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Agricultural Adjustment Act

Agricultural Adjustment Act

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The Agricultural Adjustment Act (Triple A) was a United States federal law of the New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...

 era which restricted agricultural production by paying farmers subsidies
Subsidy
A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...

 not to plant part of their land (that is, to let a portion of their fields lie fallow) and to kill off excess livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...

http://incrementalthought.com/?p=102. Its purpose was to reduce crop surplus and therefore effectively raise the value of crops, The money for these subsidies was generated through an exclusive tax on companies which processed farm products. The Act created a new agency
Agency
Agency may refer to:* Agency * Agency , refers to a person who acts on behalf of another person.* Agency * Agency , the ability of social actors to make independent choices....

, the Agricultural Adjustment Administration, to oversee the distribution of the subsidies. It is considered the first modern U.S. farm bill
U.S. farm bill
In the United States, the farm bill is the primary agricultural and food policy tool of the federal government. The comprehensive omnibus bill is passed every 5 years or so by the United States Congress and deals with both agriculture and all other affairs under the purview of the United States...

.

Thomas Amendment


Attached as title III to the Act, the Thomas Amendment became the "third horse" in the New Deal's farm relief bill. Drafted by Senator Elmer Thomas of Oklahoma
Oklahoma
Oklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...

, the amendment blended populist
Populism
Populism can be defined as an ideology, political philosophy, or type of discourse. Generally, a common theme compares "the people" against "the elite", and urges social and political system changes. It can also be defined as a rhetorical style employed by members of various political or social...

 easy-money
Easy Money
Easy Money is a 1983 comedy film starring Rodney Dangerfield, Joe Pesci, Geraldine Fitzgerald and Jennifer Jason Leigh. It was directed by James Signorelli and written by Dangerfield, Michael Endler, P. J. O'Rourke and Dennis Blair...

 views with the theories of the new economics. Thomas wanted a stabilized “honest dollar”; one that would be fair to debtor and creditor.

The Amendment said that whenever the president desired currency expansion, he must first authorize the open market committee of the Federal Reserve to purchase up to $4 billion of federal obligations. Should open market operations prove insufficient the President had several options. He could have the U.S. Treasury issue up to $4 billion in greenbacks, reduce the gold content of the dollar by as much as 50 percent, or accept 100 million dollars in silver at a price not to exceed fifty cents per ounce in payment of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

 debts owed by European nations.

The Thomas Amendment was used sparingly. The treasury received limited amounts of silver in payment for war debts from World War I. Armed with the Amendment, Roosevelt ratified the Pittman London Silver Amendment on December 21, 1933, ordering the United States mints to buy the entire domestic production of newly mined silver at 64.5¢ per ounce. Roosevelt’s most dramatic use of the Thomas amendment came on January 31, 1934, when he decreased the gold content of the dollar to 40.94 percent. However, wholesale prices still continued to climb. Possibly the most significant expansion brought on by the Thomas Amendment may have been the growth of governmental power over monetary policy.

The impact of this amendment was to reduce the amount of silver that was being held by private citizens (presumably as a hedge against inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 or collapse of the financial system) and increase the amount of circulating currency.

History


Tenant farming characterized the cotton and tobacco production in the post-Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...

 South. Even before the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

, tenant farmers lived and worked in extremely difficult situations. As the agricultural economy plummeted in the early 1930s, tenant farmers and sharecroppers experienced the worst of it.

To accomplish its goal of parity (raising crop prices to where they were in the golden years of 1909-1914), the Act had to eliminate surplus production. It accomplished this by offering landowners acreage reduction contracts, by which they agreed not to grow cotton on a portion of their land. In return, the landowners received compensation for what they would have normally gotten from those acres. By law, they were required to pay the tenant farmers and sharecroppers on their land a portion of the money. This, however, was nearly impossible for the government to enforce. What's more, this requirement gave landlords an incentive to get rid of their tenant farmers and replace them with wage laborers. Over the remaining years of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

, the once-common practice of sharecropping and tenant farming became exceedingly rare, and vast amounts of tenant farmers were put out, without homes or means of income.

Although the Act stimulated American agriculture, it was not without its faults. For example, it disproportionately benefited large farmers and food processors, to the disadvantage of small farmers and sharecroppers. By the last half of the century sharecropping and tenant farming had become obsolete.

Ruled unconstitutional


In 1936, the Supreme Court decided in United States v. Butler
United States v. Butler
United States v. Butler, , was a case in which the Supreme Court of the United States ruled that the processing taxes instituted under the 1933 Agricultural Adjustment Act were unconstitutional...

that the act was unconstitutional
Constitutionality
Constitutionality is the condition of acting in accordance with an applicable constitution. Acts that are not in accordance with the rules laid down in the constitution are deemed to be ultra vires.-See also:*ultra vires*Company law*Constitutional law...

 for levying this tax on the processors only to have it paid back to the farmers. Regulation of agriculture was deemed a state power. However, the Agricultural Adjustment Act of 1938
Agricultural Adjustment Act of 1938
The Agricultural Adjustment Act of 1938 was legislation in the United States that was enacted as an alternative and replacement for the farm subsidy policies, in previous New Deal farm legislation , that had been found unconstitutional...

 remedied these issues.

See also

  • Agricultural Adjustment Act Amendment of 1935
    Agricultural Adjustment Act Amendment of 1935
    The Agricultural Adjustment Act Amendment of 1935 made several important and lasting changes to the Agricultural Adjustment Act of 1933 . Section 22 of the law gave the President authority to impose quotas when imports interfered with commodity programs designed to raise prices and farm income...

  • Delta and Providence Cooperative Farms
    Delta and Providence Cooperative Farms
    The Delta and Providence Cooperative Farms were started in Bolivar County, Mississippi, in 1936; and Holmes County, Mississippi, in 1939, respectively. The farms were founded and run by missionary evangelist and author Sherwood Eddy, and Reverend Sam H...

  • Cully Cobb
    Cully Cobb
    Cully Alton Cobb, Sr. , was an agricultural pioneer, educator, printer, journalist, and philanthropist in the American South who with his second wife, Lois Dowdle Cobb , co-founded the Cobb Institute of Archaeology on the campus of Mississippi State University at Starkville, Mississippi.-Early...

  • Sharecroppers
  • Southern Tenant Farmers Union
    Southern Tenant Farmers Union
    The Southern Tenant Farmers' Union was founded in 1934 as a civil farmer's union to further organize the tenant farmers in the Southern United States....


External links