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I HAVE enjoyed writing this book. World War II, which is central to it, is unique in New Zealand's economic history because of a massive diversion of resources to war purposes. This in itself was a challenge. But in setting the stage, the book has had to span wider. It takes in thirty of the most momentous years in New Zealand's development from a predominantly farming community to a mixed economy. Moreover, these were the years when New Zealand emerged as a welfare state. The nature of the war effort was influenced significantly by these economic changes. It, in its turn, influenced them.
Outstanding among those who have assisted me has been Mr S. G. Elmer, whose painstaking research has extended over more than four years. The enthusiasm and thoroughness with which he has gone about this work have been a tremendous encouragement to me in completing a task which has been much more difficult, and has extended over a far longer period, than any of us anticipated. Mr Elmer has also prepared most of the statistical tables and helped me with planning the charts, chronologies and illustrations. I am grateful also to Mr L. G. Melville, who drew the charts, and to Mrs L. S. Aitken who typed the manuscript and frequently gave me valuable advice on presentation and layout. Mr Elmer, Mr Melville, and Mrs Aitken are all colleagues in the Department of Statistics.
Valuable assistance and advice on portions of the manuscript have been received from Mr H. G. Lang of the Treasury, Mr W. D. Rose, until recently on the staff of the Department of Statistics, the late Mr V. G. Boivin of the Marine Department, the Rev. A. A. Ross of Papatoetoe, Mr C. W. G. Bearman of the State Electricity Department, Mr P. W. Smallfield, until recently Director-General of Agriculture, Mr A. T. Fussell of the Railways Department, Mr R. J. Polaschek, Commissioner of Transport, and Mr J. F. Robertson of the State Services Commission. I acknowledge also the unfailing courtesy of the Editor and staff of the
I have been fortunate to have the advice of Professor F. W. Holmes as technical editor. Through his guidance many improvements have been made.
To all these people I am most grateful; but I have not always followed their advice, and I take full responsibility for any shortcomings in this book. Except where otherwise stated, all opinions expressed are my own.
Each of the four chronologies follows the chapters to which it relates. For easy reference while reading, their top corners are marked in black.
On occasions figures are rounded off to the nearest thousand or some other convenient unit. This may result in a total disagreeing slightly with the sum of the individual items as shown.
Unless otherwise indicated, values are expressed in New Zealand pounds, which were valued at approximately £125 NZ = £100 sterling from January 1933 until August 1948, and thereafter at parity with sterling.
THIS volume is concerned with the economic effects of New Zealand's participation in the Second World War.
Predominantly this is a story of effort—intensive sustained effort leading often to overstrain. The manpower record is a perfect illustration. In war, New Zealand willingly shouldered a manpower load which ultimately proved too great for her population to bear. She committed herself to supply fighting forces on two fronts, and this alone was a formidable undertaking for a small country. But she was also called upon increasingly, as a major food supplier, to expand her production. Despite mechanisation and improvements in methods, it became impossible to find sufficient men for both. In the endeavour to keep faith on the battlefield as well as on the farms and in the factories, truly Herculean tasks were performed.
This type of war effort must have been motivated as much by patriotism as by economic motives. But there are also in the pages of this volume examples of waste of materials and effort, of traders who took advantage of shortages of goods to charge exorbitant prices, of producers who took advantage of lack of competition to make excessive profits, and of workers who took advantage of shortage of manpower to make outlandish claims for rewards. In these cases one may well speculate as to the relative importance of patriotism and personal gain in motivating their efforts.
However, when all is weighed up, patriotic effort predominates over the war years. The profiteers, strikers and loafers stand out as the exceptions. Should the historian ignore them? In all honesty he should not—they are part of the story he must tell. But there is a better reason for giving them their proper place in the narrative. These are some of the difficulties which occurred in a time of national stress. They may occur again in another time of stress. Warning of them may well result in more effective effort in the future.
Can the warning be given without conveying, incorrectly, an impression of widespread disorder? It is to be hoped it can, for New Zealand's war effort is indeed a record of achievement of which she can be justly proud.
As a history this volume is probably typical in that it contains a number of strange and apparently contradictory happenings. For example, through the most difficult war years, when the need for extra production was leading to many and varied industries being declared essential, New Zealand's most essential industry—farming—was not declared essential. Again it took a rather disastrous nine months for those who had signed the Reverse Lend-Lease Agreement Parliamentary Paper A-7, United States – New Zealand Mutual Aid Agreement.
All the economic events discussed in this volume are directly or indirectly connected with the war, but it is often difficult to say whether or not particular wartime events are effects of the war. For example, the need for stricter economic control was an inevitable part of the war effort, but the tendency to expand Government controls over the economy was already well advanced by
The war can be regarded as having created a state of economic emergency. But this was no new thing for New Zealand. The years 1938 and 1939 had already seen financial difficulties amounting to economic emergency as a result of the falling away of overseas reserves in
In wartime the need for maximum supplies of foodstuffs to
The financial strains which were to be imposed on the economy by the war were different only in degree from those imposed by the then Government's welfare policies, and by its extensive public works programme. It is interesting to notice that, though the war caused public works effort to be largely diverted to military construction work, the Government's welfare programme was slowed down rather than halted by the strains of wartime finance. The first steps towards a truly universal superannuation scheme were taken pre-war, but various extensions to the Social Security programme
The Government's policy of improving working conditions was also slowed down rather than halted during the war years, in spite of the fact that some steps in the programme clashed with the need for more intensive use of labour in the interests of the war effort. However, the decision, in the interests of the war effort, to conscript men for armed service and to direct labour into essential industries represented one of the most drastic reversals of a firmly held policy any Government has been called upon to make.
Much of the Government's handling of wartime economic problems was influenced by its pre-war experiences. The fact that the extensive burden of wartime finance was carried with virtually no overseas borrowing was no doubt attributable in no small part to the depression experiences, when drastic falls in prices for New Zealand's products increased the relative burden of overseas debt servicing until it absorbed a quarter of all export earnings. Based on information in New Zealand Official Yearbook,
Probably the major economic achievement of the war was the success of the Government's stabilisation policy. This policy was assisted considerably by the decision to finance the war by taxation and internal borrowing in preference to overseas borrowing. The stabilisation programme extended well into the post-war years.
A major surprise was the persistence of full employment after the war. Entering the war with a pool of 19,000 unemployed or in subsidised employment, New Zealand had a temporary cushion against the shock of extra wartime demands for manpower for the forces and for increased production; See also Table 1, p. 581, which gives details of unemployment, etc., up to
WHEN Prime Minister Michael Joseph Savage attended the
It is probable that memory of the depression was the strongest influence leading to the overthrow of the Coalition Government at the
Even in
Actually, unemployment had shown quite a strong falling tendency before Labour took office, but this tendency was accelerated in the following two years. The numbers of men wholly or partly a charge on the Fund had fallen from an average of fourteen in every hundred of the labour force in Answering a question about the number on unemployment relief, Minister of Labour H. T. Armstrong said in ‘These are the latest available figures up to the 14th March last: Under Scheme Number 5, rationed relief, 15,704; on sustenance, 14,443; gold prospecting, 2,328; afforestation, 1,005; farm subsidy schemes, 3,117; Public Works - roads, aerodromes, etc. - 8,435; local bodies - subsidised employment - 2,831; small farms development, 1,257; miscellaneous, 3,537; a total of 52,657.’New Zealand Parliamentary Debates (subsequently NZPD), Vol. 244, pp. 360–1,
This was the position when Savage went to the Imperial Conference in
In the next two years there was a distinct danger that the tide of improvement would ebb. In
In
In
With the H-11A, Report of the
Chart 1 shows changes in numbers receiving various types of unemployment assistance.
The keys to Labour's employment promotion policy were higher personal incomes and expenditure, together with extended public works and housing programmes. The Finance Act
Various types of monetary provision made by the State were also increased and the range of benefits extended. Pension payments increased steadily from £3·3 million in the year ended
The numbers of men engaged on public works projects increased rapidly from under fourteen thousand in
It is true that, in the early stages, the Labour Government concentrated on transferring men from subsidised employment and part-time employment to full-time public works jobs. For example, highways and road works being carried on at the instigation of the Unemployment Board were transferred to the Public Works Department as from
An interesting sidelight on this is thrown by remarks made in NZPD, Vol. 247, p. 198.
‘I was quite prepared to find, owing to several years of financial depression, that there might not be a settled policy and I make due allowance for such difficulties, but I was not prepared to find that the whole of the public works activities had been converted into a system for relief of unemployment.’
Earlier Mr Semple had given a more detailed report. He said:NZPD, Vol. 245, p. 144,
‘When I assumed office approximately twelve thousand men were employed, the majority of them being relief workers. The complement today is sixteen thousand men, and when the full programme is in active operation I anticipate considerably increasing the number, even with the introduction of much more plant than is now in use. The existing practice of men for public works being sent direct to the Public Works Department by unemployment bureaux in the different centres, and without any regard whatever to their fitness for the work or their capabilities, will cease; in fact, a reclassification on the existing jobs must be done.
‘…Practically all of the works which have been carried out by the Department for several years have been classified as relief works, and the basic rates of pay have been 12/- per day for married and 9/- for single men. Under the new agreement all works will in future be classed as standard works, and the basic rate of pay for labourers will be 16/- per day and single men will receive the same rate of pay as married men.’
In spite of the prominence given to these transfers of status, often amounting to a reversal of what had been done in depression years, much of the expansion represented a genuine extension of works activity. Moreover, it was associated with mechanisation and
While the Labour Government placed reduction of unemployment high on its programme, the employment promotion aspect of public works was, in the immediate pre-war years, overshadowed by a vigorous policy of improvement of highways, land development, school buildings, aerodromes and other works using the best available equipment.
Chart 2 shows public works employment from 1935 to 1940.
Public works expenditure which, under depression conditions, had fallen from a level of about £8 million a year to under £2 million in the worst depression year, 1932–33, showed no notable recovery until 1936–37 when it increased to over £4 million. It moved to £7 million in the following year and to over £10 million in 1938–39, taking it above pre-depression levels for the first time. Not unnaturally the Government's public works programme
Economic recovery was assisted in the first two years of Labour's term of office by increases of £10 million a year in export earnings. The next two years were not so satisfactory. Export earnings fell and, for 1938 and 1939, stayed £8 million below their
The Employment Promotion Fund, after paying out about £4 million a year for each year from 1932–33 to 1937–38, spent over £6 million in 1938–39 and it was not until the first year of war that payments fell below £3 million. Employment promotion was necessary and costly up to and after the outbreak of war.
Provision of state-owned rental dwellings was an important plank in Labour's election platform. In the year ended
This housing construction was financed largely by
The dwellings were let at low rentals, admission being subject to a means test. Strictly uneconomic, And to become more uneconomic as rentals remained fixed while costs rose. Later there was considerable controversy over the actual method of financing state housing (see for example NZPD, Vol. 291, p. 2691 and onwards). Loan money, once borrowed, becomes available with other monies for a variety of uses and it is difficult, if not impossible, with most state borrowing to say that the money was raised for any particular purpose, or to distinguish the uses to which it was actually put, but the above paragraphs give a reasonable indication of what was done. The rate of interest charged averaged about 1 1/4 per cent.
The programme for construction of state housing was stepped up rapidly and, by the outbreak of war, about three thousand of these dwellings were becoming available each year.
Besides providing housing for the more needy members of the population, the state housing scheme added to the total demand for construction work and, with the augmented public works programme, helped to absorb unemployed labour.
Some of the public works projects inaugurated by the Labour Government in the late 1930s were spectacular, and several, notably the Ngauranga Gorge road and the coast road from Plimmerton to
Coming into force in Previously payable to each child after the second.
The Social Security Act aroused widespread controversy. As we have seen, its immediate effect was to increase the cost of benefits from £6·8 million in 1938–39 to £12·3 million in 1939–40; but the promise of an increasing rate of universal superannuation gave a warning of considerably heavier commitments to come. There were many who thought that the scheme must break down under its own weight, especially in times of unfavourable overseas trading conditions.
Many interesting comments are recorded in Hansard where, for example, reference is made to statements by the Farmers' Union:NZPD, Vol. 252, p. 371. Quoted by Hon. Mr Cobbe.
‘The Union is rightly concerned respecting the large addition to the imposts of the Government and their possible effect upon the already seriously depleted sterling funds in
The Farmers' Union said, further:
‘We would emphasise that in our opinion to proceed with the scheme along the lines of the present proposals is imprudent financially. The prospect of a possible £15 million increase in general taxation at some future time is a possibility which cannot be viewed other than with the gravest misgivings.’
The Associated Chambers of Commerce were no less condemnatory. They said: Ibid. Quoted by Hon. Mr Cobbe.
‘The Prime Minister and the Minister of Finance put forward the hypothesis that maintenance of the same rate of increase in the exports of New Zealand in the next 40 years as in the last 40, would enable the growing costs to be met. We consider that to place any reliance on such a supposition, as a basis for maintaining the scheme, would be reckless.’
The possible future increase of £15 million in general taxation was to prove to be a masterpiece of under-estimation. Twenty years later social security benefits were to cost an extra £68 million a year. On the other hand the volume of exports was to increase by well over 50 per cent in the same twenty years, justifying the confidence of Michael Savage and Walter Nash. In this 20-year period, export prices were to rise by 208 per cent and consumer prices in New Zealand by 119 per cent. The £ in
Chart 3 gives some impression of the impact of Labour's social security policy on the cost of benefits and pensions.
Apart from the fact that they raised average living standards by providing for those with extra needs or commitments, probably the most important economic influence of the new social security provisions was their very considerable redistribution of income from saving to spending groups and the resulting initial tendency for a higher national total of spending and a smaller national total of
This encouragement to production tended, while there were unused resources, to offset inflationary aspects of the scheme. See also ‘Social Services and Economic Development’ by Welfare in New Zealand, edited by K. J. Scott.
Unfortunately this internal effect was not the only effect of welfare provisions. The resulting higher national total of spending also raised the propensity to spend on imports, and tended to create overseas exchange difficulties in years when export prices were unfavourable.
Savage himself was the driving force towards the expansion of social security benefits, just as Robert Semple was the spearhead of public works expansion. However, behind the scenes, as Minister of Finance, Walter Nash—to become Prime Minister two decades later—was effecting a dramatic change in Government financing and financial control in order to make all these changes in works and social security policy possible.
New Zealand entered the war with her welfare provisions leading the world and being rapidly expanded. Wartime changes were to be minor, but generally in an upward direction.
For the farmers, crisis had followed crisis in the 1930s. No sooner were they free of depression conditions than there was a threat to the continuance of the free market for their products in the New Zealand's allocations under the short-term quota system were not unduly restrictive.
Meanwhile the economic depression had had its influence on many facets of
As part of its policy of insulation, it offered the farmers a guaranteed price for their products which would make them, in the short run, independent of price fluctuations in overseas markets. As it turned out, producers of meat and wool preferred to be without the guaranteed price, and the system applied only to dairy products.
The guaranteed price for dairy products, introduced in
In the following year prices fell and the guaranteed price protected dairy farmers against the fall, so to some extent insulating the internal economy. But this insulation did nothing to protect New Zealand's overseas reserves; in fact it may well have been one of many influences leading to continued high importing and to an exchange crisis towards the end of
Meantime a more lasting change had been taking place in farming—a change which was to have a material influence on its manpower requirements under war conditions. The industry was being very rapidly mechanised and, stimulated by research work by the
Between 1936 and 1939 the number of agricultural tractors increased by 69 per cent, and in Annual Report of
‘In November and December, 1941, a survey was made of approximately thirty herds where no hand stripping had been carried out for one or more years…. The production data indicated very little, if any, fall in output per cow as a result of no hand stripping, whether analysed on the basis of the same cows before and after the introduction of non-stripping or on a herd basis.’
Because of these changes, farming, which had in earlier years steadily increased its labour force, was now able to maintain ever-increasing production with a comparatively stable labour force. The change in rate of growth of labour requirements for farming was apparently not widely recognised until after the war and this misunderstanding was to have a major effect on wartime manpower planning.
Chart 4 shows changes in farm mechanisation between 1929 and 1940.
In pre-war years the
These arrangements, while ensuring a market for farm products, gave New Zealand no protection against price changes on a
In its
Between 1936–37 and 1937–38 export prices fell by more than 5 per cent, and Labour's promise was put to the test. The fall in export prices continued into 1938–39, with a further reduction of 3 per cent. These falls were serious but still left export prices at 19 per cent above their level in
The Government carried on with its expansion policy as if the economy were in fact insulated.
Fortunately import prices were still below their pre-depression levels and the purchasing power of a given quantity of exports increased by 23 per cent between 1935 and 1937. Between 1937 and 1939 this purchasing power, or terms of trade, decreased by 8 per cent, but this still left it 13 per cent above the
However, it was soon to become apparent that insulation would require either unlimited overseas funds or irksome internal restraints.
In
Imports and exports are shown in Chart 5. Export receipts have to pay for a substantial unfavourable balance of invisible items, such as debt servicing, as well as to meet the cost of imports.
When export earnings fell in
Import controls were a direct restriction on the freedom of action of a considerable economic group and must have seemed a high price for them to pay for the attempt at insulation. But the Some members had advocated it for many years.
Whether the electors would have tolerated import controls was not really put to the test at this stage. Before there was another election, import controls, along with many other controls, were to become necessary to protect the war economy.
Insulation against overseas economic disturbances had not proved so easy. The country had been subjected to import restrictions and, even with these restrictions, there was still considerable danger of financial disaster in New Zealand's external relations. It may not be fair to say, as some have said,NZPD, Vol. 256, p. 446.
In the depression, factory production had fallen by 19 per cent while farm production remained comparatively stable. In fact 1932–33, which in many respects was the worst year of the depression, saw a sharp rise in farm production. Nevertheless there was, in the 1930s, a definite indication that it might not be too long before manufacturing overtook farming as New Zealand's major producer.
Manufacturing output made its first major recovery in 1934–35 when there was a 14 per cent increase over the previous year. In 1935–36 there was a further 9 per cent increase and in 1936–37 a 14 per cent increase. This brought the level of factory production to 53 per cent above 1931–32, which had been the lowest year in the depression, and to 30 per cent above the pre-depression level of 1928–29. After 1936–37 the rate of increase tapered off, with a 7 per cent rise in 1937–38 and 5 per cent rise in 1938–39. In the following year, aided no doubt by the exchange restrictions, which became effective in
Chart 7 shows changes in the volume of manufacturing output from pre-depression to pre-war years.
In accordance with the Labour Government's declared policy of expanding production, a
Import controls were to give fertilisers and other farm requirements first priority, then capital equipment and raw materials for industry. However, there were many major consumer goods such as tea, sugar and petrol which it was politically inexpedient to cut back in time of peace. Thus the range of preferred items was very wide, and considerable cuts were necessary in less favoured items. Industry in New Zealand tended to fill the gaps. The result was certainly diversification, but often in a rather haphazard way.
Even before import controls, manufacturing was gathering strength and, in spite of the depression, output increased well over 50 per cent in the decade preceding the war. The rapid upward movement of factory production in the late thirties—an increase of 36 per cent in the four years from 1935–36 to 1939–40—was no doubt assisted by other Labour policy measures which increased consumer spending and also made direct demands on the economy through the expansion of public works.
New Zealand entered the war with a wide range of manufacturing industries. Some were still in the embryo stage, but, faced with extra wartime demands, they were to fill many gaps left by the preoccupation of overseas suppliers with their own war requirements.
On the financial side, one of the outstanding influences of the pre-war period was the very sharp lesson which had been given during the depression on the pitfalls of allowing overseas indebtedness to rise too high. Falling export earnings in the depression years had resulted in overseas debt servicing absorbing well over a quarter of all export earnings. What remained was quite inadequate to pay for imports. Relief came in due course with rising export prices, assisted perhaps by depreciation of the currency in
The lesson was that it was obviously bad policy for any Minister of Finance to allow overseas debt servicing to loom relatively so large again. This made a profound impression on the NZPD, Vol. 273, p. 337. Also Vol. 282, p.
In accordance with its declared policy, the Labour Government nationalised the
Chart 8 shows Reserve Bank advances to the State and emphasises the rapid upsurge after the second quarter of
As might have been expected, there was very considerable public criticism at the increasing use of bank credit by the Government. For some of the more sober criticism see Evening Post second leader,
In 1939–40 Government indebtedness to the banking system increased by a further £12 million, but part of this sum was required for war purposes.
At the outbreak of war, retail prices were 25 per cent above their
There were considerable inflationary influences on the economy, especially after the Labour Government commenced its legislative programme in
In this context, however, it should be noted that, in
Chart 9 shows price changes between 1920 and 1939.
What was happening to living standards while these momentous influences were changing the economy? Goods available increased steadily from 1931–32 to 1937–38 but then fell slightly under the influence of falling overseas earnings and import restrictions. However, goods supply part only of people's needs.
There is no comprehensive measure of living standards; all the statistician can provide is an approximate measure of the physical things which people use. These figures, taken on a per head basis, give some indication of potential living standards. The depression year 1931–32 stands out as a low point in the series and a good deal of the immediately following increase represents post-depression recovery.
One of the features of the depression period was that at the very time when overseas price changes were reducing the ability of New Zealand exports to purchase overseas manufactures, New Zealand's own production of manufactured goods was also drastically reduced. Expressed in 1938–39 prices, goods to the value of £116 million were available for use in New Zealand in the June
New Zealand Official Yearbook,
Thereafter the volume of goods available for use in New Zealand increased slowly until 1933–34 and then rapidly until 1937–38. In the next two years it fell once more, as a result of declining imports.
Chart 10 shows changes in the volume of goods available and also in goods available per head of population, and throws some light on the more material aspects of living standards. It is of interest that the 1929–30 volume available per head was not again reached until 1936–37.
Goods available per head reached a low point in 1931–32 and then increased yearly, accelerating in the period 1934–35 to 1936–37, with a more moderate increase in 1937–38. However, overseas prices fell, and there was not sufficient insulation to prevent falling export earnings from pulling down living standards by 2 per cent in the following year. This was only a forerunner of more drastic cuts in living standards which would become necessary under war conditions.
In forming judgments about the pre-war situation, proper weight must be given to the fall in export earnings in
The year
The internal economy was not under extreme upward pressure. Numbers unemployed and in assisted employment were still as high as 19,000 at the outbreak of war. Although some economists at the time referred to this as full employment, war and post-war experience was to show quite clearly that full employment in New Zealand could bring the unemployment level down to hundreds rather than thousands. See also Chapter 20.
Certainly the economy was developing at an unaccustomed pace and lack of money was not being allowed to delay welfare provisions, public works or housing. Naturally the resulting pressure of internal demand spread to imports. Then came the fall in export prices and the run down in reserves. If one is entitled
With bank credit being extensively used internally, those who believed in more orthodox financial methods not unnaturally lost confidence in New Zealand's ability to remain solvent. This was brought sharply home to the Government by the flight of capital from New Zealand, and later by the difficulties Mr Nash had in Round Table article said:Round Table, Vol. 117,
‘The Minister of Finance (Mr Nash) during his recent visit to
‘Although expressions of gratitude for the assistance given by the United Kingdom Government have been made in many quarters, serious doubts have been raised as to whether the temporary relief afforded will enable New Zealand to weather the financial storm into which she has sailed.
‘It is generally recognised that unless there is a sharp rise in the price of primary products, New Zealand will have to make a stern effort of national self-denial in order to meet the capital repayments and also find the £12,000,000 annually required to pay overseas interest, freights and other obligations….’
This chastening experience stiffened Labour's determination not to become further dependent on overseas capital and may have been in large measure responsible for the almost complete reliance on internal sources to finance New Zealand's war effort.
In its domestic policy the Labour Government had drawn extensively on bank credit, but, in terms of welfare provisions, new public works, extra housing and increases in production and employment, a very great deal had been done. These achievements justified, indeed required, some expansion in the monetary base of the economy, but the expansion seems to have been overdone. Even so, it is possible that New Zealand could have weathered the resulting financial storm. This was never really put to the test. War was declared the day before Mr Nash returned from his mission.
THE outbreak of war, in
By
The allied nations, weakened by disarmament and by strong antimilitary feelings among their citizens, could protest, but without offering any effective resistance. Even at
The appeasement at
The writing was on the wall in
For New Zealand, the threat of war came much closer than in Wood, Political and External Affairs, pp. 73–4.
How should New Zealand prepare her economy for war? She would continue to be the foremost supplier of food to the
Shipping and international trade seemed almost certain to be disrupted. This might be drastic and immediate in its effects on New Zealand if
Interference with shipping would also make it difficult for New Zealand to maintain the outward flow of her export commodities and a large portion of these commodities was perishable. Preparation for war should therefore make special arrangements for storage of these perishable commodities.
By
Everything pointed to the fact that economic planning for modern warfare would have to be far-reaching and comprehensive. In a prolonged war the overall strain on manpower resources and finance would be unbearably heavy. Planning would have to visualise establishing new industries to fill supply gaps, diverting construction endeavours to military works and stepping up food production. To man these industries and to protect other essential industries, precautions would have to be taken against excessive depletion of manpower for military purposes. It might even be necessary to restrict the movement of the labour which remained.
The adequacy of reserves of raw materials and equipment might easily determine the length of time many industries could continue to operate, while perishable exports might go to waste if storage facilities were not considerably extended.
The magnitude and urgency of the economic tasks called for immediate-and decisive action.
Decisive action in the pre-war years was directed to welfare provisions, public works and housing, rather than to preparation for war.
In fairness to the Labour Government, it should be said that, in its ranks, the view was strongly held that improvements in the welfare of the peoples of the world would remove a major cause of war. Those who were convinced of the rightness of this point of view and of the wrongness of military aggression, no doubt felt justified in delaying the diversion of New Zealand's efforts from provisions for welfare to preparations for war. Less sympathetically one might observe that a large number of members of the
Combine this with the fact that New Zealanders in the early 1930s had their full share of the anti-military feelingsRound Table, Vol. 20, pp. 913–14 (NZPD, Vol. 225, p. 303 (Round Table, Vol. 25, p. 215 (
By the time
On the manpower side more thinking had been done, but here frustrations were even greater. Pre-war official thinking tended to the view that some form of registration of manpower was essential.
In Wood, op. cit., p. 81.Star,
On a voluntary basis, the Territorial army was built up from 7100 in May 1938 to 10,400 a year later, and further increases were provided for, to bring it ‘within reasonable reach of its war establishment’, Parliamentary Paper H-19, Annual Report of the Chief of the General Staff, p. 1.
Economic preparation for war left much to be desired. On the three vital issues of supplies of equipment and materials, refrigerated space for perishable exports and civilian manpower planning, there was considerable discussion and a flow of official recommendations, but no adequate government action was taken before war was declared. Yet the need for planning and action had been foreseen.
A NZPD, Vol. 246, p. 559.
‘… A committee on which some twenty Government Departments are represented is investigating the problem of supplies in war—that is to say, supplies for the community at large, and not merely for armed forces. Some examples of their problems are supply of oil fuel and lubricants in war, including a rationing scheme and the provision of refrigerated space in the event of the interruption of export trade. If our export trade is disorganised, so far as beef, mutton, and lamb are concerned, we can stop killing for meat supplies; but we cannot stop the supply of butter. For this reason, a survey is being made of the refrigerating space, to see to what extent we could store butter until such time as trade was resumed between this country and the countries with which we trade. Other committees are being set up to deal with communications, cables, and wireless; another committee, to deal with manpower, and another with shipping and meteorological services. Provision is being made in the Defence estimates for meteorological service, and we are trying to cooperate with
The pre-war period was characterised by awareness, discussion and recommendations for action but very little action. Yet in spite of Government inactivity, consideration of these matters in committee had been of value. Discussion and study had brought an awareness of problems which stood officials in good stead when war broke out, while Labour's policy of development and diversification of the economy, though not part of any plan for war, probably put New Zealand in a better condition to cope with problems of wartime production.
New Zealand had received the first reminder about the need for pre-war planning at the Imperial Conference in
In the course of
Plans for action by all Government departments in the transition from war to peace were to be embodied in the War Book. As early as the Imperial Conference of
There were occasional Government statements of intention and calls for action, but, even by
Pre-war manpower planning was associated with the
The
Primarily the ONS 115, para. 5.
‘It is the opinion of the Committee that a state of affairs must be envisaged in which the Government controls the Manpower of the Dominion, allotting men either to industries which have become more essential and which demand additional staff, or to the armed services for home defence (not for service overseas, which would be dealt with as an entirely separate problem). The Committee submit that the only point which is really at issue is the time at which this control is applied.’
The Registration for work of national importance was ultimately required up to age 40 for women and 59 for men. See also pp. 99–101.
The idea of complete and detailed Government direction of manpower led to consideration of a National Register. Here again thinking at times was fairly extreme, involving registration of every member of the population. Actually, by The Social Security Act As was eventually done in Reiterated in ONS 120 of
The Labour Government's view was that, if conscription did turn out to be necessary, conscription of wealth should precede
By Social Security Supplementary Regulations
The
It was realised that even in the early stages of a war, when enlistments might be entirely voluntary, there should be some protection against manpower depletion in key industries. After considerable discussion, the Committee recommended in
By
On the outbreak of war the
The Minister of Manpower, referring to the Parlimentary Paper H-19b, Utilization of the Manpower of the Dominion, statement by the Minister of Manpower,
‘The functions of the organisation are to inquire into and report to the Government on all matters affecting the utilization of man-power in the Dominion, with a view to expanding national resources to the full. An important part of the work will be to review constantly the possible effect of recruiting on industry, so that as the war progresses production can be maintained.’
The
It is interesting to note that the rather drastic original recommendations of the Committee for a national register involving the registration of the entire population were whittled down in the actual event to the registration of particular occupations and age
When compulsion came, it was based initially on Social Security registration, but those in specified groups who did not receive a notice of registration were required to register. See also p. 100.
The possibility of disruption in overseas communications required urgent attention to questions of continuity of supply in war. Retail sales to consumers, materials for manufacturing, equipment for industry and construction materials, all had a high import content and could be seriously affected by any impediment to the flow of imported supplies. Twenty-seven per cent of all New Zealand consumption of goods and services was imported and 40 per cent of capital formation. Many manufacturing industries were entirely dependent on imports for their continual operation and the average import content of New Zealand manufactured goods was nearly one-third. Even farming was over 3 per cent directly dependent on imports, and this dependence rose as high as 10 per cent when the import requirements of those who serviced farming were taken into account. These are actually post-war estimates for 1952–53 (Accountants' Journal,
As far back as
By the time of the War History narrative 90/1, Ministry of Supply, Vol. 1, p. 21.
In
By this time the main impediment to the accumulation of reserve stocks was the critically low level of New Zealand's overseas funds. In
In Reply of Governor of
It is possible that any major commitment of overseas funds would have been similarly tagged, but it is still surprising that such a small sum for war preparations did not have a higher priority by
Recognition of the need for effective action came too late to enable reserves to be greatly expanded, for the war was only a few months away. Mr Secretary of Supply to Minister of Supply,
In spite of all the delays and hindrances, stocks of some vital raw materials sufficient to last for several months had arrived in New Zealand when war broke out and had been taken into reserve.
Among the major items in reserve were
The import of woolpacks, corn sacks and other jute goods was facilitated by waiving import licences and by specially arranged sterling funds. As a result the stock position was good when war began.
Fertilisers in a primary producing country are vital items in peace or war. Some reserves were laid down. About 80,000 tons of rock phosphate was stored at the eight phosphate works, equivalent to about a quarter of a year's supply. Sulphur and other chemicals to the value of £100,000 were also stored at works throughout the country, and probably represented on average rather less than a quarter's supply.
In anticipation of difficulties in obtaining supplies of cream of tartar The raw materials came from
The importing of 7000 tons of gypsum rock, essential in the manufacture of cement and plaster, was financed by several cement companies. This was equivalent to about six months' requirements.
The Government arranged that a reserve of rubber and associated chemicals to the value of £35,000 should be laid down, the Government meeting the cost of interest on £25,000. However, because of high ruling prices just prior to the war, only half the reserve had been established before war began and no further purchases were made until about mid-
In the year prior to the outbreak of war the The price of 2s. 4d. per bushel is taken from War History narrative 90/2. The section on wheat and flour control was ‘written in Commonwealth of Australia Official Yearbook,
New Zealand was completely dependent on overseas sources for petrol. Moreover, at the outbreak of war her supplies depended partly on cargoes carried in foreign-owned tankers, the British tanker fleet being unable to supply all New Zealand's needs and meet other requirements.
From 1934 to 1939 the annual consumption of petrol in New Zealand had risen by nearly two-thirds from 64 million gallons to just on 100 million gallons, due mainly to the rapid increase in the number of private motor cars. Requirements for private cars accounted for approximately 53 per cent of all petrol imports in
Stocks at the outbreak of war totalled 28 million gallons, equivalent to 31/2 months' usage, which was not much more than a normal stockholding. With expected extra war demands and future supplies uncertain, it is therefore not surprising that petrol was the first commodity to be rationed, control coming into force on the day war was declared.
It must not be imagined from these special arrangements that stocks generally were adequate when war broke out. Shortages of overseas funds had more probably brought the overall level of stocks to well below normal requirements, which for many industries would be a quarter or more of annual usage.
For the most part any specific precautions against a break in supplies were made by importers or manufacturers themselves acting in their own interests and often fighting against the effect of the Government's import controls. Many of the above items are just interesting exceptions and, even where special arrangements were made, they were not always sufficient to bring stocks back to normal levels after they had been run down by importing difficulties.
To meet the needs for war production, it would not be enough to safeguard supplies to existing industries. Wartime pressures would require the rapid emergence of new industries. Most important was the possibility that New Zealand, in the event of war, might have to manufacture her own munitions, because of the preoccupation of traditional suppliers with their own country's requirements. Even in
The manufacture of munitions in New Zealand would however require the accumulation of reserves of iron and steel, while suitable equipment would have to be purchased and installed. Not much was accomplished before the outbreak of war, even though it had become apparent by early
The Defence Conference in Wood, op. cit., p. 87.
To meet wartime changes in demand, new methods might be necessary in the processing of New Zealand exports. The possibility of a sudden order for canned foods for the
New industries would also be necessary to provide essential civilian requirements in cases where overseas supplies might be cut back in time of war. This would apply particularly to metal-working industries which, overseas, were likely to be preoccupied with war supplies. Little direct action was taken, though the Government's policy was to encourage manufacturing, and New Zealand industry probably became more versatile under the influence of diversification brought about by pre-war import restrictions.
Three problems would arise with regard to perishable commodities in the event of war: the need to secure maximum supplies for the Except for dairy products, where bulk purchase arrangements already existed as part of the guaranteed price scheme.
Preparations for bulk purchasing by the Parliamentary Paper H-30b,
‘In the Sic.
‘At this time it was also indicated that fresh fruit would not be especially controlled, and would therefore have to take its chance in the ordinary way.
‘Again, in
‘Again, as in the case of the preliminary discussions at the time of the Imperial Conference, questions of prices and quantities were left for detailed negotiation should hostilities actually commence.
‘This
‘In
‘Simultaneously with these various pre-war conferences which were taking place in
‘Pre-war discussions between the
This was an example of pre-war economic planning which was immediately effective when war broke out. The state of preparations for extra storage of perishable produce to meet possible shipping delays was in marked contrast.
The most urgent need, in the event of shipping delays, would be for refrigerated storage, and this was fully realised when Defence Minister NZPD, Vol. 246, p. 553. See also extract on p. 31.
Very little was achieved before the war to increase storage facilities for perishable exports. Surveys were made and a subcommittee of the Supply Committee of the
One writer, A. A. Ross, throws an interesting slant on the reasons for inactivity in extending cool-storage facilities. A. A. Ross, in Wartime Agriculture in Australia and New Zealand, 1939–50, Crawford
‘Preparations were made for some years before
‘Some have challenged the allegation that the Government discounted the possibility of war particularly after the
Ross's work has been criticised, but there is no doubt a good deal of truth in what he writes. Certainly some quite independent information points in the same direction: for example, we have noted that, even as late as See p. 37.
If the Government was aware of the danger of war, as it seems to have been, it is surprising that economic preparation for war ranked so low amongst import priorities. Or was this a case of political expedience triumphing over prudence?
Whatever the reasons, very little had been done to expand cool storage facilities by the outbreak of war. Discussions with meat companies have already been mentioned.
Office of the Minister of Agriculture,
Dear Sirs,
Cool Storage Space: Meat ExportSlaughterhouses
For some time past the position of cool storage at Meat Export slaughterhouses has been giving me some concern. At the beginning of this year my Department carried out a survey of available storage space, and the analysis of this information shows wide variation of cool storage efficiency as between works. As you are aware, the Slaughtering and Inspection Act,
‘Meat companies to be notified immediately that a condition of their meat export licence shall be the provision of cool storage space of a minimum of 60%, this capacity being based on the measurement factors used by the
In terms of this resolution I wish to notify you that the renewal of your meat export slaughterhouse licence is to be determined in conformity with the terms of Cabinet resolution.
On the 18th of May you were supplied with an analysis of cool storage space at your works. You will therefore be in a position
I might state that the question of sterling funds required to enable you to import piping, condensors, insulations, etc. has been given consideration, and wherever possible the aim should be to indent through
I shall be glad if you will acknowledge receipt of this advice, and indicate the steps which you are taking to meet the requirements thereof.
Minister of Agriculture
The circular letter to meat companies was presumably signed and despatched in this form. This copy appears on Industries and Commerce file 54/15/1. See also p.185.
It was very fortunate that there was no serious stoppage of shipping in the early months of the war.
Another obvious difficulty in war would be to maintain an adequate supply of power to industry, especially if the inflow of petrol and oil were restricted. In spite of this, the development of New Zealand's considerable potential of hydro-electric power proceeded very slowly in the pre-war period and in fact, up to
The first offender seems to have been the
‘…we are definitely of opinion that the present stage of development in the matter of hydro-electric power is sufficient for the needs of the Dominion for many years to come; and, moreover, in view of the uncertainty as to what will prove to be the cheapest form of power development in the future, any move for the commencement of further works, whether by the State or by local authorities, should be strenuously opposed.’ Parliamentary Paper B-4a, Final Report of the
Even as late as Quoted in Parliament, NZPD, Vol. 273, p. 55. See also p. 428.
It is not surprising that only £500,000 was spent on hydro-electric development in 1936–37 and £700,000 in 1937–38. The following year expenditure rose to over £1 million, but it was already too late for new developments to be ready for the early war years.
As a result of this delayed action New Zealand had electric power restrictions for about two-thirds of the war period. Because wartime and immediate post-war development was hampered by shortages of equipment, she accumulated a backlog of unsatisfied power requirements which she could not overtake and satisfy in full until
In the pre-war years the Labour Government expanded public works as a means of boosting the economy and providing full-time work for those previously unemployed; but it would be quite wrong to imagine that public works expansion, as spearheaded by Minister of Works Robert Semple, had the absorption of spare labour as its only objective. On the contrary, expansion of public works in this period was characterised by the extensive use of labour-saving equipment. Heavy earthmoving equipment was imported and extensively used on public works projects. In fact Government imports of mechanical equipment contributed to pre-war shortages of overseas funds.
In the event, these imports, though not motivated by the threat of war, proved to be one of the most effective war preparations which could have been made. Without this heavy earthmoving
Even pre-war, defence works were competing with highway construction for the use of heavy equipment. A speech by Semple in Parliament in NZPD, Vol. 254, pp. 202–4.
‘…I am going to show tonight that we have saved the Dominion tens of thousands of pounds, and that we are giving services that would not have been available for many years to come had we clung to the old method of construction. I shall name one or two of those jobs and I shall ask honourable gentlemen opposite whether they would stop those jobs. We are building a military aerodrome at Later Air Chief Marshal Sir Ralph Cochrane.
‘… Next year we shall be holding our centennial celebrations, and we are hoping that thousands of people will visit this city. Of the two approaches to this city one was a positive death-trap—forty-six dangerous bends on a narrow road leading to the Capital city of New Zealand….This Government is engaged on the job of making it safer, and it is a mighty big job to construct a 60 foot highway through the hills, some of them 160 feet high. The shifting of 450,000 yards of rock is no small undertaking. Under the old fashioned methods it would have taken four years to accomplish, at a cost of £225,000. I have undertaken to do the work in nine months, and at the present time we are well up to schedule, so the job will be completed and the road will be paved before Christmas. There will be a highway 60 foot wide where six months ago there were hills from 130 to 160 ft. high, and the total cost of the road will amount to no more than £80,000. At Paraparaumu we are to build an emergency-landing ground for aeroplanes, both military
‘… At Paraparaumu there are 403,000 yards of earth to be shifted, and this will be done by machines in three months, at a cost of £25,000. By hand labour it would take two hundred and fifty men fourteen months, and would cost £101,000….
‘…Let me give some idea of the
Truly stirring words. The Gorge road and the coastal road from Paremata to
New Zealand's pre-war economic planning was characterised by considerable discussion and many recommendations but very little action. However, in the event no great economic harm resulted from this lack of preparedness.
The greatest barriers to action were shortages of overseas funds on the supply side and the Labour Government's refusal to consider any form of compulsion, or anything which might lead to compulsion, on the manpower side.
In the event, the supply situation was saved by the fact that the threatened entry of
On the other hand, some pre-war plans went smoothly into action on the outbreak of war. Petrol rationing and the bulk purchase arrangements for foodstuffs for the
It was fortunate that, in the few years preceding the war, public works expenditure had been stepped up. This extra pre-war capital formation no doubt left the country in a better situation to carry on later when the demands of war made it impossible to concentrate on normal public works programmes. The possession of heavy earthmoving equipment, imported for public works projects, also speeded completion of defence works.
Labour's pre-war tendency towards direct economic controls helped to ease the economic change from peace to war. There were in existence at the outbreak of war a number of organisations which were used, or which could easily be used, to keep the economy under control during circumstances which must put a considerable strain upon it. For example, the
Import controls, which would be necessary to secure priority of transport for scarce supplies in war, were, for other reasons, already in existence. Moreover, industry had branched into new activities under the protection of import restrictions and, though perhaps no more economically sound overall as a result, was more diversified and better able to readjust to cope with the wide variety of new demands which war was to bring.
NEW ZEALAND declared war just before midnight on Wood, Political and External Affairs, p. 97.
Already a state of emergency had been proclaimed on 1 September and the first group of emergency regulations had been made on 1 and 2 September. Included with the most urgent military and security powers were economic measures to prevent profiteering. The Price Stabilisation Emergency Regulations
A quick succession of regulations followed, giving the Government wide powers of economic control. Emphasis is placed in this volume on regulations of particular economic significance. A more general picture of the flush of emergency regulations is given by Professor The New Zealand People at War: Political and External Affairs.
Of the War Book and its use, Wood writes: ‘Under test the machine worked well. There were enough loose ends to provide a moral for the future: contingencies inadequately provided for on the one hand, and on the other, the inveterate tendency of Ministers and departments to work independently of one another and to appeal direct to cabinet, thus imperilling a hard-won co-ordination.’ Ibid., p. 97.
While pre-war economic action was, in many directions, inadequate, the very short time needed to make a wide range of regulations affecting the whole economy was a measure of the
It has been said that, ‘In its simplest and most abstract terms the general economic problem of war is one of securing the necessary supplies’. Elliott and Hall, The Supply Control Emergency Regulations The Oil Fuel Emergency Regulations The British Commonwealth at War, p. 257.
Powers over supply and use of materials were also to be given to other Controllers, whose primary interest was in production in specified groups of industries—a dual control of supply which was inevitably to lead at times to confusion and clashes.
New Zealand was to suffer wartime shortages which were in many cases aggravated by failure to make early or adequate provision before the war for the accumulation of vital reserves. On the other hand, in those cases where stocks had been built up, the relief provided by their judicious wartime use amply justified any pre-war sacrifices involved.
It was correctly anticipated that, in war, New Zealand production would have an increasingly important part to play, both in supplying a larger proportion of New Zealand needs and in meeting the increasing demand of the
Sweeping powers to control manufacturing production were taken in the Factory Emergency Regulations The Building Emergency Regulations The Primary Industries Emergency Regulations
Thus, within two weeks of the outbreak of war, the Government had most of the administrative powers it needed to put production on to a war footing.
Recruitment of men for the armed services was, at this stage, voluntary. On 8 September plans were announced for a special force of men prepared to serve in any part of the world. ‘Recruiting for the first batch of 6600 men began on 12 September, and within a week almost 12,000 men had volunteered.’ Wood, p. 98.
The only interference with voluntary enlistment was the use of the list of reserved occupations which had been compiled by the
In the early stages, withdrawal of men for military service did not require other than voluntary measures of adjustment in civilian employment. Men could be replaced without too much difficulty. Unemployed persons were taken back into production, some less urgent work was cut out, and more overtime was worked. Women were used to an increasing extent in industry.
While unemployed labour and other unused resources were available, the need for extra output for war purposes could be met largely by drawing them into production. There was, as yet, no call for any serious sacrifice of civilian consumption to make extra resources available for war purposes, and no need for the Government to be too restrictive about the use of labour for civilian production.
The process of voluntary adjustments continued throughout the first two years of the war, but by the end of
The first flush of wartime regulations was made under the Public Safety Conservation Act Amending regulations were still being made in
The regulations were intended primarily to give Controllers and Departments ample powers to act in the interests of the war effort. However, the more power individuals had the more difficult it became to prevent them from acting at cross purposes. It was soon apparent that a strong co-ordinating authority was needed.
To meet this need, a Wood, p. 140. Savage died on Wood, p. 141.
The The War Council was to include the Prime Minister and five other ministers, with nine members representing employers, workers, farmers, returned servicemen, and other groups. The Opposition did not accept an invitation to nominate three members.
However strong the patriotism of the people, it would obviously have been impossible to meet the extensive wartime demands on the New Zealand economy without some degree of overall economic planning, leading to various forms of direct control. Wartime controls followed closely on the heels of the very definite pre-war statements of the Labour Government stressing its intention to conscript wealth before men. It is interesting to see whether this had any effect on the form they took.
Considering the Government's attitude to conscription, it was only to be expected that the early regulations would not contemplate direction of men or women. When the time for such action came, the Emergency Regulations Act of
The
Full control of manpower would involve the completion of a national register. The national register itself was seen as a possible threat to the freedom of the individual. The Government had refused to authorise it before the war and was still most reluctant to do so. Even when it became essential to have some form of register for specified age groups as they became eligible for conscription, the job was done piecemeal. Registration was, for the most part, restricted to those age groups which were immediately required.
This rather halting approach to the problem was no doubt made workable by the fact that registration had been required for Social Security purposes since See also p. 100.
The powers necessary to impose conscription for the armed services were taken under the National Service Emergency Regulations in
The same regulations made it possible for the Minister of National Service to direct any person over 16 years of age to perform any non-military service necessary for the war effort. However, this latter power was still not used, and it needed the outbreak of war with Power was taken in an amendment to the National Service Emergency Regulations dated
There is no doubt whatever that the Labour Government had been very firm in its intention to conscript wealth before men, but in the circumstances as they emerged, such a policy would probably have been quite impossible to administer. Conscription of men was doggedly resisted, but ultimately was forced on the Government, partly because of the obvious unfairness of allowing men in New Zealand to please themselves whether they contributed to the war effort while large numbers of their fellow New Zealanders were engaged in actual fighting overseas, and partly because it became quite impossible, without conscription, to find sufficient men for the forces and for essential industries.
Failure to conscript wealth before conscripting men was probably a bitter disappointment to many Labour supporters. Some drew comfort from the measures the Government did take; for example, Mr James Roberts, President of the ‘The Labour and Socialist Movements of the world’.Standard,
There is no doubt that the Government considered the full implications of conscription of wealth before abandoning it. Conscription of wealth would, if carried as far as some of its advocates wanted, mean Government ownership, or at least control, of all the means of production. Wartime experience was to show that, in some industries, higher outputs could be obtained without Government ownership. Achievement of wartime production targets often involved using new methods and working under high pressure. Many state employees were capable, given the opportunity, of rising to such heights, but usually the detailed and rigid controls associated with state employment restricted them so much that they were unable to do so. For example, some of the difficulties associated with the linen flax industry were of this nature. (See p. 217.) See also Chapter 13.
Even presupposing that there was a strong body of opinion within the Labour Government in favour of ownership of the means of production, this was politically an extremely controversial issue and one which it was not desirable to fight out during the course of a major war. Later experience has shown the New Zealand
‘Slumps and wars alike have led to further centralization of power. The Second World War, as in many other countries, encouraged what was already the chief tendency of the Labour Government, and speeded the progress towards a “planned economy” via “price control” and “stabilization”. Broadcasting, internal airways, the linen flax industry, were added to the long list of state monopolies; but, in general, the Government contented itself with control over credit and marketing and made no attempt to nationalize production.’ Sinclair, A History of New Zealand, p. 267.
Though some changes to state ownership were made, private ownership and the profit motive remained predominant throughout the war, and in fact were given extra emphasis, in many cases, as the only means to get difficult and urgent assignments completed in time.
One of the strongest weapons to control the use of resources and the direction of expansion of industry was already available to the Government before war broke out, and could easily be used to encourage war industry or to discourage non-essential industry under war conditions. This was the system of quantitative controls over imports which had been introduced in
The Import Control Regulations
The committee was in a unique position to implement the Government's industrial policy, having as one of its aims the promotion of manufacture in New Zealand, where this would save overseas funds and where it was considered that the expansion of local industry could be carried out on an efficient basis. A general indication of the committee's functions as seen through Industries and Commerce eyes is given in the following extract: Parliamentary Paper H-44, Department of Industries and Commerce, Report for
‘… In
‘To ensure that manufacturers would be able to obtain adequate supplies of raw materials and new and additional forms of plant, machinery, and equipment, etc., the
‘In addition, proposals were examined for the establishment in New Zealand of manufacturing units representing large overseas manufacturers whose products were previously available to the public only through import channels. The prospects for the success of the policy have been very bright, and already a number of new industries have been established or are in the process of being established in New Zealand; and considerable expansion has occurred in industries already in existence in New Zealand. Apart from the development of their production in lines already manufactured here, they have in many cases engaged in the manufacture of new lines previously imported.’
After the outbreak of war and when the supply position deteriorated, some change in emphasis naturally occurred. When goods were available for the ordering, control over imports could be used as a means of developing industries making munitions and other war supplies and discouraging industries not regarded as essential to the war effort. But imports of many essential materials were soon restricted by their scarcity rather than by shortage of funds. The emphasis then changed to procurement at all costs rather than to an examination of the sterling position and its effects on ability to import. In the circumstances the initiative changed to some extent and the Commissioner of Supply, rather than the Comptroller of Customs or the
As early as
Under war conditions, emergency regulations gave powers to controllers to guide the rate and direction of expansion of manufacturing, and of primary production and building. There was also some selective protection of industries in the lists of reserved occupations which were issued to recruiting officers in the first weeks of war. The intention was that persons in essential industries should not be accepted for the armed forces.
In the early years of war this latter was a rather negative kind of control. Losses to the armed forces could often be made good if the industry was strong enough to compete on the labour market.
The powers given to industry controllers were seldom used to apply controls directly to the production targets of firms, and it was supply which soon became the controlling influence for nonessential industries. This type of control intensified as shipping difficulties and the diversion of overseas production to the making of war equipment led to serious shortages of materials. As supplies became inadequate to meet the demands of essential industries, complete restrictions were placed on the use of materials for some specified purposes. Controls over the use of building materials in particular became very stringent, and severely restricted private construction or even maintenance work.
Controls over supply remained the only really effective means of influencing the rate and direction of growth of industry until the time came for the Government to take power to direct industrial labour. At that stage, control over manpower gave another powerful influence over production.
These types of influence were not always sufficient to free resources for essential works. The Government itself tended to face supply and labour difficulties. To get certain Government work done for war purposes it was necessary to divert considerable resources from other uses. This could be done either by taking direct controls sufficient to forbid the use of resources for certain purposes, or by offering a higher reward for the use of resources than could be paid by non-essential users. This latter process tended
Not to mention the need for a supporting fiscal and monetary policy.
There was very little rationing of consumption goods in the first two years of war. Motorists' supplies were an exception. Petrol was rationed from the outbreak of war. After a brief period of confusion in which some people tried to circumvent the rationing and lay in reserve supplies, coupons were issued to petrol users a fortnight after the outbreak of war. The distribution of rubber tyres was controlled from
Food rationing was avoided until Sugar was the first item to be rationed, on Dominion,
‘People who have been buying groceries well in excess of their normal requirements have led city grocers to adopt restrictions. In future they will sell only four pounds of sugar, one pound of tea, seven pounds of flour at a time. To avoid multiple purchases at different shops, many stores will serve only their regular customers. To counter requests for twenty-five pound or fifty pound bags of flour, they will in future buy 200 pound sacks and pre-packet in seven pound containers.
‘A city grocer told a reporter this morning that his business this week had been about double the normal. The main requirements by some customers was sugar, tea and flour, and big orders were being put in for tinned fish and fruit. Shop attendants who attempted to restrain customers were bullied into accepting orders, he declared. He pointed out that hoarding was both unnecessary and unfair to other customers who bought normally and the trade was forced to make restrictions.’
The grocers' reaction was sufficient to save the day at this stage. Most people behaved sensibly, though there were some cases of hoarding of a few non-perishable lines. As various groceries became short, many retailers went to the trouble to distribute them as fairly as possible and the need for ration coupons was postponed until
Arrangements by the
The introduction of the guaranteed price for dairy products would not have been feasible without controlled marketing arrangements. The Government had decided to achieve this by itself entering into the field of marketing, and accordingly the Primary Products Marketing Act
The Act gave power to the Department to market any primary product, but in the early years its function was limited to the control of marketing of dairy produce so that the guaranteed price scheme could be put into effect.
Within a few days of the outbreak of war, agreement was reached on the arrangements, which had already been discussed, for the United Kingdom Government to purchase New Zealand's exportable surplus of meat, wool, butter and cheese. A special New Zealand purchasing agency was needed and the Marketing Amendment Act Issued
No bulk purchase arrangement was made for fruits. The United Kingdom Government regarded these as comparatively low priority food items, which could be done without when shipping was scarce. It became apparent that war conditions would probably lead to the loss of most of the overseas market for apples and pears. In the circumstances the
There was a short postponement of the full impact of the See Chapter 8.
Chart 11 gives an impression of the effect of the United Kingdom Government's decision to treat fruits as a low priority food item.
Just as the bulk purchasing arrangements with the
In The Primary Products Marketing Amendment Act Internal marketing is discussed more fully in Chapter 17.
Behind all these controls, and in many ways more important than any of them, was the overall control of finance. The change from peace to war more than quadrupled annual Government expenditure in the five years from 1938–39 to 1943–44. It was characteristic of war that, if goods and services were ordered, their delivery had to be quick and certain. The urgency and size of war needs, and the massive diversion of productive resources they required, tended, unless there was a comprehensive and balanced financial policy, to generate rapid rises in prices, costs and incomes.
To find money to finance the war was only the first objective of financial policy. It had also to prevent inflation from curtailing the purchasing power of war expenditures. To this end, and to reduce fierceness of competition between defence and private orders for scarce resources, it had to take purchasing power away from the private sector of the economy. Consistent with all this, it had to leave the private sector with adequate incentives to provide increases in production from its depleted resources. For increases in production were essential, if there was to be a sufficient volume of supplies available to meet war needs in addition to such normal requirements as could not be postponed.
In short, financial policy had to make war expenditures possible, to reduce the pressure of competing expenditures and to avoid inflation, but must still not interfere with incentives to provide maximum production. It would have been difficult enough to do all these things at once had revenue collection in war not needed to be on such an unprecedented scale.
Direct controls were often necessary to ensure that the war effort was most effectively directed. They would have been inadequate to divert resources on the necessary scale had financial policy failed in any of its major objectives. Price control and stabilisation generally had to be much more than a means of protecting the purchasing power of the people. They were to become cogs in an overall financial policy aimed at providing the climate for maximum production and maintaining the effectiveness of war expenditure in its command over goods and services.
The Government, by the Reserve Bank Amendment Act
In the early war years, the fact that there was unemployment at the outbreak of war to some extent countered the inflationary effect of wartime spending. Extra expenditure tended to be absorbed and the extra need for resources met by drawing in unemployed labour. Until this pool of unused labour was largely removed, there was no immediate danger of runaway inflation.
However, financial strains soon started to appear, and in the ultimate, when it became too difficult to hold wages and prices, the Government resorted to a comprehensive stabilisation programme, in
All these changes took place with remarkably little friction. A recent writer said: Polaschek in Government Administration in New Zealand, p. 47.
‘The smooth change-over from peace to war was assisted by the import and export, marketing, and banking controls that the government had introduced already, and also by the fact that the government had a large works agency and owned or controlled much of the internal transport and communications system. Existing procedures served as a framework on which to build a more comprehensive regulatory system, much of which had been planned by the Organisation for National Service.Sic. Actually the
It should perhaps be added that the switch to a war economy was assisted by the willingness of most New Zealanders, under stress, to give extra effort and make sacrifices, and by the fact that the
Armed forces strengths given here are taken from Parliamentary Paper H–11a, Report of the b, Statement of Strengths and Losses in the Armed Services and Mercantile Marine in the 1939–45 War (
OF all the impacts of war on the New Zealand economy, probably the most momentous was the withdrawal of men and women from industry for the armed forces. At peak mobilisation, in
The effect on the civilian labour force was drastic. For over five years, from the second half of
Virtually all these men would have been available for work in New Zealand industries had they not joined the forces. As would a large proportion of the women who joined the forces.
Chart 12 shows changes in the proportion of the male labour force who were in the armed forces.
Early in
At the peak of recruitment New Zealand had 50,000 men and women serving overseas and well over 100,000 serving in New Zealand. This was in
Wherever they were serving, men in the armed forces had to be fed, clothed, equipped and sheltered, while their services were withheld from their usual contribution to production. But the financial effects differed. The men serving in New Zealand added the financial impact of their pay to the demands on the New Zealand economy in the same way as if they had been producing. This expenditure, without any accompanying production reaching the market, aggravated the tendency to an excess of money demand for goods and services.
Chart 13 shows relationships between New Zealand's overseas and home forces over the war years.
To the extent that those serving overseas allotted portions of their pay to dependants in New Zealand they, also, added to the potential money demand on the New Zealand market. However, the more significant financial impact of overseas service was the expenditure of overseas funds which had to be found to equip, pay and maintain the forces. Unless this extra expenditure was to be matched by overseas borrowing, funds had to come out of export earnings at a time when shortages of overseas funds had
p. 21. There is also a fuller discussion in Chapter 10.quantum of imported goods.
Recruitment of women for the armed forces did not reach substantial numbers until
Participation of women in the services released men for more active armed service, just as the entry of women into industry released men for tougher industrial assignments and for the armed forces. In the main, those women whose home ties were light enough to permit them to participate actively in the war effort did so by voluntarily replacing men in paid jobs which had been depleted of labour by recruitment for the forces.
With the war in the
In the second half of
Chart 14 shows changes in numbers of
From the military viewpoint, the presence of See also Chart 13.
From the economic viewpoint, the presence of
Chart 15 shows the numbers of servicemen in New Zealand, including those of both countries.
The War Expenses Account as a measure of the cost of war is examined more fully in Chapter 10. Comparison against National Income gives the best indication of the burden of the cost of war. When considering diversion of resources, comparison against Gross National Product is better, as is done in Chapter 10. Note, however, that pay and allowances of special wartime forces were included in National Income, but were not liable for taxes on income.
With up to 30 per cent of the labour force serving in the forces, it was inevitable that the financial cost of war to New Zealand would take a very high proportion of available funds. In fact, expenditure on the Navy, Army and Air Force reached nearly 12 per cent of the national income in 1940–41, rising to 19 per cent in 1941–42, and to nearly 42 per cent in 1942–43. With all costs incidental to the conduct of war included, as measured by expenditure through the War Expenses Account, the proportion of the national income going to war purposes reached 50 per cent for each of the years 1942–43 and 1943–44.
Chart 16 shows the costs of war expressed as percentages of national income.
The full costs of war over the six years 1939–40 to 1945–46 have been estimated at close to £700 million, which was equivalent to the entire national income for two and a half years, diverted to war purposes.
War expenditure on this scale was naturally not possible without very drastic curtailment of other expenditure, both for consumption and for capital formation. Even allowing for wartime restraints on other types of expenditure, the pressure on available resources was to make it most difficult to maintain reasonable stability or balance in the economy. It was fortunate that the Government was able to win a measure of support from all sections of the community for its stabilisation policy; otherwise, wartime financial pressures on a consumer market depleted of goods and on a labour market depleted of manpower would have led to rapid inflation.
Part of the costs of war had to be met in foreign exchange. Nearly £61 million was paid overseas to meet the costs of the 2nd New Zealand Expeditionary Force. This was a drain on New Zealand's overseas exchange earnings, taking foreign exchange which would otherwise have been available to pay for imports. Often in the war years it was supply shortages rather than funds shortages which restricted imports.
Under Reverse Lend-Lease, New Zealand supplied the The value for accounting purposes was set higher, but New Zealand kept a tighter control over costs and prices. See also Chapter 10.
The overall requirements of foreign exchange to meet war commitments probably reached close to £150 million, Only a rough approximation can be made. Information on overseas exchange transactions for the war years is quite inadequate. See also Chapter 14. See also Chapter 14.
Supply is vital in war, and it is no reflection on New Zealand fighting men to say that New Zealand's function of providing food for her allies was possibly just as important to the ultimate course of the war as her contribution to the actual fighting. War demanded an outstanding effort in both directions.
Throughout the war there was considerable pressure on New Zealand farming to produce more and more food and to supply it to an increasing range of users.
To some extent any food supplied to
A contribution to the continuance of supplies to the Fresh pork from
Not only was an increased output expected of the New Zealand farmer but he was required to make quite drastic switches in his production to meet the changing demands of the
Other new demands emerged and were met. Production of dehydrated meat was a special war industry to meet a
Superimposed on all this were anxieties about shipping for perishable foodstuffs and the desirability of extra cool storage, for butter at least, to provide against stoppages or irregularities.
Even before the war, Based on average output of manufacturing industries for the war years.
To meet war needs, a considerable proportion of the resources in the building and construction industry had to be diverted from dwelling construction and industrial buildings to the construction of military camps, airports and other defence requirements. This work was facilitated by the fact that there had been considerable
Industrial effort in New Zealand was also diverted to step up shipbuilding. More than 500 small ships were built, including minesweepers, submarine chasers, tugs and barges. Ship repair work was important throughout the war, but became increasingly so as the centre of war shifted to the
Coal mining, which had had a slack period prior to the war, was called on to increase production as the Australian imports of coal which had been available before the war became difficult to obtain.
New Zealand depended largely on her own resources to clothe her armed forces and, increasingly, the efforts of clothing factories, woollen mills, and footwear factories were diverted from civilian production for this purpose. Employment of women in these industries was considerably expanded, but demand increased faster. In
The general picture is of a very considerable diversion of industrial effort from peacetime supplies to war requirements, frequently involving considerable structural change in New Zealand industry, with new equipment and re-training of personnel to meet new demands. Not only were new types of munitions made, but many essential civilian commodities had to be made in place of supplies which could no longer be imported. This work, in many cases, had to be done with substitute materials and improvised equipment. New Zealand's productive capacity was put to the test as never before.
The main economic impacts of the war on New Zealand were the call for manpower for the forces, the heavy financial cost of war, the demands on overseas funds, the need for extra food production and the realignment of industries to provide military construction and equipment instead of peacetime requirements. These demands on New Zealand were all on a large scale. She escaped the serious physical destruction incurred by those countries which actually became battlefields but the impact on her economy in other ways was very considerable. A major purpose of the chapters which follow is to show how the New Zealand economy was reorganised to meet these demands and how they were in fact met.
