Agricultural Adjustment Administration

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The Agricultural Adjustment Administration (AAA) was the largest of many farm programs under the New Deal. The goal was to increase the flow of income to farmers so they could reach "Parity" with urban America. The first AAA lasted 1933-35; the second one 1938-41.

Would FDR steamroller over traditional American values?

Both versions of AAA was designed primarily to solve the economic crisis in rural America--farmers had too little money because they produced too much and the prices they received were very low. Under President Herbert Hoover, the Federal Farm Board in 1931-32 repeatedly urged farmers to cut production so that the abysmally low prices could be lifted; that was a good idea for everyone, but for each individual farmer it was better to grow as much as possible, thus resulting in more surplus and even lower prices. The farmers welcomed help from the New Deal, but instead of the crop-reduction plan those more on the left wanted a "cost of production" scheme that would have involved vast subsidies. They want prices set by the government (as happened in World War I), but the new Secretary of Agriculture Henry A. Wallace, rejected price fixing, explaining it had worked during the war because demand was much higher than supply, but that exports had shrink and supply was now much higher than demand.

The Agricultural Adjustment Act (AAA) (P.L. 73-10 of May 12, 1933) restricted production by reducing crop acreage and animal production. The first AAA used the "domestic allotment" system to tell farmers how many acres to use. Producers of corn, cotton, dairy products, hogs, rice, tobacco, and wheat would decide on production limits for their output. Every farmer was told how much of their land to use. Farmers rented their unused their land directly to the government and were paid for that. They were not allowed to grow crops on this rented land, and if any had started in spring 1933 they had to be plowed over. A farmer could refuse to participate, but then would have a 50% tax on his sales. They all participated. Processors had to pay a new tax to the federal government, which was used for the rental payments to farmers. The rental income was new cash into rural America. More important, the farm output was lower so the prices of crops and animals increased, thus solving the problem of very low crop prices.

The AAA was led by George Peek and Chester Davis, under the general supervision of Agriculture Secretary Henry A. Wallace. When left-wing elements in the AAA tried to slip through provisions to build a political base among sharecroppers, they were immediately fired by Davis, with the explicit approval of Wallace and President Roosevelt.

The goal was to increase farm prices up to the point of "parity". "Parity" was the relationship between urban and rural costs that prevailed in 1910-14, in the "golden age" of farming.

Farm incomes increased significantly in the first three years of the New Deal. Consumers paid higher prices than in 1932-33, but food was still 25% lower in price than in the 1920-31 period.[1] A Gallup Poll revealed that a majority of the American public opposed the AAA, but the majorities existed in Congress to pass it. The AAA established an important and long-lasting federal role in the planning on the entire agricultural sector of the economy.

Contents

Sharecroppers and the 1935 purge of the far left

One criticism from the left was that in the cotton belt South the AAA favored rich landowners over the impoverished tenant farmers and sharecroppers. The allegation was false but was widely spread in history books. (The AAA required land owners to maintain the same number of tenants and croppers as before.)

In 1933-35 there was a group of leftist lawyers had moved into the Agriculture department, led by Jerome Frank. They were big city people who were on the far left; several were secret Communists or fellow travelers.[2] They wanted to use the New Deal farm program to redistribute income and power AMONG farmers--they favored the tenant farmers and sharecroppers as opposed to the farm owners. (The "conservatives" wanted to give taise farm incomes so that farmers would regain their historic parity with urbanites.)

The AAA head was Chester Davis, an "agrarian" who belonged to the more "conservative" faction that deeply distrusted the leftists as un-American. The agrarians issued the rule that (in cotton) a landowner had to keep the same number of croppers. The red position was the landowner had to keep the same number and the same people as croppers. The radical solution would have the effect of locking the croppers to a piece of land--something like serfdom did in old regime Europe. The radicals wanted that so they could eventually build a stable base of voters among the croppers (who otherwise moved so often they seldom could be mobilized.)

