Agricultural Adjustment Administration

Agricultural Adjustment Administration
Name	Agricultural Adjustment Administration
Formed	May 12, 1933
Preceding1	Federal Farm Board
Dissolved	1942
Superseding1	Agricultural Adjustment Agency
Jurisdiction	United States
Parent agency	United States Department of Agriculture

Agricultural Adjustment Administration. It was a cornerstone agency of President Franklin D. Roosevelt's New Deal, established to combat the severe agricultural crisis of the Great Depression. Created by the Agricultural Adjustment Act of 1933, its primary mission was to raise farm income by reducing surpluses and increasing commodity prices. The agency represented a revolutionary shift toward direct federal intervention in the national economy and the agricultural sector.

Background and creation

The agricultural sector had been in a prolonged depression since the collapse of prices after World War I, a situation catastrophically worsened by the onset of the Great Depression and the Dust Bowl. Farmers faced ruinously low prices for crops like cotton, wheat, and corn, while simultaneously being burdened with heavy debt. Previous efforts, such as those by the Federal Farm Board under President Herbert Hoover, had failed to stabilize the situation. In response, the Roosevelt administration drafted the Agricultural Adjustment Act, which was signed into law on May 12, 1933, creating the agency as an emergency measure within the United States Department of Agriculture. Its first administrator was George Peek, a former executive with Moline Plow Company.

Goals and implementation

The central goal was to achieve "parity," raising prices for basic commodities to a level that would restore the purchasing power farmers had enjoyed during the prosperous period of 1909-1914. To accomplish this, the agency aimed to reduce production and eliminate existing surpluses. Implementation involved a system of domestic allotments, where the federal government paid farmers subsidies to take land out of production for specific crops. Funds for these payments were raised through a controversial processing tax levied on companies that turned farm products into goods, such as flour mills and textile mills. The agency worked through local committees established in farming counties across the nation.

Major programs and policies

Its most direct and controversial action was the plowing under of millions of acres of growing cotton and the slaughter of millions of piglets and pregnant sows in 1933 to immediately reduce market supply. For staple crops, it established acreage reduction contracts with individual farmers, paying them for idling portions of their land. The Soil Conservation and Domestic Allotment Act of 1936, passed after the Supreme Court of the United States invalidated the original act in United States v. Butler, shifted the justification from economic control to soil conservation. Other significant programs included the Federal Surplus Relief Corporation, which purchased surplus commodities like dairy products and distributed them to relief agencies, and marketing agreements to regulate the flow of goods like tobacco and California citrus to market.

Impact and effects

The agency's policies succeeded in its primary economic objective: gross farm income increased from $4.3 billion in 1932 to $6.9 billion in 1935, and prices for key commodities rose significantly. This provided crucial financial relief to many farm families and helped stabilize the rural banking system. However, the benefits were unevenly distributed; large landowners and farmers of subsidized crops gained the most, while tenant farmers and sharecroppers, particularly in the South, were often displaced when landowners took land out of production. The policy of scarcity amid widespread hunger was also a source of public relations difficulty for the Roosevelt administration.

Challenges and criticism

The agency faced immediate and fierce criticism from various quarters. The forced destruction of food and fiber during a time of national want was denounced by figures like Senator Huey Long and widely seen as morally repugnant. The regressive processing tax was unpopular and was the basis for the legal challenge that led to the United States v. Butler decision, which ruled the tax an unconstitutional invasion of states' rights. Liberal critics, including Secretary of the Interior Harold L. Ickes, argued the programs primarily benefited agribusiness and hurt the rural poor. The Supreme Court's invalidation of the first act in 1936 was its most significant legal and operational challenge.

Legacy and termination

Despite its controversial aspects, it established the enduring principle of federal price supports and production controls as central features of United States agricultural policy. Its successor, the Agricultural Adjustment Agency created by the Agricultural Adjustment Act of 1938, continued its core functions with a greater emphasis on soil conservation and "ever-normal granary" supply management. The outbreak of World War II created massive demand for agricultural products, rendering production limits unnecessary. The agency was formally terminated in 1942, but its framework evolved into the modern system of farm subsidies administered by the United States Department of Agriculture, influencing policy for decades through legislation like the Farm Bill.

Category:New Deal agencies Category:Defunct agencies of the United States government Category:Agricultural organizations based in the United States