Agricultural Adjustment Administration

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The Agricultural Adjustment Act (May 1933) was an omnibus farm-relief bill embodying the schemes of the major national farm organizations. It established the Agricultural Adjustment Administration under Secretary of Agriculture Henry Wallace to effect a “domestic allotment” plan that would subsidize producers of basic commodities for cutting their output. Its goal was the restoration of prices paid to farmers for their goods to a level equal in purchasing power to that of 1909–14, which was a period of comparative stability. In addition, the Commodity Credit Corporation, with a crop loan and storage program, was established to make price-supporting loans and purchases of specific commodities.

Although benefit payments to farmers totaled $1,500,000,000 by 1936, a rise in commodity prices was attributable mainly to severe drought conditions in 1933–36. In spite of its limited achievements, the early AAA program was favoured by most farmers. The Supreme Court declared the act unconstitutional in 1936, and Congress passed new agricultural legislation two years later based on the soil-conservation concept. While farmers' cash income doubled between 1932 and 1936, it took the enormous demands of World War II to reduce the accumulated farm surpluses and to increase farm income significantly.

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