One day in early 1935 Davis was on a trip and the legal office got the acting head to send out a ruling (written by Hiss) that froze tenant farmers on the land they rented. Davis was outraged as were southern farm owners, the Farm Bureau (the main national organization of farmers) and nearly all politicians. Davis got approval from Wallace and in Feb. 1935 fired the main leaders. The leftists appealed to Wallace and FDR but they approved the purge and the urban liberals lost their voice in the AAA.[3]

The radical plan failed in the AAA because of the 1935 purge, but then Rex Tugwell, forced out of the AAA, and other leftists tried to mobilize the sharecroppers and tenants through two new agencies, the "Resettlement Administration" (RA) and the "Farm Security Administration" (FSA). Their efforts failed because the tenants wanted money to buy land and become landowners and the reds saw that meant losing the proletariat. During World War II most of the sharecroppers and tenants (white and black) left farming and moved to town for much better paying jobs.

Goals

The idea of raising farm prices by cutting production was developed in the 1920s by Professor M. L. Wilson of Montana State University. The idea was a) it would raise city prices a little and farm income a lot; and 2) it was assumed that farmers (not city folk) are the best citizens and they deserve special protection and support.

Parity
1910-14 100
1915-19 109
1920-24 89
1925-29 91
1930-34 69
1935-39 86
1940-44 100
1945-49 109
1950-54 98
Source: Don Paarlberg, The Agricultural Revolution of the 20th Century (2001) p 183 online

100 Days

In President Franklin Delano Roosevelt’s Inaugural Address, Roosevelt spoke of redressing “the overbalance of population in our industrial centers” by an of unspecified “redistribution” of the population to the countryside. This would somehow make farmers out of the unemployed. At the same time, though, there would be efforts “to raise the values of agricultural products.” Roosevelt referred to the need for “national planning”. [4]

In May when the AAA began its operations, the agricultural season was already under way. In effect, the agency oversaw a large-scale destruction of existing crops and livestock in an attempt to reduce surpluses. For example, 6,200,000 pigs and 220,000 mother sows were slaughtered in the AAA's effort to raise prices at a cost of over $30,000,000.

The conservative American Liberty League referred to the economic planning of the Agricultural Adjustment Administration as "a trend toward fascist control of agriculture."

Cattle

At first cattlemen refused with pride the early efforts of New Deal government supervision in 1933. As drought and depression swept the range, however, there was a reluctant reversal of their earlier position, especially in Texas. The AAA launched a massive emergency beef purchasing to reduce the number of cattle on the drought-blighted ranges. After some two million head of cattle were slaughtered from the Texas herds alone, the emergency program was halted, over the protests of the cattlemen. The AAA urged them to join the New Deal controls program, but they refused. Eventually, as cattle prices began to climb again, Texas cattlemen felt vindicated in their independent stance and untainted by participation in a government-controlled economy. The ranchers remained outside the government programs.[5]

Prosperity returns

By 1936 conditions had dramatically improved in agriculture. Although the holy grail of 100% parity was not reached until 1943, incomes were much higher rising from $4.7 billion in 1932 to $8.7 billion in 1936. The heavy burden of debt that had soured the 1920s was mostly paid off or refinanced. The chimerical vision of escaping to the rich cities no longer enthralled the farm youth.

The main causes of the return to prosperity include the overall improved national economy, the severe draught of 1934 that reduced output and caused prices to rise. The AAA payments to farmers were a help. The acreage reduction program had little effect except in cotton and tobacco. In other crops the farmers improved their efficiency on the remaining acreage and output stayed level. In cotton and tobacco, however, prices were much higher and since the great majority of Southerners lived in rural areas and depended on these crops, the New Deal was very well regarded.[6]

Unconstitutional and 2nd AAA

In the two years of the first AAA’s existence it distributed some $700 million to farmers to restrict production and keep farm prices high.