See p. 70, note 1.
MONTH by month over the first three years of war, industry had to yield up ever-increasing numbers of men for the armed forces. Beginning with what was, by comparison, a mere trickle, this transfer of men accelerated after each major crisis in the progress of the war.
Initially men were recruited voluntarily, in moderate numbers, to be trained in New Zealand for fighting overseas, but the disasters culminating in the fall of See also pp. 58–60, where the Labour Government's attitude to conscription is discussed.
In terms of economic impact, leaving aside at this stage the question of financial costs, this meant that about one-tenth of all men normally working in industry had entered the armed services
3400 women were also in the forces by this time.
This direct transfer of resources to military purposes inevitably required major industrial readjustments, which had to be made at a time when industry had an extra load to bear in maintaining supplies to New Zealand's allies and in feeding, clothing, and even to some extent munitioning New Zealand forces.
The increase in armed services strengths and the impact on the civilian labour force is summarised in the following table:
In the first few months of war, the effect on industry of armed forces recruitments was not too severe. There was a pool of unemployed labour from which some of the gaps in the civilian labour force could be filled, and an attempt had been made to minimise losses from the more essential industries. The schedule of reserved occupations prepared by the In
Farming was not at this stage regarded as a reserved occupation and persons working on farms were accepted by recruiting officers. There were very soon complaints of shortage of labour on farms. Within six weeks of the outbreak of war these complaints became vociferous, but the Minister of Labour was not convinced.
A Dominion.
‘The existence of a general shortage of farm labour was denied by the Minister of Labour, Mr. Webb, in an interview last evening.
‘He said that on October 13 there were 180 recorded vacancies for experienced farm workers, while the men available numbered 203. The number of recorded vacancies for inexperienced workers was 16 and the number of men available was 865.
‘“Farmers requiring labour should avail themselves of the facilities offered by the State Placement Service,” said Mr Webb. “The service has a very comprehensive organisation and operates through the Social Security Department in all country districts. Competent officers will deal with every demand for farm labour of all kinds. Where experienced labour is available every effort is made immediately to supply the demand. When experienced labour is not available, the Department is prepared to subsidise labour for a period sufficient to enable the worker and the farmer to make a success of the job. Every demand for farm labour will receive urgent attention, but I must have the cooperation of the farmers. I can assure them that, given this cooperation, their labour requirements will be met.”
‘Mr Webb said there had been criticism from various sources concerning an alleged shortage of farm labour, but when investigations had been made these charges could not be substantiated. “I want the farmers to know that any demand for labour of
Perhaps this was not an answer which would give complete satisfaction to farmers, but they certainly seem to have complained too soon. At this stage fewer than four thousand men in all had been recruited and there was still a pool of some fourteen thousand men unemployed or in subsidised employment.
Nevertheless the fact that a number of persons engaged in farming and other apparently essential industries were accepted seems to have thrown doubt on the system of screening. The list of reserved occupations was kept secret, and physically fit men who were held back because they were in reserved occupations were not advised of the reason for their rejection. Widespread misunderstandings resulted, and on Dominion second leader picked up the complaints:
‘Protests have been made in various parts of the Dominion against the secrecy observed by the Government regarding the reserved occupations from which volunteers for the Forces must not be enlisted. It is not suggested that the reserved occupations decided on by the authorities have been unwisely selected, but in order to remove any doubt or uncertainty it is desirable that the public should be fully informed as to what is going on and the reasons for the decisions reached. A great deal has been heard about the necessity for maintaining farm production at the highest possible level as an important part of our war effort. Yet in spite of the admitted shortage of experienced farm labour recruits are being sought among farm workers. There appears to be something inconsistent in this. It is true that there has been talk about filling the gaps on farms with men from relief works, but how many of these stop-gap workers are skilled farm hands? Probably very few indeed.
‘There was some trouble a few days ago among slaughtermen in the north who wished to enlist, and were rejected on the ground that they were engaged in a reserved occupation. Their work as slaughtermen was regarded as more important to the
‘On the face of things there can be no good grounds for making a mystery of the occupations from which men cannot be spared for military service. On the other hand, the very fact that secrecy is observed over such a matter is bound to give rise to comment and is liable to occasion doubts and distrust not at all helpful to recruiting.’
But the Government refused to be drawn, and the list of reserved occupations remained secret. On 14 February Deputy Prime Minister Peter Fraser was reported as saying that enlistments ‘were treated on merit, and men who occupied key positions in industry would be told that they could not go away till they could be replaced. There was to be no exempted industry, but men might have to be told that if the fate of industry depended on them, they could not be spared.’ Dominion,
No doubt the lists of reserved occupations served a useful purpose by giving some protection to essential industries in the early stages of war. However, it was a little absurd that, while a worker in a reserved occupation could not join the armed forces, there was nothing at this stage to prevent him from taking a new job in a non-essential industry. See also p. 96. Parliamentary Paper H-11a, Report of
With the appointment, in
Armed forces requirements still increased and the number of men held on appeal in important industries grew larger. More attention had to be given to finding replacements for fit men who were in key positions in industry, but who were required for the armed forces.
As the forces took more men, protests from industry mounted. The Government was put under increasing pressure to give a blanket protection to specific industries or occupations. Whether the requests came from employers or from workers, it returned the same reply. No industry or occupation would be permanently reserved; each case would be dealt with on its merits. This position continued until early in
The
Thus, from the outbreak of war until peak mobilisation in
It will be noticed that, in this volume, most of those in subsidised employment, as well as the unemployed, have been treated as a labour pool. Such a treatment for the former group may be questioned, but is considered to be reasonable. Most of those in subsidised employment were in jobs which would not have been done without the subsidy from the Employment Promotion Fund.
Of Scheme 13, one of the more important forms of subsidised employment, the Employment Division of the Parliamentary Paper H-11a,
‘In order to give effect to the policy of placing all fit unemployed men in full-time work, subsidies are made available to local authorities—City and Borough Councils, County Councils, River and Drainage Boards, School Committees, sports bodies, and other social institutions not established for profit—for the full-time employment of registered and eligible labour at award rates of pay on developmental works which would not be put in hand without State assistance. The works undertaken include the formation, widening, metalling, etc., of streets and roads; footpath construction, kerbing, and channelling; local-body water-supply and sewerage schemes; land-drainage, river-clearing, river-protection, etc., afforestation; formation, levelling, improvements, etc., to parks, reserves, domains, school-grounds, hospital-grounds, etc.; flood-damage restoration.
‘Subsidies approved under the scheme range from £1 10s. and £2 5s. per man-week for single and married men respectively to, in some cases, the full wages cost. The men are employed under ordinary industrial conditions, and are paid in terms of the award to which the employing authority is a party. In cases where an employer is not cited as a party to an award the work is carried out under the conditions and at the rates of pay prescribed by the Public Works Workers’ agreement,
‘It has always been an essential condition of employment on full-time subsidised work under Scheme 13 that the applicant must be registered and eligible to receive unemployment relief.’
The most important words in this quotation seem to be, ‘which would not be put in hand without State assistance’, although it must be conceded that this test would be difficult to apply to existing subsidised work.
Work done under subsidised schemes may have been worthwhile Though the need to pay subsidies seems to indicate that it was uneconomic. In referring to subsidised public works employment, the Employment Division had written: ‘…subsidies are granted out of the Employment Promotion Fund to meet the cost in excess of the economic value of the work.’—Parliamentary Paper H-11a,
It is surprising that, even after recruitment had substantially exceeded the pre-war unemployment pool, the Government was still paying out substantial amounts for employment promotion schemes. This apparent anomaly did not escape attention at the time. The Dominion in a leader on
‘It will seem anomalous to very many people that, at a time when the country is faced with a serious shortage of manpower—a position that can be said to have been developing rapidly from the day war was declared—the Government should, in the past year, have expended no less than £1,288,000 on the promotion of employment. That the total showed a decline of £1,124,000 when compared with the expenditure of the previous year is something, but the fact remains that in the last two years New Zealand has expended £3,700,000 on the various employment promotion plans.
‘The scheme that has absorbed over £3,100,000 of that amount is known officially as Number 13 and it provides for full time employment at award rates with local bodies and other employing authorities of registered and eligible men. During
‘The men working under Scheme Number 4B, which provides for employment under contract for the improvement and development of farms, are considered by the authorities to be reasonably fit because of the nature of the work they do. This scheme was not suspended until November last, and in 1941–42 there was a monthly average of 990 men employed. At that time it was left open for all work which had been started to be completed, but in February instructions were given that no more men were to be employed and commitments were to be cancelled although current contracts could be finished. Last year over 2,000 were allocated to this class of work, which included top dressing, road and track formation, repairing of flood damage and the ploughing of virgin land. Men who could undertake that should be able to find immediate employment in the vital work of maintaining production—the routine work of the average farm.
‘This year the estimated expenditure on the promotion of employment, including administration expenses, is only £263,000, and while the marked decline will be satisfactory it will create serious doubt as to whether an expenditure of £1,288,000 last year was at all justified at a time when there was an increasing demand for labour. It seems hardly credible that in two complete years of war, with manpower at a premium, this country should have spent over £3,700,000 on employment promotion schemes.’
Be that as it may, some 17,000 men who were unemployed or in these types of subsidised work at the outbreak of war had been absorbed into industry or the armed forces by the end of The problem raised by the Dominion leader can be studied in better perspective when post-war experience is also taken into consideration. See also Chapter 20.
Under stress of war, labour for industry was also augmented from groups of people not normally in the labour force, particularly married women and retired men. In a rather speculative labour force analysis, the Parliamentary Paper H-11a, Report of the
Figures given for manufacturing employment in this section are those used prior to a statistical reclassification of manufacturing in 1951–52. The years quoted are years ended 31 March.
Women drawn into industry for the war period played the major part in filling gaps left by the withdrawal of men for the armed services. Soljak writes: Philip J. Soljak, New Zealand, Pacific Pioneer, p. 141. Soljak was born in New Zealand, domiciled in
‘Women from the cities joined those in the country in the work of maintaining and increasing farm production, vital to New Zealand's war effort. Members of the Women's Land Army drove tractors, grew fruit and vegetables, milked cows, tended sheep and helped in many other phases of agriculture.
‘All organisations were co-ordinated under the Women's War Service Auxiliary, which recruited women for service with the armed forces auxiliaries and conducted classes in first aid, signalling, truck driving and canteen, clerical and farm work. Membership of the WWSA and affiliated groups exceeded 75,000.
‘As in other countries, thousands of women took wartime jobs in the Government services and in the food, clothing and munitions industries. New Zealand women in employment totalled 230,000 (including 35,000 who worked in war plants), compared with 180,000 in
Specific references will be made to the part played by women in various industries, but at this stage a quick look at employment in manufacturing is revealing. Between 1939 and 1942 the number of women engaged in manufacturing increased rapidly from 25,700 to 35,200, a rise of 37 per cent in three years. The number of men, on the other hand, after increases in 1940 and 1941, fell in
For the remainder of the war, the number of women in manufacturing stayed comparatively stable at between 36,000 and 37,000, but fell post-war to 34,000 in Compared with 76,000 in 1939 and 82,000 in
Chart 18 shows the changing proportion of women engaged in manufacturing:
Most of the wartime effort of women was by individuals who became salary or wage earners, and accepted employment in industries where wartime recruitment of men had left vacancies. However, a great deal of unpaid work was also done, while a considerable organisation was devoted to attracting more women into war work and co-ordinating their efforts. A group of Women's Auxiliary Services was set up and played an important part in freeing men for the armed forces and for essential work.
The Women's War Service Auxiliary was established in Parliamentary Paper H-11a, Report of the
From the register, the Auxiliary organised groups of voluntary workers. The largest was the Canteen Section, twenty thousand strong, who helped staff canteen huts at military camps, service clubs and hospitals throughout New Zealand. Next in importance was the Clerical Section of ten thousand members who undertook the bulk of the clerical and typing work for the
The third most numerous group was the Transport Group, comprising five thousand members trained in all aspects of civilian transport. In most districts, members of this group were seconded to the Emergency Precautions Scheme and undertook convoy duties, collection of waste paper and similar work.
There was a Hospital Group of two thousand women who, besides undertaking hospital visiting, trained as hospital aids in kitchen and laundry work. Members also performed voluntary work for Hospital Boards, such as clerical and telephone work, and admission of patients.
Smaller groups of women were concerned with vegetable growing, obstetrical work and signalling.
Up to
The Women's Auxiliary Air Force was established in
The Women's Army Auxiliary Corps came into being towards the end of
The strength of the Women's Royal Naval Service in New Zealand rose steadily after its inception in
The Women's Land Service, where over two thousand women were serving by the second half of Chapter 8.
The impact of recruitment on farming labour was well summed up by the Parliamentary Paper H-11a, Report of the
‘In the early months of the war no special importance attached to the farming industry. World food sources had not been disturbed, and the effects of submarine warfare seemed likely to throw strong emphasis on conservation of shipping by shortening of supply lines. Under such circumstances the farming industry neither expected nor received any special protection. Consequently considerable numbers of farm workers entered the Armed Forces. The loss of
‘Before the opening of the 1941–42 season the position of the New Zealand farming industry had crystalised to a clear first priority. For that season the
It is regrettable that, though various estimates have been made, there is no reliable measure of the numbers of men lost by farming to the armed services. Nor is there any reliable count of numbers engaged in farming at any point between the Parliamentary Paper H-11a, Report of the
In the early stages of war, an attempt was made to record losses by various industries to the armed forces. Copies of all enlistment forms were sent to the head office of the Social Security Department, where the intention was to sort and classify them. The purpose of this arrangement was to find replacements for men withdrawn from their occupations. Apparently the Department was soon bewildered by the flood of forms and nothing was achieved. Except for industries such as manufacturing, where annual statistics of numbers engaged continued to be collected throughout the war, there was no accurate indication of the effect of wartime recruitment on employment in various industries. Manpower policy to this extent was carried out without adequate knowledge. Farming particularly was affected by this lack of knowledge and at least one glaring mistake resulted. See p. 493.
Manufacturing progress was affected by the policy of import selection which, as the natural outcome of import and exchange control, had been in operation since Manufacturing production is dealt with in Chapter 7. See also Chart 18, p. 91.
In electricity generation and supply women had made up only about 10 per cent of total staff, but in the first four years of war losses of men were made good by recruiting women, and in 1942–43 women made up 18 per cent of staff. In these four years the number of women in sheet-metal industries doubled and the number in foundries and boiler making trebled.
Even in 1942–43, when an extra 125,000 men had been absorbed into the armed forces, manufacturing industries had a labour force 12,000 higher than at the outbreak of war.
The war period comes into the earlier stages of a fairly rapid change in the economic structure of New Zealand, when secondary industry was moving up from its subordinate place to reach a position, in the 1950s, where it was to rival farming as the largest producer of goods. To some extent the pre-war upsurge of manufacturing made the strains of war tolerable, but then again manufacturing thrived on wartime demands and its upward impetus was strengthened.
Wartime demands for manufacturing production were much more direct than those on farming, and by the middle of
‘I have no need to point out the difficulties under which many manufacturers are working today through the loss of trained workers. This position will become more difficult as further classes are enrolled and as we have to improvise more and more in our production.’
Then, on Both letters on National Service file 13/2/5, Pt. 1. Extracts in War History narrative No. 51.
‘In each case I have used my best endeavours to have the man retained on military work, but, as I have no power to control workers' movements, moral suasion only has been open to me.’
As the position became more difficult, there was considerable pressure for protection of key industries, but, from the dropping of the original reserved occupations lists in
Losses suffered by other industries depended to a large extent on whether their occupations were regarded as sufficiently important to be listed as reserved or important occupations.
Transport and communications suffered severe losses of men to the forces. These losses were to some extent made good by recruitment of women, though the Railways did not find it so easy to use women as did the
Pressure of defence construction work and losses of men to the forces increased the labour difficulties of the building and construction industry. By Parliamentary Paper H-11a, Report of the
By the end of Under National Service Emergency Regulations gazetted on
As competition for labour grew fiercer and the production from some of New Zealand's industries became more vital to the war effort, it was increasingly apparent that more than persuasion would be necessary to safeguard staffs of essential industries.
The entry of Wood, Political and External Affairs, p. 223.
Some measure of compulsion became necessary and the Government, which had first resorted to military conscription in By amendment to the National Service Regulations,
A formal declaration by the Minister of National Service that an industry or undertaking was engaged in essential work was the starting point for industrial control. Once this declaration was made, the movement of workers in and out of the industry and the employers' right to dismiss became subject to control by the District Manpower Officers. As a corollary, measures became necessary to protect workers who were held in essential industries against unfair wages or working conditions and to require from them reasonable standards of attendance and performance.
The principal industries affected by declarations of essentiality were: Parliamentary Paper H-11a, Report of the
In many cases the acceptance or otherwise of defence contracts was crucial in deciding whether particular undertakings should be declared essential. For this purpose the
By the end of See also p. 194.
Of the introduction of manpower controls the Parliamentary Paper H-11a, Report of the
‘By the middle of
‘The outbreak of war with Sic. This figure may refer to enrolments rather than to numbers lost at a specific time. See also table on p. 82.
‘Under these regulations industries or individual units of industries in which it became necessary to hold or reinforce the labour content could be declared to be “essential”. The first declarations were made in
The regulations made every civilian liable for direction to work of national importance, irrespective of age or sex, and provided for the registration of persons by successive age and occupation
The first sentence of Clause 7 (1) read: ‘The Minister may, by notice given in such manner as he thinks fit, direct all persons of any specified class or of specified classes, whether normally engaged in any occupation or not, to register for employment with the nearest District Man-power Officer or with any other specified official.’ Clause 7 (3) read: ‘Every person registered under this regulation shall, as required by the District Man-power Officer, undertake such employment or training for employment as that Officer may direct, and shall continue in such employment or training for such period as the said Officer may require.’ On 13 February. Mr Fraser was then Deputy Prime Minister. Reported in Dominion,
As authorised by the Social Security (Supplementary) Regulations, gazetted
In general, the system was to call on all persons within certain narrow age ranges to register their names; but, to meet the pressing needs of some industries, persons in broader age groups with particular types of skill or experience were also required to register. Some 115,000 men had registered their names with the manpower officers by
There was some hesitation in calling for registration of women and, when the first registration order went out in
The following table of successive registration orders illustrates the growing intensity of the search for men and women who could be directed to fill gaps left in essential industries by armed
The order in
For the first few months of
By
For so far-reaching a control, direction of civilian labour proceeded with surprisingly little friction. The need for the co-operation of workers' and employers' organisations and, through them, of workers and employers individually, made it advisable to set up joint advisory bodies representing each important industry. Accordingly, shortly after the introduction of industrial mobilisation in
Appeal committees were also necessary. Of their establishment the Parliamentary Paper H-11a, Report of the
‘With the introduction of industrial mobilization in
Under 3 per cent of direction orders were appealed against and, of these appeals, rather more than a third were allowed.
By the end of
With this degree of mobilisation, extra demands for men for industry could be met only from men who were unfit or were outside military age, or by better disposal of those held back for important civilian work. It is small wonder that there were so many directions into essential work.
Even by mid- National Service report of
Chart 19 gives a general impression of the depleted manpower in industry during the most difficult months of the war. For every hundred workers in industry in the immediate pre-war months, only ninety were available in late
NEW ZEALAND, before the war, depended on overseas producers for 40 per cent of the goods she used. Her supply problems in the early war years were made critical by a pitiful shortage of overseas funds to pay for these imports. Becoming painfully apparent in the second half of
From the supply viewpoint, New Zealand entered the war most inauspiciously, with inadequate military equipment for even small armed forces, with manufacturers' and other stocks generally below normal, and with import and exchange restrictions hindering overseas ordering.
To tell the full story, imports had been high in 1937 and 1938, but, in those years, insufficient attention was given to building up strategic reserves. Thus many of New Zealand's wartime supply difficulties stem from an unfortunate combination of pre-war circumstances. At the time when New Zealand imports were high, the Government did not take sufficient notice of official recommendations to build up supply reserves, whereas, when the Government did ultimately decide to act, the effect of its decision was to a large extent cancelled out because shortages of overseas funds had forced an overall reduction of the level of private importing.
In a country so dependent as New Zealand on imported goods, considerable importance attaches to the purchasing power of exports. Changes in the quantity of imports purchased by a given quantity of exports are measured by the terms of trade index.
After
Chart 20 shows changes in the volume of imports.
In
The terms of trade for New Zealand deteriorated in every year from
Chart 21 shows changes in terms of trade.
Thus, the immediate pre-war period saw a decline in terms of trade, and, for the whole of the war, terms of trade were to New Zealand's disadvantage, compared with those existing before the war. In the early war years, when traditional suppliers were finding it a burden to fill New Zealand orders, this reduction in purchasing power on overseas markets restricted the already difficult search for new suppliers.
Some wartime relief on the supply side was given by reserve stocks of essential materials built up before the war. However, this effect was comparatively small, most attempts to accumulate reserve supplies being frustrated by shortages of overseas funds in the immediate pre-war years. Moreover, stocks generally tended to be below normal when war was declared. In the circumstances, it was particularly fortunate for New Zealand that the expected severe interruption of overseas shipping did not in fact occur.
As early as Copy on Industries and Commerce file 55/8. Quoted in memorandum from Permanent Head,
Certainly the questionnaires do not seem to have been of much direct use for any other purpose. They did not lead to any substantial remedial action by the Government and, in wartime, when
Early in War History narrative 90/1, Ministry of Supply, p. 22.
In
The Supply Control Committee at its third meeting, on Ibid., p. 46.
Of the following goods, a six months' reserve should be purchased as soon as definite particulars could be obtained of the quantities and kinds required:
Goods of which a six months' reserve was desirable, but not absolutely necessary, were cotton piece goods and sewing threads.
For most of these commodities it had been left too late to build up a six months' supply before war broke out, even if import controls and shortages of overseas funds had not added to the difficulties.
At the Pacific Defence Conference in
The conference discussed how the productive resources of the See p. 31.
The conference also considered how the resources of
Details of the actual reserves accumulated by
Comment has already been made See p. 37. Memorandum on Industries and Commerce file 55/7, Pt 1.
‘… the main difficulty which now arises is that no guarantee can be given for funds for the normal importations of current requirements of the articles in the approved list. Generally speaking, it may be said that the £512,000 represents three months' consumption required as a reserve to bring the average three months' stock up to the basis of six months. Therefore in the next six months it is desirable that we import the normal six months' requirements plus three months' extra stock for building up reserves. On this basis the amount involved to build up and protect reserve stocks of items already approved amounts to three times the value of the reserves, that is approximately £1,536,000.’
The pressure on overseas funds was temporarily relieved when Mr Nash, in the same month, succeeded in negotiating sterling credits for imports from the See also p. 26.
In his first Parliamentary Report, H-38,
‘… the reserve stocks created with the assistance of the Government comprised in the main bulk raw materials. These included amongst others, asbestos, rubber, tin, lead, tinplate, galvanised iron, gypsum, jute goods, phosphates, sulphur, nitrate of soda, and various other chemicals which are consumed in bulk by our manufacturing industries. To protect the food situation reserve stocks of wheat and sugar were also arranged.’
However, a six months' reserve of an essential supply was the exception rather than the rule when war broke out, and in the first report of the Factory Controller on Factory Controller to Minister of Supply, on Industries and Commerce file 55/8.
Unfortunately it is impossible now to draw a comprehensive picture of stocks at the outbreak of war. In the pre-war years there were no detailed statistics of stock holdings and the uncertainties which exist have been increased by the loss of relevant supply files. The See p. 38.
Corrugated Roofing Iron: The Public Works Department purchased and stored
In his second report on 20 September the Factory Controller stated, concerning galvanised iron, ‘there is definitely a shortage at the present time and suppliers have been rationing deliveries. The shortage is due in some measure to the demands of the A.R.P. in England…. For a few months at least I do not anticipate any acute shortage.’
The Public Works reserve was purchased primarily to meet military requirements and was less than the estimated needs for this purpose alone. In Official War History of Public Works Department, Vol. I, p. 96.
Chart 22 compares stocks of corrugated iron at the outbreak of war with imports for 1936 to 1941.
Gypsum Rock: This rock was imported from
Chart 23 shows imports of gypsum, which increased quite rapidly up to
See also p. 38. pp. 142–3.Wheat: Stocks and arrangements for Australian supplies were put on a satisfactory footing before war broke out.
Raw Sugar: The Colonial Sugar Refining Company at
Imports and reserve stocks of raw sugar are compared in Chart 24.
Rock Phosphate: The British Phosphate Commissioners supplied 80,000 tons of rock phosphate to be stored at phosphate works throughout the Dominion. This was equivalent to about four months' normal supply. Except for internal freight and handling charges, costs did not have to be met until the stocks were used.
Chart 25 shows imports and reserve stocks of rock phosphate. It should be noted also that imports of other phosphates declined from over 80,000 tons a year in
Other Commodities: Reserve stocks of corn sacks, woolpacks, calico for flour bags, tinplate, asbestos fibre, rubber, sulphur and other chemicals, and cream of tartar are also known to have been built up, but generally on a small scale.
As has been indicated, these special reserves were no guarantee of an adequate general stock position. In fact the continuance of strict import and exchange controls had made this unlikely. The change in volume of imports is shown in Chart 20 on page 106. The selective nature of import controls might have been expected to avoid interference with the more important supplies, but embarrassing gaps appeared in a number of areas where high priorities would have been expected. The declared policy required import controls to give preference to manufacturers' materials and producers' equipment, particularly where production was regarded as essential; but this selective effect of import controls can easily be over-emphasised. In actual fact, imports of producers' materials fell in value in Letter on Industries and Commerce file 54/3. Its purport was to recommend more orderly purchasing of certain materials.
Other surprising shortcomings were revealed. For example, the equipment necessary to provide more adequate storage space for perishable exports had not been imported, which seems to indicate that the selective effects of the import control policy did not always ensure that materials and equipment which were regarded as of high priority for war preparations were brought into the country. See also p. 44.
Some of the special reserves were still in existence in mid-
The work of the
Stocks were generally below normal, except in some essential lines which had received special attention, but it is probable that stocks of many essential commodities were not as far below normal as they would have been without the Committee's jogging of both Government and private enterprise.
Imports of motor spirits had been a record in See also Chapter 15.
By way of contrast,
Motor-car tyres were in short supply throughout the war and essential users had first call on them. See also p. 139 and Chapters 15 and 17.
A small proportion of private motorists installed producer gas plants on their cars. Others eked out their petrol ration with mixtures containing such unlikely fluids as kerosene and turpentine, but most allowed their pleasure running to be regulated by the petrol ration.
Essential users were kept supplied with petrol, but had to accept rationalisation of the transport industry to conserve precious supplies.
Chart 26 compares imports of motor spirits with stocks held at the outbreak of war.
The incident of the Scheme 13.Port Bowen throws an interesting sidelight on the shortage of refrigerating space, and of materials generally, when war broke out. This cargo vessel of 8000 tons ran aground off the port of
Large quantities of valuable materials were recovered, including several tons of bronze from the propellers and about 8000 tons of steel plates of various sizes from the hull and bulkheads. The Navy Department took over a lot of urgently required gear, and the winches were removed and put to new uses.
Perhaps the most interesting aspect of this salvage effort was the removal from the ship of a complete refrigerating unit. See Chapter 2 for discussion of the need for refrigerating equipment.
The following extract from Hansard for NZPD, Vol. 259, p. 642.
Mr Barrell (
‘… Ultimately, it was decided to investigate the possibilities of rehabilitating the old freezing works at Kakariki, an excellent building that had got into disrepair over the years, not having been used since
Mr Polson: ‘Are the electric motors there?’
Mr Barrell: ‘Yes, we have everything, and the works are almost
In the immediate pre-war years the
Imports from the
As wartime supplies from the
As early as
To try to speed up supply arrangements, a delegation went to
However, total imports from
As overseas suppliers became more concerned with the wartime demands of their own countries, the supply position deteriorated so far as New Zealand was concerned. Reserve stocks were in most cases inadequate to meet the situation. Shortage of overseas funds now became a secondary consideration and the major problem was to obtain goods from any available source.
This meant, on the one hand, developing New Zealand industries to produce munitions and other war supplies, and, on the other, a general switch from European and Empire sources to
During
With this centralisation of control, New Zealand's wartime supply records should have been comprehensive and reliable, but this is far from the case. Records, for most commodities, are inadequate. The rapid growth of staff in the Ministry of Supply was a problem. It was necessary to build up quickly from a staff of eighty to 550. Many of the additions were temporary public servants, directed to the Ministry under manpower control.
To add to the difficulties, the keeping of adequate statistical records was abandoned early in the war, when serious staff shortages began to be felt. Some doubt may arise about the efficiency of an import or a supply control which was not accompanied by adequate statistical records as a running check on decisions and achievements.
In Losses to U-boats were high for the whole of
Pressure for extra production from New Zealand manufacturers increased. Important classes of war goods were made in New Zealand under contracts arranged by the Factory Controller, and controlled through the Ministry of Supply, notably radio, textile, and footwear requirements.
Chart 27 shows changes in the proportion of goods for use in New Zealand which were locally produced.
Before the war, New Zealand producers had been called upon to supply 60 per cent, on average, of all goods used in New Zealand. In wartime, with scarcity of shipping and the inability of traditional suppliers to meet orders, combined with restrictions through import controls on orders of goods which were not considered essential, the contribution made by imports fell rapidly, and for the years 1940–41, 1941–42 and 1942–43, New Zealand producers supplied over 70 per cent of all goods for local use. After 1942–43,
Since demand for most commodities exceeded manufacturing capacity, the tender system of placing Government contracts was not suitable and production was arranged by allocating to various manufacturers orders for quantities fixed in the light of their respective capacities and equipment. The Factory Controller had adequate powers, when he found it necessary to use them. Regulation 3 (1) of the Factory Emergency Regulations New Zealand Gazette, p. 2385) read: ‘The Controller may from time to time, by notice to the occupier of any factory, whether or not the factory was in operation at the date of these regulations and whether or not it is the subject of any licence granted under these regulations, direct that the occupier cease, restrict, or increase the production of the factory or of any branch thereof either generally or in respect of any specified goods or class of goods, or that the occupier produce at the factory or at any branch thereof goods of such kinds, descriptions, types, sizes, quantities, and qualities and in such order of urgency as may be specified in the notice.’
In the early stages, prices for production were fixed at a value assessed by the staff of the Commodities Sections, or on the basis of costs submitted by various manufacturers. During 1942 and 1943 Ministry of Supply investigating accountants verified costs from the manufacturers' own records and then negotiated prices. It was difficult to keep up-to-date with this work. As there was not enough staff to investigate all contracts, first attention was given to larger contracts. The problem of costing production for the Ministry was made complex by the high competing demand for production of civilian goods which could not be imported. The problem is more fully discussed in Chapter 13.
The Government had taken a stand against profiteering from war contracts but administering departments had to face the fact that in other production lines there was a seller's market and high profits could be made. In many cases, manufacturers not only tended to find civilian production more profitable but were anxious to secure retail outlets to assist their post-war activities.
We have seen that attention had been given before the war to stocks and supplies of a number of essential commodities. In the early war years there were frequent surveys of reserves, and quite a number of special purchasing arrangements were made to ensure continuity of supplies. All this involved making forward estimates of requirements for many strategic commodities, but it was not until
The effect on New Zealand was to make it necessary to programme all requirements ahead and to follow these programmes by bulk forward requisitions. This meant that, from
Before long
As early as Supply Control Emergency Regulations Cabinet approval of
The introduction of forward programming and bulk ordering for allied requirements considerably extended the functions of the Ministry of Supply. For a very wide variety of essential commodities it now had to make forward estimates, order in bulk, arrange shipment, reception and storage, allocate supplies to users and retain suitable stocks.
Completion of United States Lend-Lease arrangements was to mark a new era in wartime supplies for New Zealand. As wartime pressures increased, it had become more and more difficult for the
It was to cope with this situation that the United States Lend-Lease Act was passed in
In
Reciprocal Aid provided by New Zealand under the Lend-Lease arrangements totalled nearly £7 million in
Nearly 70 per cent of the Lend-Lease Aid received from the
One important contribution to production made by Lend-Lease Aid was the supply of considerable quantities of mechanical equipment for farms. For example, over seven thousand farm tractors were supplied in the years 1943 to 1945. Some idea of the significance of these 7000 tractors can be gathered from the fact that, in
Chart 28 shows the accounting values of Lend-Lease and Reciprocal Aid in successive years.
The Lend-Lease arrangements solved many of New Zealand's very embarrassing problems of inadequate supplies of munitions and war stores, and also made available scarce farming and manufacturing equipment. New Zealand's contribution under the Reciprocal Aid arrangements helped maintain the Chapters 14 and 17.
With the substantial volume of supplies under Lend-Lease in
Chart 29 shows the increase, in
Import selection has always been associated, to a greater or lesser degree, with the quantitative restriction of imports which New Zealand has used for the primary purpose of conserving overseas exchange. Restricted imports in wartime, and the need to give priority to defence requirements, put extra emphasis on the selection aspect of import controls.
By
There were remarkable changes in the types of goods arriving, induced by varying availability overseas as well as by import selection. In the usually insignificant group of ‘unclassified’ import items it was customary to include munitions and war stores. Consequently the group became anything but insignificant in time of war. Before the war, less than £1 million a year was spent on these imports but, for the year
Many civilian lines had to give way to make room for this upsurge in war requirements. Imports of materials for the building and construction industry started to fall away in
Imports of materials for farming also decreased after
Manufacturing materials, in marked contrast to other producers' materials, arrived in greatly increased values for the whole of the war period. These imports had reached a peak in
The high degree of preference given to manufacturers' materials and equipment enabled New Zealand manufacturers to go a long way towards filling gaps in supplies of munitions, war stores, and many types of consumer goods which could not be imported in sufficient quantities because of competing allied demands for them. In some cases it also enabled New Zealand manufacturers to supply new types of goods for export to fill orders from allied countries. See also Chapter 7
Imports of transport equipment suffered the most drastic curtailment in the war years. Civilian rather than war use was affected, a good deal of transport equipment for military and allied purposes being imported during the war as munitions and war stores. The import group, transport equipment, which stood at over £8 million for each of the years 1937 and 1938, fell to £7 million in
Also seriously affected were imports of consumers' goods which, over the war period, averaged about half of their level in the immediate pre-war years. With transport equipment for civilian use, they took the main brunt of wartime import selection.
Imports of munitions and war stores, which were under 1 per cent of total imports in
Chart 30 shows changes in types of imports.
From the outset, the various Controllers under the Minister of Supply had very wide powers over the distribution and use of goods. The Factory Controller, for example, was given power ‘to regulate, restrict and control the use, sale, supply, and distribution and disposal of factory materials, to decide what kinds and qualities and quantities of goods may be made in any factory, and to decide the order of urgency in which goods are to be made.’ He also had power to commandeer stocks of materials and to direct any factory to use substitute materials. The Building Controller, besides his function of issuing permits, without which work could not commence, was given power ‘to regulate, restrict or control the use, sale, supply and distribution and disposal of building materials, and to direct the use of substitutes.’ Similar powers were given to the Mining Controller, the Electricity Controller and the Timber Controller. The Food Controller and the Sugar Controller were specifically given power ‘to take any steps necessary to ensure continuity of supply’, and equal powers were given to the Wheat and Flour Controller. Besides
These were very extensive responsibilities and powers, and in some cases were not fully used. For the most part, the investigation work required to ensure continuity of supplies and their best use fell on the Supply Sections of the
In the immediate pre-war years, New Zealand's principal sources of supply for iron and steel and for steel products were
As the wartime commitments of the
Rapid deterioration of overseas supply required the immediate regulation of use in New Zealand. Control over the allocation of most raw materials became the responsibility of the various Controllers, and the duty of rationing supplies of iron and steel fell to the Controllers of the more important industries using these commodities—the Factory, Building, Munitions, Primary Industries and Mining Controllers. A number of notices were issued by the Factory Controller, from
There were serious delays in supplies from all British countries, including
At the outbreak of war, New Zealand's only rolling mills, at Dunedin, were working on a single shift, re-rolling, from imported Australian billets, 350 to 400 tons a month of certain sizes of finished sections for the
In
Throughout
From the beginning of
As supplies came to hand they were made available for work which had the approval of the Factory Controller. To protect supplies further, the Iron and Steel Control Notice was issued by the Factory Controller in
As the result of a visit by an Anglo-American steel mission in
Iron and steel imports, with the assistance of Lend-Lease supplies, were in
The wartime story of non-ferrous metals furnishes a good illustration of the threatened loss in wartime of New Zealand's traditional sources of supply for many commodities. From the very beginning, non-ferrous metals had been among the raw materials whose shortage was most critical. Immediately the war began, the United Kingdom Government had banned all exports of non-ferrous metals, and
Because of the importance of these imports to industry, negotiations to keep supply lines open were carried out at the highest level on a Government-to-Government basis. The results of negotiations were summarised in a Parliamentary Paper H–38, p. 4.
‘… Arrangements have now been concluded through official approaches to the controlling authorities overseas for supplies of non-ferrous metals in their ingot form. In addition, the Dominion depends entirely upon overseas suppliers for semi-manufactured non-ferrous metals such as bar, tube, and sheet, and the supply of these had also to be considered…. It was not until February of this year that any serious interruptions in supply of these semimanufactured non-ferrous metals were experienced, but in that
As a result of these arrangements, it was decided to ensure that supplies reached the most vital war production by restricting to the Government all overseas purchases of a number of basic non-ferrous ingot metals. Hence copper, tin, lead, and zinc were among the first commodities to be ordered and distributed solely by the Ministry of Supply. Later, aluminium, antimony, brass, gun-metal, magnesium and certain aluminium alloys were added to the list. With some of the non-ferrous metals, a quota, revised annually, was arranged with the exporting countries through the Combined Raw Materials Board. Writing of events after History of the Second World War, The Control of Raw Materials: ‘The opportunity and the need now existed for the pooling of the fighting resources of the Allies and for the close co-ordination of their production programmes. In
The use of non-ferrous metals was restricted to essential purposes approved by the Factory Controller. The Non-Ferrous Metals Control Notice of
For most of the early years of the war New Zealand was hopelessly short of munitions. The reluctance of the Labour Government before the war to indulge in warlike preparations, accentuated, from
In the meantime New Zealand manufacturers had demonstrated their ability to provide a substantial portion of the requirements of some types of munitions. In the main, however, New Zealand remained dependent on overseas sources. The fact was that, while New Zealand was in a position to train troops and to send them overseas in uniform, if it could be assumed that most munitions would then be supplied to them from other sources, she was not in a position, either from her own manufactures or from what she could import, to supply adequate munitions for her own armed forces either overseas or in New Zealand.
Speaking of the position in Political and External Affairs, p. 223.
‘At this stage New Zealand was pressing primarily for aircraft and for equipment for the army…. It was painfully clear … that New Zealand was utterly dependent on her overseas friends for equipment. Quite apart from her basic industrial weakness, the deliberate policy in the early days of the war had been to rely on overseas supplies.’
Nevertheless the contribution made to munitions production by New Zealand manufacturing must not be under-emphasised and Wood recognises it. An interesting outside viewpoint on this contribution is given in the following extract from a H. Duncan Hall and C. C. Wrigley, Studies of Overseas Supply (United Kingdom Civil Series, History of the Second World War), p. 484.
‘In volume, New Zealand's total munitions production was only a fraction of
‘Unfortunately, during the first eighteen months of war the solution of this problem was left almost entirely to the New Zealand authorities, who made arrangements for the production of small arms ammunition, tracked carriers, mortars, mortar bombs and hand grenades. This was unfortunate, not because the selection was unsuitable or because any opportunity of securing supplies for the Sic. According to New Zealand records 14,589 sets were delivered to the Defence Service Provision Office for shipment.—War History narrative 90/2, p. 39, and Industries and Commerce file 48/8/78. See also p. 168, note 1.
‘It was no mean achievement on the part of New Zealand to have produced a sizeable export surplus of carriers, 2-inch mortars, mortar bombs, hand grenades and small arms ammunition in addition to meeting her own needs of these and some other stores, including 3-inch mortars and Sten guns. Still more remarkable, however, were her achievements in aircraft production, though limited to propellers, Not limited to propellers. See also Chapter 7.
New Zealand's main economic contribution to the allied war effort was as a supplier of food. Though she remained, throughout the war, dependent on overseas supplies for most of the munitions she needed, it was no small achievement for the country, with food production to keep up and with so little munitions production before the war, to have made the contribution she did to allied supplies of war equipment. Munitions making is also discussed in Chapter 7.
Based on information obtained from War History narrative 90/1, Ministry of Supply, and from Parliamentary Paper H–38, Activities of the Ministry of Supply in Relation to the War,
Although the control of medical supplies was more directly the responsibility of the Health Department, the Medical Supplies Controller, appointed on the outbreak of war, was answerable to the Minister of Supply, and the Ministry was involved in the procurement and distribution problems.
To facilitate the accumulation of reserves, some degree of standardisation was necessary, and, with the assistance of the
By
By
During the next two years, the problems of supply changed so often and so rapidly that the responsibilities of the Ministry had to be extended to include procurement under Lend-Lease, bulk ordering by means of Government-to-Government requests, and sponsorship of private orders. With the advent of Lend-Lease supplies and bulk orders, the Ministry had to supervise distribution. The extremely critical drugs, such as bismuth, anti-malarials, menthol, permanganate of potash, and glycerophosphates, and rubber dental and surgical appliances required close supervision to make sure that they reached users who required them primarily for medical purposes. Many materials in short supply were closely controlled at different times, under the Medical Supplies Emergency Regulations
There was, as we have seen, an improvement in supplies generally in
The Medical Supplies Section of the Ministry of Supply was disbanded on
The stock position of raw rubber and of tyres furnishes yet another example of the spottiness of preparations for war. Good quantities of raw rubber were held in reserve when war broke out, but stocks of motor-car and truck tyres were inadequate. At the outbreak of war New Zealand already had a small but expanding industry producing rubber goods, but no motor-car or truck tyres were manufactured until
Rubber goods manufactured in New Zealand during the war included milking rubberware, retreading rubber, universal carrier wheels, cycle tyres, jungle boots, industrial hose, components for radio transmitting sets, groundsheets, fruit-jar rings, naval lifebelts, gas masks, aeroplane matting, dough for the manufacture of battery boxes, soles and heels, pram tyring, a multiplicity of parts for Air Force planes, treading solutions, footwear solutions, cushion gum, general mechanical rubber goods for industrial purposes and gum-boots.
With the advance of the Japanese forces in the
The crisis found New Zealand in a relatively favourable position as regards stocks of raw rubber, this being a case where the policy of accumulating reserves before the war had been effective. To safeguard the reserves, the use of raw rubber for any purpose was prohibited in The Rubber Control Notice,
Total stocks in the country, including rubber owned by the mills, reserve stock, and crepe purchased by the Factory Controller, were sufficient for at least one year's normal usage, but the severe restrictions placed on rubber manufacturers resulted in stocks being adequate for approximately two years. During 241,000 lb arrived from
Scrap rubber was brought under control in The Scrap Rubber Control Notice,
Import restrictions and severe cuts in the licences available before the war for motor tyres had reduced stocks and they were below the usual peacetime level when war broke out. There was an attempt to make up leeway in 1940 and 1941, but it was hampered by difficulties in securing shipping space and by losses through enemy action. The number of tyres received showed no great improvement. It was estimated that, by the end of
Early in
Arrangements were made for improved supplies of truck tyres, mainly from
To give some idea of the stringency of restrictions on the use of motor-car tyres, the normal demand for car tyres was roughly 320,000 per annum, 190,000 imported as tyres and 130,000 as tyres fitted to cars. There is some further discussion of the wartime troubles of the private motorist in Chapters 15 and 17.
The various controls associated with rubber and goods made principally of rubber had to be enforced from dire necessity. In general, the needs of the armed services, essential civilian transport, the dairy industry and other important users were met, but this was possible only by careful rationing of available supplies.
Gumboots became subject to strict rationing to protect supplies for the dairy industry and it was, for a time, almost impossible to get them without proof of ownership of at least twelve cows. Or some equivalent claim to priority.
Stocks and rationing of gumboots provided an interesting example of a wartime communications breakdown. Purchasing and accumulation of stocks was under the control of the Ministry of Supply. Rationing to users was arranged by the
Chart 31 summarises the rubber supply situation.
Wartime shortages of rubber focussed attention, in a number of countries, on synthetic rubber production and on plastics generally, as substitutes for natural rubber and other scarce materials. The post-war years were to see many useful applications of this development.
Throughout the war, strenuous efforts were made to maintain adequate reserves of essential imported foodstuffs. Arrangements with regard to wheat, which had to be imported in substantial quantities to augment New Zealand production, furnish a good illustration of one of the more successful schemes.
The satisfactory New Zealand supply position for wheat was attributable, in the early stages, to the precautions taken by the See also p. 38.
New Zealand wheat production was boosted by a guaranteed price and it was possible to import substantial quantities of wheat from
New Zealand's requirements of wheat were estimated, in
New Zealand production of wheat increased considerably during the war years but was at no time large enough to avoid the necessity for substantial imports. In most years, well over half of New Zealand's requirements were imported.
Towards the end of the war, arrangements were made to obtain extra wheat from
In
Chart 32 shows sources of New Zealand's wheat supply.
The supply of edible grains was adequate at reasonable prices during the war years, and it is significant that it was not until after the war—in The Flour Extraction Control Notice,
New Zealand was well supplied with wheat during the war years. Some countries would have regarded her low extraction rate throughout the war, and her practice of feeding so much wheat to poultry, as evidence of over-supply to the extent of waste. There was, in fact, some criticism by the
Canadian Mutual Aid came later in the war than Lend-Lease, an agreement between the Governments of New Zealand and p. 142.
There were no Canadian forces in New Zealand and no other opportunity to provide reciprocal aid to
With supplies of materials generally short, it became important to salvage and use waste materials wherever possible. A National Council for the Reclamation of Waste Material was set up by the Minister of Supply in
The return of waste rubber back into supply channels was the greatest contribution by the Council, the amount collected equalling in weight all the rubber usually imported in the form of raw rubber and tyres over a period of eighteen months. So great was the need for tyres that the Government asked for all tyres collected to be inspected when received at depots. If fit for repairing or retreading they were to be sorted out, reconditioned and sold to permit holders only, or to firms or persons engaged in essential war work. In cooperation with garages and retreaders, thousands of second-hand tyres were repaired, classified as to possible mileage, priced and sold to essential users. Farmers' needs for tyres for trailer vehicles were also supplied in large numbers by these means.
Over £50,000 was paid to the
Supply in time of war is absolutely vital, and this chapter should rank as one of the most important in the book. It is a pity it could not have been one of the more satisfying chapters, but in fact it contains many gaps which no amount of research at this late stage can fill.
Much of the information contained here is built up from incomplete basic information. Adequate statistics were not kept, and many supply files, which should have been available, have been destroyed.
The short-run nuisance of having to keep statistical records of administrative action is obvious to all. The long-run hopelessness of continuing to make administrative decisions without the benefit of such records should be equally obvious. It is for this latter reason that most departments have systematic up-to-date summaries of decisions made and of the resulting action, however strong the pressure of administrative work on staff may be. It would have been nothing short of miraculous had the Ministry of Supply been able to function efficiently without proper statistical records. The loss of
Outstanding in the wartime supply story were the bad start given by shortages of overseas funds in the immediate pre-war years, the inability of a private enterprise subject to import and exchange controls to create adequate reserves before the war, and the apparent neglect by the Government to set aside adequate funds for the purpose until too late. There were some conspicuous exceptions where reserves were built up.
Then came the first three difficult war years, with overseas supplies hard to get and New Zealand manufacturing playing a brave part in filling some of the shortages. Munitions were still quite inadequate, in spite of New Zealand's expanding production of a range of small arms. Relief came in
In the supply story, luck played no small part. When New Zealand failed to prepare for a complete disruption of shipping, none occurred; when she was without sufficient munitions to repel an invader, no enemy reached her shores. For these things we should be extremely grateful, but they give us no real cause for pride.
IN WAR, New Zealand's still immature manufacturing industries were called on as never before to provide increased output and new products to fill supply gaps. Not only was an extensive range of war equipment produced for the first time in New Zealand, but also many essential consumer goods, no longer available in sufficient quantities from traditional overseas suppliers, had to be made locally.
To give a general impression of the stage of industrial development in New Zealand in
Before the war New Zealand manufacturing had a somewhat chequered career, though showing an underlying tendency to increase in relative importance. Most industries had been hit hard by the economic depression of the early 1930s, and it was not until 1935–36 that the labour force in manufacturing was built up again to what it had been in the pre-depression year, 1929–30. Nearly 83,000 people had then been employed in manufacturing, but by 1931–32 this number had fallen to 69,000. Figures used here are taken from the 1947–49 Official Yearbook. They have since been revised as a result of a change in coverage of industrial production statistics, but these are the figures which were available and which provided the basis for wartime thinking. They include generation and supply of gas and electricity, and the logging operations of sawmillers, all of which were transferred to other sectors after 1951–52.
Manufacturing was then affected by the depressive influence of the The Humanism in Politics, p. 174.
In some industries, particularly those concerned with metals, the diversification resulting from the high level of protection against imports considerably increased the need for skilled labour, and there were some staffing difficulties before the war, in spite of the quite large pool of unemployed labour still available. Special training schemes were started to provide suitable labour, and some skilled labour was recruited overseas, but not all the gaps could be filled.
The metalworking industries, with the clothing industries, were to bear a particularly heavy load in providing war stores, but most other industries were also affected. The war made ever-increasing demands on many branches of manufacturing.
Of one important group, engineering, shipbuilding and repair, the H-11a, Parliamentary Report of
‘During the war years the industry was called upon for a tremendous war effort, which included the manufacture of wireless sets, Sten guns, Bren-gun carriers, bombs, grenades, fuses, aeroplane-fuel tanks, water-bottles, steel helmets, wire nails, barbed wire, ammunition, batteries, agricultural machinery and implements, the manufacture and maintenance of machinery used in essential production and services, the repair of vehicles and equipment from the Pacific War Zone, the building and repair of aircraft, repair of ships, the fitting of defensive armament and protective equipment to ships, and the building of minesweepers, Fairmile patrol boats, tow-boats, steel tugs, powered lighters, and barges of various types. In addition, it continued to meet civilian requirements of high priority.’
The first three war years were years of quite rapid expansion in manufacturing employment. The labour force increased by 6000 in the first year, 5000 in the second year, and 3000 in the third year,
When the lessening of the threat of invasion made it possible to reduce the size of the home army, numbers employed in manufacturing increased again. By 1944–45 there were 122,000 and, in the last war year, 1945–46, over 128,000, which was some 26,000 above the immediate pre-war level.
Over the seven years between 1938–39 and 1945–46, the manufacturing labour force increased by a quarter, an average growth of 3¼ per cent a year, which compares with a population increase of a little over 1 per cent a year and would have been considered fast under much less difficult conditions.
Chart 33 shows changes in numbers employed in manufacturing over the depression, the pre-war, and the war years. It is apparent that recruitment for the armed forces caused only a temporary setback in the upward trend of manufacturing employment. In this, manufacturing is unusual; most groups were much more severely affected. So great was the pressure of extra wartime demand that manufacturing remained seriously short of labour, in spite of the fact that its work-force grew faster than in most other groups.
Wartime demands for munitions and war stores, together with the growing need to supply essential commodities which could no longer be imported, required considerable diversion of manufacturing resources from other production. The readjustments and delays involved in this diversion tended to slow up the overall rate of manufacturing expansion. The metalworking industries, in particular, had to become much more versatile in order to meet the very urgent needs of war at a time when many of New Zealand's usual suppliers were too hard pressed to come to her assistance.
New Zealand industries turned to the manufacture of mortars, shells, grenades, anti-tank mines and Tommy guns. Small-arms ammunition had been manufactured in New Zealand before the war, but much higher outputs were now required. Bren-gun carriers and light armoured vehicles were produced in considerable numbers. Aircraft frames and parts were made and light tanks and aircraft
Heavy calls were made on the clothing industry for military clothing. Boots, clothing and blankets for the New Zealand armed services were produced in New Zealand. The necessary industries had been in existence before the war; they now had to adjust their organisation to the making of military requirements.
There was an infant shipbuilding industry in New Zealand before the war. It had to come rapidly to maturity under the heavy demands made on it for war needs. Minesweepers, patrol vessels, barges and tugboats were built, and there were increasing demands for repairs to warships and merchant vessels.
Imports of farm implements and plumbing supplies declined, and the New Zealand metal industries had to turn to the production of these and other requirements to fill the gap.
Apart from the usual processing of farm products, the food industries were called on to meet special orders for manufactured foods for the United Kingdom War Office. The commodities required were mainly canned meats, service biscuits, chocolate, oatmeal
The wide variety of goods supplied, under Reverse Lend-Lease, for the A general purpose transmitter and receiver.
The upsurge of defence construction work accentuated the shortage of building steel and required extra output from the rolling mills in Dunedin. Many other building materials had also to be made in New Zealand.
Rubber goods industries before the war were increasing their output, but were still too insignificant to be shown separately in factory production statistics. After the Japanese conquests of rubber-producing countries early in See also p. 145.
One important new rubber manufacture was gumboots. Imports fell from an average of about 240,000 pairs before the war to only 24,000 pairs in See also p. 141.
These were just a few of the extra wartime demands on New Zealand manufacturing.
As wartime pressures increased, reducing the availability of manpower, and still further restricting the range of imported materials and equipment, it became increasingly difficult for those industries which were engaged in making luxury or non-essential lines to maintain their production.
An indication of increasing wartime difficulties, especially in non-essential industries, was given by the Department of Industries and Commerce in its Parliamentary Paper H-44,
‘To some extent the quantity of goods produced has been conditioned not by the consumer demand, but by the adequacy of the supply of raw materials required in the processes of manufacture. As regards the demand for domestically manufactured goods, under the operation of the Import Control Regulations this has shown an increasing tendency as stocks of similar lines of previously imported goods have become non-existent. On the production side, manufacturers appear to have received reasonable supplies of raw materials, although in some cases these have been inadequate to enable the demand for finished goods to be fully met. On the other hand, certain other factors affect production, the chief of which is the shortage of skilled and even casual labour, so that in some cases the reduced staffs now available would be unable to cope with greater quantities of raw materials.
‘Production has been limited to some extent by the amount of sterling or dollar funds available, which is unavoidable. Certain luxury trades have felt this restriction most. In general, the effects have not proved unduly severe.
‘Unfortunately, as the year progressed, the shipping position deteriorated, and the non-delivery of orders placed by manufacturers has affected production. This difficulty, combined with the difficulty involved in obtaining export licences from overseas countries, has placed a limit on expansion through resulting shortages in supplies of raw materials. Overseas prices of most raw materials continue to show substantial increases. Plant for expansion purposes is limited, as the emergencies of the war situation make it imperative that plant of a nature essential to the maintenance of output in non-luxury lines only is imported. Factories engaged in the production of military requirements for the most part worked extended hours. In industries not directly concerned with the war effort output, having regard to existing conditions, has been surprisingly well maintained.’
One of the failings of import discrimination against goods regarded as non-essential is the tendency for local production to fill the gaps and to concentrate unduly on the very non-essential goods against which import restrictions discriminate. The imposition of import controls does nothing to change the demand; it merely cuts back supply, and, if demand has enough money backing, local industry will try to fill the resulting supply shortage. Demand may then be frustrated at another stage, if materials and equipment to make the non-essential lines become in their turn restricted imports. Under war conditions, non-essential production may also become short of labour, but, if demand is still high, it often remains strong enough financially to bid successfully for labour, unless direction of labour is invoked in favour of essential industries. Even then, the non-essential industry may find ways to carry on if demand raises the price for its products high enough.
Essential and non-essential are not clearly defined concepts. Tobacco processing, for example, was one of the industries declared essential. See also p. 174.
Dealing with industries not declared essential, the Parliamentary Paper H-11a, Report of the
Of these industries the Department wrote:
‘These industries and services all play their part in the economy of the Dominion and in the life of our people, and have varying degrees of importance. It was not necessary, however, to grant them the protection of a declaration of essentiality, as in practically all cases the production or service could be curtailed if necessary without impeding the war effort. It was the aim of the Department throughout, in the administration of manpower controls in these industries and services, to permit them, as far as possible, to maintain sufficient staff to continue to function economically and thus be in a position, after the war, to rehabilitate employees who had entered the Forces. The Department
Many non-essential industries were persuaded to convert all or part of their capacity to the production of war stores or other goods or services regarded as essential. Much was achieved, and the Department of Industries and Commerce was able to write in its Parliamentary Paper H-44,
‘Shortages of raw materials and skilled labour have raised serious difficulties in the case of industries not on war work, or to a limited extent only, but the fact that many have been able to employ their surplus productive capacities on the manufacture of new lines, either wholly themselves or in cooperation with other firms, is a tribute to the resourcefulness and adaptability of New Zealand's manufacturing industies.’
Where persuasion was not sufficient, the Factory Controller had full powers to require factories to convert to war production. In cases where conversion was not possible, most non-essential industries ultimately suffered severe losses of manpower, which went to the armed services or to augment production in essential industries.
As supplies became harder to get, there was a natural tendency to concentrate more on locally produced materials. The p. 4.
‘Where the source of raw materials used was domestic in its origin, production was substantially increased, much of the additional output being for defence purposes. This was revealed in the woollen mills, boot and shoe factories, and biscuit factories.’
Industry was also called upon to continue to produce goods where the supply of the usual materials was curtailed. Experiments were made with substitute materials, in many cases successfully. The Parliamentary Paper H-44, p. 2.
substitution of ferrous for non-ferrous metals in the production of plated spoons;
use of plastic materials for buttons in place of metal;
increasing use of wood and glass for articles of domestic use;
re-use of milk powder tins for the production of billies, tin kettles, etc.
use of case strapping for the manufacture of bird cages, rat traps, soap holders, etc.
use of linen flax tow to some extent as a substitute tow in fibrous plaster and furniture production.
Reclaimed rubber, metals and other materials filled many gaps in the supply of raw materials, See also p. 144.
In spite of the substantial increases in manufacturing employment in most war years, pressure of work was so great that some of the most acute labour shortages developed here, especially in factories where women could not substitute for men.
Chart 34 shows the composition of the manufacturing labour force over the war years.
The most difficult war year for manufacturing labour was 1942–43. This was the only year when numbers employed did not increase. Male labour was at its scarcest from
Considerable overtime was worked in factories to ease the wartime employment situation. In 1938–39, overtime hours averaged 45 for all wage-earning males; on previous experience, this was a very high figure. But overtime increased progressively through the early war years to reach 199 hours in 1943–44, over four times the immediate pre-war level. A similar increase occurred in average overtime hours for women, which were 23 in 1938–39 and 90 in 1943–44. For both men and women, the longest hours worked were in 1943–44. This was about a year after armed forces strengths had started to recede from their peak, Peak strength was reached in
Chart 35 shows overtime worked in factories.
With direction of labour, from early in Dominion of
‘Following an analysis which is stated to have disclosed that absenteeism in
‘Statistics taken out for seven
Instances of this sort must be taken along with other relevant information. See also p. 175.
By early
‘“The process of reduction of the armed forces is not by any means finished and a steady stream of men continues to flow from the armed forces into industry,” said the Minister of Industrial Manpower, Mr McLagan, when giving figures yesterday showing the number of men who have been released from the Forces for this purpose. He said that during the period between April 1 and September 28, 1943, the total of 12,241 were released through District Manpower Offices.
‘The Minister said that in addition there had been several hundred releases through armed forces appeal boards, and further there had been a steady inflow of manpower back to industry through rehabilitation measures. This latter flow had now reached substantial proportions due to the large number of men returning from overseas.’ Dominion,
In an accompanying analysis, the Minister indicated that over three thousand of these men had gone into manufacturing. However, the pressure for manufacturing output was very high and manpower shortage continued to be a restricting influence on production. In its Parliamentary Paper H-44, p. 2.
‘… the factor of paramount importance is manpower. There is a general shortage of skilled machine operatives in all classes of industry and this is especially noticeable in the clothing, footwear and engineering trades. Generally, factories are short of labour, causing the necessity for continued overtime.’
On the metalworking industries fell the main brunt of the rising demand for locally produced munitions. The need for New Zealand made munitions is discussed on pp. 134–7. In
New Zealand munitions making was predominantly small arms; for example, New Zealand industry carried out all stages of the manufacture and filling of five and a half million hand grenades and of one and a quarter million trench-mortar bombs with fuses. This and much of the following information on munitions making is derived from Parliamentary Paper H-44, Report of Department of Industries and Commerce,
Over 9500 trench mortars, with parts for maintenance spares, were manufactured during the war, and in addition over 10,000 Sten guns, 1000 grenade mortars, 3750 rifle grenade dischargers, and 1500 automatic rifles were made.
As an example of munitions manufactured for an allied country, the production of well over a million special shell fuses was undertaken on behalf of the United Kingdom Government. Automatic machinery and other necessary equipment and materials had to be imported for the purpose.
Motor assembly plants, with drastically reduced private motor-car imports to handle, played a variety of parts in the production of munitions and war stores. Most nearly allied to their normal peacetime production was the assembly of armoured machine-gun carriers. Twelve hundred carriers were produced, complete with maintenance spares. Sub-contracts for parts were spread throughout the country.
These examples are illustrative of the variety of munitions work undertaken by New Zealand manufacturers. Other war stores, such as water valves, concrete mixers, hospital beds, stoves for heating tents, jungle knives and the like were made for the New Zealand Forces, the
The impact of munitions work on New Zealand metalworking industries forcibly brought about a rapid expansion in their capacity for precision work. To ensure that munitions components for fuses, bombs, and grenades complied with rigid specifications, it was necessary for manufacturing machine-shops to be provided with special production gauges and for inspectors to have inspection gauges. The
Approximately three hundred machine tools of the latest types were procured for war production purposes, and the use of these, in addition to existing equipment, on munitions and allied stores production gave an impetus in the metal industries to more efficient methods.
Pressure on most manufacturing industries continued throughout the war period and, as late as Parliamentary Paper H-11a, Report of the
The clothing and footwear needs for the New Zealand armed services were, for the most part, met from New Zealand production, and added considerably to the demands on the clothing, boot and shoe manufacturing and related industries. Surprisingly, this was one of the areas where the outbreak of war found New Zealand
Output of woollen mills and clothing factories had declined in 1938–39, as had the numbers employed. Copy on Industries and Commerce file 54/3.
‘On September 9th and 16th I visited
‘As reported to you, the complaints relate mainly to the issue of 1914–18 garments, due to lack of supplies of the new tunics and trousers….’
By Quoted by Soljak in New Zealand, Pacific Pioneer, p. 144.
‘All clothing worn by the New Zealand soldier and all the equipment he carries, except his rifle and bayonet, are made in the Dominion.’
In woollen mills, the numbers employed increased from 2400 in 1938–39 to over 4000 in 1942–43 and 1943–44, declining to 3800 in 1944–45. In the latter year, employment was still 50 per cent higher than before the war.
Peak production in woollen mills was reached in 1942–43, when military demands were at their height. Output of yarn was highest in 1941–42, being then over twice the pre-war figure. Hosiery production reached to 75 per cent above the pre-war amount in the same year. The following year, well over a quarter of a million pairs of blankets were made, bringing output to over 70 per cent above the pre-war figure, and the output of flannel reached twice its pre-war total. In 1943–44 production of tweed and cloth reached its peak, being then well over double its pre-war figure. To assist in achieving these high outputs, a good deal of new machinery was installed.
