FDR and the Farmer

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FDR and the Farmer

President Franklin D. Roosevelt’s efforts to organize agriculture did more harm than good and actually helped prolong the Great Depression.

President Franklin D. Roosevelt

By the time Roosevelt became president in 1933, farm profits had been declining for nearly 15 years. This was mainly because demand for farm products had been artificially inflated to supply troops during World War I (1914-18). Demand dropped when the war ended, but farmers continued overproducing, which forced prices down.

In an effort to raise farm prices, Roosevelt’s predecessor Herbert Hoover had initiated a Federal Farm Board, but it was ineffective. Roosevelt could have tried a new approach when he became president, but instead he merely expanded Hoover’s failed program by approving creation of the Agricultural Adjustment Administration (AAA).

The AAA was designed by Agriculture Secretary Henry Wallace, a far-left Progressive who declared that the agency would conduct “a cleaning up of the wreckage from the old days of unbalanced production.” It was inspired by the business/government syndicates then being created by Benito Mussolini’s Fascist Party in Italy. The AAA sought to drive up farm prices by restricting farm output, but the means used to attain that goal were seriously flawed.

The AAA actually paid farmers to not produce. Even worse, since the AAA was created after the year’s harvest began, it was decided to pay farmers to destroy their crops and livestock in the hope that decreased supply would mean increased demand. Cotton farmers were paid $100 million to destroy 10 million acres of crops, and hog farmers were paid to slaughter over six million hogs at a time when millions of Americans were going hungry. The AAA succeeded in raising prices, but the many unemployed Americans couldn’t afford them.

Farm income rose as intended, but only because farmers often took the government welfare while maintaining their normal production levels. The extra income was used to buy even more farm equipment and expand acreage, which defeated the AAA’s strategy of limiting production. Moreover, the program favored large farms and corporations that could afford to reduce production without risking bankruptcy. One large sugar company was paid $1 million in taxpayer money to not produce sugar.

The AAA was funded partly by imposing new taxes on corporations, and partly by imposing a new processing tax on food and clothing. Corporations and processers naturally passed the tax onto consumers in the form of higher prices, which affected the poorest Americans the most. Even Agriculture Secretary Wallace admitted that “the most serious objections to the processing tax” was “that the greatest burden falls on the poorest people.”

The government cartelization of farming meant that it was vulnerable to party politics. The Roosevelt administration was sure to allocate AAA funds to states and districts most supportive of the president. After Roosevelt was overwhelmingly reelected in 1936, author and editor David Lawrence studied voting trends. He concluded that most of Roosevelt’s votes came from counties that received the most AAA money, and he actually lost the few counties that received no funding.

Farmers may have benefited from the AAA in the short term, but consumers suffered from decreased supply, resulting in less food and higher prices during the Depression. A study by the Department of Agriculture in the 1930s revealed that the U.S. was not producing enough food to sustain its population at the minimum level. The Roosevelt administration’s curious answer to this problem was to make food even more expensive and scarce.

Attempts to raise farm prices were offset by similar attempts from other Roosevelt administration bureaucracies, such as the National Recovery Administration, to drive up prices in other sectors of the economy. Historian Jim Powell noted that farmers “actually found themselves worse off because FDR’s National Recovery Administration had been even more successful in forcing up the prices that consumers, including farmers, had to pay for manufactured goods.”

Perhaps the most damaging impact that the AAA had on the economy was the mass unemployment it caused among tenant farmers and sharecroppers. Since the AAA was paying farmers not to farm, the laborers were no longer needed. Minorities were especially hard hit because they comprised most of the farm labor force.

Three years after the AAA was created, the Supreme Court ruled that it was unconstitutional because taxing corporations to subsidize small farmers violated the federal government’s taxing powers. However, Roosevelt pushed another law through Congress that resurrected the agency under the guise of a soil conservation program. Many subsidies begun under the AAA were not removed until the 1990s, over 60 years after the bureaucracy was created.

Overall, the AAA and other interventionist policies in agriculture initiated by Herbert Hoover and accelerated by Franklin D. Roosevelt set a trend for massive government intrusion into private farming that continues today.

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