Farming prices decreased further during the Great Depression, leading to parity-seeking New Deal era legislation, such as the Agricultural Adjustment Act of 1933.
Even when occasional declines and farmer complaints occurred, like in the mid-1880s, the federal government only intervened through tariffs, anti-trust laws, and small measures to spur demand.
The prosperous 5-10 year period before 1914 is often referred to as the “Golden Age” of agriculture, and the relative price level of this time would set the standard for “parity.”[5][6] America’s involvement in the First World War in 1917 spurred the first large-scale federal intervention in the farm commodities market.
Out of wartime necessity, the government allowed executive regulation of agricultural production and requisitioned food supplies.
The Hoover administration passed the Agricultural Marketing Act in 1929, which introduced limited supply controls, but the price decline continued.
By limiting supply, the Act explicitly sought to raise prices and reestablish the relative purchasing power of farmers that had prevailed from 1909 to 1914.
After 1948, parity-prices were linked to the relationships among farm and nonfarm prices during the most recent 10-year period, rather than only on the 1909–1914 benchmark, thereby adjusting for changes in relative productivity.
For instance, if productivity in agriculture (relative to the 1909–1914 base period) rose faster than in industry, the parity price would be too high, and vice versa.
They argued the relative price structure of one period would quickly become obsolete as technology progresses at different paces in each economic sector.