The first AAA was declared unconstitutional by the Supreme Court in the case United States v. Butler et al. (297 U.S. 1, January 6, 1936) because it gave too much power to the Executive branch. In 1937 Congress then rewrote the law, creating a second AAA that achieved part of the original Act's goals with the Soil Conservation and Domestic Allotment Act of 1936 until the enactment of a second AAA (P.L. 75-430) on February 16, 1938. This second AAA was funded from general taxation, and therefore acceptable to the Supreme Court. It represented a bipartisan approach, as did the addition of an "ever normal granary" program in 1938. By 1940 Republicans and Democrats were in general agreement on farm policy. During World War II, all restrictions were ended and farmers were encouraged to plant as much as possible. However there was a price cap--100% parity--which angered farmers who saw a bonanza if their prices had been allowed to skyrocket.

Impact

The acreage cutbacks of the first AAA led many farmers to be more efficient in their use of the remaining acres. Except for cotton, where output fell 17%, the total output did not change much. The move to efficiency was a gain, but there was inefficiency as farmers became protective of their allotments and mismanaged their resources to getter larger payments. For example, cotton farmers in the east held on to cotton too long, to protect their allotments and subsidies.[7]

Communist influence

The Soviet espionage ring commonly referred to as the Ware group originated among government employees in the AAA. Alger Hiss began his government career with the AAA. Charles Kramer worked the AAA consumer council. Leonora Fuller, an associate of Hiss from 1933 to 1935 stated that Hiss, Lee Pressman, Gardner Jackson, Frank Shea and others interpreted the Agricultural Adjustment Act not in the spirit of the law but in manner which would suit their own beliefs and private purposes. Hiss and the others brought into the government employees of their choosing who they intended to fall in line with their social and economic agenda. Fuller stated it was the definite purpose of this group to change the form of government of the United States, regardless of its democratic and constitutional underpinnings, and to use the instrumentality of the offices of the Department of Agriculture to further their purpose. Instead of administering the law as it was intended, they deliberately used the government's time and money for unionization efforts.

In 1933, Brain truster Felix Frankfurter sent Alger Hiss a telegram urging him to join President's Roosevelt's administration [8] as assistant general counsel to the Agricultural Adjustment Administration (AAA). At the peak of Stalin's Terror Famine (during which the Soviets killed some 14 million[9] people through collectivization of agriculture), the AAA curtailed U.S. farm production in order to drive up food prices in the depths of the Great Depression.[10]

The agency was the brainchild of FDR's Secretary of Agriculture (and future Vice President), so-called "farm dictator" Henry Wallace, who was reportedly "most impressed" with Soviet collective farming. Wallace would run for President in 1948 on the Communist-inspired[11] Progressive Party ticket, finally recanting his support for the Soviet Union[12] in 1952.[13]

In response to a query about candidates for employment at AAA, Lee Pressman, a Soviet operative already serving as Wallace's assistant general counsel at the agency, wrote, "I have talked to Alger Hiss and Nat Witt who are considering" taking posts at AAA (Hiss would later deny under oath that he had discussed the position with Pressman).[14]

At AAA, Hiss reunited with Henry Collins, a Soviet operative, as well as International Juridical Association (IJA)[15] collegue Pressman,[16] and Witt (who would be identified as a fellow Communist by Pressman),[17] and became acquainted with secret Communist John Abt and the Communist[18] Harold Ware—recently returned from several years in the Soviet Union, where he had been instrumental in the organization of collective farms.[19]

Even before the Federal Bureau of Investigation would learn of Whittaker Chambers' charges, one of Hiss' colleagues at the AAA would tip off FBI investigators that Hiss and his circle were fellow travelers, if not Communists.[20] In February 1935, the "radicals" were "purged" from AAA. According to New Dealer Gardner Jackson:

“ Late in the day of our dismissal Wallace sent word that he would see two of the people on the dismissal list. Jerome Frank[21] and a member of his legal staff, Alger Hiss, were delegated for the interview. Wallace haltingly greeted them (and, through them, others on the list) as "the best fighters in a good cause" he had ever worked with. But he said that he had to fire them. ”

