The Broken Decade: Prosperity, Depression and Recovery in New Zealand, 1928–39

By Malcolm McKinnon

The Depression of the 1930s was a defining period in New Zealand history. It had its own vocabulary swaggers and sugarbags, relief work and sustenance, the Queen Street riots and special constables that was all too familiar to those who lived through that tumultuous decade. But one generation's reality is another's history. The desperate struggles experienced by many for work, food and shelter during the 1930s eventually gave way to the sunny postwar years, when the Depression was no more than an uncomfortable memory. And now, for the children of the twenty-first century, it's just a word. While the lives of those most affected by the Depression have been admirably documented in oral histories in various forms, the political and economic context, and the manoeuvrings and responses to the unprecedented conditions have not, until now, been given the extensive analysis they deserve. The Broken Decade, Malcolm McKinnon's detailed and absorbing history of this period, unpicks the Depression year by year. It begins by introducing the prosperous world of New Zealand in the late 1920s before focusing on the sudden onset of the Depression in 193031, the catastrophic months that followed and, finally, on the attempt to find a way back to that pre-Depression prosperity. Informed by exhaustive research, relevant statistics and fascinating personal accounts, and made accessible and meaningful by insightful analysis, this important book will become New Zealand's definitive study of the 1930s Depression.

• Language: English
• Publisher: Otago University Press
• Release date: May 20, 2019
• ISBN: 9781988531632

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Published by Otago University Press

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www.otago.ac.nz/press

First published 2016

Copyright © Malcolm McKinnon

The moral rights of the author have been asserted

ISBN 978-1-927322-26-0 (print)

ISBN 978-1-98-853163-2 (EPUB)

ISBN 978-1-98-853164-9 (Kindle)

The author was a grateful recipient of a CLNZ Writers’ Award in 2011

Published with the assistance of Creative New Zealand

A catalogue record for this book is available from the National Library of New Zealand. This book is copyright. Except for the purpose of fair review, no part may be stored or transmitted in any form or by any means, electronic or mechanical, including recording or storage in any information retrieval system, without permission in writing from the publishers. No reproduction may be made, whether by photocopying or by any other means, unless a licence has been obtained from the publisher.

Editor: Jane Connor

Design/layout: Fiona Moffat

Index: Robin Briggs

Frontispiece: Endpaper map, New Zealand Official Yearbook 1931, Archive Paper Copy, ATL, Wellington.

Front cover photograph: A march in Wellington protesting against wage cuts turning from Cuba Street into Manners Street (probably March 1931). 1/2-084837-G, ATL, Wellington.

Author photograph: Keith McEwing

Ebook conversion 2019 by meBooks

CONTENTS

PREFACE AND ACKNOWLEDGEMENTS

INTRODUCTION

1. A N I NDIAN SUMMER , 1928–30

2. E CONOMY AND ADJUSTMENT , 1930–32

3. O UT OF MIND , OUT OF SIGHT ? T HE UNEMPLOYED CRISIS , 1930–32

4. A FTER THE DISTURBANCES , 1932

5. H OW TO RAISE PRICES , 1932–33

6. A T ODDS , 1933

7. E XPANSION AND PROTECTION , 1933–35

8. B ACK AND FORWARD TO A WELFARE STATE , 1933–35

9. T HE 1935 ELECTION

10. A L ABOUR RESTORATION ? 1935–39

11. T HE D EPRESSION AS HISTORY AND MEMORY , 1940–2015

APPENDIX 1: Parliaments and elections, 1928–39

APPENDIX 2: A note on words, money and numbers

ABBREVIATIONS

NOTES

BIBLIOGRAPHY

INDEX

PREFACE AND ACKNOWLEDGEMENTS

This book is a narrative and an analytical history of the Depression of the 1930s in New Zealand, one focused on, although not exclusively devoted to, the politics of the period. This approach and focus are choices that merit some explanation.

The Depression is usually regarded as an ‘event’, and of course in a sense it was, but an event that lasts five years or more carries many smaller events within it. If we generalise that an event occurred ‘in the Depression’, we forgo insights into how the experience of the Depression changed over time and how contemporary understandings of it also altered. In this study the narrative element is foregrounded in the subtitle – the words ‘prosperity’ and ‘recovery’ conjure up different associations and reactions from ‘Depression’. The narrative of this book attempts to capture differences in mood and approach through successive years.

If it would not have overburdened the title, the phrase ‘political response’ could also have been added to indicate the nature of the analysis that shapes the narrative. How did the Depression play out politically? What range of interests and lobbies contested for influence and power through these years and how were those contests characterised?

The focus on politics provided a useful limiting device. Historians habitually resort to ‘more work to be done’ to justify omissions, but the political focus also enabled the book to be kept to a realistic length. That said, the text and the images both venture beyond the political realm to capture the experiences of ordinary people through the Depression. They also at times take us ‘beyond’ the Depression. Not all life in the early 1930s fits a Depression frame of reference. Indeed, there is probably a book to be written on how the notions ‘depression’ and ‘the 1930s’ sit alongside each other – then and now.

Many debts have been accumulated in the course of researching and writing this book, which it is a pleasure to acknowledge. Both Copyright Licensing Ltd and the History Research Trust Fund of Manatū Taonga provided indispensable financial assistance. I am deeply indebted to a variety of scholars who read through the whole or a large part of the manuscript and provided cogent comments and suggestions. One’s own progeny are never regarded quite so affectionately by others and to read and comment on someone else’s manuscript, however innately interested you are in the subject and however much goodwill you possess towards the author, is a true test of collegiality and friendship. My biggest debt in this respect is to Erik Olssen, who read the manuscript when it was a lumbering beast and made compelling suggestions for restructuring and focusing. Foremost among the other readers, he is excused any responsibility for the deficiencies that remain.

Simon Boyce, Matthew Cunningham, Brian Easton, Gary Hawke, Jim McAloon and Redmer Yska, all of whom have probed different facets of the period, were very helpful and generous with their time and feedback. Other scholars and students of the period who provided welcome suggestions and/or feedback were Ann Beaglehole, James Bennett, Michael Bassett, Michael Biggs, Michael Brown, Paul Callister, Ross Carter, Karen Cheer, David Colquhoun, Peter Cooke, Anthony Dreaver, David Grant, Richard Hill, Kate Hunter, Harshan Kumarasingham, Cybèle Locke, John E. Martin, Charlotte Macdonald, Simon Nathan, Melanie Nolan, Phil Parkinson, Jock Phillips, Kirsty Ross, Ben Schrader, Oliver Sutherland, Kerry Taylor, Bob Tristram, Jim Urry, David Verran, James Watson, John Weaver, the team at History Works, the late Tim Beaglehole and the late Bill Renwick. Sam Elworthy was a robust and therefore valued interlocutor.

