Progress of Agricultural Adjustment Program

August 28, 1933

Report Outline
A New Approach to the Farm Relief Problem
Control of Agricultural Products Industries
Control of Wheat Production by Allotment Plan
Progress of Cotton Acreage Reduction Program
Plans for Cutting Tobacco and Hog Production
Special Focus

A New Approach to the Farm Relief Problem

Provision for a new approach to the long-standing problem of farm relief was made by the Agricultural Adjustment Act, approved by President Roosevelt on May 12, 1933. Discarding reliance on so-called stabilization operations and dependence on ever-widening extension of federal credit to hard-pressed farmers as the principal methods of relief, the new law empowered the Secretary of Agriculture to inaugurate drastic plans for directly controlling production of the chief agricultural commodities. He was also authorized to enter into marketing agreements to regulate the wholesale and retail distribution of food products and fix the prices at which they might, be sold. An Agricultural Adjustment Administration was created within the Department of Agriculture to administer the new law. By the end of August, three and one-half months after passage of the act, plans for control of most of the basic crops had been either put into practice or advanced close to the final stages of preparation. While controversies within industries and other complications had delayed the application of all but a few marketing agreements, the principles governing such compacts, had begun to take form.

The main purpose of the law, as set forth in the statute, was so to adjust production of agricultural commodities to consumption, and so to regulate marketing conditions, as to raise the farmer's purchasing power to the average level of the five years preceding the war. In this respect the Agricultural Adjustment Act was given a greater task to accomplish than the National Recovery Act. While it was aimed under the latter law to raise purchasing power in general by an undefined amount, it was the purpose of the farm act to take a further step forward and regain for the agricultural population an economic position lost long before the onset of the current depression. In keeping with this purpose, the powers granted the Secretary of Agriculture under the Agricultural Adjustment Act were in some respects more far-reaching than those extended to the President under the National Recovery Act. The two laws were to a great extent complementary, the successful operation of both being essential to the final success of the general recovery program.

Trend of the Farmer's Purchasing Power Since the War

Secretary of Agriculture Wallace has explained that the purchasing power of agricultural prices prevailing in the years 1909–1914 was chosen as the objective of the farm program because in that period there was attained the most satisfactory exchange relationship between major producing groups in the last hundred years. Using these years as the base period, the Bureau of Agricultural Economics has compiled index numbers showing the ratio of prices received by farmers for agricultural commodities to prices paid by them for commodities consumed in living and production. During the period of American participation in the war, the ratio reached its peak in favor of the farmers, touching JI8 in 1917 and 114 in 1918. In February of this year it fell to the low point of 49, the consuming power of fanners then being less than half of the pre-war average. The following table gives the index numbers for each year since the war and by months for 1933.

ISSUE TRACKER for Related Reports
Economic Crises
Farm Loans, Insurance, and Subsidies