Highlights: The processing taxes are collected by the United States Bureau of Internal Revenue from the first domestic processing of certain farm products for which adjustment programs are in effect. Farmers do not have to pay processing taxes on products raised by themselves and used at home. Exporters of the unprocessed farm products pay no processing tax. “Drawbacks”, or refunds, equal to the amount of the processing tax, are paid to exporters of processed farm products. The processing tax on cotton, for example, has no effect on the export trade of raw cotton, and when cotton goods are exported, the exporter is able to obtain a refund equal to the amount of the processing tax paid. Compensating taxes, in addition to the tariff, are levied on imported articles in order to keep the usual balance of competition between imported goods and those made in the United States. Compensating taxes also may be levied on the processing of substitute products in this country, as has been done on jute and paper in the forms in which they come into competition with cotton. Benefit payments are made to farmers in consideration of their adjusting their production of certain named commodities for market to the effective demand for such commodities. Farmers are paid for giving up the use of a part of their land, in order that national production may be held in line with effective national and international demand for agricultural products. The adjustment programs are directed toward the elimination and prevention of surpluses, so as to restore and maintain farmers’ purchasing power. This, in turn, puts city people to work producing the goods that farmers buy with their increased farm incomes. In fact, the increase in farm income from 1932 to date has been accompanied by an almost exactly corresponding increase in the income of industrial workers and a higher standard of welfare for the general population. The Agricultural Adjustment Act, with the processing taxes and with benefit payments to farmers for adjusting production to effective demand, is enabling farmers to do for themselves what closely knit industrial organizations long have done—control production to secure fair returns and maintain prices in face of reduced demand.