I benefited from the insights of a range of other scholars whose long-since-completed works have remained mines of information and sources of intellectual stimulation; I am thinking particularly (but not exclusively) of theses by Robin Clifton, Lucy Marsden, P.G. Morris, Rosslyn Noonan, J.R. Powell, Michael Pugh, A.J.S. Reid, Ross Robertson and James Watson. In a special category is Tony Simpson and The Sugarbag Years, the latter the study that more than any other is cited by contemporary New Zealanders when ‘the Depression of the 1930s’ is mentioned. This book does not replace that work; it is more in the nature of a conversation with it.

A study like this necessarily involves research in archives and records in a variety of depositories, and I am indebted to the expert, able and helpful individuals who staff them. I am grateful to the Alexander Turnbull Library above all, but also to Archives New Zealand (its offices in Wellington, Auckland and Dunedin); the Auckland City Council; the Auckland War Memorial Museum; the Sir George Grey Room at the Auckland Central Library; the University of Auckland Special Collections; the Fletcher Trust Archive; the Gisborne District Council; the Tairawhiti Museum in Gisborne; Puke Ariki Museum in New Plymouth; the Sarjeant Art Gallery/Te Whare o Rehua, Whanganui; Palmerston North Public Library; Te Aratoi, Masterton; the Museum of New Zealand/Te Papa Tongarewa; the Parliamentary Library in Wellington; the Wellington City Council; the J.C. Beaglehole Room at Victoria University of Wellington; the Christchurch City Council; the Canterbury Art Gallery; and the Hocken Collections at the University of Otago.

It is truly now impossible to imagine carrying out this kind of research (and yet in a not too distant past scholars did) without the resources of Papers Past (www.paperspast.natlib.govt.nz) and other digitised sources of records, notably those of the Appendices to the Journals of the House of Representatives, historical New Zealand statutes and the New Zealand Official Yearbooks. Similarly, being able to search Australian statutes online and Australian newspapers through that country’s Papers Past equivalent, Trove, was also extraordinarily helpful.

I am grateful to Sir Tipene O’Regan for giving me permission to use and cite the diaries of P.J. O’Regan; to Helen Sutch for access to selected papers of W.B. Sutch; to Derek Challis for permission to use and cite the correspondence of Iris Wilkinson; to the late Tim Beaglehole for permission to peruse and cite his father’s correspondence; to the late Sebastian Page for permission to reproduce two of Evelyn Page’s works; to Rachel Wren for permission to reproduce works by Christopher Perkins; to Rosalie Archer for permission to reproduce a work by Russell Clark; and to Wayne Anderson of Christchurch Rotary for guidance in respect of a Rotary image. Rosemary McLeod kindly gave me access to her Aunt Jean’s diary (now in the Alexander Turnbull Library).

I greatly valued exchanges with George Forbes, descendant of his prime ministerial namesake; and with Russell Stone, a historian and memoirist of the Auckland of a century and more ago. Suzanne Blumhardt, Bill Bristed, John Bristed, John Crawford, Shona Geary, Harry Gibbons, Ruth Laugeson, Roberta McIntyre, John Mohi, Isabel Munro, Brian Opie, Rachel Plimmer, Jane Ritchie, Ann Trotter and David White all shared Depression memories of parents and/or other relatives. A number of individuals were happy to be interviewed but preferred not to be identified.

I had invaluable research and image research assistance from Catherine Falconer-Gray, Janine Faulknor, Melanie Lovell-Smith and Minnie Lomax. Thanks to Keith McEwing for the author photo and much else besides. I am also grateful to David Green, who cast his legendary eagle eye over the manuscript at a late stage. While he must therefore take credit for spotting some bloopers, he must be particularly exempt from responsibility for any that remain.

At Otago University Press the book has been superbly looked after by publisher Rachel Scott, editors Jane Connor and Imogen Coxhead and has been beautifully designed by Fiona Moffat. The fine index is the work of Robin Briggs.

In the years 2008–10 I worked alongside Ben Schrader as a theme editor for Te Ara’s ‘Economy and the City’ entries – a valuable refresher course for me in New Zealand’s economic history. I am grateful to Victoria University of Wellington’s School of History, Philosophy, Politics and International Relations for providing a welcome academic home, and to the VUW Law School Library for providing a congenial working environment, not least because of the ready access it provided to the as yet undigitised parliamentary debates. I welcomed the opportunity to give ‘work in progress’ talks at Victoria University (Stout Centre; History Programme) and at the University of Waikato.

Finally I remain, as always, deeply in debt to friends and family, both those who kept asking ‘how is it going?’ and those who stopped. All were appreciated; we do not want our prolonged labours to be completely overlooked but we do not always want the scrutiny to be too intense.

MALCOLM MCKINNON

Wellington

March 2016

INTRODUCTION

On the morning of Tuesday 10 May 1932 men downed tools on most relief-work sites throughout Wellington. The Unemployment Board had refused to make changes to a new relief regime, despite its many limitations. The unemployed men walked off their jobs, assembled at the Basin Reserve in the early afternoon and marched the three kilometres to parliament. It was the last day of a contentious parliamentary session. Around 4000 marchers reached the gates of parliament – barred by police – at about 3.30. Numbers were swelled by supporters and spectators as time passed.

Speakers addressed the gathering from the big pillars at parliament’s gates. The crowd stayed calm for the most part. The sun set at 4.45; it was only six weeks from the shortest day. The weather deteriorated and it started to rain.

Another hour passed. The crowd waited for news from two deputations – one from the relief workers’ own strike committee and the other from the mayor and the Wellington Unemployment Relief Committee – meeting Employment Minister Gordon Coates.

It was not until after 6pm that the unemployed men’s own deputation came out from parliament into the night to say that Coates would only respond in the morning and that they should reassemble then at the Basin Reserve.

