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 nr fi.10 
 
 Tobacco Leaflet No. 1 
 
 Issued November 1934 
 
 UNITED STATES DEPARTMENT OF AGRICULTURE 
 
 AGRICULTURAL ADJUSTMENT? ADMINISTRATION 
 
 ' J .CU ‘ 1 
 
 WASHINGTON, D. C. 
 
 PURPOSES AND OPERATION OF THE KERR-SMITH 
 
 3 tobacco,^ 
 
 Whether the Kerr-Smith Tobacco Act will be made effective for 
 flue-cured, Burley, fire-cured, or dark air-cured tobacco for the 1935 
 crop year will depend upon the outcome of a referendum among 
 tobacco producers of each type of tobacco. The referendum is to 
 be held in December. 
 
 The question which will be submitted to those eligible to vote in 
 the referendum is: 
 
 “ Do you favor a tax on the sale of tobacco for the crop year 
 beginning May 1, 1935, as provided in the Kerr-Smith Act? ” 
 
 The attitude of the Agricultural Adjustment Administration in the 
 referendum is that of an impartial observer. If the Act is to be 
 effective in 1935 for flue-cured, Burley, fire-cured, or dark air-cured 
 tobacco, the persons who own, rent, share-crop, or control three- 
 fourths of the land customarily engaged in the production of each 
 type of tobacco must favor its continuance. Growers of one type of 
 tobacco may have the Act applied to their type even if growers ©f 
 a different type should reject it. 
 
 The act was passed at the request of a large number of tobacco 
 growers to supplement and not to supplant the voluntary acreage 
 adjustment programs under the Agricultural Adjustment Act. 
 
 Secretary of Agriculture Henry A. Wallace, in a report to the 
 Senate Committee on Agriculture and Forestry on the tobacco bill 
 when it was pending in Congress in June 1934, included this state¬ 
 ment : 
 
 “ The demand for this type of legislation did not originate in the 
 Department but, according to our understanding, came from the 
 farmers. Tobacco growers from practically all regions have indi¬ 
 cated to us their interest in this measure. Tobacco production- 
 control associations, or county tobacco committees, or county agents 
 speaking for tobacco growers, in practically all of the southern to¬ 
 bacco-growing counties, have expressed their approval of this 
 measure. Approximately 95 percent of all tobacco growers are par¬ 
 ticipating in the programs designed to improve the economic situa¬ 
 tion of tobacco growers, and we are interested in any steps that may 
 be taken to protect as fully as practical the position of these 
 cooperating growers.” 
 
 Eligible persons are being given an opportunity, after watching 
 the Act in operation, to vote on whether they want it continued into 
 
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2 
 
 the 1935 season. The basis for the referendum is provided in the 
 Act itself and is in line with the Agricultural Adjustment Admin¬ 
 istration’s policy of having farmers make key decisions in the devel¬ 
 opment of important programs. 
 
 Irrespective of the outcome of the referendum, the 1935 volun¬ 
 tary adjustment contracts which growers signed in 1934 may be con¬ 
 tinued in 1935 at the discretion of the Secretary of Agriculture. 
 Tobacco producers who were eligible to sign a 1934—35 contract will 
 be given an opportunity to sign the contract and have it apply only 
 for the 1935 season if the program is continued. 
 
 The Kerr-Smith Act levies a tax of 33 y 3 percent on the gross sale 
 price of all types of tobacco to which it applies, unless the Secre¬ 
 tary of Agriculture prescribes a lower rate, which may not be less 
 than 25 percent. 
 
 Contracting growers of the types to which the Act is applicable 
 receive nontransferable tax-payment warrants, expressed in pounds 
 of tobacco, to cover the amount of tobacco which they are permitted 
 to market under their contracts. The Act provides that the Secre¬ 
 tary may, in addition, issue in any county, to growers who could not 
 obtain an equitable allotment under a contract, further warrants 
 covering an amount of tobacco of any type not in excess of 6 percent 
 of the amount of such type covered by the warrants issued to con¬ 
 tracting producers in the county. 
 
 All applications for allotments of tax-pajnnent warrants under 
 this provision of the Act must be recommended by the county tobacco 
 committee and approved by the county agent before the Secretary 
 issues tax-payment warrants. Two-thirds of the amount to be 
 allotted to noncontracting growers in each county under the 6-per¬ 
 cent provision, must be in allotments of not more than 1,500 pounds 
 each. 
 
 Believing that the declared policy of the Act would be best effectu¬ 
 ated thereby and with a view to making the Act a protective and not 
 a prohibitory nor eompiflsory measure, Secretary Wallace fixed the 
 rate of the tax levied on the 1934 crop at 25 percent of the gross sales 
 value. This was the lowest possible rate permitted under the Act. 
 It was specified in the belief that such a tax would permit the non- 
 contracting farmer to continue to produce tobacco and receive a 
 return equal to what h’.s return would have been without the im¬ 
 provement in tobacco j. "ices brought about by the adjustment pro¬ 
 gram. In brief, the Ac seeks to prevent the man on the outside from 
 unduly profiting by his neighbor’s reduction in production. 
 
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