The Agricultural Adjustment ActDuring World War I, England’s agricultural economy was badly damaged.
This inconvenience for the English was a blessing to American farmers. Since the invention of the combine, and various other mechanical harvesting machines, American farmers could increase their crop yield. In turn they could export the extra crops to England for more money. Once England got back on it’s feet, American farmers could not find any exports for their crops. As they continued to produce more than the American people could consume, the prices of agricultural goods dramatically dropped. By the 1930’s many farmers were in serious need of help, with heavy farm loans and mortgages hanging over their head’s. Nothing had been done to help the farmer’s during The Hoover Administration.
So in 1933 as part of Roosevelt’s New Deal, the Secretary of Agriculture, Henry Wallace devised a plan to limit production and increase prices. Which came to be known as the Agricultural Adjustment Act of 1933, also known as the AAA. The AAA was established on May 12, 1933 it was the New Deal idea to assist farmers during the Great Depression. It was the first widespread effort to raise and stabilize farm prices and income. The law created and authorized the Agricultural Adjustment Administration to: Enter into voluntary agreements to pay farmers to reduce production of basic commodities ( cotton, wheat, corn, rice, tobacco, hogs, milk, etc.
.), to make advanced payments to farmers who stored crops on the farm, create marketing agreements between farmers and middlemen, and to levy processing taxes to pay for production adjustments and market development. Basically the AAA paid farmers to destroy their crops and livestock in return for cash.
In 1933 alone cotton farmers were paid $100 million to plow over their cotton crop. Six million piglets were slaughtered by the government after they bought them from farmers. The meat was canned and given to people without jobs. In order for this new bill to work there needed to be money to pay the farmers, this money came from the companies that bought farm products in the form of taxes. While it seemed like a good idea to pay farmers to cut back on crops to lowering the surplus and boost the economy, The Supreme Court found the Act unconstitutional in 1936. In a unanimous vote (6-3) they found that it was illegal to charge the processors so they will have money to pay the farmers.
However, not long after the AAA was abolished Congress came back with a similar idea. The new Act still paid the farmers, but instead of taking it from one group the money came from the general population’s taxes.