more wonking: WWI, AAA, FDR, etc.

Here’s chapter 2, which looks at the foundations of modern agricultural policy.  FDR did a lot to modernize a lot of things in the country during the depression, and agriculture was no exception.  His Agricultural Adjustment Act (abbreviated to AAA) marked a definitive shift in agricultural policy- from the incentive- and development-based policies of homesteading and land grant universities to a modern encouragement of large-scale farming.  The US was moving rapidly towards an industrialized food system, and the AAA attempted to further that vision by providing government solutions to the overwhelming problems of food production at the time.

Chapter 2:  The Agricultural Adjustment Act: FDR’s Agricultural Legacy

Until the end of World War I, US farm policy was directed overwhelmingly towards development—i.e, incentivizing farming through legislation like the Homestead Act and aiding agricultural development through the creation of land-grant universities around the country.  Post World War I, farmers were suffering decreasing prices as a result of overproduction, which lead the government to institute an early form of price controls in the twenties.  A number of plans were proposed that would give government the responsibility of legislating farm prices,[1] and although none ended up becoming law the notion of greater government involvement in agriculture became accepted and widespread among both farmers and members of the general population.

However, the true foundations of today’s commodity supply-based, comprehensive agricultural legislation were laid with Franklin Delano Roosevelt’s Agricultural Adjustment Act of 1933.  The advent of the Dust Bowl and the Great Depression simultaneously caused widespread starvation and foreclosure; a new farm policy was desperately needed.  Overproduction had reached dire levels resulting not only in plummeting farm income and waste, but in soil depletion that helped to cause the Dust Bowl, further worsening the plight of farmers.  Accordingly, the Agricultural Adjustment Act focused on stemming overproduction, implementing direct payments for the first time to keep farmers from using their entire acreage.

The primary aim of the AAA was to ensure ‘parity’ – a restoration of farm purchasing power back to the prosperous levels of 1909-1914; this was accomplished through acreage reduction programs, processor licensing to cut down questionable business practices, and allocation of tax dollars towards price adjustments, market expansion, and surplus removal.[2]  Plow up campaigns, government purchase of surplus livestock for hunger relief, and price supports yielded immediate support for struggling farmers:  farm income in 1935 was 50% higher than it had been in 1932.[3]  Provisions of the act were later declared unconstitutional, but the stage was set for greater government involvement in agriculture.

[1] History of Agricultural Price-Support and Adjustment Programs 1933-84, United States Department of Agriculture Economic Research service #485.

[2] Ibid.

[3] Ibid.