LETTER OF TRANSMITTAL

A12 1934-36

AGRIC.
REFERENCE
SERVICE

UNITED STATES DEPARTMENT OF AGRICULTURE,
AGRICULTURAL ADJUSTMENT ADMINISTRATION,
Washington, D. C., March 9, 1935.

Hon. HENRY A. WALLACE,

Secretary of Agriculture.

DEAR MR. SECRETARY: Herewith is transmitted the second report of efforts to assist in the recovery of agriculture, undertaken in compliance with the mandate of Congress contained in the Agricultural Adjustment Act.

The report covers the activities of the Agricultural Adjustment Administration from February 15, 1934, through December 31, 1934. It supplements and is a continuation of the first report, which was dated February 15, 1934.

Respectfully,

Oldavia

Administrator.

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CONTENTS

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FOREWORD..

CHAPTER 1. THE ECONOMIC POSITION OF AGRICULTURE____

I. THE ADJUSTMENT PROBLEM

Agricultural Adjustment Act directed toward correcting

economic conditions in agriculture.-Parity established as

objective.—Adjustment of production as means of attaining

parity.-Production control applied to basic commodities.-

Secretary of Agriculture empowered to enter into marketing

agreements.

II. THE SCOPE OF THE ADJUSTMENT PROGRAM.

Adjustment programs in 1933 applied to cotton, wheat, and

cigar-leaf tobacco.-Marketing agreements in 1933 applied to

rice and fluid milk.-Surplus removal measures effected in

1933.-Loans extended to cotton and corn producers.-Pro-

grams instituted in 1934.-Wheat seedings increased to 90

percent of base acreage.-Cotton plantings restricted.-Bank-

head Control Act put into effect.-Seven tobacco programs

inaugurated.—Rice agreements extended to Southern sec-

tion.-Corn-hog production-control program instituted.-

Price support applied to milk markets.—Amendments to agri-

cultural act add seven products named as basic.-Supplies of

sugar adjusted under authority of Jones-Costigan Act.-

Production-control program replaces marketing agreements

for peanuts. Cattle-adjustment program converted into

emergency-purchase program.-Scope of marketing agree-

ments and licenses extended.-Increased loan values on cotton

and corn.-Sixty-seven to seventy percent of farm income

derived from 14 basic commodities in 1929, 1932, and 1933.—

Programs in effect for 9 of 14 basic commodities.-More than

3,600,000 adjustment contracts signed in 1934.-Marketing

agreements supplement production control.-Amendment
strengthens marketing agreements.-Corn, hog, cotton, and
tobacco growers participate in referenda.

III. EFFECTS OF ADJUSTMENT PROGRAM.

Exchange value of farm products reaches 80 percent of pre-

war level.-1934 farm cash income 21 percent over that of

1933.-Welfare of farmers advances 50 percent in 2 years.-

Farm share of National income increases.-Rental and benefits

total over 446 million dollars.-Trend of farm income fluctuates

sharply. Increased farm income sustains business activity.

IV. THE PRESENT STATUS OF ADJUSTMENT_

Expected wheat carry-over about 125 million bushels.-

Indicated cotton carry-over reduced to about 8 million bales.—

Hog numbers about 30 percent fewer than last year.-Drought

causes beef cattle decline from top to bottom of cycle.-Pro-

duction reflects results of both adjustment control and

drought. Continuing adjustment needed.-Productive ca-

pacity of crop acreage still excessive.—Agriculture now supply-

ing all that urban consumers can absorb.-Immediate aban-

donment of control measures would be almost certain to bring

new cycle of surplus and scarcity.

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CHAPTER 2. THE DROUGHT CRISIS, AND HOW IT WAS MET....

Drought of 1934 unprecedented in history of Nation.—

Federal agencies correlated program to meet crisis.

I. EARLY STAGES OF THE Drought..

First stage a climax of trends of decade.-Rainfall deficiency

occurred over wide area.-Small grains blasted beyond
recovery.-Fall pastures cut to 39 percent of normal.-Seed
supply menaced.-Livestock rushed to market to avoid star-
vation.

II. PRELIMINARY MOVES TO MEET CRISIS...

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Emergency agencies already possessed broad and flexible

powers. Relief operations well under way in May.-Congress

votes $525,000,000 to meet emergency.-Many Government

agencies enrolled.-Benefit payments provided income.—In-

portant functions delegated to Agricultural Adjustment

Administration.-Drought areas designated.

III. EMERGENCY CATTLE- AND SHEEP-BUYING PROGRAM.

Two primary methods of livestock adjustment employed.-

Drought toll reaches its peak in July.-Program designed to
maintain nucleus herds and preserve basis of livestock indus-
try.-Program has beneficial culling effect.-Sheep and goat
purchases started in August.

IV. OTHER REMEDIAL MEASURES.

Adjustment contracts modified to encourage most effective

use of land.-Measures increase actual supply of hay and for-

age. Information on needs and supplies cleared through Fed-

eral Livestock Feed Agency.-Adjustment Administration

underwrites conservation of corn fodder and corn stover.-

Funds allocated by Congress to prevent loss of adapted seed

stocks.-Government takes options on seed corn.-Railroads

cooperate with the Government in emergency movement of

livestock and feed.-Territory in which emergency rates apply

enlarged.

V. DROUGHT EFFECT ON FOOD SUPPLIES..

Comprehensive survey indicates no severe shortage of human

food.-Federal Emergency Relief Administration advised of

location of surpluses.

VI. ORGANIZING AGAINST FUTURE DROUGHT DEVELOPMENTS__

Specific functions assigned to new and existing units of

Department of Agriculture.-Effects of drought intensified by
past courses of human action. Measures designed to alleviate
future drought conditions are planned to correct mistaken
policies and practices.-Government agencies devote research
and conservation efforts to problem.

CHAPTER 3. COTTON...........

Cotton adjustment enters third year.-World supply of

American cotton decreases from 1931-32 season.-World

carryover of American cotton drops.

I. FACTORS IN DECREASE OF AMERICAN COTTON SUPPLY__.

Removal from cotton production of 10 million acres in 1933

prevents record crop.-Adjustment in 1934 restricts planting of

cooperating producers 38 percent.-Drought contributes to

short crop.-Objective of 1935 program contemplates further

reduction in carryover.-Average price of cotton rises.-Farm

value of cotton increases.-Voluntary agreement includes crop

years 1934-35 and 1935-36.-Base acreage used in program is

average cultivated acreage in the period 1928-32.-Rental and

parity payments offered producers.-Community and county

committees set up.

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