Agricultural Adjustment Administration

Written By North Carolina History Project

Created by the Agricultural Adjustment Act of 1933, the Agricultural Adjustment Administration (AAA) was a New Deal agency tasked with controlling crop yields. Low crop prices had harmed U.S. farmers; reducing the supply of crops was a straightforward means of increasing prices. During its brief existence, the AAA accomplished its goal: the supply of crops decreased, and prices rose. It is now widely considered the most successful program of the New Deal. Though the AAA generally benefited North Carolina farmers, it harmed small farmers–in particular, African American tenant farmers.

The AAA’s limiting crop production method compensated farmers for leaving land fallow. Unlike the National Recovery Administration, which allowed industries to decide how to control production, the AAA was administrated by experts, most of them economists and agricultural engineers, who set production levels without input from farmers. By and large, this system of centralized control worked: the real income of the average farmer rose 30 percent during President Franklin Delano Roosevelt’s first term. The Bankhead Act and the Kerr-Smith Act addressed non-compliance issues.

The impact of the AAA in North Carolina was profound. At the start of the Great Depression, four out of ten North Carolinians worked on a farm. Of the state’s 280,000 farms, roughly a third grew tobacco, and more than a third grew cotton. By 1932, cotton was not as profitable as tobacco, and tobacco was losing profitability as farmers struggled to negotiate prices with cigarette producers.

When the AAA began negotiations with North Carolina farmers in 1934, the program director’s goal was to reduce statewide tobacco production to less than 500 million pounds. To achieve this goal, planters were required to reduce production by thirty percent between 1930 and 1933. Acreage taken out of use could be used to grow home-used feed crops or left vacant, but growers could not increase their harvest of crops limited by the AAA. In return for taking these acres out of production, the government gave farmers two payments that were calculated by acreage forfeited and crop prices. These measures raised prices of commodities such as tobacco and cotton.

These New Deal policies may have harmed North Carolina’s vulnerable tenant farmers and sharecroppers. Recent studies of the AAA’s payments to farmers under the cotton program have shown that large planters were favored at the expense of smaller farmers. AAA benefit payments were paid out principally to landowners, who had legal obligations to compensate the tenant farmers and sharecroppers on their land. Enforcement of these obligations was lax or nonexistent.

The creation of the AAA coincided also with the advent of modern farm implements. Tractors reduced landowners’ need to employ, or lease land to, sharecroppers or tenant farmers. Because AAA restrictions required landowners to leave much of their land fallow, some land had to be dug up. As tractors made it easier to landowners to raise crops on their own, land rented to sharecroppers and tenant farmers was often dug up. In 1935, there were 93,173 white tenant farmers and 49,985 African American tenant farmers in North Carolina. Over the next five years, the number of white tenant farmers dropped by nearly 12,000, and the number of African-Americans by 9,000.

The constitutionality of the AAA was challenged in United States v. Butler in 1936. In this case, a cotton-processing company in Hoosac Mills, Massachusetts argued that the AAA had no right to collect its tax because its money was used to regulate intrastate commerce. Consequently, the Supreme Court invalidated the Agricultural Adjustment Act for its violation of the Commerce Clause.

The Court’s decision led lawmakers to pass the Agricultural Adjustment Act of 1938, which imposed marketing quotas and overproduction penalties rather than subsidies for farmers who limited production. The 1938 act was upheld in the Supreme Court case Mulford v. Smith (1939) because the new program, the Court ruled, was “intended to foster, protect and conserve [interstate] commerce.”