American Hydra: The Many Heads of Corporatism — Part 2

USDA, from the “People’s Department” to a Subsidiary of Big Agriculture

American Agriculture experienced their golden years from 1900 until the end of WWI as favorable weather conditions and massive increases of exported farm goods created both high prices and increased harvest for farmers. At the same time advances in technology were rapidly increasing farm productivity with fewer people. During WWI, food production dropped significantly in the warring nations which created an enormous demand for American foodstuffs. Farmers capitalized on this by borrowing more money to buy new equipment and more land to farm. Farm mortgages increased from $3.3 billion in 1910 to $6.7 billion in 1920.

But with the close of the war, demand for American products dropped, sending the American farmers into the great depression almost ten years before the market crashed in October of 1929. As the farmer was reeling from low prices and high mortgage, a new enemy came on the scene: Mother Nature. In the south the Boal weevil began to devour the cotton crops and the Midwest slipped into the epic Dust Bowl drought turning thousands of miles of land into sand dunes and sending out dust clouds that went travelled for thousands of miles.

While the Harding and Coolidge Administrations believed the farmers would be best served by a free market economy, the situation continued to deteriorate until Herbert Hoover, facing the greatest economic downturn in US history urged Congress to create the Agricultural Marketing Act which in essence created small monopolies (called cooperatives) that were to regulate agricultural production and limit competition between the cooperatives. This first major government intervention into the family farm was a disaster from the beginning and was soon scrapped as the nation joined the farmers in the Great Depression.


In 1935 there were some 6.8 million farms in the US so when Roosevelt promised to help the farmer during the depression; he captured a lot of votes. With the blessings of the farmers, part of Roosevelt’s “New Deal” was the Agricultural Adjustment Act (AAA) of 1933. The Agricultural Adjustment Act of 1933 was followed by the Soil Conservation and Domestic Allotment Act of 1936 and the Agricultural Adjustment Act of 1938 which form the foundation for all federal farm programs that have followed it. Congress justified this Act under the Interstate Commerce Clause in the US Constitution. Later farm bills would adopt, discard, readopt or modify the basic farm policy tools found in these Acts. The 1933 AAA applied to wheat, cotton, corn, rice, tobacco, milk and hogs then modified in 1934, to add rye, flax, barley, grain sorghum, peanuts, sugar cane, sugar beets, and cattle. Potatoes were added in 1935.

One part of the AAA created introduced price parity, this scheme set prices at a level that would give producers the same purchasing power that they enjoyed during the golden age of agriculture (1909-1914) and thereby equalize the purchasing power of farmers and non-farmers. This parity was to be achieved through a number of programs run through the USDA which was granted the authority to enter into “voluntary” contracts with farmers to reduce crop acreages in exchange for rental and parity payments. The farmer that did refuse to “volunteer” for this parity faced a 50% sales tax on everything they sold so almost everyone “volunteered” for the program. It could also regulate marketing through agreements with processors, handlers, and producer associations. These contracts were to be funded by a processing tax. The contract acreage reduction provisions were intended to manage commodity supplies and reduce surpluses while the rental and parity payments provided income streams for producers.


Another part of the AAA was the Farm Bill which has to be renewed every 5 years (and it has). This Bill subsidizes farmers to grow certain crops which the government felt were too important to let the free market control any longer. These crops sell at an artificially low price because the subsidy payments make up the price difference between what the farmer is paid for their crop and what they would get on the open market thus encouraging farmers to grow more of it. The problem with this program is that the five crops which control the subsidy market – corn, cotton, rice, soybeans, and wheat – are predominantly controlled by large corporations. So this Bill actually hastened the demise of the family farm as they received little to no assistance from this subsidy while the large farmers benefitted greatly. As a result, this program has “transformed rural America into a wasteland of large commercialized farms and abandoned fields that once served as symbols of hope to the families that depended on their plentiful yields.” — Unquote, William S. Eubanks II

The AAA also payed farmers to plow under 10 million acres of cotton, destroy millions of gallons of milk and other food stuffs plus slaughter 6.5 million hogs all at a time of national drought and food shortages. Aside from the obvious insanity of destroying food during a famine, the AAA also threw 2 million American farm workers out of a job and most of them out of their homes, during the height of the depression. In another ironic twist that the “New Deal” dealt to Americans, while the remaining farmers could charge more for their products to people who could not afford to pay it, the farmers themselves had to pay higher prices for manufactured goods as mandated by another FDR creation, the National Recovery Administration. So in the end, farmers actually became poorer through the New Deal policies that were “officially” created to help them.


As with the 1906 Meat Inspection Act, it soon became obvious that the winners with the AAA were the big farmers and landowners. By tying benefits to acres of land taken out of production, Congress made it inevitable that the more property one had the more benefit one would get from the program. Those on the bottom received virtually nothing for setting property aside. For instance if a farmer had twenty acres and plowed up five of them, they would receive $35.00 to $100.00 in AAA payments, because people renting the land or sharecroppers had to share the payments with the land owners so they would only receive $17.50 to $50.00 of that payment, while those who owned large farms and plantations would receive hundreds or even thousands of federal dollars.

