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CHAPTER 2
Impact of War

FACING war, the Labour party was in a very difficult position. Traditionally, Labour was anti-conscription and anti-militarist, viewing war as part of the imperialist struggle for markets, a force that cut clean across its aim of improving workers' conditions and standards of living. Apart from the obvious suffering and sorrow, war meant loss of civil liberties and working harder for less, while destroying fellow-workers likewise driven to arms by the forces of capital. Labour leaders had been in prison for refusing to support the 1914–18 war. Only a few, however, were absolute pacifists— rather they had opposed that particular war and its abuses, such as conscription coupled with uncontrolled prices. During the 1920s Labour had opposed the League of Nations, viewing it as a victors' club and saying that the world needed instead a league of peoples. This attitude changed gradually as the League's useful technical work emerged, and when Germany joined in 1926 and Russia in 1934 it could no longer be considered a victors' club. New Zealand Labour followed the British movement in its hopes of world disarmament by agreement, and in 1930 it supported the Forbes government in suspending compulsory military training, a measure prompted both by economy and sentiment—the will to peace being strengthened by the obvious folly of spending money on armaments when the immediate enemies were unemployment and poverty. By 1931–2 New Zealand's armed forces were small indeed: there were only two cruisers and while Britain spent £1 8s 5d a head on land and air defence, and Australia 5s 6d, New Zealand spent only 2s 10d on all these services, its air force being almost non-existent.¹

World public distaste for war preparations was at its height in 1933–4, but already British defence authorities, with eyes on Germany and Japan, were moving slowly into rearmament. Ripples of this reached New Zealand, and in 1934 the defence vote was almost furtively increased, Labour opposing it with the more urgent need to fight poverty. But Labour, growing towards the responsibilities of office, increasingly stressed collective security as the effective means

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of defending democracy and peace—H. E. Holland² asked Forbes (who declined) to urge League action over Manchuria in 1931.³ Labour in office strongly upheld sanctions against Italy and was critical of concessions to Spanish rebels. In 1936 it carried forward the programme of increasing armaments, and took to the League proposals that went far beyond British ideas for making enforcement of the Covenant automatic and powerful, while enlarging and deepening support by consulting the peoples of the world through plebiscites and broadcasts of League proceedings. It also proposed surveys of economic problems as a preliminary to rectifying international grievances. Against the charge of inconsistency in showing no will to abolish armed forces, Labour declared that it had never held that a nation should not be ready to defend itself, but that economic aggression was precedent to and the main cause of military aggression, and could be removed by economic adjustments.⁴

At the Commonwealth Conference in 1937 Savage spoke out his faith, saying that some grievous mistakes had been made, to which New Zealand had sometimes but not always consented, urging that peace could best be preserved not by secret diplomacy but by the Commonwealth laying down the lines that it would pursue in future; that as disputes between nations had always an economic basis, a concerted international effort was needed to remove these economic injustices, and that meanwhile the Covenant should be made real— there would be no final end to the miseries of war until those nations that loved peace made it abundantly clear that they were determined to maintain it, if necessary by force.⁵

The Labour party, then, even in such idealists as Savage and Jordan, had come increasingly to the idea of force as necessary to restrain evil. More robustly, Peter Fraser could say to the Labour Conference in 1937, ‘If we truly desire to see Labour Democracy continue in our country we ought to be ready to defend it, even die for it. Do you think we would get any mercy from Mussolini or Hitler?’⁶ In September 1937 the budget, totalling nearly £34½ million, allowed £15,000 to the League, and £1,600,000 to defence⁷—an increase of £585,000 on the previous year. Nash remarked that these items were inextricably linked: effective application of the League's principles alone could bring permanent peace, but until then defence

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was necessary. The military and naval services were being modestly increased and re-organised and an air force begun, but with no idea of facing a major invasion. Commonwealth defence experts thought that the most likely attack would be from a raiding ship with aircraft and able to land about 200 men on a hit-and-run mission. Gradually emphasis was shifting from reliance on internationalism to territorial defence measures, though the economic foundations of peace and the value of education and propaganda were still pillars of Labour faith.

The Standard, during 1936–8, had many solid, hard-thinking editorials giving the background of treaties and national movements since 1919, stressing that armament makers throve on fear; that economic grievances, the basic cause of war, could be worked out at a world economic conference; that the League should be made a reality with force behind it. It was not actually said that New Zealanders should be in this League force; it was always implicit that before fairness-plus-firmness even dictators would be reasonable.

In April 1937 trade unions and district Trades and Labour councils combined to form the Federation of Labour, replacing the Alliance of Labour. The industrial section of the Labour movement now had a more vigorous and coherent central organisation which in foreign affairs was more leftist than was the rest of the movement. At its first annual conference, in April 1938, the Federation passed this general resolution on foreign policy:

This Conference… directs the attention of the whole Labour Movement to the terrible threat to world peace by Hitler, Mussolini and Japanese Military-Fascism. The danger behoves the working-class to more firmly unite its ranks, strengthen its organizations, sharpen its vigilance and generate greater activity in the struggle against Fascism and war.

We consider that the policy of the Chamberlain Government in retreating before the Fascist black-mailers, instead of averting the drive to war, helps to promote aggression and is leading the British Empire into war.

The cause of world peace today depends upon the checking of Fascist aggression in Central Europe, Spain and China. Therefore we urge the Labour Government to insist that the British Empire will (a) support France and the Soviet Union in guaranteeing the independence and security of Czechoslovakia, (b) lift the embargo on arms to the Spanish Government and insist on the immediate withdrawal of the Fascist interventionists' forces in Spain, (c) organize collective action to bring to an end Japanese aggression in China.

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Also we call on the trade union movement to improve in every way its support for the Spanish Government and to strengthen the boycott of Japanese goods.

Further, this conference denounces the suggestion in certain quarters for the reintroduction of compulsory military training, which is but the prelude to a demand for conscription for overseas services in the event of an imperialist war. Having in mind the experiences of the war of 1914–18, when the people of New Zealand were subjected to what was virtually a military dictatorship, we urge the Labour Government to take steps to repeal all legislation which provides for conscription for overseas service for imperialist purposes.

Finally, we direct the National Council of the Federation to give greater attention to the danger to world peace, to the issuance of propaganda against war and Fascism and the developing of opposition to war in the working class movement.⁸

It was a large, impossible order, a putting-together, without compromise, of irreconcilable policies—insistence that the growing danger to peace and the working class be curbed, without any modification of the traditional stand against conscription and ‘imperialist’ war. The government was to insist that aggression be checked, but not by New Zealand workers—for plainly at the time the number likely to volunteer would not have caused a dictator to bat an eyelid. It was an unhappy conflict, one which was shared by the Labour movement in Britain, and which was to remain with them well into the war. It is not insignificant that this resolution was moved by a Communist and published in full by the Workers' Weekly (22 April 1938) but not in the Standard. A Standard article, after remarking that in Europe the dictators were now more firmly in the saddle than ever and probably other countries besides Austria would soon be under Fascist domination, neatly turned the point homeward: ‘It is not enough to talk of democracy or to be anxious of its fate in Europe, we must be careful to preserve Government by the people and for the people here in New Zealand.’⁹ In Germany a strong working-class movement had been overcome by Fascism; New Zealand workers must take care Fascism did not gain ground here. The election was only seven months away.

The National party, with its sense of close adherence to Britain, had felt the impropriety of New Zealand's occasional divergences from Britain at the League of Nations. Its members, with more

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experience of office, were more accustomed to the idea of the inevitability of war and not at all committed to any theory of nonparticipation. Some were not afraid to say, even in 1936, that if New Zealand subscribed to collective security it should give support not only with words but with a complete expeditionary force.¹⁰ They expected quite early that the League of Nations would fail and they wanted more defence. They were reluctant to see Labour spend on public works and social services money which could be used for that purpose.