As it turned out, Jackson, Frank and Pressman were indeed fired—but Hiss was not. "Alger must have known at least a week before the purge that it was coming," said Jackson. "He undoubtedly told Pressman, and Lee told him what to do in order to remain in the Department as his pipeline."[22]

Frank, believing Hiss to be closely linked to a coterie of Communist lawyers at the agency, would later refuse to appear as a character witness for him.[23] According to reporters Ralph de Toledano (who covered the Hiss trials for Newsweek) and Victor Lasky (who covered the trials for the New York World-Telegram): "When Hiss' lawyers approached a well-known jurist to ask him if he would appear as a character witness [for Hiss]...he said tartly: 'I have no way of knowing whether or not Mr. Hiss was ever a Communist. But as to his character—Mr. Hiss has no character.'"[24]

Collins would refuse to testify on grounds of potential self-incrimination, but another AAA official, Nathaniel Weyl, would later testify that he attended Communist cell meetings with Hiss[25] and saw him pay his party dues,[26] testimony he would reaffirm in his 2004 autobiography.[27] Ex-Communists Ralph de Sola and George Hewitt would both also testify to having seen Hiss at Communist Party meetings.[28] Communist lawyer John Abt would later admit having been a member of the Ware group,[29] as would Communist writer Hope Hale Davis, who would write that its meetings involved discussions of how to "achieve promotion—a primary goal," or whether to "try to influence policy," as well as "secret directives—for purloining official documents," etc.;[30] a former GRU station chief in London and New York reported that during the early and middle 1930s Hiss was a source of agent information for a Soviet spy ring in Washington, the Silvermaster group, according to Pavel Sudoplatov, former deputy director of Foreign Intelligence for the USSR.[31]

See also

Further reading

  • Fite, Gilbert C. "Farmer Opinion and the Agricultural Adjustment Act, 1933," Mississippi Valley Historical Review, Vol. 48, No. 4 (Mar., 1962), pp. 656-673in JSTOR
  • Nourse, Edwin Griswold. Three years of the Agricultural Adjustment Administration (1937) online edition, valuable overview
  • Perkins, Van L. Crisis in agriculture: the Agricultural Adjustment Administration and the New Deal, 1933 (1969), a standard scholarly history
  • Saloutos, Theodore. The American Farmer and the New Deal. (1982). 327 pp.
  • Schultz, Theodore W. Agriculture in an Unstable Economy. (1945) by Nobel-prize winning conservative online edition
  • Wilcox, Walter W. The farmer in the second world war (1947) online edition