Like the 1906 Meat Inspection Act, the long term goal of the AAA was the modernization of farming with new machines and techniques; this guaranteed the displacement of smaller operations all over the country. So, armed with loans granted through the AAA and payments for setting aside land, the bigger farms began to acquire new machinery and lands while the sharecroppers and renters were forced out of their homes displacing millions of the poorest of the poor. Also like the 1906 Meat Inspection Act, the government became the final determiner on who would win and who would lose from these Bills and it was rarely the little guy.


In 1936, the US Supreme Court heard the landmark U.S. v. Butler case arguing the constitutionality of the AAA. The Court ruled against the AAA stating: “If the taxing power may not be used as the instrument to enforce a regulation of matters of state concern with respect to which the Congress has no authority to interfere, may it, as in the present case, be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command? . . . The regulation is not in fact voluntary. The farmer, of course, may refuse to comply, but the price of such refusal is the loss of benefits. The amount offered is intended to be sufficient to exert pressure on him to agree to the proposed regulation. The power to confer or withhold unlimited benefits is the power to coerce or destroy.”

Though the original AAA was overturned, it never went away as Congress tweaked new agriculture bills to meet the legal requirements set down by the court. As the AAA morphed into complete control over the production of American foodstuffs, what was once a “voluntary” quota on wheat and other crop production became mandatory under the AAA of 1938. This Act gave the USDA the power to levy steep fines on farmers for exceeding their “allotment” and in 1941, that power was exercised on one Mr. Roscoe Filburn.


Roscoe Filburn operated a small farm in Montgomery County, Ohio, keeping a herd of dairy cattle, selling milk, raising poultry, and selling poultry and eggs. In July of 1940, the USDA informed Mr. Filburn his “allotment” of wheat for the 1941 growing season. Mr. Filburn grew more wheat than his allotted amount so he could feed it to his own cattle without buying it on the open market. When the people of the “Peoples Department” discovered his transgression, he was immediately charged with growing too much wheat and was given a fine by the U.S. Department of Agriculture, under the authority of its Secretary Wickard.

Mr. Filburn refused to pay the fine so the USDA took him to court and the case eventually made its way to the Supreme Court of the US. Mr. Filburn’s arguments were simple, since none of the wheat actually left his farm, but was instead fed to his cattle, this case could not fall under “interstate commerce,” he also argued that since the wheat was never for sale, Congress was trying regulate the “consumption” of wheat not the marketing of wheat.

The Wickard v. Filburn case because the Trojan horse by which Congress could legislate every area of American life on the grounds it “could” affect interstate commerce. Ultimately this case hinged on whether the US government had the authority to hurt one group of people (in this case small dairy/poultry farmers) for the benefit of another group of people (in this case wheat farmers). The court’s answer was a complete reversal of the U.S. v. Butler case. The court had this to say about their unanimous decision: “It is of the essence of regulation that it lays a restraining hand on the self-interest of the regulated and that advantages from the regulation commonly fall to others.” Any resemblance to the “Peoples Department” as envisioned by Lincoln officially died the day that decision was handed out. Between price parity, subsidies and the now all powerful interstate commerce clause, the USDA became another in the long line of government agencies picking and choosing the winners and losers in the US.


The impact of this lopsided farming policy accelerated the decline of the small family farmer while giving rise to a new term in the American vernacular “agribusiness.” Agribusiness means the sum total of all operations involved in the production and distribution of food and fiber.” Essentially, the policy of subsidies led to chronic overproduction of subsidized items which was dumped on the world market lower the price producers received for them. This in turn forced the smaller and non-competitive farmers out of business while their lands were bought out by larger farms, investment groups or equity firms.

So obvious did this become that in 1944, the USDA commissioned anthropologist Walter Goldschmidt to conduct research of the effects of large commercial farms and small family farms on two local communities. The results were staggering. The town supported by family farms had more and better schools, roads and a higher standard of living while the community supported by large commercial farms had only one school and dirt roads. The report was “officially” buried when Goldschmidt finished it. But one could argue that the results were not buried at all but instead became the official policy of the USDA in the coming years. The policy of slow strangulation of the small farmer continued until the 1980’s when the USDA simply became a subsidiary of the multinational agribusinesses.

“Goldschmidt was the first American scholar in the twentieth century who documented the relationship between farming and democracy. He knew rural America had been under attack by large farmers for several decades. He witnessed American agriculture change from a way of life for raising food and sustaining democratic society to a business for making money and exerting political influence. This has had, as Goldschmidt predicted, unforeseeable deleterious consequences for nature, food, human health and democracy. One can visualize this giant agriculture as a massive factory that has taken roots in the land, industrializing both farming and food and farmers, making rural America a colony for the extraction of profit. Giant agriculture is leaving behind millions of broken family farms. It has contaminated water and land, disrupted and poisoned nature, and created a wounded rural America open to conquest by urban culture and power.” — Unquote, author Evaggelos Vallianatos, PhD