When Franklin D. Roosevelt was elected as president, he appointed Henry Wallace as his Secretary of Agriculture. In 1933 Wallace drafted the Agricultural Adjustment Act (AAA). The AAA paid farmers not to grow crops and not to produce dairy produce such as milk and butter. The money to pay the farmers for cutting back production of about 30% was raised by a tax on companies that bought the farm products and processed them into food and clothing.
The objective of the AAA was for a reduction in food production, which would, through a controlled shortage of food, raise the price for any given food item through supply and demand. The desired effect was that the agricultural industry would once again prosper due to the increased value and produce more income for farmers. In order to decrease food production, the AAA would pay farmers not to farm and the money would go to the landowners. The landowners were expected to share this money with the tenant farmers. While a small percentage of the landowners did share the income, the majority did not.
In the 1930s it was estimated that 45 per cent of the cotton tenants were "sharecroppers" who lived in shacks provided by the landlord. They were forced to buy food at inflated prices in landlord-owned stores and received a portion of the crop in lieu of wages. Norman Thomas, the leader of the Socialist Party of America, denounced this system as "involuntary servitude" and a form of slavery. Thomas told Henry Wallace that the AAA cotton program was not helping the plight of most sharecroppers. The contracts required cotton plantation owners to share government benefits with their tenants, but the provision was being poorly enforced.
In June 1934 the Southern Tenant Farmers' Union (STFU) was established in response to allegations that an absentee landlord had evicted some forty tenant families in Arkansas. Led by socialists, the STFU promoted the idea that blacks and whites could work efficiently together. According to William E. Leuchtenburg, the author of Franklin D. Roosevelt and the New Deal (1963): "It was in Arkansas that croppers and farm laborers, driven to rebellion by the hard handed tactics of the landlords and the AAA committees, established the Southern Tenant Farmers' Union in July, 1934. Under socialist leadership, the farmers, Negro and white-some of the whites had been Klansmen-organized in the region around Tyronza."
The landlords struck back with a campaign of terrorism." The journalist, Dorothy Detzer, argued: "Riding bosses hunted down union organizers like runaway slaves; union members were flogged, jailed, shot-some were murdered." Norman Thomas told a nationwide radio audience: "It will end either in the establishment of complete slavish submission to the vilest exploitation in America or in bloodshed, or in both."
Two of Wallace's junior members of his department, Jerome Frank and Alger Hiss, decided to draw up legislation that would protect sharecroppers from their landlords. Victor Christgau, who was second in command to the head of the Agricultural Adjustment Act (AAA), Chester R. Davis, was persuaded to see out details of the change in the name of Wallace. Davis was furious when he discovered what had happened. He later recalled: "The new interpretations completely reversed the basis on which cotton contracts had been administered through the first year. If the contract had been so construed, and if the Department of Agriculture had enforced it, Henry Wallace would have been forced out of the Cabinet within a month. The effects would have been revolutionary."
Davis insisted that Frank and Hiss should be dismissed. Wallace was unable to protect them: "I had no doubt that Frank and Hiss were animated by the highest motives, but their lack of agricultural background exposed them to the danger of going to absurd lengths... I was convinced that from a legal point of view they had nothing to stand on and that they allowed their social preconceptions to lead them to something which was not only indefensible from a practical, agricultural point of view, but also bad law."
Davis told Jerome Frank: "I've had a chance to watch you and I think you are an outright revolutionary, whether you realize it or not". Wallace wrote in his diary: "I indicated that I believed Frank and Hiss had been loyal to me at all times, but it was necessary to clear up an administrative situation and that I agreed with Davis". According to Sidney Baldwin, the author of Poverty and Politics: The Rise and Decline of the Farm Security Administration (1968), Wallace greeted Frank with tears in his eyes: "Jerome, you've been the best fighter I've had for my ideas, but I've had to fire you... The farm people are just too strong."
Rexford Tugwell was unhappy with Wallace's decision and thought he should have sacked Chester R. Davis instead: "He (Wallace) gave up his policy. It was more a failure of leadership than anything else. It was letting himself be pushed around by what I thought were pretty sinister forces." Raymond Gram Swing, wrote in the Nation Magazine that Wallace had shown himself unwilling to stand up to big producers and agribusiness and seize "economic power from the interests in agriculture who hold it."
It was in Arkansas that croppers and farm laborers, driven to rebellion by the hard handed tactics of the landlords and the AAA committees, established the Southern Tenant Farmers' Union in July, 1934. Under Socialist leadership, the farmers, Negro and white-some of the whites had been Klansmen-organized in the region around Tyronza. The landlords struck back with a campaign of terrorism. "Riding bosses" hunted down union organizers like runaway slaves; union members were flogged, jailed, shot-some were murdered." (Dorothy Detzer, Appointment on the Hill (1948)) Queried by a reporter about the violence, one Arkansan responded: "We have had a pretty serious situation here what with the mistering of the n*****s and stirring them up to think the Government was going to give them forty acres." (New York Times, 16th April, 1935)