This is the solitary occasion upon which any official is permitted to play a virtuous role in the myth, for essentially they are the villains: Hobson, depicted as a weakling (in fact his illness led to indecision), his entourage as grasping and semi-literate; FitzRoy, as a vain fool (he was not notably wise, but his circumstances limited him more than his incapacities); and Grey, as a designing autocrat (he was indeed autocratic in temper, but conspicuously radical in his opinions). Missionaries in New Zealand, close to Hobson and FitzRoy, missionary agencies in London, close to the Colonial Office, share in this condemnation. The fault, if it be one, in these early governors and their advisers lay in the pursuit of policies which ran counter to the interests of the company and its settlements. This in any event falls a good deal short of villainy and recent historians have tended to judge the officials rather more favourably than the settlement promoters. In passing, it may be noted that the designation “New Zealand's first Governor”, commonly attached to Hobson, is less than accurate; strictly speaking, New Zealand began her life as a possession of the British Crown inside the boundaries of New South Wales, whose Governor at that time, Sir George Gipps, has thus a better claim to the distinction.

The myth of New Zealand's origins does not stop short with the identification of heroes and villains; it goes on to describe the virtues and vices characteristic of each side. Briefly, the villains, officials, and missionaries, were meddlesome, incompetent, selfish, and corrupt; while the heroes, the company, its agents and its settlers, were an epitome of all that was truly honest, upright, self-reliant, all, in a word, that was British. This part of the myth has two aspects; on the one hand it asserts that the company, having saved New Zealand for British imperialism, went on to populate that country; on the other it makes assertions as to the character of that population that, simply, the settlers were the best possible type of Briton. Neither aspect has been able to stand up to examination.

In the first place the settlers brought out by the company and by allied organisations, the Canterbury and Otago Associations, though numerous, were by no means the only, or even the predominating stream of settlers arriving in New Zealand in the period of foundation. Initial attention is more correctly directed towards Australia, a source of New Zealand population from the mid-1830s on, and still a source through the forties, the fifties, and the sixties, drawn considerably by the opportunities for pastoralism and the quest for gold. In the perspective of a period running from 1830 to 1870, the company's and the associations' settlers are numerous and important, but hardly dominant. They provided the nucleus of Wellington, New Plymouth, Nelson, Canterbury, and Otago; they do not account for more northerly settlement, especially at Auckland, nor for the subsequent population of the settlements they founded.

In the second place it is no longer possible to argue that Wakefield's celebrated theory of “systematic colonisation” was of material significance. Certainly this plan postulated the careful selection of emigrants and the transplantation of English social strata. Equally certain, no scrupulous selection of emigrants was carried out, and social stratification did not survive a sea change. Colonisation is normally a haphazard business, and it was so with New Zealand. Company and association settlement was in itself very far from being an example of meticulous planning; further, any effect “planned colonisation” might have had was quickly obliterated by the concurrent and subsequent stream of wholly unselected emigrants. To put it baldly, the dissatisfied, ranging from riff-raff to agitators, cannot be kept out of a colony, and the organisers of “systematic” colonisation did not try very hard to do so.

A grace note to this aspect of the myth by the so called “Race for Akaroa”. A French colonising expedition, led by C. F. Lavaud, in fact arrived in New Zealand in July 1840; its leaders were disappointed to find that the annexation of the South Island had already been proclaimed by Governor Hobson. The settlers were taken on to Akaroa, but the assertion that Hobson dispatched a vessel post haste to raise the flag before the French could arrive has no foundation. The Britomart was, in fact, dispatched to assert a sovereignty already proclaimed.

The convention of historical myths demand heroes to balance and, eventually, to defeat the villains. They are not lacking, and the most notable mythic hero is Edward Gibbon Wakefield. In his person imperial destiny, checked by timid and unworthy men, and New Zealand, saved in the nick of time for a British future, merge harmoniously. In the light of legend Wakefield, in fact a man of sufficient stature to bear the weight of the myth, takes on heroic proportions. In the first place he becomes the great protagonist of imperial destiny, the man who successfully recalled Great Britain to a sense of mission in the world at large, the victor over timid politicians like Lord Glenelg, meddling and obstructionist officials like James Stephen, the anti-imperialist ecclesiastical pressure group headed by Dandeson Coates, of the Church Missionary Society, and those diabolical men who saw in colonies merely a fit place to dump convicts (as had been done in New South Wales) or paupers (as was advocated by Fowell Buxton). In particular, Wakefield and the Colonial Reformers whom he gathered around as the chivalric Arthur gathered his Knights, are represented as victors over those who made a pretended care for the welfare of native peoples their excuse for opposition to colonies of settlement, that is, as their pretext for anti-imperialism. Glenelg, Stephen, Coates, Buxton, can all be classified under this head.