The New Zealand Returned Soldiers' Association was specially concerned with defence and felt that its members' knowledge of the last war, their sufferings and their dead companions entitled them to respectful hearing. Obviously they were not pacifists, and they could reasonably ask other men to face what they had faced 25 years before. Though a non-political body, their views on defence coincided with those of the National party: they felt that New Zealand was not ready to do her fair share in Commonwealth defence, and that compulsory training in the Territorials was a first essential.

Late in 1936 the sense of inadequate defence led some people with strong RSA and Territorial interests or belonging to such organisations as the Navy League (all of whom the Labour party speedily identified with the Nationalists) to form the Defence League,¹¹ aiming to educate public opinion towards increased defence measures and to encourage young men into military, naval, and air force training. It also wanted the government to organise services, such as hospitals, transport and food supplies, to meet a possible national emergency. The League claimed that its intention was to assist not hinder the government, and that it was a non-party organisation, on a democratic and national basis. On 15 October 1936 a deputation visited the Defence Minister who politely welcomed its assurances of co-operation, reminded it that the government was responsible for defence and was working ‘quietly but thoroughly’, and did not think there was any need for scares.¹²

Labour rank and file was much more sensitive. ‘More than ever eternal vigilance is the price of popular government and liberty’, wrote a correspondent in the Standard of 9 September 1936, alarmed at the proposed formation by business and professional men of a military propagandist league; it would be nothing new for such a league to turn into a defence force, complete with shirts and salutes. The workers must scrutinise closely the aims, objects, personnel and

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sponsors of proposed leagues. ‘Europe today proves that patriotism is the refuge for greater scoundrels and the cloak for more bestial brutality than ever before.’

Though the Standard continued its warning against the Defence League as the possible germ of a fascist force, the League was favoured by the press in general, which was consistently critical of the government and friendly to its opponents. Another sign of Labour distrust was a remit from the Easter conference of 1937 which, though not naming the League, clearly referred to it: ‘That the Government be urged to disband and prevent the formation of armed forces not directly under the control of the Government, to prevent the wearing of party uniforms, and to legislate to ensure that the manufacture of arms and and munitions is under Government control.’¹³ During 1938, with concern for defence becoming more general, the League's activity increased. At Wellington on 24 March a meeting of about 800 urged that besides increased Army strength all resources should be organised for defence. Suggested measures included a militia force of middle-aged citizens, organisations of civilians so that in a national crisis there would be as little confusion as possible, and instruction about gas decontamination and gas masks. The principal speaker, Hon W. Perry MLC,¹⁴ spoke of current negotiations in Britain to relax conditions of labour so that more work could be put into armaments; it was no argument to lessen the Labour movement's distrust.¹⁵

Progress in New Zealand's rearmament was described by Jones,¹⁶ the Defence Minister, on 18 May 1938 at Dargaville in a speech widely published in the press and as a pamphlet. He spoke of reorganising and increasing the naval division, creating an air force and making improvements in the Territorial forces which aimed to train leaders ready for a sudden expansion if needed. A peacetime strength of 9000 was thought sufficient, and Jones admitted that there were then but 7400, of whom only 41 per cent had attended camp that year. He appealed to fit, alert young men to sacrifice some of their leisure, and to employers to give leave for service. The Defence League approved; but the next day Auckland papers published a manifesto signed by four Territorial colonels who broke soldierly silence

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in a sharp criticism of the Territorial position, declaring the present numbers, organisation and training quite inadequate, due to lack of support from successive governments and from the public.

These statements brought defence into prominence for some weeks, and bodies such as a Farmers' Union Conference urged a more vigorous defence policy with universal military training.¹⁷ The Defence League offered to bring in the 1600 needed Territorials and proposed a citizens' militia of men over Territorial age. To all this the government replied that it was doing a great deal more than the Nationalists had done in the early 1930s, that its measures were adequate for any attacks anticipated by Imperial experts, that it was spending money and getting good value for it; that many of these criticisms were political, a stick with which to hammer the government. But on 2 June 1938 the Prime Minister, remarking that ‘No one can say what is going to happen when the nation has its back to the wall, but, whatever is necessary, when it comes to compulsion, we will not begin with human flesh and blood’,¹⁸ obliquely made the first suggestion that a Labour government might find conscription necessary, a suggestion that he and others were to repeat with increasing significance. Delicately Savage began to accustom himself and his party to an inevitable change that went clean against Labour principles and tradition. Meanwhile, in July, as a practical encouragement to service, Territorial pay was raised by 3s a day, plus camp allowances of 5s a day—the first rise since 1911.

Early in its election campaign for November 1938, while still acknowledging the ideal of the League of Nations, the National party urged that a strongly defended British Empire was the greatest factor in world peace, that in foreign policy New Zealand must stand wholeheartedly with Britain—Jordan's assertions of difference were deplored¹⁹—while land, sea and air forces should be expanded rapidly to contribute fairly to Empire defence and world peace. The armed force would be voluntary, but in war the resources of the country, both men and women, would be mobilised; no one would be allowed to exploit his fellow citizens.²⁰

Countering this, Labour's manifesto on 24 September had explained that it was increasing defence expenditure—£600,000 in

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1932, £1 million in 1935, more than £3 million in 1938–9.²¹ It was improving and co-ordinating the three Services. In foreign policy it claimed belief in collective security through the League, Commonwealth co-operation and more defence. Neither party wished to risk popularity by stressing war and defence; it was politically wise to keep to familiar, blunted phrases.

During 1939 as threats multiplied, feeling again grew that not enough men were enlisting in the Territorials, especially the more mature who might supply leadership. The government uneasily juggled with its distaste for militarism, with defence needs, and with rebuttal of political opponents. The Defence League, since November 1938, had urged three months' compulsory military training for 18-year-olds, followed by four years in the Territorials. The Chamber of Commerce considered this view in May²² and, together with manufacturers and employers, pressed it (plus universal emergency service) upon the government late in August.²³ Even a few Labour members with military backgrounds, notably J. A. Lee,²⁴ W. J. Lyon²⁵ and W. E. Barnard,²⁶ advocated increased recruiting. Labour's Easter Conference both re-affirmed its opposition to conscription and turned down a motion to suppress the Defence League—the Defence Minister saying that the League merely represented Labour's political opponents, defeated last year, and it was better to have them working openly than underground. Lee asked, ‘Are we to say there is to be no free speech for these retired and liverish colonels who want to see everyone doing the goose-step when there is no war?’²⁷ The Prime Minister repeated that no one could tell what a nation would do when backed to the wall, but conscription would not begin with flesh and blood.

In the second half of April 1939 a Pacific Defence Conference was held in Wellington. It had its origins in repeated requests by New Zealand for discussions between Britain, Australia and New Zealand on the strategic importance of the Pacific should trouble

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there coincide with a European war.²⁸ It was made clear that help from overseas, even of equipment, could not be quickly obtained, and New Zealand's defences must be sharply increased. Savage was finally convinced that immediate strengthening of land forces was needed. This he proclaimed on 22 May, having in the preceding weeks fumbled reluctantly towards it. In April he still wanted an international conference, hated the idea of conscription, and was sure that every man would be ready to serve in an emergency;²⁹ on 25 April he suddenly spoke of a home defence force of 50 000 men of up to 50 years old, independent of overseas sources for arms. This was closely involved with his belief in New Zealanders' eagerness to defend their Labour-governed country, but it gave rise to a report that the government was ordering 60 000 uniforms and should have done so earlier when it would have improved the wool sales.³⁰ This Savage called an attempt to discredit the government both with the wool growers and the anti-militarists; he was thinking of a citizen army in plain clothes, ‘not goose-stepping… in uniform and spending hundreds of thousands a year.’³¹ The goose-stepping reference offended the Territorials, reported the Dominion of 6 May; poor Savage complained that everything was being turned to party propaganda.³² Political absurdities attended New Zealand's approach to war.