Much of the crowd dispersed, almost certainly disconsolately, but the demonstration gained a place in history on account of a group of men who set off window-smashing along nearby Lambton Quay, Willis Street and Manners Street – the heart of the downtown area. ‘The street was so densely packed with people that the trams couldn’t get through … I heard a voice cry, Let’s smash the bloody town up! [A] Hindu fruit barrow was upended, oranges and bananas – the first supplies of ammunition … at hardware stores [men] picked up spanners, iron bars … a feeling of horror and suspense, the crash of glass in the earholes and thousands of people just out of curiosity probably, like most of us, and if you wanted to go against the crowd you just couldn’t.’¹

The window-smashing lasted about 20 minutes, until the police who were on guard at parliament plus other police from the Central and Taranaki Street stations were able to deflect rioters at the far end of Lambton Quay and outflank others near Manners Street (half a kilometre further away). Large numbers of special constables, who had been summoned to police stations in the latter part of the afternoon, were sent out. It made for an eerie evening: ‘The wet pavements echoed to the tramp of squads of overcoated specials and the clatter of the horses of the mounted men who patrolled the main streets. Police [on] short beats kept an eye on the goods in the broken windows. A load of planks and three-by-twos dropped on the street was being nailed into place over a window. Lit windows seemed to have been singled out for damage, and lights were scarce last night in places where they are usually seen.’²

The crowd of unemployed demonstrators at the gates of Parliament Buildings, Lambton Quay, Wellington, 10 May 1932. 1/2-084210-G, ATL, Wellington

In May 1932 New Zealand had been ‘in depression’ for at least 18 months. This was triggered initially by a sharp fall in export returns in the 1929–30 season, followed by equally sharp falls in 1930–31 and 1931–32: ‘Never a word seemed to be spoken among farmers except about the staggering fall in the value of stock – sheep first, and later cattle.’³ In 1931–32 average returns were just 60 per cent of the level for 1928–29. Spending on imports fell in the 1930–31 season (a whole year later than the collapse in export prices) and for the year ended March 1932 was at half the 1929–30 level. These two collapses transmitted a global economic downturn to New Zealand.

WOOL, MEAT AND BUTTER, 1925–39

The earnings of New Zealand’s three principal export commodities over the years 1925–39 highlight the variations in the impact of the Depression on different producer interests. Statistics NZ, long-term data series

EXPORTS AND IMPORTS, 1926–39

The trend of exports and imports highlights the timing and scale of the Depression downturn. NZOYB, sections on external trade, passim

For most New Zealanders in towns and cities it was in the summer of 1930–31 that the downturn had become unmistakable. ‘The farmers had been facing ruin for well-nigh a year before the workers of the towns and cities felt the full force of the blizzard. We country people had thought of it as our slump, our special ruin. Now we realized the indivisibility of calamity and that there were those still more naked to the blast than we. At least we could eat: the unemployed were hungry.’⁴ Auckland poet R.A.K. Mason, who had gone to Samoa at the beginning of 1931, returned home in March and was struck by how much more desperate things had become in the time he was away. It was strange ‘to see in our native Auckland boys and women playing the fiddle for money in the streets, men selling fruit on the pavements, old crones diving into rubbish-baskets for a few rejected newspapers, men sneaking scraps of food out of Keep our city clean [bins]’.⁵

According to the New Zealand Financial Times, in a review of 1930, ‘Doubt has at long last passed away and fear is here with us, naked and unashamed …’⁶

By the winter of 1931 numbers of registered unemployed had soared to an unprecedented 50,000, compared with a little over 5000 a year earlier. The 5000 would have been an underestimate for adult male unemployed, the 50,000 less so, but in any case the difference was still substantial. The commodity-price collapse made many farmers, particularly the heavily indebted, virtually insolvent. Many householders were in a similar plight, with no or reduced income but a mortgage or rent still to pay. Investors left their money on fixed deposit; banks and other institutions stopped lending and house construction ground to a halt – just £2.7 million of building in 1931–32 compared with £10 million in 1929–30.⁷ The government’s own income – mostly customs duties and income tax – threatened to dry up.

Inside parliament on 10 May 1932 the emergency session, summoned by the government in late February to implement its controversial retrenchment and tax policies, was in its last hours. In the Legislative Council the mood was sombre: ‘We can only hope,’ said Sir James Parr, prominent in political life in the 1920s, ‘that the right thing has been done and that, in the long run, New Zealand will benefit.’ The council’s Speaker, W.C.F. Carncross, ventured that ‘much as it has hurt people by retrenchment and taxation … the government has played the part of a kindly surgeon who amputates a limb possibly to save the whole body’.⁸ Surgery was an apt metaphor: wages, pensions, education had all been ‘cut’. The moment for valedictories in the House arrived after William Downie Stewart, the minister of finance, had spoken briefly about difficulties in concluding a trade treaty with Belgium. Prime Minister George Forbes acknowledged the retrenchment: ‘We have had to undo and go back upon many things that we did in prosperous times; but that is true not only of the government but of private citizens as well.’⁹ But Labour leader Harry Holland, eschewing the convention of anodyne comment, looked back and out in anger – or despair. ‘There has never before been a session,’ he said, ‘where the lines of demarcation have been so rigidly drawn between the two sections of the House … the supreme tragedy of history … [is that] while there is no shortage whatever of the things people need, the people starve and perish because of their inability to buy the things which have been produced.’¹⁰

We and they

The demonstrators outside parliament that gloomy May evening believed the government could have done more, and inside the House they had supporters: ‘The Prime Minister in making his [valedictory] speech introduced one slightly controversial point when he said that New Zealand’s difficulties were caused by world-wide conditions,’ contributed Labour MP James McCombs. ‘The government of the country takes [such a] hopeless view of things … if the government had really set out to solve New Zealand’s difficulties it could … have pursued a policy that would have made good, in part at least, that tremendous loss [of £20 million], instead of that it has pursued a policy that has multiplied that loss by three …’¹¹

Many of the informants interviewed in the early 1970s for Tony Simpson’s The Sugarbag Years, the most influential account of New Zealand in the Depression, confirmed the view of the slump as a story of desperate people and callous and unfeeling authorities, be they bankers, businessmen, officials or, most often, politicians in government: ‘When Mr Forbes [the prime minister] appeared on a balcony at the hotel, resplendent in his evening suit, this incensed the crowd, which immediately started to abuse him … Coates [the deputy prime minister] made that famous statement when the unemployed called on him in his room in Parliament. He said You can eat grass … a hell of a lot was made of that statement.’¹² ‘Downie Stewart kept the cashbox firmly locked, acting as he was directed by the banks.’¹³ ‘Forbes … typified the political bloke[s] that were in power then. Solid from the head to the feet … a group of conservatives who could think of nothing else but retrench, retrench, retrench …’¹⁴

It was a contest between workers and the bosses, between the poor and the well-off. It was the difference between living in damp and cold rented cottages and flats in South Dunedin, Sydenham, Te Aro Flat or Freemans Bay, and living in comfortable houses in Maori Hill, Fendalton, Khandallah or Remuera. It was the difference between a shearer and a ‘wool king’, a wage-worker and a professional man on a salary, a man and his master, a maid and her mistress, a man out of work and a man living off investments.