Because of the extensive military contracts undertaken by woollen mills and the dependence of the clothing industry on their output, the mills were, throughout the war, regarded as of high priority for the allocation of labour. However, the Parliamentary Paper H-11a, Report of the
‘Unfortunately, mill managements were not prepared to cooperate with the Department to the extent of appointing representatives to a national Man-power Utilization Council for the
In the later years of the war, military needs were less, and it was possible to switch back to civilian production. By 1947–48 employment in woollen mills fell back to lower than in 1937–38, a decline which was unusual for a New Zealand manufacturing industry, and in marked contrast to what happened in clothing factories, where employment increased by well over a quarter in this decade.
Chart 36 shows fluctuations in numbers engaged in woollen mills.
Wartime staff increases in the clothing industry were relatively much more moderate than in woollen mills, though, in numbers, the influx was greater. With a staff approaching 12,300 in 1938–39, the industry had a 19 per cent increase by 1941–42, to reach nearly 14,600. There was a temporary decline in the next two years, but, in 1945–46, numbers employed were still 21 per cent higher than before the war.
The clothing industry was well established before the war and was called upon, during the war years, to manufacture battledress, greatcoats, and other garments of all descriptions in large quantities, not only to equip the New Zealand Forces, but also for allied forces overseas. Those clothing factories which were engaged substantially on military contracts were included in the first list of declarations of essentiality, issued in
By Parliamentary Paper H–11a, Report of
Clothing factories employed predominantly female labour. Large numbers of extra women entered civilian employment in the early years of war, but not always in the traditional women's occupations. They were increasingly required to replace men who had been mobilised. Industries which customarily used female labour had their share of staffing problems. By the end of
The war period saw the start of a tendency for clothing factories to decentralise in order to seek out reserve pools of female labour in secondary population centres, a tendency which was to become much more marked when the labour shortage continued into the post-war period.
In 1944–45, value of output in clothing factories was well over double its pre-war amount. In contrast to what happened in woollen mills, the expansion in output and employment was to continue strongly into the post-war years after the flush of defence ordering had passed.
Chart 37 shows changes in employment in clothing factories.
Requirements for military footwear resulted in considerable extra pressure on the boot- and shoe-making industry, which was already being rapidly expanded to meet the dwindling flow of imported footwear. With a staff of under 3100 at the outbreak of war, it had taken on 1500 more people by 1941–42 and was to employ over 4500 for the rest of the war. Even with this staff, pressure for military footwear was so intense that there were shortages from time to time in some types and sizes of civilian wear. Production for military purposes was at a peak in
The extra demand for leather for footwear led to an exceptional increase in work for the tanning industry, which doubled its staff between 1938–39 and 1943–44, and maintained the increase for the rest of the war. Considerable extensions to plant had to be made to provide extra productive capacity.
Chart 38 shows changes in employment in boot and shoe factories.
Over a million battledress suits were made during the war in New Zealand factories, together with over half a million greatcoats, four and a quarter million pairs of socks, and corresponding quantities of other military clothing. Seven hundred thousand pairs of blankets were also made to military orders. Clothing factories and boot and shoe factories received an impetus from this wartime ordering, which was to continue into the post-war years and enable them to produce many civilian lines which had previously been imported.
Chart 39 shows changes in output of some selected items.
Of particular interest is the marked wartime reduction in output of shirts and trousers for civilian use. Shirts and trousers for service use were included in military orders, which were at a high level from 1940–41 to 1942–43.
A useful contribution to the allied war effort was made by the radio industry in New Zealand. This industry, at the outbreak of war, was not yet able to meet all New Zealand civilian demands, but there was already a move to increase its output and to lessen its dependence on imported components.
Output continued to expand in the early months of the war, and, by the middle of The Radio Equipment Supply Committee.
Only small quantities of specialised military equipment were made in the first three years of war, but in Known as a ‘transceiver’. The ZC 1.
Because of difficulties in importing components, this New Zealand transceiver was based as far as possible on locally made components. The sets were required for use in tanks, armoured scout cars, reconnaissance cars and other military vehicles, as well as for general front-line field communications purposes.
The industry's ability to meet the orders depended on the availability of components and raw materials. To conserve existing supplies, the Controller restricted the manufacture of radio equipment to defence contracts. Stocks of components and materials held by manufacturers and retailers were ‘frozen’ and items in critical supply bought up by the Ministry of Supply. However, as it was likely to be some time before production of the transceiver could begin, sufficient domestic manufacture was allowed to keep the factories intact, and to allow the industry to preserve its skilled manpower.
Full production of the transceiver began in See also p. 137. A Indian War Economy (Supply, Industry and Finance), p. 426.
From mid-
Pressure of war work remained heavy. Not until
‘As there appears to be no possibility of the industry obtaining further war contracts, a relaxation of the control notice will be necessary not later than the end of this month, to enable units to maintain continuity of work in various departments.’
Eight days later
Soon after the outbreak of war it became apparent that, although the Royal New Zealand Navy had taken over most of the small coastwise cargo vessels suitable for conversion into minesweepers, there would still be insufficient minesweeping craft to adequately protect New Zealand coastal sea lanes and harbour approaches under war emergencies. Other allied countries, with similar and even more pressing needs of their own, could not be expected to fill the gap. New Zealand had to try her hand at building minesweeping ships and their machinery.
Shipbuilding was not a new industry in New Zealand. Prior to the war a steady flow of small ships had been built, and the knowledge so gained laid the foundation for the war programme. From the beginning of European settlement in the early nineteenth century, small wooden ships had been built in localities where kauri and other suitable timbers were available. Later some had been built entirely of steel, examples being the s.s. Earnslaw, a passenger ship for Lake Wakatipu, of 330 tons, built at Dunedin, and the tug Dunedin, 345 tons, constructed at
To meet the wartime emergency, it was thought that vessels of the minesweeper–trawler class could be constructed of composite design, that is, steel frames with wooden planking. However, a bottleneck occurred. Engines, although they were eventually built in New Zealand, could not be constructed quickly. The impasse was resolved when five old condemned vessels, lying in the ‘Rotten Row’ of the
Early in Castle type all-steel trawlers had been received from the Admiralty and construction of composite ships based on the Castle design started. In at least one case the boilers from the old ships had to be placed back to front, and the general arrangement of the composite vessels, having regard to the difficulties of installing old engines in new hulls, was a feat of engineering. Eventually four minesweepers were successfully constructed and launched. They were in service with the Navy for over five years.
In
The programme for the construction of steel minesweepers was hardly under way before the Admiralty requested the construction of twelve ‘Fairmile’ patrol vessels for anti-submarine warfare. Arrangements were made, in Parliamentary Paper H–15, Report of
In addition, the Public Works Department arranged for the construction of twenty-seven small vessels, to act as refuelling barges, crash launches, flarepath dinghies and the like, for air bases in New Zealand and in the nearby
Towards the end of Later Sir James Fletcher – then Commissioner of Defence Construction.
The ship and boat building industry employed seven hundred men in
For the construction of steel minesweepers, the difficulty in securing skilled labour was even more acute than it was for the wooden ships. This was one of the reasons for changing from steel to composite minesweepers at The
Wartime ship-construction work is summed up in the following table: Based on Parliamentary Paper H–15, Annual Report of the
Acceptance of the
When an order for wooden barges was received from the Americans, there was no spare capacity in the industry and again it was necessary to call on firms outside the usual run of boatbuilding. These barges were made by a syndicate of coachbuilding firms in
Labour problems arose also in the construction of seagoing tugs to an all-welded design. There were not enough welders. A training school was set up and, after three or four weeks' tuition, trainees were passed out for welding on the tugs, their work being supervised by a more experienced welder. The hull of each of these vessels was constructed in three separate parts, the bow portion, the middle body and the stern. During this period early-rising motorists might have been startled to come upon the bow portion on the way by road from the Railway Workshops at Otahuhu, round about daybreak when interference with traffic would be at a minimum.
Normal repairs to the New Zealand coastal fleet had to be maintained while this shipbuilding programme was going on. In addition, because of ship and machinery repair congestion in other countries, there was extra repair work to be done on overseas vessels in New Zealand ports. For example, New Zealand engineering establishments played a part in effecting repairs to over a thousand
New Zealand's only floating dock, at T. D. Taylor, New Zealand's Naval Story, p. 145.
The speed and quality of New Zealand shipbuilding and repair work made a considerable impression on ‘New Zealand Sea Frontier Organisation’, unpublished manuscript, copy on Department of Statistics file 100/20/43.
‘… there was a quality of self-sufficiency about the little shops and a pride of workmanship that was most impressive.’
‘The skill of the average New Zealand mechanic should be noted, as it is of the very highest order.’
‘Phenomenal records were put up in building these ships. The rate of building compared favourably with similar construction in the States, only more were built in the States, but the rate was not exceeded.’
‘Considering the pre-war demand for ship repair facilities in
Many of the ships built under special difficulties as part of the wartime shipbuilding programme would still be found usefully serving peacetime pursuits around New Zealand,
During the war, the tobacco and cigarette making industry in New Zealand took over most of the local market from the pre-war overseas suppliers of manufactured tobacco and cigarettes. The number of cigarettes made in New Zealand more than doubled between 1938–39 and 1941–42. The industry was to continue to strengthen its position for the remaining war years and to hold the bulk of the market after the war.
This expansion was not entirely an effect of war. In its Parliamentary Paper H–44, p. 29.
Progressively this policy was intensified. The original reasons for it were soon supported by new justifications arising out of the war. In its Parliamentary Paper H–44, p. 18. The Board mentioned was the Tobacco Board.
‘Efforts have been made to bring about a substantial expansion in production during the 1940–41 and future seasons, this being both desirable and necessary, having regard to war conditions, to the possibility of interruption of supplies of leaf from
This policy was effective in increasing the New Zealand-grown content of local manufacture. In the three years 1938–39 to 1940–41, 30 per cent of tobacco used was grown in New Zealand; in the next three years the proportion was 35 per cent and, in the three years 1944–45 to 1946–47, 40 per cent. Government policy was to be even more effective in increasing the amount of local processing of cigarettes and tobacco smoked in New Zealand. Local production of cigarettes averaged 600 million a year in the three years 1938–39 to 1940–41, being then over twice that of the preceding three years. From 1941–42 to 1943–44 it averaged over 1000 million, and from 1944–45 to 1946–47 nearly 1200 million.
Expansion of production was aided by the decision of the Minister of Industrial Manpower, in Declaration No. 110 in New Zealand Gazette of 6 August, amended in
Throughout the war, the supply of labour to tobacco factories was one of the more difficult problems confronting the
In the circumstances, it is interesting to record that direction of labour for tobacco and cigarette manufacture was, in large measure, successful. An employer wrote: W. D. and H. O. Wills. The firm, in
‘Directed girls gave excellent service and, almost without exception, worked as well as voluntary labour. They performed semi-skilled work and quickly became proficient. Most of the girls stayed with us when the manpower controls were withdrawn, although some of them have since left us, in most cases because of marriage. In the ordinary course absenteeism was, if anything, lower with directed girls residing at the hostels as compared with local girls. After public holidays the rate was higher with directed girls, due no doubt to their inability to travel to their homes and return within prescribed limits. It must be remembered that most of these girls were directed to us from all parts of the
Many new manufacturing industries sprang up during the war years. Some of these owed their existence to war conditions, but many were a result of the quantitative controls of imports which had been introduced before the war started. The Parliamentary Paper H–44, p. 15.
‘Some idea of the progress that has been made by local manufacturers to supply the market for goods previously imported can be gained from the following list of products, the manufacture of which has commenced during the past year: Parchment lamp shades, rubberware for milking machines, fruit cases,Sic. Perhaps a new factory, but the industry was not new.Sic. Not new. This industry had been producing over £1 million of output for some years. It is probable that this is a list of new factories rather than new industries.
The obvious tendency towards diversification in New Zealand manufacturing revealed by this list was not an unmixed blessing. Before import controls were imposed, in
Some of the effects of war are revealed in the Parliamentary Paper H–44, Report of the
‘The following important additions to our manufacturing industries were made during the year: dehydration of food, linseed oil, fishmeal, fish liver oil, rubber reclamation, macaroni, plastic substitutes for tin, enamel mugs and plates, gasmasks, turret lathes, batteries for hearing aids, power presses.’
An interesting commentary on the fish-liver oil industry is given in the 1944–45 annual report of the Parliamentary Paper H–15, p. 17.
‘Among other developments in the utilization of fishery products, hitherto wasted, that have been more or less forced upon us by conditions arising out of the war, the fish liver oil industry is one of the most important and probably has the best chance of continuing to be a good thing in both its commercial and social aspects after the return of normal economic conditions. During the year
‘Some of our relatively abundant New Zealand fish provide oils that are richer in vitamins. For example, ling has sixteen times as much A and five times as much D; groper (hapuku) has fifty times the potency in A and twenty-two times in D; kingfish two hundred times as much A and probably about a hundred times as much D. Ling liver oil, like that of the true cod, is relatively easy of extraction, which is not the case with that of groper and kingfish. Livers from various species of shark yield copious amounts of oils that are particularly rich in vitamin A—in some cases up to over one hundred times as much as in cod liver oil—but poor in vitamin D.
‘A large proportion of the oil produced in New Zealand is obtained from vitamin A rich shark livers. Nutritional authorities consider that our ordinary New Zealand diet is deficient in vitamin D, more especially for juvenile and maternity requirements, but there is, or there need be, no deficiency of vitamin A. Shark liver and other oils very rich in vitamin A are thus available for export. And this last statement can be strengthened by adding that practically all the rest of the world is undersupplied, while to the populations of those countries which are the concern of UNRRA, their restoration to anything like normal health is absolutely dependent on their receiving, among the “protective” food factors, increased amounts of this vitamin.’
Some of the new industries established during the war disappeared when the special war needs passed, but most remained in existence and grew in stature. The tendency for the range and depth of New Zealand manufacturing to increase was to continue apace after the war. It is quite impossible, in this chapter, to deal in detail with all the industrial changes in the war years. Those mentioned here must be regarded as examples only. Many are referred to in other chapters; for example, the processing of a new local crop, linen flax, is dealt with in the farming chapter, the need for extra steel rolling capacity in the supply chapter, and so on. For those who are interested in a particular industry, the alphabetical index may help, but to give even a brief account of every manufacturing industry would need several volumes this size.
In the seven years from 1938–39 to 1945–46 the volume of manufacturing production increased 31 per cent, equivalent to a growth rate of nearly 4 per cent a year. Though production volume increased each year, the period includes two spells of comparatively slow growth. In 1940–41, with supply problems becoming more difficult, the increase dropped to 2 per cent. The rate then stepped up, but later, when munitions work declined, there was a second deceleration. Victory in
These wartime increases occurred in a manufacturing sector which was well protected by quantitative import restrictions, but was hampered by wartime supply and labour difficulties and, in some cases, by shortages of power. There is no need to go fully into these difficulties here: supply problems are discussed in Chapter 6, labour shortages in Chapters 5 and 18, and power restrictions and coal shortages in Chapter 16. Sufficient now to recall that stocks of manufacturers' materials tended to be inadequate from the outbreak of war, See also p. 116. See also p. 96. See also p. 433.
The wartime growth in volume of manufacturing production of 4 per cent a year on average was roughly in line with the long-term trend. The years 1933–34 to 1937–38 had seen a faster rate of growth, but this was in large measure a post-depression recovery.
In 1938–39, with difficult overseas trading conditions having some effect, the increase had been only 3 per cent. But wartime demands gave a new boost, which was initiated with a production increase of 10 per cent in the first year.
Chart 40 shows changes in volume of manufacturing production.
Considering the quite rapid increase in labour available to manufacturing industries, the rate of increase in production is not very fast. It should, however, be remembered that much of the new labour came into the industry under manpower direction. Often training or retraining was necessary before the extra workers could be used efficiently.
Uncertainties in supply affected equipment as well as materials. Many of New Zealand's suppliers of productive equipment found their efforts diverted to war production for their own governments and could not meet New Zealand orders. However, it is interesting to note that motive power available to manufacturing industries in New Zealand increased from 848,000 horsepower in 1938–39 to 1,167,000 horsepower in 1945–46, an increase of 37 per cent. There
The prevailing weakness of New Zealand manufacturing, its tendency to small-scale operation in a multiplicity of types of establishment, remained throughout the war period and no doubt contributed to the slow rate of improvement in output per labour unit. The average size of establishment was 17 persons in 1938–39 and 18 in 1945–46.
The setback to increases in productivity, that is, in production per unit of labour, Strictly, productivity is a measure of changes in output from industry per unit of labour and other resources used, but useful information is obtained by comparing output to labour only.
NEW ZEALAND'S most vital economic contribution to the allied war effort was the produce of her farms. For a time, when British food supplies were at their lowest ebb, extra food production became more urgent than the strengthening of New Zealand's fighting forces.
Before the war, a sixth of the
The long-term trend was for the volume of New Zealand's farm production to increase by about 2 1/4 per cent a year. However, production as well as price was subject to unexpected variations. There had been two very good farming seasons in 1936–37 and 1937–38, but, in the immediate pre-war year, 1938–39, the volume of farm production fell back to the level of three years before. The main decline was in the production of butter, which more than offset the effects of a very good season for wool. As a result, export volumes were comparatively low. This, combined with a tendency for export prices to fall, added up to a poor season for export earnings in 1938–39, a result which was particularly embarrassing when New Zealand was already having overseas exchange difficulties.
The season 1938–39 saw the first really effective use of the Labour Government's guaranteed price scheme for dairy produce. The price of butter averaged £130 a ton on the
At this time, though there was some sign of an upsurge in manufacturing industries, farming's position as New Zealand's main producer was virtually unchallenged. It was the chief contributor to the volume of goods and services in New Zealand, and almost the sole earner of foreign exchange. Unfortunately, this most important New Zealand industry was subject to violent fluctuations in the overseas prices for its products, an influence which, in spite of guaranteed prices for dairy products, tended to keep the whole economy in a state of undulation and uncertainty.
Fertile soil, equable climate and good farming methods, kept up to the mark by adequate research and technical advice, all contributed to enable New Zealand to enter the war with one of the most efficient farming industries in the world.
The average annual output of New Zealand farm produce for the three seasons 1936–37 to 1938–39 was:
Of these, 85 per cent of the butter, 94 per cent of the cheese, well over half of the meat, and 92 per cent of the wool were exported. The foreign exchange earnings of these farm exports averaged:
Other exports averaged less than £4 million a year, bringing the total to £60 million, of which farm products supplied 94 per cent.
The United Kingdom took four-fifths of all New Zealand's exports, including nearly all the food Over 97 per cent in each of the four pre-war years.
The pattern of New Zealand farming is fairly inflexible, sheep being based predominantly on the hilly and mountainous country, cattle on the pastures where winter feed can be more readily provided.
In the immediate pre-war years, British farming supplied only about 30 per cent of her food requirements. Seventy per cent came from overseas, either as food or as feeding stuffs for livestock. About half of all meat used and 91 per cent of butter came from overseas. Keith A. H. Murray, History of the Second World War—Agriculture, p. 38.
Before and during the war, efforts were made to expand W. M. Hamilton, The Dairy Industry in New Zealand, p. 14.
However, these changes could not do much to reduce dependence on imported supplies and it is not surprising that, within a few days of the outbreak of war, the See p. 41.
As early as
When the necessity arose again, a quarter of a century later, negotiations and purchasing arrangements were made easier by the fact that the introduction of the guaranteed price for dairy products, in the 1936–37 season, had necessitated bulk purchasing arrangements for these commodities. The Marketing Department, already in existence for this purpose, now provided, ready-made, the machinery for bulk purchase and shipment of farm products under the wartime contracts.
In the 1914–18 war, bulk purchasing arrangements had commenced for meat and cheese in
With the agreement between New Zealand and the
The Government took much wider powers than this. On Under the Primary Industries Emergency Regulations Farming in New Zealand,
The
Once labour became short, farming, along with other industries, had to depend on the Director of Manpower to maintain an adequate labour supply. This dependence became even more apparent once power was taken, in In manufacturing and construction, particularly, the tendency was, naturally, to direct labour to establishments which undertook war contracts. If, on occasions, this amounted to coercion to accept war contracts, such a practice does not seem to be too far removed from the purpose of manpower direction. (See also p. 163). In many cases, directed workers would have had to live in farmers' homes. See also p. 194.
Thus, in the main, wartime controls over farming were restricted to marketing, rationing of some scarce supplies, and limited direction over production in one or two exceptional circumstances such as the butter to cheese switch in See also p. 199.
In pre-war years, fears had been freely expressed of a possible six months' break in shipping should New Zealand become involved in a war with As late as
At the outbreak of war the Government brought its influence to bear to see that some extra storage space was provided. As a condition of their licences to slaughter and export meat, it required all freezing works to provide at their own expense sufficient cool storage space for holding 60 per cent of their average kill of meat. See also p. 45.
A further indication of the Government's mounting anxiety to provide extra storage space was the trouble taken to salvage refrigerating equipment from a wrecked vessel, the See also p. 119.Port Bowen, and use it to provide cool-storage space in an abandoned meat works.
It was most fortunate for New Zealand that The Dairy Industry in New Zealand, p. 14.
The German invasion of ‘Telescoping means severing the carcass crosswise at the pin-bone joint, and then packing the leg portion inside the trunk. This results in a considerable saving in storage and shipping space.’—Parliamentary Paper H-30b, Food and Other Supplies to the United Kingdom during the War, p. 13.
In
All this came at a time when New Zealand meat production was rapidly increasing. For a time it looked as if there might be an undue accumulation, followed by post-war dumping, as had happened after World War I. Further emergency cool stores were constructed, dehydration was resorted to, and more meat was canned. Canned meat did not need refrigerated space and there was considerable expansion of production in the later years of the war.
For the meat industry, the greatest relief came in
In the second half of
As an exporting year, See also p. 199.
Commenting on overseas trade in Dominion, leading article,
‘The outstanding feature of the preliminary (trade) returns is the proof they afford of the sustained ability of the British shipping authorities to lift the produce. In the third year of a World War they have provided shipping facilities for this distant source of supply which have enabled record quantities to be dispatched. There may be even more difficult days ahead, with intensification of the submarine menace, but what has already been achieved by the Merchant Marine constitutes a wonderful record, and shows plainly the success that has followed the unremitting efforts of the Navy to keep the sea lanes open. The figures also provide convincing evidence of a sustained effort to maintain, and where possible increase, production. The results have been obtained despite shortages of labour and material. Prices for our chief exports have moved little since the outbreak of war, so that an increase of £22·8 millions since
In fact, the volume of exports in
This high volume of trade was carried in spite of the fact that allied shipping losses were at their highest in the first half of See also Chapter 14. Of imports into the ‘The other principal contribution to ship-saving was by the boning of imported beef before shipment and the “telescoping” of frozen mutton and lamb carcases in the refrigerated holds. In the calendar year History of the Second World War. Food. Vol. I: The Growth of Policy, p. 224.
As we have seen, the war came in a period of increasing mechanisation of farms. See also Chart 4 on p. 15.
It was not just a matter of making more power available on farms but of making power available in more convenient form. For example, electric motors were taking over from internal combustion engines. From 1939 to 1946 the number of electric motors used on farms increased by 51 per cent, while the number of internal combustion engines decreased. The electric motor required much less personal attention. Electrical equipment in the home tended in the same direction, allowing the farmer and his family more time to work on the farm and reducing their need to bring in paid labour.
These changes are summed up in the following table:
1Source, New Zealand Official Yearbooks. Numbers rounded for convenience in reading, but percentages are calculated on original figures.
The process of mechanisation of farming, with improved methods, was well under way before war broke out. Though it is probable that wartime shortages of labour hastened it, it was by no means a wartime phenomenon. In fact, the underlying situation seems to have been that, both in times of unemployment and in times of labour shortage, mechanisation (and the accompanying improvements in methods) was having a profound effect on farm labour requirements. The situation was reached, probably somewhere around
In contrast, wartime thinking was in terms of steadily increasing farm labour requirements. Early complaints of labour shortage on farms reinforced this view, and there was no statistical information to show the true position. Between the 1926 and 1936 population censuses, the numbers engaged in farm work had increased by nearly a quarter. Employment conditions generally in
This assumption was to be proved faulty, but the proof came too late to prevent frustrating and costly misjudgments in time of war, when they could least be afforded.
The population census due in Census procedures have been changed several times since
If the circumstances of the
Thus, on a comparable basis, the number of males in farming decreased from 148,000 in See p. 194.
The rapid mechanisation of farming has already been illustrated. Chart 4, p. 15, and p. 188.
The reduction in farm labour needs seems to have been fairly general. The most rapid fall was in dairying, but a post-war report on sheep farming includes the following paragraph: Parliamentary Paper H-46a, Royal Commission to inquire into and Report upon the Sheep Farming Industry in New Zealand.
‘It is also interesting to note that the number of sheep and breeding ewes to one unit of labour has increased greatly in the last thirty years.
‘The doubling of the number of breeding ewes to one labour unit may be ascribed to the fact that dry-sheep numbers have fallen in this thirty year period, being replaced by breeding ewes on the better pastures.’
In dairy farming the reduction in labour requirements was given an impetus by the discovery that hand stripping, long considered an essential for the efficient use of milking machines, could be eliminated without significant ill-effects. It is difficult to trace precisely the spread of the practice of no hand stripping. In 17th Annual Report of the 20th Annual Report of the Journal of Agriculture.
By the 1943–44 season, information was being taken from 266 herds where there was no hand stripping, including 32 where non-stripping had been the practice for ‘at least 4 or 5 seasons’. Still the change showed only a minor reduction in butterfat production per cow. Said the Dairy Board, Ibid., p. 49.
It is likely that the practice of eliminating hand stripping continued to spread throughout the war, progressively reducing labour requirements on dairy farms. It may well have been the most important influence leading to the reduction of farm labour requirements.
In short, rapid mechanisation and changes in farming methods were making it possible, in most types of farming, to produce an increasing output with a stable or decreasing labour force. By far the greatest fall in numbers of men engaged was in dairy farming, where there were some 75,000 at the
Though the farmers were one of the first groups to complain about the depletion of the civilian labour force by armed forces recruitments, they do not seem to have been seriously inconvenienced until later in the war. Labour requirements on farms decreased during the war, but labour requirements were increasing in manufacturing and in most other industries. Consequently, though certainly in need of some protection, farmers were generally better able to sustain losses to the armed forces than were most other essential industries. Unfortunately, this difference in labour force trends was not recognised during the war, and as a consequence mistakes were made.
Losses of men to the Armed Forces were considerable and it was inevitable that, in spite of the falling tendency in farm labour requirements, farmers would, before too long, run short of labour. In the very earliest days of voluntary recruitment for the wartime Armed Forces, farming did not receive any special manpower protection, and considerable numbers of farm workers entered the forces. Very soon there were complaints from farmers, but, with a pool of unemployed labour still unabsorbed, these complaints were not at the time taken too seriously. See also p. 83. Parliamentary Paper H-11a, Report of
To strengthen the New Zealand home defence forces after See also p. 94.
The farm labour problem was now becoming difficult and, with increasing pressure for extra food production, the Government gave such assistance as it could, consistent with maintaining its defences against possible invasion. At harvesting time, when labour requirements were at their peak, an arrangement was made for farmers to draw men temporarily from the Armed Forces. These men remained under military discipline, and the harvesting became in effect a type of army operation. Ten thousand men were used in this way in the 1941–42 season, and eight thousand in 1942–43. This arrangement looked after the most difficult seasonal peaks for labour on farms and enabled recruiting for the Armed Forces to be carried on in spite of the rising pressure for extra food production. By the end of
Special arrangements were made, also, to put women on farms. At the
University students and senior school pupils also assisted as vacation workers. During the 1943–44 vacation, it was arranged that the universities should resume at the beginning of April instead of the beginning of March, so that students could help at the peak of the season. In addition, the Education Department agreed that senior school pupils should be allowed to work for an additional month after the normal holidays.
Throughout the 1943–44 season, farming continued to receive manpower assistance in various ways, though it still had to contribute a share towards the manpower requirements of the New Zealand forces overseas.
Though a great deal was done to assist with farm labour difficulties over these years, some farmers do not seem to have been particularly co-operative. The experience of the Parliamentary Paper H-11a, Report of the
‘By the beginning of
‘It was estimated that 7,000 men could be absorbed by the farming industry, and plans for the return of Third Division personnel to meet this estimate proceeded accordingly. At the same time action was taken to obtain returns of actual labour
In fairness to the farmers, it should be added that the men were to become available at a time when farm labour needs were not seasonally high. (Author's footnote.)
Throughout all these vicissitudes, farming was never declared an essential industry. It is perhaps an indication of the strength of the farmers as a pressure group that, in spite of their receiving so much manpower assistance, they were able to avoid the preliminary step which other industries had to take of being declared essential. Essentiality would of course have placed obligations on the farmers themselves, and what actually happened was that they received the benefits of essentiality without accepting its special obligations.
Some of the reasons why the farming industry did not wish to be declared essential were stated by Mr A. P. O'Shea, Dominion Secretary of the New Zealand Farmers' Union, in As reported in the Dominion,
‘To those who are fully conversant with the position here, it is obvious that Mr Clarke has spoken either without a complete knowledge of the facts or else without fully appreciating that the question of declaring farming an essential industry has been fully considered a number of times by the Farmers' Union and the
This sounds very reasonable, but it should be assessed against the fact that between 1 October 1943 and 31 March 1946, some 13,300 men and 3300 women were in fact directed into farming. Parliamentary Paper H-11a, Report of the
Some idea of the protection given to farm labour, in spite of the fact that farming was not declared essential, can be gained from a Quoted by Wood, p. 292.
In the inter-war period, the practice of topdressing farms with artificial fertilisers had become widespread, and by
Roughly three-quarters of this annual use of fertiliser was superphosphate, for which New Zealand was dependent on supplies of rock phosphate from
By the outbreak of war precautions had been taken against interruption of supplies, and 80,000 tons of rock phosphate was in store, equivalent to about one-third of a year's requirements. Fortunately, there was no immediate break in supply, although imports of basic slag and other phosphates declined from over 80,000 tons a year
Fertiliser supplies from alternative sources were scarce, and usage fell to 500,000 tons in 1941–42, to 360,000 in 1942–43 and to 285,000 tons in 1943–44. This was well under half of pre-war usage, a truly drastic fall. Rationing was necessary, The Phosphatic Fertilizer Control Notice, A. A. Ross, Wartime Agriculture in Australia and New Zealand, 1939–50, p. 266. See, however, the reference to hay and silage yields (p. 198, note 1).
The limited supplies of fertilisers available from alternative, more distant, sources were dearer but were subsidised to hold the price reasonably close to its pre-war level.
Use of lime had also increased rapidly in the pre-war decade and, when wartime difficulties created shortages of phosphate fertilisers, even more lime was used. Lime being available in ample quantities in New Zealand, the main problem was cartage of a commodity with a very great weight for value. Rail and road cartage were subsidised. Free carriage of lime by rail had been a long-standing concession to farmers.
Imports of phosphatic fertiliser were at their lowest in 1942 and 1943, when arrivals were less than one-third of Primary Production in New Zealand,
Chart 41 shows the areas topdressed in each year from 1934–35 to 1948–49, including topdressing with lime, artificial fertiliser, or both.
After 1934–35, dairy herds, which had increased year by year for nine years, started to decrease in numbers and continued to decrease until 1939–40, by which time they were 5 per cent below 1934–35. There was a slight recovery in 1940–41, which was sustained into the following season, but in 1942–43 the number of cows in milk fell again, to reach its lowest level since 1932–33. There were fewer still in the last two wartime seasons, and the war ended with 2 ½ per cent fewer cows in milk than in the immediate pre-war season 1938–39. This was in marked contrast to breeding ewe numbers, which increased by 10 per cent over the war period.
Farming activities were undergoing a distinct change in emphasis. For each dairy cow in milk, there had been 16·1 sheep in 1934–35. In 1938–39 there were 18·5 and in 1944–45 20·2 sheep.
Chart 42 shows in clearer perspective the change in emphasis in farming:
In the war years, livestock on dairy farms declined quantitatively as well as relatively. Between 1938–39 and 1944–45 the number of dairy cows fell by 45,000, while the number of sheep increased by 2,100,000. It is not surprising that, whereas the 1944–55 production of wool was an all-time record, the 1944–45 production of butterfat had been bettered in five preceeding seasons, including one as far back as 1935–36.
In terms of war requirements, the change in emphasis did not necessarily represent the most advantageous use of farm resources. In the
The wartime diversion from dairy to sheep farming played little part in bringing about the reduction in farm labour needs. On the basis of pre-war manpower requirements, the 7 per cent increase in sheep numbers would have needed rather more than pp.190 and 191. There was unemployment in
After the German conquest of the
Of the reasons for the change, W. M. Hamilton, The Dairy Industry in New Zealand, Bulletin 89 of Council of Scientific and Industrial Research, p. 16.
‘Not long after the outbreak of war the British Ministry of Food expressed a preference for cheese rather than butter or meat, and gave it priority over all other refrigerated foodstuffs. Butter is purely an energy food containing only a trace of protein and being poor in minerals, but relatively high in the vitamins A and D. Cheese, on the other hand, is a well balanced food rich in protein, fat, and the important minerals calcium and phosphorus. Per cubic foot of shipping space, cheese provides twice the energy value and more than twice the protein content of telescoped frozen lamb and is also markedly richer in mineral and vitamin content.
‘Cheese in wartime is essentially a substitute for meat, superior in nutritive value, much more economical in shipping space, and less vulnerable in land store to damage from enemy raids, as it can be kept for some time without refrigeration.’
Within a year, the output of cheese had increased by a quarter, and exports to the
In
The changeover from butter to cheese involved well over six thousand dairy farmers, but was achieved largely by persuasion rather than compulsion. Less than a hundred farmers had to be issued with orders to change. Powers to make such orders were taken by an amendment to the Primary Industries Emergency Regulations Ross, Wartime Agriculture in Australia and New Zealand, p. 267.
‘The success of this great change in the dairy industry calls for examination, for there was no reliance on price incentives, control measures, or rationing preferences. The Director of the Dairy Division
In the 1940–41 season, in spite of increasing emphasis on cheese, butter production stayed at pre-war levels, but in 1941–42 butter production fell by 32,000 tons.
The change to cheese required considerable reorganisation of dairy factories. Butter factories were converted to cheese-making, disused
The increased emphasis on cheese production lasted for only two seasons, but in these two seasons exports equivalent to nearly three normal seasons were sent to the
In Quoted in Parliamentary Paper H-30, Marketing Department (Export Division),
‘Vicissitudes of war have fundamentally changed our dairy produce position. Since we requested you to increase cheese supplies at expense of butter our fat position has been prejudiced by loss of raw materials margarine from
This request also was accepted, and the change back made in the 1942–43 season. Less persuasion and pressure were brought to bear on farmers, Any necessary powers were taken in the Dairy Supply Control Order
Chart 43 shows how butter and cheese production was affected by the switch in emphasis from butter to cheese and back.
The 1943–44 season started badly, with unfavourable weather and heavy lambing losses. Butterfat production was to be the lowest since 1931–32 and more than 10 per cent below the average of the four previous seasons. With Pacific forces to be supplied and the
A Dominion, second leader,
‘The adverse weather conditions that have prevailed since the commencement of the 1943–44 season must have a very serious effect on production. The national income will be reduced and there will be other unwelcome results, but to most people the really vital aspect will be the possible reduction in the capacity of the Dominion to provide the British food authorities with
Sic. Butterfat production was down by 7 per cent.
‘It is admitted that several factors have handicapped the producers, particularly the cumulative effects of the lack of fertilisers and the shortage of labour, but the position presents a challenge to New Zealand, as it has to
‘On the production side, something might be done if supplies of phosphate could be obtained from North Africa. The Federal authorities, it has been reported, are testing phosphate deposits in
‘Nothing can be done to replace the losses the farmers have suffered in the heavy lamb mortality and in other ways, but the community can assist to maintain supplies of dairy produce to Great Britain. With the winter weather approaching there the need for these things is increasingly great, and in its domestic consumption the Dominion has a substantial reserve that should be tapped, with a contribution for the best possible purpose, the health and welfare of the
Butter rationing was introduced in p. 603.Official Yearbook
The same Yearbook contains an estimate of the extra exports made available by rationing of dairy produce: ‘As a result of the present (
Production of meat was very close to 520,000 tons in each of the war years except 1940–41 and 1943–44. Tonnage estimates used in this paragraph were given by
High meat production had not always been an unmixed blessing. There had been a tendency in
Meat exports in 1939–40 were a record, Partly because the United Kingdom Government accepted as a special reserve lower grade meats, some of which had been in store for some time. The reasons leading to this decision are discussed more fully by R. J. Hammond in a United Kingdom Official War History entitled Food, Vol. III, pp. 230, 231.
Writing of shipping shortages, A. A. Ross says, ‘… the British Government was forced to refuse to lift certain classes of lower-grade meat such as beef and ewe and wether mutton, and these meats were unshipped for a number of years’.Wartime Agriculture in Australia and New Zealand, p. 260.
This was not a new problem. In pre-war years, also, heavyweight mutton and second grade beef had been difficult to sell. The Parliamentary Paper H-29, Report of the
‘… So far as export lamb is concerned there is no need for any apprehension that increasing quantities cannot be satisfactorily marketed within the quota limits, but a very serious position has arisen, and will continue to exist in the export of aged-ewe mutton. This class of meat is the least wanted in Great Britain, and some method must be arrived at whereby this class of mutton is reduced to make full room for expanding lamb exports…. the fact that old-ewe mutton in Great Britain is rapidly coming into the unwanted class necessitates a complete readjustment in our marketing.’
Shipping shortages became worse in
The situation was also changing in p. 279. United Kingdom Ministry of Food to New Zealand High Commissioner,
Cattle slaughtering, like sheep slaughtering, was always above the pre-war figure, but in both cases exports were reduced.
Exports of frozen and chilled beef, after an initial boost in
By the time New Zealand experienced her bad 1943–44 season, the
Most New Zealand meat comes from sheep farms, and the higher level of meat production over the war years was associated with the tendency for sheep farming to gain ground at the expense of dairying. Lamb killings, which had averaged 9·4 million for the three seasons preceding the war, moved up to 10·4 million in 1939–40, and to 11·2 million in 1940–41. They stayed close to eleven million for each of the following two seasons and were around 10·6 million for the last two wartime seasons. On average, lamb had made up about two-thirds of the value of all meat exported, but the proportion was higher after
Mutton, normally providing rather less than half as much export meat by weight as lamb, fell still lower in the war years. In 1941 and 1942 export tonnages were about 40 per cent down, and in
Chart 44 shows changes in livestock slaughterings.
In spite of these variations the meat industry's output was high during the war years. The only sustained decline was in pigmeat production. Labour difficulties on dairy farms were a contributing factor here, and, with better returns for cream and milk, there was less need of this additional time-consuming source of farm income. Changes from butter to cheese and back also brought uncertainty in the pig industry and, from
War in the
Slaughtering of pigs was below the pre-war figure for all of the war years. There was some slight recovery in 1940–41 and 1941–42, but by
During the war, individual farmers did not receive the full benefit of favourable meat prices paid under the bulk purchase arrangements. Substantial sums were diverted into special meat accounts, which played an important part in the Government's overall stabilisation scheme. See also Chapter 12. Partly in the form of Government stock of bonds or as credits to National Savings accounts.
Chart 45 shows changes in New Zealand meat production and exports.
It will be recalled that supplies for American forces, purchased by the
All the American purchases occurred in the last three years of war. For these years they were taking as much as a quarter of New Zealand's exportable surplus.
Early in Wood, p. 279.
One of the strangest economic effects of war was the steady accumulation of very large stocks of unwanted wool at a time when, in many other industries, resources were being diverted away from production of all but the most immediately essential requirements. The fact that, on sheep farms, wool could in a sense be regarded as a by-product of meat production was not a complete answer to this conundrum. It was no answer at all in the later years of war, when wool production increased much faster than meat production.
By the end of the war, New Zealand had accumulated stocks of wool amounting to approximately 370 million pounds, equivalent to more than one full year's production of wool; this after there had been considerable pressure for extra production of butter, cheese, and meat for much of the war period. For these food products, farmers were unable to meet the full demand, there being in fact a declining trend in butterfat production.
While the wool stockpile was growing, it was necessary to ration the consumption of meat and butter in New Zealand, quite apart from the very drastic rationing which occurred in the
Before examining this apparent misapplication of farming resources, one or two other facts should be taken into consideration. To some extent it was to be expected that stocks of wool would accumulate over the war period. Enemy countries were no longer taking any portion of British Commonwealth supplies and, even with increasing wartime needs of allied countries, there was likely to be a surplus.
The accumulation of wool stocks was not peculiar to New Zealand. By
The situation is well summed up in an article published in Gerda Blau in ‘Wool in the World Economy’. Paper read before Royal Statistical Society. Journal of the Royal Statistical Society,
‘The wartime rate of American wool consumption rose to the all time record of around 1,000 million lb. greasy per annum. Consumption in
‘On balance, world consumption during the war could absorb only about two-thirds of current supplies from the five main exporting countries; which meant that by the summer of
In New Zealand, as in Wool prices were low in 1938–39, but not low enough to invalidate the comparisons which follow.
When the 15 per cent price increase was given in See for example, Parliamentary Paper H-30, Marketing Department (Export Division), NZPD, Vol. 262, p. 71, of
Compared with the other major farm products, wool price increases were affected comparatively little by stabilisation policies in New Zealand. The Government's comprehensive economic stabilisation plan, which included stabilisation of farm produce payouts, took effect from See Chapters 11 and 12.
Whereas, by
Why did the United Kingdom Government pay such a high price for wool, when so much of it was stockpiled, unless it was to prevent it from getting, by devious routes, into enemy hands? Of course, with their less favourable conditions for farming, the price may not have seemed high to them. In fact, the Parliamentary Paper H-29, p. 4.History of the Second World War, The Control of Raw Materials, p. 378).
‘The future ahead of fine wools is not promising. No doubt prices will rise beyond their present low level, but whether or not the high prices of the past will ever again be realised depends largely on the future of staple fibres, the production of which is increasing enormously. One point is perfectly clear; the total world's supply of wool is not now anything like sufficient for the total requirements of goods which at one time were manufactured entirely from wool. Thus substitutes have become a necessity in world trade. However, the fact that staple fibres by themselves are not suitable for replacing woollen goods in their entirety makes it apparent that the full production of the world's wool is in no danger of oversupplying the market. One does not infer, however, that wool substitutes will not check wool prices, and this check is more likely to be felt in the fine than in the coarse wool trade. The matter is one of particular significance to our mountain-sheep industry, where the returns are almost wholly derived from fine wools and where the returns per sheep are low.’
A Hurstfield, op. cit., p. 378.
In view of the wide differences in production costs in the p. 211.
At the end of the war it was estimated that it would take 12 to 13 years to clear all surplus stocks of wool,Farming in New Zealand, New Zealand
Of the accumulation of wool stocks, Ross writes: Ross, Wartime Agriculture in Australia and New Zealand, p. 258.
‘It may be asked if there were attempts to divert production from wool to meat and to rationalise the sheep industry to save manpower. No such attempts were made. The surplus of meat during the years of restrictions on shipping were a deterrent to a switch from wool to meat.’
However, with the favourable price offering, it would no doubt have been difficult to persuade farmers to put less emphasis on wool. Though a change in emphasis between meat and wool would be comparatively slow in the sheep-farming industry, part of the increase in wool production, which helped to add to the huge stockpiles, must have been induced by the favourable price and by the fact that no portion of the price was held back in stabilisation pool accounts, as happened with meat and dairy produce. As already mentioned, the small portions of wool earnings not paid in cash but as Government bonds or stock, or as credits to National Savings Accounts, became assets of individual farmers.
In the first two years of war, New Zealand farmers do seem to have concentrated on producing meats and dairy produce rather than
Estimated from statistics of lambs tailed.
Chart 46 shows changes in emphasis between breeding ewes, other sheep, and dairy cows for those war years where the information is available.
After
Chart 47 gives changes in the numbers of lambs tailed and lambs slaughtered, and shows the tendency, after 1940–41, for the annual lambing to be used more for flock increases and less for killing. The two sets of figures are not exactly comparable, because of differences in statistical coverage, but the general impression is correct.
New Zealand uses for her own manufactures a surprisingly small percentage of the wool she grows, but the figures received a boost during the war. With defence orders to be filled by local woollen mills, a good deal more wool was used in New Zealand. Before the war, the mills had been buying about seven million pounds of wool a year, but they bought as much as sixteen million pounds in some war years.
The wool-scouring industry staged a recovery, after being in the doldrums in the immediate pre-war period. Its wartime staff averaged 50 per cent higher than the pre-war figure.
The effect of the war was to give a fillip to the wool industry. Before the war, sheep numbers had started to decline. There had been concern about prices and costs, and about deterioration of land. A Royal Commission on the sheep-farming industry had been
The fruit-growing industry received a setback during the war years. The United Kingdom Government considered fruit to be of very low priority for shipping space, with the result that very little was exported. Apples and pears to the value of around £600,000 a year had been exported in pre-war years, but in See also p. 65.
The Internal Marketing Department took over the major problem of selling this extra fruit in New Zealand. Local consumption had to be more than doubled, if the fruit was not to be wasted. There were intensive advertising campaigns. Case lots were sold direct to households, apples were dehydrated, and free issues were made to school children. Clearances were satisfactory, but intensive effort was involved in marketing the fruit. The situation improved to some extent after
The area in orchards had been falling before the war. It continued to fall in most war years, reaching its lowest point in
When Eastern Europe was invaded, an important source of linen flax for the
Investigations into the possibility of growing linen flax in New Zealand had been made by the
The growing and processing of this linen flax was essentially a Government undertaking. Private farmers who co-operated were initially guaranteed a basic payment per acre sown, as a protection against loss. The Government built seventeen factories to process the crop. All the necessary machinery was manufactured and installed by the New Zealand
In 1940–41, 12,000 acres were grown, and, in the following season, 22,000 acres. In earlier years about 30 per cent of the acreage grown proved to be too short for fibre and was harvested for seed only. Parliamentary Paper, H-44, Report of the Department of Industries and Commerce,
The industry was plagued by cumbersome management arrangements, which impaired its efficiency and raised its costs. Ross writes: Ross, Wartime Agriculture in Australia and New Zealand, p. 275.
‘Control of the industry was vested in an interdepartmental committee on which were represented a surprisingly large number of State Departments. But while the controlling powers of this Committee appeared adequate, they were not so in fact; all recommendations had to be approved by a Cabinet Minister who was greatly overburdened with far too many administrative details. On many occasions urgent repairs or alterations were found necessary in the factories and the reorganisation of buying and processing methods proved imperative. Yet these changes could not be put in hand until the managers of the factories concerned and the director of the whole industry had received the sympathetic approval of the “controlling” committee and the final approval of the overburdened Minister, who was often absent from the country on matters of national importance. Even the purchase of trucks to carry the flax from farms to factories which needed a flow of it to maintain steady production had to be approved on the ministerial level and this took several months. One factory manager, who hired trucks in order to avoid partially closing his factory, was severely reprimanded for such action.’
In spite of these difficulties, the industry filled an urgent wartime need. It was planned, when the
New Zealand's main difficulty was the high cost of processing the flax to obtain fibre. While the United Kingdom Government was prepared to pay a high price for fibre all was well, but, after the war, New Zealand was to have difficulty in competing on a free market.
An interesting wartime development was the Services Vegetable Production Scheme inaugurated in
To meet the needs of the American forces in the
The scheme had to face considerable criticism, especially from commercial growers. A good deal of wastage was involved, partly due to uncertainties about the timing and size of military orders and partly to what seemed to New Zealanders to be the over-rigid specifications which the Americans required the produce to meet. However, some waste seems inevitable in the growing and distribution of vegetables. Wherever possible, mature vegetables which could not be used to fill USJPB orders or for the New Zealand armed forces were dehydrated.
After the entry of
Medicinal plants were specially grown in New Zealand to meet a
These are only a few examples of extra crops produced to meet special war needs.
Some of the extra burdens on farming in time of war have been mentioned in this chapter. The fortunes of war brought sharp changes in the intensity of demand for particular products. The supply and shipping situation varied, both for the food items the farmers produced and for the materials and equipment they required.
Frequent modifications of objectives and methods were made to meet these changes.
The greatest achievement was the production of considerably increased quantities of meat from the very first year of war. Butterfat production was disappointing, showing a declining tendency after the 1940–41 season. Output of the other major product, wool, had by 1944–45 increased more than had the output of meat, but most of the increased wool output was surplus to wartime requirements and was stockpiled.
Chart 48 shows changes in output of the three major farm products.
Between 1938–39 and 1944–45, the volume of total farm output increased 13 per cent. This increase was achieved with a declining labour force on farms, and in spite of shortages of fertilisers and other farm requirements. It was made possible by improved methods and a continuation of the trend towards increased mechanisation of farming. In all the circumstances, the wartime increase, equivalent to a rate of 2·1 per cent a year, compares not unfavourably with the long-term average of about 2 1/4 per cent a year.
ALREADY under pressure when war broke out, the building and construction industry was to be very heavily loaded for most of the war years.
Public works had been, not unnaturally, one of the first activities to feel the upthrust of the Labour Government's policy of providing adequate employment opportunities. Development expenditure through the Public Works Department, which, since 1931–32, had been well under £3 million in each year, had increased to £4 million in 1936–37, to £7 million in 1937–38, and to £10·5 million in 1938–39.
At the same time, the Government's state housing scheme was gathering momentum. The first contracts for state houses had been let in
With all this extra work to be done, skilled labour for the building and construction industry was becoming short, in spite of the fact that, for the economy as a whole, there was still a pool of some 20,000 men unemployed or in subsidised employment. See also Table 1 in Appendix I.
For public works development, a considerable range of heavy earthmoving equipment had been imported, and was in use on major projects, when war broke out. The building and construction industry was at this time quite well equipped and was working at full stretch with all available skilled labour.
Though the imported content of construction work was quite high, For 1952–53 it has been estimated at 38 per cent and for 1954–55 at 34 per cent.—Inter-Industry Studies of Department of Statistics. Imports pre-war were about 30 million board feet a year and exports 15 million. The equivalent of about a further 12 million board feet was imported as sleepers and logs.
Local industry provided over a third of the 11 million square feet of plywood used each year, as well as producing nearly 15 million square feet towards the annual requirements of wallboard, but for some other important building materials New Zealand was entirely dependent on imports. Reinforcing-steel, corrugated iron, common window glass, gypsum and linseed oil were major imported items.
Under the influence of reduced overseas funds and restricted imports, overseas supplies of some important building materials had declined. Corrugated iron, which in 1936 and 1937 was imported at the rate of well over 20,000 tons a year, fell to 13,000 tons in Later the Minister of Finance, Mr Nash, denied that imports of corrugated iron had been restricted for balance of payments reasons.—NZPD, Vol. 260, p. 47,
Imports of flat iron were below normal in
Fortunately, stocks of timber were high when war broke out, but the reduced importing of some types of steel and iron, needed for building and construction work, was soon to give rise to shortages and to restrictions on their use for non-essential work.
Chart 49 shows, for some important building materials, the relative importance of imports and local production before the war.
Some defence construction work had been commenced before the war, but it was hardly sufficient to make up for the arrears of defence works caused by retrenchment in the depression of the early 1930s.
Aerodromes had received most attention. As early as New Zealand Official Yearbook,
For other branches of the armed forces, still less had been done. At the time of the Official War History of the Public Works Department (cyclostyled), Vol. I, p. 96.
In addition it was estimated that 3,000,000 super feet of timber would be needed for the initial phase, for canvas camps. It has already been noted that stocks of galvanised iron held by the Public Works Department at the outbreak of war amounted to only See also p. 113.
Some idea of Government thinking on defence works immediately before the war can be gleaned from the Budget statement of
‘In the case of the Naval Forces, action lies chiefly along the lines of completing the Naval Dockyard, building and stocking a naval armaments depot and storehouses, building and equipping
‘On land the fortifications of the defended ports are being modernized and strengthened. The establishment of the Territorial Army has been raised to 16,000, and recruiting for this Force, and also for the National Reserve, is proceeding satisfactorily. Training facilities in all directions are being increased correspondingly and every effort is being made to build up stocks of equipment, armament, ammunition, and stores necessary for training and for mobilization…. The Air Force as a fighting force hardly existed when the Government took office in
‘As a result of the visit of the United Kingdom Air Mission, arrangements have been made for the establishment of an aircraft factory at
‘During last year approval has been given to the establishment of a Flying Training School at
‘Capital expenditure involved in the expanded programmes for the three Services will exceed £5,000,000, spread over the next two years. Maintenance costs will be in the vicinity of £3,000,000 per annum. For all purposes the expenditure during this financial year will be about £5,400,000.’NZPD, Vol. 254, p. 885.
At the outbreak of war the Public Works Department had in hand the construction of seventy defence buildings of a total floor area of nearly 800,000 square feet. All except two of these buildings were on Official War History of the Public Works Department, Vol. I, p. 97.
Construction of mobilisation camps for the training of troops was included in this early wartime programme. The construction of Ibid., Vol. II, p. 382.
‘As Army had requested that both battalion blocks be ready for occupation within eight weeks from 18 September, the entire resources of the Department and of the contractors were organised with a view to achieving this objective. All available plant and machinery were diverted to
‘On
It was to be expected that there would be a diversion of resources from housing and other work to defence construction. Within a few months, the state housing construction programme started to slow down.
Customarily, building permits are issued in New Zealand by local authorities. As a wartime expedient, a Building Controller was appointed in
In the early stages of the war, the Building Controller did not make full use of the powers available to him, but tended to be concerned mainly with maintaining the supply of materials, and channelling them to the most urgent work. He was reluctant to restrict unnecessary work, ‘provided labour and materials are available and not required for more essential purposes’. Proceedings of the General Working Committee of the Economic Stabilisation Conference,
Defence construction work did not move above £4 million a year in the first two years of war, but, nevertheless, shortages of building steel and corrugated iron soon became restrictive in the building industry and gave rise to a number of wartime controls over private building.
In The Building Construction Control Order The Building Construction Control Notice No. 2,
Difficulties in getting adequate supplies of iron and steel are discussed in Chapter 6. By
In a question in the House of Representatives in Mr C. A. Wilkinson (NZPD, Vol. 260, p. 47.
In the course of his reply, the Minister of Finance, Mr Nash, said: ‘There is an acute shortage, and the position would have been a great deal worse had not the Government taken action by endeavouring to obtain additional supplies from
Defence construction expenditure was between £3 million and £4 million a year in 1939–40 and 1940–41, March years.
Considerable strains had started to show up in the building industry by late
The entry of Official War History of the Public Works Department, Vol. I, p. 165.
Mr James Fletcher to hold office as Commissioner of Defence Construction during the pleasure of the Prime Minister, and to act in accordance with all directions, general or special, given to him by the Prime Minister.
The general functions of the Commissioner shall be to organise and promote the undertaking of all defence works according to the importance thereof in the interests of defence, and for that purpose to determine the order of the urgency thereof, and to ensure the supply of materials, plant, and labour for the prosecution of defence works according to the order of urgency laid down from time to time by the Commissioner.
For the purpose of exercising his functions, the Commissioner may give such directions as he thinks fit to any officers of the
In particular, the Commissioner may direct—
That any constructional work (whether commenced by the Crown, any local authority or public body, or any other person) shall be stopped:
That contracts for any defence works shall be let on such basis and on such terms as he thinks fit:
That such labour and materials and plant as he thinks fit shall be made available for any defence works at such places and times as he thinks fit.
Subject only to any special direction to the contrary by the Prime Minister, it shall be the duty of all officers to carry out all such directions of the Commissioner, and their respective Ministers (where necessary) will authorise and direct them to do so, notwithstanding any previous decision or instruction to the contrary given by the Government or any other authority.’
In spite of these very extensive powers given to the Commissioner by name, he was originally appointed as Chief Executive Officer to the
Thus was this most dynamic personality placed in the position where he could have the greatest effect on the war effort. Inevitably there were clashes with those normally in control of sections of the building and construction industry. On War History narrative No. 8, Commissioner of Defence Construction, p. 56.
In a rather characteristic reply the Commissioner pointed out that he was in daily communication with the Government Architect, Mr Patterson of the Public Works Department, and that the need for accommodation at times was so great that he had ‘to commence construction while the Services were endeavouring to clarify the whole situation’. Ibid., p. 57.
Decisive action and straight talk. Meantime much was being achieved. In
It is perhaps significant that it was the Works Department, in its
‘Points of criticism arose here and there as a result of these sweeping changes, but there was no doubt that the prompt and powerful measures taken were largely responsible for the dramatic speed with which New Zealand was provided with camps, air raid shelters, gun positions, and all the other buildings and construction works required by a nation preparing to defend itself against invasion.’ Parliamentary Paper D-3,
One of Mr Fletcher's first moves as Commissioner of Defence Construction was to attempt to cope with manpower difficulties in the construction industry by requiring a fifty-four hour working week. The necessary Order was made in The Defence Works Labour Legislation Suspension Order
In the same month, defence works had been covered by a declaration of essentiality, making it possible to direct workers into the industry and to divert men from low priority to high priority work.
In the event, the fifty-four hour week proved to be too ambitious. In the winter there were not enough daylight hours to work more than an eight and three-quarter hour day, and the long working week tended to reduce the effectiveness of labour. Men were away from home from 10 ½ to 11 hours a day. In
From 1939–40 to 1945–46, over £50 million of defence construction work was controlled by the Public Works Department and the Housing Construction was a branch of the State Advances Corporation and later a division of the Public Works Department, but it was commonly known as a Department.
The need for new army camps gave rise to one of the largest demands for defence construction work. In all, over £16 million of
Expenditure from year to year is shown in Chart 50. From between £3 million and £4 million a year in the first two war years, it rose to over £5 million in 1941–42; then, under the influence of the Japanese invasion threat, and boosted by the needs of
Public Works expenditure is available in detail for each year. The tables, though large, are worth reproducing for the picture they give of the onset of the various types of construction work. See pp. 233–7. Adapted from tables on pp. 76–80, Vol. I, Official War History of the Public Works Department.
The Australian port of Darwin was bombed by the Japanese in
The year 1942–43 saw also the first large expenditures on coastal defences, harbour defences and controlled mine bases; and again, a significant acknowledgment that shore-based defences might prove inadequate, there was considerable expenditure from 1942–43 on ‘Military Roading (including tank obstacles and road-blocks)’.
Some Government activities to assist wartime industries are also revealed. For example, from 1940–41 to 1942–43, there was substantial expenditure on linen flax factories and, in 1943–44 and 1944–45, on dehydration factories. See Chapter 8 for discussion of the linen flax industry and of services vegetable production. Some services vegetable orders required dehydration, which was also valuable in avoiding waste, when production and orders were not synchronised.
The item ‘Prisoner of War Camps’ appeared for the first time in 1942–43, followed by larger expenditure in 1943–44. The first 450 prisoners of war arrived in
For the first three years of war, until the 1942–43 burst of defence construction activity in preparation for a possible Japanese invasion and to accommodate Year-book;New Zealand Official Yearbook, p. 181. The same page gives a complete list of stations in New Zealand and the New Zealand Stations: Anderson Park, Pacific Stations:
‘In
‘By
‘The expansion necessary to meet the Japanese threat, and the need to accommodate the large numbers of
‘The improvement in the
Nearly all the construction work for the See also p. 241. Official War History of the Public Works Department, Vol. I, p. 44.
The same report says:
‘… in the
‘Corresponding figures for the
All these figures are exclusive of a very considerable area of existing accommodation made available to the Americans.
Due to ‘rounding’, totals may disagree with the totals of individual items as shown.
Rather less detail is available for work arranged by the
This expenditure has been subdivided into:
Work for the
Defence construction work using New Zealand men and equipment extended into the Information taken from J. M. S. Ross, Official New Zealand War History, Royal New Zealand Air Force, pp. 70–5.
Following the recommendations of the Pacific Defence Conference in
The
Shortly before
No. 2 Aerodrome Construction Squadron of the
The Pacific, p. 41.
‘The successful completion of this project was one of New Zealand's most important achievements in the
Effective work was done, also, in the construction of a flying boat base at
In May the
The building and construction industry faced a seemingly impossible task in
The Commissioner of Defence Construction had the unenviable task of fixing priorities between construction work for the New Zealand armed forces and for the American authorities, and restraining even the most urgent private work. For a time, virtually all private building activity was suspended.
Even with the restraint on private building, construction resources were stretched to the utmost to cope with defence needs. Standardisation and prefabrication were introduced as far as possible, longer hours were worked, and there was rigid control over the use of scarce building materials.
The system of private tendering, previously in use for government work, proved too cumbersome at a time when speed was the major consideration. It was in any case unsuitable in an industry whose resources were saturated by the demand for its services. Tendering was suspended and the work was allocated to master builders, first by the Government Architect and later through district Building Committees.
Unless there could be very detailed inspections, allocation of work without tendering left the gate wide open for inefficiency. In any case, it created an atmosphere of distrust about the content and pricing of work.
After some uneasy experimenting with ‘cost-plus’ contracts, the ‘Standard Master Schedule’ system was introduced. Its purpose was to subdivide defence construction jobs into more or less standardised component operations, and to fix standard rates for each component. The system is described more fully in Chapter 13.
The system became widely used, and offered distinct advantages in coping with the exceptional pressure of demand on the industry's resources. For its effective operation it required the schedule, analysing the job into components, to be drawn up in advance, so that all parties concerned could have a clear-cut statement of the work involved. Unfortunately, construction needs gathered so much momentum, and particular jobs were so urgent, that there was not
Inevitably, all this sweeping change gave rise to considerable criticism. There were certainly abuses, which often remained unchecked because of staff shortages in the administering department. However, under the threat of invasion, and with the influx of
We have noted the completion in six weeks of camps in the
Examples of this sort can be multiplied, but the quantity of defence construction work crammed into 1942–43 and 1943–44 gives ample evidence of effectiveness in getting work completed.
Meanwhile scarce materials had been conserved by placing restrictions on their use for non-essential work. A series of Building Construction Control Notices in
For some time these controls had to be very rigidly applied; the following report of a statement by the Commissioner of Defence Construction, in Dominion,
‘Cement for building may be obtained only by application to the Public Works Engineer, and applications will be granted only if the job is considered vitally important in the national interest or if cement is required to make a building in course of construction structurally safe.
‘“A number of large contracts using cement have been suspended,” said Mr Fletcher, “and from the indications of the requirements of the defence programme will probably be shut down for about four months.”’
With labour also being increasingly diverted to essential work, private building fell right away. The value of all urban building permits, which had been £11·1 million in 1940–41 and £9·0 million in 1941–42, dropped to £2·7 million in 1942–43.
Dwelling construction, a major part of the work of the building and construction industry, had been slow to recover from the effects of the depression of the 1930s. It was not until Initially a branch of the State Advances Corporation, but to become a branch of the Public Works Department in
The war came before the state housing programme was properly under way. Four hundred state houses had been completed in 1937–38, and 2700 in 1938–39. A target of 5000 houses a year had been set in
In spite of the increasing pressure of defence construction, permits for new state houses reached nearly 4400 in the financial year 1939–40, compared with 4100 in 1938–39, and 2200 in 1937–38. The pressure for defence works started to have its effect in 1940–41 and the number of new permits for state houses fell to 4000.
In
At the same time, the effect of labour and materials shortages in restricting private building was being reinforced by a concerted attempt by the controllers to divert into essential works building labour which could not be taken for the armed forces, and to debar the use of scarce materials for any but essential purposes.
