultural support programs to continue, while adding a provision for crop insurance.

The Agricultural Adjustment Administration ended in 1942. Yet, federal farm support programs (marketing boards, acreage retirement, storage of surplus grain, etc.) that evolved from those original New Deal policies continued after the war, serving as pillars of American agricultural prosperity. They still exist, administered by the U.S. Department of Agriculture's Farm Service Agency [9]. They did not, however, reverse the long-term process of competitive elimination of small farms, tenant farms and sharecropping, the migration of the rural population to the cities, and the transformation of the old Cotton South [10].

Sources: (1) "Franklin Roosevelt, Day-by-Day," A project of the Pare Lorentz Center at the FDR Presidential Library, http://www.fdrlibrary.marist.edu/daybyday/event/may-1933/ accessed April 17, 2015. (2) The National Agricultural Law Center has the full text of the law at http://nationalaglawcenter.org/wp-content/uploads/assets/farmbills/1933.pdf (accessed April 17, 2015). (3) Michael Hiltzik, The New Deal: A Modern History, New York: Free Press, 2011, pp. 105-109. (4) Willard Cochrane, The Development of American Agriculture, Minneapolis: University of Minnesota Press, 1979. (5) Wayne D. Rasmussen, Gladys L. Baker, and James S. Ward, "A Short History of Agricultural Adjustment, 1933-75," Economic Research Service, U.S. Department of Agriculture, Agricultural Information Bulletin No. 391, March 25, 1976, http://naldc.nal.usda.gov/download/CAT87210025/PDF, accessed April 17, 2015, p. 3. (6) See note 3 at p. 110. (7) See note 5 at p. 4. (8) United States v. Butler, 297 U.S. 1 (1936), Oyez, http://www.oyez.org/cases/1901-1939/1935/1935_401, accessed April 17, 2015. (9) "Records of the Farm Service Agency," National Archives and Records Administration, http://www.archives.gov/research/guide-fed-records/groups/145.html#145.1, accessed April 17, 2015. (10) Paul Conkin, A Revolution Down on the Farm: The Transformation of American Agriculture Since 1929. Lexington KY: University of Kentucky Press, 2008.

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Agricultural Adjustment Act (1933, Reauthorized 1938) - Living New Deal

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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]. ... read more

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The bill was designed to reduced bank failures from over 4,000 in 1933 to 61 in 1934 and regulated interbank control. This created the Federal Deposit Insurance Corporation (FDIC) to insure individual bank accounts and also protected up to $2,500 per depositor at FDIC-insured banks. The Glass Steagall act helped restore public confidence in the financial system after a weeklong bank holiday in March 1933

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Banking Act of 1933 (or ‘Glass-Steagall Act’) President Bill Clinton and members of Congress celebrate the signing of the Financial Services Modernization Act of 1999, which dismantled key parts of Glass-Steagall. The billwas spearheaded by U.S.Senator Phil Gramm (R-Texas), U.S.

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Glass-Steagall Banking Act (1933)

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The main purpose of the Federal Emergency Relief Act was to address the economic and social hardship caused by the Great Depression by providing federal funding to states for relief and recovery efforts. The act established the Federal Emergency Relief Administration (FERA), a grant-making agency, which was tasked with distributing federal funds to states for relief purposes

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" Back to Glossary Index

The FERA was created on May 12, 1933, by the Federal Emergency Relief Act of 1933, and President Roosevelt chose Harry Hopkins to be the administrator [1].

As part of the First Hundred Days of legislation of the New Deal, it was aimed at responding to the fiscal crisis of state and local governments created by the Great Depression - both the collapse of tax revenues and the mounting costs of emergency relief. On the latter front, FERA "was the beginning of a form of partnership arrangement between the Federal government and the States and local governments in meeting the unemployment relief problem, a partnership which was later to continue in somewhat different forms through the Civil Works Administration and the Works Progress Administration" [2].

