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The Agricultural Adjustment Administration

Roosevelt also encouraged the creation of the Agricultural Adjustment Administration(AAA) to assist America’s farmers. The AAA temporarily reset prices for farm commodities, including corn, wheat, rice, milk, cotton, and livestock, and then began subsidizing farmers to reduce production. Before the depression, many debt-ridden farmers had increased crop production in order to earn more money. Ironically, this increased production had led to overproduction, which flooded the market and drove prices down, forcing farmers to plant even more the next year in a never-ending cycle. The AAA, however, began paying farmers extra to plant less or destroy their surplus crops in order to raise prices again. Congress also passed the Farm Credit Act to provide loans to farmers in danger of bankruptcy.

The AAA was quite controversial, as many critics wondered why landowners rather than sharecroppers and tenant farmers were receiving federal aid. Indeed, some landowners who received aid unjustly used it to purchase farm equipment, which had the potential to eliminate farm owners’ need for sharecroppers and tenant farmers entirely. Furthermore, many poorer and hungrier Americans were outraged that the government was paying farmers money to destroy perfectly edible crops in order to inflate prices. Despite these criticisms, however, the AAA did manage to raise prices to their pre–World War I highs.

The Tennessee Valley Authority

Congress also created the Tennessee Valley Authority(TVA), whose goal was to modernize and reduce unemployment in the Tennessee River valley, one of the poorest and hardest-hit regions in the country. The agency hired local workers to construct a series of dams and hydroelectric power plants, which brought cheap electricity to thousands of people. The public corporation also created affordable employee housing, manufactured cheap fertilizer, and drained thousands of acres for farming.

The TVA, like the AAA, was highly controversial. Many conservatives claimed that government production of electricity was a mild form of socialism and that it disrupted market prices too much. Competing electric companies also attacked the TVA for selling cheaper electricity and lowering their profits. Still, the TVA had such a profound impact on the economy and quality of life in the Tennessee River valley region that the federal government initiated similar projects throughout the West and South. Within a decade, many major U.S. rivers were set up to produce hydroelectric power that provided both electricity and jobs.

The National Industrial Recovery Act

The 1933National Industrial Recovery Act was the federal government’s first attempt to revive the economy as a whole. The bill created the National Recovery Administration(NRA) to stimulate industrial production and improve competition by drafting corporate codes of conduct. The NRA also sought to limit production of consumer goods to drive up prices. Furthermore, the act helped set up the Public Works Administration(PWA) to construct public roads, bridges, and buildings. In accordance with Keynesian economic theories, Roosevelt believed that improving the public infrastructure would put more money into the economy.

Restructuring American Finance

Finally, Roosevelt also lobbied Congress to establish new regulations on the financial sector of the economy. After taking office, he took the country off the gold standard, which allowed citizens and foreign countries to exchange paper money for gold. To prevent people from hoarding the precious metal, the president also ordered all private gold stocks to be turned over to the U.S. Treasury in exchange for paper dollars. Congress also created the Securities and Exchange Commission(SEC) to regulate trading on Wall Street and curb the out-of-control speculation that had led to the Crash of 1929.

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