Here one must exercise great care to separate the truth from the legend, the wheat from the chaff. It is indeed the case that an important body of opinion, itself a by-product of the Evangelical Revival and influential among politicians, officials and the missionary bodies, looked with horror at the past history of colonisation and, in particular, at the harm to native peoples this history recorded. The Evangelicals were not alone in seeing in the chance it afforded to spread Christianity and civilisation the main raison d'âtre of European expansion. Spanish Dominicans and Jesuits of the sixteenth and seventeenth centuries had held the same view. It is difficult to see why Christians should be condemned for a belief which springs so readily from their faith. Where the Wakefield myth errs is in supposing that this concern for native welfare was simply, or at best partly, an insincere disguise for cowardly anti-imperialism. The Evangelicals and their allies were successful and zealous imperialists, but their imperialism was other than that of the Colonial Reformers. It is at least an open question, and one that involves the historian in a value judgment, which of the two was the more noble concept. In the mid-twentieth century it is more than likely that historians will take an approving view of an imperialist theory which begins with a wish to safeguard the welfare of the people already living in the country about to be colonised.

Again, the myth errs when it supposes that the efforts of the Colonial Reformers were alone instrumental in converting British policymakers from anti-imperialism to imperialism. Their propaganda was certainly among those factors which led, first, to an accelerated pace of expansion in the mid-nineteenth century and, secondly, to that evolution of British colonial policy which saw the creation of the self-governing Empire. But other factors had a greater effect: first, the increasing stream of British subjects going overseas from the 1840s on, many to the United States, but a number to Canada, Australia, and New Zealand; and secondly, the prevailing laissez-faire liberalism of the age and the vital part played by Gladstone, Cobden, and Bright.

Further, the myth errs when it supposes that all the opposition which Wakefield's New Zealand enterprises, the New Zealand Association and the New Zealand Company, met from the Colonial Office was due to the Evangelical affiliations of Stephen, the permanent head. Stephen, on this view, was in the pocket of Dandeson Coates and the Church Missionary Society, was firmly opposed to the annexation and colonisation of New Zealand, and was a diehard enemy of colonial self-government. It is perfectly clear, on the contrary, that though Stephen was an Evangelical, he was in no sense a Church Missionary Society puppet; he thought, not without reason, that the association's original plans were designed by the promoters to combine opportunities for enrichment with a total absence of risk, and that the company itself was a dangerously speculative venture; that he and the Colonial Office were in fact planning for annexation, even as he was rebuffing Wakefield; that he saw the colonisation of New Zealand as inevitable and wished to see it proceed with safeguards; that, finally, he had no wish to prevent the introduction of self-government at what he believed to be the proper time.

Some of the more flamboyant details of the myth lead to the conclusion that only resolute action on the part of Wakefield personally and the company corporately saved New Zealand from annexation by France, a fate which the blindness and timidity of the Colonial Office made all too probable. Wakefield has been represented as dashing, in a post-chaise, variously to the London docks or to Portsmouth, to send the company ship Tory on its way before the officials could detain her, thus forcing the hand of the Colonial Office and saving New Zealand from the French. His dash, if it in fact occurred, had no effect upon the movements of the Tory. The Tory itself sailed, not because it had been learned that the Colonial Office had set its face against annexation, but because (according to a likely reconstruction) it had been learned that, in fact, annexation was at a mature stage of planning and would be accompanied by a Crown monopoly of land buying from the natives. The company, indeed, wished to present the British Government with a fait accompli; not that of a New Zealand irrevocably British (for the Tory was a survey, not an emigrant ship), but that of land bought in quantity, and cheaply, from the Maoris.

The most notable myth about the New Zealand past arose in the attempt to explain, and at the same time to glorify, the process by which this country became British, as a matter of law and as a fact of human settlement. It is a myth at once radical and conservative: radical because it selects as villains the most notable representatives of State and Church in early New Zealand; conservative because it canonises those who, in the long run, successfully opposed officialdom at home and in the United Kingdom. Here it will be referred to as “the myth of origins” and “the myth of the possessors”.

The basic assumption of this myth is that Great Britain was a nation with a manifest imperial destiny. Her own leaders sought to thwart this destiny in the early nineteenth century by retiring from expansion after British fingers had been burned in the War of American Independence. At the outset this theory ignores the not inconsiderable British expansion accompanying the Revolutionary and Napoleonic Wars (1793–1815). Cook, on this reckoning, is shown as having annexed New Zealand in 1769, and the likelihood that he exceeded his instructions in so doing is forgotten. From 1769 to 1840 British policymakers, statesmen, and officials, are described as “reluctant” to make British sovereignty actual in New Zealand, men who were timid where they should have been bold, men who wilfully neglected a golden imperial opportunity awaiting Great Britain in the South Pacific. The mere fact of the matter is that Great Britain was not “reluctant” to expand into New Zealand: such a description implies that such expansion was seen as a possibility and rejected. For the greater part of this period Great Britain was neither reluctant nor anxious to take New Zealand; the possibility did not enter the realm of the practicable. In the past overseas territories had been annexed for concrete reasons, such as strategic considerations, the presence of eagerly sought raw materials or treasure, the settlement of a substantial number of British inhabitants. At no time did the first two conditions apply in New Zealand; the third came to apply in the later 1830s and British annexation followed without undue delay.

