The Politics of Food Supply, Chapter 2:
Early Battles Lost - Reaching for Regulation, 1920-1932
Prior to its intervention into agriculture in the 1930s, the U.S. government supported farmers through education, low export tariffs, and minor agribusiness regulation. But after six straight years of decline in agricultural prices beginning in 1927, gross farm income dropped by more than half for all agricultural commodities and the climate was ripe for new policy implementation. "With farm prices and income in a free fall, farmers throughout the country increasingly faced bankruptcy and bank foreclosure on their farm mortgages." National agriculture was at risk.
Overproduction played a leading role in the decline that began in the late 1920s, as did reduced exports. Key crops of cotton, corn, and wheat were each affected differently by these factors. Cotton was impacted primariy by overproduction, corn experienced a dramatic reduction in exports, and wheat was affected strongly by both factors, being "crowded out" of the international wheat market by production from other countries.
|New Orleans' own Cotton Mill. The building is still there... it's condos now.|
Presidents in office from 1920 to 1932 saw the agricultural depression as "deriving from a lack of economic coordination," and "opposed policy solutions that created significant intrusion into the economy, such as directly influencing prices or production." As evidenced by continuing decline, this approach was not adequately addressing the problem. Congress, particularly its members from farming regions, advocated for Federal intervention.
|McNary and Haugen in 1929|
The bill was defeated again in 1926, but less robustly. It was then refocused on southern commodities such as cotton, rice, and tobacco, and was passed in both houses of Congress - but vetoed by president Calvin Coolidge - in 1927, and again in 1928. With each vote farming conditions had continued to worsen, and southern Democratic support had continued to increase. Nevertheless, the bill faded away after these numerous failed efforts. That farm organizations were not involved in the drafting of the bill may have been key in its failure, along with farmers' lack of representation in the Presidents' administrations.
After his election in 1928, President Herbert Hoover charged Congress with developing an agricultural policy that would create "stabilization corporations to protect farmers from seasonal gluts and periodical surpluses." Thus the 1929 Agricultural Marketing Act (AMA) was born. Through the Act, "[a]gricultural cooperatives would help to control the supply of agricultural goods by helping farmers to withhold surpluses from the market and thereby raise prices." Essentially a marketing policy, its focus on increasing price "was the AMA's downfall given the economic context of falling exports for wheat, rising production for wheat and cotton, and declining prices for most agricultural commodities."
Additionally, just months after the AMA's passage the Great Depression caused gross farm income to fall by more that half. Because it did not address production, the Farm Board it created to buy surplus crops quickly ran out of funds. "[T]he social organization of farming made voluntary reductions in production irrational." Meanwhile, "farm leaders and agricultural economists were formulating and gaining support for mandatory production control programs."
The idea that people will stop doing something that is currently making them money, without legally being forced to, is laughable. As is evidenced here, that trend is not new. It is of course illogical. The sole function of a business is to make money. If a business is making all the money it can, it has no motivation to change the way it is operating. This becomes sticky when the commodity that the business makes money on is something that people literally die without. What is best for the country is often not what is best for business - and, it seems, business always wins. The next chapter is particularly illustrative of the idea that our government is more invested in keeping businesses going than in keeping its own people alive.