The New Deal and Recovery, Part 9: The AAA

George SelginHaving devoted thelasttwo posts inmy New Deal series to the NRA, I may have given readers the impression that I had nothing to say about the consequences of the Agricultural Adjustment Act (AAA) passed more than a month before the National Recovery Act. As this series is about the New Deal's contribution to economic recovery, you perhaps assumed that I skipped the AAA because it was a farm relief and reform measure only, and not an important part of FDR's recovery strategy.If so, you were mistaken, for I realize that FDR saw the AAA and NRA as twin pillars of his recovery plan. The NRA was supposed to boost manufacturers' revenues by ending cutthroat competition, while enhancing their workers' purchasing power by raising their wage rates. The AAA was, in the meantime, supposed to raise farm product prices, and thereby boost farmers' purchasing power, by getting farmers to cut their output. Indeed, if FDR can be said to have considered either program more crucial to recovery than the other, it was to the AAA that he assigned top priority. I took up the NRA first, not because I considered the AAA less important, but because the NRA's tendency to reduce the real gains from gold-based demand growth made it seem natural to turn to it immediately after discussing New Deal gold policies.Despite its name, the NRA ended up hampering "national recovery" instead of promoting it. In contrast, many experts believe that the less ambitiously-named AAA did promote recovery. In t...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs