Bankhead Cotton Control Act

Written By Jonathan Murray

The Bankhead Cotton Control Act was passed by the U.S. Congress on April 21, 1934. The act addressed an impediment to the Agricultural Adjustment Administration’s efforts to raise cotton prices. The Agricultural Adjustment Act, which created the Agricultural Adjustment Administration (AAA), explicitly made farmer participation in AAA programs voluntary. Most AAA programs compensated farmers for leaving land fallow, reducing supply, and triggering a corollary price increase. Nevertheless, as some agricultural economists (such as Mordecai Ezekiel) had foreseen, non-AAA farmers could prevent price increases by flooding the market with cotton.

When the AAA began its cotton programs, it stipulated that participating farmers leave up to half of their land inactive. Many farmers did not participate, realizing that they could reap larger profits by selling larger quantities of cotton at lower prices, and by 1934, cotton prices had not risen. Similar to the Kerr-Smith tobacco legislation, the Bankhead Cotton Act instituted a heavy tax on cotton and made AAA contract crops tax-exempt, effectively driving noncontract farmers out of the market.

When the U.S. Senate debated the Bankhead bill, both senators from North Carolina criticized it. Senator Robert Rice Reynolds, then North Carolina’s junior senator, ridiculed the legislation, asking why the federal government would attempt to reduce the supply of a commodity like cotton. “We spent millions arresting the boll weevil which was destroying cotton. Now we are about to spend millions to do the very thing we asked the boll weevil not to do,” he argued. Reynolds voted for the bill nonetheless. The senior senator from North Carolina, Josiah Bailey, voted against the bill. He believed that the mandatory crop controls stipulated by the bill would violate individual liberty. Bailey had similar views of other New Deal policies (these views would find their clearest expression in Bailey’s 1937 Conservative Manifesto).

The Bankhead Act succeeded in raising the price of cotton, and by 1935, the price of the crop had reached 11.5 cents per pound. The Bankhead regime did not endure, however, for the U.S. Supreme Court declared the AAA unconstitutional in January 1936. Congress repealed the Bankhead Act one month later.