Besides the Defence League there were in May 1939 a few extra-governmental movements to augment the home forces. An RSA National Guard was proposed at New Plymouth³³ and a Veterans' Brigade at Auckland.³⁴ Some trade unionists made their own suggestions. The Easter Labour Party Conference had asked the government to co-operate ‘with the Industrial Labour Movement in building up a Democratic Defence Force.’³⁵ The Auckland Trades Council in May proposed a company of 200 trade unionists officered by men with whom they normally worked, which would, said their adviser W. J. Lyon, assist co-ordination and ésprit de corps.³⁶ The leftist Carpenters Union paper The Borer in May urged the recruiting of trade unionists prepared to defend both their country and their progressive institutions, to fight enemies at home and abroad.

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The Standard of 11 May strongly deprecated attempts ‘by a section of the Press and certain organisations to create a feeling of panic’ about defence, and Savage declared that private armies were not wanted, that the bogey of invasion had been turned into a political weapon against the government. The Defence Minister politely vetoed all separate organisations, saying that their spirit was appreciated, but defence must be under government control and those prepared to join such organisations would readily enlist in the Territorial forces.³⁷

In May a recruiting drive began; on the 22nd Savage, in a special broadcast, said that while he did not believe general war to be inevitable and had no secret information of a crisis, the international situation was bad and all, however reluctantly, must face reality. Strength and vigilance were the conditions of survival. If war came to Britain it came to New Zealand. He asked for volunteers, first to the regular Army, then for 6000 more Territorials to make them up to 16 000; for 280 to the specially trained coast defences, and finally for all able-bodied men of 20–55 years to register in a National Military Reserve, from which 5000 experienced men would be selected as Territorial reserves.³⁸ To avoid confusion he asked the Defence League to withdraw its enrolment cards. He stressed that training was for home defence, defence of living standards and social security; explained how the Air Force in particular had improved in Labour's time, and still declared that international discussions would be of more use before a new war than after it. The Defence League welcomed the speech, and withdrew its cards. The Opposition expressed relief and qualified approval, still preferring universal training to volunteers.³⁹ So did the press in general. The Dominion on 27 May gave the views of 17 assorted people on the defence proposals, several suggesting that conscription would be necessary.

Territorial enlistment was brisk and the 16 000 were secured early in August,⁴⁰ but for the Military Reserve it went much more slowly. The anxieties of the Opposition and the RSA were renewed, the latter's annual conference in June urging ‘compulsory universal national service’.⁴¹ After Parliament opened in June the Opposition vigorously criticised defence inadequacy and wanted universal military training for home service, while some members introduced what was to be one of the repeated themes in the next few years: that money should be diverted from public works and social services to

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defence—national security before social security.⁴² The Farmers' Union, a body usually closely associated with the National party, in July approved the government's defence efforts, deprecated criticising it for inadequate preparations, saying that the people themselves were to blame, and strongly urged compulsory military training.⁴³ In its qualified approval, the Farmers' Union at this stage was close to the Defence League, acknowledging advances but demanding more.

The National party, then, in the three years before the war urged increased defence as a need transcending politics, but urged it in the terms of party warfare. The RSA and the Defence League, in advocating compulsory military training, stood with the National party. Labour was sensitive and resentful about these attacks, and suspicious of their motive. Party politics dogged and clogged every defence move.

Immediately war was declared towards midnight on Sunday 3 September 1939⁴⁴ all major sections of the community voiced support of the government to help Britain and fight the Nazis. Many different streams of feeling and tradition could unite in this. For instance, a Labour party caucus replying to British Labour greetings predicted the inevitable ‘triumph of justice, democracy and socialism’;⁴⁵ the National caucus resolved ‘This is the hour to remember the slogan which fired the patriotism of the men and women of this country twenty-five years ago—“To the last man and the last shilling”’;⁴⁶ Adam Hamilton declared ‘Party politics must be laid aside so that our people may be united in their determination and effort to live up to the high traditions established in the past.’⁴⁷ The Federation of Labour promised to keep production as high as possible, stressed that Nazis were the enemies of trade unionism and of the best sections of the German people and called all workers, including those of Germany, to make common cause in the fight for human justice, liberty and international brotherhood.⁴⁸ The churches sonorously proclaimed loyalty to the Throne, co-operation with the State, and the brotherhood of man.

A great many local bodies, trade associations, sports and other groups passed resolutions and wrote to the government of their

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unswerving loyalty to the Crown, and keen desire to co-operate fully with the government in defence of the Commonwealth. Such declarations came, for instance, from the NZRSA,⁴⁹ the Associated Chambers of Commerce, which most pressingly offered to assist in framing regulations affecting commerce and industry,⁵⁰ the Wellington branch of the National Council of Women,⁵¹ the New Zealand Federation of Young Farmers' Clubs,⁵² the New Zealand Motor Trade Federation,⁵³ the Wellington Manufacturers Association,⁵⁴ the Municipal Association of New Zealand,⁵⁵ the Canterbury Progress League,⁵⁶ the Christchurch City Council,⁵⁷ the New Zealand Bowling Association⁵⁸ and the New Zealand Amateur Swimming Association.⁵⁹ Fortunately for the government officers concerned, many local sports bodies did not express their loyalty individually but asked their New Zealand associations to frame suitable resolutions: thus the rugby players of Otago, hotly followed by those of Canterbury, on 4 September telegraphed to their New Zealand Union proposing a united resolution.⁶⁰ Some took the situation very seriously: the cricketers of Wellington and Otago delayed planning their season as their young men might be defending the country instead of playing cricket,⁶¹ while the New Zealand Baseball Council declared that though competitions would be carried on where possible, players of military age should offer their services in this dark hour.⁶²

In a few aspects, war actually began. Recruiting for the National Military Reserve, begun in May for service in New Zealand, increased rapidly, with nearly 7000 offering in the first four days, making a total of 25 444 by 6 September, some of whom were soon called for guarding vital points, coast-watching and fortress duty.⁶³ Enlistment for the overseas force opened on 12 September to an equally enthusiastic response. Public Works carpenters and private contractors swung into action, building camps at Trentham, Burnham and Ngaruawahia. Some eager people who, remembering 1914–18, at

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once began to raise patriotic funds, were checked and chilled by the government which promised instead a comprehensive organisation for money-gathering. Petrol was rationed for a few weeks; prices were frozen; day-to-day life changed not at all. For most people there was nothing immediate to do.

With some people, self interest balanced fervour and they began at once to hoard food. Anticipating shortages arising from import restrictions plus war conditions, they bought tea, sugar and flour in panic quantities. The grocers, unable by regulation to exceed their normal wholesale supplies, were obliged to ration their customers. Four pounds of sugar per person per time was fairly general and in Wellington, for instance, tea was limited to one pound and flour to seven pounds.⁶⁴ This embarrassed grocers, for obviously it was the more worthwhile customers who could afford such outlay, nor did it avoid multiple buying by the determined ones; country people, used to 56lb bags of sugar, were bewildered when offered 4lb a week. The flour rush lasted only a few days. The quantities of tea and sugar entering New Zealand were not diminished, rather increased, and by mid-November the panic had subsided. Tinned fruit and fish were also bought up by those who could afford them, while in drapers' shops the belief that reels of cotton would be scarce made the demand so strong that they were scarce indeed.⁶⁵ It was all small scale, but the private and petty greed contrasted with public professions of loyalty and co-operation.