Permits for private dwellings, from well over 5000 in each of the first two years of war, fell back to 4900 in 1940–41 and to 4300 in 1941–42, then dropped to 1000 in 1942–43, which, as with state housing, was to be the lowest year.
Chart 51 shows changes in the number of permits issued for new dwellings.
As defence construction work became less urgent, building resources tended to switch back to housing construction and other types of civilian work. Permits for state houses, which had been at around 600 in 1942–43, were 2200 in 1943–44, and 3300 in 1944–45. Total permits for new dwellings were at their lowest point in 1942–43, when there were
Labour for building and construction was already becoming scarce before the war. From the outbreak of war there was a gradual increase in the pressure on manpower, and by Parliamentary Paper H-11A, Report of the
The entry of The Building and Allied Trades' Workers Registration Order
The Building Committees, which were established in each district, had sub-committees to deal with the allocation of labour, but it was the District Manpower Officers who had the power to direct labour to the industry, and whose approval was necessary before labour could be released.
In The Defence Works Labour Legislation Suspension Order See also p. 229.
Wherever possible, normal public works and local authority construction work was postponed during the war years, especially when defence construction was at its height. Road works, in particular, were held over, but so also were land improvement, railways construction, and construction of public buildings. Considerable numbers of men from these works became available for the armed services or for essential work, including defence construction work.
Chart 52 shows changes in the numbers of men engaged on defence works, including those employed by contractors.
Between the
The building and construction industry returned to award conditions in
At the outbreak of war, stocks of timber were good. At this stage the sawmilling industry was producing some 315 million board feet of timber a year, which was being supplemented by imports, mostly of types not available in New Zealand, averaging about 40 million board feet a year. Including the equivalent of 12 million board feet imported as sleepers and logs.
During World War I there had been a steady decline in the demand for timber, and it was expected that a similar decline would occur again. Rather than try to bring about any general reduction in timber output, it was proposed to adjust the supply by opening up smaller areas of new state forest for milling.
Recruiting for the armed services made early inroads on manpower in the timber industry. In 11, 14, and 15 Forestry Companies, New Zealand Engineers.
By this time, it was becoming apparent that the expected reduction in the demand for timber was not likely to eventuate. As civilian construction work fell off, the demand was taken up by defence construction work, and by
A Timber Controller had been appointed in The Timber Emergency Regulations
The Timber Controller's powers now became more important to the war effort. He had a substantial measure of control over the milling of timber and could require any private owner of forests to sell. His consent was necessary for the erection of a new sawmill or for a change of site of a sawmill. These powers were used to get quicker access to millable trees and to conserve scarce equipment and skilled workers.
In spite of various measures to assist the industry, production started to decline after
In The Defence Works Labour Legislation Suspension Order
In The Timber Workers' Registration Order
In
Towards the end of
Chart 53 shows changes in the production of sawn timber.
With civilian building restricted, use of timber during the war years averaged only a little above the highest pre-war year, 1937–38. However, imported supplies had fallen away by some fifteen million board feet, which had to be made good by an industry with a
Stocks of other building materials were not particularly good at the outbreak of war, and inevitably the upsurge of defence construction work led to scarcities.
Where New Zealand depended on imported supplies, the slowing up of imports created real difficulties, and such small reserve stocks as had been set aside before the war became of vital importance.
We have noted that imports of corrugated iron, after totalling over 20,000 tons in each of the 1936 and 1937 calendar years, had fallen to 13,000 in
Then, in
Corrugated iron soon became very scarce. Its use was severely restricted throughout the war and for some years after. It was, in fact, one of the principal causes of restrictions on private building. Wartime imports of galvanised flat iron were well below normal, the annual inflow averaging less than half the pre-war amount. Malthoid-covered roofs and, later, wooden gutters became a visible evidence of wartime shortages.
Imports of window glass had fallen away before the war, and stocks at the outbreak of war must have been below normal. In this case, however, imported supplies arrived in fair quantities throughout the war, and extreme shortages did not develop.
Stocks of gypsum, essential in the making of cement and plaster, The following notes are extracted from Modern Concrete Construction, Vol. 1, p. 2, by H. Glanville (Caxton Publishing Company, Portland cement may be defined as the product obtained by intimately mixing together calcareous (containing lime) and argillaceous (containing alumina), or other silica, alumina, and iron oxide bearing materials, burning them at a clinkering temperature, that is a temperature at which partial fusion occurs, and grinding the resulting clinker, The powder so produced possesses the property of combining chemically with water to produce a hard or ‘set’ mass. This chemical combination takes place very rapidly if no ‘retarder’ is incorporated with the cement.
Gypsum (calcium sulphate) is the material generally used for this purpose, and it is customary to add from two to three per cent to the clinker during the grinding operation.
Plaster of Paris Gypsum (calcium sulphate). Dry plaster is gypsum which has been heated until about one quarter of the original water remains.
Most of New Zealand's pre-war cement requirements were locally produced, and imports of cement were trivial by comparison with local production. The building and construction industry continued to rely almost entirely on local production throughout the war years. Production in
Some of these shortages of materials were to continue well after the rush of defence construction work was past. There were, for example, shortages of cement in the second half of
Eventually the southward push of the Japanese in the Parliamentary Paper D–3,
The home army was allowed to decline progressively in numbers from its peak in
The critical stage of defence construction work had passed, but for some time there were to remain considerable strains on the building and construction industry. A large programme of defence works remained to be done and stocks of many materials had been depleted in the critical period. Moreover, much important civilian work had fallen into arrears and would soon have to receive higher priority in the construction programme.
Urgent work still to be done included expansion of munitions manufacturing, linen flax factories, food-processing and canning factories, export storage space and the development of hydro-electric schemes to meet the growing shortage of electric power.
Recognising the change in emphasis, the Government created a He returned to private enterprise in
Labour regulations were also broadened in their scope. With the decreasing proportion of military work being carried out, the special working conditions on this work tended to cause friction when it was done alongside other work where the requirements were less rigid. In The Defence Works Labour Legislation Suspension Order
During the war more than £50 million of defence work was completed, equivalent to some seven times the annual pre-war outlay for state and private housing. The Parliamentary Paper D–3.
‘It has been estimated that the provision of the whole of the accommodation which was constructed for New Zealand and Allied Forces during the war has involved in all a programme equivalent to the building of seventeen new towns, complete with all services, each with a population of some 10,000. This impressive fact combined with a realization that, apart altogether from the provision of this accommodation, there was a great volume of work done on tank traps, gun emplacements, and other defensive works will serve to give some indication of the great magnitude of the task which was carried out during the war by New Zealand's building and constructional industries.’
The principal value of such comparisons is to give an impression of the extent to which resources were diverted from civilian work and from normal government work, and of the immense backlog of such construction work which accumulated while defence work was receiving top priority.
IN the two most difficult years, 1942–43 and 1943–44, over two-fifths of all New Zealand's output was required for war. The preceding chapters give some impression of the wide range of direct wartime controls over manpower, materials and production, and of their effectiveness in allocating resources to war purposes. Essential as were these controls to the successful conduct of a major war, they would certainly have failed, without the backing of an adequate financial policy, to divert enough of the national output to war purposes.
The fact was that, apart from capital formation and normal government expenditure, the people had, at the outbreak of war, incomes high enough to buy and consume more than two-thirds of the national output each year. Increases in government expenditure might achieve an immediate diversion of output to war purposes, but they tended also to raise private incomes, thereby giving the private sector the purchasing power to compete for a larger share of output, and hindering the Government in its efforts to bring about further diversions to war purposes. Thus, quite apart from the obvious inflationary effects of competing for scarce output under these conditions, the system would tend to be self-defeating. In short, diversion on the scale required was unlikely to be possible unless financial policy included a concerted effort to take purchasing power out of the hands of the people.
Even in time of war, when the need for personal sacrifices was widely recognised, extensive reductions of the purchasing power in the hands of the public were not likely to meet with universal acclaim. Furthermore, there was always the risk that the disincentive effects of high taxation would retard the war effort.
However, any attempt to finance the war with budget deficits, The expression ‘budget deficit’ means different things to different people. It is used here in a broad sense, to indicate a situation where the Government takes less from the public by taxation and borrowing than it pays out.
In NZPD, Vol. 256, p. 363.
‘It is worthwhile, however, emphasising that the Bill establishes in itself a major principle, that major principle being the complete isolation of war accounts, both revenue and expenditure. The source of the money and how it is expended will be seen in one account, which ultimately will come before Parliament for analysis, criticism, or approval.’
In speaking on the Bill in the Legislative Council the Ibid., p. 423.
‘We must all realise that as time goes on much heavier taxes than are contemplated by the Bill will be imposed on the people of this country, and will, I know, be borne by the people for the purpose of prosecuting the war to a successful conclusion…. I observe that power is given to the Minister of Finance to borrow £10,000,000. It has been said that the £10,000,000, or a substantial portion of it, may be borrowed from the
On pages 253–5 there appears a classification of war expenditure year by year and of the sources of funds for war purposes, as recorded in War Expenses Account.
In the financial year 1938–39 the Government had spent £3 million on defence, but this was more than doubled in the first year of war. Expenditure through War Expenses Account then increased by tremendous leaps to a peak of £163 million in 1943–44.
Because of the inclusion of loan repayments, and for other less important reasons, expenditure through War Expenses Account is not a precise measure of the cost of war. However, it does give a reasonable first general impression of the increasing proportion of the national output which was diverted to war purposes.
Chart 54 shows the proportions of national output used for war purposes.
The mounting pressure on national resources in 1940–41 and 1941–42 shows clearly in this chart, and the jump to well over two-fifths of national output for war purposes in the two most difficult years, 1942–43 and 1943–44.
War Expenses Account gives, also, a general impression of the main items of the cost of war and of the means of raising the necessary revenue. The table which follows excludes loan repayments but otherwise shows, by items, the total of payments through War Expenses Account for the years 1939–40 to 1945–46.
The five items under the heading Navy, Army and Air Force, totalling £494 million, were obviously genuine costs of war, as was most of the sum of £25 million under miscellaneous expenses and rehabilitation. The £81 million of Reciprocal Aid may appear doubtful, because it was requited by Lend-Lease aid received from the
The £14 million cost of subsidies charged to War Expenses Account was not strictly a cost of war to the nation, because it was a transfer payment back from the Government to the private sector of the economy. However, it was a cost incurred by the Government as a result of the war and, unlike the loan repayments which have been excluded from this table, did not reduce the Government's indebtedness. It is therefore included in this first assessment of war costs; but later in this chapter in the national income type of analysis, which is concerned with the provision of goods and services, and their use, the £14 million of subsidy payments is excluded. Incidentally, the £14 million did not cover all subsidy payments. For example, some were charged to the farm produce stabilisation accounts. See also Chapter 12.
The years 1939–40 to 1942–43 required rapid, and at times painful, readjustments of national patterns of expenditure. The proportion of the national product required for war rose from 1 per cent in 1938–39 to 44 per cent in 1943–44. As recorded in the unadjusted War Expenses Account figures.
The economic burden of New Zealand's war effort was very heavy. Of the allied nations, only the
It is interesting also to compare the proportionate costs of war for the years
New Zealand, in this table dealing with the most exacting years of the allied war effort, moves up to second place. The relative strain of war on her economy, according to the information used in these tables, reached 53 per cent in
It was fortunate for the stability of the internal economy that the Government was determined to pay for the war substantially out of taxation and internal borrowing. Income tax increases reduced the disposable income of the people and cut back their ability to spend. Extra purchase taxes discouraged spending and, when money was spent, took part of it away from the private sector of the economy. Extra borrowing from the public, so long as it was not financed by bank credit, reinforced the effects of extra taxation. It might have come out of income and might have reduced consumption expenditure, or, if it took money already saved, would have made less available for private capital expenditure. In the special circumstances of war, some of the savings would have remained idle if not borrowed by the Government; but there would have been an undue growth of liquid assets in the hands of the public.
A summary of the sources of war finance is given in the following table, which is based on War Expenses Account.
Out of a total of £628 million made available for war purposes, £242 million was raised by internal loans, and £225 million by special war taxation. A total of £27 million was transferred from the Consolidated Fund, and could for all practical purposes be regarded as having been met from general taxation. A further £111 million represented the value of goods and services made available through Lend-Lease and Canadian Mutual Aid, leaving only £23 million of receipts from other sources.
Thus, out of a total of £628 million, the people and institutions of New Zealand had by
Taxation, in all its forms, increased year by year from just under 19 per cent of private income in 1938–39 to nearly 32 per cent in 1944–45. For war purposes taxation revenue was stepped up by increases in income tax rates, by a new national security tax at a flat rate on income, and by increases in sales taxes.
Income tax on individuals, which took, on average, less than 1s. in the pound of their income before the war, was taking 1s. 6d. in the pound at the end of the war. The War Expenses Act To give some impression of the incidence of these tax increases the rates of tax (in brackets) fixed by the
In addition to the surcharges on income tax, a new tax on income, the national security tax, was imposed by the Finance Act
In 1938–39 and earlier years there had been a charge on incomes of 8d. in the £ for employment promotion, but this had been superseded by the social security charge in 1939–40. Social security charge had been fixed at a shilling in the £ at the inception of the scheme in National security tax was abolished in
Changes in revenue from each type of taxation are shown in the table on p. 263, which also gives a useful summary of the special taxation levied for war purposes.
For individual taxpayers the position changed as follows:
With these changes in direct taxes on income, the amount of direct tax per head of population increased steadily from £8 17s. 5d. in 1938–39 to reach over 4 ½ times this level, £41 2s. 3d., in 1944–45.
Provision for additional revenue for war purposes was also made by way of indirect taxation in
Further alterations in indirect taxation were made in
Under these influences, customs and excise duties which had yielded £11·7 million in 1938–39 were yielding £14·9 million in 1944–45. Yields would have been considerably higher had it not been for the restraining effects of taxation and borrowing on consumption during the war period. The physical volume of private transactions fell, as it had to do if sufficient resources were to be made available for war purposes. Affected by declining imports and restricted private transactions, returns from customs and excise duties actually fell from 1939–40 to 1940–41, and again from 1940–41 to 1941–42. However, the 1942–43 yield was above the pre-war figure and there were steady increases for the rest of the war.
The most significant increases in tax yields were from direct taxation on incomes. As a proportion of all taxation, these direct taxes rose from 38 per cent in 1938–39 to a peak of 63 per cent in 1944–45. In this latter year direct taxes took £68 million out of private incomes totalling about £340 million, while other taxes took a further £40 million.
Chart 55 shows revenue received from taxation, classified according to the purpose for which the taxation was levied.
Though war taxation bit deeply into incomes, it was borrowing which, in every year except 1945–46, provided most funds for war.
After See also p. 270. One can seldom say with certainty which state revenues were used for any particular purpose. However, the general effect is as stated in the text.
The New Zealand held public debt rose from £146 million in Individual figures given do not add exactly, due to rounding. See p. 271. Including £7 million for purchase of Bank of New Zealand shares.
In the same period, from March 1939 to March 1946, overseas debt, expressed in New Zealand currency, was reduced by £45 million. The overseas held public debt stood at £167 million in See also p. 271. All figures in this paragraph exclude £33 million (NZ) of contingent liability to the United Kingdom Government.
The Government's policy of borrowing internally had the effect of changing the proportion of the public debt held in New Zealand from 47 per cent in March 1939 to 80 per cent in
Of the £242 million borrowed in New Zealand for war purposes, some £10 million was raised by way of compulsory loan.
In the Parliamentary Paper B—6, Financial Statement,
‘A start towards the provision of interest-free loans has already been made by generous voluntary effort on the part of many citizens, and to date nearly sufficient has been subscribed to balance the War Expenses Account to the end of last financial year. But that is not sufficient. It is not right that others equally capable of affording assistance should not make their due contribution. In this connection it is the intention of the Government to formulate for the consideration of the House a procedure under which all who have means will be required to assist by subscribing to loans for these purposes. Those who already have or who may in the future voluntarily lend money free of interest, may have the amount already subscribed taken into account in determining their total liability under this heading.’
However, only the first war loan, issued in New Zealand Official Yearbook,
Special war loans for voluntary public subscription, floated with intensive publicity appealing to the patriotism of the people, became a feature of wartime borrowing. Public support for these loans was generally very encouraging.
Chart 56 shows the rapid increase in public debt over the war years and the extent of the concentration on internal borrowing.
A summary of successive war loans follows. Adapted from New Zealand Official Yearbook, 1947–49, p. 437.
In addition to these loans, the National Savings Act
Care is necessary to distinguish between figures for gross borrowing and those for net borrowing, after there have been repayments. Figures used under this heading are net.
Government borrowing in New Zealand, like taxation, can be more than a means to raise money for the Government to spend. This is not to suggest that taxation and borrowing are identical in their effects. A taxation increase, for example, can be much more depressive than the borrowing of an identical sum from the public.
When government borrowing in New Zealand is regarded in this light, it is apparent that some types of borrowing will be less effective than others in reducing the spending power of the private sector. In particular, borrowing from the Speaking on war finance in the Budget debate in NZPD, Vol. 290, p.
In the three years up to The figures used here and in the next few paragraphs were published in The Reserve Bank of New Zealand Bulletin,
Between March 1939 and March 1944, borrowing from the banks increased by nearly £52 million, to reach £75·5 million in Report of the Royal Commission on Monetary Banking and Credit Systems,
The net effect was that between March 1939 and March 1946 the Government had borrowed an extra £26 million from the
In the broader context of the public debt, this means that of the increase of £327 million in the internally held public debt between March 1939 and March 1946, some £42 million was not represented by withdrawal of spending power from the private sector and therefore, to the extent that it gave rise to extra Government expenditure, it tended to be inflationary in its effects. Some of the borrowing from the
There were some other sources of government borrowing which did not take money away from the private sector, though they may have reduced government spending in the private sector. Substantial subscriptions to government loans came from government departments, such as the Government Life Insurance Office, the State Fire Insurance Office and the Public Trustee, who held funds for investment.
No attempt has been made to analyse departmental investments in detail. Lists of investments held by various Departments are available, but other transfers of capital funds often lie hidden behind the published records. Until the Department of Statistics first published its Accounts of the Government Sector in
For ease of accounting, the British Government agreed to pay the costs of the 2nd New Zealand Expeditionary Force as incurred and then to claim on the Under this scheme 131,000 trainees graduated in
In discussing the Memorandum of Security, in the first wartime Budget statement in Parliamentary Paper B-6,
‘… arrangements have been made for the cost of New Zealand's forces overseas to be financed by the United Kingdom Government on a loan basis, New Zealand being charged the same rate of interest on such loans as the The important question of the availability of overseas funds to make the repayments to the United Kingdom Government is discussed in Chapter 14. (Author's footnote.)
Under the Memorandum of Security the United Kingdom Government paid nearly £6 million in 1940–41 and over £8 million in 1941–42. The next two years added £35 million and, by See also p. 260, note 2.
In accordance with the policy set out by Mr Nash, progressive repayments were made. Nearly £1 ½ million was repaid in 1940–41 and a further £11 million in 1941–42, leaving less than £3 million owing at the end of
Repayment of this balance before the end of the 1945–46 financial year meant that the entire cost of the war to New Zealand had been met without adding to the country's indebtedness overseas. This was done without any pressure from the United Kingdom Government, but as part of the policy of the Labour Government in New Zealand to meet war costs from New Zealand, as far as possible.
The Parliamentary Paper B-6,
‘The debt of £22,500,000 in New Zealand currency representing £18,000,000 sterling was the subject of negotiations in These lump sum payments were made up of £12 million ‘as compensation to meet the abnormal increase in prices of New Zealand imports from the
‘The New Zealand Government, however, after taking into account all the relevant factors, decided that this debt should be liquidated forthwith.
‘We appreciate the facilities made available to us in this way by the United Kingdom Government, but have been happy to arrange for repayment in full of the debt so incurred.’
In the same year, the Government paid off £29·6 million of overseas debt, the necessary funds being raised by issuing stock in New Zealand. The stock was taken up mainly by the p. 18.
‘… An item of outstanding importance, though not producing any variation in the total debt, was the repayment of loans of £16,107,000 on the
‘The net saving in interest on this transaction is approximately £605,000, but the main benefit is the elimination of overseas interest totalling £1,330,000, which, coupled with the annual saving of £675,000 in connection with the Memorandum of Security repayment gives a net reduction in overseas debt charges of over £2,000,000 per annum.’
Thus, by
In spite of New Zealand's ultimate ability to emerge from the war with a lowered overseas debt, the external cost of war was heavy and the situation was not always free of anxiety. In particular, in late See also Chapter 14.
New Zealand's overseas commitments for the 2nd NZEF and for the Empire Air Training Scheme, amounting to some £60 million, were covered by the Memorandum of Security. As has been noted, these costs were repaid in full by
Heavy expenditures of foreign exchange were also involved in the wide range of war materials which had to be imported. A portion of these was received under Lend-Lease and can be regarded as offset by Reverse Lend-Lease goods and services supplied by New
Allowing for these and other overseas commitments, but ignoring losses of overseas exchange earnings, it is estimated that New Zealand had to find some £150 million of overseas exchange to meet war costs. No great accuracy is claimed for this estimate. See also p. 77.
Without the drastic wartime curtailment of private importing, it would not have been possible to find all this extra overseas exchange. Import restrictions, inability of traditional suppliers to meet orders, the reduction of disposable incomes in New Zealand and extra sales taxes on expenditure all played their part in restraining private imports. The combined effect was sufficient to enable New Zealand's overseas exchange position to be strengthened, in spite of her special war commitments. The improvement was assisted to some extent by
Net overseas assets of the banks rose from their low level of about £9 million at the outbreak of war to about £40 million by the middle of See also p. 271.
It is useful to bring together the main items of revenue and expenditure, as they were recorded in the Consolidated Fund and the Social Security Fund, and to compare the War Expenses Account items against them. This is done in the table on p. 274. The accounts which record government capital formation and development loans are excluded from this analysis. Government capital formation is discussed in other chapters. The purpose here is merely to make some comparisons which will put War Expenses Account items into perspective. Chart 57 has a bearing on these comparisons.
War expenditure, at a total of £615 million for the seven financial years 1939–40 to 1945–46, made the totals of £133 million for permanent appropriations, £133 million for annual appropriations, and £113 million for social security look comparatively insignificant.
The items in italics refer to War Expenses Account.
The best available picture of the massive diversion of resources to war purposes is obtained through the national income, output and expenditure analysis. It is unfortunate that detailed national income estimates are available only for 1938–39, 1943–44, and for 1946–47 and following years. Because 1943–44 was the year when war expenditure was at its highest, it is still possible, through these records, to show some of the more important changes in expenditure patterns. In 1938–39, 82 per cent of all goods and services were used for consumption purposes and 17 per cent for the creation of capital assets. Defence took only 1 per cent.
By 1943–44 ‘defence and war’ was taking 42 per cent The percentages used here differ from those given on p. 258. Apart from correction in the national income estimates of some of the accounting inconsistencies which crept into War Expenses Account (such as those already mentioned in this chapter), comparison is now being made with the national usage of goods and services, instead of with the national output of goods and services. Table 57 in Appendix I will make this distinction clearer. The comparison used on this page and in Chart 57 and Table 57 is believed to give the most realistic picture of the effects of reallocations of resources. It should be noted that, for national income purposes, the creation of war equipment and installations does not rank as capital formation.
After 1943–44 there was some relaxation of the pressure to divert resources, and in 1944–45 and 1945–46 about one-third of all goods and services used went to war purposes.
By 1946–47 ‘defence and war’ had dropped back, to take only 4 per cent of all goods and services used, capital formation had recovered to its pre-war proportion of 17 per cent, and consumption, at 79 per cent, was again approaching its pre-war proportion of 82 per cent.
Chart 57 shows these wartime changes in the use of goods and services.
Some of the goods and services needed for war purposes were released by cutting back other government activities. Normal government and local authority expenditure on goods and services took 13 per cent of the total used in 1938–39 and only 8 per cent in 1943–44. Transfers of cash to the private sector (technically known as transfer payments), such as social security monetary benefits are excluded here, because the discussion refers to the actual use of goods and services. These transfers enabled certain groups of people to purchase more goods and services than would otherwise have been possible, but they did not represent direct purchases by the Government. The net effect of this and other influences on private spending is summed up in Chart 57. Reference here is to the use of goods and services for the creation of physical assets rather than to investments of money.
In studying the allocation of goods and services over the war years, it is relevant that New Zealand did not seek to get command over extra foreign production by overseas borrowing, but depended almost entirely on her own production, except in so far as imports were paid for by her own exports or were supplied under reciprocal arrangements through Lend-Lease and Mutual Aid. Not only was there no extensive borrowing overseas, but the tendency was for overseas assets to be built up from their very low pre-war level. They had decreased in each of the three pre-war years to average only about £11 million in
In spite of wartime manpower and supply difficulties, worthwhile increases in output were obtained in farming, in manufacturing and in other industries. But the extra demands of war were of a higher
The financial policy to encourage and support the necessary diversion of resources had to be a three-pronged one, involving raising money for war expenditure, cutting back private expenditure which would otherwise compete too fiercely for available goods and services, and taking firm measures to restrain costs and prices. These last measures would be necessary because, in spite of all other restraints, the remaining demands would still press too heavily on available resources. At the same time the private producer and his employees had to be left with sufficient incentive to maintain and increase production.
These were truly formidable requirements, considering the magnitude of war needs.
This chapter set out to deal with the financial cost of war, but, in history, money is meaningless except in terms of its command over contemporary goods and services. So, from the start, the most important thing the finance chapter had to do was to sum up, as far as money values could measure them, the massive diversion of economic resources to war purposes, and the sacrifices of normal economic satisfactions which made it possible. Some impression is given, too, of the effect of financial policy on various money flows, and of the influence of these money flows on normal expenditures on goods and services. But this part of the study is still incomplete. War needs had to be met in real terms rather than in money terms. How could financial policy encourage people to produce more goods and services than before, and yet induce them to take much smaller quantities of goods and services for their own use? Until consideration is given to the handling of problems of restraining costs and prices and of providing adequate production incentives, no study of financial policy can show how and why so much was produced and made available for war purposes. This is the function of the next three chapters.
ONE of the very first economic measures of the war was a price regulation designed to prevent profiteering; The Price Stabilisation Emergency Regulations
Retail prices had recovered steadily after Wartime Price Control in New Zealand, p. 12.
Prices continued to rise about 4 per cent a year, on average, and by Made on
These regulations did not apply to all goods, but to a fairly comprehensive schedule which included any article of food for human consumption and quite a wide range of other goods and services.
The Tribunal in practice accepted increases in costs of materials from overseas, increased wage rates, and so on, as reasons for increasing prices, but there were occasions when it considered the margin of profit already being obtained was sufficient to allow such increases to be absorbed. The general effect of these regulations was that, for a wide range of goods and services, rises in prices had to be justified if challenged.
By this time the Government already had power under various Acts to fix the prices of a number of items, including rail and road transport, wheat, flour, bread, butter, cheese, tropical fruits and motor spirits.New Zealand Official Yearbook,
At the outbreak of war, an attempt was made to stabilise prices of all goods and services. Regulations made on The Price Stabilisation Emergency Regulations, issued following a Proclamation of Emergency under the Public Safety Conservation Act
The necessity for exceptions to be authorised by the Minister of Industries and Commerce soon made administration of the regulations too cumbersome. In By the Control of Prices Emergency Regulations, which changed the name of the Tribunal from the
Replacement costs should not be allowed. That is, rises in prices taking place after stocks were purchased were ignored, even though traders would have to replenish stocks at the higher prices. It was argued that to allow replacement costs would give traders windfall profits, which was not justified unless there were likely to be later price reductions. There is an alternative statement of these principles on p. 303.
Prices might be increased to the extent of increased costs, or less if the margin of profit was high enough to absorb all or part of the increase.
The effect of the second stipulation was to allow increased costs to be added to prices, but not any profit margin on the increased costs. Actually a provision was soon made to allow for exceptions in cases of hardship, but this new provision was used only sparingly. The rule against replacement costs was also modified in some cases, usually by taking an average of costs of old and new stocks.
As well as considering applications to increase prices, the
In spite of the apparent rigidity of this attempt at stabilisation, prices continued to rise. By the March quarter of In this six months prices of imported items in the Wholesale Prices Index increased by 10·8 per cent.
With as yet no really effective restraint on rises in the cost of living, it was to be expected that wage earners would want their real rates of earnings to be maintained. Following precedent established in World War I, and again in the depression of the 1930s, emergency regulations had been prepared to give the Court of Arbitration power to amend award wage rates by general orders at intervals of not less than six months. The Regulations The initial legislative step in the control of wages and remuneration was the gazetting of the Rates of Wages Emergency Regulations
In the June quarter of
The first General Order of the Court of Arbitration was made and took effect in
While the 5 per cent wage increase was justified by past price increases, it was unlikely to end the upward movement, and in fact it became another influence tending, by pushing up costs and prices, to defeat the stabilisation attempt.
Despite all attempts to hold prices, they continued to rise. Pressure came from a variety of directions. An interesting illustration is found in the experiences of the Director of Housing. In a minute of War History narrative No. 24, p. 7.a) increased costs of materials on account of war conditions, scarcity of stocks, extra freight charges, and insurances, (b) an additional 5 per cent sales tax imposed in c) mounting costs resulting from a 5 per cent wage increase effective from
In varying degrees, costs of consumer goods and services were affected by similar upward influences. Even with the
The substantial initial rises in retail prices, and the resulting general order increasing wages by 5 per cent, gave wartime stabilisation a very poor start. Moreover, import prices were still rising fast, and it was becoming increasingly apparent that restraint on profit margins would not prevent prices from pushing up wages, and wages from pushing up prices. This sort of spiralling now seemed inevitable, even had it not been boosted by the rising cost of imports and by increasing shortages of materials and services.
The tendency for prices and wages to move upwards was raising the cost of war to the Government and was emphasising the risk that its increasing war expenditures might disrupt the economy by creating runaway inflation. With war taking an increasing share, the supply of goods and services was not sufficient to meet everyone's demands. Unless urgent steps were taken, competition for scarce resources would certainly accelerate cost and price rises.
In
The Conference, which was widely representative of various economic groups, was given comprehensive instructions. It was ‘To survey the general economic position of the country under war conditions in order to consider the possibility of stabilising costs, prices, and wages, and to discuss expanding production so that the
At its first meeting, the Conference set up a working committee of seven employers' representatives and seven employees' representatives which, under the chairmanship of Mr A. T. Donnelly, Chairman of Directors of the Bank of New Zealand. Report of the Economic Stabilisation Conference,
‘The Conference is agreed that it is not possible to stabilise money wages unless essential commodities are available at prices fixed for the same period as money wages. It therefore recommends that, in addition to wages, salaries, and rents, the prices of the following categories of essential commodities and services be stabilised:—
Essential foodstuffs.
Essential standard articles of clothing, footwear and household necessities.
Public services, fuel and light.
In making this recommendation the members of the Conference are fully aware that it is not practicable to stabilise the prices of commodities or raw materials imported from overseas. The Conference, moreover, agrees that in certain circumstances, such as short supply or increased prices, the consumption of some imported goods may have to be reduced by all, or other commodities used instead.
‘The Conference strongly recommends that every effort be made to ensure that the goods value of the pound will remain constant, as otherwise all attempts at stabilisation must fail.’
In summing up the Conference said:
‘The recommendations of the Conference are designed to achieve two main results:—
The first is to stabilise prices, wages and costs so that the cost of the war is not thrown unfairly on one group to the benefit of another. The second is to increase all kinds of production and the efficiency of every type of service which will help, however indirectly, the national drive.’
Meantime retail prices were still rising. By the June quarter of
The futility of any attempt at stabilisation which was not fully comprehensive was becoming increasingly obvious. But the carefully reasoned and deliberately emphasised statement by the Economic Stabilisation Conference, in
In The full list was:Foodstuffs: Meat, flour, milk, sugar, bacon, cheese, honey, bread, eggs, butter, coffee, condensed milk, tea, rolled oats, oatmeal, baking powder, salt.New Zealand made clothing and footwear: Men's, women's, boys', and girls' shoes (New Zealand leather in each case), men's all wool underwear, women's woollen underwear, boys' all wool underwear, boys' all wool jerseys, girls' all wool underwear, men's woollen socks, boys' school hose, woollen piece goods, knitting wools, blankets, suitings (from New Zealand wools), shoe repairs.Public services, fuel and light: Tram fares, electric light, gas, coal, and coke.
This new government action was much too narrow in its scope to provide a firm basis for stabilisation, a fact which the Government recognised by setting up an
To give the Economic Stabilisation Conference its proper place in the struggle for stability, it should be recalled that this Conference unanimously urged the Government to stabilise ‘prices, wages and costs so that the cost of the war is not thrown unfairly on one group to the benefit of another.’ It was in furtherance of this aim that the Government set up the
The
To have any hope of success, the plan had to be comprehensive and had to be worked out in detail before any attempt was made to put it into operation. It was no use trying to hold prices stable if wages were not held, nor wages stable if prices were not held. Neither prices nor wages could be kept stable if other costs continued to rise. Moreover, with reduced importing, the gap between money incomes and the flow of goods available for civilian consumption was steadily increasing, making price control difficult and giving an impetus to black marketing.
The problem was to plan a stabilisation framework which would be workable in detail, and acceptable, both in principle and in its application, by the various sections of the community. The task was bristling with difficulties. The Committee settled down to a long, hard job.
By the beginning of
Meantime, in November a workers' application had been taken to the Arbitration Court for a further General Order increasing wages. The application was made on 10 October under the Rates of Wages Emergency Regulations
The Court must have been considerably influenced by the risks of inflation under war conditions, for it had before it price and wage index numbers which showed that the effects of its The 5 per cent order in
However, between the September and December quarters of The power to so restrict the application of an order had been given by an amendment to the Rates of Wages Emergency Regulations on
The Court, in its pronouncement, noted that there had been a definite acceleration in retail prices since the increase granted in
These Arbitration Court increases tended to be passed on to salary and wage earners generally, in spite of the fact that many were not subject to the Court's jurisdiction.
Needless to say, the general orders did nothing to stop further price and wage rises. In the year ending in the December quarter of
In the 3 1/4 years between the outbreak of war and the introduction of a comprehensive stabilisation plan in
Chart 58 shows price and wage changes in the first 3 1/4 years of war.
The continued upward movement of prices in each quarter of
The scheme could not hope to be successful unless it was acceptable to workers, manufacturers, farmers, traders, and other major economic groups. The comprehensiveness of the plan not only made this wide acceptance vital, but was also a pre-requisite for it. No group of people would willingly accept stabilisation of its income if the prices it had to pay were not stabilised, or if the incomes of other groups were free to move upwards.
On
The essential features of the plan were: Based on a statement in Parliamentary Paper H-43, The New Zealand Wartime Prices Index,
The list of stabilised commodities and services was increased from the original 38 items or groups to 110. The prices of the whole group of items taken together were to be kept stable at the levels ruling on
Wages, salaries, and all other forms of remuneration were to be stabilised at the rates ruling on
Rents of all types of real property, other than those already covered by the Fair Rents Act
Transport rates for goods and passenger services were to be stabilised at the general levels existing on
Wages and salaries were to be linked to prices through the medium of a special wartime price index, which was to be established for the purpose of recording changes in the general level of prices of a group of essential commodities and services (including rents).
In the event of a general order of the Court of Arbitration varying award rates, in accordance with changes in the index, an adjustment was also to be made in the prices paid for farm products.
The Court of Arbitration was to make general orders only where there was an increase or reduction of not less than 5 per cent in the special wartime price index, but initially an order could be made when there was an increase of not less than 2 ½ per cent. Its powers to make other wage changes were severely restricted.
Most of the provisions of the stabilisation plan were brought into effect by the Economic Stabilisation Emergency Regulations in
The wages provisions in the new regulations superseded the That is, the Economic Stabilisation Emergency Regulations And to other groups.
The powers of the Court of Arbitration to make general orders were now restricted, and it could make no such order until there was an initial movement of 2 ½ per cent in the Wartime Prices Index. Thereafter it could not make a further general order until there was a subsequent variation of 5 per cent in the Wartime Prices Index. Thus the Court now had only a restricted power to amend by a single pronouncement the rates of remuneration contained in all awards and industrial agreements. The power of the Court to amend individual awards was also severely restricted. Anomalies might arise, or new occupations have to be provided for, but in such cases the Court had to be guided by the existing stabilised levels of remuneration of other workers. The regulations Sections 38 and 39.
Under the new regulations, control over actual or ruling wage and salary rates was intended to be just as rigid as the control over award rates. The regulations even went so far as to provide that ‘In any case where the basic rate of remuneration exceeds the rate of remuneration that was actually paid as on the 15th day of Section 32, 5. The Director was the Director of Stabilisation.
Thus the rates of remuneration in Appeals against the decisions of Wages Commissioners could be made to the Court of Arbitration.
It has been observed that the Wartime Prices Index was the key to the new comprehensive stabilisation scheme. It fixed the level at which the economy was to be stabilised, and facilitated widespread agreement to the whole scheme, by providing a yardstick to determine the equity of the sacrifices to be made by various sections of the community. Without an acceptable index of consumer prices, with which the whole scheme could be interlocked, the plan could not have been operated successfully, even as an emergency measure in time of war.
In a Parliamentary paper dealing with the Wartime Prices Index, H–43, The New Zealand Wartime Prices Index,
‘On
As was to be expected, much of the administrative work in operating the new stabilisation scheme would be concentrated on the Wartime Prices Index. The objective would be to use price control, subsidies, and resistance to cost increases to keep price rises, as measured by the Wartime Prices Index, below the 2 ½ per cent increase which would trigger off increases in wages and farm payouts. All cost changes would tend to be assessed in terms of their effects on the Wartime Prices Index.
For this reason, a fuller study of the content of the index is deferred to Chapter 12, which deals with the administration of the comprehensive economic stabilisation scheme.
The brief discussion in this chapter of the safeguards in the new comprehensive stabilisation scheme has pinpointed some of the reasons why the more piecemeal attempts up to the end of
In the first 3 1/4 years of war the financial strain on the economy was building up rapidly, as distinct from the last 2 3/4 years, to be dealt with in the next chapter, when the strain, though quantitatively much greater, was more constant. See also Chart 54, p. 256.
A significant reference to the problem of readjustment in the early war years is contained in the following extract from Prime Minister Peter Fraser's Dominion,
‘Our people are working hard and earning more money, but the supply of things they can buy has not increased. It is growing less
Put this into perspective by remembering that in these years national income was under £300 million, and it is not surprising that the stabilisation measures of the early war years were only partially successful. Only a fully comprehensive scheme, such as that introduced at the end of
Chart 59 gives an impression of the widening gap between incomes and goods available. The income figures used are not adjusted for taxation. The effect of taxation, loans, and saving in reducing private expenditure is discussed in Chapter 12.
In the context of this ever-widening gap, an economy under rapid structural change, and import prices which rose about 50 per cent between September 1939 and December 1942, the recorded increase of 14 per cent in prices and wages up to
OUTSTANDING as a wartime economic achievement was the comprehensive economic stabilisation scheme introduced in
For the first half of the war, the objective of price policy had been to ensure that cost increases and the rising level of demand did not lead to disproportionate increases in prices. For the second half, policy shifted to preventing cost increases altogether, or, where that was impossible, preventing them from affecting prices. This attempt at detailed stabilisation of the economy was a much more formidable administrative task, but it was one which offered some hope of success if tackled with sufficient determination. This was more than could be said of attempts to stabilise prices alone or even to stabilise prices and wages. Such limited attempts were doomed to failure from the start, because the attempt at stabilisation was undermined by the infiltration of cost increases in items which escaped the net of price and wage control. Sharply rising costs of imported goods, for example, had helped to defeat stabilisation plans in the early war years.
From Mr A. T. Donnelly, CMG (Chairman), Mr F. D. Cornwell, Hon. Angus McLagan, MLC, Mr William Marshall, Mr C. V. Smith and Mr
The regulations defined functions as follows:
‘The Minister
‘The principal function of the Commission shall be to make recommendations to the Minister, after inquiry and investigation, in relation to the economic stabilisation of New Zealand and the functions of the Minister under these regulations.’
The Economic Stabilisation Emergency Regulations also set out the plan for a co-ordinated attempt to stabilise costs, wages and prices, and can be regarded as the culmination of a struggle for stability which had gone on over the first three and a quarter years of war. These were three and a quarter years in which prices and wages had both risen by 14 per cent. The struggle to achieve economic stability had been hard-fought, against considerable odds. At the outbreak of war an attempt had been made to stabilise the prices of all commodities and services at the levels ruling on
Costs in fact tended to rise, and it had soon become apparent that, without much more powerful controls, any attempt to do more than restrict increases in prices to the actual increases in costs due to war was unrealistic. A policy so confined could act only as a brake on the general upward trend of prices; a trend which was influenced by wartime supply difficulties, by the vast increase in the overall level of demand as a result of the Government's war expenditure, and by unavoidable cost increases such as the rise in prices of imports. Once any persistent increase in internal prices was allowed, wages could not long be held, and rising wages became yet another cost influence tending to raise prices.
Central to the new stabilisation scheme was the Wartime Prices Index, which was to record price changes in 238 items. Wages were to remain fixed at
The
The first Director of Stabilisation was Mr B. C. Ashwin, Later Sir Bernard Ashwin. In ‘Politics and Administration’ in the New Zealand (edited by H. Belshaw), p. 287.
‘The
‘In the brief period of its existence the Commission has passed through many changes. Originally it consisted of six members, with the permanent head of the treasury acting as director of stabilisation. Later its membership was reduced to three: the permanent head of the treasury who acted as chairman; a representative of the employers; and a representative of the trade unions. At present there are five members. Its staff, which for the sake of convenience is a sub-department of the treasury, consists mainly of cost accountants, economists, and research workers.
‘The importance of the part played by the
The new stabilisation scheme was to cover all essential costs and payments. Prices, farm returns and costs, transport charges and operators' costs, wages and rent were all stabilised at their
A decision had been made earlier in Wartime Price Control in New Zealand, p. 28,
‘Stabilisation goes further than control inasmuch as it aims not at the control of prices within certain limits, e.g., according to the extent of increases in costs due to the war, but rather at the maintenance of costs and prices at a predetermined level. This implies the absolute prevention of further cost increases above the level ruling at the predetermined date such as could bring about resulting increases in prices, or, alternatively, the meeting of any increases in costs that do take place by such means as will obviate the necessity for any compensating increases in prices. It also involves the determination of standards of quality and in some cases the determination of a standard article, for, although the price of a commodity may remain constant if the quality falls the effect may be just the same on the consumer as if the quality had remained constant and the price had risen.’
While it was intended wherever possible to prevent any rise in the prices of the stabilised items above the basic level of
The Economic Stabilisation Emergency Regulations had extended the provisions of the Fair Rents Act
If confidence could be sustained in the fairness of the Wartime Prices Index, and if the index could be prevented from rising by
When the main stabilisation plan was announced to the country, an indication was given of how farm prices and costs would be adjusted within the new stabilisation framework. Prices for farm products were not to be increased: similarly the major farm costs were to be held. Stabilisation accounts were established for farm products. Any price increase received from sales of farm produce overseas was credited to the appropriate stabilisation account. Similarly, any subsidy paid to keep the cost of production down to the base level of
The economic stabilisation scheme operated over those years when wartime inflationary pressure was at its height. Price control and subsidy payments were essential features of a comprehensive scheme of economic stabilisation at a time when war expenditures were high and the arrival of consumer goods was restricted. The policies were administered by the
All consumers were interested in the relationship between income and the prices of goods and services. Most of them looked to the Wartime Prices Index as an indication of price change, but no group of consumers was so directly concerned with this index as the wage earners, whose remuneration was directly tied to it. It was a significant endorsement of the Wartime Prices Index when the See letter on p. 311.
The more comprehensive stabilisation plan did not alter the constitution of the There is an alternative formulation of these principles on p. 279.
Price increases could be approved only to the extent of actual additional costs.
Such increases could be applied only to those particular goods which had incurred the extra costs.
Where the margin of gross profit formerly made on similar goods appeared to be too high, or where the general position of the trader made it possible, some or all of the extra costs should be absorbed by the trader.
In implementing these principles, the emphasis in the early war years had been on the individual trader or manufacturer. Each application for increased prices had been considered on its merits, and the fact that other manufacturers producing similar goods were allowed to charge higher prices was not admissible as a reason for granting increases. The undesirable effects which this policy had on efficiency Because low-cost firms would be forced to sell at lower prices than high-cost firms; and all would be able to sell their total output when goods were scarce.
Price control by fixing ceilings for an industry had the advantage of giving a direct inducement to greater output to the more efficient units. The competitive element was therefore to some extent restored under shortage conditions. However, ceilings common to all the firms in an industry could be applied only to goods which were fairly standardised.
Some revealing references to the influence of the new regulations on the In a public lecture on ‘The Work and Practice of the
By way of illustration,
‘Again the Tribunal may have to deal with an application, say from the butchers' industry to increase the prices of meat. That is a stabilised line. It is Government policy that the price of meat to the public may not be increased. The Tribunal will hear the applicants and examine their accounts, and, if it is of the opinion that an increase in prices is justified and necessary, it will recommend accordingly to the Stabilisation Commission which, if it agrees, will probably recommend the Government to grant a subsidy to the butchers. No increases of any moment have occurred in the retail price of meat since The coupons were for rationing purposes. Meat was rationed from
It has been observed that prices of 110 items were stabilised from
‘Now what is the result of all this? As you have seen, no one has been permitted to raise the price of goods or services or combinations of goods and services above the Variations in supply and quality were major problems. The principal new feature of price control in
Then, after commenting on the stability of the Wartime Prices Index he said, ‘No increases in any of the items covered by this latter index are permitted without the approval of the Stabilisation Commission.’
Subsidies had been paid for various purposes before
In 1938–39, £500,000 had been paid out in subsidies on wheat and for transport of fertilisers. Total subsidy payments had increased in the war years to £2·2 million by 1941–42. Payments rose to £3·6 million in the financial year 1942–43, which included just over three months of the comprehensive economic stabilisation plan.
Transport of fertilisers had been subsidised for the benefit of farmers for some years and, with the addition of subsidies on the cost of the fertilisers from the 1940–41 financial year, made up two-thirds of all subsidy payments prior to the advent of economic stabilisation.
Subsidies on the production and distribution of coal had made their appearance in 1940–41, See also Chapter 15.
The following table shows, under broad headings, the stabilisation subsidy payments between 1942–43 and 1945–46:
Most of the consumer subsidies are shown in this table under the heading ‘Essential clothing and foodstuffs'. £155,000 had been paid out in 1940–41 and £347,000 in 1941–42, the only item being the subsidy on sugar. In 1943–44 payments for sugar, tea and other items under this heading totalled nearly £1·3 million. In the following years the range of items expanded, and by 1945–46 consumer subsidy payments reached over £3 million. Subsidies were paid on flour, bread, sugar, tea, oatmeal, dairy produce, eggs, clothing, and many other consumer goods.
Subsidies aimed at reducing production costs or off-setting rises in import costs became very substantial also, but considerable portions of the farm subsidies were recovered from the farm produce stabilisation accounts. Amounts recovered for years ending in July, were £1·6 million in 1943–44, and £2·5 million in each of the years 1944–45 and 1945–46. These recoveries brought the net cost of all stabilisation subsidies to approximately £3 million in 1943–44, £4 million in 1944–45 and £6 million in 1945–46.
Parts of this discussion are taken from The New Zealand Economy, 1939–1951. (Parliamentary Paper B–5,
Stabilisation would not have been possible without fairly extensive use of subsidies to prevent unavoidable cost increases from impinging on prices and finding their way, directly or indirectly, into the Wartime Prices Index.
However, government policy was to restrict their use to a minimum. Before a subsidy was approved in a particular case, a close and searching examination was to be made of the ability of a business to bear further cost increases and of its efficiency in production. Sellers or manufacturers or those providing services might be required to institute economies through standardisation, rationalisation and similar methods, as a condition for receiving assistance. No subsidy would be paid to maintain inefficient units Criteria of efficiency were not clearly defined, but judgments would be made on the basis of comparisons with other units in the same industry.
Subsidies to farmers included-payments to hold major farm costs and provide assistance to those who had lost their pre-war markets, particularly orchardists. The wheat subsidy was an example of an incentive payment intended to increase production.
The declared purpose of many of the producer subsidies was to offset increased costs which would otherwise have entered into the prices of essential commodities. While the cost of a subsidy was usually met by the community as a whole, to the same degree as if an original price increase had been permitted, Being met from general revenue, it was borne by a rather different group of people from that which would have been affected by the price increase. The most common use of the word spiral by economists is to describe a situation where price increases justify a wage increase, which in turn leads to further price increases, then another wage increase, and so on. A variety of other types of spiral can occur, many of them more intricate than this. High profits, for example, or extra investment or new consumption expenditures can initiate spirals. Many spirals move more quickly in potentially inflationary situations, where goods and services generally are tending to be in short supply.
Costs at
The most important producer subsidies were the coal subsidies and those paid to farmers.
By 1945–46 subsidy payments were equivalent to over 2 ½ per cent of the national income and had become a significant component of the New Zealand pattern of financial transactions. They needed careful consideration in deciding government financial policy. The direct cost of subsidies was partly offset by the fact that, in the absence of subsidies, costs, prices and wages would all have risen more, and government expenditure in many avenues—salaries, works schemes, defence purchases, railways—would have been much greater.
In spite of offsetting savings, subsidy payments were one of the larger transfers of funds from the Government to the private sector of the economy. If not matched by taxation or other revenue, they tended to add to the money level of demand. To subsidise
Not quite true of cases where the subsidy was used to offset a rise in price of imports. The position here is that extra internal purchasing power was mopped up in paying for the imports. The subsidy payments restored an equivalent amount of purchasing power. Recent discussions among economists assess the probability of a ‘cost-push‘, as distinct from a ‘demand-pull‘, inflation. If their views are accepted, one might alter the text to say that the effect of stabilisation subsidies would be to avoid cost-push inflation at the risk of inducing demand-pull inflation, and that, where subsidies are accompanied by sufficient extra taxation or internal borrowing, it might be possible to avoid both types of inflation.
Consumer subsidies, where demand was elastic, could have had a considerable effect on expenditure patterns. In practice most consumer subsidies were on items for which demand was inelastic. Elasticity of demand refers to the degree of response of demand to a given price change, both being expressed as percentage changes. It could be argued that, with the degree of price, wage and other controls operating in time of war, the price mechanism could not have worked effectively in any case.
In spite of shortcomings in subsidies as a stabilisation expedient, they were an integral part of the comprehensive scheme. To condemn their use in time of war would be to underestimate seriously the importance of stabilisation and the magnitude of the task of achieving it.
The economic stabilisation scheme put responsibility for stabilisation into the hands of the
The Parliamentary Paper H-43,
Equally important, however, was that pricing should extend over a group of items which, while covering all essential requirements for an average family, did not include too many items whose prices would be difficult to hold reasonably stable.
The regimen The regimen of a price index is the list of items to be priced, the units of measurement to be used and the weights expressing each item's relative importance.
In selecting items, the Parliamentary Paper H-43,
‘In determining the regimen the
‘The index thus relates to the essential requirements entering into the cost of living of the average New Zealand household, and is not limited to what is commonly termed the “working class” standard of living. In this connection it may be noted that in New Zealand social stratification does not show the wide cleavages common to older countries, industrialisation is limited, and the dispersion of incomes relatively small, these factors making for a more uniform standard of living than is possible in countries with more complex social and economic structures.’
An innovation in the Wartime Prices Index was the inclusion of fresh fruits and vegetables in the regimen. This necessitated a careful study of seasonal changes in supply and price of these commodities. A not unrelated new feature of price control in A reference by the Chairman of the
The items included in the Wartime Prices Index are of interest because of the central part the index played in economic stabilisation, and also because, with a few relatively minor additions and exclusions, the prices of the same items were stabilised at their level on The distinction between price control and price stabilisation is outlined on p. 301, note 1.
The persistent rise in prices of imported goods, combined with other unavoidable cost increases, and the general shortage of goods, services and labour, made it inevitable that there would have to be extensive use of subsidies to keep retail prices stable. However, the scheme was designed to reduce the need for subsidies where possible. With the experience of the rapid rise in import prices in the first half of the war, the natural tendency was to concentrate the index regimen on locally made goods as far as possible.
The following table shows the group weights of the Wartime Prices Index, that is, it indicates the relative importance given to price changes in each group of items.
The Wartime Prices Index became the only published index of retail prices. The Director of Stabilisation wrote to his Minister on
‘With reference to your minute of the 11th instant regarding the publication of the Government Statistician's Retail Prices
Index for
‘It is therefore recommended that publication of the Retail Prices Index be discontinued from Copy on Department of Statistics file 100/20/43.
This received the Minister's concurrence, and the Government
For the remainder of the war and for a year or two after the war, the policy of stabilising the price structure, as far as the essential goods and services included in the index were concerned, was pursued very rigidly. As a result it was not until Except for the very short-term rise and fall between the December 1942 and June 1943 quarters.
The index had a base equal to 1000 in
In assessing this price stabilisation achievement, it must be remembered that stabilisation policy tended to be concentrated on holding the prices of the commodities in the Wartime Prices Index, even to the extent, on occasions, of offloading cost increases in the stabilised items in the index on to related items which were not in the index. See also p. 314.
A statement from an unpublished thesis on the footwear manufacturing industry E. A. Harris, ‘A survey of the New Zealand footwear manufacturing industry with special reference to conditions in the industry prior to and during the licensing phase 1939–1949‘, pp. 94, 95. Copy held by Canterbury University Library.
‘A range of essential commodities was tabulated and, as far as possible, standards of manufacture for these lines were adopted. Included in these commodities were Men's, Women's, Boy's and Girl's shoes made from New Zealand leather. Prices for these lines were stabilised at the prices ruling on the
‘The method used in the industry was:
To allow increased costs to be borne by military contracts.
To allow higher margins of profit on non-essential lines.
Enforcement of quotas for manufacture of essential or so-called “utility” lines.
‘In effect this method meant military and non-essential lines were subsidising the manufacture of essential lines.
‘While military contracts absorbed a large proportion of the productive capacity this arrangement appeared to work. From
In peacetime a statistician publishing a retail price index accepts certain responsibilities with regard to the items he prices. He must make quantity and quality checks on each item, and be satisfied that it is readily obtainable by a prospective purchaser at the quoted price. He must also be satisfied that the price movements in the index items remain reasonably typical of the price movements in related consumer purchases. The special circumstances of war, and the economic stabilisation scheme, might reasonably have been taken to modify these requirements a little. Quantity and quality checks were still needed, but it was generally accepted that the emergency called for some sacrifices by consumers in the range of goods available to them. Of the items in the Wartime Prices Index, it could be said that most remained freely available throughout the war at the stabilised prices. The rest could usually be
The most serious threat to the representativeness of the Wartime Prices Index was the practice of offloading cost increases in stabilised items on to unstabilised items. This practice, however, was shortlived, and no doubt the Government Statistician's protests were largely responsible for its demise. The following Hansard reference is significant:NZPD, Vol. 266, p. 531,
Mr Sheat (Patea):‘… It was reported that the
The Hon. Mr D. G. Sullivan: ‘There were some instances where that was done, but it has not been the practice recently, for it has been completely abandoned.’
The success of the stabilisation scheme clearly required holding costs and prices at all points of distribution, not just at retail. Wholesale prices of locally produced goods, which had risen 17 per cent in the first half of the war, rose less than 6 per cent in the second half. Stabilisation of wages and other costs was having its effect.
Imported items continued to create stabilisation difficulties, though their price rise of 11 per cent in the three years following economic stabilisation was at less than a quarter of the rate in the preceding three years. Chart 60 compares price changes between December 1942 and September 1945. In these three years, when wholesale prices of imported goods rose by 10·6 per cent, and of locally produced goods by 2·4 per cent, the Wartime Prices Index rose only 0·1 per cent. Imported goods had made up over half the content of the old Retail Prices Index, but the emphasis was deliberately changed in the Wartime Prices Index and the imported content was probably rather less than half. See also p. 310.
Before the introduction of the Economic Stabilisation Regulations in
The provision, in
It would, however, be unreasonable to blame either wages policy or prices policy for the lack of stability up to
When regulations for the stabilisation of wage and salary rates were introduced in
The effect of the regulations was to peg rates of remuneration at the levels ruling on
To deal with applications for increases in wages or salaries above the basic rate, in cases affecting individuals or small groups of employees, three Wages Commissioners were specially appointed under the regulations. Applications had to be made jointly by employer and employee, and approval was to be given only where there were additional duties, responsibilities, or risk, where an anomaly called for adjustment, or where remuneration was abnormally low. Care was taken to appoint as Wages Commissioners only men who would abide by the spirit of the stabilisation scheme and refuse to approve increases unless there were adequate grounds. As this often meant refusing increases which employers and employees had already agreed to, it required a different attitude from that usually taken by Conciliation Commissioners.
The new stabilisation scheme was to apply to all salaries and wages, not just those previously under the jurisdiction of the Court of Arbitration. To cope with the usual arrangements for salary scales in many institutions, it was permissible to pay rates of
The practice whereby the Court of Arbitration, in fixing award rates of wages, took account of changes in the cost of living was a long-standing one, but except in the period 1919–25 had had no statutory basis. The Rates of Wages Emergency Regulations
Thus for two and a half years from
The period from It was not until
There were other signs, too, of increasing flexibility in the operation of the regulations. Difficulties arose out of the spreading of the wage-fixing function. Besides the Arbitration Court, the Wages Commissioners, and the Recommendations were made by a Select Committee of the House.
During Section 24, Part 5, of the Finance Act (No. 3) of
However much the increases were justified in individual cases, the fact that some sections of the community appeared to be receiving special favours denied to others caused considerable unrest. A number of industrial disputes resulted, including several major ones. There were increasing threats to the flow of production and trade. One writer, Industrial Conciliation and Arbitration in New Zealand, p. 154.
‘During these years there was some restiveness amongst the trade unions at these restrictions on wage increases. It was a period of acute labour shortage. (At one point in
For some sections of the workers, the action of Parliament in raising the pay of its members in Evening Post,
‘A strong protest against the action of the Government and members of the Opposition in increasing their own wages while railway employees and other lower paid workers throughout the country are still waiting increase in their wage rates, was expressed in a resolution passed at a meeting of the Southland Branch of the Engine Drivers', Firemen, and Cleaners' Association today.
‘“Although the establishment of the Tribunal to investigate railwaymen's wages and conditions was authorised by the Prime Minister in
Unrest was by no means confined to the Evening Post.
‘The centre of negotiations yesterday shifted from
‘The threat of a strike in the industry first appeared before Christmas when the workers in some of the
The report continued:
‘In Hamilton on Friday night, over one hundred dairy factory workers of the
Strike action indeed resulted, and on 17 January newspaper reports said: Evening Post,
‘The strike of dairy factory workers is not general. Workers at eleven factories owned by the New Zealand Cooperative Dairy Company, including two powdered milk factories and one or two independent factories, were on strike in the
‘Arrangements have been made to man the striking factories with volunteer labour, including military labour. All the dairy factories in
The following day waterside workers were threatening direct action, in protest at the use of ‘free’ labour to produce butter. Ibid.,
On 19 January a basis was found for resumption of work in dairy factories, subject to negotiation of the dispute at a conference of workers and employers organisations; but at midnight of the same day
These strikes did not last long, but they had their effect. On 13 February the Arbitration Court was given power to adjust general disparities in wage levels. Two days later the
The new regulations for the Arbitration Court meant the end of the more rigid period of economic stabilisation. Stabilisation was to continue, but in a modified form. The Prime Minister's announcement of the change is worth recording at some length. Ibid.,
‘Amendment of the Stabilisation Regulations to enable the Arbitration Court to adjust general disparities in wage levels was announced by the Prime Minister (Mr Fraser) today.
‘“In their original form the Stabilisation Regulations limited the power of the Arbitration Court in dealing with wages; there being a general barrier against increase except on the ground of strictly-defined anomalies. Since then a number of amendments to the Regulations have made possible the adjustment of wages in a variety of additional circumstances. The most recent of these amendments, No. 4, of June last year, reduced the limitations on the Court's powers in the main to a requirement that the Court should have regard to the economic stability of New Zealand.
‘“During the last two years, in the adjustment of our economy to the constantly changing stresses of war, some classes of workers have received increases in wages, others have not. So there has arisen a disturbance of the general equilibrium within the wage structure tending to produce a sense of unfairness and dissatisfaction. Such a lack of balance is contrary to the intention of stabilisation, which has always involved keeping a proper balance between the various classes of workers and a proper relationship between wages and living costs.
‘“The Stabilisation Regulations are accordingly being amended to enable the Court, in dealing with wages, and incidental to giving consideration to the economic stability of New Zealand, to take into account the disparities which have arisen within the wages structure through some groups receiving increases while others have not received them. The Court is given power to amend existing awards and agreements so as to restore the balance between the different classes of workers. So that it may achieve this, the amendment requires the Court to take into account ‘the desirability of so fixing rates of remuneration as to restore or preserve a proper relationship with the rates of remuneration of other workers or classes of workers.’ The regulations also provide for amendment of the wages portions of the awards, apprenticeship orders, and industrial agreements during their currency.
‘“Provision is made empowering the Court to issue pronouncements specifying the standard wages for skilled, semi-skilled, and unskilled workers. The Court may exercise this power of its own accord or on application being made to it by any organisation of workers or employers. This will enable the Court for its own purposes, and as a guide to other parties when they come before it on wage matters, to lay down principles, rather than to leave these principles to be deduced from awards as they are issued. Such pronouncements by the Court will also serve as a useful guide in other negotiations on wages.
‘“Unions are thus enabled to apply to the Arbitration Court for a review of the wages portions of awards, even during their currency, on the grounds of disparity with other workers, using any standard wage pronouncement as a guide. Workers who do not come under the Arbitration Court will be able, as in the past, to apply for adjustment of wages through the Wages Commissioners, to whom applications are made jointly by employee and employer. The Wages Commissioners are empowered to approve wage increases on the grounds of removing disparities. In doing so they are enabled to take into consideration any standard wage pronouncement which may be made by the Court.
‘“It is also necessary to consider the position of the farmers. I am not unmindful that these adjustments in the wages structure may affect the position of the primary industries. This is a matter which will have to be very carefully studied and dealt with in the light of the general undertakings given to the primary industries at the time the original stabilisation policy was announced. Needless to say, in any action which is taken, full consideration will be given to the views of the representatives of the industries concerned.
‘“The announcement of these changes does not in any circumstances mean that the inflationary danger is over. It was sufficiently demonstrated in all countries in 1914–18 and later that the greatest inflationary danger develops in the immediate post-war period. We must be prepared to meet that situation again—a situation in which stabilisation will continue to be our most sure defence on the economic front. Our prosperity in New Zealand is so largely dependent on the sale of our produce overseas that the success of stabilisation is vitally important to our primary industries. How successful we are with stabilisation will widely affect our ability to deal with the difficult problems of the export market.
‘“Beyond all this there is a further reason why stabilisation must have the continued support of all New Zealanders. The Government, together with the people of New Zealand, is determined that the men returning from the Forces, when re-establishing themselves in civil life, shall not have to do so under conditions of economic disruption. Stabilisation is their protection against these conditions.”’
On The pronouncement referred also to a ‘noticeable tendency in the last few months for employers to agree to increased rates in Conciliation Council or in negotiations for special agreements.’ Again, it said, ‘The relative position of certain limited groups of workers has been appreciably improved in the past two years, possibly in some cases as a result of the adoption of militant tactics.’
