Second AAA

"My feeling about this bill is that from the standpoint of intelligible legislation it is the most completely conglomerate mess of involved language which was ever perpetrated upon a free people," rumbled Michigan's Arthur Vandenberg in the Senate last week. "Is it conceivable . . . that there could be any emergency on earth that would justify it?" rasped North Carolina's Josiah Bailey. "Perhaps it will not work," admitted Nebraska's old George Norris, "but what will work?"

The bill in question was the 104-page compromise measure patched together by a twelve-man conference committee out of the House and Senate Farm Bills passed during the special session (TIME, Dec. 20, et seq.). Since it had already been approved by the House, 263-10-135, it needed only the approval of the Senate and the signature of Franklin Roosevelt to make it the Agricultural Adjustment Act of 1938 and the law of the land. This week, after three days of debate divided between assertions by various Senators .that they did not understand what they were voting for and contrary assertions that the bill had to be passed anyway, Majority Leader Barkley managed a roll call, got the bill passed 56-10-31.

Bill. Thus propelled from the 75th Congress was the third major Farm Bill of the Roosevelt Administration, aimed at regulating the production and prices of the U. S. four major crops--wheat, cotton, corn, tobacco--also rice. Three major types of legislation provided models: the voluntary crop control insured by the first AAA through loans and benefit payments; the compulsory control enforced by penalties for overproduction introduced in the Bankhead Cotton Act and .the Tobacco Act; the voluntary reduction of soil-depleting acreage to encourage which the Government paid farmers $500,000,000 a year under the Soil Conservation Act.

A complex combination of all three, the Act empowers Secretary Wallace: 1) to set a national acreage allotment for each crop each season based on production during preceding years; 2) to give farmers who cooperate with the acreage allotment program loans on their crops whenever prices fall too far below "parity"--the purchasing power relative to other commodities which wheat, corn, rice and cotton enjoyed between 1909-14 and tobacco between 1919-29 (unless Secretary Wallace thinks other base periods would be more just); and 3) to invoke compulsory marketing quotas, subject to rejection by one third of the growers involved in a referendum and enforced by penalty taxes, whenever national supplies of any crop exceed specified levels.

Wheat. To provide for a normal year's domestic consumption and export of wheat plus a 30% carryover, the Act sets the national acreage allotment for 1938 at 62,500,000 acres, compared to 68,198,000 acres under cultivation last year. Allotments must be proclaimed by Secretary Wallace before July 15, divided among the wheat-producing States, counties, divided by county committees (including the Department of Agriculture's extension agent) among individual farmers. If the price (currently $1.11 a bushel in Manhattan) is less than 52% of the parity-price on June 15, or if the July crop estimate forecasts a bumper year, Secretary Wallace with the President's approval can make loans from 52% up to 75% of the parity price. Like the "nonrecourse loans" currently being given, on cotton, these loans are in effect Government payments in advance to the farmer for his crop at a fixed price almost certainly higher than the market price he will get when he sells it. They need not be repaid and bear no interest, although if the farmer stores his crop in a Government warehouse he may be liable for storage charges. A referendum on a marketing quota will be held when supplies reach 940,000,000 bushels.

Corn allotments must be proclaimed by February 1 of each year; that for 1938 "as soon as practicable." Corn crop loans will be granted when the price (currently 73-c- a bushel in Manhattan) is below 75% of parity on November 15, or if the November crop estimate is excessive. Marketing quotas will be invoked when supplies reach 2,700,000,000 bushels, penalties assessed at 15-c- a bushel.

Cotton allotments must be made by November 15 of each year; for 1938 ten days after the passage of the Act. Loan provisions are the same as those for wheat. Marketing quotas (except for 1938) will go into effect when supplies reach 19,500,000 bales with a 2-c-enalty for excess marketing on first crop and a 3-c- penalty on subsequent crops.

Rice allotments must be made by December 31. Although no loans are mandatory, rice growers have their own safeguard against overproduction--anyone producing rice for the first time in five years must take an acreage allotment 25% smaller than his farm would otherwise get. Marketing quotas will be invoked when supplies reach 10% above normal, with a penalty of 1/4-c- a pound.

Tobacco is the product of big growers and its regulation will be almost altogether compulsory. Not only are no loans mandatory, but marketing quotas can be invoked with a referendum when supplies are 5% over normal, and penalties are 50% of the purchase price.

Odds & Ends, 1) an appropriation of $4,000,000 for four regional research laboratories to investigate new uses, markets, and by-products for farm commodities; 2) the appropriation of $20,000,000 unexpended balance from the $500,000,000 Soil Conservation Act appropriation to finance a new Federal Crop Insurance Corporation empowered to issue policies to farmers against crop disaster; 3) a provision to limit payments to any one farmer in any one State to $10,000; 4) the recognition in principle of outright payments to farmers to make up the difference between market and "parity prices," which will be forthcoming only "if and when appropriations are made therefor."

Costs. What the administration of the Act would cost, neither Chairman Smith, nor Chairman Jones, nor any of its sponsors ventured to say. While the House and Senate bills were being drawn up, President Roosevelt asked that the appropriations be kept within the $500,000,000 appropriated to administer the Soil Conservation Act. Some Congressional estimates ran as high as $1,500,000,000. Assumption was, however, that Secretary Wallace could use his discretionary power over crop loans to keep the cost near the President's figure. Like the Soil Conservation Act, the Act provided for no compensating revenues such as the processing taxes collected under the first AAA, will have to be paid for out of the Government's regular revenues.

Constitutionality. In holding the first AAA unconstitutional, the Supreme Court ruled that the Government was using the Federal taxing power unconstitutionally in employing it to impose a system of crop regulation lying outside the powers delegated to Congress. The constitutionality of the second AAA, which has the same general objectives, rests not on the taxing power but specifically on the powers of Congress to: 1) regulate interstate commerce, and 2) promote the general welfare. As a further safeguard against the Court, the drafters of the AAA of 1938 inserted a provision separating the Act into sections dealing with each crop, so that the whole Act could not be thrown out by one adverse decision. But perhaps the strongest safeguard was arithmetic. Of the five Justices whose majority opinion threw out the AAA of 1938, neither Willis Van Devanter nor George Sutherland will ever write a Supreme Court opinion on the AAA of 1938.

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