In the spring of 1933, the agricultural sector of the economy was in a state of collapse. It thereby provided a laboratory for the New Dealers' belief that greater regulation would solve many of the country's problems. In 1933, Congress passed the Agricultural Adjustment Act (AAA) to provide economic relief to farmers. The AAA proposed to raise crop prices by paying farmers a subsidy to compensate for voluntary cutbacks in production. Funds for the payments would be generated by a tax levied on industries that processed crops. By the time the act had become law, however, the growing season was well under way, and the AAA paid farmers to plow under their abundant crops. Crop reduction and further subsidies through the Commodity Credit Corporation, which purchased commodities to be kept in storage, drove output down and farm prices up...
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Answer Key: 1. Congress passed the Agricultural Adjustment Act (AAA); 2. Commodity Credit Corporation; 3. Plains states; 4. C - 2.5 million; 5. Soil Conservation Service; 6. Its tax on food processors was ruled unconstitutional by the Supreme Court; 7. Answers will vary.
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