Changes

{{cquote|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.<ref>Thomas Sowell, ''[http://books.google.com/books?id=gbfTLG_HmGEC Basic Economics]'' [New York: Basic Books, 2007] 3rd Ed., ISBN 0465002609, p. 56</ref>}}

{{cquote|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.<ref>Thomas Sowell, ''[http://books.google.com/books?id=gbfTLG_HmGEC Basic Economics]'' [New York: Basic Books, 2007] 3rd Ed., ISBN 0465002609, p. 56</ref>}}

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."<ref>[http://www.econlib.org/library/Enc/GreatDepression.html </ref> One study found that such [[New Deal]] policies prolonged the [[Great Depression]] by about seven years.<ref>Meg Sullivan, [http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx FDR's policies prolonged Depression by 7 years, UCLA economists calculate], ''UCLA Newsroom'',  August 10, 2004. Cf. Harold L. Cole and Lee E. Ohanian, "[http://www.jstor.org/stable/10.1086/421169 New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis]," ''The Journal of Political Economy'', Vol. 112, No. 4 (August 2004), pp. 779-816; Harold L. Cole and Lee E. Ohanian, [http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf [http://www.journals.uchicago.edu/doi/pdf/10.1086/421169 New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis] (Federal Reserve Bank of Minneapolis Research Department Staff Report XXX), February 2003</ref>

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."<ref>[http://www.econlib.org/library/Enc/GreatDepression.html </ref> One study found that such [[New Deal]] policies prolonged the [[Great Depression]] by about seven years.<ref>Meg Sullivan, [http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx FDR's policies prolonged Depression by 7 years, UCLA economists calculate], ''UCLA Newsroom'',  August 10, 2004. Cf. Harold L. Cole and Lee E. Ohanian, "[http://www.jstor.org/stable/10.1086/421169 New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis]," ''The Journal of Political Economy'', Vol. 112, No. 4 (August 2004), pp. 779-816; Harold L. Cole and Lee E. Ohanian, [http://www.economics.hawaii.edu/research/seminars/02-03/02-21.pdf [http://www.journals.uchicago.edu/doi/pdf/10.1086/421169 New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis] (Federal Reserve Bank of Minneapolis Research Department Staff Report XXX), February 2003</ref>

==Rationale==

==Rationale==

Both versions of AAA were 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.

Both versions of AAA were 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 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,<ref>In 1936 the Bureau of Agricultural Economics reported that in the case of cotton, farm income would have been at least as high, if not higher, in the absence of the AAA. (Leander D. Howell and John Sanderlain Burgess, ''Farm Prices of Cotton as related to its Grade and Staple Length in the United States, Seasons 1928-29 to 1932-33'' [U.S. Department of Agriculture Technical Bulletin no. 493, 1936]). Cf. Thomas E. Woods, ''[http://books.google.com/books?id=ltSIOnW6XLsC The politically incorrect guide to American history]'' (Regnery Publishing, 2004) ISBN 0895260476, p. 147</ref> 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 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.