Men were covered to an extent by the relief regime but ‘women were on their own,’ recalled a relief worker years later: ‘No relief camp, no sustenance allowance, got nothing, my sister was with my uncle up in Waikato, gets damn cold in Waikato, as you know, they couldn’t give her any money but they fed her but she had no winter coat, boots etc., how would she get on? She was young, she should have been running around having a good time … some girls did because they had the obvious way out, I was scared my sister would go the same way …’¹⁵

‘Boys and girls between 10 and 20 were getting no work at all,’ attested a Dunedin unemployed leader at a meeting at the hospital board offices in early April 1932. ‘A woman had been put out [of her accommodation] only that morning,’ reported another at the same meeting, ‘and there were six cases the previous night in Glasgow St. That sort of thing happened every day. The woman who had been evicted was still in the street with her furniture.’¹⁶

You’d work Monday, Tuesday, Wednesday morning; Wednesday afternoon you’d receive your pay – the following week you’d find you’d start on Wednesday afternoon – so you had to go to the following Saturday before you got the next lot of money – and if there was a stand down week as well – it could be two and a half weeks.¹⁷

Dan Greaney, in Greymouth, recalled a ‘particular foreman [who] was round that building, watching the men, like a squirrel leaping all over the show; the men were afraid of him, a lot of them resented him too … after one big job [we] went to a pub and had a few beers; he happened to be standing near to me. Hey, Dan, I believe you nicknamed me Simon Legree? I said, That’s right Jack. Who in the hell was he? I looked at him and said, The bastard who flogged Uncle Tom to death.’¹⁸

Anger and despair fuelled political awakening and political action. We ‘were not going to stand by and see them put out of their houses,’ asserted Len Hunter at the Dunedin meeting of the hospital board.¹⁹ ‘I applied for membership in the Communist Party in early 1931,’ recalled Jim Edwards in later life; ‘an intense desire to alter the conditions of life obsessed me then.’²⁰ Intellectuals were drawn in. ‘I became a rabid socialist – a Marxist,’ explained poet Denis Glover a generation later. ‘I got as far as page one and a half of Das Kapital … [I] never joined the party, they wouldn’t have me because I had sort of capitalist origins or some other shit … [but] a socialist I’ve remained ever since.’²¹ Throughout the Depression thousands of men and women put immense effort into promoting socialist ideas and policies: ‘It must have been a rude disturbance,’ said the Communist Party paper the Red Worker of the May Day 1932 demonstration in Christchurch, ‘to the idyllic quietude of suburban bourgeois residences surrounding [Cranmer] Square when our speakers thundered out their message through the loud speakers to the assembled hosts.’²²

The zeal for transformation, for a new start, reached well beyond the Communist Party, which had a membership in scores or hundreds, not thousands (though it ‘punched above its weight’). Public meetings and marches organised by the Labour Party, unions and the unemployed organisations were attended by thousands in the major cities. They lasted hours – partly the style of the time but also reflecting a zeal for action, for change, that the politicians and other leaders both stimulated and responded to.

‘If ever anyone set out to build Jerusalem in this green and pleasant land it was the Leader of the Opposition,’ said Peter Fraser, eulogising Labour leader Harry Holland, days after his death in October 1933.²³ Margaret Thorn, the wife of Labour Party president James Thorn, was a lifetime socialist who co-founded the Unemployed Women Workers Association in 1932. ‘It was clear from the last 17 years,’ she said at an election meeting in Ōtaki in 1931, ‘that a free enterprise, exploiting economy would not meet the needs of the people of the world. Our conception was of a cooperative collectivist economy … this security the Labour and Socialist parties of the world were dedicated to bring about …’²⁴

‘It is fashionable,’ said fiery Labour politician John A. Lee in March 1932, ‘to predict [capitalism’s] collapse in chaos and misery but it may be that the pains and agonies are of a rebirth.’²⁵ Would the rebirth be a revolution or a reform? The Labour Party had been wedded to gaining political power through parliament since its formation in 1916, which implied a reformist approach: gain control of the state, then embark on transformation. From this perspective, fully realised socialism was a long-term project that depended on the people as much as the party: ‘The achievement of a new society will require the creation of a public mind that will demand different economic and social principles from capitalism. That is the long term task of the Labour Party.’²⁶

That ruled out the immediate socialisation of production, but distribution and exchange were different matters. In May 1932 Lee spoke of the ‘staggering quantity of goods in the world yet there is an impoverishment … the solution [is] public control of the financial system.’²⁷ To Wellington Labour MP Bob Semple, the only gainers from unemployment and other miseries were the ‘legalized plunderers who manipulate and control the money of the world’.²⁸

Labour was not the only political force hostile to ‘money power’. Farmers, in particular North Island dairy farmers, were receptive. The Auckland provincial division of the Farmers’ Union supported one monetary reform movement – Douglas Credit. Enthusiasm was palpable, contagious. Speaking at the Auckland Town Hall in June 1933 the sole Country Party MP, Captain H.M. Rushworth, said that ‘during the past year the people of New Zealand from the North Cape to Bluff have awakened to their responsibilities in this connection’. He could not have imagined ‘four or five years ago, this great hall being filled to discuss such a dry-as-dust subject as money!’²⁹

At other points on the political spectrum hostility to socialism – or to radical solutions to the economic and financial crisis – also ignited passion. ‘If we are to avoid national bankruptcy, the destruction of the people’s savings, a collapse of business, and even more extensive unemployment,’ said Finance Minister Stewart in November 1931, ‘then we must meet the situation boldly and without delay.’³⁰ And by that he did not mean socialism but fiscal responsibility. The trial magistrate in Wellington, E. Page, was convinced that the ‘orgy of window smashing and looting’ on 10 May 1932 was ‘not the work of the genuine unemployed. It was, I think, the work of a small band, instigated and led by members of an organisation operating in our midst – the Communists, whose doctrine appears to be the fostering of mob violence and revolutionary disorder.’³¹