After the first moments of acceptance when all parties stood bareheaded before the great issue, the war seemed far away and local differences re-assumed their sharp outlines. On 12–13 September the Emergency Regulations Bill which gave the government very wide powers to legislate by orders-in-council, was passed without opposition, J. G. Coates⁶⁶ saying ‘All of us dread the idea of a Government taking omnibus powers to do exactly what it likes, but the people of this country must realise that their very existence may depend on the unification of effort.’⁶⁷ Fraser soon warned that the government would advance some finance measures on which he would not expect the Opposition to stifle its criticism: ‘Nobody should be

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expected to sink his conscientious opinions even at a time like this.’⁶⁸ Hamilton, as he himself later explained, had privately besought Fraser to avoid contentious legislation; this he held would not seriously embarrass the government and would be a very real contribution towards public and sectional unity.⁶⁹

Here it is necessary to remember the background. The National party was alarmed by what the government had already done and feared more for the future. Labour, coming to power in 1935 pledged to relieve unemployment, had done so largely by putting thousands of men on public works—hydro-electricity, irrigation, and, conspicuously, road-making. It was not pick-and-shovel relief but fully-paid work, often from large camps which included family housing, and using a great deal of heavy equipment imported directly by the government. This, plus increased imports resulting from increased spending power, bit so deeply into New Zealand's balance of trade funds in London that the government was obliged to restrict imports at the end of 1938. Nash went to England to renew accumulated loans totalling more than £17 million due for repayment in 1940. He found the financial authorities so hostile to his government's ‘unsound’ experimental policies that they at first refused to convert the loan (which would have bankrupted the New Zealand government), then consented to do so on very hard terms. In July 1939 the loan was raised: more than £1 million was to be repaid on 1 January 1940, and the remaining £16 million carried on at 3½ per cent, with £2 million to be repaid in 1940–1 and £3½ million in each of the four following years.⁷⁰ Restrictions checking the import of British goods were frowned on, and the New Zealand government should not promote industries in conflict with British interests.⁷¹ Nash learned a lesson he never forgot: ever after he watched over New Zealand's sterling balance with a protective care which caused him to restrain early wartime impulses to give produce and money to Britain.

Meanwhile it was necessary to keep imports down, and as local industry could not rapidly be built up without importing equipment, shortages were inevitable. These were soon to be swallowed up in the larger shortages of the war, but during the first year the complaint was often made that, but for pre-war import restrictions imposed by a spendthrift government, various goods would still have been plentiful. While the restrictions favoured manufacturers, they curbed and threatened many importers and traders, and

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encroached on an area hitherto free from State intrusion; they were viewed with resentment and alarm as a long step towards socialism. Such controls, administered by civil servants necessarily new to the business field, inevitably occasioned misunderstanding, rudeness, muddle and delay, which brought resentment against regimentation to a very high pitch well before war started. However, when war made controls inevitable not only were people pre-conditioned to accept them, but the organisation already existed and had got through some of its teething troubles.

War further sharpened the Nationalists' wish to have men of sound ideas and business ability at the helm. Many were convinced that the country would be ruined, its war effort enfeebled and democracy overthrown by experimenting socialists, and many saw totalitarianism looming at home: ‘if democracy is worth fighting for abroad, it is worth defending politically in this country’.⁷² Firmly exiled from office by the 1938 election, the National party hoped that the new need for unity would at least curb Labour's socialistic progress, and shrewd minds knew that wars often bring in coalition governments. As the Standard jeered on 12 October: ‘they thought that the sweet fruits of office, even though they had to share them with the Labour party, were almost within their grasp.’

For the Labour party, avoidance of measures that would displease the Opposition was a very high price to pay for co-operation. What was the point of being the government if they were to govern according to the wishes of the Opposition? From top to bottom Labour was exasperated at being interrupted by war when it had lately achieved triumphant re-election and was ready to press on with social and financial reforms. To rein in, or to accept coalition, was to abandon the position for which it had battled so long, and workers could argue that abandonment would be giving in at home to the enemy they were fighting abroad.

The political truce was broken early in October over the Marketing Amendment Act, which enabled the government to buy and re-sell any produce at prices fixed by the State, and over the Reserve Bank Amendment Act which enlarged the Bank's powers and made final the government's control of it. There was a storm of protest, directed particularly against Nash, in Parliament, in the press and at meetings of farmers and businessmen. The national emergency was being exploited to promote the factional end of complete socialisation.⁷³ Nash stated that the Bank bill was an ordinary measure

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which would probably have been introduced had there been no war, but war made it still more necessary that currency and credit should be controlled by the government. Hamilton replied that New Zealanders would never submit to autocratic dictatorship of the State, the very thing Britain was fighting; Sidney Holland⁷⁴ said New Zealand had thrown her financial captain overboard and faced a stormy voyage with a crew of political adventurers rocking the boat; Coates wanted to know the difference between National Socialism under Hitler and National Socialism under Nash.⁷⁵

The session closed on 7 October 1939, with Fraser remarking that such heat was quite in order; the government did not expect sinking of principle or curtailment of expression of opinion.⁷⁶ The Standard, however, wrote about obstruction of war measures.⁷⁷ During the next two or three months widespread and widely reported meetings of farmers and businessmen complained of these new encroachments of socialisation, plus the longer-standing grievances of import restrictions and no increase in dairy prices for 1939–40. Such war regulations as price and transport control were seen as clumsy government intrusion into affairs run much better by private enterprise. A few extremists even advocated direct action such as closing all farms for a fortnight, or tipping milk down the drains.⁷⁸ A Dunedin newspaper correspondent wrote: ‘We are at war and it is no disloyalty to organise and put into practice a general strike to make this country quietly more efficient, prosperous and free.’⁷⁹

Such wrangling could perhaps be expected, paradoxical as it may now seem to have been. Troubled peace had been replaced by ‘phoney war’. After all the forebodings, bombs were not raining on cities; almost stationary armies faced each other in fortifications. For New Zealand, waiting went on. Normal living, it was felt, should be suspended, but there was nothing to replace it. Unable to get at the enemy without, National party people turned their frustration and adrenalin against the enemy at hand; Labour replied in kind, and each accused the other of using the war to grind political axes.

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The need for increased production confirmed the position of farmers. Traditionally they were the backbone of the country, the vital basis of the New Zealand economy—in fact, were the economy— and they knew it. It was only sense, therefore, that their interests should rank first with any government, and especially in war time. They believed deeply that what was good for farmers must be good for New Zealand. They had little use for secondary industries, which the Labour government, hoping to lessen dependence on overseas prices for farm produce, was trying to foster behind tariffs and import controls. They had still less time for unproductive public works, some virtually relief projects, on which the government was spending freely and which, by offering better pay and conditions than farmers could afford, drew workers away from farms. Traditionally suspect were freezing workers and wharfies, always loafing behind their regulations and awards, always trying to clip a bit more than their labour's worth from the farmer's returns, and cossetted now by a Labour government. For two years or so before the war farmers had adjusted to rising costs by trimming expenses, especially of labour, cutting down dairy herds and increasing sheep numbers, thus maintaining net income even though production was lessened.⁸⁰

Now farmers were asked to produce more, while army enlistments and a rise in public works pay made their labour shortage worse, and the government took no large steps to help them. Let the government close public works, they urged, then farmers would have an adequate supply of men to choose from, money would be saved for war expenses, and even the guaranteed prices might be improved enough to make increased effort worthwhile. They resented being asked to work harder for no more money while the rest of the community took the war easily.

