Question

What TWO things were instrumental in causing many farms to fail during the onset of the Great Depression? Select all that apply.

A. higher farm prices
B. Federal subsidies
C. extended drought
D. lower farm prices

Answer 1

A. higher farm prices
B. Federal subsidies

Answer 2

The correct answers are:

• D) "Lower Farm Prices": During the decade of 1920, farm production had an important increase due to technological improvements such as mechanization and more potent pesticides, which made crops more resistant to plagues. As a result of this, there was an oversupply of agricultural products that led to sharp reductions in their prices.
• B) "Federal Subsidies": The government created the Agricultural Adjustment Administration in 1933, which set a series of policies including paying farmers for letting part of their lands to become idle (not produce) so the output of food would be lower. The objective of this was to create scarcity in order for the prices of agricultural products to rise. These policies, however, where declared to be unconstitutional by the Supreme Court as it considered that the regulation of agricultural production was beyond the power delegated to the government.