It was the Labour Party, not the Communists, that made the running though. In the May 1933 local elections Labour made big gains in Dunedin, Wellington and Auckland (it was already strong in Christchurch). ‘The outstanding feature of the contest for the 21 seats on the Auckland City Council was the gain made by the Labour party representatives,’ reported the Auckland Star; ‘In the new council [they] will occupy eight seats, as compared with three in the old.’³² In the May 1935 local elections Semple nearly won the Wellington mayoralty, and in Auckland Labour nearly doubled (to 15 seats) its 1933 tally, putting to full use an electoral organisation admired by opponents as well as supporters: ‘Labour Party … members express no surprise, as they have worked for The Day for many months past,’ reported ‘Industrial tramp’, the labour reporter in the Auckland Star. ‘The affiliated organisations and unions are its machinery, and through this districts have been divided into streets and blocks, and the electors have been kept supplied with literature and advice. As the Press has put it this week: The organisation of the Labour party never sleeps between elections.’³³

The excitement at the general election in November 1935 was intensified because commentators had either not predicted a Labour victory or not predicted its scale. After all, this was a national election, not a matter of cities: ‘Labour … will make gains, but whether they will be sufficient to give them control of the House is very doubtful. The weight of opinion is that the present Government will come back the dominant party, but possibly not strong enough to carry on without the aid of Independents and others, who, although against the Government will not assist Labour.’³⁴ It was not to be: ‘The Labour victory – can I remember it! … every time there was a Labour victory – screams and cheers and people kissing each other …’³⁵ In Wellington the crowd outside the Evening Post building, where the results were posted, ‘was almost stupefied; it gave a sense of hope …’³⁶ ‘It was almost like coming out of the depths of hopelessness into some sort of promised land.’³⁷

That was Jerusalem. Believers had left behind not just the wilderness of the Depression and the coalition government but the wilderness of decades of conservative government: ‘There was a time,’ said Prime Minister-elect Michael Joseph Savage, on election night in 1935, ‘when New Zealand led the world in social and economic affairs. New Zealand will lead the world again and as early as is possible, we intend to begin again where [Richard John] Seddon and his colleagues left off.’³⁸

Seddon had died in 1906; the years that followed, culminating in the Depression, were the ‘dark times’ now to be banished for ever. In the first months of office the new government acted swiftly. The transformation was one of distribution. ‘We have ample production on all sides,’ said Savage; ‘it only comes to a matter of distribution. That is the main problem which will face the new government.’³⁹ Its first act was to make the Reserve Bank a fully state-owned entity. It introduced guaranteed prices for butter and cheese, returned the semi-independent Mortgage Corporation to departmental control, revived state lending for house-buying and planned a housing programme. It paid a Christmas bonus to all unemployed relief workers, raised relief wage rates (and would do so twice more in 1936) and, in the middle of 1936, put all public works relief workers on the wages and conditions applicable to full-time permanent Public Works Department (PWD) employees. Pensions were raised and an invalid benefit introduced, both interim measures preparatory to a full-scale reform of the welfare system.

That was legislated for two years later. In September 1938, just weeks before the next election, the Social Security Act became law. It was, said Walter Nash, the minister responsible for it, ‘the first social security act on any proper definition of that term, ever written in any statute-book in the world … [I]f it brings the benefits which I believe it will bring, then once more this country will be God’s Own Country.’⁴⁰ That was the term used to describe New Zealand during Seddon’s premiership.

A different Depression history

The account just given treats the Depression as a conflict between rich and poor, the powerful and the powerless, in which the ‘little guy’ finally wins, or appears to. That win draws a line not just under the Depression but under the era of conservative or ‘not very liberal’ governments since 1906, when Seddon died. It is reinforced by the belief, as strong in 2015 as at the time, that the Depression was a turning point in world history, as a result of which many governments and voters rejected a laissez-faire political economy in favour of a more collectivist and interventionist one.

Politicians and political parties emphasise differences between themselves and their opponents – why support us if we are just the same as the ‘other lot’? For the New Zealand Labour Party, never in government before 1935, the demarcation was not just with its long-standing adversary, the Reform government that had held office from 1912 to 1928, but with political liberalism, which had gained a new lease of life in 1928 when the United Party, a renovation of the Liberal Party headed by ageing former Liberal Prime Minister Joseph Ward, gained office. So power yet again eluded New Zealand Labour, although Labour votes in parliament kept Ward in office.

Labour did not want to give life to what was left of political liberalism by praising Ward or his government; nor did it want to be identified with his high-risk, creditor-beholden overseas borrowing. Seddon, 30 years dead, was a safer bet. The difference between the old and the new world was presented as one between black and white, darkness and light, one side of Jordan and the other. When Labour took office in 1935 this political strategy of emphasising the contrast between before and after became history.

Equally, for Labour’s opponents, crushed in both the 1935 and the 1938 elections, the sooner United was forgotten the better, though Reform was also buried as Labour’s opponents sought to ignore not just Ward but their own assumed responsibility for the Depression. A new party and a (nearly) new name were called for. So Depression history continued to be that of the victors and the victory.

A wealth of historical research into the Depression era has qualified this orthodoxy, but that research appeared mostly in university theses and scholarly papers and has not unsettled the popular view. Indeed, the popular view was intensified by a raft of accessible publications and projects over the quarter-century from the late 1960s to the early 1990s – memoirs from articulate and charismatic figures such as John A. Lee, Colin Scrimgeour, Jim Edwards and Elsie Locke, and the oral history captured in Tony Simpson’s The Sugarbag Years and a sequence of Spectrum radio documentaries from the New Zealand Broadcasting Commission.

Apart from Simpson’s The Slump (1990) – not as widely known as The Sugarbag Years nor ever reprinted (as The Sugarbag Years was, three times) – no book-length account of the Depression in New Zealand has been published. Standard accounts focus on a moment of crisis, in 1932, followed by a moment of transformation, in 1935, which marks the ‘beginning of the end’ of the Depression. This account introduces the prosperous pre-Depression world of 1928–29; then focuses on the sudden onset of the Depression in 1930–31 and the catastrophic months that followed; it then turns to the attempt to find a way back to that pre-Depression world, a quest that shaped the politics of the latter years of the Depression.

The ‘Indian summer’ of 1928–30 was the fruit of relatively good commodity prices in 1928–29 and of Joseph Ward’s expansive policies – the culmination of 35 years of state-led development since Ward himself had launched ‘advances to settlers’ in 1894. As through much of the 1920s, only more so, house-building and public works thrived; unemployment, though a problem, was modest compared with the levels of the 1930s; and imports and consumer spending reached record levels.

