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AGRICULTURAL ADJUSTMENT ACT.   Term Paper ID:20753 Click to get this paper

Essay Subject: New Deal law aimed at saving farm economy. Background, provisions, politics, effects, problems.... More...

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Paper Abstract: New Deal law aimed at saving farm economy. Background, provisions, politics, effects, problems. Paper Introduction: Faced with a depression unparalleled in the history of the United States, in the winter of 1933 newly-elected President Franklin Delano Roosevelt embarked upon an ambitious yet politically pragmatic series of programs designed to jump-start the American economy from crisis to credibility. This series of programs came to be known as "The New Deal." Central to the advisor-initiated policies of the New Deal was the belief held by Mr. Roosevelt that the key to American economic recovery lay in the agricultural sector. Specifically, the President and his inner circle of economic advisors contended that by increasing agricultural income, combined with limited inflation and modest federal spending for relief and construction, his administration could pull the country out of the deep doldrums it had slipped into during the just ended, anti-federal-activism presidency of Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Mayer, and Luther G.Tweeten, Roots of the Farm Problem: Changing Technology,Changing Capital Use, Changing Labor Needs (Ames, Iowa: TheIowa State University Press, 1965), 171-172.Ibid, 193; also, McElvaine, 148.McElvaine, 147.Ibid., 148.Ibid., 148 & 167.Ibid., 149.Ibid., 149-151, 189-192.Bird, 217.McElvaine, 3 2.----------------------- 1 Indeed, even before the "official"beginning of the Great Depression in 1929, the agricultural sector wassuffering mightily. The world economy wasgoing down with it; whether one brought down the other, or they all sanktogether, is still a matter of debate. The Great Depression: America, 1929-1941. Thus, inadvertently,a new underclass of poverty was created: the suddenly landless, starving,rural farmer.[x] Yet, thanks largely to nature - the Dust Bowl drought of the 193 sdecimated Midwestern crops - the working parts of the AAA did manage to cutdown on food output and raise prices. Endnotes BibliographyBird, Caroline. In response to theconservative assault on the AAA and other key aspects of his domesticpolicy, Roosevelt allowed a few months slide by when he let the laissez-faire implications of fiscal conservatism take their toll - the economyplummetted again - then in 1937 quickly reconstructed new versions of theprograms declared unconstitutional. Solid politics, pooradministrative judgement: Roosevelt had selected in Peck a man whobasically disapproved of the programs he was to initiate.[viii] The AAA was less than the foundation of economic recovery Roosevelthoped it to be - in large part because of the internal conflicts of theAct's charter. -----------------------Robert S. Acting upon the impetus of crisis which made Congress exceedinglypliant, Roosevelt's first hundred days in office are usually described interms akin to that of the "steamroller effect." The new president proposed- and both houses of Congress passed - omnibus legislation that gave theexecutive branch of government broad administrative and enforcement powersthat were largely undefined, often contained contradictory amendments, andinvested in Mr. Roosevelt the opportunity to address the country's economicwoes within terms he felt were his. The process began with Roosevelt's nomination as presidentialcandidate by the Democratic Party in the summer of 1932. This had happened already and the results weredisastrous during a period of prolonged overabundance/ strong currency. In the rapid-fireimprovement of technology on all fronts that characterized the earlydecades of the 2 th Century, by the time Franklin Roosevelt began hispresidency it took half as many farmers, utilizing half as much land, toproduce twice as much as thirty years earlier. The president achieved his desiredmodest inflation; those farmers surviving felt a modest improvement. To begin with, enlistment in the farm subsidy program wasvoluntary; initial participation was too low to cut back output during thefirst year - and raise crop prices - as hoped; the AAA's image was notaided by the public relations debacle of federal officials killing off2 , sows and 6 million piglets and plowing under 1 million acres ofcotton in the first month following passage of the Act.[ix] Later, asfarmers caught on to the tricks of bureaucratese, they learned to offertheir poorest acreage for subsidy, putting that aside to lie fallow - thendoubling their efforts on the rich fields, producing as much or more onfewer acres. In the new president they served, those advisors had apersonality not afraid to act. To that end, during his first one hundreddays in office, the thoroughly activist-oriented president pushed through apliant Congress the Agricultural Adjustment Act - and brought into beingthe Agricultural Adjustment Administration, or AAA.