The First World War severely disrupted agriculture in Europe. This worked to the advantage of farmers in America who were able to use new machines such as the combine harvester to dramatically increase production. During the war American farmers were able to export the food that was surplus to the requirements of the home market.
By the 1920s, European agriculture had recovered and American farmers found it more difficult to find export markets for their goods. Farmers continued to produce more food than could be consumed and consequently prices began to fall. The decline in agricultural profits meant that many farmers had difficulty paying the heavy mortgages on their farms. By the 1930s many American farmers were in serious financial difficulties.
When Franklin D. Roosevelt was elected as president, he appointed Henry Wallace as his Secretary of Agriculture. In 1933 Wallace drafted the Agricultural Adjustment Act (AAA). The AAA paid farmers not to grow crops and not to produce dairy produce such as milk and butter. It also paid them not to raise pigs and lambs. The money to pay the farmers for cutting back production of about 30% was raised by a tax on companies that bought the farm products and processed them into food and clothing. The AAA also became involved in trying to help farmers destroyed by the creation of the dust-bowl in 1934.
In 1936 the Supreme Court declared the AAA unconstitutional. The majority of judges (6-3) ruled that it was illegal to levy a tax on one group (the processors) in order to pay it to another (the farmers). In 1938, another AAA was passed without the processing tax. It was financed out of general taxation and was therefore acceptable to the Supreme Court.
Beginning in the Carolinas and extending clear into New Mexico are fields of unpicked cotton that tell a mute story of more cotton than could be sold for enough, even to pay the cost of picking. Vineyards with grapes still unpicked, orchards of olive trees hanging full of rotting fruits and oranges being sold at less than the cost of production.
(2) Oscar Heline, farmer from Iowa, interviewed by Studs Terkel in Hard Times (1970)
Grain was being burned. It was cheaper than coal. In South Dakota, the county elevator listed corn as minus three cents a bushel. If you wanted to sell them a bushel of corn, you had to bring in three cents. We had lots of trouble on the highway, people were determined to withhold produce from the market - livestock, cream, butter, eggs, what not. If they would dump the produce, they would force the market to a higher level. The farmers would man the highways and cream cans were emptied in ditches and eggs dumped out. They burned the Trestie Bridge, so the trains wouldn't be able to haul grain.
(3) C. B. Baldwin, was assistant to Henry Wallace, Secretary of Agriculture, in Franklin D. Roosevelt's administration in 1933.
The New Deal was an uneasy coalition. Fights developed very early between two factions: one, representing the big farmers, and the other, the little farmers. The Agricultural Adjustment Administration (AAA) came into being shortly after I got to Washington. Its purpose was to increase farm prices, which were pitifully low. All the farmers were in trouble, even the big ones.
Hog prices had just gone to hell. They were four, five cents a pound? The farmers were starving to death. It was decided to slaughter piggy sows (a pregnant pig). The AAA decided to pay the farmers to kill them and the little pigs. Lot of them went into fertilizer. Then a great cry went up from the press, particularly the Chicago Tribune, about Henry Wallace slaughtering these little pigs. You'd think they were precious babies.
You had a similar situation on cotton. Prices were down to four cents a pound and the cost of producing was probably ten. So a program was initiated to plow up cotton. A third of the crop, if I remember. Cotton prices went up to ten cents, maybe eleven.
(4) Herbert Hoover, interview quoted in the New York Times (31st October, 1936)
I rejected the schemes of economic planning to regiment and coerce the farmer. That was born of a Roman despot 1400 years ago and grew into the AAA. I refused national plans to put government into business in competition with its citizens. That was born of Karl Marx. I vetoed the idea of recovery through stupendous spending to prime the pump. That was born of a British Professor (John Maynard Keynes).