The change in circumstances in late 1930 and early 1931 was abrupt and the policies that followed in the wake of that sudden onset were contentious. Until 1932 both the coalition partners – United and Reform – and even to an extent the Labour Party agreed that New Zealand had to ‘cut back’ to match its reduced income; this was ‘deflation’. The loan crisis at the end of 1931 provided reinforcement. Some challenged this stance, austerity being much less appealing than development and expansion, but the sharpest debate took place on the aptness or equity of particular measures.

The unemployment crisis that erupted in violence in April 1932 turned the political world away from austerity. That shift divides the history of the Depression in two – not a neat, crisp demarcation but a demarcation nonetheless. Over the next three years politicians and interest groups argued about reflation, and recovery sputtered. Creditors wanted their investments protected, not written down or off, but debtors said the opposite. Business was wary, sluggish and spooked by ‘high’ taxes. The government’s January 1933 decision to ‘raise the exchange’ divided the community. ‘Certainly most of us have some sort of faith that a collapse of our social system may be averted,’ wrote the student journal Phoenix in March 1933, ‘that we shall return to the normal of 1929 or even 1912, that we shall soon once again see business as usual.’⁴¹

It was not to be, not for some time. The high exchange was a bonus to farmers but it discouraged consumer spending and was a burden to business, which wanted the government to reduce tax and stimulate expansion through internal borrowing and public works. The government resisted; it was wary of taking on new debts and new fiscal burdens, and wanted business to lead the recovery. It wanted to keep relief rates down to encourage the unemployed to seek paid, not relief, work. The disagreements had real consequences – months of slow recovery.

The return of expansion – how much, how fast? – was still a contentious matter in 1934–35, even though that year proved to be one of overall economic growth. The October–November 1935 election campaign reignited the debate. When Savage opened Labour’s campaign in early November he talked first not about unemployment or welfare but about money: ‘There are a thousand and one minor issues that must come up for consideration and immediate action, but unless the money problem is solved there is little hope of a permanent solution of the other problems facing the country.’⁴² This was very like Ward, but for overseas borrowing Labour had substituted local credit creation.

Labour and the new Democrat Party were aligned – both wanted to see state-led expansion. When Labour won its substantial election victory in 1935 a startled Times (London) hazarded that ‘the recovery seemed painfully slow to New Zealanders, accustomed to the prosperity they had enjoyed over a long period of expansion’.⁴³

Labour in government did not, therefore, wait for business to stimulate the economy – it did it itself and, by and large, succeeded. Labour began again not where Seddon had left off in 1906 but where Ward had in 1930, with burgeoning public works and state advances. ‘Politics in hard times’ saw restoration as much as innovation.⁴⁴

In late 1938 New Zealand faced an economic crisis comparable with that of 1930–31; deflation was avoided but the episode reinforced the parallels between the 1920s and the late 1930s and demonstrated that Labour had not remade politics and the economy as much as it had aspired to. The outbreak of war in September 1939 drew a line under that phase of the Labour government and also under the political world of the 1920s and late 1930s generally.

In sum, the story of the Depression is as much a tale of a struggle to restore a world as it is a story of building one. Ward’s combination of state-directed expansion and wage-earner and other kinds of sectional welfare was a potent mix that Labour replicated – even if it did not acknowledge this – when it gained power in 1935.⁴⁵ The themes through which this contrast was played out are now introduced in more detail: first, political parties and policies; second, the fate of wage-earners, of welfare and of economic-interests groups during the Depression; third, the relationship of country and town; and last, international comparisons.

Party politics and policy-making

Party politics shaped and were shaped by the course of events. Both Labour and Reform treated the 1928 election campaign as a two-party contest; both were disconcerted by Ward’s triumph; and both sought, in different ways, to return to that two-party contest, something only accomplished after 1935. After Ward’s departure from the political scene in 1930, both sought to hasten the demise of the upstart rival. Reform’s leadership disliked the idea of fusing with United, when the next election (due at the end of 1931) was expected to see United’s annihilation. The outcome – with United lacking a parliamentary majority and deprived of Labour’s support through 1931 – was months of political stasis. Labour, expecting to improve on its 1925 result in 1928, had seen its support plateau in the face of the United resurgence; perforce it supported the new government through 1929 and 1930. In 1931 and thereafter, when it had moved to opposition, Labour expected to do better but the two governing parties – United and Reform – coalesced rather than fused, and though United’s vote fell in 1931, it did not evaporate. Through the four years to the next election Labour remained hyperalert to any movement that might portend a third-party revival, be it the Country Party, the New Zealand Legion or the Democrats. Only in the latter stages of the 1935 campaign did Labour relax. For its part, the coalition – riven by barely buried rivalry between its two wings, which mapped, not tidily but to a degree, onto rivalry between country and town – faced a comparable although less severe situation after 1935 (its loss of seats exaggerated its plight). The coalition had to find its own way of tapping Ward’s legerdemain, legacy and loyalties.

Behind or beneath the parties lay the public servants and, to an unprecedented degree during the Depression, professional economists. The most influential public servants in the 1920s – men like Fred Furkert of the PWD – were exemplars of development and expansion. A rival impulse, fostered in part by commercial and financial interests, had made headway. Exemplified particularly by a succession of secretaries to the Treasury, it sought to shape the New Zealand political economy around notions of fiscal restraint and monetary solidity that had long been ascendant in Britain, the centre of the world financial system – the practices of creditors rather than debtors. This impulse reached a peak of influence in the early Depression years, its archetypal documents being the two reports of the National Expenditure Commission in 1932.⁴⁶ The second (‘final’) report proved a bridge too far for the political class and most of its recommendations were shelved, at some political cost to the government.

The move of Coates (the former Reform Party prime minister) into the minister of finance role in January 1933 ushered in a different temper, particularly in measures related to farm finance and marketing, about which Coates authored no less than five reports between 1933 and 1935. But even in those years the contours of two new institutions – the Reserve Bank of New Zealand and the Mortgage Corporation – bore the imprint of Treasury thinking. Moreover, the farm-finance measures had other antecedents from the 1920s.

