In February 1938 Congress passed the Agricultural Adjustment Act (AAA) of 1938. The Soil Conservation and Domestic Allotment Act of 1936 had proven unable to limit farm surpluses or the decline in prices. The second AAA was a revised version of the AAA of 1933. Because the processing taxes of the original AAA had been declared unconstitutional, the 1938 law eliminated those taxes. It also provided for farmers’ subsidies to be paid from the federal treasury. The act allowed the secretary of agriculture to establish a marketing quota—or how much of a certain crop a farmer could market—when a surplus of an export farm commodity existed. These commodities included corn, cotton, rice, tobacco, wheat, and others. The act also allowed the government to limit acreage based on the quota. In addition, the AAA authorized the Community Credit Corporation to loan farmers money based on the value of their surplus crops. The act also allowed farmers to store surplus crops in granaries. The AAA also established the Federal Crop Insurance Corporation, which provided insurance for wheat crops in the event of an unavoidable loss.