Reviews of awards to adjust disparities resulted in increases in individual awards of up to 3 3/4d. an hour. In the state services, a general increase in wages, approximately equivalent to the 3 ½d. per hour increases granted by the
It was wages rather than prices which made the first major breakaway from the rigid stabilisation programme. The stabilisation programme depended above all on equality of sacrifice or equality of restraint in demanding higher incomes. The end of wage stability came from a sense of unfairness when some sections got increases, rather than from any breakaway of prices raising the cost of living.
In
Chart 61 shows the degree of stabilisation in prices and wages from
Stabilisation policy, which was first formulated at the Economic Stabilisation Conference in
The special place of farmers in the New Zealand economy had always been recognised. Their production was the predominant, earner of overseas exchange out of which imports and overseas debt servicing could be financed. Exports of farm produce earned annually a sum averaging about a quarter of the national income. Net incomes of farmers made up on average about 14 per cent of national income.
The relative importance of farm incomes made changes in export prices a major cause of instability in the internal economy of New Zealand. This had been an important consideration leading to the introduction of the guaranteed price scheme for dairy produce in
The comprehensive stabilisation scheme introduced in
One of the main concerns of stabilisation policy was to keep an acceptable relationship between wages and farm incomes. The basis of the stabilisation understanding was that farmers and workers alike agreed not to take advantage of a sellers' market for their produce and labour. Without farm stabilisation, based on subsidies and pool accounts, wage stabilisation would have been doubly difficult. Without wage stabilisation, farm costs could not have been stabilised, and farm price stabilisation would have been unacceptable to farmers. Farm incomes would have followed closely the upward trend in world prices, bringing severe inflation in a country short of goods and services.
In accordance with the stabilisation announcements of
The establishment of stabilisation accounts for each product or group of products after consultation with the industry concerned.
The payment into stabilisation accounts of any increases in price received from sales of the product overseas above the level ruling at
The payment from the accounts of subsidies required to keep the costs of production down to the level ruling at
The agreement provided that credit balances in the accounts at the termination of the stabilisation scheme would be used for the benefit of the industry concerned, while debit balances would be met by the Government. The final clause provided that, while the agreement was in force, prices received by the farmer would not be allowed to fall below the level ruling in
The stabilisation agreement with the Farmers' Federation was announced by the Minister of Marketing on
To siphon off price increases on sales of produce to the
A
There was also a
The result was to vary payments to dairy farmers, as follows:
In The Commission reported in Parliamentary Paper H–30 The following statement appeared in the B,
The balance in the Dairy Industry Stabilisation Account rose to £1·1 million in
Early in
In addition to these contracts for meat and dairy produce, the United Kingdom Government agreed to pay a lump sum of £12 million sterling ‘as compensation to meet the abnormal increase in prices of New Zealand imports from the
The p. 4.
‘He explained that at the commencement of the war, New Zealand agreed to sell the whole of the exportable surplus of produce to Great Britain at prices generally in line with the then ruling prices. It was emphasised that New Zealand did not wish to make any profit out of the war, but made a reservation that the position should be reviewed if the cost of imports from the
Both New Zealand and the
New Zealand, in paying for imports from the Subsidies to keep down the prices of imported items entering into farm costs were usually charged to the farm stabilisation accounts, but farmers, along with wage earners and others, benefited from subsidies to keep down the cost of consumer goods and services.
These facts affected both the settlement with the
Full information concerning the lump-sum payments was given to the dairy and meat industry leaders, who later expressed themselves as satisfied that these payments were not being paid in respect of produce sold to the Letter of
Though there was no guaranteed price scheme for meat, a pool account had been established in
It was further agreed that, if at the end of the emergency period a financial surplus remained in the Meat Pool Account, the Government and the
After the inauguration of the economic stabilisation scheme on
The balances in the meat accounts from year to year are shown in the following table:
Before the commencement of the 1943–44 meat season, prices were adjusted to allow for increased costs and to encourage the production of heavier lamb carcasses in accordance with the desire of the United Kingdom Government for increased production. Increases were also granted in the price of ewe and heavyweight wether mutton, while adjustments were made in beef prices, resulting in increases in prices for the heavier weights of ox and heifer beef.
In
‘It is considered desirable that both the Meat Pool Account and the Meat Industry Stabilisation Account should remain within the Meat Industry Account as at present, but the whole of the proceeds from the recent increase in the prices of meat to be paid by the United Kingdom Government will be credited to the Meat Industry Stabilisation Account and will be conserved exclusively for the industry, subject of course to such debits against the account as are contemplated in the Government's agreement with the Farmers' Federation on the
These arrangements were subsequently confirmed by the Board.
Since any balances remaining in each of the meat accounts were to be held for the benefit of the industry, there seems to have been no real need to keep them separate. The fact that there was in each case a Government undertaking to meet any deficit in the account may contain the explanation. A certain amount of concern about the possible implications of these separate undertakings was indicated in the Prime Minister's statement, when he referred to a review of the arrangements in the event of the resources of the Meat Stabilisation Account being insufficient to meet charges against that account.
Substantial funds accumulated in the dairy and meat industry accounts, especially in the last two years of the war. The total reached approximately £17 million by the end of the 1945–46 season. The following table shows the influence of these accounts in keeping a portion of overseas earnings out of circulation in New Zealand.
There was no stabilisation pool account for wool, Reasons for this are discussed in Chapter 8. The prices fixed for bulk purchase arrangements were in any case likely to be somewhat arbitrary, and the procedures adopted to switch production from butter to cheese and back (see Chapter 8) illustrated the expedients which may be necessary where a change in the relationship between supply and demand does not communicate itself, through price, to suppliers.
Stabilisation meant not only divorcing prices paid to farmers from export parity; it also required that many ascertained increases in costs of farm requisites should not be allowed to affect farm running expenses. Many of the farmers' major costs were held for a number of years, and substantial subsidies were paid on fertilisers and other farm requisites to bring this about.
A record of stabilisation subsidy payments, including those on farm requisites, appears on page 305. The importance of the farm subsidies is indicated by the following totals:
Nearly £7 million of subsidy payments was debited to farm stabilisation accounts up to
The increasing balances in the stabilisation pool accounts give a measure of the anti-inflationary effect of farm stabilisation policy. This was money diverted away from the private sector of the economy, where incomes were already too far in excess of goods available. Most of the reserves were invested in Government stock or bills. To the extent that this enabled the Government to make internal expenditure it would not otherwise have made, the anti-inflationary effect on the economy as a whole was lost.
The need for equity between farm incomes and wages has already been discussed as the primary reason for divorcing farm payouts from export price parity. Farming policy was, in fact, an integral part of the stabilisation scheme.
Reference has been made to the fact that the items included in the Wartime Prices Index became price stabilised items. In some cases stabilisation extended beyond the ranges of items included in the index, but, for most commodity or service groups, the two lists of items were identical. This concentration of stabilisation on the index items tended to make the index unrepresentative, and
Though the Government Statistician did not publish the old Retail Prices Index after the
In the
While an honest endeavour was made, as part of the stabilisation scheme, to ensure a steady supply of the stabilised items, there were occasional breaks in supply. There were also cases where the controlled prices fixed by the Correct procedure (as used for the Consumers' Price Index) is for field staff to record the prices at which goods are actually being purchased.
Price control, while it helped to arrest price-wage and other spirals, could do nothing to contain the growing surplus of purchasing power, as goods and services became scarce. Restraint of price rises in some items therefore tended to leave an even greater excess of purchasing power for spending on other items. However, the prudent consumer was reluctant to spend money on items whose prices had risen too high, and preferred to save until goods and services were more plentiful. Small savings averaged well over £25 million a year in the second half of the war.
Attempts by the Government to reduce disposable income by taxation and borrowing also discouraged expenditure and tended to encourage care and patience among consumers. For those consumers who bought with a restraint fitting to the state of national emergency, the Wartime Prices Index was not an unrealistic measure.
Even taking the evidence of the Retail Prices Index, the period December 1942 to September 1945 was one of remarkable price stability for a belligerent country.
The success of New Zealand's economic stabilisation scheme after
Chart 59, on page 291, showed the rapidly widening gap, in the war years, between private incomes and goods available for use.
National income statistics, when they became available, provided a better measure of income changes. These statistics permit an assessment of the effects of government fiscal policy in reducing the gap between income and goods available. In following the analysis in the next few pages, it must be remembered that the gap between the two statistical series concerned cannot be studied exhaustively. Services, which may be paid for out of incomes, are not included in goods available. Goods available may be used for capital purposes. They may also be used by the Government, though war stores are specifically excluded. For a variety of reasons there is normally a gap between incomes and goods available. Interest attaches not to the size of the gap in any particular year, which is affected by these statistical differences, but to the way in which it widened over the war years, when civilian services as well as goods were in short supply. Some of the shortages of services are discussed in Chapters 16, 17 and 18.
Chart 62 shows the effect of direct taxes on income. Between 1938–39 and 1944–45 private income increased 70 per cent, but direct taxes increased 241 per cent. Disposable income, which is private income after deduction of direct taxes, increased, as a result, by 46 per cent. This was still a formidable increase compared with the 4 per cent increase in goods available, but the effect was much less disturbing to the stability of the economy than it would have been had the rates of direct taxation not been accelerated.
The approximate effect of customs and excise duties and other forms of indirect taxation can also be studied. Indirect taxes, by raising the prices of the goods which were available, helped to mop up excess purchasing power. In fact, this form of taxation is often more effective than income taxes as an anti-inflationary measure, because it tends to restrain spending, and, when spending does occur, draws off part of the purchasing power. Subsidies obviously have the opposite effect. As indicated on p. 307, their value as an anti-inflationary measure lies in their ability to arrest spirals or potential spirals.
In Chart 63 the values of goods available have been adjusted to allow for the effects of indirect taxation in raising prices and of subsidies in lowering prices.
The total of indirect taxes less subsidies increased by 47 per cent between 1938–39 and 1944–45. When allowance is made for this change, the market value of goods available increased by 10 per cent compared with their unadjusted increase of 4 per cent. However, as we have seen, disposable income increased by 46 per cent over the same period.
Summing up the effects of these changes:
Stabilisation policy required a compromise between the impossibility of complete rigidity and the ineffectiveness of measures which merely restrained price increases to what was justified by cost increases.
The first three and a quarter years of war, when retail prices rose 14 per cent, showed the inadequacy of a policy aimed at restricting cost and price increases to what was due to war conditions. A much more stringent policy was called for. Costs, prices and wages had to be held close to a basic level in spite of wartime changes. This required more extensive use of subsidies, where elements of cost could not be prevented from rising. It needed to be supported by an intensive government financial policy to draw off excessive purchasing power at a time when the supply of goods and services was below normal, and when the Government's own high wartime spending was tending to aggravate the unbalance.
A further essential was the stabilisation of rates of payment for farm produce, both in the interests of equity and to reduce spending pressure on the internal economy. Holding farm costs was both a part of the general policy of cost stability, and one of the essentials for stabilising farm produce payouts.
Equally important, external influences in the form of rising import prices had to be offset, if prices and costs were to remain stable. The cost of this in subsidies was reduced by the fact that imports were not freely available, but this influence in its turn added to the difficulty of keeping a reasonable internal supply of goods and services to match the rising money demand for them.
No matter how effective government policy might have been in holding stabilised prices, stabilised wages and other stabilised costs, the fact remained that insufficient goods and services were available to meet normal civilian requirements, and that, even allowing for
If one assumes a reasonable balance between goods available and disposable incomes in 1938–39, there was an annual surplus of incomes of £46 million by 1942–43 and of £67 million by 1944–45, after allowing for the effects of extra taxation. These surpluses, in the hands of people who were short of goods and services, could have led to fierce competition for the comparatively few remaining unstabilised items and to determined attempts to divert resources to the production of those items. As a less troublesome alternative, considerable portions of the surplus income could have been saved.
Both these effects occurred, but, with pressure of demand reduced by war taxation, control over the non-essential use of resources proved strong enough to restrict severely the available range of unstabilised items. Though prices for some items soared, the number of transactions in these items was not large enough to be a serious threat to the stabilisation scheme.
The situation for the consumer was that a good supply of most essentials was available at stabilised prices, and a very restricted range of luxuries at high prices. Some luxuries and consumer durables were not available at all. The consumer tended to postpone his spending, in the hope that these extras would become available later at reasonable prices. In other words, he saved his money. For this the Government provided ample opportunities and encouragement. Private saving left more resources available to be diverted to war purposes.
Small savings balances, after decreasing in each of the years 1938–39 and 1939–40, increased by £7 million in 1940–41, by £18 million in each of the next two years, by £29 million in 1943–44 and by £26 million in 1944–45. Small savings taken to include Post Office Savings Bank, Trustee Savings Bank and National Savings Accounts, together with National Savings Bonds. National Savings Accounts and Bonds were first used in 1940–41.
Private savings were used also to subscribe to war loans and development loans. In fact, if allowance is made for sums borrowed by the Government from the banking system, the rest of the wartime increase in the New Zealand held public debt must have come out of private savings. Savings on this wider basis, which would
Most of the increase in small savings became available to the Government and was embodied in the public debt, along with sums subscribed directly to loans. The internally held public debt increased by £257 million between March 1939 and March 1945, but of this sum £40 million was borrowed from the banking system. Changes in holdings of securities by Government Departments have been ignored, and may affect the above assessment a little.
In Chart 64 the results of the study of wartime changes in private income and goods available, which were emerging in Charts 62 and 63, are summed up. The difference between the figures after allowing for taxation and subsidies is shown as a gap which grew larger until 1944–45, and thereafter started to contract.
The wartime build-up in saving and lending by the private sector of the economy is also apparent in Chart 64. While not too much accuracy can be attached to the figures, it is apparent that savings accounted for much of the surplus of disposable income over goods available.
The fact that these savings occurred, while people went without a portion of their normal supply of goods and services, and while prices remained pegged for a very wide range of items, is an outstanding tribute to the success of the stabilisation scheme.
New Zealand was not the only allied country to achieve substantial stability in prices in the later war years. The United Kingdom and
A MAJOR economic problem in wartime was the collapse of the system of competitive tendering for government contracts. Whether in peace or war, special problems arose when the assistance of private firms was needed to carry out work on behalf of the Government. Both in allocating the work and in arranging payment, there were ample opportunities for corrupt practices unless watertight systems could be evolved and rigidly applied.
In peacetime, a wide variety of government work was allocated to private firms by inviting competitive tenders for jobs whose content had been carefully defined. Where there was genuine competition for the work by a number of firms with the capacity to undertake it, the system was effective, solving the problem of allocating the work, and providing some assurance that the price paid was reasonable.
Under war conditions, it was not long before pressure to get work done in a hurry led to the use of special types of contract designed to cut delays in assigning jobs to private enterprise. Speed was essential when the war situation became critical, but out of the speed with which much work was assigned arose uncertainties and muddlement as a result of newer, less definite forms of contract. Moreover, the competitive spirit, which provided a valuable safeguard against waste in any form of contracting, was severely weakened as firms became overloaded with war work.
Some change from peacetime contract arrangements was essential to get war work completed. So great was the volume of contract work to be done and so severe the shortage of materials and labour that the more cautious peacetime methods of assigning
Problems were created by the great volume of war work to be done, as well as by its urgency. Private contractors were being offered more work than they could handle. Competitive tendering was not effective in an industry overloaded with work to do; it depended on the existence of spare capacity. Moreover, when the productive capacity of contractors became saturated, some of them were reluctant to come to any form of advance agreement which would significantly restrict their ability to make high profits. Because the Government's hand was forced by the need for urgency, a number of very loose contracts resulted.
The extent to which looseness should be allowed to creep into contract arrangements in the interests of speed must always be open to question. Getting started on a job earlier does not always mean that it is finished earlier, or done better. Workmen or firms who refuse to operate in a muddling or untidy way may take longer to get started, but are likely to work more efficiently and to complete a job earlier. It is equally likely that, even where competitive tendering breaks down, properly drawn contracts, requiring a clear understanding in advance of what is to be done, and the basis of payment, may in the long run save much more than the time involved in preparing them.
Difficulties over government contracts were experienced in most allied countries as a result of the volume and urgency of war work.
The early use of special types of contract, and the resulting misunderstandings, disputes, and excessive charges are referred to cryptically in the Controller and Auditor-General's report for the year ended
‘In view of the extreme urgency of the work of erecting and equipping the mobilization bases and training camps, both for land and air forces, the normal procedure of calling for tenders for the carrying out of the work was found by the Public Works Department to be impracticable, and the Hon. the Minister of Public Works approved the system of the letting of contracts on a “cost plus” basis. The “cost plus” contract system was a feature of armament expenditure in the
‘Under the New Zealand system contractors are reimbursed for proved expenditure, and receive an additional percentage designed to cover general overhead and to return some margin of profit.
‘The Audit Office agreed to check before settlement all claims made by the contractors under this system, and this service entailed considerable urgent work on the part of my inspectors.
‘Some little time after the commencement of work on “cost plus” contracts the Public Works Department prepared a standard contract form which was drawn to embody the conditions verbally conveyed to contractors by Public Works Engineers. Several groups of contractors declined to sign the contract documents, claiming that the contents did not coincide with their impressions of the position, and that they did not wish to prejudice their rights to maximum remuneration. This attitude led to disputes during the settlement of claims, and several of the “cost plus” contracts when settled had to carry a final on-cost considerably in excess of the originally intended 7 ½ per cent. The intervention of Audit before payment resulted in substantial savings of public moneys, and contractors' claims in respect of one mobilization camp alone were, due substantially to Audit action, reduced by more than £8,000.’ B1, Part II,
The refusal of contractors to sign the standard type of contract was a symptom of the rapid change in the market for war work. Because of the urgent need to get massive volumes of work done with limited resources, contractors soon found they had a seller's market for their services. Some exploited the position to the full.
Special types of contract were soon in extensive use for building operations, for shipbuilding and ship repair work, and for munitions manufacture.
The Government's difficulties were to get worse. The rapid upsurge of war expenditure through See also Chapter 10.
These extra demands fell on producers whose manpower was, by the end of
As with defence construction work, special types of wartime contract were soon in use for shipbuilding and repair. Excessive pressure of work on this small industry
Prior to the war the
The basis of the ‘time-and-line’ method was that all materials used were paid for at gross cost, the trade and cash discounts going to the contractor, and labour was paid for at ‘schedule’ rates, which included the award rate for those employed plus an extra 40 to 50 per cent to cover the administrative costs, overhead and profit of the contractor.
As with defence construction contracts, uncertainties and suspicions of overcharging soon arose with regard to shipbuilding and repair work. For shipbuilding an attempt was made to improve the situation by fixing target prices and by trying to write terms into the contracts which would give firms a profit incentive to keep within the target prices. See also p. 352.
Apart from the fact that, in most industries, the rapid saturation of any excess capacity made it difficult to get competitive tenders, the Government was hindered by insufficient departmental staff to make advance estimates of the content of jobs. Staff shortage also prevented adequate inspections of the work as it progressed: a deficiency which led to waste and made the checking of firms’ accounts even more difficult.
Lack of advance estimates of job content was the most serious drawback. Without them, there was no possibility of reaching agreement on a price for the job before work started. There was then no target for the contractor which would automatically bring him increased profit if he kept within it. He had no incentive to do the work efficiently.
In those cases where there was no target figure for the whole job, but the profit element was fixed in advance, there was still no incentive for the contractor to keep down costs. Worse still, in the cases where profit was related to actual costs, there was even an incentive to inefficiency—extra costs meant extra profit.
These troubles, combined with inadequate staffs to check progress of work and review charges, left the Government in a very vulnerable position at a time when so much extra war work had to be done.
When the Controller and Auditor-General prepared his report for the financial year ended B-1 [Part II],
‘In my last report I referred to the examination of accounts in connection with the erection of emergency defence buildings under “cost plus” contracts. Modifications of this form of contract have been introduced with the object of providing contractors with an incentive to urgency or economy.
‘One useful modification lies in the direction of reviewing a completed contract and fixing the final price in accordance with an investigation of the contractor's books by Government costing officers. This procedure permits the Government to ascertain more closely the cost of the contractor's operations, and gives a more accurate result than is yielded when indirect costs are fixed by
‘The construction of several vessels has been entrusted to shipbuilding firms under a variation of the “cost plus” contract whereby a “target” or estimated price is fixed plus an agreed upon fee. If the contractor is able to introduce economies so that he undercuts the target price he shares in the savings. If, on the contrary, the target price is exceeded no fee in excess of the fee originally agreed upon accrues to the contractor.’
In spite of this rather more optimistic view, the position was to get worse rather than better. Pressure of work was increasing and contractors were often able to refuse or circumvent the modifications designed to tighten up the special contracts.
The entry of
With the increasing volume of war work, and the mounting unsatisfied public demand for consumer goods, pressure of demand became excessive for a wider range of industries. The peacetime system of letting contracts by competitive tendering, already difficult to apply in some industries, now became unworkable over a large portion of the economy. Work banked up for depleted departmental staffs struggling with the preliminary estimating and final checking associated with the special types of wartime contract.
Departmental control became less and less effective and there were increasing abuses of the looser contracts.
Attention has been drawn to some early attempts to cope with the special weakness of cost-plus contracts—the fact that higher costs led to higher profits. Target cost figures were fixed for contracts and profits were based on the targets. A bonus could be earned by working within the target. See also p. 352.
Moreover, it was not always possible to let contracts under the target cost type of contract. Many firms were looking for looser arrangements where more profits could be made. In some industries, any attempt to insist on a certain type of contract just meant that contractors would concentrate on other work. There was no lack
With ship repair work, where the exact requirements were more difficult to settle in advance, targets were usually not practicable. In an attempt to improve contract arrangements, the This was a programme organising committee appointed by the Minister of Supply and Munitions on
the exorbitant charges made by ship repairing firms, both main contracts and sub-contracts and
the spirit of competition which exists between ship repairing firms as between ship repair work which returns handsome profits and other Government work such as minesweeper construction, where profits are limited.’
In his report for the year ended B-1 [Part II],
‘In former reports the subject of “cost plus” contracts has been mentioned, with particular reference to their use in defence construction contracts, and this type of contract is still in operation, although it has defects which have evoked criticism in many places where it has been used. The circumstances in which these contracts find favour include:
Where the time element is of great importance:
Where productive capacity is so limited that every productive unit, efficient or otherwise, must be pressed into service:
Where lack of production experience makes the accurate estimation of likely costs difficult or impossible.
‘Amongst its defects are the following:
The contractor receives his percentage to cover his overhead and profit irrespective of results or cost:
The more the cost is inflated, the greater the fee received by the contractor:
Incentives to speed, and to economy in the use of labour and materials are lacking:
The limitation of profit to a percentage on capital employed offers no reward for special effort; neither does it penalise inefficiency or negligence.
‘The “cost plus” system was applied during the year principally to building operations, shipbuilding and ship repair, and munitions manufacture. In respect of ship repair work and munitions manufacture, standardised contract forms have been devised, but the Audit Office understands that Departments have not made use of them, despite the desirability of ensuring that contractors should know what expenses the Crown is prepared to allow or disallow. There is very considerable diversity in the methods at present adopted for assessing overhead and profit allowances, and it is desirable that they be placed on a uniform basis for each manufacturing group.
‘In respect of ship repair, the Audit Office was not given the opportunity it would have wished to check expenditure as it proceeded, and as regards munitions contracts the data on which the Government Costing Officers based the prices agreed upon is not available in suitable form for ready investigation by Audit.
‘The target price or target cost contracts in connection with shipbuilding mentioned in my last report have now been completed, but the Department concerned advises that owing to material changes in design the final costs were approximately double the target price. The aim, therefore, was wide of the mark, and the value of fixing a target was altogether discounted. The Audit Office was, however, able to satisfy itself as to the expenditure which the contractors had incurred. An extra fee to be settled by negotiation is to be paid to the contractors on account of the excess cost.
‘Since the recent appointment of the Commissioner of Defence Construction, building contracts have been arranged upon the basis of schedules of quantities prepared by quantity surveyors and priced by reference to master schedules based on agreements between the Commissioner and the Master Builders’ Association. Provision is made for the contractor to claim adjustments of schedules arising from circumstances of a particular contract, and the contract price is arrived at by adding to the priced schedule 5 per cent for profit and a further 2 ½ per cent to cover overhead expenses. Timber requirements are arranged and paid for by the
The master schedule system for defence construction work had been introduced in
Under the master schedule system the proposed work was divided into its component parts and an initial contract price was arrived at ‘by multiplying such component parts by the unit prices (labour and materials) allowed in the master schedule. The Commissioner of Defence Construction sought the co-operation of the builders to arrive at mutually acceptable unit prices. Official War History of the Public Works Department, Vol. I, p. 194. For some types of work the rates were revised in
Meantime public criticism of the abuses of wartime contracts was becoming much more vocal. In ‘James Fletcher Talks about War Contracts: High Wages and Output’—New Zealand Truth,
‘There is no such thing as a contractor being allowed to do a job and then put into the Government a bill for all his costs, and on top of that a percentage for his profit.
‘We work to a master schedule,’ continued Mr Fletcher. ‘The cost of all materials is fixed and supplied at those prices. The amount of material necessary for the job is measured beforehand by Quantity Surveyors who are experienced experts in their particular work. The labour cost of doing a particular job connected with any contract is assessed by experienced practical men on a man-hour basis. The complete total of the cost of the contract includes transport, board for workmen, allowance for waste, and a percentage as the contractor's profit for the completed work.
‘The contractor is responsible for engaging the men and assessing the number of men he requires to do the work in the prescribed time. If he overmans, or the men are not efficient and do less per hour or day or week than what an efficient workman should do, then the contractor will find his profits diminishing or disappearing altogether. The contractor has all the facts in front of him when he takes on the job.’
This was a very good summary of the purpose of the master schedule system, but unfortunately all did not work out according to plan. One of the essentials of the master schedule scheme, the assessment of contract details in advance, was frustrated by lack of staff. The Works Department later wrote: Official War History of Public Works Department, Vol. I, p. 239.
It was equally obvious that, if quantities of materials and labour could not be scheduled in advance, work under the master schedule would have many of the disadvantages of work under the old ‘cost-plus’ system, in that there was no longer a proper incentive for the contractor to save materials or labour, or even to be accurate in his measurement of materials or his charges for labour.
Public criticism continued and in NZPD, Vol. 261, p. 895,
‘There is no doubt in my mind, nor in the minds of my officers, that the tender system would have failed completely to meet the tremendous defence programme of the past few months, and, moreover, costs would certainly have soared. Members will recollect the serious competition for labour between building firms and the manner in which labour rates were being increased and increased, to obtain that labour. The necessity for organisation and control of materials due to our limited resources also rendered the tender system inapplicable.’
By this time a further difficulty had emerged. For many types of work, the profits earned under the master schedule system had turned out to be very much in excess of what had been in mind when the master schedule was first worked out. The Minister of Public Works went on to inform the House of adjustments in the schedule rates. He said:
‘The master schedule rates constituted a basis upon which payments would be made to the various firms to which jobs had been allotted. It became evident long before final payments were made to these firms that the basis was too high for certain grades of work, though fairly right for others, in which a higher standard of workmanship was demanded. Accordingly, I arranged with officers of my Department to take the requisite steps to have the whole position fully investigated, and, as a result of this investigation and various conferences arising from it between the Commissioner of Defence Construction, quantity surveyors,
‘Over and above this arrangement, which is as near perfect as it can be made arbitrarily, there is a final check on the cost of the works after they have been completed, the purpose of which is to see that the various firms concerned do not realize more than 5 per cent profit and 2 ½ per cent overhead on the cost of the work.’
This last statement is particularly interesting in view of later revelations about profits earned on some of the wartime contracts.
The Controller and Auditor-General, in his report for the year ending B-1 [Part II],
‘Much the greater part of building constructional works for defence purposes is now being effected on the “master-schedule” basis introduced into this sphere of activities by the Commissioner of Defence Construction, as referred to in my last year's report. Competitive quotations are not obtained, but contracts are arranged upon schedules of quantities priced according to schedules agreed upon by the Commissioner of Defence Construction and the master builders’ associations. Each schedule sets out the unit rates for labour and material in the area or district to which it relates, and includes full allowances for workshop expenses and profit in the case of materials such as joinery, plumbers’ requisites, electrical, metal, and similar supplies,
Referring to the profit rates being earned in building contracts, the Controller and Auditor-General went on to say:
‘Investigation by the Public Works Department indicated that the original schedules gave contractors an unduly high rate of profit on certain types of buildings, and a reduction in rates was effected in September last. It is desirable that tests of the fairness of schedule prices should be made from time to time by reference to the actual profits earned by contractors as shown by their own records, and the contracts provide for such reference if it is desired. Representations were accordingly made to the Commissioner and the Public Works Department and these authorities have agreed that examination of the contractors’ records will be made forthwith.’
Once more there was recognition of the need for early steps to review contracts, but, in the event, there was to be very little effective action.
Shipbuilding contracts also received further attention. The Auditor's
‘These contracts have been the subject of comments in my reports since the outbreak of war. To New Zealand's requirements have now been added the local requirements of the
‘The Audit Office has endeavoured to maintain a close and effective check on expenditure on shipbuilding activities, particularly at the main shipbuilding centres, but it has experienced difficulty in satisfying itself that capital charges to be borne by certain contractors and construction costs to be paid by the Crown have been charged correctly in terms of the relative subsisting contract. Where the Audit Office was of opinion that a payment did not fall within the terms of contract the attention of the Treasury and Marine Departments was drawn to the matter….
‘“Cost plus” contracts appear to be unavoidable in some classes of ship repair work, as distinct from shipbuilding, but the Audit Office has not had the staff necessary to verify actual costs. In this class of contract the
Reference was made also to unduly high prices for construction of Army huts. ‘A very large contract for the construction of some 8,500 Army huts had been arranged at a fixed price per hut, but information obtained by the Audit Office indicated that such price was excessive. Treasury and Audit then made an investigation, with a result that a saving of some £30,000 was effected.’
Finally, one finds in the Controller and Auditor-General's
Maximum pressure had been put on the construction industry in 1942–43, and an unbelievably high output had been achieved. The accelerated defence works programme to meet the threat of Japanese invasion, and the rush to provide camps and hospitals for American forces which first arrived in
In this emergency, James Fletcher was not the man to be deterred by the shortcomings of oral contracts. In New Zealand Truth,
‘I am no lover of red tape. There is a job to be done quickly. I have no big office staff—but it is most efficient. Hours, days, weeks, perhaps months, are saved by use of the telephone or the telegraph office.’
War demands were to put the radio industry under extreme pressure. A small portable radio receiver and transmitter, known as a ZC 1.
In the radio industry a rather tighter control over cost-plus contracts seems to have been established, with the result that there were apparently fewer abuses than in some other industries. One firm which came under the notice of the Audit Office and the Treasury had succeeded in 1943–44 in making a net profit amounting to 34 per cent on capital employed, mostly from fixed price contracts, but this seems to have been an exceptional case. There was considerable negotiation over one of this firm's contracts where the price was 3 3/4 times the pre-war imported price. It was eventually reduced to 2 ½ times the prewar imported price. This price the Controller considered still too high, but he was refused access to cost records.
An interesting feature of the industry, which probably accounts in large measure for the comparatively small amount of profiteering in it, was the virtual prohibition of civilian work after This Order was designed primarily to preserve stocks of components. See also p. 167.
Though some exceptions were made to this rule, the restriction on private work was more severe than in most other industries.
During See also p. 347. The customary engineering practice was to charge packed hours for overtime, which meant that an overtime payment for, say, 4 hours’ work at 1 ½ times ordinary time rate was entered in the books as 6 hours at ordinary time rate. The payment to the worker was the same, but all 6 hours ranked for overhead and profit allowances. See also p. 360 for an example of the effect of this practice.
To reduce discrepancies in quantities charged, a Ship Repairs Costing Service was set up in
Growing recognition of the need to review war contracts led to the inclusion of a provision in the Finance Act All government contracts and sub-contracts were covered. The provision was not limited to construction work.
This became effective in
Accordingly Cabinet, on Later Sir Arthur Tyndall.
Meantime the Controller and Auditor-General was becoming increasingly concerned. In his B–1 [Part II],
‘Reports from Great Britain,
‘The Audit Office has, so far as staff was available for the purpose, inquired into profits made on war contracts in this Dominion, and has also examined reports on the same subject made available by other Departments.
‘A figure of 6 per cent return on capital, after deducting income tax at basic rates, has been given by the Minister of Finance as a profit guide to Departments concerned in the negotiation of war contracts. In some cases noticed by this Office this rate has been far exceeded, and in others profits earned have been in excess of the rate fixed by the terms of the contract. In only a few cases, however, has an endeavour been made to effect re-negotiation.’
Speaking specifically of building contracts the Controller and Auditor-General said:
‘In my last report mention was made of the desirability of testing the fairness of prices paid under master schedule contracts by reference to the actual profits earned by contractors as shown by their own records. Accordingly, arrangements were made with the Public Works Department that it should examine contractors’ accounts, and, in all, the results of over eighty contracts of a total value of well over £1,000,000 were obtained. The investigation showed that contractors were earning profits far beyond the 5 per cent on profit bearing costs contemplated by the master schedule, and representations were made to the Department that it should endeavour to recover from contractors sums considered to be in excess of fair and reasonable profits. In December last, Departmental representatives met a Committee of the Federated Builders’ Association of Employers Commonly known as the Master Builders’ Federation. (Author's footnote.)
Actually the Contracts Adjustment Commission had had three meetings and was at the stage of assembling information for study when, in
No satisfactory arrangements to review defence construction contracts were ever made. After a number of attempts to have the Contracts Adjustment Commission re-established, Official War History of the Public Works Department, Vol. I, p. 280.
Attempts to have shipbuilding contracts reviewed were also largely ineffective. The Controller and Auditor-General in his B–1 [Part II],
‘The Audit Office has maintained a reasonably close check on current payments, and has supplemented this check in selected instances by an examination of contractors’ accounts. Where contractors appear to have earned high profits the circumstances have been reported to Treasury, but in no case has this resulted in any cash recovery to the State.
‘In my last report I advised that the Controller of Shipbuilding intended to retain the target price type of contract in respect of ship construction, but contracts let since that date have actually been (a) firm price contracts, or (b) cost plus a percentage, or (c) cost plus a fixed price.
‘As the production or turnover of shipbuilding contractors has expanded, a percentage to cover actual overhead expenses, based on a previous year's accounts, has usually resulted in the contractor receiving a “profit” on such expenses, but this profit has been the reflection of a larger turnover rather than an indication of increased efficiency. In response to Audit representations, Treasury therefore has agreed that, where possible, contractors’ overhead expenses will be reimbursed on the basis of actual cost rather than on a percentage of wages cost.’
The Controller and Auditor-General became resigned ultimately to the fact that no effective general investigation of wartime contracts was likely to result from the criticism which these contracts had received over the years. In his B–1 [Part II],
‘In my last report I indicated that undue profits had been earned on building contracts let on a master schedude basis and that a
‘The Audit Office was represented at several conferences of departmental officials on the matter mentioned in the foregoing paragraph, and as a result of exchange of views, I am of the opinion that the authority given by Section 2 of the Finance Act (No. 3) See also p. 355.
Because of the failure of attempts to investigate war contracts, review procedures generally seem to have been less effective in New Zealand than in a number of other countries. In the The Army and Economic Mobilization, p. 369. £6.6 billion represented 3·9 per cent of the
For most industries there was no clear picture of the upsurge in wartime profits, except in a few isolated instances where National Income Statistics, New Zealand Official Yearbooks.
More detailed information was available for manufacturing from the Annual Statistical Reports on Factory Production, and one writer, p. 50.The New Zealand Economy in War and Reconstruction.
The very substantial rise in surplus as a percentage of capital assets occurred in spite of a slight falling tendency in the ratio of gross margin to output. Williams rightly qualifies his results, but, in spite of all necessary qualifications, one impression clearly emerges. To use his words, ‘It appears that savings in overhead gained from a large increase in turnover have not been passed on’.
Unusually high profit earnings, resulting from some firms keeping for themselves all or most of the benefits of increased turnover, were only one of the causes of criticism of war contracts. Had this been the only weakness, the benefits which emerged from the quicker start on jobs might well have outweighed it. Extra profits from higher turnover were to be expected and reasonable increases
However, some of the firms which showed the more spectacular increases in profits from higher turnover must have had an extremely wasteful overhead structure in peacetime if they were not profiteering in wartime.
High profits which resulted, under some forms of contract, from charging the same flat percentage mark-up on overtime as on ordinary time were rather more difficult to defend. Overtime did not lead to a proportionate increase in overhead, and some firms recovered several times their actual overhead costs by this method of charging. Here is an example of what actually happened in a particular case:
The award rate was 3s. per hour and the full charge-out rate was 5s. 6d. per hour, calculated as follows:
For overtime the firm charged out 1 ½ times or double this rate, i.e., 8s. 3d. or 11s. per hour worked. That is, apart from the extra profit allowance on the overtime, it was recovering overhead at 32·0 pence per hour or 42·7 pence per hour, as compared with the above rate of 21·3 pence per hour. Moreover, the allowance of 21·3 pence per hour was calculated on a basis which would recover the full normal overhead costs of the firm in a 40-hour week. Overtime working would occasion some extra costs, but a substantial proportion of overhead items would remain fixed.
High profits arising from wrong measurements or from practices such as charging for apprentices at journeymen's rates were indefensible. In many cases, but by no means all, they led to refunds when charges were checked.
It is interesting to note that the Master Builders’ Federation, when withdrawing its support from the Contracts Adjustment Commission, wrote on Official History of the Public Works Department, Vol. I, p. 276.
This last reference no doubt referred to the Excess Profits Tax Act The 60 per cent excess profits tax was reduced by the amount of income tax and social security charge already paid on the excess profit. Cabinet approval of
‘As regards any suggestion that the position is remedied by taxation, it is considered that this is fallacious. If adjustment of taxes is necessary as a result of the Commission's operations this may be adjusted by the contractor submitting an amended return to the Commissioner of Taxes, who will make a refund where necessary.’
High profits on war contracts must have been for several years the worst breach in the economic stabilisation scheme's defences against inflation. The contrast between increases in incomes derived in many cases from these profits and increases in stabilised incomes such as wages was most striking.
Stabilisation was tolerant to extra pay for extra work or for extra responsibility, and should therefore have been tolerant to reasonable extra profits for extra turnover. But where, for example, extra turnover led to charging the usual flat percentage rates for overhead on extra wage costs, this meant that firms were being paid again for overhead costs which they had already recovered in full. Extra wage costs would lead to some extra overhead costs but the increase was by no means proportionate, especially when the extra wage costs were at overtime rates. See also p. 360.
High profits under war contracts were inequitable in a country where rigid stabilisation had been accepted by some other groups of income earners. Weighing much more heavily against the special wartime contracts was the fact that many of them did not make
While pressure of work was at its height, most of the modifications of the cost-plus types of contract did not succeed in removing their fundamental weakness. Attempts to improve wartime contracts involved, for the most part, forward estimates of costs, or at any rate of the profit element in them. The purpose was to avoid the disincentive effect of basing profits on actual costs and, if possible, to provide a profit incentive to keep costs within a fixed figure. Even where contractors were amenable, these attempts usually broke down, either because there was insufficient staff to make forward estimates or because forward estimates proved to be so wide of the mark that adjustments had to be made before the work was finished. Master schedules for defence construction work lost much of their effectiveness in the many cases where quantity estimates were not entered in advance. Target prices for ship construction work were often so far removed from actual costs that contract arrangements had to be adjusted before payment was made, a process which destroyed the original relationship between efficiency and profit.
The unprecedented volume of war contract work combined with shortages of departmental staff due to military recruitments often made adequate forward estimates of quantities and costs impossible. It was the absence of these estimates which led to most of the abuses of wartime contracts. In many cases abuses continued unchecked, because there was inadequate supervising and checking staff to watch progress of work and to examine claims. It was not until the rush of work started to taper off in 1944–45 that there was sufficient breathing space to make really adequate checks on contractors’ quantities and costs. By then much of the evidence needed for proper checking had gone.
Abuses of wartime contracts were by no means universal, but they were nevertheless widespread.
In building and construction work investigation revealed considerable overpayment as a result of contractors entering wrong quantities in the master schedule. To put these into perspective, the total value of contracts let under the master schedule was estimated at £15 million. See p. 357.
As a result of investigations an offer was made by five contractors, in
In other cases evidence was found of timber being moved from job to job and the records becoming muddled.
These discrepancies were coming to light at the stage where the volume of defence construction work was falling and the Public Works Department was able to catch up on its work of checking defence contracts. Defence construction work, after costing over £17,000,000 in 1942–43, and over £13,000,000 in 1943–44, fell to just over £5,000,000 in 1944–45.
Checking back on contracts let during the rush period was becoming increasingly possible and a number of other refunds were made by contractors, some of large and some of small amounts. However, reviews of contracts and discovery of abuses, at this stage, did not always lead to refunds. Entry of excessive quantities on claims, though often suspected, was, with the passing of time, becoming more difficult to prove, while evidence of profits far in excess of those contemplated when contracts were drawn did not always give grounds for legal action. Nevertheless other countries succeeded in reviewing war contracts and an attempt was made in New Zealand. Success here was very limited. See for example p. 357.
To sum up the problems facing those who were responsible to get war work done in the most difficult years:
The volume of work to be done was quite unprecedented.
Urgency was paramount for a time.
Productive capacity was saturated.
Much of the work was new—there was insufficient experience to provide a basis for forward estimates.
It must be conceded by critics of the looser system of contracting that the normal peacetime system of competitive tendering had
Direct Government supervision of work does not always produce results superior to the system of contracting with private enterprise, although there are some notable instances where it does. In any case, the Government was just as short of good supervising staff as was private enterprise. Recruitment of over a quarter of the labour force for the armed services had had its effect. In fact, the excessive costs of some wartime contracts arose as much from poor supervision on the job as from muddlement or dishonesty by contractors.
On the whole, it was preferable to work in partnership with private enterprise firms rather than to take them over, but this, in wartime, needed to be accompanied by much more self-discipline on the private enterprise side. As it was, the profit motive seems to have been left with too much liberty altogether, having regard to restrictions put on other sections of the community. The profit motive cannot be condemned out of hand, but one example of the profit motive on the rampage was the refusal of some firms to accept any type of contract which required efficient working as a prerequisite for extra profit.
It is an interesting contrast that, while the Government made full use of its powers to direct men into firms doing essential work, it was reluctant to use its powers to control labour, materials and production as a means to persuade firms to carry out essential jobs under watertight contract arrangements. However, see footnote 2 on p. 468.
Had the Government been in a position to work out suitable systems of wartime contracting in advance of the event, and had it had the firmness to stand by those arrangements and insist that they apply to all jobs, work might well have been done more efficiently and more speedily. In the event, many private contractors got the bit between their teeth.
In cases where forward estimates of job content were impracticable, for instance in some types of ship repair work, there were almost insuperable difficulties in the way of providing a profit incentive for efficiency and speed of work. But, is it possible that, given a little more forethought, a much larger proportion of contracts could have been drawn up in a way which would have allowed efficiency and speed to be matched by extra profits? Could the cost-plus type of contract, which put a premium on inefficiency, have been largely avoided?
It was not unreasonable to expect the Government, in a time of excess demand on industry, to provide extra profits to get work done faster and more efficiently. Though even this conflicted with the initial NZPD, Vol. 256, p. 249).
What of the future? One point which emerges clearly is that the Government should never again contemplate extensive use of cost-plus or similar types of contract, unless contractors are prepared to disclose all their relevant records, not just those relating to Government contracts. Wartime experiences point to the need for
IN the years just before the war, the New Zealand economy had shown a disconcerting propensity to import more goods than could be paid for out of current overseas exchange earnings. This tendency was to be repeated and to become more marked after the war.
The situation was aggravated by the fact that, because of the nature of New Zealand's overseas exchange transactions, she has never been able to maintain a healthy balance of payments position merely by exporting sufficient to pay for her imports. Unless there is to be overseas borrowing, exports must earn enough to pay also for interest on debt owed overseas, expenditure by New Zealand tourists abroad, and a number of other items of this sort, known as invisibles, where New Zealand's commitments considerably exceed what she receives on a similar account from other countries. The net annual cost of these invisible items was approaching £10 million at the outbreak of war. These amounts were an annual charge on export earnings which then averaged about £60 million a year.
In the years 1933 to 1937 there had been comparatively little change in volume of exports; 1936 and 1937 were record years but were still only a little above
Imports had risen to keep pace with export earnings, but were reluctant to fall when export earnings decreased. When, in
Export prices declined up to late in
Import control regulations to conserve overseas funds became effective from
With no recovery in export earnings, the
The situation looked desperate, and the Reported in the Financial Times leader, dealing with Mr Nash's fund-raising mission to Dominion,
‘In view of the difficult external debt problem of New Zealand, the arrival of Mr Nash is greatly welcomed. The real problem of the Dominion's credit is that behind the exchange situation lies a record of expensive social reform, public works, and guaranteed prices for dairy produce.
‘The first essential should be a slowing down of expenditure on social and economic reform in order to give the maximum effect to the present import control, but Mr Nash is apparently convinced that import control alone will be sufficient.’
Nevertheless Mr Nash, in
The p. 602.Official Yearbook
‘The Government has undertaken to provide for redemption of this stock by making available in
This stringent repayment provision was new to New Zealand.
In spite of the discouraging reaction from the Financial Statement, Parliamentary Paper B–6, p. 2. Mr Savage was Prime Minister and acting Minister of Finance.
‘Our position generally has been eased and more time for necessary economic adjustments secured as a result of Mr Nash's successful negotiations in
Markets for meat, butter, cheese and wool were, as far as was possible under war conditions, assured by the bulk purchase arrangements with the See also Chapter 8.
Over the war years, New Zealand's volume of exports averaged about 1 per cent above the average for the years 1936 to 1938. Under normal conditions this small increase could not have been considered particularly satisfactory. Even allowing for Reverse Lend-Lease supplies, which were not recorded as exports, See also p. 377 for a discussion of the effect of supplies to 2
Regulations issued on
Wool was the only major export item seriously affected, but New Zealand was protected by the bulk purchase arrangement with the
An interdepartmental committee was set up to assist the
Chart 65 shows changes in the volume of New Zealand's exports from 1936 to 1947.
Export volumes rose to a record level in
For the next three years, 1943 to 1945, with the See also Chapter 8
An interesting wartime development was the upsurge of exports of manufactured articles, which prior to the war had been valued at under £1 million a year. A good proportion of these extra manufactured goods went to the An Indian official war history gives a detailed list of items in the £17.0 million (Stg.) of supplies from New Zealand. (N. G. Sinha and P. N. Khera, Indian War Economy, p. 420.)
Reverse Lend-Lease supplies, valued for the whole of the war at £81 million, were excluded from export figures. From the point of view of reciprocal aid they helped to keep the balance against the Lend-Lease supplies which were flowing in from the
Supplies for New Zealand forces overseas were usually recorded as exports, though some supplies sent direct to New Zealand forces were excluded. While not themselves exchange earners, all these exports helped to reduce the direct cost in foreign exchange of maintaining New Zealand forces overseas.
After being low in
Import prices rose too. In fact they rose much more rapidly than export prices. However, until
Though import licensing was severe, and, before Lend-Lease, shortages of hard currencies severely curtailed ordering in the
In
Under stress of war, nearly a quarter of all import arrivals were defence materials. In the seven years 1939 to 1945, imports of defence materials were valued at just over £105 million out of total imports valued at £438 million. The heaviest influx of defence materials was in
The effect of war on the availability of normal imports is shown
A finer subdivision of imports, in current prices, is given in Chart 30 on p. 130.
In the early war years the availability of shipping for the New Zealand trade was determined largely by the emphasis the
The New Zealand trade had always been dependent on British shipping and, in the years 1935 to 1939, British shipping represented approximately 77 per cent of the total tonnage of all arrivals in New Zealand. Immediately war began all British shipping was requisitioned and became subject to the direction of the
Though New Zealand was spared the immediate interruption of her sea traffic which might have occurred had Niagara, sailing from
She was carrying gold valued at some £21/2 million, most of which was recovered from a depth of 483 feet in a remarkable feat of salvage in dsc, rn, in The War at Sea, 1939–1945, Vol. I, p. 282.
Many other ships trading to New Zealand fell victim to enemy action; for example sixty-four ships, representing 631,000 tons gross register, engaged in the New Zealand refrigerated cargo trade were lost. Parliamentary Paper H–30, Report of the Marketing Department (Export Division),
The major shipping losses were inflicted in the Quoted by S. D. Waters in Ordeal by Sea, p. 100.
‘But, after all, everything turns upon the Battle of the
Allied shipping losses were at their highest in the first half of
There were some bad months in the early part of Waters, op. cit., p. 197.
Losses of merchant shipping under British control had amounted to nearly 11 million gross tons in the war period up to
Losses had included refrigerated cargo space which was vital for the long haul of New Zealand perishable produce to the See also p. 216. Chapter 8.
An interesting sidelight on New Zealand's shipping shortage was thrown by the use of the barque This in spite of the fact that there was no formal declaration of war with Pamir, a Finnish ship which had been seized as a prize of war following her arrival at Pamir, in
Because of the scarcity of shipping it was not difficult to find cargo, and her first three trips brought a profit of £45,000. The gradual improvement in the shipping position was reflected in the results of the seven remaining voyages. On all except two of them she sailed at a loss.
Pamir under sail was a stirring sight. Her arrivals and departures created considerable public interest. She was eventually handed back to the Government of
From Samuel Eliot Morison, History of United States Navy Operations in World War II, Vol. I p. 294. The Second World War, Vol. V, p. 4.
American tonnages in New Zealand ports were quite high again in
The following table revalues wartime trade at the average prices ruling for the three pre-war years 1936 to 1938 and gives a good impression of the change over the war years in the volume of total trade. Imports, as shown in this table, include Lend-Lease supplies and other defence imports. Exports, however, do not include reverse Lend-Lease goods, which were supplied to the American authorities in New Zealand and either used here or shipped by them to the
Tonnages of vessels hauling New Zealand's overseas trade averaged 2·3 million net tons a year during the war as compared with 3·0 million net tons in the three years 1936 to 1938. This was a reduction of nearly a quarter in shipping space reaching New Zealand each year. These vessels carried a volume of cargo only 5 per cent lower than before the war. The export cargo was slightly higher and the import cargo 12 per cent lower. As a rough approximation, some 30 per cent more export cargo was put into each net ton of shipping space, while 15 per cent more import cargo arrived in each net ton of shipping space. Some of the methods of economising in the use of shipping space are discussed in Chapters 8 and 15.
By
1Warships of all kinds are excluded.
Reference has been made to the exclusion of Reverse Lend-Lease supplies from recorded figures for New Zealand's exports. Food supplies alone for the
Food supplied by New Zealand to the See also p. 387. On p. 272 reference is made to the effect of the diversion of food exports on overseas exchange earnings.
A war correspondent gave a first-hand account of the flow of New Zealand food to the Dominion,
‘This ship in which I am travelling used to carry
‘Never before has so much or such a variety of New Zealand's farm and market garden produce flowed overseas as in this year of the war, and never before has the
The bulk purchase arrangements with the
After
Because of the need to hold down consumer prices as part of the price-wage stabilisation scheme, stabilisation subsidies to producers were increasingly necessary to offset rises in prices of imported materials. Much of the increasing disparity between import and export prices was becoming a direct burden on the stabilisation scheme.
Apart from the strain on the stabilisation scheme, the balance of payments situation would, under normal conditions, have deteriorated rapidly when faced with the four successive years, from 1940 to 1943, in which prices for imports rose much faster than the prices New Zealand received for her exports. In the event, the very slow arrival of imports avoided a balance of payments crisis. Imports were held back by the inability of overseas suppliers to meet orders, by interruptions to shipping, and in some cases by import restrictions. Consequently there were trade surpluses in each of the years 1939 to 1942 and, in spite of New Zealand's need to meet payments under the Memorandum of Security in the latter half of this period, Payments under the Memorandum of Security for March years were, in millions, 1940–41 £1·5, 1941–42 £9·9, 1942–43 £9·3, 1943–44 £11·4, 1944–45 £6·2, 1945–46 £22·5.
The outlook changed in Compared with before the war.
The comparative stability of New Zealand internal prices and costs had matched the stability of bulk purchase prices for the farm products she sold overseas. However, the stability of these latter prices, in face of rising prices overseas, was placing her at a disadvantage, not only with regard to imports which she purchased out of the foreign exchange her exports could earn, but also with regard to the recording of Reverse Lend-Lease items which were her contribution to the reciprocal arrangement with the
With Lend-Lease supplies not having to be paid for in cash, the whole of the trade and other balance of payments transactions for
In an excellent leading article on Evening Post dealt with the problems of price disparities and the resulting discussions in
‘Discussions are at present taking place in
‘When
‘So far as the negotiations at present proceeding in
‘Speaking in a “general way” of transactions governed by Lend-Lease, Mr Nash informed the House of Representatives: “There is no agreement for actual payment in cash”. But notwithstanding this, it is desirable that transactions should be set out in terms that truly represent the values of goods exchanged.
The negotiations in Parliamentary Paper B-6, p. 10.
‘Funds for the unusually large redemptions from Loans Redemption Account In 1944–45 £6,250,000 of external debt and £15,166,216 of internal debt were redeemed from this account. (Author's footnote.)
‘The agreement reached was announced last year, and honourable members will recollect the provision for the payment of a lump sum of £12,000,000 sterling and £4,000,000 sterling annually for four years to be made by the
‘An important aspect of the matter was that since the original war contracts for our produce were arranged
It is interesting to notice that the United Kingdom Government accepted the second of these reasons for making lump sum payments, but not the first. Some British critics refused to accept either. Writing on financial policy, Sayers says:History of the Second World War: Financial Policy, 1939–45. United Kingdom Civil Series,
‘The Chancellor felt bound to record his refusal to accept the “terms of trade argument”, but conceded a cash payment of £12 millions in respect of the past and £4 millions a year for the future, as a contribution towards New Zealand's stabilisation subsidies, and in lieu of price increases. Thus New Zealand took the cash and let the doctrine go. The United Kingdom regarded the payment as substantially justified without any dependence upon the unacceptable doctrine, but there was sharp criticism in the Press. Even the Manchester Guardian saw fit to
The New Zealand Government found it expedient internally to favour the same argument as the Chancellor. It was necessary to decide promptly whether these payments were due to farmers as an extra return for sale of their products or whether they were due to the New Zealand stabilisation scheme which, by holding down farmers’ costs, had enabled them to produce at the low prices specified in the bulk purchase contracts. The Government took the latter view.
Continuing his Parliamentary Paper B–6, p. 10.
‘As borrowing for War Expenses Account had been increased by payment of stabilisation subsidies out of that account and also by the increased prices for war stores bought overseas, the readjustment in New Zealand was made by crediting the lump sum payment of £12,000,000 sterling, and the first payment of £4,000,000 sterling received prior to 31st March last to Loans Redemption Account for repayment of war debt. The whole community will benefit from relief from taxation to the extent it would otherwise be necessary to provide interest and repayment charges on the amount of debt involved.’
In Imports of Lend-Lease goods were estimated at £21 million in
New Zealand foreign exchange earnings in The arrangement by which New Zealand repaid the
In
This favourable conclusion to wartime overseas transactions was due to very low private importing throughout the war, assisted by the fact that export prices had risen 14 per cent between 1943 and 1945, bringing some relief from the comparatively unfavourable terms of trade experienced for most of the war. However, it was not until
Chart 67 shows changes in overseas assets of the banks.
Many unusual overseas exchange transactions took place during the war, and it is most unfortunate that information on these transactions is inadequate. Several published statements are available, but the grouping of items is much too broad, while some items are not treated consistently throughout the war and there is no proper distinction between current and capital items.
Surviving records are not good enough to permit any full analysis to be made of the items year by year. The best that can be done is to take one of the unsatisfactory published statements as a framework and to discuss the content of the items in it.
The table on p. 386 is adapted from a table published in the first of New Zealand's regular Economic Surveys.The New Zealand Economy, 1939 to 1951, Table 9, p. 60.
The items in the table are now discussed briefly.
Export Receipts, 1939 to 1946: £661 million: For the same period, exports, f.o.b., were valued at £613 million. There is seldom a very close correspondence between the recorded value of goods leaving New Zealand and the sum received in payment for exports. A time lag is to be expected between export and payment; prices for exports have to be estimated at the time of shipment. However, the difference of £48 million over eight years is large.
Reverse Lend-Lease supplies were not recorded as exports but, on the other hand, they would not give rise to an inflow of export receipts. Reverse Lend-Lease supplies were valued at £81 million, of which perhaps £40 to £50 million This is a rough estimate only. It is known that 65 per cent by weight of the food supplied was sent out of New Zealand. The food supplied under Reverse Lend-Lease was valued at £41 million. Prefabricated huts and other buildings and a variety of stores also went to forces in the
Lump Sum Payments: £30 million: In addition to the
Lump sum payments were set aside by the
Other Receipts: £150 million: Included here is a total of £29 million received on account of American authorities and personnel. This records the transfer of funds to provide for the pay and maintenance of American personnel in New Zealand. It does not include supplies and services provided by New Zealand under Reverse Lend-Lease and valued at £81 million. Apart from expenditure by servicemen, the American authorities made certain purchases in New Zealand which were not covered by the reciprocal agreement.
Total Receipts of Overseas Exchange: £841 million: This figure excludes the value of Reverse Lend-Lease supplies totalling £81 million, but includes between £60 and £100 million of special wartime receipts which would cease in the post-war period.
Import Payments, 1939 to 1946: £341 million: This is a most unsatisfactory classification. It relates to a portion only of total imports.
Actual import arrivals, valued at 10 per cent above current domestic value in their country of origin, totalled £510 million in the eight-year period. C.i.f. figures are not available for the war years. C.d.v. + 10 per cent gives a rough approximation to c.i.f. C.i.f.=landed cost, including insurance and freight; c.d.v.=current domestic value in country of origin. In total this type of assistance reached £111 million, but part was in the form of services other than imports.
Records of import arrivals included Government imports of defence stores, valued at some £105 million, and other supplies for the Government, at some £70 million. Part of these supplies came under Lend-Lease and Canadian Mutual Aid, but the rest, amounting to some £100 million, would be paid for by the Government. Government payments for imports are, in the main, included in the item ‘Other Payments’.
No satisfactory reconciliation of these transactions is possible.
Government and Local Body Debt Repayments: £124 million, roughly: Progress payments, reimbursing the United Kingdom Government for the cost of New Zealand forces overseas, as provided for under the Memorandum of Security, were recorded under this item. £60 million was paid in all to meet this commitment in full before the end of
Interest on Government and Local Body Debt: £55 million, roughly: As a result of loan repayments and of efforts to finance the war out of internal loans or taxation, this was a reducing item.
Other Payments: £228 million, roughly: This is another most unsatisfactory classification, which badly needs to be subdivided. For a start, it includes some £100 million of Government import payments. About £14 million of overseas payments on account of
No adjusting payments were made.Total Payments: £747 million: Excluded from this total are some £105 million of Lend-Lease goods and services for which no charge was made, but which were offset in the main by Reverse Lend-Lease supplies from New Zealand;
Excess of Receipts over Payments, 1939–46: £94 million: The balance for the whole period was an excess of receipts over payments of overseas exchange amounting to £94 million. In the main this favourable balance affected the overseas assets of the banks, which increased by £101 million, from £7 million at the beginning of
This was a truly outstanding result. An expensive war had been waged and New Zealand's resulting overseas commitments had
Chart 56 on p. 266 shows changes in the public debt.
The Government's firm intention to meet the costs of war from internal sources and its success in raising special war taxation and loans played a major part in achieving the improvement in New Zealand's external economic situation. Remember that overseas reserves had been dangerously low at the outbreak of war. This deficiency had now been made good, and there was a substantial cushion of extra overseas reserves to be carried into the post-war years.
Extra reserves might well be needed. The essential counterpart to the Government's financial policy had been a willingness on the part of the public generally to cut back or postpone spending and to save an increased portion of their incomes. While in many cases reduced wartime consumption would not automatically create a compensating increase in post-war demand, there was a sizeable backlog of deferred expenditure on consumer durables such as refrigerators and washing machines, on housing and commercial buildings, and on capital works generally which would have to be overtaken in the post-war decade. Moreover, there was a considerable accumulation of wartime savings which would become available to make this expenditure possible. The import content of these types of expenditure was high, a characteristic which made their postponement so important in time of war, but would increase the propensity of the economy to over-import when backlogs were being overtaken. Post-war economic events are discussed in Chapter 20.
FEW industries have such a potential for duplication and waste as the transport industry. Fittingly, the industry in New Zealand has received more attention from co-ordinators and would-be co-ordinators than has any other industry. The legislative provision for co-ordination, when war broke out, was a Transport Licensing Act, passed in
The war, bringing with it supply difficulties and manpower shortages, emphasised the need for efficiency and co-ordination in transport facilities. Government action was taken quickly. Overseas shipping came under the control of the
Later in the war, shortages of shipping and the necessity for quick loading and turn-round of such shipping as was available
Petrol shortages hampered road transport for most of the war period, while losses of overseas ships and the transfer of coastal vessels to naval and other uses required the utmost economy in the use of merchant shipping. Growing wartime demands for coal and reduced coal imports led to shortages which restricted the increasingly overworked rail transport system.
Coastal shipping around New Zealand was so drastically reduced by the requisitioning of vessels for naval purposes that it became necessary to shift timber workers from the more plentiful
The need for co-ordination of transport under war conditions had been foreseen before the war. In
In peace, New Zealand had tended to be oversupplied with internal transport facilities but, in war, curtailments caused by shortages of petrol and coal were to make this a happy memory. Labour shortages and industrial unrest in the mines, on the waterfront, and elsewhere were to add to wartime difficulties.
All was not well on the waterfront when war broke out. Considerable dissatisfaction over wage rates was developing. The award granted by the Arbitration Court in
Union officials were interested in building up pressure for a co-operative stevedoring system and, by
Meantime the situation was deteriorating. Disputes and stoppages of work became more frequent. Disputes Committees were in existence but in general were not used. There were faults on both sides. The employers were too slow to discuss causes of dissatisfaction. The men were too ready to cease work when a matter was in dispute.
Considerable public dissatisfaction was aroused, and pressure was brought to bear on the Government to set up a royal commission to investigate the waterfront situation. The Government countered by calling a conference in
The outbreak of war brought a reduction in the volume of shipping in New Zealand ports and a corresponding reduction in the amount of work on the wharves. By
The wartime demand for greater speed in handling cargo and for a quicker turn-round of ships emphasised the unsatisfactory nature
At the biennial conference of watersiders, in Evening Star, Dunedin,
Realising that no increase in the speed of work could be hoped for under the existing conditions, the Minister of Labour, the
As the weeks went by and no conclusion was reached, the men tended to become critical of their union officials. The national executive of the union was accused of breaking faith with the men it represented. Early in The Waterfront Control Emergency Regulations
Commenting on the regulations, the Minister of Labour said, Reported in Evening Post,
The March regulations were superseded in April by the regulations which set up the Waterfront Control Commission. The Waterfront Control Commission Emergency Regulations Gazette notice of
Not unnaturally, all the unrest and the changes in control had led to a considerable reduction in the pace of work on the waterfront. There was some justification for the cable received by the Overseas Shipowners’ Allotment Committee from their Copy of cable enclosed with letter to Minister of Labour,
‘Ministry of Shipping wish everything possible to be done to ensure prompt despatch and would welcome any reasonable scheme to improve waterfront conditions in New Zealand which are now notorious for inefficiency and expense.’