Professional – academic – economists became prominent during the Depression; they were reported constantly in the daily, weekly and monthly press. Hardly a week went by through the years 1931 to 1935 without comment from one of A.H. Tocker, Bernard Murphy, Horace Belshaw, A.G.B. Fisher or Douglas Copland. Economists from further afield, and none more so than John Maynard Keynes, were also widely reported. They appeared on the covers of financial weeklies, gave addresses to a variety of lay audiences, and sat on government-appointed commissions. They did not agree among themselves – the ‘Canterbury school’ was sympathetic to the Treasury view, favouring debt reduction, lower taxes and tariffs, wage flexibility and a stable exchange rate (but counter-cyclical public works).⁴⁷ As the Depression advanced, some became more experimental – in particular, ready to contemplate a higher exchange; others again, notably Fisher, focused on the need for the New Zealand economy to reduce its dependence on agriculture.⁴⁸ The relatively high profile of the economists during the Depression is a prefigurement of wartime and postwar attempts at economic stabilisation (later ‘economic management’), which demarcated the war and postwar from the inter-war years. The late 1930s were marked rather by a feisty return to the state-directed political economy that had been favoured in the 1920s, not least by Joseph Ward.⁴⁹

Wage-earners, welfare and protection

Historian John E. Martin has described a century-long ‘evolving contract between migrants/workers and the state’.⁵⁰ To that contract can be added the web of commitments that governments had entered into with farmer and business interests, be that via customs duties, subsidies or financial aid. Labour, in government after 1935, restored, and then enlarged on, work and welfare conditions that had been the norm in the 1920s. It also – less expectedly – offered ‘protection’ to business interests. In the 1920s compulsory arbitration in award disputes over wages remained the rule; indeed, in November 1927 employer groups and unionists combined to defend it. Employment on public works schemes was regulated by a 1920 agreement that covered hours, pay rates, education and health facilities, and living amenities.⁵¹ Assisted immigration was sharply reduced from 1927 to protect New Zealand wage-workers. Successive governments spent up, as they were expected to, on the unemployed. It was at times a very hands-on approach. Acting Prime Minister (and Hutt Valley resident) F.H.D. Bell met the mayors of Petone and Lower Hutt in September 1921 to discuss what was to be done about 50 unemployed men in the Hutt Valley.⁵² In sum, what Castles labelled the ‘wage earner welfare state’ was, if not thriving, then at least secure.⁵³ For those whom wage-earner welfare bypassed, a range of pensions were disbursed, with family allowances added to the list in 1926.

Ward’s prime ministership of 1928–30 saw further measures – relief wages were restored to the 14s daily rate that the Reform government had abandoned in 1926, and an unemployment act promised to place unemployment relief on a more stable and generous basis. Moreover, in Australia, Labor governments at state and federal level had a range of accomplishments to their credit, which provided a benchmark for New Zealand Labour.

Almost all of these provisions were curtailed or dismantled during the Depression. Wages were cut; pensions were cut; jobs were cut. Labour fought vigorously but unsuccessfully against these measures. The unemployed were still assisted but the system of unemployment relief collapsed. Labour invoked Ward’s commitments: ‘Ward definitely told me that as long as he remained in office there would be no reduction in wages,’ claimed Holland in July 1931. In the immediate aftermath of the Auckland rioting in April 1932 Bill Parry invoked the sustenance provisions of the Unemployment Act: ‘our original legislation made provision for sustenance. That is the law of the country … the government has broken the law and committed a grave breach of faith with the people.’⁵⁴ The government did not agree.

To wage- and salary-earners – those on 70–90s per week who were suddenly on 25s relief wages or on no wages at all – the contract had been well and truly broken. To the school-leaver expecting to join the public service or attend a teachers’ college, the contract was broken. Of two busy Auckland builders in 1929, by 1935 one was a watersider and one was a jobbing painter.⁵⁵ The Railways Department was handed over to a commission and stopped work on new lines; the PWD became a relief agency.

The 1920s had been a time of rising expectations: ‘By 1930 most New Zealanders had come to believe that they were sharing in a New Zealand dream of prosperity divided fairly evenly among all hardworking citizens; they had a long way to fall. When they or their children fell it was a chilling experience, one they would never forget.’⁵⁶ The tragedy was ‘the frustration, the postponement of long-deferred desires, of hopes dashed in the dust’.⁵⁷

After the disturbances in the cities in April and May 1932 the government stabilised the unemployment relief system but did not revert to the more liberal pre-Depression regime. The labour movement called for a return to relief work at standard wages and also for the wage cuts to be reversed: ‘All that is needed in New Zealand,’ wrote Alliance of Labour leader Jim Roberts late in 1933, ‘is for the government to admit the fact that wage cutting and deflation is a failure and to restore all wage cuts imposed since 1929.’⁵⁸ Only in 1934 and 1935 did the government reverse some of the wage and pension cuts and also reduce the ‘wages tax’ levied on all wage-earners since 1931 to pay for unemployment relief.

Wage cuts affected not just wage-earners but also their families. The Arbitration Court applied the notion of a ‘breadwinner’ wage – that is, wages were set at a rate that allowed a man to support a wife and children. The system was replicated with unemployment relief; the act provided for a married-man sustenance rate while relief work was allocated on the basis of marital status and number of children.

This differentiation between the primary wage-earner – the breadwinner – and other wage-earners had distributive consequences. Women were paid less than men under the terms of every wage award (indeed, different court awards were made for women workers) and youth were paid less than adult men; in all instances this was justified on the grounds that such workers were not maintaining families and could turn to their family for support should they be out of work.⁵⁹

By and large this differentiation was accepted across the political spectrum and debate focused more on restoration of the pre-Depression terms and conditions than on transforming that pattern. Indeed, sometimes women benefited. Female wage-earners were subject to the across-the-board wage cuts but the Industrial Conciliation and Arbitration Amendment Act 1932 did not apply to wage awards involving women or girls – a backhanded acknowledgement of the lower wages they received in the first instance.

The Unemployment Committee of 1928–30 had recommended the payment of sustenance to women and youth as well as adult males, but in the event the Unemployment Fund was financed by levying adult males alone and they were the only ones eligible for assistance from it. The introduction of a universal wage tax in mid-1931 (which was quadrupled nine months later) reopened the question of taxing women – and youth – to support a fund they were not entitled to draw on. Māori, in this as in many other respects, had a distinctive status – adult Māori men did not have to pay the unemployment levy unless they wanted to register for relief.

Advocacy groups lobbied for change – for single working women, for youth and for Māori (for whom assistance was often less generous than for Pākehā). They pointed to the unfairness of an out-of-work single girl not being entitled to unemployment assistance even though she might be living away from her parents. A widow might rely on her 18-year-old son for support, but what if he lost his job? With the advent of the Labour government, women became eligible for unemployment assistance; this implemented the recommendation of the unemployment committee of six years before and conferred full ‘economic citizenship’ on them.⁶⁰ Māori too were placed on an equal footing with Pākehā.

