Between 1929 and 1932, the net income of the average farm operator fell 69%.
Prices for agricultural products were at their lowest since the 1890s. Wheat sold for only 25 cents per bushel.
Much of this drop in prices was due to an agricultural surplus. Harvests had been bountiful before the drought hit, and a considerable amount of grassland had been converted to cropland to meet the demands of World War I. No sooner had the war ended than the prices for crops had dropped sharply. To cope with their reduced incomes, farmers scrambled to plant more acres and sell more bushels, driving the prices down still further. By the time the Great Depression and the beginnings of drought hit the Great Plains, the farm economy was already in a state of crisis.
But Franklin D. Roosevelt took office in 1933, promising Americans from all walks of life a New Deal. Regulation and government support could bring stability to the economy, FDR claimed.
Agriculture promised an excellent way to test this fundamental principle of the New Deal.
FDR’s stated purpose was to return prosperity to the farm by bringing the farmer better prices for his products. The theory was simple. When the supply of a commodity falls short of the demand, the prices rise as purchasers compete to obtain the scarce commodity. Thus, if consumers had to compete a little harder to obtain commodities, farmers would receive more income for those commodities.
How much of an improvement was sought? Nothing short of parity. In this case, parity meant that any given commodity would have the same purchasing power that it did prior to World War I.
Accordingly, the Agricultural Adjustment Act was passed in May 1933 during FDR’s first 100 days. This act created the Agricultural Adjustment Administration (AAA) with the responsibility of planning the farm economy. The ultimate plan, as stated by FDR’s secretary of agriculture, Henry Wallace, was the “ever-normal granary.”
The AAA established a system of “domestic allotments,” which in practice meant that the AAA set the amounts of commodities that the country would produce annually. Initially, seven commodities were targeted:
- Dairy products.
Additional commodities were added to the list in 1934 and 1935:
- Grain sorghum.
- Sugar beets.
- Sugar cane.
Beginning in the fall of 1934, the AAA also started buying up poor cropland. This acreage, ruined by the Dust Bowl, was to be converted into demonstration farms to illustrate how to conserve soil by planting drought-resistant grasses. After the damage to the land had been fully repaired, these areas would be leased as pasture.
Adjusting Crop Production
To reduce agricultural production to the AAA-desired levels, a new tax was placed on food processing. The money obtained from this tax was used to pay subsidies to landowners who would leave farmland idle. Lawrence Svobida noted in his memoir Farming the Dust Bowl (read our full review) that he had to agree to remove 15% of his total average acreage from production. The total average acreage was determined by averaging the number of acres that he had planted the last three growing seasons. (Thus, farmers who had previously let land lie fallow received considerably less money than their continuous-cropping peers.) Payments were calculated based on the county average yield per acre.
Of course, there were abuses of this system. Some farmers attempted to cheat the AAA and overestimate their total average acreage to receive more subsidies. To prevent this scenario, the averages reported by farmers were published in local newspapers to give others an opportunity to report fraud. In the words of Svobida:
This provided a unique opportunity to the spiteful, the revengeful, the envious, and the righteous, and most of the culprits were exposed in their trickery, and were compelled to correct their figures.
Unfortunately, by the time the AAA came into being in May 1933, the growing season was well under way. Farmers receiving AAA money could not harvest their grain, so perfectly good crops were destroyed or left to rot. This included 10 million acres of cotton, some of it grown in Plains states such as Oklahoma. Over 87,000 farmers in that state alone plowed under their cotton in exchange for over $15 million.
Even in subsequent years there were difficulties. Svobida cited the story of a neighbor who was able to raise a good wheat crop in 1934, only to discover that he had made an error in his arithmetic and had planted 80 acres more than was allowed under the provisions of the AAA:
This farmer had been honest in his intentions, so he was embarrassed as well as amazed; but, now that the mistake had been made, he wanted to go ahead and harvest the excess eighty and turn the wheat crop over to the county commissioners, to be distributed to the needy.
You will be able to guess what happened, if you have had any experience of small men elevated to petty office. The local allotment committee was made up of men who found great satisfaction in administering their office, and they were the ruling power in such matters, from whose decision there was no appeal. They would not consider the farmer’s sane and philanthropic suggestion for the disposal of his surplus wheat. He was ordered to destroy it.
The effect of fallow land on the Dust Bowl is still debated by historians and climate experts. It is certain that a state of drought existed prior to the AAA. The first dust storms hit in 1932. However, the years 1935 to 1938 were among the worst in the history of the Dust Bowl. By this time, millions of acres were lying fallow due to the influence of the AAA.
Ironically, some Dust Bowl farmers did not use their AAA money as anticipated. According to agricultural and Western historian R. Douglas Hurt, some subsidy recipients left their poorer, dust-destroyed lands fallow and used the federal aid to buy or rent new cropland to plant. This way, if the drought ended, they would still be in a position to bring in a crop despite their participation in the AAA program.
Meanwhile, the cropland-purchasing program met with mixed results. AAA employees did manage to restore some poor land, either to native range or to drought-resistant plants such as sudan grass. The program could be rather exasperating to landowners trying to sell out, however, as they received low prices for their land and the checks were inevitably slow in coming. Nevertheless, some grasslands established under the AAA remain to this day, such as Cimarron National Grassland in southwestern Kansas.
Agricultural Adjustment Act of 1933
Full text of the original act.