In particular, farmers were disturbed because there was no time limit to the commandeer of produce under the Marketing Amendment Act and, when questioned, Nash would say only that the matter would be brought before Parliament when the war ended.⁸¹ It was strongly felt that the government intended to use the war as a stalking-horse to get control of the main economic structure, and this cut very deeply at farmers' independence: ‘… the farmer will not do what he is told according to the dictates of an employer. He is the master of his farm and its production depends on his ability

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and organisation. If he is given the correct incentive he will do his job but without it he won't. If they interfere with the individual enterprise of the farmer they can never replace it with any other organisation and get the same production’,⁸² wrote an indignant man from Hawke's Bay, and similar views were widely uttered.

Labour's guaranteed prices for dairy produce, starting in the 1936–7 season, had at first won farming approval. In that year a loss of £272,482 was borne by the government. The 1937–8 season saw a modest rise in prices paid to farmers and a £576,724 surplus in the dairy account; but in 1938–9, when prices again rose slightly, the deficit was £2,514,889.⁸³ An advisory committee recommended a further price rise for 1939–40 but Nash, questioning the basis of its calculations, decreed that there would be no increase,⁸⁴ and in fact butterfat prices were to continue unchanged from 1938–9 until 1 April 1943.⁸⁵ The halt in 1939–40 caused keen dissatisfaction: farmers were being asked to produce more with no compensation against rising costs: it followed that the prices were a bar to increased production, and loyalty to the Empire required their improvement.

An allied complaint was the shortage of experienced farm labour. This was not just a wartime problem; it had succeeded the Depression problem of not being able to pay even for an experienced man when he stood at the door asking for work. But it was accentuated by rural labour enlisting, and a further acute annoyance was the public works pay increase from 1 October of 5s a week (plus an extra 5s camp allowance for married men in single quarters), giving a minimum wage of £4 5s a 40-hour week. This brought public works pay in line with that fixed for other industries by the Arbitration Court, but the award wage on a mixed farm was £2 5s a week, plus board and lodging reckoned at £1 a week, and on a dairy farm £2 12s 6d, with no 40-hour limit.

Farm wages, except those for a few groups such as shearers and harvesters, had never been fixed by collective agreements or Arbitration Court awards. Farm workers were too scattered for organisation, farmers strongly disliked regimentation, board and lodging were normally part of the deal, hours and conditions varied, and pay likewise. However, following the guaranteed price scheme which was intended to assure the competent dairy farmer a decent standard of living, the Agricultural Workers Act 1936 passed on the benefit to his employees. It decreed a certain number of paid holidays and a scale of minimum wages ranging from 17s 6d a week for those of

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less than 17 years to £2 2s 6d for those of 21 or more, which rose by 1939 to range from £1 to £2 12s 6d.⁸⁶ Meanwhile, by various Orders-in-Council, the Act was extended to other farm workers, establishing holidays and rates of pay. From 1 May 1937, on farms producing wool, meat and grain, the rates ranged from 17s 6d to £2 2s 6d.⁸⁷ These rates rose with those for dairy farms, except that for men of 21 years and more pay should not exceed £2 5s a week.⁸⁸ Farmers widely allowed that good men would be fools to stick to farms, and were certain that they could not compete with such pay; according to newspaper reports, very few spoke like the Waimate farmer who said that somehow farm wages must be raised: ‘Do not think for a moment you are going to smash all other classes of the community down to the level of the teamster who gets £2.5.0 a week’.⁸⁹

Few mentioned poor farm housing as a cause of the labour shortage. Basically, many farmers expected a supply of capable single men, content to live in more or less primitive bachelor conditions. They were sure that they could not afford family housing for employees, forgetting that the resultant absence of children from rural districts perpetuated the shortage and that it was the Public Works Department's provision of housing, as well as better pay, which enticed labour away from the land. Of course some farmers provided good houses for married men, but often even large farms had only one or two small family houses apart from single quarters. Naturally farm housing had been at a standstill during the Depression, and during the few intervening years of comparative prosperity it seemed a less urgent need than the fencing, top-dressing and long-delayed repairs or improvements that soaked up the better prices.⁹⁰

It was frequently urged that unproductive public works where men were ‘unemployed in the sense that we understand the term’ should cease, and it was even suggested that farmers should be able to claim particular men from public works—the obvious difficulties ‘probably could be solved if the Government faced the position resolutely’.⁹¹ Some thought that farm workers should not be accepted by the Army, others that it was useless to hold a man who wanted to enlist: ‘he would only grumble on the job’.⁹² Subsidised farm labour was proposed at a number of meetings—one at Lawrence,

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for instance, approved a detailed plan advanced by the president of the Otago Farmers' Union, transferring men from subsidised local body (Scheme 13) and public works to such jobs as scrub cutting, weed clearing, hedge cutting, ditching, draining and fencing, not more than £1 a week of wages coming from the farmer, the rest from government funds. Camps on wheels for easy moving could be established where required in country districts, and the men distributed to adjoining farms to work in gangs under efficient supervision.⁹³ A good many farmers would have endorsed the Canterbury Progress League's suggestions for suspension of the 40-hour week, registration of manpower, national service for both war and production and the transfer of men from public works back to farms.⁹⁴

After a month's tour of the North Island, Hamilton's summing-up of the farmers' attitude modified somewhat the devoted support for Britain expressed earlier: support in the form of farm produce should fetch a decent price. He had found everywhere ‘intense dissatisfaction of the militant type’ arising from the inadequate price of butterfat, the permanence of the commandeer of produce, the shortage of suitable labour and the insufficient measures to check rising costs. Though farmers were willing to make sacrifices, he said, if they retained ownership of their produce and could sell it for sterling, ‘thus getting possession of British money’, they would get substantially more than at present, and ‘regain a large portion of that economic justice that is not only their right but also the country's vital need’.⁹⁵

An editorial in Point Blank, the Farmers' Union paper, of 15 December gathered together the farmers' grievances as many saw them:

While the farmer is asked to work fifty or sixty hours on seven days a week, in all weathers, and for an inadequate return, the produce from his farm is commandeered and controlled by well-paid officials who are given the benefit of the forty hour week. It is handled on the wharves and in the freezing works by spoon-fed trades unionists, many of whom are concerned with doing as little as possible for as much as possible…. The farmer is willing to do his duty, but he cannot do it unless he gets a good deal fairer treatment than he is getting now. In the first place, adequate labour must be provided…. There is plenty of labour available for Public Works, on which the wages have recently been increased

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…. Let Mr Webb⁹⁶ use his influence with Mr Nash to obtain prices, for their commandeered produce, that will enable them to pay farm workers a wage that will attract men from Public Works and also permit them to give their workers a forty hour week. Why should the farmer himself not have a forty hour week if it comes to the point, and be recompensed for the higher skill and ability he possesses. His returns to-day are less than those of a carpenter. When the Government is willing to look at matters squarely and put first things first, then, and then only will increased production be assured.

Another, more appealing, statement of attitude by the man on the land appeared in the advertising columns of several newspapers:

I, THE UNDERSIGNED, and all those associated with me, engaged in a 60- to 80-hour week producing Wool, Mutton and Lamb in order that New Zealand will keep its promise to the British Government as part of its war effort, and being quite content to set aside all pecuniary reward for the duration, give notice that on conclusion of peace, WE WILL ASSUME COMPLETE CONTROL OF THE SALE AND DISPOSAL OF OUR WOOL, MUTTON AND LAMB, and will use every Constitutional and Legal measure TO PREVENT THE NATIONALISATION AND SOCIALISATION OF OUR PROPERTIES. T. D. Burnett,⁹⁷ Mount Cook Station, South Canterbury November 11, 1939.

