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A New Deal:  Rural Reforms

Rural Reforms

"...if we can greatly increase the purchasing power of the tens of millions of our people who make a living from farming . . . we shall greatly increase the consumption of those goods which are turned out by industry..."

     - Franklin Roosevelt, Third Fireside Chat, July 24, 1933

FDR believed aiding America's farmers was crucial to ending the Great Depression.

In 1933 more than one in five workers were farmers. They had been struggling through hard times since the 1920s, when crop prices dropped sharply. The Depression turned hard times in rural America into crisis times. Prices for agricultural products collapsed, causing farm income to plummet 60 percent. Desperate farmers defaulted on bank loans and lost their lands. Tenant farmers and sharecroppers were forced to accept harsh terms from landlords. Farm laborers' wages were cut.

Roosevelt's farm program aimed to rescue indebted farmers and increase their income. Farmers could then buy products produced in the nation's cities, aiding economic recovery there. He also planned to improve rural life and productivity by bringing electricity and industry to underdeveloped areas.

Raising Farm Income

The centerpiece of FDR's farm program was the Agricultural Adjustment Administration (AAA). The AAA sought to raise farmers' income by increasing crop prices. To do this, the government paid farmers to cut production by reducing livestock herds and leaving some fields unplanted.

The AAA was controversial. Some objected to cutting agricultural production when many Americans lacked adequate food. The AAA also hurt poor farm laborers because landlords often evicted tenant farmers from unplanted land.

The agency's success in raising farm prices greatly relieved rural suffering by getting badly-needed cash into the hands of farmers. By the end of 1933, farm prices had nearly doubled. By 1934, over three million farmers were participating in the program.

Saving Family Farms

Falling prices for agricultural products sharply cut farm income during the Great Depression. Strapped for cash, many farmers couldn't pay their mortgages. By 1933, thousands had lost their farms and many more faced the threat of foreclosure.

To meet this crisis, FDR included credit legislation in his farm program. The Emergency Farm Mortgage Act refinanced farm loans at lower interest rates and on easier terms. The Farm Credit Act established local credit institutions for farmers to improve their access to capital. These laws kept thousands of farmers from losing their lands and set a precedent that continues today.

Powering Rural America

Imagine a world without electricity. In 1933, 90 percent of America's farmers lived in such a world. Ignored by private power companies, who could not make a profit wiring rural areas, farm families passed their nights in darkened homes. Their days were filled with time-consuming manual labor.

Electricity could transform farm life with pumps to supply running water, refrigerators, washing machines, and other labor-saving devices. A longtime advocate of public power, FDR was determined to bring affordable electricity to rural Americans.

The Tennessee Valley Authority (TVA) was a first step. It put thousands of people to work building dams and public power plants in the giant Tennessee River Valley. The TVA controlled flooding, improved agriculture, and developed industry in the Valley. It sparked economic growth and improved living standards in a region touching eight states. Today, the TVA is America's largest public power producer.
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