[i] It is important to know just how badly off the country was duringthis period, just four years into the twelve-year cycle of economic miserythat has come to be termed "The Great Depression." Beginning with theinfamous Stock Market Crash of October 1929 - "Black Monday," when so manyfortunes were lost in a single day that legends of the suddenly ex-wealthyleaping from the skyscrapers of New York persist to this day - since thenthe nation had been on a downward economic slide. Roosevelt and hisadvisors came to the conclusion that, in order to pull the farming sectorout of the debt it had accrued over the past decade, a modest, government-controlled inflation would be necessary. It was a brilliant tactic: whatever theinternal compromises, debates, misgivings and rivalries within the lockedroom, to the public these leaders presented a united front. Regarding subsidies, the processingtax was not revived, but the government began subsidizing the controlledgrowth of certain crops - in the name of "soil conservation." Soybeans,clover and other soil enrichers were favored over overproduced staples;theoretically this would prevent surplus agricultural commodities floodingthe market and depressing prices. It was too late to take the government out of the agriculturalsector, however. And another element was factored in: inflation. Between his November '32 victoryand assumption of office in March '33, the president-elect gatheredtogether financial and farm interest leaders, put them in a "locked room"(a technique he used repeatedly), and told them to devise a bill that theywould all agree to support. One of the key successes ofRoosevelt's first hundred days' "steamroller" of legislation throughCongress was his foresight in preparing bills this way. As the nation'scrisis was so extreme that no one invited leader refused to participate -as is often the case in "bipartisan" programs developed today - Roosevelt'sprocess was a foolproof political mechanism: if the program failed, it wasnot the president who made it up - but if it succeeded, he garnered thecredit.[vi] Which is not to say that the final legislative product was untaintedby compromise - although just how much Roosevelt himself engineered thosecompromises is unclear. Those excess farmers andtheir extra fields posed a dilemma with which the laissez-faire federalideology of Herbert Hoover's presidency could not begin to cope.[iii]Analyzing the situation, Roosevelt's advisors saw the need for a decisivegovernment hand to forcibly cut the bonds with the past - rather than letthe pressures of the marketplace draw out the execution in more slow, cruelfashion. Heady, Edwin O. There wasvirtually no opposition to the Agricultural Administration Act once itemerged from the development committee. The so-called "Thomas Amendment" to theAgricultural Adjustment Act, demanded by Senator Elmer Thomas of Oklahoma,authorized presidential powers of discretion over, among other things, thevalue of silver and gold vis-a-vis the dollar. McElvaine, The Great Depression: America 1929-1941(New York: TIMES BOOKS, The New York Times Book Co., Inc.,1984), 148 & 156.Caroline Bird, The Invisible Scar: The Great Depression, andwhat it did to American life, from then until now (New York:David McKay Company, Inc., 1966), 1-4 .Ibid., 41-69.Earl O. Farm prices would go up, then,from the pressure of two sources: decreased output would mean scarcity,resulting in higher prices; and the devalued dollar would further boost theprice, giving the agricultural sector a much improved input cost-to-outputprofit ratio than the current status quo was capable of providing.[v] Those were the ideals; the political triumph was in how Rooseveltpersuaded the legislative community to accept this unheard-of governmentmanipulation of the agricultural sector. This series of programs came to be known as "The New Deal."Central to the advisor-initiated policies of the New Deal was the beliefheld by Mr. Roosevelt that the key to American economic recovery lay in theagricultural sector. There was another, more ironic, cause for agricultural over-production as well: improved farming methods. In keeping with that policy,he appointed George Peck, from the conservative end of the farm policyspectrum, to head the Agricultural Adjustment Administration, thussilencing critics from that quarter who might object to the governmentinterventionism implicit in the AAA's charter. Ames, Iowa: The Iowa State University Press, 1965.McElvaine, Robert S. World War IIcured the surplus problem; the pattern of government-agricultural sectorrelationships set in the late 193 s has persisted to this day.[xii] The Agricultural Adjustment Act, and the Agricultural AdjustmentAdministration created from it, were the impulse policy of anadministration hard-pressed to address the crisis of the Great Depression.Like all of the programs and policies developed by Franklin Roosevelt's NewDeal, the AAA was fraught with internal contradictions that prevented auniform record of accomplishment from ever being within its reach.Administration procedures varied from region to region; changes in programscame about as a combination of political and administrative expediency inmost cases, rarely as a result of fine-tuning in coordination with long-term policy goals. This was consistent with Roosevelt's nonideological, politicallypragmatic orientation toward problem-solving. That is, the ThomasAmendment gave President Roosevelt the right to devalue the dollar, addingan inflationary spin to the Act's proposed boost to the economic recovery.Certainly Mr. Roosevelt was not displeased with being forced to accept this"amendment" to his original proposal.[vii] As it emerged from Congress, the Agricultural Adjustment Act'somnibus character incorporated philosophically and economically conflictingideas designed to placate different interests groups aligned with the NewDeal. Haroldsen, Leo V. Although the record of success for this New Dealpolicy is spotty at best, perhaps this political endurance is its besttestimony; an indication, at least, that Roosevelt's decision to involvethe government in agricultural policy was fundamentally in concert with thewishes of the American people. Europe had never fully recoveredfrom the physical, manpower, psychological and economic ravages of TheGreat War, ended only a decade earlier. The large farming interests in the South and farm mortgage-holding banking institutions throughout the nation became quite adept atthis technique, the former pushing off sharecroppers and tenant farmers(blacks in particular) whose payments in the depressed economy did notequal the government subsidies, the latter taking over independent farmers'lands in toto, then declaring the untilled fields eligible for subsidy.Under the loosely-administered rules of George Peck's AAA, which reliedheavily upon local officials' oversight participation (officials whosepatronage by those large-scale interests and banks was a political given),such twisting of the Act's ideals went unchallenged. At one extreme it was argued thatfarmers, in order to meet fixed expenses, needed to increase output whencommodity prices fell. If agricultural reform had not turned out to be theimportant impetus to recovery that Roosevelt had hoped, nevertheless thedraconian reduction of farmers and cultivated fields guided by governmentinvolvement had strengthened that particular sector of the economy, whichhad come to rely upon the AAA's helping hand. The United States' trading partners,however, were in no position to take in American goods during the 192 s;international trade in foodstuffs and industrial goods slide into a malaisefueled by European hyper-inflation.[ii] The American farmer was particularly hard hit: years of bumper crops- with no overseas markets toward which to divert the excess - depressedagricultural prices drastically. In 1936, even while Rooseveltwas winning the second of four presidential election victories, LibertyLeague-sponsored opponents succeeded in getting the processing tax/no-growsubsidy portion of the Agricultural Adjustment Act declaredunconstitutional. New York: TIMES BOOKS, The New York Times, Inc., 1984. The Invisible Scar: The Great Depression, and what it did to American life, from then until now. But those bills were not passedblindly; rather, as in the case of the Agricultural Adjustment Act passedon May 12, 1933, they were the end-result of an open-eyed redress to thepolitical process. To fund the subsidies, a sales tax would beimposed on the processing of food products. New York: David McKay Company, Inc., 1966.Heady, Earl O., Haroldsen, Edwin O., Mayer, Leo V., and Tweeten, Luther G. Oddly, despite the almost revolutionary reach ofgovernment into the private sector that implementation of the AAA entailed,the agricultural programs that grew out of that period and endure to thisday enjoy a generally bipartisan support - in the states where agricultureis a major concern. Faced with a depression unparalleled in the history of the UnitedStates, in the winter of 1933 newly-elected President Franklin DelanoRoosevelt embarked upon an ambitious yet politically pragmatic series ofprograms designed to jump-start the American economy from crisis tocredibility. Anticipatingsuccess in the November elections - not a major display of hubris given theanti-Hoover sentiments of the times - the nominee called together acatholic array of advisors from the commercial and academic communities toprovide him with input on how to address the deteriorating economicenvironment. Specifically, the President and his inner circle ofeconomic advisors contended that by increasing agricultural income,combined with limited inflation and modest federal spending for relief andconstruction, his administration could pull the country out of the deepdoldrums it had slipped into during the just ended, anti-federal-activismpresidency of Herbert Hoover. SoRoosevelt decided to try the proposals from the opposite end of thespectrum: that when commodity prices fall, farmers need to reduce outputso that the needed input, output and income adjustments will be made in ashort time.[iv] Taking this a step further, it was understood that theindividual self-discipline required to cut back on output would probablynot be able to withstand the pressures of the current economic situation.Growing crops was the traditional farmer's indication of "worth." Tocounter-balance that, it was decided to offer the agricultural sector a newvaluation of wealth: land would be evaluated for what it could yield, andfarmers would be paid by the federal government for not growing certainagricultural commodities - it would be the land, not the produce, thatdetermined the subsidies. But the United States had sufferedlittle from that conflict, indeed, had profited from supplying both sideswith provisions during the early years, and had emerged the healthiest ofthe contenders once the great battles were over, having suffered less thantwenty-four months of mobilization. As the nation's hopes confronted the longsiege of world depression, however, they (and the politicians who listenedto the populist tide) fell prey to doubts. Constitutionally acceptable - especiallyafter a more New Deal-friendly majority emerged on the Supreme Court - aspolicy the new version failed to control the surplus problem. Very quickly the economic debate - embracing the agricultural sectorparticularly, as noted above - revolved around the nature of supply and itsresponse to changed circumstances. Although fiscally conservative himself, Roosevelt was noideologue: he was looking for ideas and was ready to try whatever soundedlogical and had not already failed under the Hoover administration. When the domestic market began withering in the faceof massive industrial layoffs that rippled from the four years' wake of theOctober '29 Crash, the drastically over-valued dollar resulted in farmersbeing forced to sell their produce for less than it cost to grow. Roots of the Farm Problem: Changing Technology, Changing Capital Use, Changing Labor Needs. Still, there was a constant attack on government intervention in theagricultural marketplace by the one longtime opponent of Roosevelt whowould not be placated: a coalition of conservative Democrats who sought toshift the tax burden from the rich to the poor and the middle class, agroup going under the moniker of the "Liberty League." Advancing to thewar cry uttered by financier John Jay that "this country should be governedby the people who own it,"[xi] the Liberty League was stalled during theinitial year of Roosevelt's first term as the new president rode a wave ofpersonal popularity and hope. 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