The Agricultural Adjustment Act (Triple A) (Pub.L. 73-10, 48 Stat. 31, enacted May 12, 1933) was a United States federal law of the New Deal era which restricted agricultural production by paying farmers subsidies not to plant part of their land (that is, to let a portion of their fields lie fallow) and to kill off excess livestock[1]. Its purpose was to reduce crop surplus and therefore effectively raise the value of crops, The money for these subsidies was generated through an exclusive tax on companies which processed farm products. The Act created a new agency, the Agricultural Adjustment Administration, to oversee the distribution of the subsidies.[1] It is considered the first modern U.S. farm bill.
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Attached as title III to the Act, the Thomas Amendment became the "third horse" in the New Deal's farm relief bill. Drafted by Senator Elmer Thomas of Oklahoma, the amendment blended populist easy-money views with the theories of the new economics. Thomas wanted a stabilized “honest dollar”; one that would be fair to debtor and creditor.
The Amendment said that whenever the president desired currency expansion, he must first authorize the open market committee of the Federal Reserve to purchase up to $4 billion of federal obligations. Should open market operations prove insufficient the President had several options. He could have the U.S. Treasury issue up to $4 billion in greenbacks, reduce the gold content of the dollar by as much as 50 percent, or accept 100 million dollars in silver at a price not to exceed fifty cents per ounce in payment of World War I debts owed by European nations.
The Thomas Amendment was used sparingly. The treasury received limited amounts of silver in payment for war debts from World War I. Armed with the Amendment, Roosevelt ratified the Pittman London Silver Amendment on December 21, 1933, ordering the United States mints to buy the entire domestic production of newly mined silver at 64.5¢ per ounce. Roosevelt’s most dramatic use of the Thomas amendment came on January 31, 1934, when he decreased the gold content of the dollar to 40.94 percent. However, wholesale prices still continued to climb. Possibly the most significant expansion brought on by the Thomas Amendment may have been the growth of governmental power over monetary policy.
The impact of this amendment was to reduce the amount of silver that was being held by private citizens (presumably as a hedge against inflation or collapse of the financial system) and increase the amount of circulating currency.
Tenant farming characterized the cotton and tobacco production in the post-Civil War South. Even before the Great Depression, tenant farmers lived and worked in extremely difficult situations. As the agricultural economy plummeted in the early 1930s, tenant farmers and sharecroppers experienced the worst of it.
To accomplish its goal of parity (raising crop prices to where they were in the golden years of 1909-1914), the Act had to eliminate surplus production.[2] It accomplished this by offering landowners acreage reduction contracts, by which they agreed not to grow cotton on a portion of their land. In return, the landowners received compensation for what they would have normally gotten from those acres. By law, they were required to pay the tenant farmers and sharecroppers on their land a portion of the money. This, however, was nearly impossible for the government to enforce. What's more, this requirement gave landlords an incentive to get rid of their tenant farmers and replace them with wage laborers. Over the remaining years of the Great Depression, the once-common practice of sharecropping and tenant farming became exceedingly rare, and vast amounts of tenant farmers were put out, without homes or means of income.
Although the Act stimulated American agriculture, it was not without its faults. For example, it disproportionately benefited large farmers and food processors, to the disadvantage of small farmers and sharecroppers.[3][4] By the last half of the century sharecropping and tenant farming had become obsolete.[5]
In 1936, the Supreme Court decided in United States v. Butler that the act was unconstitutional for levying this tax on the processors only to have it paid back to the farmers. Regulation of agriculture was deemed a state power. However, the Agricultural Adjustment Act of 1938 remedied these issues.
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