The present is constantly trying to remake the past for its own purposes; people so keenly feel that they are the product of their origins that they tend always to find in those origins what they choose to see rather than what is, in fact, there. So it has been in New Zealand's historical thinking, and the distortions which have resulted are not entirely without value. They mean, at the very least, that the past is still alive; were it not so people would not seek to alter it. But the academic historian, dedicated to reconstructing the past as faithfully as he may, must make it his business to detect and expose the myths, legends, and fallacies which accumulate around the past of his country. But he will not limit himself to mere exposure. The myths and legends, used themselves as evidence, are valuable clues to the mentality of the people who, more often than not unconsciously, constructed them.

The 1950s have seen a more anxious time for New Zealand. Since the Korean boom of 1950–51, the terms of trade have fluctuated considerably, but on the whole have moved unfavourably for New Zealand – as for many other primary producing countries. A specific cause of concern has been the continued protection of agricultural produce by most industrial nations. Pastoral production has continued to increase, somewhat irregularly, but by the early 1960s there were signs that the expansion induced by aerial topdressing had perhaps nearly run its course. Whether a further technical advance of comparable significance may be in the offing can scarcely be predicted, though the work of New Zealand's agricultural research workers suggests that there are, in fact, still considerable gains to be made even within the traditional pattern of grassland farming: the more systematic use of artificial insemination, and the more widespread inclusion of trace elements in the fertilising programme, are two of the more obvious possibilities.

Meanwhile, the expansion of manufacturing industry has proceeded apace, stimulated by the continued inflation which has been one of the chief causes of concern in recent years, and by conscious manipulation of the machinery of import controls which also serves, though not without many fits and starts, to restrain the demand for imports within limits which the balance of payments can tolerate. Over the period 1938–39 to 1956–57, the volume of manufacturing production expanded by 153 per cent and the number of factory employees now substantially exceeds the number engaged in farming.

These developments have served to intensify the trend, which has been apparent for at least 90 years, for the composition of imports to change: producers' equipment and raw materials and semi-processed goods for working up in New Zealand's own factories are more and more replacing finished consumer goods. Nor has this manufacturing development been confined to the light consumer industries, of which, save for the processing of her primary products, New Zealand manufacturing had previously chiefly consisted. At the beginning of the 1960s construction had started, or plans had been agreed upon, for a scrap steel mill which it is hoped will be the precursor of later development of New Zealand's ironsands; for an oil refinery; and for a £200 million installation using part of the South Island's great reserves of hydro-electric power to smelt Australian bauxite for aluminium production. One major success of the past decade has been the expansion of forestry products, based on the huge plantations of exotic trees in the North Island, which has added a modest but welcome diversification to the pattern of New Zealand's exports – the more so since these products are largely exported to Australia, thus helping to reduce the percentage of exports going to Britain. In 1959, exports of forest products accounted for 2.8 per cent of all exports.

Notes:

(1) Census figures for all years except 1931 and 1941 (figures up to 1921 slightly revised from originals to conform with modern census definition of Maori). For 1931 and 1941, estimated population at end of year.

(2) F.o.b.

(3) C.d.v. + 10 per cent.

(4) Year 1900–01, etc.

(5) Enumeration taken September 1857 to September 1858.

(6) 1903.

(7) 1936.

(8) Excludes armed forces overseas.

Despite such developments, the rate of growth of real income per head during the 1950s has been substantially lower than that of most Western economies, and this notwithstanding the investment of something between 20 and 23 per cent of the national income in capital formation. It seems evident that in the future the performance of the economy will be much more closely bound up than it was in the past with the productivity of manufacturing industry; and in this respect New Zealand's relative paucity of mineral resources, the small size of the local market and of the average plant, and a structure of taxation, controls, and social services which, at best, does not seem particularly congenial to the determined pursuit of high productivity, have all caused much heart searching in recent years. Yet the New Zealand community undoubtedly enjoys one of the highest standards of living in the world, and the continued flow of immigration and high rate of natural increase of population which have been features of the post-war years, suggest that there are many people both within and without the country who have faith in the future viability of the New Zealand economy.

by John Dennis Gould, B.A.(LOND.), M.A.(BRISTOL), Professor of Economic History, Victoria University of Wellington.

