Agricultural Adjustment Act of 1938

======The Agricultural Adjustment Act of 1938========

• This was the second of the Agricultural Adjustment Acts to be passed.
• It made a necessary price support corn, cotton, and wheat
• The Act also created price minimums for certain products such as rye, peanuts, raisins, figs, dates etc
• Also, it created the Federal Crop Insurance Corporation
• The act appied marqueting quotas and overproduction penalties directly.

• It restricted the production by cutting down acreage and production of animals and crops.
• Farmers could only use so much of their land to grow crops, the other unused land could not be harvested. This land was primarily rented to the government in which the farmers recieved payment for.
• If farmers refused to participate, they had a to pay a 50% sales tax on their products
• With the cutting down of production, the prices of crops/animals began to increase which began to combat the problem of low crop prices

• Farm prices significantly increased, but food prices were still 25% lower than in the 1920-1931 period.
• Consumers had to pay higher prices for the crops, since the demand and supply became closer to reaching equilibrium
• Within two years of the AAA's existence, it gave out $700 million to farmers, which came from taxes from the people.
• This caused many people in the lower social class to just have enough money to get by or to even go bankrupt