Academic Master

Business and Finance

Agricultural Agreement Act of 1933 and 1938

The United States experienced partial economic meltdown till before President Franklin D. Roosevelt came into power. The 1933 Act introduced back the farmers’ purchasing power, and the 1938 Act replaced the illegal 1933 Act.

The economic meltdown in the United States was brought up by the lack of purchasing power for the farmers. The majority of the American population had relied on agriculture which resulted in an oversupply of food products. Consequently, the demand of the produce was reduced which in turn lead to lower buying prices from the manufacturing companies.

President Roosevelt sought to resolve this issue, so he introduced the 1933 Agricultural Act. The Act controlled the seven major crops’ supply, “corn, wheat, cotton, rice, peanuts, tobacco and milk” (Ganzel 1 para 3). This law put a limit on maximum acreage for the different crops per farmer, bought surplus food from the farmers, and paid farmers to engage in other farming activities such as livestock rearing. Some of the large-scale farmers were unwilling to embrace the new law, unlike the majority of small-scale farmers (Ganzel para 4). In reducing the supply, the president wanted to increase the buying price of food materials and save the economy. The money to pay these farmers was from the tax charged to the manufacturing companies.

The 1938 Agricultural Act was a replacement for the 1933 Act. The latter had been declared illegal, and hence, the 1938 Act was formulated. It denied the Federal government authority to charge the manufacturing companies and pay the farmers. Instead, the state relied on federal government money to pay the farmers. The 1938 Act also saw to the legislation on the Federal Crop Insurance Corporation (FCIC). This insurance was meant to protect farmers from losses accrued in cases of famine and other climatic conditions (Kramer, 181).

In putting into place the 1933 Act, President Roosevelt, and the Congress had deliberately overlooked the rights of the manufacturing companies to protect the citizens. The 1938 Act was put into place after the 1933 Act was declared unconstitutional. The 1938 Act functioned legally and maintained the payments to the farmers.

Works Cited

Ganzel, Bill. “AAA, Agricultural Adjustment Act.” Living History Farm 1.1 (2003): 1. Print. <>.

Kramer, Randall A. “Federal Crop Insurance 1938-1982.” Agricultural History 57.2 (1983): 181. Print. <>.



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