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The 1920s "boom" enriched only a fraction of the American people. Earnings for farmers and industrial workers stagnated or fell. While this represented lower production costs for companies, it also precluded growth in consumer demand. Thus, by the mid 1920s the ability of most Americans to purchase new automobiles, new houses and other durable goods was beginning to weaken.

The Agricultural Adjustment Act (AAA), passed in 1933, accepted the long-held premise that low farm prices resulted from overproduction. Thus, the government sought to stimulate increased farm prices by paying farmers to produce less. While the original AAA was declared unconstitutional by the Supreme Court, a new act correcting for the Court's concerns was passed in 1935. Critics pointed out the irony of reducing food production in a society where children already went hungry. Of course, those children's hunger did not represent demand in the marketplace. Indeed there were agricultural surpluses; as usual, the problem of the American farm was demand and distribution, not supply. "Acreage allotment" (the backbone of the crop reduction program) helped the largest and best capitalized farmers. It did little for smaller farmers and led to the eviction and homelessness of tenants and sharecroppers whose landlords hardly needed their services under a system that paid them to grow less. Further, it failed to address the fundamental problem of the Depression: weak consumer demand due to falling wages and unemployment. In the long run the effect of the AAA was beneficial to moderate to large operators.

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14y ago
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11y ago

farmers lost their farms because they weren't able to pay for their taxes

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10y ago

The American farmers over-planted and poorly managed their crop rotations hence causing the great depression later.

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Q: What did farmers do to cause the depression?
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