The FERA was a granting agency to the states. Governors applied to FERA and, upon approval, federal grants were given to the applicant state to be combined with other state and local funds to provide assistance to those in need. Such assistance included: General work relief programs; education programs designed to employ jobless teachers; part-time work programs for college students; special work programs for transients; direct cash relief for those unable to work; and rural relief programs. Through its funding requirements, the FERA attempted to customize relief efforts so that the particular needs of different groups were met [3].

The final report of the FERA describes its value to the nation: "Through the FERA, Federal funds totaling $3,068,000,000 were granted to the states; these grants financed a major part of the total cost of relief given to unemployed persons and their families from May 1933 when the agency was created until the end of 1935 when its liquidation began. More than 20,000,000 persons, or about 16 percent of the total population of the United States, received relief under the programs conducted by emergency relief administrations when these programs reached their peak in January 1935" [4].

The FERA was not directly involved in the administration and oversight of work projects, but its funds were used in part by the states for infrastructure. FERA funds helped construct 40,000 miles of new roads, 200,000 miles of repaired roads, and 5,000 public buildings [5]. A direct works project, the Civil Works Administration, was created under the FERA in November 1933 and lasted through July 1934 (although most employment ended on March 31, 1934) [6].

The termination of the FERA was an extended process. It began with the creation of the WPA in May 1935, yet the agency continued to operate through December of that year. Formal liquidation, "...originally provided for by the Emergency Relief Appropriation Act of 1936, was postponed by the ERA Act of 1937, which made the liquidation the responsibility of the WPA Administrator and provided funds for this purpose until June 30, 1938" [7].

Sources: (1) Frances T. Bourne, Administrative History of the Federal Emergency Relief Administration, the Civil Works Administration, and the Work Projects Administration, Department of Interior Archives (prepared with the assistance of Betty Herscher), March 1946. This works program summary is located on the second floor of National Archives II (College Park, Md.), in the finding aid, "Work Projects Administration: General Administrative and Operational Correspondence, 1934-1944," Appendix D, pp. 47-65. (2) Federal Works Agency, Final Report on the WPA Program, 1935-43, Washington, DC: U.S. Government Printing Office, 1946, p. 2. (3) Ibid. at pp. 2-7. (4) Federal Works Agency, Final Statistical Report of the Federal Emergency Relief Administration, Washington, DC: U.S. Government Printing Office, 1942, p. iii. (5) See note 2 at p. 5. (6) Works Progress Administration, Analysis of Civil Works Program Statistics, Washington, DC, 1939, pp. 5-6. (7) See note 1 at pp. 53-54.

" Back to Glossary Index

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Federal Emergency Relief Act (1933) - Living New Deal

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The FERA was created on May 12, 1933, by the Federal Emergency Relief Act of 1933, and President Roosevelt chose Harry Hopkins to be the administrator [1]. As part of the First Hundred Days of legislation of the New Deal,... read more

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In 1933, President Franklin D. Roosevelt signed the Tennessee Valley Authority (TVA) Act, creating the TVA to address issues like flooding, lack of electricity, and economic hardship in the Tennessee Valley through a federally-owned and operated utility and regional economic development agency.

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The Social Security Act, signed into law by President Franklin D. Roosevelt on August 14, 1935, established a federal safety net for the elderly, unemployed, and disadvantaged, including a system of old-age benefits, unemployment insurance, and aid for dependent mothers and children

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Passed in May, this law broadened the income tax base and aimed to reduce tax avoidance (exacerbated by now-higher tax rates) by increasing taxes on personal holding companies. The act also raised the top estate tax rate from 45 percent to 60 percent.

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Income and Wealth Taxes (1934-1941) - Living New Deal

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New Deal efforts to address the economic catastrophe of the Great Depression required much more revenue than was coming in at the beginning of the 1930s; and later in the decade the Roosevelt Administration would face the need to raise... read more

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The New Deal was an amalgam of dozens of programs and agencies created by the Roosevelt Administration and the Congress. Some came into being by