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.
(1) New
Republic Magazine (1932)
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).
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