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On May 12th, 1933 President Franklin D. Roosevelt signed the Agricultural Adjustment Act (AAA) of 1933 into law. The AAA had two main objectives: 1) To help farmers who were severely in debt, and 2) To raise the prices of farm goods.

The AAA of 1933 was an abrupt change in policy and was designed as an emergency response to the low prices of commodity crops during the Great Depression and the Dust Bowl in the years prior to 1933. The AAA established a primary federal role in limiting the production of certain agricultural crops including wheat, corn, and cotton to reduce supply in order to increase prices.

The years before the passage of the AAA was a time of great difficulty for American farmers; at the end of World War I US farmers supplied the European markets until they rebuilt their agricultural sectors. Once the Europeans restored their farmland sufficiently to meet their agricultural needs, US farmers lost an important export market. The diminished market for American farm commodities led to a surplus of crops, which depressed prices. The Great Depression further stressed the already struggling agricultural sector, and many farmers were at risk of foreclosure. In this time of agricultural crisis, farmers continued to produce as much as possible in the hopes that selling high quantities would make up for low prices, exacerbating the cyclical problem of surplus and low prices. At the same time, the urban areas faced high unemployment, so the entire nation was struggling economically.

President Roosevelt's New Deal legislation focusing on agriculture paid farmers to reduce the number of productive acres on their farms, ultimately limiting the supply of commodity crops on the market. The goal was to increase the price of farm commodities by reducing overall supply, while also providing relief to farmers who were deeply in debt. This was, however, a voluntary program, meaning farmers were not required to remove acres from production if they were not interested in government assistance. Those who participated tended to remove land from production that was already producing poorly, thereby reducing their yield as little as possible, and ultimately limiting the effectiveness of the Act. The AAA was short-lived as the Supreme Court deemed it unconstitutional on January 6th, 1936. This was partially due to the processing tax that was used to finance payments to farmers and partially because the Court ruled government regulation of agricultural production within the states unconstitutional.

Sources: Benedict, Murray R. “The Trend in American Agricultural Policy 1920-1949.” Zeitschrift Für Die Gesamte Staatswissenschaft / Journal of Institutional and Theoretical Economics, vol. 106, no. 1, 1950, pp. 97–122. JSTOR, www.jstor.org/stable/40747300.

Coppess, Jonathan. The Fault Lines of Farm Policy : A Legislative and Political History of the Farm Bill, UNP - Nebraska, 2018.