The Hog Reduction Program of the AAA
When Franklin D. Roosevelt took office in 1933, the agricultural community was reeling from the effects of the Great Depression. Prices were at record lows. Drastic measures were required. Roosevelt designed the New Deal, his policies and principles, to confront the problem. The Agricultural Adjustment Act started in May 1933 was intended to reduce surpluses and increase prices.
The AAA was controversial from the beginning. The programs that dealt with supply reduction were especially susceptible to attack. When crops were plowed under, farmers and the government were accused of wasting food in a time when many were going hungry. The most controversial program was that of hog reduction.
In Illinois, a major pork-producing state, and across the country, the market prices of hogs had dropped to the lowest level in fifty years. This was because of high supply and low demand. The supply of hogs had become great because of the parallel situation of high supply, low demand, and low prices confronted by the growers of corn, the primary hog feed. With nearly forty-five percent of the nation's corn fed to hogs, the large increase in corn supply led to an equally large increase in hog production. In addition to abundant corn for feed, improved production methods had also caused hog production to skyrocket. The human population had expanded by a third since the period before World War I, yet the hog market had increased by fifty percent staying far ahead of the population growth. With the production of hogs at record highs and prices at record lows and falling, the government tried to devise a plan to help.
In July 1933, through the joint discussion of the Agricultural Adjustment Administration (AAA) and the National Corn-Hog Committee, a plan to increase hog prices was developed. The plan was basically the same idea behind similar plans for wheat, corn, cotton, and other products. The prices of hogs would be raised by decreasing the supply.
In the fall of 1933 the features of a new corn-hog program were made public. The new dual-control system was designed to reduce the production of both corn and hogs. The program paid farmers to reduce corn crops by twenty to thirty percent and the number of hogs farrowed by twenty-five percent. Thirty cents per bushel, based on an estimated yield, was the price set for unplanted corn. The program would pay five dollars a head for seventy-five percent of a hog farmer's base-period production. Dairy and cattle producers feared that acres not used for corn would be used for hay and pasture, which would cause a sharp increase in beef and dairy products. Some people filed false reports to gain more money. This hurt the program somewhat, but not enough to deem it unsuccessful.
Some parts of the AAA proved to be unworkable, although prices of farm products rose as planned. In the 1936 Supreme Court case United States v. Butler, the court declared the AAA unconstitutional. They ruled that the processing tax imposed on farmers was not a tax, but a way of controlling and restricting agriculture. To some people, it reflected socialism or communism, where the government or a few people controlled the market. Controlling the market was determined not to be a power of Congress, who had passed the Agricultural Adjustment Act.
In 1938 Congress passed a new Agricultural Adjustment Act. Under this plan, if two-thirds of the farmers in an area agreed, each would be given a certain number of acres to plant. If a farmer were to produce an excess, the excess would be stored until the supply had dropped enough to put it on the market.
Although the first Agricultural Adjustment Act was found to be unconstitutional, the plan did help the agricultural economy recover from the low prices it had borne due to high supply. Hog and corn prices rose as they were expected to, and the agricultural community began to recover.—[From Winthrop D. Jordan, Miriam Greenblatt, and John S. Bowes, The Americans: Van L. Perkins, Crisis in Agriculture; Theodore Saloutos, The American Farmer and the New Deal; Claude R. Wickard, Roosevelt's Farmer; USDA Yearbook of Agriculture, 1934.]