Conditional Grants to the States

Report Outline
Proposed Federal-State Crop Control Program
Proposed Federal-State Crop Control Program
Evolution of System of Federal Grants-in-Aid
Growth of Federal Aid During the Depression
New Deal Extensions of Federal Aid Services
Arguments for and Against Federal Subsidies
Special Focus

Proposed Federal-State Crop Control Program

The administration farm bill now before Congress contemplates the establishment, by January 1, 1938, of a permanent plan of crop control to be made effective through extension of federal financial assistance to states setting up agricultural adjustment programs which correspond to the federal program invalidated by the Supreme Court on January 6 in the Hoosac Mills case. The new program would be modeled after the existing system of federal grants-in-aid to the states for highway construction, social security, and other purposes. In the interim between now and 1938 federal power to control agricultural production would be reinstituted by conditioning federal benefit payments to individual agricultural producers on the application of crop practices promoting the conservation of soil fertility.

The farm bill first provided only that federal funds disbursed after 1937 should be paid to the states. Enactment of legislation setting forth specific conditions under which grants-in-aid would be extended was to be postponed until a later date, presumably until the next session. Since it was doubtful whether this arrangement would allow sufficient time for the enactment of enabling legislation by the states, and since the constitutionality of the proposed temporary federal plan was doubted, the bill was later modified to provide for immediate operation of the federal-aid plan.

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Proposed Federal-State Crop Control Program

In its present form the farm bill authorizes federal grants-in-aid of state laws designed to carry out any of the following purposes: (1) preservation and improvement of soil fertility; (2) promotion of “economic use” of land; (3) diminution of exploitation and of “unprofitable use” of soil resources; (4) reestablishment and maintenance of farmers' purchasing power, at prices for farm commodities fair to producers and consumers. States enacting legislation designed to carry out one or more of these purposes would be entitled to federal grants immediately the plans were approved by the Secretary of Agriculture. As conditions of such approval, state plans would be required to designate a state agency to administer the program, to provide for participation by such county and community committees or associations of farmers as the Secretary “finds necessary,” and to provide for submission to the Secretary of reports showing that the plan was being administered in compliance with federal requirements.