This was reprinted in the New Zealand Transport Worker, the watersiders' paper, of 15 December with the comment: ‘[if this gentleman] had to sell his wool in the market this year without nationalisation, as he calls it, how would he get on? And who the devil wants his Mount Cook station anyhow?’ The same paper, remarking on talk of a farmers' revolt, wrote that under a Nationalist government a Labourite who talked sedition during a major war would be summarily dealt with, and perhaps even a Labour government could be too tolerant with agitators. ‘The sooner these people are made to realise that they are now the “agitators” and the “spreaders of strife”, and that the Labour government is the rightful and constitutional guardian of this country, the better.’ It remembered the baton-carrying farmers who helped to break the 1913 strike.⁹⁸

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A few letters appeared in newspapers saying that the Farmers' Union did not speak for all farmers, and that its president and Hamilton should urge increased production instead of ‘continually grousing and attacking the Government’.⁹⁹ A resolute note of self-help sounded from some districts where, though young men were scarce and wives were helping with milking, farmers claimed they would get over this difficulty just as they had in the past;¹⁰⁰ some local committees proposed to advise and assist on properties owned or affected by those enlisting.¹⁰¹

Government spokesmen tried to placate. They saw the difficultties—including that of getting experienced labour under 21 years of age. They explained that farm workers were on public works only if no farm work were available (which did not, of course, account for men who deliberately got themselves sacked from farms);¹⁰² that public works men could readily have leave for seasonal farm work; that more than 3500 men were already transferred from Scheme 13 and public works to farm work, breaking in new land or reclaiming farms that had gone back, with the government paying 75 per cent, and it was hoped to transfer thousands more to such work.¹⁰³ Farmers were offered a subsidy of £1 a week for six months to take on an inexperienced man,¹⁰⁴ and were assured that arrangements were being made to check on enlistments, men in occupations classified as essential being refused; of those already enlisted several hundred would be returned to their normal jobs.¹⁰⁵

In the community of trade, background discontent against Labour's regimentation of business, in wages, hours, working conditions and import restrictions, was increased again by price stabilisation.¹⁰⁶ An early request by Auckland's Chamber of Commerce to start selling at replacement costs was refused.¹⁰⁷ Prices could be raised after 1 September 1939 only by the actual increase of costs, applied for and approved in each case by the Price Tribunal. Increases such as extra imported costs of goods, freight, insurance, interest on extra capital needed to meet increased import prices, all set forth on special application forms, could be passed on, but traders feared that there would

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be rising costs everywhere—such as for stationery—with which the forms would not cope. They did not seek extra profits, they claimed, only the right to pass costs on, making a reasonable margin of profit; they added that they would not get what they did not fight for.¹⁰⁸ The Christchurch Chamber of Commerce and the Canterbury University College Economics Department, in two bulletins published in November, protested that to submit a claim for every price increase would be intolerably cumbersome and slow in the quick moving world of business. There were as yet very few shortages and adjustment of supply and demand would be better achieved if prices were allowed to run free.¹⁰⁹

In the first months of the war import restrictions remained the chief complaint of the business world. This was linked to war purposes by the idea that to pay as you go required business as usual; hence the government should strongly assist farmers to increase production and sterling funds and allow traders to secure stocks, in order to supply revenue and maintain employment. Also, a few shop assistants' unions feared that business retrenchment would lead to unemployment ‘after Christmas’.¹¹⁰ A large meeting at Hamilton on 4 December, combining the usually conflicting voices of farmers, the businessmen and shop assistants (‘an unholy alliance’, said Savage),¹¹¹ pressed for the relaxing of import restrictions, and reducing farm costs and labour problems.¹¹²

Some sections of the trading interest, however, had no sympathy with the Farmers' Union claim that unless their conditions were improved primary production could not be increased. This production determined how much imports might buy, and a trade journal harangued farmers in terms reminiscent of the extreme Left:

There can be no more haggling now over prices, and anyone (no matter what his standing) who attempts to put any brake on production for either personal gain or political motives deserves nothing short of a prompt trial and speedy punishment on conviction. The rest of the Empire is rallying to the tocsin and every New Zealander worth his salt will pull his full weight, without stopping to argue what it is worth to him.¹¹³

From the Associated Chambers of Commerce, a body traditionally critical of government interference in business and trade, came a

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remarkably fair, non-sectional statement by the retiring president, M. S. Myers, who said that had there been no war he would have protested about regulations intruding on trade. But war inevitably meant assumption by the State of functions neither necessary nor desirable in peace. The government had to govern, to decide what the country would do in all the war's aspects. Fighting men were only a part of defence; food-growing, factories, and financial sacrifice were also important factors. More co-operation was needed between all sections. Discussion and constructive criticism should not be stifled—‘it is only mean, contemptible, negative or destructive criticism that is to be condemned’. As the State's intervention might be more easily borne but for lack of business knowledge in its officers, the remedy surely was close consultation between the public authorities and trained private interests. On the ‘sound business’ handling of shortages he remarked that sharply rising prices simply meant that the poor paid by going short or doing without, while the rich paid in money. He did not believe that special profits out of war conditions were necessary for the maximum output of New Zealanders: rather that large returns easily made, in business or in wages, induced slackening of effort.¹¹⁴

Such far sight was exceptional. For the most part public utterances in these first few months showed no foreboding of how long or deep the war might be. The war was as yet only an argument to be used by various sections of the community in support of attitudes already held: the traders were still chafing against import restrictions, the farmers' complaints were really another phase of the conflict between town and country, a conflict very strongly rooted in New Zealand. The government felt it neither necessary nor wise to stifle—or even to censor out of the newspapers—sectional hostility and criticisms of itself that only a few months later would seem dangerously subversive.

War sharpened the government's inner trouble, the threat of schism which could have made necessary either coalition or else an election charged with war hysteria. It grew from the past. The distress of the Depression had swept Labour into power after 20 years of striving growth, in which members' differences mattered less than their effectiveness. They were men of high purpose, fervent to bring economic justice and prosperity to the people of New Zealand, and at first they were so busy relieving the Depression that they scarcely noticed a latent division in their ranks. The majority was headed by

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Savage, who inspired a quite extraordinary faith and following in the electorate, if to a lesser degree among his colleagues; under him a shrewd, competent, hard-working pair, Fraser and Nash, gradually came to dominance. This majority aimed to direct the economy through existing channels, while others wanted government to take control of it more boldly.

The cracks were held together by the pressure of the 1938 election, but afterwards there emerged a group of left-wingers. In this group were Lee, McMillan,¹¹⁵ Nordmeyer,¹¹⁶ Clyde Carr,¹¹⁷ Lyon, Richards,¹¹⁸ Barnard and Langstone,¹¹⁹ with some other waverers on the edge. They felt that Labour's government was making no advance towards socialism, which they regarded as its original and proper goal. Instead, the relief measures and the 40–hour week giving employment and overtime pay, by increasing spending power had promoted inflation and the crisis of 1938, which had compelled import restrictions and a British loan on hard terms. Hardening of Labour's hierarchy discipline made these back-benchers powerless; they felt that democracy was dying in the Labour party, with leaders becoming less brotherly as years in office multiplied, and many voters shared their disillusion. At Labour grass-roots in the branches there was a broad swell of discontent, growing from lack of socialism and from awareness that the comradely atmosphere of the branches, in which Labour had largely grown to strength, was becoming unimportant beside the growing influence of trade union leaders, powermen elevated by compulsory but inert unionism. That mounting Nationalist pressure for conscription of men was not being confronted by vigorous measures to conscript money augmented the sense of Labour's betrayal.