The April regulations provided for a Waterfront Control Commission of three which would operate through the Waterfront Controllers and other officers at the ports.
Losses of shipping and interference with shipping movements were making it difficult to move New Zealand's exports sufficiently quickly. It was vital to save time wherever possible. Quicker turn-round of ships was an obvious step, and the regulations of
The Commission had very extensive powers. It could employ labour, prescribe terms and conditions of employment, fix rates of remuneration and even make provision for a guaranteed weekly minimum payment. In ports where the bureau system operated, each man registered who complied with the bureau rules had, since The whole of the provisions of the New Zealand Waterside Workers’ Award and of the Labour Disputes Investigation Act
The Commission's first function was to deal with existing discontent, rather than with special wartime measures. This was a matter of urgency, but it must not be imagined that the watersiders were the only ones dissatisfied. While many people recognised that they had a genuine grievance, there was widespread condemnation of their reluctance to exert themselves. The Prime Minister misjudged public feeling and aroused ‘sharp criticism’ when, in a speech
Quoted by Wood, p. 132. The second leader in the Dominion of 21 May said: ‘The Prime Minister's reference to the civilian side of national organisation contained proposals which are needful enough …. His lavish praise of waterside workers who worked on a Sunday (presumably at the high rates of overtime they are entitled to claim for such work) in order to load a certain important cargo was a form of kowtowing to petty sectional interests which was a monstrous anomaly in the light of the news from overseas and the sacrifices being made in the Motherland.’ On the other hand, a statement in the House of Representatives by Mr F. L. Frost, Member for
The Waterfront Commission took immediate steps to settle the question of the award. A new wage order came into force in
A system of co-operative contracting was introduced by the Commission at
‘“The Commission is confident that the extension of the Contract System to other shipping is only a matter of time,” said Mr Webb. Only that morning he had discussed all phases of the waterfront position with the Commission, which had expressed itself as highly delighted with the results so far
‘“I am personally delighted with the progress that has been made,” said Mr Webb, “and I am confident of the ultimate success of the cooperative contract system, which will bring everlasting benefits to the men who do the work and to the country.” ‘ Reported in Dominion,
This expression of satisfaction was a little premature. It was to be some years before the system was generally accepted.
Under the contract system the owners of a ship paid the Commission a contract price for the work of loading or discharging, plus overtime rates, minima, special payments and so on. Initially the men were paid wages; but any residue remaining out of the contract price was regarded as a profit or bonus payable to them. There were variations in the methods of payment. At Wellington profits were always distributed on a ship basis, but at all other ports they were pooled.
The Commission itself seems to have been somewhat disappointed in the results of the scheme after it was put into operation. Some sections of the Waterside Workers’ Union did not co-operate, even though there had for a long time been considerable pressure from the union for such an arrangement.
In drafting its ‘For security reasons’, the Waterfront Control Commission did not actually publish an annual report in any of the years 1942 to 1944.
‘It is promising to find an improved outlook towards the contracting system although it has taken a longer time than the Commission expected, and it is hoped that the outlook will extend still further so that a degree of understanding will exist which will bring the fullest measure of industrial harmony and peace.’
This was a very guarded statement, but the fact was that the system was watered down, and in general did not achieve what had been expected of it.
While the Waterfront Commission made some improvements, it was unable to secure the wholehearted co-operation of the watersiders which was necessary for the quickest possible turn-round of scarce shipping. One particularly irritating example of lack of co-operation was the practice of ‘spelling’ which became blatant during the war. This practice is described in the Parliamentary Paper H–50, paragraphs 27 to 33.
‘In this industry work does not proceed steadily without intermission. Many circumstances combine to reduce productive time. All this is mentioned because, from the very nature of the work involving as it does coordination with many other services, there are delays or spells during which the worker has to wait. These delays, or spells, are not referred to, but rather the practice of taking spells and of not working when work is available.
‘This had developed before the war to an extent, but during the time of Commission control it was organized by the workers and increased. It was worst in the main ports, and it spread to secondary ports almost as if by direction. In unloading an overseas ship there might be twelve men in the gang in the hold. The practice obtained of only six men being in the hold working while the remaining six were absent spelling. On a discharging inter-colonial ship there might be normally, say, six in the hold and four on the wharf, but in fact you would never get more than four in the hold and two on the wharf. Spelling was practised equally in the ship and on the wharf and on overseas inter-colonial and small coastal ships. It might vary in detail on ships of different sizes and from port to port, but it usually meant that from one-third to one-half of the men at any time were spelling.
‘The organisation varied. Spelling might be on a two-hour or an hour basis. If on a two-hour basis, six men worked for two hours, being replaced by the other six at the end of the two hours, and so for spelling on a one-hour basis. In other words, at any one time there was only half the number working or men worked half the time for which they were paid. On inter-colonial ships there might be in the hold from one-half to two-thirds of the gang. With coastal ships the men in the hold might work only two-thirds of the time for which they were paid and might spend one-third of their time away from the job spelling. On the wharf the same practices obtained, and from one-third to one-half of the gang on the wharf might at any time be absent spelling.
‘The matter went deeper. When men were working on special cargoes an additional rate was claimed and charged for the whole time, although the worker might not even be upon the ship or wharf, but might be in town or at his own home. In some cases the arrangement was that some men would not work overtime hours, and then they did not go down in the evening or came down only to put in a nominal appearance and then left. But pay was drawn at an overtime rate for the full evening's work, plus special cargo rate if that happened to be payable.
‘At times men spelling might remain on the ship or on the wharf, or they might go off the wharf and up to town on their own business, or home. The practice was worst at
‘Spelling in some cases meant a reduction in the spread of hours, say, from 59 to no more than an effective 30. From 1942 to 1946 the foremen at
‘The Commission was well aware of the practice and employers were continually complaining of it. During Commission control spelling became organised and increased and was done more openly, whereas it began surreptitiously. The employers did in time endeavour to stop spelling and to meet the legitimate needs of the men for a break during the morning and the afternoon, but did not receive much support in any quarter.’
In spite of all attempts to improve output on the wharves, spelling continued to be abused and was not brought under control until the Government took firm action following the prolonged waterfront dispute of Then a National Government with William Sullivan, later Sir William Sullivan, as Minister of Labour.
Shortly after its appointment, the Commission, moved by the urgency of the overseas shipping shortage, made arrangements for
Annual Report of Waterfront Control Commission, Parliamentary Paper H–45,
The introduction of co-operative contracting also lessened the time needed to handle vessels, by increasing rates of work per hour, although the improvement was considerably less than had been expected.
Coastal shipping had, by
The Commission, in
From the time of the arrival of the
Optimum allocation of labour to jobs on the waterfront and elsewhere was made difficult by the comparatively high rates of pay offered by the Discussed more fully in Chapter 17.
The Commission, in its p. 4.
Profit distributions under the co-operative contracting system in the last two years of war added about 9 per cent to wage earnings and should have been an adequate incentive to work effectively, had the bonus payment been directly related to the work done on each job. In some ports, however, bonus payments were averaged out over a number of vessels, so that the ultimate payment became too far removed from the effort put into any particular job. In these circumstances bonus payments provided an overall increase in the level of payments and gave some assurance that the workers would not lose by working harder, but failed to provide an adequate incentive to work really effectively on any particular vessel. This view is confirmed by the Report of the Royal Commission of Inquiry into the Waterfront Industry, Parliamentary Paper H–50,
There was considerable difficulty in securing adequate supervision of waterside work, and the Commission took over foremen previously employed by the individual companies in order to use them more effectively. At Auckland in
Nearly a million tons of cargo was handled under the co-operative contracting system in the year 1940–41, increasing to well over three million tons in 1941–42, and to nearly four and a half million tons in 1942–43. For each of the next two years over four and a half million tons was handled under this system, and the Commission, in its Parliamentary Paper H–45, p. 4.
Had the co-operative stevedoring scheme provided an adequate incentive to effective work, the shortage of supervising staff might not have proved too serious a handicap. As it was, the increased incidence of spelling and other abuses showed clearly that the incentive to get the work done was inadequate. Despite some minor improvements in rates of working, the general standard of work on the waterfront remained one of the weakest points in the country's war effort.
The Commission's p. 24. Paragraphs 145 to 150 of the Report of the Royal Commission of Inquiry into the Waterfront Industry throw considerable doubt on this comparison.
Commission control may have helped to reduce the loss of time through stoppages of work on the waterfront. The percentage of hours lost during five years of Commission control was approximately half of what it had been during the preceeding four years.
Chart 68 shows changes in turn-round times of overseas vessels.
Quicker turn-round of overseas vessels was the main consideration. The Commission estimated that an average saving of eighteen days per vessel had been made in the time spent in New Zealand by overseas vessels, reducing the average time by half. April 1944 to March 1945, compared with January to June 1939; including steaming time between ports, but excluding days taken on ship repairs when cargo was not worked. The base period, in See also p. 377. On average, each ship called at one less port in New Zealand.
Coastal shipping for transport between ports and for fishing was inadequate for most of the war years.
There had been a decrease in the volume of coastal shipping in the immediate pre-war years. The trawling industry had declined, and the improvement in road and rail transport as a means of distribution of goods from the main ports of
At the outbreak of war the The Shipping Control Emergency Regulations of
The concentration of overseas shipping on the main ports, in order to reduce the time spent on the New Zealand coast, increased the demands on coastal shipping for transhipment work, while oil fuel shortages and consequent restrictions on road transport increased the pressure on coastal shipping as well as on the railways.
There was some scope to reduce the strain by better co-ordination between road, rail and sea transport; but little could be done about the inter-island trade, and here the shortage of coastal shipping became really restrictive. The position was most acute early in
The Commissioner of Defence Construction, in urgent need of extra timber from the
Naval minesweeping requirements had seriously reduced the number of trawling vessels available for fishing. Supplies of fish became inadequate to meet local needs. A local daily, Dominion,
‘Of all food commodities, one which should be in abundance in this country is fish. It is true that in the last two years of war commandeering of large trawlers for defence purposes, together with restrictions placed on fishing in special areas, has hampered the harvesting of food from the sea. It is true also that the fishing industry, like other industries, has been depleted of skilled manpower. Taking these facts into consideration, however, it has to be said that the fish industry—reduced as it has been by lack of encouragement from State departments, control of manpower, and other essential priorities to the status of an industrial Cinderella and hedged about with a multitude of regulations—has made probably the poorest showing against wartime adversity of any important productive enterprise.
‘As the position stands the public are the sufferers in a needless famine. During the past year or so a system of discrimination in the allocation of fish supplies during frequent periods of particularly acute scarcity seems to have been introduced. In Wellington this week, for example, it was reported that certain supplies of fish could be sold at auctions only to restaurants and hotel keepers. Other supplies—apart from those very properly reserved for hospitals and similar institutions—may have found their way to favoured consumers, but the rank and file of retail buyers were again denied fresh fish….’
Despite this shortage of fish on the New Zealand market, about a fifth of all the fish marketed continued to be exported to
For New Zealand's state-owned railways, the war brought a much heavier load of passenger and goods traffic, to be handled by a
For every three passengers carried by rail in
The extra organisation involved was greater than would be indicated by these figures. During the war thirty-two thousand special trains were provided to move troops, and over seventeen million individual journeys for members of the Armed Forces were made on these trains. Many other special trains were arranged to carry munitions and other war materials. With the build-up in numbers in the armed forces serving in New Zealand to meet the possibility of Japanese invasion, the extra strain on the railways became particularly severe. In each of the years 1940–41 and 1941–42, rather more than one million troop movements had been arranged on special trains, but in 1942–43 and again in 1943–44 the numbers were over five million, and in 1944–45 over four million.
In addition, the railways workshops, as befitted the largest mechanical engineering establishment in New Zealand, played an important part in the manufacture of war materials such as Bren-gun carriers, trench mortars, bomb casings and camp equipment. All this was essential work, but work which, with a depleted staff, made it more difficult to keep up to date with maintenance of railway rolling stock.
The Parliamentary Paper D–2, p. 3.
‘Programmes for the building of locomotives and rolling stock of all types have of course been seriously interrupted during the war years. The interruption has been felt very keenly in the case of open type LA This is a high-sided open four-wheeled steel waggon.
As in the 1914–18 war, well over a quarter of all railwaymen enlisted. In
Some railway work was declared essential in
Staffing difficulties generally were most difficult in February and March 1943. This was a period when the Department was carrying a very heavy load of extra work for the armed forces. In
Towards the end of
Considering the exceptionally heavy extra load carried by the railways in the war years and their key position in the transport industry, the degree of manpower protection was quite inadequate. Other countries gave much more protection to their railway systems, as the following table shows: Parliamentary Paper H–11A,
The deterioration in the railways staffing position was pointedly brought home to the Government by a Board of Inquiry which reported to the Minister of Railways concerning the derailment of an Upper Hutt - Report of Board of Inquiry dated
‘The condition of the track cannot be dissociated from the weight and density of the traffic movement upon it, on the one hand, and the available strengths of the maintenance gangs, on the other. It is disquietening, therefore, to find that, against large increases in train-miles, train-loads and gross ton-miles on the Hutt Valley Section from 1938–39 to 1942–43, there has been a marked decrease in the effective man-power of line gangs.
‘It cannot be too emphatically stated that the standards of maintenance of the railway-transport system, whether of track, signals, or locomotive or rolling stock, must be sustained at a high level, and in no circumstances must the level be allowed to fall so low as to jeopardise public safety and the transportation requirements of the national war effort. Our investigation of the circumstances of the present derailment has afforded strong indications of a close approach to such a level, insofar, at all events, as the Hutt Valley track and the work in the repair-shops and in the locomotive running-sheds are concerned, and the position must be regarded as being potentially serious.
‘We very strongly recommend that every effort be made by the Government and the man-power authorities to meet the requirements of the
A constant wartime problem for the railways was the inadequacy of supplies of hard coal for the efficient running of locomotives.
Political and External Affairs.
Chart 69 shows some key railway statistics.
Coal shortages had caused restriction of railway services as early as See also Chapter 17 for a fuller discussion of travel restrictions.
The shortage of coal was particularly acute early in Compared with 78,000 tons in
The permit system was abandoned from
In the years just before the war, annual coal production in New Zealand had been increasing, and in
The coal-mining industry was influenced very considerably by the special circumstances of war. The increased incidence of state ownership of mines, and the rapid extension of open-cast mining, were both part of the effort to step up production of a commodity which became more vital to the economy as demand increased and the inflow of imported coal and oil fuels declined.
The New Zealand output of coal increased year by year throughout the whole of the war period. This result was assisted materially in the last two years of war by the expansion in open-cast mining, but coal mining was also one of the few industries where the number of persons engaged was consistently higher than before
In A, p. 41.
From
In spite of increased output, there was an unsatisfied demand for coal in most war years. Considerable extra work fell on the King's Wharf and Evans Bay, respectively. New Zealand's power generation is predominantly hydro-electric. The normal function of the two steam generating stations was to handle exceptional peak loads.
It had been common before the war for coal production to exceed demand, and a good deal of attention had been given to finding uses for the coal which was being mined. The war changed this, to the extent that in the years 1940 to 1945 there was an acute shortage of coal. This shortage, mainly of bituminous coal, was accentuated as imports from
The reduction in imported supplies of hard coal had to be made good from local production and, if demand was to be fully met, it had to be made good in the best quality bituminous coal. In the event, users tended to be supplied with lower grades of coal than previously. The railways found that, because of the decreasing proportion of hard coal, even greater quantities of coal were required to provide the necessary locomotive running. Similarly, in gasworks more coal was required to give comparable results.
The proportion of soft coal used by the railways increased from 41 per cent in 1939 to 64 per cent in
Coal production by
Some grades of bituminous coal, essential to gasworks and other industrial activities, were available in New Zealand only on the
With the shortage of coastal shipping, the
When war broke out, the State owned and was operating three underground mines, all situated on the
Some of the underground mines which were taken over had reached a stage where the companies working them were unable to continue operations because of severe financial loss or inability to carry out development work to increase production. On the other hand, some mines were taken over as a means of settling disputes between owners and miners. The most notable instance was the See also Wood, p. 236.
State ownership of the
The Government was more successful in its venture into opencast mining. Small-scale open-cast mining had been undertaken before the war, but large-scale operations were a direct result of the wartime coal shortage.
The first new area to be opened up was Glen Afton, where work commenced in Parliamentary Paper C–2, Mines Statement,
‘Since
‘Generally it has not been until
Chart 70 shows changes in output of coal.
In the later war years the acceleration in open-cast mining considerably boosted coal production in New Zealand. In
Open-cast mining had another important influence on efficiency in mining. It was only the extension of this method which avoided a substantial fall over the war years in the output per man for the whole industry. After Parliamentary Paper C–2, p. 5.
‘It will be noted that in the case of underground mines, while the output per man increased during the years 1941 and 1942, there has been a progressive decline since then. This is due in great part to conditions brought about by the war. Increased production has been expedient in those years even if future production was thereby affected, and the effect has been cumulative with the years. Restriction of essential development work in the interests of immediate production, the shortage of skilled miners, and the increased average age of the coal-hewers owing to the difficulties in replacements with younger men have all contributed to lessen the output-per-man figure.’
Referring specifically to bituminous coal, which came from underground mines, the Parliamentary Paper C–2, p. 6.
‘… New Zealand's resources of bituminous coal are not unlimited, and after many years of exploitation the more accessible and easily worked deposits are approaching exhaustion, while, owing to the lenticular nature of the deposits, extensive boring is necessary before development of new mines can be undertaken with confidence. It was inevitable during the war years with shortage of manpower that essential development work had to be sacrificed to the exigencies of the time, and there is accordingly considerable leeway to be made up.’
The output of bituminous coal fell steadily after
In spite of these difficulties, the wartime performances of the
It is likely that the experiences of the Parliamentary Paper D–2, p. 2.
‘The coal-supply has continued to be a source of constant difficulty throughout the year, and restrictions on passenger services have had to be maintained. The total quantity of coal consumed increased from 576,926 tons to 610,086 tons, although over eighty per cent of the increase was in soft coal.
‘Arising out of the difficult position regarding coal supplies, investigation has been made into the possibilities of the use of oil fuel for locomotives. From the operating viewpoint there is no doubt that the present fuel cost per locomotive mile of an oil burning locomotive would be in excess of that for a coal burning locomotive. However, arrangements have been made for two locomotives to be converted for test purposes and these should be ready for operation at about the end of the year.’
Railways coal consumption was to drop to well under a half in the twelve years following the war.
The first scheduled commercial air services had been started in New Zealand in
It is difficult to tell how fast air services would have grown over these years had the war not intervened, but the expansion in the
New Zealand had tended to be over-supplied with some types of transport facilities in the decade before the war. Road transport, while essential as a feeder service to the railways, tended also to offer facilities parallel to those already available by rail. In particular, the
The private motor car was also taking a considerable part of the passenger load which would otherwise have fallen on railways or buses. In the three years from 1936 to 1939 motor vehicle registrations had increased by a quarter. In particular, registrations of motor cars had increased by 42 per cent and registrations of heavy trucks by 32 per cent. In terms of the popularity of the motor car, New Zealand was second only to the
The rapid increase in numbers of motor vehicles not only created a demand for new and better roads but provided, through taxation on motor spirits, an expanding source of revenue for road building and maintenance.
Petrol imports had increased by one-fifth in the three pre-war years and, by The Oil Fuel Emergency Regulations were gazetted as part of the Supply Control Emergency Regulations
In
By 20 September the position had become a little clearer, and the regulations were amended to provide for the coupon system of rationing. This system enabled the private motor-car owner, by surrendering coupons, to obtain varying quantities of petrol for domestic and pleasure running. The Oil Fuel Controller, with power to specify the earliest date on which any of these numbered coupons could be used, could quickly adjust the amount of petrol allocated for non-essential purposes, in accordance with the supplies available. Essential industrial and commercial users were issued with licences to use petrol.
The system was most effective. Two months after the outbreak of war, stocks of petrol had accumulated to the extent that it was possible to remove all restrictions. This was done on 13 November.
In the following month the British Government asked New Zealand to reimpose oil fuel rationing, so as to conserve every possible dollar for the purchase of war materials which were urgently needed from the Weekly sales in this unrationed period were about a third higher than under rationing but most New Zealanders take their holidays around Christmas and the New Year.
By way of contrast,
Before the war, stocks of petrol held in New Zealand had ranged between 25 million and 30 million gallons, and the rate of importing was moving up towards 100 million gallons a year, which level it passed in
Supplies fell rapidly in the first three years of war, and imports in Dominion,
‘Petrol re-sellers in
‘Califonts, kegs, kettles, demijohns, vinegar and whisky bottles, tins of all descriptions, and even a new dustbin, were produced to hold petrol as all available coupons were handed in. However, these activities were curbed to some extent in the afternoon when the Oil Fuel Controller, Mr
Chart 71 shows imports of petrol from 1934 to 1948.
By the middle of Evening Post,
‘The future prospective stock position of both petrol and tyres was very grave, said the Prime Minister (Mr Fraser) last night. There was a veritable famine in tyres, and petrol stocks were just sufficient to carry on the country on a very careful rationed basis. Nevertheless, whenever supplies of petrol and tyres could with due regard to national safety be released to private motorists a ration would be made available. It was, however, very difficult to make any forward estimate of the petrol and tyres position….’
Early in the war some firms had voluntarily curtailed or zoned delivery services in response to petrol restriction and other shortages. If these and other voluntary measures had been considered inadequate, powers already existed to bring taxis and town carriers under control. However, not until after the evacuation of
Passenger services and goods services running out of or between towns had been licensed since 1932 and 1933 respectively under the Transport Licensing Act
As a result of the extreme shortages of road transport supplies in The Transport Control Emergency Regulations ( To receive orders for the carriage within its district of goods or stock by motor vehicles. To allocate such orders among available goods service licensees, having regard to the necessity of conserving motor vehicles and supplies of motor spirits and tyres and the
The regulations made similar provisions for taxis. Another regulation tightened up existing arrangements to eliminate or zone delivery services. The Delivery Emergency Regulations (
The zoning and rationalisation measures embodied in the The Traffic Emergency Regulations
A ministerial assessment of the measures taken in Evening Post,
‘The former Minister of Transport (Mr Semple) in an interview today, said he was relinquishing the portfolio of Transport at a most critical period in road traffic, generally brought about by shortages of tyres and petrol, but that he had every confidence that his successor, Mr O'Brien, and those engaged in the road transport industry, would be able to overcome the difficulties that lie ahead.
‘“Some three or four months ago,” said Mr Semple, “I was entrusted with the task of organising the road transport industry on a basis which would meet the precarious situation which faced the industry as a result of the tyre shortage. I travelled the length and breadth of this country addressing meetings of the parties concerned and giving, as far as I was able to do, a complete picture of the situation with which the industry was faced. As a result of the measures deemed necessary to safeguard the industry, the transport licensing authorities, goods transport control committees, and the zoning officers have given excellent service.
‘“I am now in a position to say that the action taken has resulted in an actual saving of 25,500,000 vehicle miles without any serious interference with our national volume of production, so much of which has, of course, been built up on road transport. This saving represents approximately 2,500,000 gallons of petrol and over 6,000 commercial tyres.”’
The Goods Transport Control Committees continued in operation until
New Zealand's predominantly undulating landscape makes transport a comparatively costly sector of her economy at any time. Transport problems were aggravated in time of war by shortages of fuels. Petrol supplies became scarce in allied countries generally as the vulnerable tankers were attacked, and as some of the major supplying countries fell into enemy hands. Shortages of petrol tended to throw emphasis on rail transport, but here again there was a fuel problem as demand for coal exceeded supply, and the smooth flow of coal to users was hindered at times by transport difficulties and industrial unrest in the coal mines. Except for municipal tramways, and for some suburban railway lines, electricity had not yet moved far enough into transport systems to be able to take a major part of the load away from the coal and petrol users. In any case, electricity, too, was in short supply for much of the war period.
Transport operators of all types were needed both in New Zealand and overseas for military operations, and, as more and more men were recruited, all normal transport service in New Zealand tended to become seriously short of staff. Staffing difficulties on the waterfront were aggravated by recurring industrial disputes and by working arrangements which, partly from lack of supervision and partly from lack of co-operation on the part of the workers, failed to use the available labour effectively. Apart from the short sharp strike of railway staff in early See also Chapter 12.
On the industry, faced with fuel shortages and depleted staffs, fell a considerable extra burden as a result of movements of military personnel and stores, including, after
There was every need for a supreme effort of co-ordination in an industry where duplication of services had always been a problem. Zoning of deliveries, elimination of less essential services, licensing and restriction of competing services, restriction of unnecessary passenger journeys through a permit system and even the restriction
The necessity to ration petrol and later to restrict the supply of tyres to the private motorists threw a considerable extra passenger load on road passenger services, on the railways, and on the tramways and taxis. In its Parliamentary Paper H–40, p. 1.
Petrol and tyre shortages were general and meant that road passenger services could not absorb all the extra load. Manpower difficulties were somewhat less severe in road transport because petrol and tyre restrictions had, by the time manpower became really scarce, led to considerable reductions in the less essential services.
Coastal shipping which, particularly in New Zealand, with its long shore line running parallel to the main road and railway routes, could have taken a share of the increased transport load, was restricted in its activities by shortage of vessels. Many had been requisitioned for naval use. For trade between the North and
An inevitable result of petrol and tyre shortages, and of limitations on the availability of manpower generally, was to increase the relative importance of the
For the most part the transport industry in New Zealand achieved remarkable heights during the war years. Co-ordinating committees, management, and staffs triumphed over very considerable difficulties.
WARTIME shortages of fuel and power were by no means restricted to the transport industry. Production, especially in manufacturing industries, was for a time hampered in meeting the demands of war by inadequate supplies of coal and electric power.
The war was but part of an era when manufacturing was increasing in importance relatively in the New Zealand economy and when motive power for manufacturing industries was tending to move over more and more to electricity. Steam engines, as sources of motive power in factories, decreased from 51,000 horsepower in 1937–38 to 37,000 horsepower in 1947–48. They provided 20 per cent of all factory horsepower in 1937–38 but less than 9 per cent a decade later. Though probably accelerated by wartime shortages of coal, the decline in the importance of steam power was already well under way when the war started.
In factories, oil was also starting to take the place of coal as a fuel for engines; 5 per cent of factory horsepower came from oil engines in 1937–38 and 11 per cent in 1947–48.
Thé waning importance of the steam engine as a source of motive power in factories did not cause a proportionate fall in the demand for coal. Many industries required large quantities of heat. Here coal could usually retain its place against electricity, though it tended to find a more serious rival in oil.
In the decade up to 1947–48 electric motors, which by 1937–38 were providing 72 per cent of the power available in factories, moved up to 80 per cent. Meantime the volume of output of factories had increased by over half, aided by a much increased overall use of power and an associated rise of 13 per cent in the volume of output per person engaged.
There is no statistical record of the electric power used by factories alone, but electric power used for all commercial and
Production per labour unit is commonly called productivity. It is normally increased by better equipment, more power in the hands of each worker, and better methods of work. Productivity is sometimes measured per unit of capital used or per unit of some combination of labour and capital used.
Apart from wartime or depression interferences, the long-term trend for New Zealand has been, in general terms: labour force increasing 2 per cent a year, electric power usage increasing 8 per cent a year, production per head of labour increasing 2 per cent a year, and volume of production increasing 4 per cent a year. These growth rates are not independent of one another.
In the decade 1937–38 to 1947–48, the number of electric motors used on farms approximately doubled, tending to take over work done by internal combustion engines, which increased in number only 11 per cent in the decade. Agricultural tractors were also coming into their own. There were under 7000 in use in
This was the age of mechanisation of farming, with the horse being steadily replaced by the tractor. Better methods and better equipment were becoming generally available and, in spite of rising farm production, there was a slow but progressive decline in the numbers of men required to work on farms.
Meantime household demands for electric power were increasing by leaps and bounds. Households took nearly half of all power sold in
Wartime difficulties in obtaining sufficient coal to meet all the demands for it were discussed in Chapter 15. It is probable that uncertainties in the supply of coal played some part in bringing about the movement towards electricity in factories and elsewhere. However, in the main, the movement was part of a longer term tendency for electric power to increase in relative importance.
Coal consumption at the outbreak of war was running at about 2,400,000 tons a year. It increased, by
Coal used in factories Excluding electricity and gas generation. p. 423.
The bulk of New Zealand's electric power was water generated, 77 per cent of the horsepower of the electric supply installations being of this type in 1937–38. Even here, coal-burning installations were tending to lose position relatively. The steam powered generators accounted for 18 per cent of the horsepower of all electric supply installations in 1937–38, but for only 10.5 per cent by 1947–48. In the latter year 96 per cent of electric power was generated in hydro-electric units.
For domestic use, electricity was tending to push aside gas and coal. Electric ranges for cooking were gaining in popularity at the expense of gas ranges; electric heaters were taking over from gas heaters and open fires. Nevertheless, gas production increased by a quarter between 1939 and 1945.
Use of coal in gasworks increased from 226,000 tons in Presumably taken from stocks. No imported coal arrived in
Inadequacy of stocks held by gasworks, and irregularity in supplies of suitable coal from the
The increase of 25 per cent in gas production over the war years seems quite fast until it is compared with the 67 per cent increase in electricity generation. As a further comparison, manufacturing output increased 36 per cent.
The repeated shortages of coal for railways use and the restriction of less essential railway services were discussed in Chapter 15. Because of its key position in the transport industry, and the extremely heavy extra wartime load it had to carry, the
Coal used for ships bunkering decreased over the war years from 159,000 tons in
Supplies of coal remaining for civilian and other purposes fluctuated around 1,000,000 tons from about
Irregularities in coal production, as well as the extra convenience of electricity for heating and power, encouraged the growing tendency for electricity to take over. There were shortages of electricity, too, in the war years, but supplies were more reliable than coal supplies. Up to
Electricity generation in New Zealand was by no means new in the pre-war decade. As far back as By the Phoenix Quartz Mining Company on the Shotover River. The first government hydro-electric station was at Lake Coleridge in
Electricity was rapidly moving into new uses in the pre-war years and, in the five years up to
Electric power shortages developed in the
Wartime shortages of electric power cannot be explained entirely in terms of an unexpected increase in demand, although domestic and manufacturing uses were expanding rapidly, and difficulties in getting adequate coal supplies tended to switch demand to other sources of heat and power. The real cause of the difficulty was that hydro-electric development had been neglected before the war. From 1936 to 1938 expenditure on hydro-electric development was far less than it had been at any time during the depression. Indeed, it was not until the war was well under way that depression expenditure was exceeded.
From 1930 to 1935, under the influence of the depression, power consumption in New Zealand had increased by only about 5 ½ per cent a year. It was, no doubt, this comparatively slow rate of growth in consumption which influenced the very conservative estimates which were then made about future power requirements, and led to the curtailment of development.
From 1935 to 1941, however, the increase in consumption averaged over 12 per cent a year. With curtailed expenditure on hydro-electric development, demand soon overtook generating capacity.
The reduced pace of hydro-electric power development in the pre-war years was no doubt attributable initially to faulty judgment of the See also p. 47.
However, not all the blame can be placed on the
‘The position in the North and South Islands respectively in regard to available generating capacity, installed plant and maximum demand for 1943–44 is set out in attached figures. From these figures it appears that the necessity for developing an entirely new (hydro-electric) scheme is remote.’ See also NZPD, Vol. 273, p. 99.
Power supplies seem to have been sufficient at the outbreak of war, but with inadequate provision for expansion. By
In
‘The unlikelihood of electricity being rationed during the coming winter was mentioned by the Minister of Public Works, Mr Armstrong, during his visit to
‘The rapid extension of secondary industries had created a demand for electric power that had never been anticipated, said Mr Armstrong. Only in years to come, when complete electrification of industry was accomplished, would the wisdom of the Government's decision to continue the Tuai In
‘Discussing Public Works policy generally, Mr Armstrong said that only works of national importance would be continued during the war. Manpower was the chief factor to be considered.’ Dominion,
It is true that wartime requirements expanded manufacturing needs, but it is also true that hydro-electric expansion was not pushed forward fast enough in the pre-war years, especially when the possibility of war was apparent. See also p. 46.
A good picture of the overbalancing of surplus into shortage of power was given after the war by the Hon. John Robertson in a debate in the Legislative Council. He said:NZPD, Vol. 273, p. 99,
‘… We have made tremendous advances, but if we look at consumption since
As could have been expected, it was difficult enough during the war years to provide new plant for normal expansion, let alone to catch up on neglected pre-war expansion and to provide for special war needs at the same time. The first warning of pending power shortages had come in
Wartime difficulties in power development should not be underestimated. The only criticism is that they were not foreseen. A recent writerThe Electrical Supply Industry in New Zealand.
The need for restraint in the use of electric power became apparent in
In
‘… However, this could not be foretold. The balance of power required above that produced by hydro-stations would come from steam-operated plants at King's Wharf,
‘Big problems were presented in the operation of these plants, particularly when running to full capacity, said Mr Kissel. An undertaking had already been given that the Evans Bay plant would be supplied with its needs of coal. King's Wharf operated on
‘Though the Coal Controller made valiant efforts last winter and was able to meet the demand, Mr Kissel was a little apprehensive that he might not be able to do so in the coming winter. However, instead of 180,000 tons as estimated 6 months ago it was now believed that 130,000 tons might be sufficient. The rate of increase in the demand for electricity might still further drop. A 7 ½ per cent increase in the demand would mean that 127,000 tons would be required for King's Wharf. The Coal Controller, while giving no guarantee, said he could deliver this.’ Reported in Evening Post,
As a measure to save electric power, daylight saving, which normally concluded on the last Sunday in April, was extended throughout the winter, starting in
In The restrictions applied from Mondays to Fridays, in the The Electrical Appliances Control Notice,
A ministerial statement on Evening Post,
‘… In a joint statement issued last night the Minister of Supply (Mr Sullivan) and the Minister of Public Works (Mr Armstrong) said that the present position with regard to the supply of electricity from the Government system in the
‘“… It is also necessary that economy be practised in the use of electricity at all times,” added the Ministers. “A very large amount of oil is being used to generate electricity and this has to be imported, and this means the use of ships. For example, the steam generating plant at Evans Bay used 26,000 tons of coal and 10,000 tons of oil in
For the winter of A second unit was installed in
On the occasion of a temporary breakdown of one of the generating units at the Arapuni Station, Arapuni had six units at the outbreak of war. Two more were added to cope with increasing demand during the war. In these years Arapuni was generating over half the
Restrictions imposed in 1943 and 1944 included reduction of radio broadcasting hours, metering of water heaters, and restrictions on non-essential lighting in shop windows and under verandahs.
Power shortages became progressively worse over the war years and in due course threatened to restrict the productive capacity of industry.
Chart 73 shows the increase in use of electric power for various purposes from 1939 to 1946.
As shortages of electric power became more serious, it was necessary to restrain the increasing demands for power for industry. This was a ticklish problem of control. The war effort required increasing production and the establishment of new industries. It would be stultified if producers were starved for power. From Amendment Order No. 1 of
Increasing power shortage led to a very restrictive application of the Electricity Control Order, and the position became so serious as to lead, in Factory Controller to Minister of Supply,
As a result of this clash,
As a result of the Factory Controller's representations, a rather more liberal policy was adopted towards the supply of electric power for those industries which were concerned with ‘critical civilian production’.
The centralised control over supply of power to factories ceased in Amendment Order No. 1 of
Restriction of power to domestic users was to continue in varying degrees until
Deferred hydro-electric development showed its effects at a most awkward time. Some of the difficulties in extending and completing existing schemes have already been mentioned. The worsening supply position for electric power forced the Government to give
In
In the event, hydro-electric development was one of the few aspects of Government construction expenditure, apart from actual defence works, which showed a higher rate of expenditure in the war years than before the war. Even this high level of wartime expenditure was soon to appear moderate as the full impact of the accumulating demand for power made itself felt. What had appeared to be high expenditures in wartime were doubled, tripled, and quadrupled before generating capacity, in the late fifties, showed any sign of getting ahead of demand.
The task of administering the war effort and bringing about the necessary diversion of resources away from civilian use fell almost entirely on state servants who were responsible for carrying out the Government's policy.
Special wartime control procedures, rationing, manpower direction, bulk purchasing arrangements on behalf of the United Kingdom Government, defence construction, supply and a host of other new functions were administered by government departments during the war.
The Government became very active in promoting new industries which could produce supplies for war or manufacture essential civilian goods previously imported. Much war production was arranged on a contract basis, but the Government often supplemented this by actual participation. For example, the
Formidable volumes of administrative work were involved in the defence construction programme, the shipbuilding programme, and the making of munitions by industries normally engaged in civilian production.
The greatest part of the burden of administering the stabilisation scheme fell on public servants, who advised on financial policy
Special war taxation, war loans and war expenditure all placed an extra load on government departments.
The intensity of the war effort necessitated government participation or influence in most economic activities, and comment on one or other government department is included in every chapter of this book.
In The staff in the latter two Departments were outside
Over these years there was a very marked change in the quality of staff employed in the public service. In spite of several years of quite rapid expansion before the war to cope with the Labour Government's public works, housing, and welfare programmes, the public service was, in
In
Recruitment for the armed forces created difficulties in public service staffing, as it did in many other activities. By
Extra staff had to be found, to make good losses to the services and for the wartime expansion of government activities. Generally the policy was to make temporary appointments as replacements for men in the services. The intention was to release these temporaries at the end of the war, together with those who had been required for the special wartime agencies. However, with the continued expansion of state activities, a fair proportion of them were retained. One of the problems facing the
The temporary staff included large numbers of women, many of whom had sought wartime jobs in the public service. The numbers of women in the public service, excluding a few on the permanent staff, reached a maximum of over 7000 in
Wartime experience, combined with the changed general employment situation, was to have a profound effect on attitudes to the employment of women in the public service. In
In New Zealand almost all communications are the responsibility of the Government, and are administered by the
The
A general impression of the reduction in local authority activities during the war is given by the fall in numbers engaged. By
Counties and boroughs were the most voracious users of government subsidies before the war and were, in consequence, most seriously affected by the Government's determination to divert a maximum of funds and manpower to the war effort. In 1938–39 local authorities received £2·4 million from employment promotion funds: £0·6 million of this went to counties and £1·4 million to boroughs. By 1943–44 only £110,000 was paid over to all local authorities, and, though counties and boroughs received the lion's share, their expenditures had to be severely pruned.
Commenting on these changes, a Local Government Committee wrote in Parliamentary Paper I–15, Report of the Local Government Committee, p. 131.
From another angle, this change in subsidy payments has already been discussed in Chapter 5. As was noted there, men previously in subsidised employment were absorbed into the armed forces or into normal employment; and there was a certain amount of criticism from those who thought the process was too slow.
Counties were also very dependent on main highways funds from motor spirits taxation, of which they received well over 90 per cent. Payments were by way of subsidy, normally at the rate of £3 for each £1 spent by the local authority. Receipts from this source fell from £884,000 in 1939–40 to £399,000 in 1943–44.
For development work on back-country roads, grants had been made from the Public Works Fund. Here again curtailment was severe. £1·3 million was paid over in 1938–39, mostly to counties; only £128,000 in 1942–43.
Chart 74 shows changes in local authority employment.
Compared with counties and boroughs, most other local authorities were comparatively well off for staff during the war. Electric power boards, for example, had 86 per cent of their
Urban transport boards also carried an increasing load, as petrol
Harbour boards, by
In spite of exceptions, such as railway transport and electricity supply, the general tendency was for services to the public and to industry to be reduced during the war, while the rate of production of commodities increased more slowly than in normal times.
Apart from hospitals and some of the special services already discussed, most services received comparatively low priority for manpower purposes during the war and, since service industries tend to be labour intensive, That is, they require a comparatively large amount of labour (and often a comparatively small amount of capital) to produce a given output.
A number of service industries were declared essential, but
In Men medically fit for service. Parliamentary Paper H–11 For purposes of this comparison, electricity supply and transport and communications are excluded from services.a, Report of the
The H–11a,
‘These industries and services all play their part in the economy of the Dominion and in the life of our people, and have varying degrees of importance. It was not necessary, however, to grant them the protection of a declaration of essentiality, as in practically all cases the production or service could be curtailed if necessary without impeding the war effort. It was the aim of the Department throughout, in the administration of manpower controls in these industries and services to permit them, as far as possible, to maintain sufficient staff to continue to function economically and thus be in a position, after the war, to rehabilitate employees who had entered the Forces. The Department assisted these industries and services from time to time by arranging the release of home servicemen and home servicewomen from the Forces where such action was deemed to be warranted. Armed Forces Appeal Boards in dealing with appeals, also permitted the retention from military services of limited numbers of Category “A” men holding key positions and a more substantial proportion of non-Category “A” men. Category ‘A’ men were those who satisfied the age, fitness and other requirements for overseas service. (Author's footnote.)
In spite of shortages of fuel and power, and the tendency for most services to be curtailed during the war years, an increased
Chart 75 shows changes in the volume of production of goods.
Production changes in particular industries have been discussed in other chapters. Manufacturing–production, supported by an increasing labour force, rose progressively from year to year, but farm production fluctuated and, though tending to increase, was largely responsible for the occasional downturns in total production of goods. Building and other production also fluctuated.
Between 1938–39 and 1944–45 manufacturing output increased at an average rate of 4 3/4 per cent a year, farm production increased at 2 1/4 per cent a year, Dairy factories, freezing works and other industries processing farm products are included with farming, for purposes of this analysis. On pp. 177–80 they were left with manufacturing. The building and construction industry lost ground, in spite of wartime pressure for defence construction work. See also Chapter 9, especially pp. 244–5, dealing with manpower.
At first glance these rates of growth look poor by comparison
p. 424.
AT the outbreak of war 1,630,000 people were living in New Zealand, and their numbers were increasing by about 20,000 a year. The population growth rate had started to increase, after falling very low in the depression and the immediately following years. However, by
Maoris now numbered 90,000. Since According to census records the Maori population suffered a period of almost unbroken decline from 1858 to 1896. Warfare amongst the tribes and with the European settlers, and the susceptibility of the Maori to epidemic and other diseases introduced with the settlers, contributed to the decline. After
In the period from the
These depression influences were to affect the population age structure significantly for a very long time. The low birth rates of the years around
Well into the 1960s, and probably for the rest of the twentieth century, the low birth rates of the middle thirties would remain the greatest single influence on the population age structure.
The aftermath of depression had led to a net loss through migration in each of the years 1931–32 to 1936–37. The year 1938–39 was only the second time in over a decade when there had been a net annual inflow near the long-term New Zealand average of between 4000 and 5000 a year. The net inflow, apart from troop movements, was just over 6000 in 1939–40, but war conditions then had their effect, and the net increase due to migration averaged less than 400 a year for the following four years. It was not to reach 5000 again until 1947–48.
Marriage rates were naturally affected by war conditions. Straitened circumstances had reduced them to as low as 6·8 per thousand of population in the two depression years, 1931 and 1932. Thereafter they had shown a steady rate of increase right through to
With the return of men from overseas, the marriage rate again stepped up, until it reached an all-time record of over 12 per thousand in
Birth rates, though they had been increasing, were still low up to the outbreak of war. For
Chart 76 shows changes in marriage rates and birth rates.
The wartime setback to the recovery in the birth rate was less than might have been expected. It was war casualties and a reduced
17,000 were wounded. See also pp. 540–1 where effects on the post-war labour force are discussed more fully.
The numbers of New Zealanders actually living in New Zealand during the war were reduced by departures of servicemen overseas, and falls were recorded in 1940 and 1941, with very large increases in 1945 and 1946 when servicemen returned. There would have been quite a large increase in
By
The very low birth rates centred around In New Zealand, education is compulsory from the age of 7, but children are permitted to attend from the age of 5 and most do. Except in private schools, primary and post-primary education is free. Over 70 per cent of all scholars and students were in public primary schools.
The numbers of secondary school pupils fell in 1940 and 1941, but then increased steadily.
Soon after the outbreak of war, single men teachers began enlisting in the Services. In the early stages, most were released for armed service, but appeals were made for postponement of the calling up of some of the men in district high schools. By Parliamentary Paper E–1, Report of the Minister of Education,
When military service became compulsory, no blanket provisions were made to protect university students. However, in the interests of the war effort, some students taking courses in agriculture, dentistry, engineering, medicine, mining and science Especially those taking mathematics and physics.
A certain amount of experimental war work was done in universities, especially in chemistry, engineering and physics departments. For example, development work for special types of radar equipment was undertaken in Canterbury University College, in conjunction with the
Technical colleges also assisted with war work, and lent equipment for military training and maintenance work.
When the manpower shortage became most difficult, university vacations were altered to enable students to assist more effectively with harvesting and other seasonal work. Subject to suitable precautions, a limited number of post-primary school children who volunteered were made available in December and February for harvesting and other seasonal work. The services of male teachers were also used in the vacations to relieve labour shortages in seasonal work. Those who did not make arrangements to work, or to supervise the welfare of boys placed on farms, were liable to be directed (if single or married without children) to freezing works, wool stores and canneries. School holidays in New Zealand normally extend from mid-December to the beginning of February, this being the most popular holiday period. University examinations are in October and November, with vacations then extending to the beginning of March. See also footnote on p. 487 regarding seasonal peaks.
The The Welfare State in New Zealand, p. 67.
One of the very early measures, on the outbreak of war, provided for the suspension or adjustment of labour legislation in the interests of a maximum war effort. Regulations made on The Labour Legislation Emergency Regulations (
‘If it appears to be necessary or expedient to do so for securing the public safety, the defence of New Zealand, or the efficient
prosecution of any war in which His Majesty may be engaged, or for maintaining supplies and services essential to the life of the community, the Minister by Order in the Gazette may suspend, so far as they relate to conditions of employment, the provisions of any Act or of any Regulations or Orders under any Act or of any Award or Industrial Agreement under the Industrial Conciliation and Arbitration Act of 1925 , or of any agreement under the Labour Disputes Act1913 , or of any voluntary agreement, and the Minister by the same or any subsequent Order may prescribe conditions of employment in lieu thereof.’
To administer the regulations, the Minister had the assistance of an
Provision was made for shift work.
Ordinary working hours were extended in some industries.
Additional overtime was authorised in certain industries.
Restrictions on the employment of women were relaxed in some industries.
Restrictions on the employment of young persons on dairy farms were relaxed.
The considerable reduction in unemployment by See also p. 220.
Longer working hours and more stringent working conditions had to be accepted. Some of this extra time and effort was rewarded, and rewarded generously. Some of it was given willingly without any extra compensation. The great bulk of the labour force regarded the extra effort as part of its service towards the common cause, but accepted extra pay for extra hours worked, including the penal rates which, in most industries, became payable after forty hours. To summarise the position in the first two years of war, the 40-hour week was general but not universal; for example, overtime was payable after 44 hours in shops. The standard overtime rate was 1½ times the ordinary rate. Under many awards, double time was payable for overtime in excess of four hours (in some cases three hours) on any day. Generally speaking, work done on statutory whole holidays was paid for at treble time, on Sundays or other holidays at double time, and on half holidays at time and a half.
In the exceptional cases, extra time and effort was given grudgingly, with insistence on every scrap of possible extra reward. The depleted labour force and the extra work to be done favoured groups of workers who drove a hard bargain. The rapacity of some
See Chapter 13 and pp. 398 and 477. There are other examples in this volume, and in
Not surprisingly, the resistance in the early stages of the war to any form of conscription of manpower was centred in the trade union movement. Among the workers was a considerable proportion of the fit men of military age. They would be most affected by conscription.
By the time the disasters in
On 23 May, two thousand people attended a public meeting in Dominion,
On 30 May the Labour newspaper, the Standard, reported:
‘In view of the sudden emergence of crisis conditions of a magnitude and an acuteness never before imagined, emergency conferences of the New Zealand
Labour Party and the New ZealandFederation of Labour will be held at the week-end.‘With the same full representation as for their ordinary annual conferences, these two bodies will define their attitudes to and discuss co-operation in the emergency measures that are being submitted to Parliament this week by the Government.
‘Conscription, in all the implications of the term, will doubtless be the subject uppermost in the minds of all delegates. Historically, both the political
Labour Party and the trade union movement have been against conscription of human life for the business of war.‘That objection has derived largely from the fact that, during past wars, governments that were in power were of a reactionary,
capitalist nature and freely allowed money-power to batten off the misery of mankind while sending the workers to sacrifice their lives on the battlefields. ‘In view of the world-shattering threat of
Hitler 's total warfare and of the fact that the presentNew Zealand Government is determined that conscription of finance and productive institutions shall accompany, if not precede, any compulsory utilisation of manpower, there undoubtedly exists a strong feeling that the historical attitude of the working-class movement needs shaping to the special circumstances of today.’
A bill introduced in the House of Representatives on 30 May gave power to require persons to place themselves, their services, and their property at the disposal of the State. Conscription of men for the armed forces became effective in See also Chapter 5.
Some aspects of direction of labour are dealt with more fully in Chapters 5 and 18.
From the beginning of
In some of the key industries, where labour problems were particularly difficult, special arrangements were usually made. For example, in the transport field, the Waterfront Control Commission Emergency Regulations
A total of 176,000 direction orders was issued: 138,000 to men and 38,000 to women. Up to By an amendment to the National Service Emergency Regulations
Though it was avoided as much as possible, workers had sometimes to be transferred into lower paid jobs in order to staff an essential industry. The principle was accepted that the loss of earnings should not fall on the individual worker concerned, and financial assistance was usually given by the Government.
Direction of workers into industries which were not of their own choice naturally led some to hang back. It was not uncommon to find a number of workers absent from work, especially following a holiday period. The term ‘absenteeism’ was applied to this type of slackness and a good deal of public feeling was aroused against it. There is no doubt that some workers did indulge in abuses of this sort, but it is equally true that some critics applied the term ‘absenteeism’ to any absence from work, no matter what its cause, and became quite unreasonable in their outlook. Take for example the following extract from a leading article in a Dominion,
‘… In May of last year when a special emergency regulation was introduced in an attempt to cope with the evil, the Minister of National Service (Mr Semple) issued an explanation of the measure, which rather than emphasising an intention of the Government to eradicate absenteeism was almost apologetic in tone. “It was not intended,” he said, “to penalise the loyal and willing worker who might perhaps have an isolated absence. The penal clauses were designed to deal with the deliberate defaulter and the person who was habitually or persistently late for work.” …. The question of distinguishing between the deliberate and unintentional cases might well have been left to the Courts. By introducing such distinctions when speaking of
the Government's intentions the Minister displayed a weakness (and left a loophole) which, no doubt, was appreciated by the slacker group….’
The leading article goes on to mention that, after the New Year, various manufacturing concerns ‘reported that absenteeism ranged from 26 per cent to 80 per cent of the total of their hands.’ Here it should be mentioned that early January is traditionally a holiday period in New Zealand, and, for many single workers directed into new localities, this was their only opportunity to visit their homes. Not until
Some employees took all the latitude they could, but some employers were equally unreasonable in refusing to give leave of absence. Most workers complied gracefully with direction orders and worked well; and were treated considerately by their employers.
Recruitment amongst the Maori people for all branches of the armed forces remained on a voluntary basis throughout the war, Parliamentary Paper H-11 See for example J. F. Cody, a, Report of the 28 (Maori) Battalion.
The Maoris set up their own organisation to encourage a maximum war effort from their own people. A Member of the Executive Council representing the Native Race.NZPD, Vol. 262, p. 353.
‘… When the
Maori War Effort Organisation was formed, it was decided that tribal committees should be set up throughout New Zealand, the functions of those committees being to stimulate recruiting among their own immediate tribes and to stimulate production …, and to direct and control manpower in order to assist essential industries. At present there are 121 tribal committees in the Northern Maori Electorate, 135 in the Western Maori Electorate, 102 in the Eastern Maori Electorate, and 23 in the Southern Maori Electorate—a total of 381. I desire to give an indication of their activities. They have put into production, for purposes other than their own immediate needs, 4,933 acres of land, and it is estimated that, on a conservative basis, the land will yield 126,700 bushels of maize, 475 bushels of beans, 3,403 tons of kumaras, 4,992 tons of potatoes, 206 tons of mixedvegetables, 440 tons of pumpkins, and 5,400 pecks of peas. In addition the Maori people have collected approximately 20,000 lb of dried agar seaweed. Since Japan entered the war, this seaweed has been much in demand. ‘… Now I wish to deal with Maori manpower. Under the
Maori War Effort Organisation , we have enlisted 5,178 men for overseas service, 2,088 home service, and 10,229 for theHome Guard , which gives a total of 17,495 enlistments in the armed forces. In addition, there is a total of 11,550 now working in essential industries, making a grand total taking part in the defence Forces and in essential industries of 29,043.’
Sic. The correct total is 29,045.
A H-11a, Report of the
‘The valour of members of the
Maori Battalion and Maori members of the Air Force and Navy is widely known. On the industrial front, also, they have contributed much to the achievements of New Zealand's war effort. Maori workers have assisted materially in the manning of seasonal and heavy industries throughout the war period, particularly in the high-priority industries of shearing and meat-freezing. They have been conspicious also in sawmilling, constructional activities, and defence works. Maori men and women have also played their part in urban industries. When theNational Service Department commenced its wartime redistribution of the industrial manpower of the Dominion it sought and readily obtained the cooperation of theMaori War Effort Organisation . Special Maori Sections of the National Service offices were established in the main centres of Maori population, and these sections (working in close contact with the tribal committees and with Maori Utilization Committees) were able to secure the willing services of Maori workers in many critically short-staffed industries throughout New Zealand. Maori workers were made subject to manpower direction and control to the same extent as others, and it is worthy of note that virtually all directions issued by District Manpower Officers (who acted in close consultation with the tribal committees and Maori Utilization Committees) were accepted without appeal. The total number of Maoris employed in essential undertakings at1st April, 1945 , is estimated to have been 15,000. Some 10,000 direction orders had then been issued to Maoris.’
There are very few separate references to the Maori people in this volume. Similarly, there are very few separate references to people of European stock. The reason for this is that nearly all
When direction of a worker involved a change in location, there was often difficulty in finding suitable living accommodation, and in some areas the Government had to meet the situation by providing hostels. Towards the middle of Parliamentary Paper H-11a, Report of the
‘Particular difficulty was encountered during 1942 and 1943 in directing female workers to employment in munitions and other essential industries, particularly in the Hutt Valley. Shortage of accommodation in this area was acute, and the Department found it necessary to establish several hostels for workers in essential industries. The first of these was constructed at Woburn,
Lower Hutt , by arrangement with the Housing Department in1943 , and was designed to accommodate some 360 girls who, for the most part, comprised girls directed to munitions employment inPetone .’
Camps, which came to be known as Defence Workers' Camps, were provided for men in the Official War History of the Public Works Department, Vol. IV, p. 797.
The earthquake damage work was mainly chimney repairs. As this work eased off, men were drafted to defence construction in and around
There was some criticism of the management of hostels and camps. In particular, there were complaints about delays in providing equipment and essential facilities in some of the women's hostels. But the hostels and camps provided a reasonable standard of accommodation, and played a most important part in facilitating the direction of labour to localities where it was most urgently needed.
After the war, the Parliamentary Paper H-11a, p. 66.
Well before the war, efforts had been made to reduce hours of work in industry and, in For example, in factories the limit was 120 hours of overtime a year for women and boys.
As the strain on manpower built up, there was naturally a good deal of pressure for the extension of working hours to meet war conditions. The
For more sweeping revisions of hours, the Labour Legislation Emergency Regulations See p. 447.
With the increasing scarcity of labour, considerable overtime was worked. In factories overtime increased from under 4 million hours in 1938–39 to over 17 million hours at the most difficult time in 1943–44.
From time to time further attempts were made to increase the regular hours of work in industry in order to make better use of scarce labour. Quite drastic steps were actually taken in some key industries. For example, we have noted an increase in each worker's hours to 54 per week, for a short time, on defence construction work p. 229. With shift work. See also p. 399.
These extensions of hours, however, in general involved payment of overtime to workers at rates which were 1½ times, double, or treble the ordinary rates.
At the time of The Holidays Labour Legislation Modification Order The substitution to occur within six months.
Payment of overtime at penal rates still added to the cost of production and hindered the Government's stabilisation policy. The extra costs tended to make employers reluctant to extend hours. During the most critical stages of the war in the Memorandum of
Up to Even the District Manpower Officers were given power, by the Industrial Manpower Emergency Regulations, to extend working hours for a period not exceeding four days.
The stresses of war did not prevent the Government from going ahead with one or two pieces of advanced labour legislation. For example, in The Annual Holidays Act For example, by the
A considerable number of workers had previously had paid annual holidays of varying duration. The Act assured at least two weeks for all. The rights of workers to the statutory holidays were not affected.
Out of the special wartime measures to protect directed workers against loss of earnings came another piece of more permanent labour legislation.
In See p. 451. The Minimum Wages Act
The Act provides ‘an enforceable minimum wage for workers not subject to awards, industrial agreements, or other wage fixing machinery’. See p. 451.Industrial Conciliation and Arbitration in New Zealand, p. 165. This book also refers briefly to the Act at pp. 142 and 173.
In the press, during the war, considerable attention was focussed on sections of workers who were slow in returning to work after holidays, who engaged in strikes or other militant action, or who worked with less effort than was expected of them. In particular cases much of this criticism was fully justified.
However, the much more significant general impression was of a drastically depleted force of civilian workers who managed to keep production increasing at a pace which, while not as high as the country's long-term rate of economic growth, See also p. 441.
The war effort was hindered by the loss of an average of 40,000 working days a year through industrial disturbances. This average was quite high compared with experience before the war, though there had been a worse period in the 1920s. However, the great majority of the workers did not take part in these disturbances. Two
Though some groups of workers were much more militant than others, the initial cause of a dispute was not always the fault of the employees. Some of the difficulties in water-front work were outlined in Chapter 15. Industrial disturbances are discussed quite fully by Wood in Political and External Affairs.
One must not overlook the fact that a very considerable part of the pressure for a civilian war effort fell on the workers. The loss of personal freedom involved in direction of labour into industry was greater than for other sections of the community, apart from those who served in the armed forces. There was, moreover, some foundation for the contention that stabilisation, in spite of the Government's precautions to make it equitable, bore more rigidly on wages than on most other incomes. On the other side of the picture, the spectre of unemployment had gone, prices of essential commodities were held stable, and there were ample opportunities for overtime and secondary employment to supplement incomes.
Though wage rates remained remarkably stable for most of the war years, the increased availability of overtime raised workers incomes, and the influx of women into the labour force meant an extra income earner in many homes. Manufacturers' and contractors' incomes were increased, also, by the pressure of demand for war production and essential civilian supplies, and by the good prices offering for war contracts generally. Moreover, New Zealand had entered the war with consumer spending at a high level. The inter-war period had seen a tendency towards equalisation of incomes, and the Labour Government's Social Security scheme accelerated the trend by transferring income into the hands of those with special needs, where the proportion of income spent was likely to be high.
High consumer spending, with its resultant pressure for imports, had been a contributing factor to balance of payments difficulties in
In the early years of the war, the tendency towards high consumer spending hindered the Government's efforts to divert a maximum of resources to war purposes. Some of the monetary and fiscal
The war did not halt the Social Security programme, though it may have slowed up its full implementation. The first Social Security benefits became effective from
As indicated in Chapter 12, an excess of spending power still remained in the hands of consumers, after extra taxation had had its effect. Despite Government restraints and organisation of distribution, a disorderly scramble would have ensued had not most consumers resigned themselves to the scarcity of goods, particularly consumer durables, and saved their money, to be used when goods became more plentiful. Special arrangements whereby workers could authorise employers to transfer regular amounts from their wages into National Savings Accounts played quite an important part in increasing savings by the general public. Intensive publicity campaigns for war loans also assisted, though much of this saving came from larger investors.
Wartime scarcities of some essential commodities required careful attention to marketing arrangements. Price stabilisation policies which, over a wide range of commodities, prevented prices from carrying out their usual function of equating demand to supply accentuated the shortages. With many commodities in short supply, it would have saved some administrative difficulties to have allowed prices to run free so as to cut back demand. However, the effect on individual consumers would have been inequitable, and, with the possibility of prices, wages, and incomes generally getting completely out of hand, there would have been no assurance that demand would have fallen sufficiently. The alternative was very
The administrative nucleus for wartime marketing already existed when war broke out. In
Inevitably, the entry of a Government organisation into marketing gave rise to considerable public criticism, which flared up whenever a commodity was in short supply or was not of high quality. That there would be many shortages was never in doubt. The quantity of goods available per head of population declined in each war year until, by 1944–45, it had fallen by well over a quarter.
At the outbreak of war, the immediate problem of the p. 216.
The
From
By By the Egg Marketing Emergency Regulations
Eggs were not formally rationed to consumers, as were butter and a number of other commodities, but special priority arrangements were made to secure a minimum of three eggs a week for young children, invalids, and expectant and nursing mothers. Later in the war, expectant and nursing mothers received a minimum of six.
To cope with the overall scarcity of eggs, the
Prior to the war, the
In 103,000 were in the See also p. 218.
In
Early in
From late
The
Actually the policy of the Division was to disturb normal channels of distribution as little as possible. In most cases it operated through existing merchants, but, where improved standards were needed in handling and storage facilities or in accounting for profit margins, distributors were licensed. During World War I, when the Government thought meat prices were too high, it opened state shops in Even under strict marketing arrangements, small sales direct to consumers for their own use were legal.
The Division could not hope to satisfy everyone. Nevertheless it did distribute scarce commodities as fairly as possible, and it reduced distributive costs at a time when the stabilisation policy required the paring down of all unnecessary components of cost. The magnitude of the task of distributing scarce supplies should not be underestimated. A more comprehensive view of the extent of overall shortages of goods is given in Chapter 12. The tools at the disposal of the
‘Perhaps the main conclusion arrived at after ten years’ experience is this, that it is impossible to interfere in one field or small area of marketing without affecting every aspect of production, distribution and price. The whole of the marketing and production system is wrapped up altogether.’
After the war most of the functions of the
Only for a limited range of goods was it necessary to supplement the distribution efforts of the
The first consumer item to be rationed was motor spirits. Restrictions were imposed from the outbreak of war and, except for a brief period at the end of
Apart from a certain amount of panic buying in anticipation of rationing, See, for example, pp. 64 and 418. Dominion,
‘Yesterday morning will long be remembered by bicycle dealers in
Wellington and the Hutt Valley. Before the shops had opened for business, groups of anxious-looking people assembled in the hope of acquiring a useful means of transport, even if it was less comfortable than a car. The dealers did brisk business, and by midday it was a matter of extreme difficulty to purchase either a man's or woman's bicycle. One determined suburbanite visited five shops inLower Hutt andPetone before he succeeded in making a purchase, and was told it was the last machine in that shop. Another dealer stated that his house phone rang incessantly after the petrol announcement on Saturday night, and when he opened his shop yesterday morning his first task was to label every bicycle with the name of the man who had arranged its purchase. He had a shop full of machines, all were sold, much to the chagrin of the steady stream of would-be purchasers who continued to call. Some dealers have telegraphed all parts of New Zealand in the hope of securing stocks.’
The result of this was a government attempt to husband stocks of men's bicycles for possible army use. According to a report on 15 December from Dominion.
Motor tyres, as we have seen, p. 139.
There was no further use of systematic rationing until the war in the Dominion,
‘As from today sugar may be purchased only from licensed retailers by registered consumers on the surrender of the appropriate ration coupons….
‘… All retailers of sugar, whether licensed or not, are required to make a declaration to the Rationing Officer at their local post office as to the stocks of the various types of sugar held by them on the opening of their business today. Till this declaration is made retailers will not be able to obtain further supplies of sugar.