See also

References

  1. ↑ For detailed price data see Statistical Abstract: 1938 (1939) ch 13 pp 306ff; for farm income see ibid. ch 25 pp. 616ff
  2. ↑ One who later became infamous as a Soviet spy was Alger Hiss. Jess Gilbert, "Eastern Urban Liberals and Midwestern Agrarian Intellectuals: Two Group Portraits of Progressives in the New Deal Department of Agriculture," Agricultural History, Vol. 74, No. 2 (Spring, 2000), pp. 162-180 in JSTOR
  3. ↑ Lawrence J. Nelson, "The Art of the Possible: Another Look at the 'Purge' of the AAA Liberals in 1935.' Agricultural History 1983 57(4): 416-435. in JSTOR
  4. ↑ FDR: The Man, the Leader, the Legacy, Ralph Raico, Future of Freedom Foundation, April 1, 2001. Retrieved from The Independent Institute.org 06/17/07.
  5. ↑ C. Roger Lambert, "Texas Cattlemen and the AAA, 1933-1935." Arizona & the West 1972 14(2): 137-154; Lambert, "The Drought Cattle Purchase, 1934-1935: Problems and Complaints," Agricultural History 1971 45(2): 85-93 [ http://www.jstor.org/stable/3742072 in JSTOR]
  6. ↑ Benedict, Farm Policies, p 353
  7. ↑ Theodore W. Schultz, Agriculture in an Unstable Economy (1945) p. 174.
  8. ↑ Roosevelt and his supporters saw the New Deal in revolutionary and dictatorial terms: First Lady Eleanor Roosevelt “lamented that the nation lacked a benevolent dictator to force through reforms." Soviet intelligence source Walter Lippmann told Roosevelt, "The situation is critical, Franklin. You may have no alternative but to assume dictatorial powers"; in his influential column, Lippmann added that the use of "'dictatorial powers,' if that is the name for it—is essential.'" The New York Herald Tribune approved the Inauguration with the headline "FOR DICTATORSHIP IF NECESSARY." In response to a hit Hollywood movie featuring as hero a President who “dissolves Congress, creates an army of the unemployed, and lines up his enemies before a firing squad,” FDR wrote that he thought the film “would help the country.”
  9. ↑ Robert Conquest, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine (Oxford: Oxford University Press, 1987) ISBN 0195051807) p. 306
  10. ↑ “During the Great Depression of the 1930s, agricultural price support programs led to vast amounts of food being deliberately destroyed at a time when malnutrition was a serious problem in the United States.... For example, the federal government bought 6 million hogs in 1933 alone and destroyed them. Huge amounts of farm produce were plowed under, in order to keep it off the market and maintain prices at the officially fixed level, and vast amounts of milk were poured down the sewers for the same reason. Meanwhile, many American children were suffering from diseases caused by malnutrition.” (Thomas Sowell, Basic Economics [New York: Basic Books, 2007] 3rd Ed., ISBN 0465002609, p. 56) As Gene Smiley, emeritus professor of economics at Marquette University, writes in The Concise Encyclopedia of Economics: "Reduced production, of course, is what happens in depressions, and it never made sense to try to get the country out of depression by reducing production further. In its zeal, the administration apparently did not consider the elementary impossibility of raising all real wage rates and all real prices." One study found that such New Deal policies prolonged the Great Depression by about seven years.
  11. ↑ The Progressive Party was in fact a creation of the Communist Party, growing out of CPUSA General Secretary Eugene Dennis' February 12, 1946 order "to establish in time for the 1948 elections a national third party." Arthur Schlesinger, A Life in the Twentieth Century: Innocent Beginnings, 1917-1950 (New York: Houghton Mifflin, 2000) ISBN 0618219250, pp. 455-456. In 1955, the Jenner subcommittee cited the Progressive Party on its list of subversive organizations, identified as a Communist front.
  12. ↑ Had FDR died a few months earlier, Wallace would have become President; Wallace once said if he were to become President, he would appoint Soviet agent Laurence Duggan as Secretary of State
  13. ↑ Henry Agard Wallace, “Where I Was Wrong.” This Week, September 2, 1952
  14. ↑ Allen Weinstein, Perjury: The Hiss-Chambers Case (New York: Alfred A. Knopf, 1978), ISBN 0394495462, p. 133
