I found it strange that one of the main causes of the Great Depression was overproduction, be it overproduction of cars or toasters, or even food! With the help of inventions like trucks and reapers, farmers were able to produce more goods more efficiently, which would usually be considered a good thing for a business. However, though each individual farmer was able to produce more crops, since farmers all across the nation benefited from these inventions, a large surplus of food was generated. Because of this surplus, the prices of crops gradually decreased until the price dropped so low that the cost to produce the goods was higher than the price at which the farmers could actually sell.
This presented a problem to the United States. Usually when a business fails, a better one steps up to replace it. However, if farmers went out of business, there would be nobody to replace them and the country would starve! When President Roosevelt came to office, he forced the Agricultural Adjustment Act (AAA) through Congress in order to relieve the farmers in 1933. The AAA paid the farmers to either leave their fields fallow or destroy their crops, livestock, and dairy products in exchange for subsidies. In total, the government paid farmers roughly 1.5 billion dollars to the farmers, which is the equivalent of 24.7 billion dollars in money today.
Although the AAA greatly helped farmers throughout the depression, because sharecroppers did not own the land on which they worked, they received no relief from the government. When the owners of the land told the sharecroppers to destroy their crops, they kept all the money to themselves while the sharecroppers got nothing. Additionally, the AAA also affected the Supreme Court. In 1936, the Supreme Court struck down the AAA, deeming it unconstitutional. After striking it down, Roosevelt confronted the Supreme Court, which included the Four Horsemen, and said that he was considering adding more Justices that would favor Roosevelt and the New Deal. After this, the power in the Supreme Court shifted as the two swing votes in the Court constantly sided with Roosevelt and the New Deal instead of the Four Horsemen.
http://www.britannica.com/EBchecked/topic/9551/Agricultural-Adjustment-Administration-AAA
http://www.intellectualtakeout.org/library/food-and-agriculture/agricultural-adjustment-acts-1933-and-1938-aaa
This is interesting Chase! The United States government does essentially the opposite today, and they pay farmers $20 Billion annually across the country. Now farmers are guaranteed a base price for every crop they sell plus an extra bonus (ex. $3.86 per bushel of grain *base price* + $0.52 extra)! The government is now trying to promote agricultural production, rather than slow it down like they did in the Great Depression.
ReplyDeleteWhat I find quite shocking is that the government was wasting food while millions of Americans were starving! Is that really ethical, even in the name of saving the economy?
That is an interesting question you posed, Andreas. From the video we watched in class, most farmers were just bitter and didn't want anyone to eat their food if they weren't making any profit from it. While it may not be ethical by today's standards, the farmers didn't really have a choice but to follow the government's order to destroy and stop planting so many crops. Most farmers could not afford not to take the government's payoffs. Even though the farmer's lives were improving because the prices of their crops were increasing, the dust storms across the midwest just set them back further. Being a farmer was rough, as we have seen numerous times in this class.
ReplyDeleteVery interesting Chase! I did some research on sharecroppers before and after the new deal and found an old film with images from 1936 showing what was happening. If anyone is interested here it is: https://www.youtube.com/watch?v=Q-I5aX7qZtQ
ReplyDeleteThanks for going more in depth about the AAA Chase, I think sometimes we have a tendency to memorize the name of something but not actually remember what it did.
ReplyDeleteAndreas's comment caused me to wonder what made it so that crops now have a base price, etc. I did a little research, and found that the Federal Crop Insurance Corporation (FCIC), established in 1938, was created to carry out the program of crop insurance. With crop insurance, the government provided compensation to farmers if their crops were destroyed by natural disasters. However, the FCIC was initially an experiment conducted by the government to see if regulating crop prices would actually be beneficial, causing crop insurance to be limited to major crops in the main areas of production. The fact that the government was apprehensive about the idea of crop insurance gives me a better idea as to why they would establish something like this, considering they had been against it for so long. Crop insurance was finalized in 1980 when the Federal Crop Insurance Act was passed, which expanded the already in place crop insurance program. The program really took effect in 1994 when a second Federal Crop Insurance Act was passed making it mandatory by all farmers to participate in the program. I was wondering why some farmers would not want to be a part of the crop insurance program, it seems as though it would only help them!
http://www.rma.usda.gov/aboutrma/what/history.html
I was interested in the role of the supreme court in all you mentioned, so I did some more research on the court during this time period. Here are just a few more details about the justices in the 1932-1937 supreme court and FDR's court-packing plan.
ReplyDeleteFour Horsemen: conservatives who shot down Roosevelt's New Deal legislation
Justices James Clark McReynolds, George Sutherland, Willis Van Devanter, and Pierce Butler.
Three Musketeers: liberals who supported New Deal legislation
Justice Louis Brandeis, Benjamin N. Cardozo, and Harlan Fiske Stone.
Two swing votes: Chief Justice Charles Evans Hughes and Justice Owen J. Roberts
Roosevelt's proposed Judicial Procedures Reform Bill of 1937
- Since the U.S. Constitution does not define the size of the Supreme Court, Roosevelt pointed out that it was within the power of the Congress to change it
-bill would have granted the President power to appoint an additional Justice to the U.S. Supreme Court, up to a maximum of six, for every member of the court over the age of 70 years and 6 months.
-used as a "threat" to the current court if they didn't start upholding his New Deal legislation
-the bill was never very popular with the public, and was never passed
Hey Andreas, I appreciate your economic breakdown of the AAA and what it did. One thing about this agency that I never cleared up was the role of domestic allotment in all of it. After doing some research, I found out that the Domestic Allotment Act of March 1936 was a motion meant to partially replace the recently stuck down Agricultural Adjustment Act (declared unconstitutional in January 1936). The Domestic Allotment plan's purpose was to conserve soil usage, reestablish and maintain fair farm income, and protect consumers by ensuring adequate supply of food. This was different from the AAA because the AAA was struck down because it was levying taxes on processors just for the money to be paid back to the farmers. The Domestic Allotment Act did not mention anything about a tax. Later, in 1938, another Agricultural Adjustment Act was enacted, officially replacing the 1933 one. This amended the Domestic Allotment Act, and allowed for the Secretary of Agriculture to control railroad rates for the transportation of agricultural products.
ReplyDeleteBreakdown: The Agricultural Adjustment Act of 1933 was declared unconstitutional in January 1936 for federal levied taxes, so the Domestic Allotment Act was established in March 1936 and excluded any legislation about taxes. The Agricultural Adjustment Act of 1938 was then established to amend and add onto the Domestic Allotment Act.
Sources:
http://www.presidency.ucsb.edu/ws/?pid=15254
http://what-when-how.com/the-american-economy/agricultural-adjustment-act-of-1938/
Going to what Lauren stated about the Dust Bowl and the AAA, yes the dust bowl caused many farmers to move over to California, and compete with farmers there, and this provoked even more action to preform the AAA. This also lead to the idea of Soil Conservation, and the application of restoring the damaged land which the four year drought brought. One question remains that being how they accomplished the task of repairing over 97 million acres.
ReplyDelete