In this dissatisfaction John A. Lee had a forward part, advancing a financial policy much akin to the Douglas Credit-type ideas prominent in the mid-Thirties: that the State, instead of borrowing for development, should create a socialist bank and issue credit based on capacity to produce, with more stress on secondary industries than

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on the roads and hydro-electric schemes of Labour's public works, thereby checking the inflation caused by spending power not balanced by production of consumer goods.

After the 1938 election, wherein Lee's Socialism in New Zealand was much pointed to, and Nationalists hinted alarmingly that he was likely to succeed the milder Savage, Lee pressed for the appointment of Cabinet by caucus. This had been Labour's original intention, but in the enthusiasm of 1935 Savage had been given a free hand. He expected it again in 1938, and after initial defeat by caucus he got his way as a personal matter. Lee, able, forceful, and his party's most skilful propagandist, expected Cabinet rank, and many expected it for him, but after four years he had no portfolio, no real power, though he was active on the Defence Council. In defence Lee diverged from New Zealand's traditional policy of sending expeditionary forces to seek the foe overseas. He believed in isolation and in New Zealand being defended by air and by a small but efficient military force. His defence thinking was not adopted but the Air Force was substantially increased between 1937 and 1939.¹²⁰

In mid-1936 Lee became Director of Housing with wide powers and cheap finance and with Nash, his Minister, pre-occupied with other matters. It was estimated that New Zealand needed 20 000 new houses, while 27 000 should be demolished and 55 000 repaired. Lee organised with energy and skill, making good use of such resources as his shrewd and able permanent Under-Secretary, Arthur Tyndall,¹²¹ and the facilities of the powerful Fletcher Construction Company, which included joinery factories.¹²² Building trade unions, which sought to establish socialistic principles and worker control in State house construction, were advised by Lee to form cooperative companies and to compete with tenders. Companies were formed in Wellington, Hamilton and Dunedin, but proved successful only in Dunedin.¹²³ Land was purchased and prepared in many towns, architects devised standardised but not uniform houses, and, despite rising costs and shortages of both workmen and materials, contractors put up houses at an increasing pace. By July 1938 it became clear that the Housing Department had outrun the capacity of the building industry,¹²⁴ but by March 1939 some 3445

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houses had been completed.¹²⁵ After the 1938 election, Armstrong¹²⁶ became Minister of Housing and Lee's responsibility lessened.

Lee, restive, criticised Nash's policies—‘shilly-shallying and drift’, attempting ‘a Labour spending policy with a capitalist financial machine’—in a letter which leaked out early in 1939 and was widely circulated.¹²⁷ Labour's Easter Conference of 1939 very heartily voted confidence in Nash, and more narrowly (285 votes to 207) censured Lee's disloyalty and indiscipline. With the war Lee's impatience grew. Five Cabinet ministers, including Fraser, had been gaoled in the 1914–18 war, while Lee, with all the appeal of a demagogue heightened by a DCM and an empty sleeve, was seemingly qualified for wartime leadership. This did not endear him to the Fraser–Nash group, and his financial proposals increased their irritation. He declared that orthodox financing of the war would ruin New Zealand, he spoke of debt repudiation, he renewed pressure against bankers, recalling that bankers had subsidised Hitler; these ideas were attractive to many who had felt the weight of ‘the Bank’ in the bad years. He was ready to press on towards socialism, despite the war and the risk of financial panic. Against the charge of disloyalty, Lee and his friends claimed that they were holding to Labour's pristine policy, which others were forsaking. He stood for democracy in caucus, and he was critical of New Zealand being hitched to Chamberlain's chariot without visible safeguards.

Savage, the beloved figurehead, was ill with cancer, though this was carefully concealed to avoid unrest.¹²⁸ Lee, knowing that he was sick but not how near he was to death, wrote ‘Psychopathology in Politics’¹²⁹ explaining that a leader physically and mentally sick was fatal to his party. It was poor taste and poor timing, and Lee was at once relieved of his post as parliamentary under-secretary to Nash. On 11 January 1940 at Auckland's Labour Representation Committee a motion of severest censure against him was defeated 109:85 and replaced by one expressing confidence in both Lee and Savage. But before Labour's National Executive two days later almost the same censure motion was carried 15:3.¹³⁰

On 25 March at the Easter Conference Lee was expelled from the Labour party. With Savage dying, it was vital to the central group

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underwriting the smooth succession of Fraser that Lee be got rid of quickly. The expulsion was well organised. ‘Big Jim’ Roberts,¹³¹ king of the waterfront unions and president of the Labour party, made little pretence of impartiality. Savage's death was expected hourly and it was claimed that Lee's attacks had killed him. Branches unaware of the issue beforehand had not instructed their delegates, and power was concentrated in a few hands by a voting system established that very day whereby union delegates exercised votes in proportion to the size of the unions, now swollen with compulsory but often passive members. The expulsion vote however, 546:344, showed that Lee's challenge was far from slight, while the election of D. G. McMillan, also prominent in the left wing, as vice-president of the party showed that this group was not rejected.

There is little doubt that the offending article was the pretext, not the cause, of Lee's expulsion, little doubt that he was condemned in an hysterical atmosphere to which Fraser contributed.¹³² But political comradeship of 20 years mattered nothing beside the welfare of Labour, which Fraser firmly identified with his own comprehensive leadership. Lee's expulsion was more than the removal of an unruly member, it was a formative piece of discipline. He was exiled to the political wilderness, a salutary example, and with him went W. E. Barnard, the Speaker, who resigned from Labour in principled protest. The sacrifice of Barnard's promising career (he had been in Parliament 12 years and was widely respected) marked as with a gravestone the point where the rest of the leftists headed back into the main stream. It was the task of McMillan, runner-up to Fraser in caucus voting for Prime Minister,¹³³ to close the rift. He firmly expressed loyalty and received Cabinet rank but resigned at the end of the year for health reasons. Langstone, already in Cabinet, supported Lee silently and later retired to a diplomatic post. Lyon went into the Army and was killed.

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Lee set up his Democratic Labour party, with branches all over the country, but there was no large breakaway. The election due in 1941 was postponed for two years because of the war. In the 1943 election almost all of Lee's 51 candidates lost their deposits, though they polled four per cent of the total votes; Labour, though losing five seats, still had a comfortable majority.¹³⁴ Many of Lee's followers would not split Labour; all their political experience held them from this, especially with the Nationalists pressing for wartime coalition. However much Lee had contributed to his own downfall, something died in the heart of Labour when he was cast out. Authoritarianism was strengthened; criticism of the leaders would not do. This change, this narrowing, would probably have occurred without the war, but at all levels the war was an extra reason for suppressing strife within the government's party.

Lee's head on a spike was both a warning against divergence within Labour and a show of force to those outside. It revealed, said the New Zealand Herald of 27 March, a system as totalitarian as Fascism, Nazism or Communism, which should be noted by people fighting for freedom. A writer to another Nationalist paper wondered how opponents of the government could hope for tolerant consideration when men who had served Labour faithfully for years were discarded for divergence on the means to achieve Labour's ends.¹³⁵ But most conservatives were thankful that Labour had shed its dangerous member. ‘The “Thunder on the Left” seems destined to pass away harmlessly for lack of a storm centre’, predicted the New Zealand Herald on 27 March.