  15. ↑ The International Juridical Association (IJA) was a Communist front organization which "consistently followed the Communist Party line." Report on the National Lawyers Guild, legal bulwark of the Communist Party," Committee on Un-American Activities, House of Representatives, United States Congress (1950), p. 12
  16. ↑ Pressman joined the Communist Party about this time
  17. ↑ Whittaker Chambers, Witness [Washington: Regnery, 1952] ISBN 0895267896, p. 612
  18. ↑ John Earl Haynes and Harvey Klehr, Early Cold War Spies: The Espionage Trials That Shaped American Politics (Cambridge University Press, 2006) ISBN 0521857384, p. 94
  19. ↑ Ware, the son of American Communist Party founder "Mother" Bloor, reportedly "tricked" Soviet peasants into collective farms (Deborah Kay Fitzgerald, Every Farm a Factory: The Industrial Ideal in American Agriculture [New Haven: Yale University Press, 2003] ISBN 0300088132, p. 161), for which he was praised by Lenin, that praise repeated by Stalin (J.V. Stalin, Works, Vol. 11: 1928-March 1929 [Moscow: Foreign Languages Publishing House, 1954], pp. 195-196.)
  20. ↑ FBI memorandum: Ladd to Hoover, January 28, 1949, p. 2 (FBI file: Hiss-Chambers, Vol. 44)
  21. ↑ "....Jerome Frank, the leading liberal judge on the court; Jerome Frank, the intellectual leader of the New Deal and architect of its most progressive legislation; Jerome Frank, the idol of young progressive law students and leader of the liberals when he taught law at Yale, who had led the fight against the conservatism of the old-guard faculty...." Arthur Kinoy, Rights on Trial: The Odyssey of a People's Lawyer (Cambridge, Mass.: Harvard University Press, 1983) ISBN 0674770137, p. 97
  22. ↑ Ralph de Toledano and Victor Lasky, Seeds of Treason (New York: Funk & Wagnalls, 1950) ASIN B0007DS43A, p. 60
  23. ↑ Allen Weinstein, Perjury: The Hiss-Chambers Case (New York: Alfred A. Knopf, 1978), ISBN 0394495462, p. 43
  24. ↑ Ralph de Toledano and Victor Lasky, Seeds of Treason (New York: Funk & Wagnalls, 1950) ASIN B0007DS43A, p. 60
  25. ↑
    Mr. COHN. Did you know Alger Hiss to be a member of the Communist party?
    Mr. WEYL. Yes, I did.
    Mr. COHN. Were you in the same Communist cell with Alger Hiss at one time?
    Mr. WEYL. That is correct.
    …
    Mr. WEYL. ...Hiss and I were among the eight or nine people who met with the first meeting of that organization, I presume. So I was in this Communist cell with him for a period of approximately nine months.
    Testimony of Nathaniel Weyl before the Permanent Subcommittee on Investigations of the Committee on Government Operations, United States Senate, February 23, 1953, pp. 619-620 (PDF pp. 658-659)
  26. ↑ Nathaniel Weyl, “I Was in a Communist Unit with Hiss,” U.S. News and World Report, January 9, 1953
  27. ↑ Nathaniel Weyl, Encounters With Communism (Philadelphia: Xlibris, 2004), cited in John Earl Haynes, "Ales: Hiss, Foote, Stettinius?" johnearlhaynes.org, June 7, 2007
  28. ↑ Allen Weinstein, Perjury: The Hiss-Chambers Case (New York: Alfred A. Knopf, 1978), ISBN 0394495462, p. 360
  29. ↑ John J. Abt with Michael Myerson, Advocate and Activist: Memoirs of an American Communist Lawyer (University of Illinois Press, 1993) ISBN 0252020308, pp. 40-41. Arrested for the assassination of President John F. Kennedy in 1963, the communist Lee Harvey Oswald would request Abt as his attorney. Pamela J. Ray with James E. Files,Interview with History: The JFK Assassination (AuthorHouse, 2007) ISBN 142595992X, p. 64
  30. ↑ Gilbert J. Gall, Pursuing Justice: Lee Pressman, the New Deal, and the CIO (SUNY Press, 1999) ISBN 0791441032, p. 41. According to Davis, the Ware group “was used, to my knowledge, for stealing documents from government agencies.” Her husband, she said, regularly supplied “a party contact confidential information from his job.” Davis added, “Everyone in Hal Ware's group had accepted the directive to get whatever we could for the party to use in any way it saw fit.”
  31. ↑ Anatoli Sudoplatov, Pavel Sudoplatov, Leona P. Schecter and Jerrold L. Schecter, Special Tasks: The Memoirs of an Unwanted Witness, a Soviet Spymaster (New York: Back Bay Books, 1995) ISBN 0316821152, p. 227-228. Two others also alleged to be in contact with the Ware group (George Silverman and Harry Dexter White) would likewise be identified as sources of the Silvermaster group.

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