‘All wholesalers of sugar must make a telegraphed declaration to the Ration Controller as to the stocks held by them on the opening of business today. A special declaration under the Regulation in support of the telegraphed return must also be completed and forwarded by post to the Rationing Controller.
‘Commercial users requiring supplies of sugar should apply to the Rationing Controller at the post office in the district in which the business is operated. This applies to bakers, pastry cooks, dispensing chemists, bee keepers, bacon curers and manufacturers whose consumption of sugar is less than half a ton a month.’
The ration, after some changes, settled down at 12 ounces a week for each person for most of the remaining war years. Initially the sugar ration was 12 oz. per person per week. The basic rate was adjusted to 3 lb per person per calendar month as from New Zealand Official Yearbooks.
From the beginnning of Initially tea was rationed over the whole population (except infants under six months) at 8 oz. per calendar month, but children under ten years of age were eliminated from the scheme on 1 November of the same year. The ration was changed to 2 oz. per week on New Zealand Official Yearbooks.
Much more difficult to administer was the rationing of clothing, footwear and household linen, introduced in
Rationing, however carefully administered, could not always avoid exhaustion of stocks. Fluctuations in clothing stocks were particularly difficult to foresee. Replying to a question in the House of Representatives in NZPD, Vol. 263, p. 560,
‘All possible steps have been taken to maintain supplies of children's footwear generally. The shortages, which have not been confined to country districts, have been due principally to the decreased supplies available from the
United Kingdom during 1941 and 1942 but also to the huge production of military footwear in our local factories. Advice was received, recently, however, that New Zealand's quota of infants' footwear from theUnited Kingdom for the current year would total 450,000 pairs (which is a very satisfactory figure) and together with increased local production of children's footwear, which has become possible because of diminished military requirements, it is anticipated that the shortage of children's footwear will beovertaken. I have given special instructions that the production of children's footwear should be regarded as of the highest priority.’
Shortages were a frequent subject for questions in Parliament. In NZPD, Vol. 264, p. 968,
‘At the present time I am not able to indicate with certainty when pyjamas will become available in substantial quantities for general sale to the public. At the moment every endeavour is being made by the Government, working through the New Zealand Garment Control Council and district control committees, for the allocation of work within the clothing industry in a way that will secure the production of most essential garments as quickly as possible. Pyjamas are in the highest priority-group, and reasonable material supplies are available for pyjama manufacture. However, the shirt and pyjama manufacturing group is at present engaged almost entirely in meeting orders from the Armed Services. It is expected that arrears of orders for the Armed Services will be overtaken shortly and that quantity production of pyjamas for the civilian market will commence in the near future.’
There were also revealing references in a statement by the Dominion,
‘In
November, 1943 , aNational Garment Control Council andDistrict Garment Control Committees were set up to maintain a close watch on production and to set production targets for critical lines. With such targets established it became possible for District Manpower Officers, assisted by Utilisation Committees, to take much more drastic steps to transfer labour into factories prepared to concentrate on these critical lines.’
‘Faced with a serious shortage of women's underwear at the beginning of last year, the industry has taken effective steps to overtake the position…. The Council makes no attempt to minimize the fact that in certain categories of clothing, shortages continue to exist. There are, for example, big shortages of men's three piece suits, shirts, and some items of children's clothing. To rectify these shortages before they reach the acute or critical stage, the garment manufacturing industry, with the backing of the Factory and Manpower Controllers, is continuing to afford first priority production to these items. The benefit of this arrangement is already apparent, as witnessed in the manufacture of 27,350 suits during the first quarter of this year. Strenuous efforts are being made to increase materially the supply of men's and children's clothing even to the extent of diverting manpower where practicable. Inspections are being carried out by
of the Factory Controller to make certain that the manpower within the industry is being used to the best advantage.’ Clothing rationing ceased in repre- sentatives representatives 1947 .
Ultimately even New Zealand-grown foods were rationed. Increasing pressure to supply maximum quantities of bacon and ham to Some minor exceptions were made. In the following month bacon and ham curers were placed on a quota of a certain number of pigs per month. The restrictions on pork were lifted on
Butter rationing commenced in The ration was reduced for most consumers to 6 oz. a week in
Rationing of butter gave rise to requests for special consideration for workers in heavy industries; in fact, in some cases, the requests became vigorous protests, and the Minister of Supply was moved to reply publicly. The Dominion reported:
‘The threat by the
West Coast timber workers to strike unless the butter ration was increased to 1 lb a week for all workers engaged in the timber industry was the subject of a statement last night by the Minister of Supply, Mr Sullivan.‘Actually, prior to the annual meeting of the Union at Grey-mouth representations in the normal way had been received on behalf of the timber workers from Mr F. Craig, National Secretary of the Timber Workers Union, and along with representations from the
Federation of Labour on behalf of other groups of workers in heavy industries, the timber workers' case was being considered by the Government. These investigations are not yet complete, but when they are the Government will make its decision in respect of all representations received, solely on the merit of the respective cases and on no other basis.‘“I desire to make it perfectly clear that the Government has no intention of allowing its consideration of the matter or its judgment to be diverted in any way by threats or inflammatory language….”
‘The Minister paid a tribute to the splendid war effort of the timber workers in both Islands throughout the war, specially the forest companies who went to
Britain , where the services they rendered earned the highest praise from the British authorities.’
Discussions then became much less public, but a fortnight later the same paper reported:
‘It has been decided to grant coal miners an extra ration of four ounces of butter a head a week, according to information received in
Christchurch today. Sawmillers and bush workers living in isolated districts will also qualify for this additional ration, especially those in localities where their diet is restricted because of lack of normal shopping and other facilities.’
Thereafter criticism of the Government waxed eloquent.
This extra ration was continued for the duration of butter rationing. Some other groups, such as freezing chamber hands, were also given the extra ration.
It was estimated that restrictions on the use of butter by consumers and by manufacturers reduced per head consumption in New Zealand by a quarter, and made available an extra 8000 tons a year for export or supply to the
Cheese was not officially rationed to consumers, but available supplies were shared out by individual grocers. The amount of cheese released by factories for local consumption was subject to regulation by the Food and Rationing Controller. Cream could not be sold to consumers except to persons suffering from certain ailments.
Meat was rationed from Rationing applied to practically all fresh carcass meat, an exception being mutton skirts. The value of the original adult weekly ration, estimated to purchase on the average 2½ lb of meat, was fixed at 1s. 9d., increasing to a maximum of 2s. according to seasonal price changes. Children under five years (excluding infants under six months) were allowed half-rations. On Additional allowances were granted to certain classes of workers because of special working conditions, and to persons suffering from certain ailments. Manufacturers (of pies, etc.) were allowed two-thirds of their pre-rationing usages. Canned corned beef and corned mutton were not available for local consumption except by workers in isolated districts where there was difficulty in obtaining fresh meat. Although there was no restriction on the local sale of canned tongues they were practically unobtainable. There was no restriction on wet packs, that is, mixtures of meat and vegetables. Freezing companies were instructed to limit their deliveries of edible offal to the local market to the pre-rationing level. Poultry and fish were not rationed. Information from New Zealand Official Yearbooks.
Arrangements for the less formal sharing of supplies of eggs and other essential food items have been discussed earlier in this chapter. For most of the widely used essential items, the Government introduced some method of equitable distribution, unless, as in the case for example of flour and bread, See also p. 143.
A comparison of weekly food rations in New Zealand and the
Most of the rationed items were price-controlled and many were subsidised. Subsidies and price control were discussed in Chapter 12. Apart from their use in curbing some of the effects of inflation and removing some of the influences tending to further inflation, consumer subsidies made possible a fairer distribution of scarce goods. Without subsidies and price control the better-off sections of the community would have received an increased share, simply because they were able to pay higher prices than some people could afford. However, the artificially lowered prices, by keeping up
Supply problems for the private motorist were discussed in Chapter 6 and 15. pp. 117–18 and 416–19 respectively. The Transport Department reported in Parliamentary Paper H-40 for ‘Gas-producers. These plants are manufactured under licence from the Factory Controller. The issue of permits to fit them was transferred from the Factory Controller to the Oil Fuel Controller last June, and since that date permits have been issued for 196 cars, 96 trucks in the
Initially, sheets of consecutively numbered coupons, each for two gallons, were issued to motorists through the Post Offices; and the Oil Fuel Controller had power to fix the date after which any particular coupon could be redeemed. In
After the suspension of rationing in December and January, four 2-gallon coupons were made redeemable in
With the relicensing of motor vehicles at the end of May, cars were divided into three groups: under 9·5 horsepower, from 9·5 to 14·5 horsepower, and over 14·5 horsepower. Basic rations starting in June were to be 6, 9 and 12 gallons a month respectively, to give between 216 and 225 miles of running. However, with the fluctuating supply position, these allocations were varied from time to time. In About two-thirds of normal.
Usually, rather more than the normal allocation was made available for the Christmas holiday period.
Petrol rationing continued until See also p. 421.
With shortages, rationing and price control, a certain amount of black-market selling of goods was to be expected. From time to time cases came to light. It is probable, however, that most consumers abided by the spirit of the rationing arrangements and that, where black marketing tended to develop, it was nipped in the bud. The Courts generally took a firm stand. In dealing with cases of black marketing of motor spirits in Dominion,
‘I think it is appropriate, before inflicting penalties in these cases, that I should state, now it is evident that rationing is likely to be increasingly extended to other goods and commodities, that I consider it is essential that any attempt to foster black markets in New Zealand should be promptly crushed. The only way, in my opinion, to do this, is to inflict such penalties as will not only punish the present offenders but will be of sufficient severity to deter others from following their examples.’
Marketing of scarce farm products was much more difficult to control because of the wider variety of possible selling points. Farm-gate purchasing of eggs by consumers, for example, has normally been a method of disposal of part of production. With supplies short, and the Government endeavouring to provide priorities for pregnant mothers and others with special needs, practices such as this had to be curtailed in the interests of a fair distribution to all consumers. There were other problems with regard to eggs. For example, the Dominion reported in
Ibid.,
‘“A big black market in eggs is developing in
Auckland andWellington , and it is draining eggs away from the distributive channels,” said the Minister of Marketing (Mr Barclay) to a deputation ofChristchurch commercial egg producers, who complained yesterday they had been penalised by their loyalty to organised marketing in having to send eggs toWellington . Their complaint was that they were charged double commission and grading fees, and their receipts were below those obtained by producers who marketed eggs inChristchurch .‘“… The opinion of the
War Cabinet is that the Regulations will have to be more drastic to force all eggs through thedistributive channels,” said Mr Barclay. “There will be a shortage of eggs for pulp and everything this year.”’ Egg marketing arrangements were discussed earlier in this Chapter (p. 461). Eggs were price-stabilised from
1 September 1941 . See p. 283.
Eight days later, on 18 June, the Egg Marketing Emergency Regulations tightened up marketing arrangements. See also p. 462.
Prescribed marketing channels for fruit and vegetables were also evaded at times. On Evening Post reported:
‘Prosecutions were pending in a number of districts for alleged cases of black marketing, said the Minister of Marketing (Mr Barclay) today.
‘The
Internal Marketing Division was endeavouring to put a stop to black marketing and was investigating any cases brought to its notice, added the Minister.‘He was commenting on a report from
Christchurch that increased black market trading in fruit and vegetables was alleged by retailers, brokers, and growers. One allegation was that more pears were being sold on the black market than through regulation channels.’
These are some of the bad examples and should not be allowed to give the impression that such practices were widespread. No full survey is possible, but for most commodities black marketing seems to have been kept to narrow limits.
In all the war years, including periods of greatest stress, when industries were being rigorously examined to see whether they were essential to the war effort or not, New Zealanders had to have their cigarettes, their beer, and their horse racing. Soon after the outbreak of war, the question of the unrestricted continuance of race meetings was raised by various people, but a number of arguments, many of them quite ingenious, were put forward against curtailment. In
There was, however, growing pressure against the full-scale continuance of racing when a maximum war effort was being sought. In
In spite of protests against this curtailment, it continued until
In
The war gave New Zealand its first experience as host to foreign armed forces. The arrival of American forces in For example, Churchill wrote, on ‘The fact that an American Commander will be in charge of all the operations in the Wood in his Chapter 16 deals with New Zealand's defencelessness at this stage.Documents, Vol. III, No. 160 (
The position seemed to change completely when the USS See also Table 15.Wakefield entered Wellington Harbour on
The first American arrivals found camps ready for them. Many more camps were to be prepared by New Zealanders for American servicemen and much of their food was to be supplied from local production. Besides the camps, hospitals to accommodate 9400 patients, stores and many other buildings were constructed and handed over for American use. See also Chapter 9.
Relationships between New Zealanders and the visiting servicemen were most friendly. An American writer sums up for one Marine division: Richard W. Johnston, Follow Me, p. 83.
‘It is doubtful if any alien troops ever received a warmer and more sincerely friendly welcome than the Second Marine Division got in New Zealand. Nearly every home was open to them, and thousands of Marines learned the niceties of 11 a.m. “morning tea” and 4 p.m. “afternoon tea”. As often as they could the Marines donned their green winter service uniforms and responded to dinner or week-end invitations in
Wellington ,Paekakariki ,Otaki ,Palmerston North , andFoxton . The friendship was not one-sided—the Marines immediately and immensely liked the New Zealanders, and they charmed their hosts and hostesses by quickly adapting themselves to local ways.’
American servicemen spent freely in New Zealand. They were paid at higher rates than most servicemen of other allied countries. Those who had been in action had substantial amounts of back-pay to draw. Their dollars, exchanged into pounds at the current rate, would buy much more than in the
Florists, milkbars, hotels, night clubs and restaurants did a roaring trade with the Americans. Taxis could not cope with all the business offering; dry cleaning and pressing shops were overworked.
To the New Zealand consumer this extra demand was not an unmixed blessing. Many traders saw such good profits to be made from the Americans, with their high pay and free spending, that they annoyed New Zealanders by neglecting them. Commodities already in short supply became even scarcer under pressure of the American demand.
Equally significant was the effect on the labour market. The American authorities, in
At current rates of exchange these wage rates may not have seemed high to the Americans, but their purchasing power in New Zealand was greater than similar workers could have had in
In Waterside workers handled American supplies from ships' holds to the wharf sheds.
In
Not only were high rates paid for most of this cilivian labour, but the supervision seems often to have been inadequate. Large sums were paid out in overtime, but there was often no effective check on hours worked. Some employees claimed and were paid wages for hours of work which they could not possibly have worked. One, for example, was paid for hours which implied that he had averaged three hours sleep each 24 hours for a fortnight. While this was an extreme case, plenty of other improbable cases came to light.
Meantime, after
A fundamental difficulty was that there was no central
The New Zealand Government was embarrassed by the higher wage rates being paid by the All labour except administrative personnel was to be paid under Reverse Lend-Lease.
Had this important fact been made known earlier it might well have changed the course of events. The Secretary of Labour wrote in July: Secretary of Labour to Officer in Charge of
‘… had it been made known to the late Mr Coates and myself when we visited
Auckland last November that wage costs were a charge against lease-lend, we would, I think, have been in a different position and could have requested closer control over the wages paid.’
Further representations were made to the
There is no real excuse for the New Zealand failure to realise the implications of the Lend-Lease Agreement. But perhaps the rather loose arrangements for employment of civilian labour by some American authorities highlights a more important point. There is a need to guard against a possible weakness in inter-Government reciprocal arrangements, such as the Lend-Lease Agreement. One government, not having to bear the cost, may have an inadequate incentive to provide effective supervision of the people it employs; the other, not being directly concerned in particular contracts, is unable to do so.
These economic influences of stationing American servicemen in New Zealand, while they had an important effect on life in New Zealand at the time, were trivial compared with the economic advantages of the movement of supplies under the Lend-Lease Agreement. Moreover, the most significant aspect of their presence here was the measure of security it brought against Japanese invasion.
Most United States personnel had left New Zealand by the middle of
In Evening Post,
‘The United States Naval Operating Base in
Auckland will be closed on Sunday morning and its officers and enlisted men will leave New Zealand shortly. The American flag, which flies over the Base headquarters, will be lowered at 9 a.m. and this small ceremony will virtually close a period in New Zealand history which has been of great significance to this and neighbouring countries, and of intense interest to all New Zealanders.’
It was inevitable in time of war that freedoms would be lost and people would have to suffer a reduction in living standards. The much reduced supply of goods would be distributed equitably only if very great care was taken.
The surprising thing was the smoothness with which sweeping economic adjustments were made, and the readiness with which they were usually accepted. A number of exceptions have been noted, for example the scrambles, on occasions, to get possession of scarce supplies of a particular commodity. These were usually of short duration, and the practice of queueing for supplies did not reach unreasonable proportions in New Zealand. These facts, put against the background of increased incomes, a large reduction in the per head availability of goods, and comparatively stable prices, must stand as a tribute to those who were responsible for the organisation of rationing and marketing in New Zealand. They are a tribute, also, to the tolerance of the New Zealand consumer.
Services as well as goods tended to be in short supply. Electricity and gas shortages were discussed in Chapter 16. Delivery services of bread and other commodities were eliminated. Milk deliveries continued but were zoned.
Apart from the effect of petrol rationing on private motoring, travel became more difficult. Train services were restricted from Over 100 miles in the
Most health services had been newly taken under the social security scheme, and were used more intensively than before the war. Hospital and maternity benefits had been introduced in
Many people who, because of wartime shortages, were unable to buy the things they wanted, set aside their money for use when goods and services became available. Savings bank deposits had changed surprisingly little in the twenty years 1921 to 1941. In the former year there was £43 million to the credit of depositors and in See also Chapter 10.
Thus did the people accept reduced living standards. Many other wartime sacrifices were required of them. Even conscription and direction into industry were widely accepted, when the time showed them to be necessary. Reasonable equality of sacrifice was all that was asked by most people, and, apart from one or two groups which seemed to be naturally militant, it was only when major inequities seemed to be emerging that any large body of people showed reluctance to meet the demands of a war economy.
WHEN the armed forces reached their peak strength, in
The threat of Japanese invasion had seemed most ominous in the first nine months of
But the limit had been reached. It was difficult enough to transfer so many people out of industry; quite impossible to keep the economy working efficiently without them. What had been achieved under stress of the threat of Japanese invasion could not be sustained for more than a few months.
From the middle of
In
The Government, however, faced with commitments to maintain overseas forces on two fronts and still seized of the need to strengthen the home army, decided to continue with the ballots.
It was already apparent that the demands of the armed services for more men could no longer be met without curtailing food production and essential services.
There was some pressure at this stage for a ‘total war effort’, See also p. 456.
In Wood, p. 248.
‘Administrative difficulties would have been immense, and unless the community had been confronted with an immediate threat of invasion or defeat, discontent at such drastic measures might well have been keen enough to cause that economic dislocation which they had been designed to avoid.’
In the event, the
We have seen, in Chapter 5, how men had been drawn out of the unemployment pool and from subsidised work, as wartime pressures for extra manpower increased. Of 19,000 men on unemployment benefit or in subsidised employment in
Even with the absorption of this reserve pool of labour, together with the wartime entry of some 36,000 extra women and the return of many older people into the labour force, the supply of labour to meet the needs of wartime production remained pitifully
See also Table 19.
As late as mid-
Without further mobilisation of manpower and much more intensive use of the remaining industrial labour force, it was impossible to meet all demands.
The Battle of Midway on As quoted in The War, 1939–1945, p. 715; edited by D. Flower and J. Reeves.
‘… This battle was a decisive American victory by any standard. It was also the third great turning point in the war in the
Pacific . Midway stopped the Japanese advance in the Central Pacific; Coral Sea stopped it in the South West Pacific;Guadalcanal stopped it in the South Pacific…. If our ships and planes had been routed in this battle, if we had lost it, our troops onGuadalcanal would have been trapped as were our troops on Bataan. We could not have reinforced them or relieved them…. Unobstructed, the enemy would have driven south, cut our supply line to New Zealand andAustralia and enveloped them.’
Much bitter fighting still remained, but
In
Towards the end of
Writing to Mr Churchill in Cable No. 176, Prime Minister of New Zealand to Prime Minister of Documents, Vol. II.
From 72,000, in
The reduction in armed forces strengths and the return of men to civilian work was not nearly fast enough for industry; and the continual combing out of industry during Southland Daily News, NZPD, Vol. 262, p. 66,
The following month Mr Fraser warned Mr Churchill, Cable No. 222, Prime Minister of New Zealand to Prime Minister of Documents, Vol. II.
In an endeavour to plug gaps in essential industries, direction of civilian labour was intensified in
The strength of the army in the At this stage 3 Division was embarking on the first of its three Island actions, on The Pacific, Chapter 5.
In Dominion,
The urgency of the need to reduce the strain on civilian manpower was matched only by the Government's reluctance to withdraw from either of the overseas theatres in which New Zealand forces were engaged. To maintain a division on both fronts, and to keep up food production, was obviously impossible, but, while the production of food was coming to be seen as New Zealand's main war contribution, neither Churchill nor Roosevelt could be induced to condone the withdrawal of New Zealand forces. Churchill wanted 2 Division to take its place at the fall of Rome The Hon. W. Nash ( New Zealand Minister (Documents, Vol. II, p. 337.Documents, Vol. II, p. 329.
To place the flow of food in jeopardy was out of the question. The decision had to be made between the withdrawal of 2 Division or 3 Division. New Zealand had to make the decision; her allies would not make it for her. As with all difficult decisions, it tended to be deferred.
By the end of Documents, Vol. III, p. 430.
‘From a survey of the manpower situation undertaken by
War Cabinet it is apparent that New Zealand is faced with a most serious crisis, particularly in regard to the production of foodstuffs. Accordingly every effort is being made to effect the temporary release of any further men from the Armed Services, and it is most earnestly desired that men who are to be relieved of garrison duties in thePacific should be brought back to New Zealand, if possible before the end of the year. Indeed, unless these men in thePacific can be made available for employment in the freezing works before the peak of the season in January, it will not be possible to fulfil the commitments in respect of meat, either for theUnited States Forces in thePacific or for the urgent needs of theUnited Kingdom .’
The number of men serving with the Army in the
Between November 1943 and February 1944, the strength of the home forces was reduced by 9000 men. The Army and Air Force under the harvesting scheme supplied 6900 men on a temporary basis.
A statement by the Minister of Industrial Manpower on the 1943–44 season gives some indication of the expedients to which the Government was driven to tide over the seasonal peak: Dominion,
‘The services of almost ten thousand teachers, students, and schoolchildren had been used by the
National Service Department during the recent summer vacation period to assist in various forms of nationally urgent work, stated the Minister of Industrial Manpower, Mr McLagan, yesterday. In paying a tribute to these people, and to the University authorities and educational bodies for their assistance, the Minister said it looked as though New Zealand would have obligations just as great, if not greater, in respect of seasonal industries this coming season, and it might be necessary to seek similar assistance again.‘“The response from all concerned last season was most willing,” the Minister said. “From the University and Training Colleges we brought under direction
2099 men students and1720 women. In addition, 212 men teachers and 558 women teachers were called up to help. These 4589 persons represented a large and willing labour force whose availability proved to be of the greatest moment in meeting our seasonal requirements. These people worked under the direction of the Manpower Officers, and as a whole they appear to have been reasonably satisfied with their conditions. There have, I am aware, been a few cases where persons were less fortunately placed and I am having any such cases fully investigated, so that their occurrence can be minimised should a similar necessity arise at the end of this year”.
‘The Minister said the main classes of industry to which the holiday workers went were as follows:
‘“We had also,” said Mr McLagan, “a very large army of most willing younger workers, who volunteered from the post-primary schools. Altogether we had the voluntary assistance of 3271 schoolboys and
1958 schoolgirls. This is apart from many who assisted in various ways without coming under the notice of the Department. The cumulative total of the work of these young people in the fields and vegetable gardens, if it could be measured into thousands of tons of foodstuff which they handled, would be amazingly great. I wish to express my thanks to all these for the fine way in which they helped us in a national service of the utmost urgency.”’
A summary of the manpower problem of the time was available to Cabinet in a survey which was later conveyed to Mr Roosevelt by Mr Nash. His letter read, in part:Documents, Vol. II, No. 362,
‘The position in New Zealand requires some clarification in order to determine the most effective method by which we can use our manpower to help the war effort.
‘Our position at the time of the most recent full analysis was as follows:
|
Total number of males between the ages of 14–64 | 600,000 | |
Of this total those engaged either full time with war and defence forces—in munition and war equipment manufacture—essential work, or minor, less essential work numbered | 560,000 | |
Total number of males between Service ages (18–40) | 330,000 | |
Of this total, at middle of last year those serving full time in Army, Navy or Air Services (exclusive of casualties) numbered | 149,000 | |
Of this 149,000, the forces overseas totalled | 70,000 | ‘The large proportion engaged in full-time war services is causing a reduction in our production of primary products. When I left New Zealand, for instance, in December last it was not possible to obtain full production in our meat freezing works (corresponding to your meat packing-houses) owing to shortage of manpower. Our butter, cheese and meat production from the farms is also declining owing to shortage of manpower (and of fertiliser, which is in very short supply).
‘We are anxious to use our full resources to finish the war at the earliest possible date, and also to meet all our commitments overseas, but we have to determine now where our manpower can best be used.’
Since
Mr Fraser wrote to Mr Churchill:
‘The whole question of our overseas commitments has now to be reviewed, in view of the fact that New Zealand has reached the end of its resources of manpower not engaged in essential industry and fit and available for service in the armed forces.’
Documents, Vol. II, No. 360,19 January 1944 .
Under extreme difficulty the Government had succeeded in maintaining two divisions overseas until early in
The main
British food supplies were getting critically low. New Zealand dairy production in the 1943–44 season was at its lowest for over a decade, and meat production while higher than before the war was well below the preceding four wartime seasons.
In the early part of
Confirming a Letter copied in cable Nash to Fraser,
‘… I would like to give you a few figures illustrating the vital importance of New Zealand's production of meat and dairy produce to the people of this country and to our Armed Forces. If New Zealand's production declines below the present level I do not see how we can possibly maintain our present standards of feeding in this country. Indeed I cannot be certain that we shall achieve this even if there is no further decline in the supplies you can send us and I can see no hope of making good our prospective deficiencies from any other source. It is the considered view of Cabinet here that the general standard of our civilian rations is not capable of any reduction if we are to keep the nation fighting and production fit. Therefore if some substantial reduction of the essential supplies which we get from your country has to take place our Service rations will almost certainly have to take a share in any cuts that have to be made. The following figures show the extent to which we depend on New Zealand for meat, butter, cheese.
‘
ButterTo maintain our present ration of two ounces per week we need to import in1944 160,000 tons of butter. Of this quantity we are looking to New Zealand to provide 96,000 tons. For practically all the remainder we look toAustralia .‘
CheeseTo maintain our three ounce ration we need 224,000 tons of imports and we are looking to New Zealand to provide 85,000 tons for this country and for our Armed Forces overseas. As we shall not get more than 80,000 tons of cheese from the U.S.A. in1944 , we shall probably have to reduce cheese ration for a number of weeks and replace this with canned meats from our protein reserves.‘
MeatAlthough we are not so dependent on New Zealand to the same overwhelming extent for the maintenance of the 1s. 2d. meat ration, we are looking to New Zealand for 210,000 tons of frozen meat in1944 .‘We must either get this quantity from New Zealand or we must look to the U.S.A. to supply us with whatever deficiencies in our liftings from New Zealand is caused by the supply of New Zealand meat to the U.S.A. forces in the South Pacific.
‘New Zealand has been able to send us substantially greater quantities of these foods in the past. For example, in the four years 1934–38 our average imports of butter from New Zealand were 136,000 tons and of cheese 89,000 tons. In the year 1940–41 you actually supplied us with 107,000 tons of cheese. In the case of meat our average imports from 1934–38 were 260,000 tons, and in the first year of the war 285,000 tons.
‘The particular foods which New Zealand sends us are those of which we are now in most need. It is in livestock products that we suffered our most serious reductions over pre-war consumption levels, and my scientific advisers tell me that our consumption of animal protein foods is now as low as it can safely be.’
Faced with these urgent British needs and with increasing American requisitions for food and services for her forces in the
As an additional measure, to step up food for
It fell to the lot of General Barrowclough, commanding 3 Division in the Quoted by The Pacific at p. 198.
‘No modern war can be won by the fighting services alone. The production of warlike equipment and stores and primary products (including food) is as essential to the war effort as is the work of the soldier in the front line. By virtue of her geographical position on Allied lines of communication and because of her natural resources, New Zealand has been requested by the highest Allied authorities and as part of the general war strategy, to undertake a greatly increased programme for the supply of food and other primary products. This she cannot do without some reduction in the numbers of her armed forces. It has been agreed that she ought to recall from active service certain categories of men whose work in primary and essential industries at home is likely to be of greater assistance to the war effort than is their continued service with the colours.’
The scheme for diversion of men from the
Estimates for farming and related industries comprised:
For other essential industries the estimated needs were:
First priority was the return of 7000 men for dairying. They would be needed by July to start the 1944–45 season.
The estimate of minimum labour requirements for farming turned out to be far too high. Farmers and Primary Production Councils had overstated shortages, and there was no proper picture of labour trends on farms against which their estimates could be checked. Mechanisation and new methods on farms had reduced labour needs far more than was realised. Instead of 7000 men, expected to be needed by July for dairying alone, only 4286 men could be placed on all farms by November. The experiences of the pp. 193–4.
This unfortunate experience highlights the need for good background statistics in making the type of judgment which was required of the
In Chart 77, successive census results are compared, the use of male labour in each major industry group being equated to 1000 in
Labour force changes up to Including about 700 women.
While 3 Division was being reduced, there had been growing agitation in New Zealand about the strength of the armed forces held in New Zealand when the Japanese were on the defensive. A committee of civilians, the
Action was too slow for some critics, and, on New Zealand Herald launched a full-scale attack on the
The full article and a discussion of it is in War History narrative, ‘The Manpower Situation in the
‘The time has come for New Zealand to be satisfied whether its present Air Force establishment is necessary. It should be told why the colossus which was justified in 1942–43 should retain its stature in
1944 when so much of the excuse for its size has apparently disappeared as rapidly as the war in the South Pacific has receded from this area.’
It has to be remembered that, as 3 Division was reduced, the Air Force and the Navy became New Zealand's only sizable representation in the
The strengths of the forces in New Zealand were, compared with a peak strength of 107,000 in
Squadron Leader Ross writes: Squadron Leader J. M. S. Ross, Royal New Zealand Air Force, p. 290.
‘On some stations and in some trades, manpower was not used to the best advantage and there was room for improvement; but in general the position was not nearly as bad as the public was led to believe.
‘A certain discrepancy between available manpower and immediate needs at the time was inevitable. The RNZAF had been expanding its
Pacific strength as rapidly as possible to meet its commitments, and was in the process of levelling off. There was necessarily a slight time-lag between the achievement of full strength and a review of that strength to see if it was too great or too small for the job in hand.’
In This was eight months after the decision had been made to reduce the strength of 3 Division. See also p. 489.
Actually, by the end of August, the Army had only 3400 men left in the Parliamentary Paper H–19b,
Gillespie says, The Pacific, p. 202.
At the end of H–11a, Report of the
Meantime industry was repeatedly being combed through to find fit men suitable for armed service who could be taken into the forces without hampering essential production.
Between peak mobilisation in about
In late Documents, Vol. II, No. 412.
In Writing to Minister of National Service,
The only remaining reserves from which new military recruits could be obtained were men held in essential industry. Cabinet decided, in February, that a further comb out of industry was to be made and, except in sawmilling and coal mining, 20 per cent of the appeals reviewed were to be dismissed without reservation. The effect of this drastic instruction was to bring about an increase of 3000 men by
There was, however, increasing restiveness in industry about manpower policy, especially in view of the need for extra food production and the banking up of long-deferred civilian demands for many commodities.
By the end of
Between peak mobilisation in 2 Division, in
The end of the war in
There were still 56,000 men and women serving in the forces in See also Chapter 20.
VE Day,
VJ Day,
IN the first half of Demobilisation figures are taken from reports of the A).
Where strengths of establishments were to be reduced gradually, priority was given to men whose release was applied for on industrial or compassionate grounds. Farming, dairy factories, sawmills, coal mines, and the building trade were given preference for release on industrial grounds. Apart from these special releases, the aim was to release first, if possible, those who had completed four years' service, and married men with children.
At
Early in J Force.
Chart 78 shows the progress of demobilisation.
The rate of discharge was about 4000 a month from
When discharged, servicemen were given 28 days' leave on pay, a free railway pass for a month, and an allowance of £25 for civilian clothes.
In NZPD, Vol. 271, p. 622.
‘Let me summarise: (1) The gratuity is 2/6d a day for service overseas, and 8d a day for service in New Zealand. (2) The serviceman will require to make application for it; application forms will be made available at an early date at post-offices, Army offices, and other places throughout the Dominion. (3) After an application has been checked …, the serviceman will own money in a post-office savings-bank account.
(4) The minimum payment on behalf of a deceased serviceman will be £200. (5) The minimum for a permanently totally disabled serviceman, £200. (6) For each of three years a 5 per cent bonus will be paid on the 31st March on the sum remaining in the War Gratuity Post-Office Savings-bank Account. (7) A five per cent discount will be given to a serviceman for all money used to pay off capital sums approved by the Minister of Defence. (8) All gratuities are free of taxation—social security charge, national-security tax, and income tax. May I, in conclusion, urge again the imperative necessity, in the interests of the serviceman and the interests of the economy of the country, that the minimum should be withdrawn and spent, and that the maximum sum be left until the end of the period? It will pay the serviceman, and it will pay the country.’ The purposes were specified thus: (
a) For the purpose of purchasing a home, or furniture, or any other real or personal property for the investor: (b) For the purpose of establishing the investor in any business, profession, trade, or occupation: (c) For any other purpose approved by the Minister. (Section 10, War Service Gratuities Emergency Regulations1945 . Gazetted23 November 1945 .)
Nearly £23 million was paid out in gratuities. The injunction and encouragement to defer spending them had some effect. In
The general economic situation had an important influence on the progress of re-establishment of men in industry. It was quite apparent from the reduction in numbers of unemployed, the increase in vacancies in industry, and the clamour by employers for a more speedy reduction in the numbers of men serving in New Zealand, that, initially at least, there would be less difficulty in finding suitable employment for men who were demobilised than there had been after World War I.
As it turned out, the shortage of labour generally was to continue, and to make the problem of rehabilitation comparatively simple. The Parliamentary Paper H–18, p. 14.
‘The continued buoyancy of demand for labour in industry, together with a marked and commendable inclination of exservicemen to “settle down” in employment within a reasonable time after discharge from the Forces, has rendered the problem of placement of ex-servicemen a comparatively light one.’
At this time 95,000 out of 167,000 demobilised ex-servicemen had been self-placed.The New Zealand Economy in War and Reconstruction, p. 59.
Where servicemen had to be found employment, the newly-emerged Previously the
Where necessary, certain expenses incurred in finding employment might be met by the Board, including fares, travelling allowances, costs of removal of furniture and effects up to £25, and a separation allowance if a man was obliged to maintain two homes.
Substantial numbers of women and older people, who had joined the labour force during the war, resigned as servicemen returned to work. However, there remained plenty of jobs for all who wanted to work. Even when general demobilisation was complete, factories, unable to get enough workers, were still paying in overtime £10 million a year more than before the war.
Those servicemen who wished to return to their former employment were protected by the Occupational Re-Establishment Emergency Regulations
The Government's policy was that nobody should lose civilian status because of his service with the forces and, where necessary, the regulations were interpreted accordingly. In giving a ruling on a particular case, in
Actually, very little use had to be made of these regulations, and there were fewer than 200 cases of alleged breaches between the years 1940 and 1948. In nearly every one of these cases, discussion or a warning was sufficient to induce the employer to comply. The acute shortage of labour, which built up during the war years and continued into the post-war period, no doubt accounted for the exceptionally small number of cases in which the regulations had to be enforced.
Special problems arose with regard to apprenticeship, and separate legislation provided for the suspension of contracts and for their revival when military service was completed. Suspension of Apprenticeship Emergency Regulations
In spite of this protection, many apprentices, when they returned to work after military service, found that their wages under the existing contracts were too low. They were now older than an apprentice would normally be, and military pay and privileges had altered their standard of living. General dissatisfaction with apprenticeship wages encouraged those who returned to take up unskilled work, which was readily available and returned higher rewards. The only solution was to pay journeymen's rates, in order to avoid the loss of potentially skilled men and wastage of earlier apprenticeship training.
All parties were agreed that apprentices should not suffer financially as a result of war service, but employers considered that, as the apprentice would be receiving a higher wage than his economic worth, a proportion, if not all of the loading, should be a charge on the community. Eventually an arrangement was reached whereby in most cases the employer undertook to pay one-third of the difference between the maximum apprenticeship rate and the journeyman's rate, while the
While employers had extra responsibilities at the end of the war, with regard to the reinstatement of men who had joined the forces, they were rapidly being freed from other restrictions.
Further information is given in Parliamentary Paper H–11A, Report of the
On the surrender of
Complete abolition of manpower controls would mean that over a quarter of the labour force would be able to move freely for the first time for several years. Though it was obvious that the conclusion of the war must soon bring to an end most manpower controls, this important change in the relationships between employer and employee needed to be made with a certain amount of caution.
The H–11a, Report of the
‘In regard to the removal of controls generally it was necessary to bear in mind the need for continuing to meet the requirements of men overseas—particularly for food—the necessity to push ahead with housing, and other work necessary for rehabilitation and the transition from war to peace; and the need to maintain an operative minimum of labour in key industries and services through the transition period. It was apparent that no wholesale removal of controls could take place immediately, but that relaxation must be a gradual process to smooth over the change from wartime to peacetime activities as much as possible.’
On
A few days after the end of the war a public statement summarised the Government's intentions: Evening Post,
‘Further relaxations of manpower controls announced last night by the Minister of Industrial Manpower (Mr McLagan) provide for exemption from liability for future direction of all married women, irrespective of age, of all other women 30 years of age and over, and of all men of 45 years of age and over. Employers will not need to obtain consent for the engagement of labour within exempted classes, provided they notify all such engagements to the Manpower Officer within seven days. Most declarations of essentiality are to be removed by the end of the year, and some large groups by the end of September. All married women will, on application, receive automatic consent to leave essential industries if they desire to take up home duties….
‘“With the end of the war against
Japan ,” said the Minister, “the Government has given immediate consideration to the maximum extent to which manpower controls can at once be further relaxed. There are, of course, some industries and services which have a particularly vital part to play in giving effect to the rehabilitation programme and the production of food for export and which will have to rely (though to a steadily decreasing extent) upon assistance from manpower control and direction measures. These will include such industries as hydro-electric development, freezing works and dairy factories, sawmilling and housing, coal mining, hospitals and mental hospitals, certain public utility services, woollen mills, and possibly a few others. It is unlikely that we can remove control from these industries this year. Removal even in these cases will, however, be made as early as possible, and the position will be kept under constant review, and further relaxations will be effected as demobilization proceeds.‘“With the exception of the industries which I have already indicated, it is the Government's intention to have all other declarations of essentiality revoked by the end of the current year. In a number of cases the revocation cannot be effected immediately, but over the next few months very large numbers of men and women will be returning to industry from service in the Armed Forces, and their return will sufficiently ease the manpower position to enable these revocations to be effected. There are, however, a number of industries in which consideration of a number of matters (such as the ending of war contracts, the current manpower position in the industry, and the numbers of men and women likely to be returned from the Armed Forces) has convinced the government that declarations can be revoked by the end of September, if not sooner.”
‘… It will not be possible to avoid directions for some time yet, but in future directions will not be given to persons in the classes now exempted from the Employment Restriction Order. Directions will be restricted to only the highest priority industries, and other industries will be expected to rely upon voluntary sources of obtaining staff.’
From the end of
Meantime, further declarations of essentiality were being revoked. A Evening Post,
‘It is estimated that 8,085 undertakings and 96,500 workers will be affected by the revocation, as from today, of all declarations of essentiality, with the exception of those relating to the industries of coal mining, dairy factories, freezing works, hospitals, prisons, sawmilling and tramways, and some small industries subsidiary to them. The declaration covering hospitals and prisons will be lifted from February 28th, tramways on March the 9th, and the others probably on March 31st.
‘Announcing these revocations the Minister of Industrial Manpower, Mr McLagan, said the most important of the declarations now being revoked were in respect of the following industries:
Brick and tile works, building, canvas, cement, clothing, concrete products, engineering, fertilizers, fire boards, flour milling, footwear, furniture, Government services, including Public Works Department,
Rehabilitation Department ,Price Tribunal and second division Railway Department, laundries, main highways, rubber, sack manufacture, tanneries, timber merchants, woollen mills, hosiery, and knitting factories.‘“Since the cessation of hostilities it has been the policy of the Government to relax manpower controls as soon as practicable, having regard to the necessity to maintain important production and services till the benefit of demobilization from the armed forces can be felt,” said Mr McLagan. “Declarations of essentiality have been subject to constant review and considerable numbers have been revoked in progressive stages.”’
After There were 95 in February and March.
From
Safeguarding the interests of servicemen returning to civilian life was a
The Rehabilitation Act had been passed in
The principal function of the Council was to make recommendations to the Minister in Charge of Rehabilitation in relation to the re-establishment of discharged servicemen in civil life. In the main it was an advisory body.
The Board, under the authority of the Minister, was charged with making all necessary provisions for re-establishment. To this end the Board was empowered to use and co-ordinate the services of various Government departments and other organisations. Specifically, the Board had power to acquire property for disposal to discharged servicemen, to give them financial aid, to provide vocational training, to arrange employment for them and to recommend to the Government any modifications necessary to ensure their entry into any employment or occupation.
Initially, instead of setting up a special department, the Board appointed various departments and organisations as its agents in particular defined fields, but with a Rehabilitation Division of the
In Previously Lieutenant-Colonel
The aims of the Parliamentary Paper H–18, Report of the
In fact, in the immediate post-war years, the
From £6 million in 1944–45, rehabilitation expenditure, including loans, leapt up to nearly £16 million in 1945–46 and then, for the years 1946–47 to 1952–53, averaged over £19 million a year. Thereafter it decreased fairly steadily, to be under £7 million in 1962–63.
Chart 79 shows annual expenditure on rehabilitation.
From
The The Class A Scheme.
Under this scheme, the
During their period of advanced practical training, building trade trainees were engaged on the construction of houses under the Government's housing scheme. In Parliamentary Paper H–18, p. 10.
‘Since the modest beginning in
1942 , the output of State houses built by trainees (during the course of their training) has steadily increased to the extent that the Department is now one of the biggest contractors for State housing in the Dominion. The number of completed units has increased from 19 in1942 to 285 in1945 and it is estimated that by1947 some 1,400 houses will be built by trainees during that year.’
Provision was also made for the training of ex-servicemen in general engineering, welding, and the footwear manufacturing industry.
The last of the full-time Trade Training Centres closed in
A supplementary scheme B Class training.
The Board also assisted with the training of disabled ex-servicemen, the Disabled Servicemen's Re-Establishment League and the Blind Servicemen's Trust Board acting as its agents in appropriate cases.
For those who wanted to take up or renew university courses, bursaries were provided. By
There was a peak university attendance in
Of ex-servicemen, Condliffe wrote: ‘By the end of the financial year, The Welfare State in New Zealand, p. 96. The 4212 studying full-time refers to the number of students who were assisted in this way up to
Profiting by experience after World War I, when many untrained men who had been placed on farms were forced to abandon them, the Government classified applicants according to experience and ability. Inexperienced applicants who were otherwise suitable were given training before being placed on the land. Training farms were established, short academic courses were given for some of the more experienced men, and selected farmers provided training, while paying a wage which was subsidised by the
To facilitate the purchase of land on which to settle ex-servicemen, and also to prevent land speculation and undue increases in land prices, the Servicemen's Settlement and Land Sales Act had been passed in Subject to the right of the owner, if farming the land himself, to retain an economic unit. Section 53 (3) of the Servicemen's Settlement and Land Sales Act
There was some tendency for sales to be made at figures higher than those fixed by the Land Sales Committee, in cases where the prospective vendor was not willing to sell at that price. The fixed price would be recorded, and the balance paid secretly. A number of cases of extra payments being made came to light and others were suspected. See, for example, NZPD, Vol. 274, p. 821.
In addition, the Small Farms Amendment Act
The Government's policy of developing farm land before handing it over to ex-servicemen slowed up settlement, and gave rise to some impatience. In As reported in Evening Post,
‘two outstanding problems in connection with rehabilitation which still remained were land settlement and housing. The latest figures had not been released but he indicated that 4,000 ex-Service personnel had been settled on farms “and we still believe, despite criticism from some quarters, that our method of carrying out developmental work on blocks before handing them over to the men is the correct policy.”
‘There was no difficulty in acquiring land for the purposes required, but some years must necessarily elapse before hundreds of thousands of acres of undeveloped land were ready for ex-servicemen. However, the difficulty was to procure sub-divisional materials. The Minister said that the situation in regard to fencing wire, for example, was worse at the moment than at any time during the war. The Government was scouring the world for wire and had been able to obtain only small parcels.
“We are not getting one hundred per cent of New Zealand's requirements,” said Mr Skinner, “and there is no prospect of the situation becoming easier.”
‘However, the fertilizer situation had shown a definite improvement. The end of the shortage of phosphate rock was in sight. The supply of the latter would soon exceed pre-war requirements….’
By
The following table summarises the method of settlement of men on the land:
Settlement of ex-servicemen on the land was usually successful. The care taken in selecting and, if necessary, training applicants, and the policy of developing land before handing it over, reduced the possibility of failure. There were a few cases where farms proved to be uneconomic, or where for other reasons the Board had to give further assistance, but, generally speaking, ‘post-settlement problems have been very few in comparison with the assistance granted’. Parliamentary Paper H–18, Report of the
Considerable assistance was given to ex-servicemen who wished to establish themselves in businesses. In the early years of demobilisation, transport undertakings proved particularly popular as own-account businesses for ex-servicemen, and in H–18, p. 4.
‘For ex-servicemen wishing to re-establish themselves in civil life by the acquisition of their own businesses the field of transport is proving most popular. In point of fact, more ex-servicemen have been assisted into this field than in any other except farming….
‘Because of the supply position, the difficulty of obtaining suitable transport vehicles has been a serious obstacle to ex-servicemen. Arrangements have been made amongst the
Rehabilitation Department , theWar Assets Realisation Board , and theTransport Licensing Authorities whereby theTransport Licensing Authorities allocate all new and ex-service trucks and vans in accordance with certain priorities necessary to keep essential transport moving, and with due and full regard to the claims of ex-servicemen properly approved and recommended by theRehabilitation Department .‘The allocation of second-hand cars, ex-
War Assets Realisation Board , available for ex-servicemen is made by theRehabilitation Department , and those suitable for taxi or passenger transport services go to ex-servicemen applicants for those businesses. Very few cars are now left for release through theWar Assets Realisation Board . Negotiations have commenced for ex-servicemen to receive proper distribution of new cars as they become available.’
In its p. 5.
Nearly 11,500 business loans were authorised for ex-servicemen who wished to set up in business; 3800 of these were for transport undertakings, 1400 for building and related trades, 1100 for professional services, p. 9.
‘All except 13 of the 11,495 loans concerned were granted to ex-servicemen of World War II. The loans have been made in respect of businesses ranging from small suburban shops and
one-man businesses to larger-scale organisations in which several qualified ex-servicemen have formed themselves into limited liability companies. The majority have been successful and it has only been necessary to write off less than 1 per cent of the total amount approved.’
Some industries were subject to licensing after the war, and in many cases ex-servicemen were assisted by giving them preference in the issue of licences. Up to
While rationing was in existence, ex-servicemen were assisted by giving them preferences for rationed goods. More than
Except in special circumstances, rehabilitation assistance to establish ex-servicemen in their own businesses came to an end in
Housing for ex-servicemen was one of the major rehabilitation problems. Loans were granted for building or purchasing dwellings, and there was a preferential allocation of state houses. At least 50 per cent of state houses becoming available were allocated to ex-servicemen.
By
The Servicemen's Settlement and Land Sales Act attempted to stabilise the prices for dwellings as well as for farms, by providing that there should be a basic value, based on
For houses, as for farms, the law that no sale should be made at a price in excess of the fair value applied to all sales, not just those to ex-servicemen.
Here also, the law was generally effective in holding down prices, though it tended to reduce the number of sales. There was a fair
Hawera Star,
‘Allegations that returned servicemen, purchasing properties in Taranaki, paid special prices for such extras as clothes lines, fowl houses and concrete paths, have been commented on by the Minister of Rehabilitation, the Hon. C. F. Skinner, who has strongly condemned the circumvention of house values fixed by
Land Sales Committees . It was alleged inHawera recently, as an example, that in the sale of one property £300 was paid by a civilian purchaser for the front door mat as consideration above the price fixed by the Taranaki Committee.‘The Minister went on to say that by Section 14 of the Land Laws Amendment Act
1944 “It is an offence to offer or make any illegal payment or arrangement or to try to persuade anyone else to do so either before or after the hearing of the application. The wording is wide enough to include agents as well as principals, vendors as well as purchasers, and lessors as well as lessees.”’
Control of land sales, including farm land, was lifted in
As well as over 18,000 preferential allocations of state houses, 64,000 housing loans were authorised for ex-servicemen, and a similar number of furniture loans of up to £100. These figures are up to
The task of rehabilitation was tackled with determination and skill, but was made much easier by the continuance of full employment right through into the 1960s.
In its H–18, p. 4.
‘As in previous years the employment position of ex-servicemen has presented no problems to the Board or to the Department of Labour, which continues to act as the Board's agent in the employment field.’
Up to the end of The These totals refer mainly, but not exclusively, to World War II ex-servicemen. In its
In Dominion,
Perhaps the best summary of the effectiveness of rehabilitation is given by Condliffe, who wrote in
In Parliamentary Paper A–8.
Elaborating on the purchase of surplus war property, the acting Minister of Finance, Mr Sullivan said: Dominion,
‘In addition to the discussions which have now been completed concerning mutual cancellation of lend-lease and reciprocal aid, negotiations have been in progress during recent months on the separate question of the purchase by the
New Zealand Government of quantities of American surplus war material situated both in this country and in thePacific . This includes items such as earthmoving machinery, steel huts and hangars,civilian type aircraft, radio and navigational equipment, together with a large quantity of miscellaneous stores all in very short supply here, and which could not be obtained elsewhere. Satisfactory arrangements have been made to pay for this material without the necessity for immediate provision of dollar funds, by setting off the purchase price against contemplated expenditure by the United States authorities within New Zealand.’
Further details of the surplus equipment purchased were given by Mr Sullivan two days later: Evening Post,
‘The items include civilian type aircraft, together with spares; the Minister stated that arrangements are also being completed for the purchase of aviation aids necessary for internal air services and in connection with the Dominion's responsibilities on the international air route and for
Pacific regional services.‘The surplus property purchased from the
United States forces includes materials purchased in New Zealand and in thePacific . The following are the principal items involved in the purchase. Earth moving equipment and plant of a similar type, $2,274,000; hand tools for carpenters, engineers, etc., $55,000; miscellaneous textiles, $55,000; timber, 862,000 board feet, valued at $38,000; miscellaneous steel buildings, $254,000; tyres and tubes, $250,000; miscellaneous stores of a general character taken over in New Zealand, $454,000; various items purchased outside New Zealand, $30,000. Spare parts for heavy equipment, $99,000; freight etc. on purchases ex-Pacific , $491,000.‘These items make a total of $4,000,000.
‘In addition the
New Zealand Government is acquiring certain aircraft of a civilian type, together with spares, at an estimated cost of $750,000….’
Some of the equipment purchased was of vital importance to New Zealand at a time when deferred civilian works needed to be put into operation quickly, and when supplies of suitable equipment in New Zealand had been depleted, and orders for new equipment might not be filled for some time. The final shipment of heavy equipment from the
The accounting value of Lend-Lease aid from the New Zealand's more effective stabilisation policy put her at a disadvantage in trading relations with the Parliamentary Paper A–7,
In
Disposal of assets realised some £33 million, but, more important, an orderly method was found to bring as much as possible of the surplus material into peacetime use without delay, at a time when supplies of many lines were still very scarce.
Originally the Board had nine ex-officio members, This included the Minister of Finance, as Chairman, but he did not usually attend.
Government departments were to have first call on the surplus assets. An attempt was made to avoid dumping stores at bargain prices. On the other hand, it was necessary to push ahead with realisations to avoid deterioration or obsolescence of large stocks.
For commercial goods, trade channels were used where possible; otherwise goods were disposed of by tender or, failing that, by auction. Private treaty might be used where other methods failed.
Apart from assets declared surplus by New Zealand government departments, the Board purchased for disposal certain
Most sales were made in New Zealand, but overseas organisations took goods valued at over £500,000. Food to the value of £1 million was sent as a gift to the British Government. See also p. 526.
Surplus buildings and motor vehicles played a most important part in tiding over supply shortages in New Zealand. Many of the larger buildings were taken over by Government departments, others by local authorities. The Government had inaugurated a transit housing scheme in H–27,
By Including 1000 Bren-gun carriers. The figures which follow do not add exactly, due to rounding.
In The vehicles were awaiting repair in New Zealand when hostilities ceased, many of them needing a major overhaul. The government-to-government purchase of these vehicles was arranged in
On most counts, the Commission found that the Board had acted properly, but found it to be at fault in not insisting on at least a rough valuation of certain of the vehicles before dealing with tenders. Parliamentary Paper H–27A, dated
The Commission, however, made a more important observation. It said: Parliamentary Paper H–27A, p. 35.
‘I have the honour to report that I consider that in its present constitution the Board is too cumbersome a body for the effective discharge of its functions in a businesslike manner. The larger the number of members the more is the sense of personal responsibility dissipated. The evidence showed a too-ready acquiesence in the recommendations of the General Manager—the Deputy Chairman could not recall an instance where the Board had disagreed with the General Manager's recommendations—and the failure to give time to due consideration of important matters. The official members have not necessarily the qualifications to deal with business matters. The Board should be organised on a businesslike basis, as it would be in the commercial world. If the members are too numerous, there can be no adequate discussion of business in a reasonable time.’
Response to this comment was quick and effective. The p. 1.
‘Experience has shown that the Board as originally constituted and added to from time to time, a total of fourteen members, was too cumbersome a body for the effective discharge of its function. It was therefore recently decided to considerably reduce the size of the Board and as now constituted it consists of three members only….’
By
Up to
From the economic viewpoint, the cash realised was not so important as the fact that vast quantities of surplus war materials had been distributed through the peacetime economy in a reasonably orderly fashion. Above all, they had been distributed speedily and with comparatively little waste at a time when many materials needed to assist in post-war recovery and development were in very short supply.
Early in
Thus, when the war ended, New Zealand had an assured market for some years for her exportable food production.
The original bulk purchase arrangement for wool was not extended. It was to continue for one season's clip after the war. The arrangement terminated after the 1945–46 season. The situation for wool was quite different from that for the food products. Huge stocks of wool had accumulated, and their satisfactory disposal was expected to take many years.
On the other hand, the shortages of food were expected to continue. The Agriculture Department wrote: Parliamentary Paper H–29, Annual Report of the
‘In
1944 contracts were negotiated for the bulk purchase of meat and dairy produce up to1948 . It was recognised at this stage that there could be no sudden return to a system of free markets after the war; world-wide shortages would make a system of controlled marketing essential and at the same time they would give producers a degree of stability during the transition from war to peace.’
United Kingdom Government communications, initiating the discussions which led up to the This and his
‘My Ministry has been surveying the meat position with the object of ensuring that supplies may be available for a reasonable period ahead. I am told that the production of meat in New Zealand has not as yet been increased to any great extent (although steps which have been taken may be expected soon to produce results) and that the most effective way to increase it may be to give producers the confidence that would result from a long term arrangement to purchase their exportable surplus. We are accordingly prepared to discuss the purchase of your exportable surplus meat until the end of
1947 .’
Again, in
‘As you know the world supply position for milk products is causing us some anxiety and I believe your Government views with some concern the steady decline in exports from New Zealand to the
United Kingdom and Allied nations. You may consider a long term contract for a period similar to that suggested for meat, about which I wrote you on 31st December last, may not only help to stem this decline but may well stimulate production to an extent that would enable exporting to be resumed on a scale more nearly approaching that of immediate pre-war years. We are therefore prepared to discuss with the representatives of your Government the purchase of your exportable surplus butter and cheese for period ending with your 1947–48 production season.’
The arrangements concluded were for Government-to-Government sales, but there was to be consultation ‘as to ways and means of securing an orderly transition to the resumption of private trading if and when the present control is withdrawn or modified….’ H–30,
The problem for wool was to dispose of accumulated stocks without disrupting the market for the annual clip. At the end of the war it was estimated that this might take thirteen years. A contemporary statement summed up the situation: Annual Report of the National Bank of New Zealand, Ltd.,
‘Wool is in a state of transition. A controlling company in which the
United Kingdom ,Australia , New Zealand, andSouth Africa participate—the U.K. – Dominion Wool Disposal Ltd—has commenced operations as owners of a surplus, estimated at ten million bales, or two years’ normal supply from the Dominions, accumulated from British Government purchases during the war.‘Auction sales will recommence later this year, at which the Company will ensure maximum and minimum prices by buying in wools or releasing additional offerings from its own stocks, so as to provide orderly and progressive marketing of the surplus along with current annual clips without detriment to the value of either, or to the manufacturer. Good quality wools are not expected to sell for less than prevailing prices.’
In New Zealand, a
World consumption of wool increased faster than was expected; the Commonwealth surplus of 10 million bales was sold profitably at the rate of about 2 million bales a year. By New Zealand Official Yearbook,
War Expenses Account for the year 1946–47 recorded, under payments, an item ‘Gifts to Under UNRRA New Zealand also contributed over £5 million in the years 1945–46 to 1948–49 towards relief and rehabilitation in European and other countries. p. 522. As reported in the Evening Post,
‘You were so good as to indicate that the foodstuffs could be at our disposal for use where we think they will be needed. The gift consists of a great number of items. Certain of them we feel will be most useful in
India , particularly the whole milk powder, malted milk, and service type biscuits. These we have offered to the Indian authorities, who have accepted them with gratitude, and the necessary shipping arrangements are being put in hand. A part of the dehydrated vegetables will be needed inMalaya .‘We feel that it would be best for all the remaining items to be shipped to this country. The sausages, canned peas, canned tomatoes, and tomato puree, and possibly other items will be a welcome addition to our food supplies in the
United Kingdom . They will be valued too as one more token of New Zealand's sympathy and help in times of difficulty.‘As regards the substantial quantities of processed vegetables, wartime increase in production of potatoes and other fresh vegetables in the
United Kingdom has been so great that it makes additional supplies of most types of dehydrated or canned food vegetables unnecessary to civilian consumption. Arrangements are being made for most of the processed vegetables to be used for relieving distress in European countries.‘May I again thank you most cordially for this gift and for the continued efforts by New Zealand to assist in overcoming the grave and worldwide shortage of food supplies which I feel will continue to face us during these coming months.’
In
In Evening Post,
‘This gift from the Government and people of New Zealand to the Government and people of the
United Kingdom , is in recognition of the magnificent and unprecedented effort of theUnited Kingdom and her people in maintaining freedom and making possible its expansion in the years to come.‘It will afford some reduction in the heavy load which the United Kingdom Government and people are carrying at this time, and recognise the enormous burden the United Kingdom Government has carried and is bearing during the post-war period.’
Out of the desire for some co-ordinated plan for the transition from war to peace had come New Zealand's first attempt to establish a central planning organisation. The
Mr New Zealand, edited by
A brief outline of the structure of the organisation was contained in the Parliamentary Paper H–18, p. 26.
‘All the major departments of State are in one way or another involved in the organisation, which, for obvious reasons, is directly responsible to the Prime Minister. Associated with the Prime Minister in the policy direction of the organisation is a Cabinet Sub-Committee of Ministers most directly concerned—namely, the Ministers of Finance, Industries and Commerce, Works, Agriculture, and Rehabilitation. The Executive Committee of O.N.D., comprising the Permanent Heads concerned, including the Director of Rehabilitation, and working in close cooperation with a Chief Executive Officer, Mr
J. S. Hunter , until recently Director of National Service, is responsible to the Cabinet Sub-Committee for organising and coordinating the activities of several (so far nine) major Research and Planning Committees, which are in turn comprised of the various State and non-State organisations affected. The Secretariat to the Executive Committee is located in the Prime Minister's Department. Each of the main Research and Planning Committees will, as necessary, create specialist sub-committees to deal with particular assignments allotted to them.’
Rehabilitation, and the need for full employment to provide a climate in which jobs would be available for demobilised servicemen, ranked high in government and official thinking at this time. Planning for full employment was therefore an important function of the Parliamentary Paper H–11A, p. 16.
‘In New Zealand the establishment of the
Organisation for National Development early in1944 set in motion machinery to plan and coordinate the economic transition to peacetime conditions and the subsequent development of industrial activity. Full employment is thus the main reason for the Organisation's existence.‘The
National Service Department works in close association with theOrganisation for National Development in all matters concerning personnel in industry, and, by arrangement, theDepartment, in cooperation with the Rehabilitation Department and theOrganisation for National Development , will be responsible for the initiation and execution of all personnel research assignments. Already a number of these are in hand.’
The Parliamentary Paper H–44, p. 8.
‘In working towards this objective through the expansion and further development of manufacturing industry, the Department enjoys, in addition to its close association with manufacturing enterprises during the past twenty-five years, the experience of, and consultation with, representatives of private enterprise and workers on the
Industrial Development Committee of theOrganisation for National Development …. Whilst theIndustrial Development Committee is concerned with general policy, the Department, as the administrative body, is dealing with the practical issues, such as assisting in the provision of plant and raw materials to expand and develop secondary industry and…. investigations in relation to projected major expansions and new developments. The Committee has behind it theOrganisation for National Development , with a staff of economic specialists, and with it is employed the departmental machinery of Industries and Commerce to devise and implement the plans best suited to the Dominion's economy.’
A comment in the Parliamentary Paper H–18, p. 13.
‘The
Organisation for National Development has sponsored the formation of some twenty-five autonomous bodies, known asRegional Planning Councils , whose functions are to examine and advise upon both long-term and immediate projects for the development of their regions and the promotion of full employment therein.’Regional and town planning activities of OND are discussed more fully in the Report of the Local Government Committee,
1945 , Parliamentary Paper I–15, p. 145.
The rehabilitation interests of OND were outlined in the same report: p. 14.
‘The Personnel Committee of the
Organisation for National Development sits under the chairmanship of the Hon. the Minister for Rehabilitation, and its function is to concentrate onworking out detailed plans for demobilisation of the Armed Forces, rehabilitation of servicemen and civilian workers, and their re-employment in peacetime work.’
Another reference gives an example of the research activities of the organisation and their relationship to the planning function: p. 14.
‘The
National Service Department ,Rehabilitation Department , andOrganisation for National Development are at present collaborating in the conduct of a comprehensive survey of industry in New Zealand with particular reference to post-war plans and employment possibilities, whilst theRehabilitation Department , in cooperation with the Service Arms, is conducting a census of serving personnel with the object of discovering the post-war intentions and ambitions of the men and women yet to be demobilized. It is hoped that the summarised results of these surveys will provide basic data upon which the Committee will be able to progress to the preparation of a comprehensive manpower budget coordinated with the planning data assembled by other Research and Planning Committees of theOrganisation for National Development .’
After these high-sounding references, none of the Departments mentioned OND at all in its
Comprehensive planning, involving manpower budgets and the like, was quietly dropped. Other work, if it was continued, passed to existing Departments; in particular, the
Lipson and other writers On the other hand, large numbers of committees had been used in the transition from peace to war.The Politics of Equality, p. 392; The New Zealand Economy in War and Reconstruction, p. 62; Government Administration in New Zealand, p. 48.