It was often remarked after the first few weeks that it was a funny war. Poland was knocked out with numbing swiftness in three weeks, but thereafter the expected war did not happen. The cable war news, despite bigger headlines, seemed in its day-to-day effect much the same as people had been reading for years. In Britain air-raid precautions were switched on, children were evacuated from cities, and everyone waited with their gasmasks, but the bombers did not come. British ships blockaded, while British aircraft attacked a few naval bases and dropped propaganda leaflets over Germany explaining to Germans that the Nazis were their real foes. The French advanced a few miles into the Saar, stopping short of the Siegfried Line; by mid-October they were joined by some 160 000 of the British Expeditionary Force, and the western front settled down quietly for the

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winter, while German propagandists assured French troops that Britain would fight to the last Frenchman.

During those first months, but for Russia New Zealand's newspapers would have been hard up for excitement and for wrath. Russia was rated the direct and immediate cause of the outbreak of war, for without the treacherous Russo–German pact would Hitler have attacked Poland? This fury of words and feeling could not, of course, reach Russia, but part of it could be turned against New Zealand's own Communist party, a small, highly derivative group, zealous in trade union activity and fringed with intellectuals,¹³⁶ which stuck faithfully to its duty of supporting Russia's foreign policy through all its changes.

After 1928 it had been the declared policy of the Comintern, to which the New Zealand party was then affiliated, to ward off attacks on the USSR and promote world revolution. The local party gathered strength during the Depression, when authorities viewed it as a sinister influence among the workless, and its leaders were repeatedly arrested on charges of fomenting unrest and strikes, and of distributing seditious literature. A closely allied body, professedly nonpolitical and cultural, the New Zealand branch of Friends of the Soviet Union, was formed in 1932 and had 1000 members by the following year,¹³⁷ its aims being closer political, economic and cultural relations between the workers of the USSR and other countries, defence of the former against imperialist intervention and making known the truth about Russia's development.¹³⁸ In 1935, following the rise of Hitler, declared foe of Bolshevism, world revolution receded in the Comintern's policy, while support of Russia became paramount. Reformist governments which, by offering the workers a slice of bread and inducing them not to seize the loaf, were no longer the enemy. Communist parties the world over were urged to unite with socialist and labour forces in the struggle against war and Fascism, and to defend the USSR. In New Zealand this directed Communists toward anti-war efforts, such as ‘hands off Abyssinia’ processions, but local leadership continued opposition to Labour till after the 1935 election, when it was decided to give the new government unconditional support against the forces of reaction. The offer was not welcomed. Pointing to the communist role as disrupters of working class solidarity in Germany, Spain, France and Australia, unions and the Labour party firmly rejected united front proposals.¹³⁹ The Communists continued to seek affiliation regularly, undaunted

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by vigorous rejection—as in 1937 when the Labour Conference declared against admitting Communists or Friends of the Soviet Union to membership of the Labour party.¹⁴⁰ Communists were active in trade unions, where they rallied all those anxious for rapid internal social progress and for opposition to war and Fascism abroad. They denounced appeasement very strongly throughout the Spanish war and the Czech crises, and urged the formation of a peace-bloc, including the USSR. The Polish guarantee they greeted with scepticism, unable to credit Chamberlain with a genuine change of policy. In the chequered Anglo–Russian talks they saw, rightly, evidence of Chamberlain's inability to stomach an alliance with Russia; they took no notice of rumoured German–Russian negotiations except to deny them.¹⁴¹

On 25 August, in a widely distributed Manifesto, the National Executive declared staunchly: the Soviet Union is right. The Pact signed on 23 August was in the interests of socialism and the world Labour movement. The USSR had double-crossed no one, remaining faithful to its policy of having peaceful and friendly relations with all countries willing to do the same. Hitler, realising that the Soviet Union, with its people morally and politically united under socialism, was too powerful to attack, had double-crossed his backers, the financial gangsters in London, the real criminals, who had hoped to direct him against the Soviet Union. By signing the Pact, the Soviet Union had disrupted imperialism's cynical plans to involve it in a war which, whatever its initial stages, would develop into a united front of the Munich powers against the land of socialism; it had safeguarded the citadel of socialism, and it had driven a wedge between Germany and Japan, thereby greatly assisting the Chinese people. If war came, it would be the responsibility of the pro-Fascist leaders of Britain and France, the top-hatted gangsters who had helped Fascism to unleash the war.

But, continued the statement, while the Pact was necessary in the interests of socialism, Hitler's Fascism remained the deadly enemy of the working classes. Fascism could not be defeated by Britain under its present leadership but only if this were replaced by a real people's government and a democratic defence force. In New Zealand Peter Fraser was fraternising with Adam Hamilton, preparing to abandon the positions of the working class for those of the reactionary imperialists who intended, under cover of the war crisis, to attack democratic rights and living standards. If Fascism were to be

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defeated, democracy must be extended and living standards maintained, for only a free people with something to defend could defeat Fascism. An emergency conference of the Labour party, the Federation of Labour and the Communist party must meet at once, the government must state its support of the Soviet Union and oppose the reactionary British imperialists. All trade union standards, all social services and all democratic rights must be maintained, defence measures must be on a democratic basis and conscription of wealth must begin.

This may be taken as a sample of current communist thinking, pruned of much rhetoric. It was printed in the People's Voice of 1 September 1939 and, as a leaflet, 40 000 copies were thrust under doors, into letter boxes and cream cans, into factories and workshops. It was infuriating to many citizens in that September, when the mood of loyalty was high. Sections of the community with little in common could at least join in berating the Communists, as could those frustrated by having no direct means of getting on with the war. In Parliament, protests came from both sides: Doidge¹⁴² and Polson¹⁴³ on 12 and 13 September thought that Communist subversive activities should be suppressed in war time, while Labour's Schramm¹⁴⁴ wanted the country to be protected from ‘unfair, subversive, untrue, malicious and disloyal Communist propaganda’. Fraser soothed, explaining the folly of giving nation-wide publicity to statements beneath contempt. The government, he said, would take action if necessary¹⁴⁵ and this remained the administration's policy until January 1940.

Most newspapers warned against communist subversion but the Standard, headlining ‘Nonsense from the Mental Slaves of Moscow’ on 7 September, launched a campaign that surpassed anything from the conservative press:

The New Zealand dupes of Comrade Stalin¹⁴⁶ are now bellowing out that a war between democratic Britain and Fascist Germany is an imperialist war…. The Communist decoy ducks now say that Stalin has betrayed the European Socialists so that he may preserve intact the so-called Socialism operating in Russia.

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Exactly the same argument is used by a scab in an industrial fight… so that his wages will keep his home comforts intact.

Stalin's course was in harmony with the treachery of local Communists everywhere who deliberately weakened Labour movements with internal strife, and whenever this happened Fascism triumphed. ‘Only a person with the logic of a lunatic and the mentality of an industrial and political traitor would try to explain the relations of Germany and Russia away as the Communists… are attempting.’ While democracy was making a life and death bid for law in world affairs, the Communists were making a typically twisting attempt to cloud the issue by criticism of the Chamberlain government.

The Labour hierarchy, zealous to extinguish in its rank-and-file the deep-seated though not uncritical regard many had for Russia as the exponent of Socialism, attacked this lingering loyalty in other major Standard articles. On 21 September one, ‘The Hitler–Stalin Axis; brief history and explanation of communist policy’, told how Russian Communism had departed from its beginnings, and how local Communist parties, under Kremlin direction, shattered Labour movements, while in Russia itself Stalin's purges made Hitler's insignificant, and the last ten years showed that Hitlerism and Stalinism were not opposites but twins. All Communists were now revealed as Nazis in disguise and all the ‘confusionism’ of the New Zealand Communist party could not hide their openly established front with Stal