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This Week in History
April 7-13, 1933
Debate on the Agricultural Adjustment Act

by Nancy Spannaus

April 2013

Franklin Delano Roosevelt

As spring progressed, and with it the planting season, the political and economic situation in the farm sector became hotter and hotter. Debate on the Agricultural Adjustment Act (AAA), which had been introduced during the first week of the Administration, was dragging on as well.

One of President Roosevelt's major concerns was the rapid rate of foreclosures of mortgaged farm property. If the farmers were not to explode in rage, and if planting were to proceed, there would have to be arrangements made to provide credit to the farmers, and to keep them on their farms. On March 27, the President had already issued a message and executive order consolidating nine Federal agencies that dealt with agricultural credit into the Farm Credit Administration. The aim was less to save money, than to create a system "for the purpose of meeting the credit needs of agricutlure at minimum cost."

The major focus of this new agency was to be the refinancing of farm mortgages. But for that to be effective, new legislation was necessary.

That legislation came on April 3, when the President sent a request for passage of the Emergency Farm Mortgage Act. The request included the following appeal:

"That many thousands of farmers in all parts of the country are unable to meet indebtedness incurred when their crop prices had a very different money value is known to all of you," he said, referring to the deflationary collapse of farm prices. "I seek an end of the threatened loss of homes and productive capacity now faced by hundreds of thousands of American farm families." The bill called for the refinancing of farm mortgages at 4.5% interest. In addition, the President said that he would soon call for supplemental legislation calling for reciprocal tariff agreements.

The President did not sit around waiting to see what became of his legislation. He held a meeting the next day with Congressional leaders, and demanded that action be taken immediately on all farm legislation, including the AAA. The Emergency Farm Mortgage Act became Title II of the previous act. Still, it took until May 12 for the legislation to be passed.

President Roosevelt held his second Fireside Chat on May 7, during which he addressed the entire gamut of legislation which he had been pushing through since the banking emergency—including that on the CCC, emergency relief, public works, railroads, the Tennessee Valley Authority, and the farm bill. In it he described the Farm Relief Bill as follows:

"[The bill] seeks by the use of several methods, alone or together, to bring about an increased return to farmers for their major farm products, seeking at the same time to prevent in the days to come disastrous overproduction, which so often in the past has kept farm commodity prices far below a reasonable return. This measure provides wide powers for emergencies. The extent of its use will depend entirely upon what the future has in store."

(Of course, the President was not correct in claiming "overproduction." The problem was actually the lack of ability to pay by those who needed the food being produced—but this was a problem he was not prepared at this time to deal with.)

When President Roosevelt signed the bill into law, he made it very clear that his objective was to keep farmers in business:

"I urge upon mortgage creditors ... until full opportunity has been given to make effective the provisions of the mortgage refinancing sections ... that they abstain from bringing foreclosure proceedings and making any effort to dispossess farmers who are in debt to them. I invite their cooperation ... to effect agreements which will make foreclosures unnecessary."


The original article was published in the EIR Online’s Electronic Intelligence Weekly, as part of an ongoing series on history, with a special emphasis on American history. We are reprinting and updating these articles now to assist our readers in understanding of the American System of Economy.