The Great Depression occurred during the late 1920s and the early 1930s. The years of the great depression were characterized by poverty, high unemployment, deflation, low profits and plunging farm incomes. The Great Depression started in the United States, spreading on to other parts of the world. The Great Depression lasted for close to a decade and is still regarded as the most severe depression to have been experienced in the world in the 20th and 21st centuries. In the United States, the Great Depression began on Black Tuesday when the stock market crashed. The Greta Depression can only be likened to the recent global financial crisis that lasted for 2 years; between 2007 and 2009.
Although many factors are thought to have caused the Great Depression, nonetheless, the most common amongst these include the great inequality in wealth distribution in the 1920s and the extensive speculation of the stock market towards the end of the 1920s. Various sectors were greatly affected by the Great Depression and the agriculture industry was no exception. In the United States, the implementation of the New Deal farm Policies was with a view to helping farmers recover from the aftermath of this financial crisis. The rationale behind this was that the economic slowdown in farming had somewhat had an effect on the occurrence of the Great Depression. Therefore, the New Deal Farm Policies were aimed at reducing the effects of the great depression on farming.
Overview of Causes of the Great Depression
The great depression was caused by several factors but one of the major causes was the unequal distribution of money across individuals and interest groups. At the time, there was also unequal distribution of resources in the various industries between on the one hand, the middle class and on the other hand, the rich1. In addition, there was also un-proportional distribution of money between the United States and Europe was also proportional. Consequently, this resulted in an unstable economy. In the late 1920s, the stock market in the United States was characterized by high levels of speculation and this kept the stock market quite high for a given period of time. However, this eventually led to the crash of the stock market on October 29, 1929. From the beginning of the 1920s, the gap between the rich and the working was seen to be rapidly increasing. For example, the manufacturing output had risen by thirty two per cent by 1929 while the wages paid to the employees had only increased by eight per cent.
In the 1920s, manufacturing industries in the United States experienced a period of high rates of production of products. The high production led to an imbalance in supply-demand. For example, although the manufacturing companies produced goods, nonetheless, the middle-wage consumers could not afford these manufactured products. Consequently, these individuals had no choice but to buy goods on credit. The purchase of goods on credit created a situation whereby many individuals were in need of goods they could not afford
Thanks to the advanced credit purchase, many of the middle-income earners could even purchase such luxury products as cars. At the time, corporate wealth was controlled by a few corporations even as such other industries as agriculture were declining steadily.
The Effects of the Great Depression on the Agricultural Industry
The great depression affected the agricultural industry more than all the other industries. During this period, vehicles and radios were in high demand as many individuals spent their money purchasing these items. Individuals were left with little money to purchase the excess supplies from the agricultural sector. As a result, many farmers went bankrupt because some of their products could not sell and those which sold went at very low prices. Many employees who worked in farms had their wages greatly reduced. In fact, employees in the agricultural industry worked for the longest hours but received the lowest wages. This greatly affected their lives because they could not afford to meet their daily needs, further pushing them into abject poverty. The use of machines in farms had become extensive and farmers did not hire as many employees as they used to. This increased the rate of unemployment in the country. Many individuals working in the agricultural sector became homeless. Since these individuals could no longer work in the agriculture sector, agricultural production declined steadily.
Dust storms swept away the fertile top soil and destroyed crops that were in the farms. Many landowners became bankrupt and could not produce any more. Some deserted their pieces of land to go and find rescue in other places.
The New Deal Farm Policies
The New Deal Farm Policies were introduced by President Franklin D. Roosevelt with the intention of improving the economy in the agricultural industry that had suffered greatly as a result of the great depression. The Congress decided to come up with policies that would balance the supply and demand for commodities produced in the farms. This would make it possible for farmers to purchase those products that were within their purchasing powers. Some of the policies that greatly affected farmers include: the Agricultural Adjustment Act of 1933 (AAA), the Civilian Conservation Corps of 1933 (CCC), the Farm Security Administration of 1935 and 1937 (FSA), the Social Conservation Service of 1935 (SCS), and the Rural Electrification Administration (REA).
The Agricultural Adjustment Act (AAA)
This act was passed a shortly after the inauguration of President Franklin D. Roosevelt. The act touched on seven agricultural products. These were rice, cotton, corn, peanuts, wheat, tobacco, and milk. The government offered payments to farmers so that it could limit the amount of goods that they produced. The federal government bought animals that had been reared by farmers and slaughtered them with the intention of selling them later on. This way, the prices of farm products were expected to increase. As a result, prices of farm products doubled between 1933 and 1937. Most of the farmers accepted to take the payments that the government offered but a few refused them. In the year 1937, the Agricultural Adjustment Act was ruled unconstitutional by the Supreme Court. This led to another meeting whereby the program was discussed, rewritten and once more, passed into law. The law had faced some criticism but most of the critics later agreed that it had helped raise the hopes of many farmers. In a bid to enhance the effects of the act, farmers were placed in committees where they could communicate their views. The act never brought to an end the great depression neither did it end the drought that prevailed. Nonetheless, it found aide application in all farm programs for a period of 70 years following its legislation. Some of the controversies surrounding the law include the many products that the farmers produced yet the government decided to pay for just seven of them. The argument is that all products qualify to be paid for. The farmers also continued to produce more of the products using new technologies.