In any event, a system of economic and financial policy co-ordination was to emerge early in the 1950s and survive well into the 1960s. It would use a rather similar group of Cabinet Ministers and supporting Permanent Heads, but would avoid the weaknesses just mentioned.
The
See also pp. 527–30. A stencilled OND report in ‘This chart illustrates how coordination can be secured between Government and all other sections of the community. While the organisation provides a central office for research and pooling of ideas on reconstruction and national development, it does not restrict the implementation of industrial or other expansion usually carried out through the medium of private enterprise.’ However, the chart gives an impression, which no footnote can remove, of the highly co-ordinated and intensely detailed nature of the proposed planning.
THE full effects of a major war do not exhaust themselves in a decade or two. Nevertheless, some of the more significant economic distortions of World War II worked themselves out in a reasonably short period, and peacetime influences then started to dominate where wartime influences had dominated before. It is in this sense that the present chapter sets out to discuss the recovery of the economy from the war, and to point to the beginnings of a period of economic development, comparatively unaffected by wartime diversions and restrictions.
A good deal of change in emphasis occurred around about
The more rigid wartime system of price control came to an end in
However, some quite significant effects of war can be found in the following decade; and, for this reason, at least the major economic events up to
In the recovery period, if we may so designate the years 1946 to 1955, the most frequently discussed economic topic was inflation. The
New Zealand, wrote Condliffe, ‘emerged from the war taut with suppressed inflation.’
Incomes as well as savings were high, and shortages of raw materials and of finished goods were to continue for some years after the war. New Zealand, with its labour force already fully employed, was likely to have more difficulty than some countries in overtaking demand.
The policy of stabilisation was continued after the war and, indeed, many people saw its restraining influence then as even more necessary than during the war. In Evening Post,
‘Emphasising that the stabilisation fight did not end with the war and that the danger of inflation was now greater than ever, the Minister of Industries and Commerce, Mr Sullivan, said in an address last evening that New Zealand was now in the second period for which stabilisation was designed, and that to abandon those controls now would be inviting disaster. Experience had shown that the period just after a war was the time of greatest danger from inflation, and the time when the greatest effort was called for to protect the economic security of the country. The Government had always made it clear that, while its stabilisation policy was vital to the New Zealand economy during the war, nevertheless it would be a necessary cornerstone of economic policy during the immediate post-war years, said Mr Sullivan. The problem was insufficient goods with Plenty of eagerness to buy, and if there were no stabilisation controls the prices of everything might rise to fantastic levels. To prevent that inflationary boom right now was the purpose of stabilisation. Price controls during the war kept inflation from getting into its stride and affecting the most important everyday commodities, and they must be maintained if the people were not to have skyrocketing prices.’
Mr As reported in the Evening Post of
‘He recalled the disastrous effects of the inflation which followed World War I, and said that there were dangerous elements in the present situation of New Zealand's economy. So far, thanks to the policy of economic stabilisation, which met with the official and active support of the
‘“But”, Mr Walsh continued, “we must not lose sight of the fact that the forces that brought about the chaotic conditions of boom and slump after the last war are present in the New Zealand economy today.
‘“… The only solution to our problem is increased production. I must stress again the point that, if we are to have higher standards of living, we must have more goods and services. Our movement is no longer just fighting for wages. We want to increase actual standards of living. To do this, we must increase production. Real standards come from production, not from the printing of a note issue.”’
In war, savings had played a most important part in reducing the civilian demand for scarce goods and services. Now the risk was that this pent-up demand might be released too soon, before the flow of civilian goods and services was sufficiently increased. The considerable accumulated savings of civilians from the war period were swelled by the gratuities which had been credited to returned servicemen, and were in many cases held in savings accounts. The consumer durables on which many of these savings might have been spent were not yet available in adequate quantities, and the risk that savings would be extensively used on the normal consumer market was an ever-present threat to price stability.
Williams wrote:
‘The importance of savings held in monetary form as a source of inflation, is somewhat difficult to assess. Spending of savings has been kept in check by absolute shortages of materials. There is, for example a large demand for houses which cannot be supplied fast enough to meet the shortage. Controls of prices, rent, land sales, and materials prevent the price of old and new houses from being forced up, and the accumulated savings are held back. The same applies to such imports as automobiles. How long this situation will persist depends on how long people are willing to wait for goods now in short supply.’
Actually savings proved to be a potential, rather than an actual, threat to stability. There was no sudden depletion of savings accounts; in fact, since the war, the sums in small savings accounts In Post Office Savings Bank Accounts, Trustee Savings Bank Accounts, and National Savings.
The more immediate threats were the high level of incomes and the expansion of bank credit, coupled with accumulated shortages of consumer durables and capital equipment. The question was whether the conversion of the economy back to civilian production would be fast enough to cope in a reasonable time with the shortages and with the rate of expansion of demand.
Until
However, in
Apart from modifications of this sort, the general stabilisation of prices was continued, but, in
The Government took advantage of the buoyant state of the economy to announce the return of the currency to parity with sterling in The currency had been depreciated to £125 NZ = £100 sterling in
Meantime, the supply position for a number of commodities was improving. Petrol rationing by coupons was dropped in
In
The remnants of the wartime economic stabilisation policy were abandoned by the National Government, after it came into office in
Attempts were made to remove price controls progressively as supplies of goods and services improved. This policy received a setback for a time from the end of
In The New Zealand Economy 1939 to 1951. Parliamentary Paper B–5,
In the recovery years, 1946 to 1955, retail prices increased at an average rate of nearly 5½ per cent a year. The purchasing power of the currency was depreciating dangerously fast. The average rate for New Zealand, since the early 1900s, has been about 2½ per cent.
From The demand for washing machines, for example, was satisfied in this year.
Subsidy removals had a considerable effect on short-term price fluctuations, but, over the period 1946 to 1955, cannot be blamed for much of the price rise. But see the fuller discussion of subsidies at pp. 305–8.
Chart 80 shows price changes up to
As international tension eased after 1 Parliamentary Paper H–44, Report of the Department of Industries and Commerce, ‘On
From
Arbitration Court orders were still being made every year or two to adjust award, or minimum, wages. After
From
In the later war years, the conviction grew that a country which could achieve full employment of its labour force in war should be able to find a way of continuing full employment in peace. This conviction was not born of the idea that full employment would be easy to maintain, but of a determination that, however much effort it involved, economists and politicians must find a way to adjust the peacetime economy so that it would, in the interests of the people's welfare, do what it had obviously been able to do in the interests of war.
This feeling is summed up in a paragraph of a Interim Report on Post-War Reconstruction and National Development, p. 1.
‘It is now more clearly recognised that nations which can organise the whole of their human and material resources in the service of the war effort, must similarly organise their capacity for the task of raising living standards. Provided the goal is clearly seen by all, and a high enough priority is attached to its attainment to enable all hindrances to be thrust aside or overcome—provided that is, that the whole resources of private enterprise, banking and otherwise, as well as all State enterprise, are directed positively towards the achievement of a state of full employment of human and material resources—then there is no basic reason why full advantage should not be taken of the
Again, in In a circular to secretaries of Regional Planning Organisations.
‘The most important single problem to be faced after the war is the maintenance of full and efficient employment of the Dominion's labour force.’
These were widely held views in the last year of war. Yet, when full employment persisted after the war, there was no lack of people to suggest that this outcome had been obvious.
The inflationary influences in the economy at the end of the war have often been offered as a sufficient reason for post-war full-employment. Williams, for example, wrote:
‘Since the war, the demand for both consumers' and producers' goods has been much greater than that which industry has been able to satisfy at current prices. The consumers have large monetary resources and are willing to spend them. The result has been a very high level of employment without any action by the state other than the provision of labour exchange services.’
Again Weststrate, writing later, said:Portrait of a Modern Mixed Economy, p. 133.
‘As the inflationary situation inherited from the war was obviously not created for the purpose of maintaining full employment, full employment was, in the immediate post-war years, just a by-product of the war. This applies also to other countries. In most of these inflation was halted around
Weststrate was not content with this explanation alone. He teamed it with another cause, stickiness of wage rates. He went on to say: p. 137.
‘Overfull employment is usually the effect of inflation plus “stickiness” of wage rates. The active cause is inflation; stickiness of wage rates is a condition that has to be fulfilled if inflation is to lead to overfull employment.’
However, these explanations were not enough. Inflation and lagging wage rates had been experienced in many other countries, and, on previous occasions, in New Zealand. They had usually led to rapid price rises, over-importing, and other evils, rather than to full employment.
Price rises, if inflation did not get completely out of hand, could be restrained by price control, and, to the extent that this control was really effective, high money demand would be persistent in its pressure on production, employment and importing. Price control was comprehensive in the immediate post-war years, but, even after considerable decontrol in the early 1950s, full employment was to continue.
In any event, it is likely that backlogs of capital goods and consumer durables, and the productive effort to replace them, would have kept employment at high levels in the early post-war years; but the scarcity of labour lasted much longer than did the accumulated shortages of these types of goods.
It is impossible to say how long inflation and full employment would have continued in the 1950s and 1960s if they had not been encouraged by other influences which were not really war effects at all.
For a start, two important new government influences were at work in the post-war economy, both of them to a degree inflationary in their effects, One because it tended to redistribute income from saving to spending groups; the other because it held back part of the flow of goods which might have helped to mop up excessive internal demand.
Introduced and maintained as a measure to preserve overseas exchange, import controls were, in practice, used extensively as a shelter for the expansion of manufacturing industries. Even had this not been so, their presence ensured that a large proportion of the high level of incomes was channelled into demand for local production; and so helped to encourage expansion of output and employment. To the extent that local producers could not cope with the extra demand, it also tended to raise the internal price level.
Another effect on the employment situation was the loss, as war casualties, of 11,625 men who would almost all have been in the labour force for a considerable period after the war. A larger number of men who survived the war were fully or partially
17,000 were wounded, but more than this had their ability to work fully or partially impaired. In
These effects of war were reinforced by the effect of a pre-war influence on the size of the labour force. The birth rate had fallen in each year from 1928 to 1935. A falling tendency was evident before Moreover, the school leaving age was raised from 14 to 15 in
After It then started to increase slowly and had reached 59.4 per cent by
Chart 81 shows changes in the percentages in three major age groups in the population.
The effect of this changing age structure on the size of the labour force has been offset to some extent since the war by an increased proportion of married women taking jobs. This has been in part influenced by changed attitudes as a result of war experiences, when married women worked as a war effort, and in part by the wider range of job opportunities now offering.
On the other hand the higher school leaving age and the postwar tendency for an increased proportion of young people to seek higher education, aided usually by Government bursaries, has delayed entry to the labour force.
Some people have suggested also that increased Social Security benefits for the aged may have reduced proportions working, but the effect of this, when most of the new benefits have not been subject to means tests, is much more doubtful. This question is discussed in the author's paper ‘Social Services and Economic Development’, published in Welfare in New Zealand, edited by K. J. Scott.
Under these influences the proportion of the population actually working, already reduced by direct war effects, has tended to fall since the war, but not by as much as the changing age structure of the population might lead one to expect.
Depletion of the size of the labour force relative to the rest of the population may have been a contributing influence helping full employment to continue in New Zealand after direct war effects had been expended. However, this alone could not have accounted for the persistently high level of demand relative to the output of New Zealand's industries. Here two Government policies, though they often had quite unrelated objectives, interacted most effectively. The social security scheme was in no small measure responsible for the high overall level of demand, and import licensing restricted the proportion of this high demand which could be diverted to imports. Thus New Zealand production was nearly always less than the demand for it, and New Zealand's labour remained in short supply. This summary is necessarily over-simplified, but contains what are, in the author's view, the most important reasons for New Zealand's continued full employment.
The Employment Act
In the event, official measures to maintain full employment proved to be unnecessary, and the new employment service found that its energies had to be directed to assisting employers to find scarce labour rather than to the maintenance of full employment.
Before the war substantial numbers of men who would otherwise have been unemployed had been employed by local authorities in subsidised work, much of it connected with roading.
Subsidies were continued after the war, but were paid in recognition of national responsibility for some of the work done by local authorities, rather than as part of an employment promotion scheme.
The system of subsidy payments for roading was formalised in
These subsidies no doubt helped to keep up employment in local authorities, but, with labour now in short supply, no encouragement was given to uneconomic work. Because of the rapidly increasing use of motor vehicles, improvements in roading, in spite of high rates of expenditure, could barely keep pace with needs. Subsidies for roading, as a percentage of national income, were in any case well below what they had been before the war.
Even with the considerable increase in roading and local authority functions generally after the war, the numbers employed by all local authorities had not by
It was thirteen years after the war before the number of registered unemployed rose above 1000, Even in 1500 is one-sixth of 1 per cent of the labour force. Census counts have shown roughly 6000 unemployed (still well under 1 per cent of the labour force), but this includes short-term unemployed and others who do not seek the assistance of the placement service.
There has been a very small occasional resort to job creation to absorb small pockets of local unemployment, but this has involved only a few hundred people for a month or two.
In point of fact, had employment promotion been necessary on a broader front, it must soon have become apparent that the
Employment policy would then have required special fiscal and monetary policy measures, which could only have been administered through the Treasury and the
It took New Zealanders a comparatively short time to become used to and to expect low levels of unemployment. In the last decade rises in the numbers of registered unemployed to only as high as 1500 have caused considerable concern to the Government, be it Labour or National. The threat by firms to terminate the employment of even 10 or 20 people was to prove effective on occasions in obtaining import licences or other favours from the Government; this in spite of the fact that very seldom would any useful workers so disengaged have had to wait more than a few weeks for a new job.
Massive redistributions of income through the social security scheme have been one of the most significant influences on the economy since the war. Though most income was liable for the flat rate of Social Security charge, the general tendency was for the scheme to transfer money from saving to spending groups, so helping to prolong the effects of the post-war backlog of unsatisfied demand.
Much of the framework of social security benefits had been introduced before the war, See also p. 10. 10s. per child under 16, without means test. Raised to 15s. per week from Still 1s. 6d. in the £ in The age benefit is payable, subject to means test, from age 60; universal superannuation, without means test, from age 65. Universal superannuation was originally £10 a year, increasing by £2 10s. each year to reach the £78 payable under the age benefit, but several modifications have since been made in both rates of benefit. In
An innovation in The scheme became effective in
Chart 82 shows changes in the cost of social security benefits and pensions as a percentage of national income.
The cost of social security benefits and pensions All social security benefits are included here, not just the cash benefits.
Judgments on the influence and duration of war effects are clouded also by the varying intensity of bank advance controls in the past twenty years.
Selective control of advances, by the
A number of people believe that Government economic policy, since the war, has tended to concentrate too much on control of bank advances as a restraint on the internal economy, and on quantitative restriction of imports as a means of correcting recurring balance of payments difficulties. These policies, while each in its own way quite effective as a broad restraint, have tended to be clumsy in their application to individual cases. It may well be that their very effectiveness on the broad front has led to their being asked to carry too much of the burden of economic restraint. However, it is fair to say that some genuine attempts to free them from control have been defeated by the failure of bankers and importers to exercise self-restraint.
Bank advances were quite well held in the late 1940s.
In
A tighter lending policy was adopted in
Advance controls were continued in subsequent years, with varied intensity and effectiveness. The Parliamentary Paper B–6, Financial Statement, p. 9.
‘In order to reduce the level of bank credit, the
However, no really effective control of bank advances was taken until late in the 1950s, when the Affecting the cash balances the trading banks are required to keep at the
Trading bank advances rose from £58 million in These are annual averages of weekly figures. It is of interest to compare Chart 80, which shows what was happening to prices.
Chart 83 shows changes in bank advances.
The unrestrained behaviour of importers and bankers when controls have been relaxed arises on occasions from a fear that controls may soon be tightened up again. This is understandable, but nevertheless unfortunate for those who would like to see controls removed. With no likelihood of self-restraint, the economy is particularly vulnerable when neither import nor advance controls are operating effectively. As tends to happen around election times. The quite pronounced election cycle in bank advances and imports was discussed in a paper by the author in
Many New Zealanders looked forward to an end to import controls after the war. A resolution passed at the annual conference of the Associated Chambers of Commerce in
Leathem summed up the Labour attitude to import controls, as it was expressed by Mr Nash in New Zealand, edited by
‘The Minister of Finance, the Hon. Walter Nash, in the budget debate in the House of Representatives on
One part of the statement by Mr Nash is worth careful assessment. He said:NZPD, Vol. 266, p. 183,
‘… We are of the opinion that the carrying-out of a policy of import control and exchange control will lead to the maximum of trade.’
Certainly import controls, since the war, have not stopped New Zealand from importing more than her export earnings could pay for; and in recent years she has been trying hard to enlarge these earnings, so as to be able to import still more. This of course ignores possible effects of import controls on industrial efficiency and hence on ability to produce most effectively for export or in substitution for imports.
Though the scope and intensity of import controls have varied greatly since their inception in
Labour stayed in power until As a long-term trend, volume of imports has increased by 3 per cent a year (based on 1928–29 to 1960–61).
The National Party came into office in
Many import items were freed from quantitative control in An announcement in this month freed 326 items worth £45 million.New Zealand Official Yearbook,
Imports dropped back for a while. Reserves built up quite well in the middle of
Though it had restrained imports, exchange allocation had not been a satisfactory system. Any form of restriction of imports meant that some items would be cut back, others preferred. The importer naturally preferred the items which yielded him the highest profit, and tended to spend his exchange allocation accordingly. If asked to bring in other items which the Government regarded as essential, the importer expected to be given more funds.
When the exchange allocation scheme came to an end, import controls over a limited range of goods continued. Less than a quarter of private imports were now subject to control.New Zealand Official Yearbook,
With no extensive controls, imports again soared in
In the election year
To make the situation look worse, export prices were falling quite rapidly in late
Labour, elected to office in
Even with all feasible overseas borrowing and realisation of assets, it seemed, early in Parliamentary Paper B-6, Financial Statement, p. 10.
‘The Government recognises that a comprehensive import control policy, while contributing materially to a solution of our balance of payment difficulties, will not by itself correct the basic cause of those difficulties. It must be supplemented by fiscal and monetary measures designed to establish a more stable economy in which the demand for imports more closely approximates our ability to pay for them.’
It was unfortunate that this courageous fiscal measure was overdone. The extra taxation was more than was needed to secure internal stability. Demand for local production was considerably reduced, as well as demand for imports; and the rate of growth of New Zealand industry started to slow down. Considerable public resentment was aroused.
That this was unfortunate for the Government was apparent at the
Though this cannot be taken as conclusive evidence, the effects of the
Unless measures to reduce demand are to be discriminatory, so that they restrain demand for imports before they restrain demand for local production, the attack on over-importing from the demand side will not be effective.
Import controls were more severe in
Chart 84 shows changes in the value of exports and imports since the war.
‘Invisibles' is here used to mean payments becoming due to foreigners, excluding those for imports or capital transfers, less payments due by foreigners, excluding those for exports or capital transfers. Important items are transport costs (£22 million net in 1962–63), investment income (£26 million) and travel (£11 million).
In the last decade attempts to relax or remove import controls have been hindered by a quite rapid rise in debt servicing, travel payments and other ‘invisible’ items of overseas expenditure, which have taken an increasing portion of New Zealand's export earnings. To some extent the method of administration of import licensing has aggravated this difficulty.
Concentration of external economic policy thinking on changes in the net overseas assets of the banking system has led to ‘no-remittance’ imports receiving favoured treatment for import licensing. A formal no-remittance scheme for holders of overseas funds was first introduced in
The rising cost of overseas transport and the increasing tendency of New Zealanders to travel have also added to the net outflow of invisible items which have to be paid for in the main out of export earnings, so restricting the amount available to meet the cost of imports.
It was inevitable, in any case, with the overseas deficit on current account averaging £25 million a year between 1951–52 and 1962–63, that the cost of servicing of private and government debt Including dividends accruing to overseas shareholders, interest on loans, etc.
Chart 85 shows changes in the net deficit on invisibles expressed as a percentage of export earnings.
In the three years 1950–51 to 1952–53 the net cost of invisibles averaged 16 per cent of export earnings. Comparable earlier figures are not available. Including private investment as well as government and local authority loans. The figures refer to accruals rather than to actual remittances. A good deal of private investment income is reinvested in the country where it is earned.
New Zealand finished the war with an assured market in Reference has been made in Chapter 19 to the British agreement to purchase New Zealand's surplus of dairy products and meat until
The assurance of unrestricted duty-free entry into the British market was not the perfect guarantee it may have seemed.
After the war there was an increasing tendency for industrial countries to subsidise their agriculture. Policies of protectionism, national security and income-support all influenced governments in this direction, These three influences are mentioned by P. Lamartine Yates (Food, Land and Manpower in Western Europe, pp. 256–8), but the particular emphasis given in this paragraph is not his.
Alternative markets were sought; but the
The United States did take some care not to cause direct damage to existing commercial markets, The
In
By the end of Quota-free entry for meat was assured by an undertaking in
However, in
Of even more concern to New Zealand was Comprising Belgium,
Economic co-operation among war-devastated European countries after the war had been encouraged by a A useful summary of developments is given in Parliamentary Paper A-21, European Economic Community.
Initially the EEC plans for a common market in agriculture, with regulated intake from outside countries, and managed prices at a level much higher than those at which New Zealand could supply, had been seen merely as a threat to hinder New Zealand access to EEC countries. Then it became apparent that the EEC policy of encouraging agriculture and keeping its retail prices high would result in considerable surpluses being dumped on However, increasing demand, as a result of rising living standards in EEC countries would have a countering effect, as was becoming apparent for some commodities by
The growing economic strength of the Community Considerably faster than in the looser European Free Trade area (EFTA) to which
New Zealand could be vitally affected if
Unless Britain's entry to EEC could be negotiated on very special terms, it seemed that, far from having unrestricted entry for her food products, New Zealand would have to compete with other non-EEC suppliers for whatever extra was needed after EEC production had been completely absorbed.New Zealand Economic Survey,
The hope of British negotiators was to gain admission without sacrificing New Zealand interests, Other Commonwealth countries were affected too, but none so vitally as was New Zealand.
There was, in fact, a good deal of relief in some quarters in New Zealand when General De Gaulle, President of
Under these and other influences there has been a steady change in the direction of New Zealand trade. Though Britain has remained by far New Zealand's most important trading partner, her share of both exports and imports declined during the war and has continued to decline up to
Chart 86 shows changes in the direction of trade.
Initially the decline in supplies from
A number of smaller trading partners have become increasingly important; for example,
New Zealand's favourable trade balance with
New Zealand has been slowly increasing her trade with Asian countries, and hopes to continue to do so as their living standards rise.
War, and the need to meet an urgent demand for extra food with a depleted labour force, gave a boost to farm mechanisation; a boost which could become effective because the
The return of large numbers of trained pilots from the war encouraged the expansion of air passenger and goods transport and the use of aircraft for topdressing, seed sowing, spraying, and other farm operations. Often the initial experimental work was done by the New Zealand Official Yearbook,
Of importance also has been the increasing tendency for more and more farm work to be done on a contract basis. This no doubt enables the available labour to be used much more efficiently, and brings into use specialised equipment which would not be economical unless available to a large number of farmers.
Many other improvements in methods have been developed from research activities of the Agriculture Department, the
Since the war the trend to increased emphasis on sheep farming has continued. See also Chart 42, p. 198.
Recently, increasing emphasis has been placed on beef production, in response to encouraging markets in
Between the 1951 and 1961 censuses, the farm labour force decreased by 4 per cent. In the same decade the volume of farm production increased by 31 per cent, so that the quantities of farm products produced per person engaged Census counts of persons working on farms include the farmer as well as any labour he engages. Persons engaged in farm contracting, including aerial topdressing, etc., are included under farming.
The manufacturing labour force increased by 30 per cent in the same period and the increase in its overall volume of production was naturally much larger than in farming; it was 69 per cent. Farm output could have been increased faster by using more labour, but it is open to question whether the increase would have been proportionately faster. Neither has research yet disclosed whether extra labour in farming would have yielded a greater return in output than it did in manufacturing. The question is not answered by comparing the per person outputs in farming and manufacturing. These are overall averages, whereas what one needs to know is whether 100 extra persons in farming add more than 100 extra persons in manufacturing. In economic terminology, marginal changes need to be studied. Moreover, it is net outputs which matter rather than gross.
Chart 87 compares farming and manufacturing growth.
At the end of the war, there was some £5 million in the Dairy Industry Stabilisation Account, and over £9 million in the Meat Industry Reserve Account. No such account existed for wool. By It had been agreed that the profit or loss arising from the transactions of the Joint Organisation in the wool of any Dominion would be shared equally between the In the case of the dairy and meat funds, this had been agreed in Farmers, workers and others, who acquiesced in the restraint of their wartime incomes by the economic stabilisation scheme, all had the benefit of roughly matching restraints which the scheme put on the prices of their personal expenditures. Those who incurred business costs also received the benefit of stabilisation restraints on these costs. Farmers were unusual in having industry stabilisation funds against which the expenses of stabilising their business costs could be charged. However, whereas workers and others emerged from the war with only their personal savings to show for their wartime restraints, farmers had also, available for their joint benefit, the industry reserves. The equity of these end results needs more examination than the author has so far been able to give it.
The meat and wool reserves were now being used to maintain minimum prices which were fixed at the beginning of each season. If meat export prices fell lower, deficiency payments were made to producers. If wool prices at auction fell below the fixed minimum prices, the Wool Commission would buy in at these prices. In There is expected to be a small credit balance at the end of the 1963–64 season.
The rapid exhaustion of the dairy funds started in the 1956–57 season, when nearly half the surplus which had accumulated over thirteen seasons was paid out. The following season the other half was used up, and the account ran into deficit. Low prices in these two seasons were a major cause of the run down, but another important cause was the failure of those who fixed payout rates to realise that the high butter prices in
The relative growths of the three funds is influenced by the fact that dairy produce prices have not risen so much as have prices of meat and wool since the war; but the administration of the Dairy Produce Account has not been particularly farsighted in the past decade.
Though none of the funds, as at present administered, is ideal as an economic stabiliser, the depletion of the dairy funds leaves this industry in particular, as well as the economy as a whole, much too vulnerable to overseas price fluctuations. It would be in the long-run interests of the farmers themselves, as well as of the economy as a whole, to have more rigid rules for the administration of all these funds, e.g., rules which would make it very difficult for those for the time being in control to avoid adding substantially to the funds in good seasons. This is discussed more fully in the author's Income Distribution in a Trading Nation. (Cyclostyled: copies with the Department of Statistics.)
For over a year, during the war, building and construction resources were switched almost entirely to defence construction work, and for most of the war, defence construction had a high priority. When private building was not being deliberately deferred to transfer resources to defence construction, it was under controls of varying intensity, designed to conserve scarce materials. Normal public works were cut back also.
A formidable backlog of deferred construction work resulted, much of it requiring urgent attention by the time the war finished.
The Parliamentary Paper D–3, p. 3.
‘Six years' arrears of housebuilding, factory building, school-building, hydro-electric construction, bridge renewals, land development, highway maintenance, and many other forms of peacetime building and construction must now be made up before the physical capital of the Dominion can be properly related to her expanded and redistributed population.’
This was an exaggeration. Some private work and normal public works had been done during the war See for example Chart 51, p. 243, for housing construction, and p. 435 for electricity construction. Hospital buildings, warehouses and the like particularly, but see also pp. 521–2. This is the author's assessment based on information in this volume. While rough, it gives a reasonably correct impression of the accumulation.
A statement in the Parliamentary Paper B–6, Financial Statement, p. 28. Actually the figure is introduced in a paragraph dealing with importing, but the order of the deferred imports of capital goods would be very much smaller.
‘Moreover, it is estimated that about £150,000,000 is required to provide for the accumulated needs for capital goods necessarily postponed on account of war circumstances.’
This figure may have been intended to include producers' equipment However, many factories had been kept well equipped for war purposes, and the equipment, unless highly specialised, could be put to peacetime uses. Farm tractors and other equipment had been imported under Lend-Lease. The author would estimate all these at not more than £130 million. See also Chapter 16.
Two and a half years of deferred building and construction work was a formidable hurdle after the war, when building materials and equipment were still in short supply.
Shortages of materials forced the Government to maintain many wartime building controls for some years, so that high priority construction work would not be held up. Skilled tradesmen were also scarce. The Parliamentary Paper D–1, p. 1.
‘The excess of demand over the present potential of the works industry has necessitated a continuance of the Building Control Emergency Regulations beyond the special needs of war for which they were originally designed.’
Controls extended to commercial buildings as well as dwellings, and might restrict size and materials to be used, or debar construction altogether if it was not considered essential. Construction of private garages, for example, was not usually approved.
Supplies of timber, steel, and cement were all below requirements when the war ended, but, of all building materials, corrugated roofing iron caused the most problems. In Memorandum of
‘The supply position in regard to galvanised iron is particularly bad, and on the latest information available it is apparent that there is little likelihood of any reasonable improvement being made in the position for the next year or so. Supplies in sight at present from all sources are less than 6,000 tons per annum, whilst the estimated annual demand is 25,000 tons.’
Timber shortages were largely overcome by
Difficulties with corrugated iron continued, and not until Building Construction Control Notice No. 35 of
As materials became more freely available and controls slackened off, there was a dramatic rise in the building and construction labour force, which, between 1951 and 1956, increased by over 40 per cent.
Chart 88 shows labour force changes since
By
Controls over construction of the larger commercial buildings continued until
Controls had been lifted as soon as the industry had sufficient capacity to cope with the demand for construction work. Building costs were helping to reduce demand. In the recovery years, pressure of demand on the restricted capacity of the industry had caused building costs to rise considerably faster than most other costs. They have tended to remain high up to
Building and construction and other capital formation was taking 22 or 23 per cent of the national output The gross national product is used as denominator.
Much of the remaining arrears of capital works was overtaken by Though there was a surge in dwelling construction in the early 1960s, caused by the
Completion of a new generating unit at Arapuni at the end of
In
In
Hydro-electric construction was still hampered by shortages of imported components. Other countries had to overtake war backlogs, and some had to replace installations destroyed in the war. Countries supplying electrical equipment were unable to cope with the demand. Delivery of plant and materials tended to become worse for a time, and in New Zealand new stations could not be brought in fast enough to cope with the ever-increasing demand for power.
In only five years, between 1944–45 and 1949–50, demand for power increased by over a third.
In fact, the situation was to become much worse for some years, and one authority wrote: G. H. Battersby, Some Aspects of Electrical Supply in New Zealand, Canterbury Chamber of Commerce Bulletin No. 456,
Maraetai, the most powerful of the Half its ultimate capacity.
Hydro-electric generating potential had been developed faster in the
Meantime, other types of power generator were being developed. The geothermal steam station at
The last of the electric power restrictions were lifted at the end of See also Chart 72, p. 426.
By Benmore, in the
The war tended to emphasise the importance to New Zealand of its railway service, which, though it might in normal times lose ground to more versatile methods of transport, could carry a vastly increased load in times of national emergency.
Transport in New Zealand has been relatively expensive, both in terms of capital development and operating costs, Transport Department paper, Transport in New Zealand, p. 14.
While the predominantly undulating nature of much of the surface of New Zealand has always been a serious hindrance, the position has been eased by the early construction of an efficient railway service, which has done much to reduce costs to producers. A White Paper on road transport said: Parliamentary Paper H–40a, Transport of Goods by Road in New Zealand,
‘Much of New Zealand's economic development has been due to its extensive railway network (some of it in areas where traffic was never likely to be plentiful) and to the railways' willingness to carry large volumes of goods at low prices.’
After making a major contribution to New Zealand's war effort the
Reference has been made to the influence of wartime coal shortages in hastening p. 415. Estimated in gross ton-miles.
To provide an improved service between
In This decision was announced in Aramoana. The service has proved so successful that a second vessel is to be added.
For passengers, air travel was becoming increasingly popular. Air services had been reduced during the war. New planes were not available for civilian work and some of those already in use were commandeered. See also p. 415.
Increasing use of the private motor car was a more important influence arresting the growth in numbers of railway passenger journeys. Motor-car registrations numbered 200,000 in i.e., after the large-scale military movements had finished.
There had been no significant improvement in the standard of waterfront work in New Zealand during the war, in spite of the introduction of co-operative stevedoring. In fact in some ways, for example because of the incidence of ‘spelling’,
After a prolonged dispute on the waterfront in
Nevertheless, the waterfront, through which passed each year two-fifths of all the goods New Zealand produced and two-fifths of all she consumed, remained, as it had been during the war, one of the weakest links in the New Zealand economy.
A New Zealand Overseas Trade, Report on Shipping, Ports, Transport and Other Services, Producer Boards' Shipping Utilisation Committee, New Zealand, and New Zealand Trade Streamlining Committee,
After the demise of the
Early in the 1950s, a sub-committee of Cabinet was formed to deal with economic and financial policy. Primarily, it was an advisory body to Cabinet. It might sometimes decide minor questions, but would take all major policy issues back to Cabinet for decision.
Attached to this sub-committee was a committee of permanent heads known as the Officials Committee whose function was to give advice on economic and financial policy matters which were
With slight changes in name but with very little change in function, this Committee system has persisted through various changes of Government up to Policy decisions made by Cabinet through this system have been carried out by the administering department concerned, under the control of its Minister who is responsible to Cabinet, not by the Officials Committee.
With some notable exceptions, For example, electric power planning. See also p. 548, note 1.
Adequate power for industry is of paramount importance for economic development; a fact which has been brought home forcibly to governments in New Zealand by wartime and post-war power shortages and, more recently, by the estimated requirements of such bulk users of power as the projected iron sands industry and aluminium smelting plant.
In New Zealand, particularly, with its labour force now fully employed, there is no way to achieve lasting increases in living standards unless more is produced by each worker. This requires that workers have the use of more power, better equipment, and improved methods. A reasonable amount of attention has always been given to these requirements; they have had increasing emphasis in recent years; and they need more still.
Taking a long view, the New Zealand economy, subject to year to year fluctuations in production which are comparatively small by international standards, increases its output in real terms by 4 per
In the 1960s some economists have suggested that the rate of growth of the New Zealand economy is too slow. Certainly spectacular rates of growth have been achieved since the war in countries such as
Since the war, Governments have given increasing attention to the direction which economic development should take. Their thinking has, however, been considerably influenced by the tendency for the country to be in almost continual balance of payments difficulties. Because the causes of this tendency have been expressed alternatively as over-importing or under-exporting, Of course export prices have had a full share of the blame too.
Far too little attention has been given to other more fundamental causes of over-importing: the too-eager desire of the people to increase their current living standards, or alternatively, the failure of the domestic economy to increase its production fast enough.
In spite of the considerable attention given to the direction of development, no clear-cut public statement of government policy for economic development, or for the very closely related subject of import control, has ever emerged. The vague outline of import policy in the Parliamentary Paper B–6, p. 9.
‘The new licensing schedule was designed to give priority to imports of essential foodstuffs, raw materials, machinery, and medical requirements and to allocate the balance of the available funds on the most reasonable possible basis…. A paramount objective of Government policy in this field will be to maintain the supply of those imports which are essential and on which employment depends.’
In
Important new industries established since the war have been the rapidly expanding manufactures of pulp, paper, and cardboard from New Zealand's exotic pine plantations. Exports of forest products, including logs, increased in value from £250,000 in
An oil refinery started operations in
The rapid expansion of manufacturing is illustrated in Chart 87, on page 560. What was this doing to New Zealand's dependence on overseas trade? Condliffe wrote:The Welfare State in New Zealand (published A History of New Zealand (published
Condliffe went on to point up the change more precisely; he wrote: Op. cit., p. 354.
Equipment is expensive, but raw materials are often cheap compared with the value of finished products. The tendency has been to increase the value added to overseas materials by New Zealand manufacturers and to decrease the value added in exporting countries. This seems to have had significant effects on the relationship between the cost of imports and the value added in New Zealand, as Chart 89 shows.
(1) Imports valued at c.d.v.
Customarily value added in manufacturing in New Zealand has been smaller than the value of imports. During the war this situation was reversed for the first time. In the last five years value added has consistently been higher than imports. Much higher, if imports are valued c.d.v. (current domestic value in country of origin), but still true if c.i.f. (landed cost, including insurance and freight) values are used. Chart 89 uses c.d.v. values, as c.i.f. values are not available for the earlier years.
As a recent paper said,Commonwealth Development and Its Financing. 4. New Zealand, p. 9.
These policies, if pursued steadfastly, must have an effect on New Zealand's ability to pay her way overseas. Whether they assist her overall rate of economic growth is another question.
The long-term average rate of growth, since World War I, has been about 4 per cent a year. In the period up to World War II, which included the depression of the 1930s, a fractionally higher growth rate was achieved. Estimates for this period are necessarily very rough. This is the author's estimate based on all available volume indicators. All growth rates in this paragraph measure changes in volume, not in money values, of outputs. See also p. 441.
World War II, by forcing New Zealand to depend much more heavily on her own manufactures, accelerated the tendency towards industrial development. Since the war, import controls and economic policy generally have further encouraged this tendency. The question still remains, whether, given a more carefully ordered set of criteria for development and a longer-range approach to economic policy formation, the same amount of effort would, without damage to the economy, have produced a much faster rate of growth.
Source: Adapted from Table VII, H-11A, Report of Department of Labour: Employment Division,
These figures include, in addition to workers in the direct employ of the Public Works Department, those employed by contractors for public works and those employed by local authorities on (a) works which are financed wholly or partly by the Public Works Department, and (b) highways or road construction and maintenance. This information is available only since the beginning of
Source: New Zealand Official Yearbooks.
Source: New Zealand Official Yearbook,
Source: Adapted from New Zealand Official Yearbooks.
Source: New Zealand Official Yearbook,
Last Monday in each quarter
Source: Statistical Summaries,
Source: Report on Industrial Production Statistics, 1956–57, p. 9.
Source:
Source: Prices, Wages, and Labour Statistics of New Zealand,
Source: Department of Statistics.
Source: NZ Official Yearbook,
Source: Adapted from Parliamentary Paper H-11A, Report of the
Source: As for Table 12.
Source: New Zealand, as for Table 12.
War Expenses Account covers expenditure from NZ Official Yearbook, p. 478:
‘The War Expenses Account was set up under the provisions of the War Expenses Act of
‘Commencing with the 1946–47 financial year, the defence vote was restored to the Consolidated Fund, and current defence expenditure has since been met from that source. Expenditure arising from or consequent upon the Second World War, however, was paid from the War Expenses Account up to and including the financial year 1949–50, when the account was finally abolished.’
Source: NZ Official Yearbooks.
Source: Table 22, p. 134, Parliamentary Paper H–11A, Report of the
Source: Derived from information in New Zealand Official Yearbooks. The coverage of factory production is that used in the war years. A revision was made in 1951–52.
Source: Rough estimates based on information from New Zealand Official Yearbooks.
Source: New Zealand Official Yearbooks.
Source: New Zealand Official Yearbooks.
Source: Annual Statistical Reports on Trade and Shipping, and War History narrative, Vol. 90.
Source: New Zealand Official Yearbooks.
Source: New Zealand Official Yearbook,
Source: Annual Statistical Reports on Trade and Shipping.
Source: Report on External Trade Statistics,
RESERVE STOCKS
Reserve stocks of raw rubber in
RECLAIMED RUBBER
Reclaimed rubber, including tyres, estimated at 13,440,000 lb. from 1940 to 1945 or (say) 2,240,000 lb. a year on average.
Source: Annual Statistical Reports on Trade and Shipping, and War History narrative, Vol. 90.
Source: New Zealand Official Yearbooks.
Source: Statistical Reports on Factory Production.
Source: Annual Report on Factory Production Statistics, 1946–47 and 1947–48, p. ix.
Source: Statistical Reports on Factory Production.
Source: Statistical Reports on Factory Production.
Source: Statistical Reports on Factory Production.
Source: Statistical Reports on Factory Production.
Source: New Zealand Official Yearbook, 1951–52, p. 512.
Source: Primary Production in New Zealand,
Source: Department of Statistics.
Source: Numbers from New Zealand Official Yearbook, 1947–49, p. 924. The figures include export works, abattoirs, and killings on farms.
Source: Numbers from New Zealand Official Yearbooks.
Source: New Zealand Official Yearbooks.
Sources:Wartime Farming (Meat), and New Zealand Official Yearbooks.
Source: New Zealand Official Yearbooks, Factory Production Statistics, and Statistical Reports on Trade and Shipping.
Source: Official War History of the Public Works Department, Vol. 1, p. 73, and War History narrative Vol. 24, p. 12. In Parliamentary Paper D–3, Report of the Commissioner of Works,
Source: New Zealand Official Yearbooks.
Source: Figures are approximations derived from a chart in the Official War History of the Public Works Department, Vol. 2, p. 318.
Source: Parliamentary Paper C–3, Annual Report of the Director of Forestry,
Source: Percentages derived from Department of Statistics figures.
Source: New Zealand Official Yearbooks. See also table on p. 263.
Source: Department of Statistics.
Source: Adapted from Official Estimates of National Income and Expenditure.
Source: New Zealand Official Yearbooks. Retail Prices Index for each quarter, and Nominal Weekly Wage Rates Index at end of each quarter.
Source: New Zealand Official Yearbooks.
Note: The Aggregate Private Income series was discontinued after the war, when national income figures became available. The series was compiled before deduction of taxation or savings. Goods available for use excluded the value of many services. A gap between the two series was normal, but interest attaches to its rapid widening over the war years. The goods available series was calculated from production plus imports less exports, with some adjustments for changes in stocks of primary produce. In the war years, ordnance was excluded from imports for the purpose of these calculations, while supplies under Reverse Land-Lease were added to exports.
Source: Monthly Abstracts of Statistics.
Source: Monthly Abstracts of Statistics.
Source: Income, taxation, goods available, and public debt from Department of Statistics, Indebtedness to the banking system from
Source: New Zealand Official Yearbooks. Reverse Lend-Lease information in Yearbook, p. 324.
Source: New Zealand Official Yearbook,
Source:New Zealand Official Yearbooks.
Note: Information on the average number of ports visited is given on p. 377.
Source: Parliamentary Paper H–45, Report on Waterfront Industry Commission,
Source: Parliamentary Papers C–2, Mines Statements.
Source: Annual Statistical Reports on Trade and Shipping.
Source: Department of Statistics.
Source: Department of Statistics.
Source: Department of Statistics.
Source: Department of Statistics.
Source: Report on the Vital Statistics of New Zealand.
Sources: Adapted from the original Population Census tabulations in the following ways:
Estimated figures for Maoris added to 1936 and 1945 census figures.
Treatment of Government administrative officers adjusted in
Detailed worksheets and also corresponding figures for female labour are on Department of Statistics file 100/20/43.
Source: Adapted from Parliamentary Paper H–18, Report of the
Source: Parliamentary Papers H–18, Reports of
Source: Annual Reports on Prices, Wages and Labour Statistics.
Totals do not always add to exactly 100·0, due to rounding.
Source: Department of Statistics Age Estimates.
Source: Monthly Abstract of Statistics.
Years used are:
Pre-war:
Post-war:
s
Source: Department of Statistics.
Source: Adapted from Department of Statistics figures.
The units of measurement and weights of these items are given in Parliamentary Paper H–43, The New Zealand Wartime Prices Index.
Rent Group
Rentals for four-, five-, and six-roomed houses for the following classes: State; State reverted; Private.
Clothing, Footwear, and Household Drapery Group
Miscellaneous Group
Fares
Railway fares for suburban and other short trips.
Tramway fares in
Tobacco
Tobacco (cut)
In spite of having unrestricted access to the wide range of
The war history narratives vary greatly in the thoroughness with which they cover their subjects. The The lack of a Treasury narrative has added considerably to the difficulties of producing an economic war history.
The inadequacies of some of the factual records available during the war must have added to the difficulties of policy-makers and administrators then to an even greater extent than they now hinder the historian who tries to record and assess the significance of wartime events. For example, during the war, manpower policy had to be developed without any clear picture of trends in the industrial distribution of the labour force. Only the 1926 and 1936 censuses were then available. Again, no satisfactory subdivision of foreign exchange transactions was made during the war, in spite of the assistance it would have been for external economic policy. It is quite impossible to reconstruct one now.
The Department of Industries and Commerce, which handled most of the crucial supply arrangements, failed to keep running accounts of the quantitative effect of its decisions. Later it allowed considerable portions of the inadequate records it did have to be lost, when many of its wartime files were indiscriminately destroyed. Thus the fruits of experience in this sphere were only partially available during the war, and cannot be comprehensively recorded now to assist those who may be responsible for supply in any future state of emergency.
While the time which elapsed before this volume was written has given a better broad perspective to the view of the war effort, it has added considerably to the difficulties in clarifying the more blurred parts of the picture. As the chapters were written, it has fallen to the lot of my research worker, Mr S. G. Elmer, to plough laboriously through limitless periodicals, newspapers and reports in search of the answers to several thousand queries on doubtful points. Most of them he has ultimately found. Between us we have skimped nothing. As far as we can make it so, the record is complete.
Though a number of other newspapers are mentioned, most of the newspaper references in this volume are from two Dominion and the
All volumes of Hansard for the war years, the annual reports of all relevant Government Departments and a variety of periodicals were read. The
One benefit of being late in the field was that economic war histories were already available from other countries, and a number of valuable references are listed below. Naturally, few of these overseas volumes throw light on the New Zealand internal economy in war, nor do economic experiences here seem to have paralleled those in any other belligerent country. Nevertheless, the record of external relationships has been filled out from these volumes, and often the internal economic effects they record for other countries have been compared with New Zealand experience.
Valuable information and references have been received from Mr J. S. Welply of the Department of Statistics, Mr R. A. Barber, Librarian, Army Department, and Captain F. Kent Loomis, acting Director of Naval History,
Wherever possible, data drawn from the various reference works has been tested against other information. This has been time-consuming, but, since by this means a number of statements made during and after the war have been revealed to be ill-founded, As noted, where appropriate, in the text.
Of the New Zealand works, most valuable has been the companion volume to this one, Political and External Affairs, by Professor
Cody, J. F., 28 (Maori) Battalion, New Zealand Official War History.
Gillespie, Oliver A., The Pacific, New Zealand Official War History.
New Zealand Department of Internal Affairs, Documents Relating to New Zealand's Participation in the Second World War (3 vols).
Proceedings of the General Working Committee of the Economic Stabilisation Conference,
Report of the Economic Stabilisation Conference,
Ross, A. A., Wartime Agriculture in New Zealand.
Ross, Sqn Ldr J. M. S., Royal New Zealand Air Force, New Zealand Official War History.
Waters, S. D., Ordeal by Sea, The New Zealand Shipping Company in the Second World War.
Williams, J. W., The New Zealand Economy in War and Reconstruction.
Wise, H. L., Wartime Price Control in New Zealand.
Wood, F. L. W., The New Zealand People at War: Political and External Affairs.
Cyclostyled. Copies held by Department of Statistics.Income Distribution in a Trading Nation.
Patterns and Relationships in the New Zealand Economy. 1
New Zealand Tomorrow. 1
New Zealand.
Condliffe, J. B., The Welfare State in New Zealand.
Farming in New Zealand.
The Dairy Industry in New Zealand.
Hare, A. E. C., Report on Industrial Relations in New Zealand.
Harris, E. A., A Survey of the New Zealand Footwear Manufacturing Industry with special reference to conditions in the industry prior to and during the licensing period 1939–1949. Thesis; copy held by Canterbury University Library.
The Work and Practice of the Price Tribunal.
Interim Report on Post-War Reconstruction and National Development. Report by the
The Politics of Equality.
Nash, Walter, New Zealand, a Working Democracy.
New Zealand Overseas Trade. Report on Shipping, Ports, Transport, and Other Services. Producers' Board Shipping Utilisation Committee, New Zealand; and New Zealand Trade Streamlining Committee,
Paul, J. T., Humanism in Politics.
Polaschek, R. J., Government Administration in New Zealand.
Primary Production in New Zealand,
Report of the Royal Commission on Monetary, Banking and Credit Systems,
Scott, K. J., ed., Welfare in New Zealand.
Sinclair, K., A History of New Zealand.
Social Security Department, The Growth and Development of Social Security in New Zealand (1898–1949).
Soljak, P. J., New Zealand, Pacific Pioneer.
Speer, N. M., The Electrical Supply Industry in New Zealand.
Thorn, J., Peter Fraser.
Weststrate, C., Portrait of a Modern Mixed Economy.
Woods, N. S., Industrial Conciliation and Arbitration in New Zealand.
Annual Reports of the National Bank of New Zealand.
Annual Statistical Reports of the Department of Statistics.
Appendices to the Journals of the House of Representatives.
Bulletins of the
Canterbury Chamber of Commerce Bulletins.
Files of the Dominion and the
New Zealand Apple and Pear Board Annual Reports.
New Zealand Gazettes.
New Zealand Meat Producers' Board Annual Reports.
New Zealand Official Yearbooks.
New Zealand Parliamentary Debates.
New Zealand Wool Board Annual Reports.
Central Statistical Office, History of the Second World War: Statistical Digest of the War. (U.K. Civil Series).
Churchill, Winston S., The Second World War (6 vols).
Hall, H. Duncan, History of the Second World War: North American Supply. (U.K. Civil Series).
Hall, H. Duncan, and Wrigley, C. C., History of the Second World War: Studies of Overseas Supply. (U.K. Civil Series).
Hammond, R. J., History of the Second World War: Food—The Growth of Policy. Volume I (U.K. Civil Series).
Hammond, R. J., History of the Second World War: Food—Studies in Administration and Control. Vol. III (U.K. Civil Series).
Hancock, W. K., and Gowing, M. M., History of the Second World War: British War Economy. (U.K. Civil Series).
Hurstfield, J., History of the Second World War: The Control of Raw Materials. (U.K. Civil Series).
Murray, Keith A. H., History of the Second World War: Agriculture. (U.K. Civil Series).
Pollock, George, The Jervis Bay.
Roskill, Capt. S. W., The War at Sea. Vol. I. (United Kingdom Military Series).
Sayers, R. S., History of the Second World War: Financial Policy 1939–45. (U.K. Civil Series).
Snyder, Louis L., The War, 1939–1945.
Flower, D., and Reeves, J., eds., The War, 1939–1945.
Johnston, R. W., Follow Me. 2nd Marine Division in World War II.
Morison, Samuel Eliot, History of United States Naval Operations in World War II. Vol. I.
‘New Zealand's Sea Frontier Organisation.’ Unpublished manuscript by the Naval Branch of the United States War History Branch.
Sherwood, Robert E., The White House Papers of Harry L. Hopkins, (2 vols).
Smith, R. Elberton, The Army and Economic Mobilisation. The United States Army in World War II.
‘Twentieth Report to Congress on Lend Lease Operations.’
Elliott, W. Y., and Hall, H. D., eds., The British Commonwealth at War.
Sinha, N. C., and Khera, P. N., Official History of the Indian Forces in the Second World War, 1939–45. Indian War Economy: (Supply, Industry, and Finance).
Hull, Cordell, The Memoirs of Cordell Hull.
Koenig, L. W., ed., The Truman Administration.
Yates, P. Lamartine, Food, Land and Manpower in Western Europe.
Annual Abstracts of Statistics and other British statistical publications.
Blau, Gerda, ‘Wool in the World Economy.’ Paper read before the Royal Statistical Society and published in the Journal of the Royal Statistical Society,
Commonwealth of Australia Official Yearbooks and other statistical publications.
The Round Table,
All material in this volume is included in the following detailed index, with the exception of the statistical appendix which has its own index on pp. 577–80. The contents of the charts are covered in the detailed index, and each chart has its own table correspondingly numbered in the statistical appendix.
Admiralty, British,
Aerodrome Construction Squadron (No. 2),
Agar,
Age structure of population and labour force,
Airfields. See
Air Force stations,
‘Allied Committee’,
American Forces. See
Anti-aircraft defences,
Antimony,
Apples and pears: exports,
Apprenticeship,
Aramoana, m.v.,
Armed forces: home and overseas,
Army, in the See
Ashwin, Sir B.,
Assisted employment. See
Associated Chambers of Commerce,
Backlogs: building and construction,
Mentioned,
Bags and sacks,
Baker, F.,
Balloting,
Banking system, Government indebtedness,
Barclay, Hon. J. G.,
Barrowclough, Maj-Gen Sir H.,
Basic slag,
Beer, duty,
Beverage industries,
Bicycles,
Bismarck Sea, Battle of,
Blankets,
Blind Servicemen's Trust Board,
Brass,
Bretton Woods Conference,
Bricks,
Bronze,
Building: materials,
Building and construction industry,
Building Committees,
Building Control Emergency Regulations,
Buildings, surplus,
Bulk ordering,
Bulk purchasing: contracts,
Bureau system, waterside,
Bursaries,
Business loans,
Butter: British needs,
Butterfat: declining production,
Calico,
Canneries,
Capitalisation of family benefits,
Carpenters,
Category ‘A’ men,
Cattle, slaughtering,
Chancellor of the Exchequer,
Cheese: diversion from butter,
Chiefs of Staff,
Cigarettes. See
Civil aviation,
Civil defence works,
Clarke, R. C.,
Clothing: chart,
Coachbuilding,
Coal: bituminous,
Coastal fortifications,
Cobb power station,
Cochrane, Wing Commander R. A.,
Combined Boards,
Commissioner of Defence Construction,
Commissioner of Supply,
Commissioner of Works,
Communications, See also
Conciliation Commissioners,
Confectionery manufacture,
Conscription: of men,
Construction: backlogs, See also
Consumer,
Contracts: war, See also
Controller and Auditor-General,
Cook Strait power cable,
Copper,
Coral Sea, Battle of,
Corn sacks,
Corrugated roofing iron,
Costing,
Cost of war: financial comparisons,
Cost-plus contracts,
Cotton piece goods,
Court of Arbitration,
Cows. See
Cream of tartar,
Dairy factories,
D Day,
Defence materials,
Defence stores,
Defence workers camps,
Defence works. See
De Gaulle, General C.,
Dehydrated vegetables,
Delivery Emergency Regulations,
Departments. See under name of Department
Development loans,
Development works,
Direction of labour,
Director of National Service,
Distribution and finance,
2 NZ Division See under
3 NZ Division
Drugs, stocks,
Dumped surpluses,
Duty free entry,
Earthquake damage,
Economic and financial policy,
Economic development,
Economic planning. See
Economic Stabilisation, See also
Economic Stabilisation Emergency Regulations
Egg Marketing Regulations,
Electric power, See also
Emergency defence buildings,
Emergency Regulations Act
Emergency Regulations Amendment Act,
Employees, reinstatement of,
Employment Act
Employment Promotion Act
Employment Restriction Order,
Enemy Trading Emergency Regulations,
Engine Drivers', Firemen, and Cleaners' Association,
Engineering,
Essential industries,
Essential raw materials,
Essentiality. See
Excess Profits Tax,
Exchange allocation. See
Exchange control. See
Export industries,
Export parity,
Export surplus,
Ex-servicemen. See
Factory advisory Committee,
Factory Controller,
Factory Emergency Regulations
‘Fairmile’ patrol vessels,
Fair Rents Act
Family benefits, See also
Farm cost allowances,
Farm costs subsidies. See
Farm labour. See
Farm Produce Stabilisation Accounts, See also
Farm stabilisation policy,
Fertilisers, See also
Fibre,
Fifty-four hour week,
Financial cost of war,
Fiscal policy,
Fish liver oil,
Flax: phormium tenax, See also
Floating dock,
Food Controller,
Food rationing. See
Forbes, Rt. Hon. G. W.,
Fraser, P. R.,
Fraser, Rt. Hon. P.,
Freezing workers,
Freights,
Fuel,
Full employment, See also
Galvanised iron: flat, See also
Garages,
General wage orders, See also
Goods, volume available,
Greatcoats,
Gumboots,
Gun-metal,
Halsey, Admiral W.F.
Holidays, paid annual,
Hosiery,
Hydro-electric power, See also
Import controls,
Imported commodities,
Import prices,
Import selection,
Imports classified by purpose,
Imports, principal supplying countries,
Income. See
Indirect taxes,
Industrial Absenteeism Emergency Regulations,
Industrial disputes,
Industrial Efficiency Act
Inter-island cable,
Internal Transport Sub-committee (of ONS),
Internment camps,
Iron and Steel Control Notice
Japan: entry into war,
Joiners,
Joint Organisation (wool),
Jute,
Kaitawa power station,
Karapiro power station,
Kauri timber,
Key industries,
King's Wharf power station,
Kissel, F. T. M.,
Labour: construction, See
Labour force,
Labour Legislation Emergency Regulations
Labour Legislation Suspension or Modification Order,
Lamb, exports,
Lambs: born,
Land Act
Laurenson, G. L.,
Leather,
Lend-Lease,
Lend-Lease Agreement,
Lend-Lease, Reverse,
Liberty ships,
Linseed oil,
Llewellin, Col. J. J.,
Local authority services,
Local Government Committee,
Logging and sawmilling,
Machine-gun carriers,
Machine tools,
McKay's Crossing,
McPherson, R.,
Magazines,
Magnesium,
Main Highways Fund,
Malthoid,
Manpower Controller,
Manpower Director,
Manpower, Minister of,
Manpower Officer,
Manufacturing: diversification,
Marshall Plan,
Meat: British supplies, See also
Meat Industry Stabilisation Account,
Meat Producers' Board,
Mechanisation, farms. See
Mechanisation, roading,
Medical benefits,
Medical supplies,
Memorandum of Security,
Merchant Marine,
Meremere power station,
Midway, Battle of,
Military camps,
Milk deliveries,
Mines, See also
Minimum wages,
Minimum working week,
Minister of Customs,
Minister of Finance,
Minister of Mines,
Minister of National Service,
Minister of Railways,
Mortars,
Motor assembly plants,
Motor spirits. See
Motor transport vehicles,
Motor tyres,
Munitions Controller,
Mutton,
Mutual Aid Agreement. See
Nandi,
Nash, Rt. Hon. W.,
National Expenditure Adjustment Act,
National Savings Act
New Zealand Dairy Workers' Union,
New Zealand Farmers' Union,
NZEF (2nd),
New Zealand Manufacturers' Federation,
New Zealand Meat Producers' Board,
New Zealand Supply Mission,
Niagara,
Nickel chromium wire,
Non-ferrous Metals Control Notice,
No-remittance imports,
O'Brien, Hon. J.,
Oil,
Oil refinery,
Orchards,
O'Shea, A. P.,
Overfull employment, See also
Overpayments,
Overseas assets,
Overseas exchange transactions,
Overseas service. See
Overseas Shipowners' Allotment Committee,
Overseas transport,
Pacific Division. See
Pamir,
Paper,
P.A.Y.E.,
Pears. See
Perry, Hon. W.,
Petrol reselling licences,
Pharmaceutical benefits,
Phosphates, See also
Phosphatic Fertiliser Control Notice,
Picot, F. R.,
Pilots,
Piripaua power station,
Plaster,
Plywood,
Polaschek, R. J.,
Population,
Ports,
Potatoes,
Power. See
Pre-fabricated huts,
Pre-fabricated steel buildings,
Prevention of Profiteering Act
Price changes, See also
Price Investigation Regulations,
Price orders,
Price Stabilisation Emergency Regulations
Primary Industries Emergency Regulations
Primary Products Marketing Account,
Primary Products Marketing Act
Primary Products Marketing Department,
Prisoner-of-war camps,
Producers' equipment,
Production,
Protectionism,
Public Safety Conservation Act
Public Works,
Pulp,
Quantity surveyors,
Quick-frozen vegetables,
Quota restrictions on imports. See
Racing,
Radar stations,
Radio broadcasting,
Radio Production Controller,
Rail-Air Freight Service,
Rationalisation of road transport,
Rationing, See also
Rationing Officer,
Reciprocal Aid. See
Refugee camps,
Rehabilitation Act,
Rehabilitation bursars,
Rents,
Replacement costs,
Reserve Bank Amendment Act
Reserve Bank of New Zealand Act
Reserve stocks. See
Retail prices. See Prices
Reverse Lend-Lease. See
Rice,
Road blocks,
Road transport. See
Roberts, Hon. B.,
Robertson, Hon. J.,
Rock phosphate. See
Rogers Mission,
Roll-on ferry,
Ross, Sqn Ldr J. M. S.,
Sago,
Salt,
Savings, See also
Sayers, R. S.,
Scheme No. 4 B,
Schmitt, L. J.,
Scrap Rubber Control Notice,
Seasonal work,
Second Division. See NZEF
Secretary of Labour,
Serpentine. See
Servicemen's Settlement and Land Sales Act
Services, for production,
Shift work,
Shipbuilding and repairs,
Shipping,
Ship Repair Costing Service,
Ships bunkering,
Shipyards,
Singleton, W. M.,
Small Farms Amendment Act
Social Security,
Social Security charge,
Social Security Fund,
Social Security levy books,
Soda ash,
Soil research,
Solomon Is.,
Space heating,
Speer, N. M.,
Stabilisation, See also
Stabilised commodities and services,
Standard Master Schedule. See
Statistician. See
Steam generating stations,
Steel Controller,
Steel workers,
Sterling,
Stout, J. L.,
Strategic commodities,
Students,
Subsidies,
Subsidised agriculture,
Subsidised employment,
Substitute materials,
Sugar Controller,
Sullivan, Hon. Sir W.,
Superphosphate. See
Surplus assets. See
Suspension of Apprenticeship Emergency Regulations
Tanker fleets,
Tank obstacles,
Tanning industry,
Tapioca,
Taxis,
Technical colleges,
Tenting material,
Textiles,
Thomas, J. E.,
Tiles, roof,
‘Time and line’ method,
Topdressing, See also
Totalisator investments,
Trade, overseas: agreement with See also
Trade training,
Training camps,
Training colleges,
Training farms,
Transport and communications,
Transport Licensing Act
Treaty of Rome,
Trench mortar bombs,
Tuai hydro-electric scheme,
Unemployment Act
Unemployment Board,
Unemployment Fund,
See also
Universal carriers,
Universal superannuation benefits, See also
Unrestricted duty free entry,
Utilisation Councils and Committees. See
Value Added, manufacturing,
Variation Orders,
Vegetable oils,
Vegetables, See also
Volume of trade,
Wage Rates, See also
Wallboard,
War Administration,
War costs. See
War costs allowance, butterfat,
Wartime Prices Index,
Waste reclamation,
Waterfront Controller,
Waterfront dispute,
Waterfront Industry Act
Water heaters,
Webb, L. C.,
Welders,
Weststrate, C.,
Wharf Superintendents,
Wheat and Flour Controller,
Wholesale prices,
Wills, W. D. and H. O.,
Wise, H. L.,
Women's Army Auxiliary Corps,
Women's Auxiliary Air Force,
Women's Royal Naval Service,
Wood, F. L. W.,
Woods, N. S.,
Wool; cost of production,
Wool Commission Account,
Wool scouring industry,
Working hours,
Yarn,
Zinc,
Zoning, transport,
Professor N. C. Phillips, MA, University of Canterbury
Professor F. L. W. Wood, MA (Oxon), Victoria University of Wellington
Professor F. W. Holmes, MA, Victoria University of Wellington
This volume was produced and published by the Historical Publications Branch of the Department of Internal Affairs.
The Department gratefully acknowledges the valuable assistance given in the production of this volume by Professor Holmes.
the author:
Ex-President of the New Zealand Statistical Society and present vice-President of the New Zealand Association of Economists, he has represented New Zealand at international Statistical Conferences and was rapporteur of the United Nations Statistical Commission in