The slow return to ‘normal times’ after mid-1932 reinforced the sense of dislocation: ‘This depression and its resultant unemployment,’ argued one report on the unemployment problem, ‘has shown how great is the necessity for a sound training in domestic economy … which will enable [our girls] to pull through such a crisis as this should it ever again occur in our history.’⁶¹ That said, the drive to protect the circumstances of single women workers reflects the expansion of other kinds of female employment in the 1920s: the future of such women lay in industry, wholesale, retail and office work, not in domestic service.

Beyond the wage or unwaged workers were those not in the workforce at all. With the improvement in the economy in 1934, the circumstances of those ‘left behind’ – men on sustenance, their families, especially children – became more salient. Poverty rivalled unemployment as a political issue. ‘Close by the carillon tower’ in Wellington, wrote one newspaper, are ‘men, women and children living in squalor and filth, in little shacks lacking even the ordinary comforts of existence.’⁶²

A vivid sense of ‘before’ and ‘after’ persisted and, for many, an equally vivid sense that the coalition government had broken a tacit – but no less powerful for that – understanding with the people, which the Labour government restored. As one teacher recalled years later: ‘It seemed to me that although the Depression was worldwide there was no need for it to have been so bad in New Zealand – a country that has always produced more food than it could eat. All the talk was of retrenchment … Only the most essential work was done … it took years after the Depression ended before things were back to normal.’⁶³

Work and welfare featured in the 1935 election campaign, but not as prominently as the debate about economic expansion. Nonetheless, once in office, Labour restored and then enlarged the wage-earner and welfare provision of the later 1920s, culminating in its ‘summit’ achievement, the Social Security Act 1938, although in practice it was the full employment of the workforce (now including women and youth) that was central to its strategy and that relied on public works and house-building, as in the 1920s.

Labour adopted other policies, in emulation not so much of 1920s New Zealand (though there were some antecedents) as of 1920s Australia. A Labour government that was not committed to socialisation of production had to deal with producers. Australian governments had been more protectionist than New Zealand, while the Australian Country Party had argued for a ‘fair Australian price’ for primary producers.⁶⁴ In government, Labour in New Zealand experimented with new forms of protection: guaranteed prices, industrial ‘efficiency’ (itself a euphemism for protection), import licensing and exchange control.⁶⁵

Country and town

New Zealand by the late 1920s was predominantly urban, but that was a relatively new phenomenon and one readily seen as reversible when hard times struck in the 1930s. Another strand in the Depression story – alongside the ‘contracts’ between government and voters, and government and wage-workers – was the tension between 1920s urbanisation and the pronounced political inclination in the 1930s towards rural solutions to urban problems. It was matched to an extent by the tension between the proposed methods of solving the Depression by restoring profitability to production (a ‘rural’ solution) and by promoting consumption (an ‘urban’ solution).

The total population was around 1.5 million, of whom around 45 per cent lived in rural areas. Rural New Zealand had long been the ‘senior partner’ in the economy, earning as it did the overwhelming bulk of export income. The rural economy was predominantly pastoral. The eastern provinces of both islands had millions of sheep, being run for both wool and meat. Prices for both tumbled early in the Depression – a harbinger of it – and the calls for a raised exchange rate were heard the more strongly. The lower North Island, especially Manawatu, was a fecund mix of dairy and sheep farming – one reason for Palmerston North’s rapid growth. Wheat and other crops were important in Canterbury and North Otago and benefited from protection against the cheaper Australian product.

Auckland province and Taranaki both had lots of dairy herds, with butter and cheese the major commodities produced. Persistently weak prices for these harmed Auckland more than the rest of the country (bar much smaller Taranaki) and fuelled political agitation. Auckland farmers were the most indebted, the most vocal and the angriest. Currency reform was an Auckland cause; the guaranteed prices vs high exchange debate was an Auckland one; loud calls in 1933–34 for free trade with Britain were from Auckland dairy interests.

Rural New Zealand was not wholly pastoral, however. Coromandel, the West Coast and Central Otago had some reminders of goldmining days but only one town – Waihi, in Coromandel – still made its living from gold. Equally, Huntly and neighbouring townships in Waikato made a living from coal, as did Ohura in the King Country, towns the length of the West Coast, Kaitangata in Otago, and Nightcaps and Ohai in Southland. Sawmilling underpinned King Country towns like Ohakune, Raetihi and Taumarunui. These zones of extractive industry also explained Labour’s hold on the electorates of Waimarino, Buller and Westland. Pine trees were being planted in large numbers on the Volcanic Plateau, but the social, political and economic effects of that were to be in the future.

The Māori population was estimated at 67,000 in 1931 (probably an underestimate as it had been recorded as 63,670 in 1926), about 4.5 per cent of the total population (compared with around 15 per cent, albeit with a more permissive definition, in 2015). Though a small percentage, it was a rapidly growing population, reaching 82,236 (5.3 per cent) in 1936. This growth alone suggests a vitality in the Māori population that is captured in some of the images in this book. A very small proportion of Māori were urban – 3.7 per cent in 1926; 4.6 per cent in 1936. As will be shown, elements of the Depression experience brought Māori into the New Zealand mainstream, anticipating postwar urbanisation for Māori. The Depression did not so much interupt a pattern as foreshadow a new one. Even further beyond the gaze of average New Zealanders than Māori were the populations of the islands administered by New Zealand in the Pacific: Western Samoa, Tokelau, the Cook Islands and Niue. They would also be hit by low commodity prices.

Rural New Zealand was awash in invention and innovation. Well-off landholders readily took to the phonograph, motoring, and even flying. Whether well-off or not, they were also ready to speculate, with profits anticipated from rising land values as well as production. The speculation had been particularly marked in the immediate postwar years. When land prices fell heavily from the 1920 peak, the government was forced to reassess downwards the value of many soldier-settler properties, by about 20 per cent on average.⁶⁶ But land trading continued: in any given year in the 1920s, between 7500 and 8500 rural properties changed hands, averaging between £1800 and £2000 per sale.⁶⁷ Many of these transactions were financed with borrowed money. One estimate was of £140 million of mortgages on rural lands in 1923–24, compared with a total New Zealand export income of around £46 million in the same year.⁶⁸ Average rates of interest were around 6.5 per cent, compared with the pre-war 5.75 per cent.⁶⁹ Indebted farmers were particularly vulnerable to falling produce and land prices.

Politicians in all the main parties endorsed the notion that New Zealand’s future was primarily rural and pastoral. In particular, closer land settlement was seen as the answer to unemployment, an outlook that was to weaken only in the latter years of the Depression. ‘If we eliminate