Civilian conservative Corps (CCC)
The CCC was a public works program that was run by the United States army. The program brought over three million individuals together with the intention of increasing development in the country. Young men and adults were led by the armed forces to construct conservation dams, planting grazing land, planting trees, building roads and trials in parks, and graining swamps5. Individuals who joined were given physical training and orientation in barracks. The conditions here were harsh but many individuals preferred remaining here because they could be provided with a place to sleep and some food. The CCC was the passed within the shortest period of all the acts in the new deal. Roosevelt took office on 4th March 1933 and the bill was introduced on 27th of March 1933. it was passed on 31st March 1933 and the first group of enrollees was absorbed on the 7th April 1933. The African Americans and the Native Americans were part of the project but the African Americans were allowed to register to a maximum of ten percent. After a long days work, the individuals had time to play, study, and attend education classes. The CCC was disbanded in 1941 having employed about 3.5 million individuals. The enrollees did a lot of work by the time when it was disbanded.
The Farm Security Administration (FSA)
The FSA was a program started by the government to offer loan to farmers so that they could increase production. Some farmers used the amount that they received from the AAA to purchase farm equipments such as the tractors. This allowed them to work on large pieces of land compared to the amount they could have managed when using horses. The struggle by farmers to use the little that they received led to the formation of the FSA. The program was to offer loans at low interest rates to individuals who rented land. Cooperative farmsteads were also built to cater for some farmers who had been previously forced to take relief. Many tenants managed to stay in the lands for long periods of time using the loans. The loan allowed many tenant farmers to purchase their own pieces of land from the earnings they acquired. The individuals who went for the loans were required to have some skills in bookkeeping. Many individuals gained some business skills that helped them succeed in life.
The Social Conservation Service (SCS)
The SCS is one of the programs that helped in conservation of the environment especially land. During the 1920s, farmers over plowed, over planted, and over grazed the lands on the Great Plains. The harsh conditions of heat, drought, wind, and low prices of agricultural products caused a great disaster in the 1930s. This made the government to come with some strategies that could be used to conserve soil. The intention was to prevent soil erosion and conserve the fertility of soil. Some people were worried of implementing the soil conservation programs because the land was not theirs and some others were worried of using methods that could not give a return on investment. Farmers were paid to plant certain types of crops and in some cases they were paid to leave the lad to lie idle. Some other methods implemented include crop rotation, contour plowing, Terracing of sloping land, planting trees in rows, and others. This program had positive results in the late 1930s when the rainfall increased, farmers started planting better crops, and the farm outputs increased.
Rural Electrification Administration (REA)
The REA helped bring electricity in the rural areas. This benefited farmers in a great way. All the farm work was previously done by hand but electricity helped improve most of the conditions. Activities such as milking, pitching hay, cranking the cream separator and many others could now be done using machines. Children belonging to the farmers could now study using electricity in place of kerosene lamps. The electricity improved the lives of the farmers in a great way.
Conclusion
The great depression defines a decade between 1929 and 1939 when the world was faced by an economic downturn. It led to poverty, high unemployment, deflation, low profits, and plunging farm incomes. The great depression was caused by such factors as the unequal distribution of wealth and the extensive stock market speculation that took place towards the end of 1920s. The agricultural sector was faced by many problems during the great depression. For example, prices of agricultural products went down, the wages of those who worked in farms were reduced and many farmers reduced the number of employees on their farms. The New Deal Farm Policies were aimed at improving the lives of farmers across the United States. The Agricultural Adjustment Act of 1933 was aimed at controlling the products that farmers produced by giving payments to farmers for the products they produced. The Civilian Conservation Corps of 1933 was a program that was run by the United States army and helped in building the environment. The Farm Security Administration of 1935 and 1937 was formed to give loans at low interest rates to farmers who relied on renting land. The Social Conservation Service of 1935 and the Rural Electrification Administration helped preserve soil fertility and bring electricity to rural areas respectively.
Reference
Leuchtenburg, William. E. Franklin D. Roosevelt and the New Deal 1932-1940. New York: Spurgeon Bell Publishers, 1963, 121-148.
Rothbard, Murray. N. America’s Great Depression. Fifth Ed. New York: The Ludwig Von Misses Institute, 2000, 217-237.
Schlesinger, Arthur. M. The New Age of Roosevelt, Volume 3. Chicago: University of Chicago Press, 1957, 06-43.