• New Zealand in the Making, Condliffe, J. B. (1959), and The Welfare State in New Zealand, Condliffe, J. B. (1959)
• The Instability of a Dependent Economy Simkin, C. G. F. (1951)
• Economic Changes of a Quarter Century, Sutch, W. B. (1959)
• A History of New Zealand, Sinclair, K. (1959).

Labour swept to power in 1935 on a mixture of urban and small farmer vote similar to that which had brought the Liberals into office in 1890. The new Government sought to promote economic stability and security. In regard to stability, the aim was to avert the large fluctuations in prices, incomes, and employment, largely originating outside New Zealand, which had caused so much hardship in the years since the First World War. New Zealand has been successful in this objective, in the sense that for nearly a quarter of a century the country has experienced full employment and a continued high level of domestic economic activity. To achieve this has involved, however, throwing the burden of fluctuations on the external aspects of the economy – hence the recurrent balance of payments crises which have caused so much perplexity, especially in the 1950s. Moreover, to protect the country's overseas reserves and contain inflation within tolerable limits has necessitated a structure of controls which, in the opinion of many observers, has entailed some distortion of the country's economy, and has proved inimical to rapid economic growth.

In regard to security, success has perhaps been less ambiguous. The system of social services which the Labour Government and its successors have erected and maintained has, together with the absence of unemployment, substantially removed the fear of destitution from the people, and the vitality and health of the New Zealand population of today are plain for all to see. Critics have maintained that this success, too, has been bought at a price: that the incentive to save, for example, has been weakened by a “cradle to grave” system of State Security, and that the high level of taxation needed to finance these benefits has had an adverse effect on economic initiative. There may well be some force in these arguments; but it is incorrect to suppose that the proportion of the national income taken by taxes in present-day New Zealand is materially higher than in other countries with similar levels of per capita income.

To return, however, to the mid-1930s, the new Government proceeded to tackle the economic problems of the country in a far more imaginative way than its predecessors had done. It must be acknowledged, however, that Labour was fortunate in the timing of its electoral victory; for by late 1935 the worst of the depression was over – export prices, except those of dairy produce, had passed their trough two or three years earlier, and the relatively healthy state of overseas reserves enabled the Government to take measures to stimulate the economy without undue fear of immediately precipitating a balance of payments crisis.

The 1936 Budget restored the Coalition Government's cuts in public service salaries and brought wages back to their level preceding the general order of May 1931 which had initiated the sharp decline of wage rates during the depression period. A vigorous State housing programme was begun, public works expenditure was stepped up, and unemployment and other social benefits were increased. The dairy farmers got their promised “guaranteed price”, though the principles underlying it were ambiguous from the start, and a major collision over its interpretation was postponed only by the war. In 1937 a Marketing Department was established, monopolising the export of dairy produce. A programme of stimulating the development of manufacturing industry was started, and the 40-hour week was introduced. All these measures without doubt helped greatly to stimulate the economy. Nevertheless the revival of imports induced by a rising national income, combined with the minor recession overseas of 1937–38, did in fact run reserves down to a dangerously low level in 1938, and shortly after its second period of office began, the Labour Government began to erect the system of exchange and import controls which developed, after the war, into a major instrument of national policy.

For New Zealand, as for many countries, the Second World War involved a larger economic effort than did the First. Yet being directed by a Government whose philosophy favoured controls, some of which were already in operation, the economy was mobilised to wartime needs with remarkably little disruption. New Zealand was able, for example, to hold the rise of retail prices during the war to only 18 per cent – much less than in many other belligerent countries. The Marketing Department, again, was well placed to mobilise exports of primary produce, which, as in the First World War, but more promptly, were “commandeered” by the United Kingdom government. Farmers benefited from assured prices, though in fact, perhaps because of unwillingness to press Britain too hard, New Zealand received for her exports prices substantially below the world level – a comment which would equally apply, in the case of meat and dairy produce, to the post-war years also.

New Zealand put into its armed forces a higher proportion of its able-bodied men than did any other allied country save Russia, yet the volume of production generally expanded, though in the later years of the war a shortage of fertiliser somewhat impeded farm production. Secondary industry received a marked stimulus from the shortage of imported consumer goods; the number of factory workers rose, despite conscription, by some 20,000.

The holding of the price level and the comprehensiveness of controls, together no doubt with the better understanding of national income economics which New Zealand, in common with other countries, now enjoyed, smoothed the difficulties of war finance. The National Debt, in the eight years prior to March 1947, increased by some £290 million but liabilities in London and in Australia were reduced by £36 million. This, following on a conversion operation to take advantage of low interest rates in 1933–34 and together with further debt repayment in the later 1940s, greatly reduced the burden of interest payments on the balance of payments, particularly in view of the post-war rise of prices and incomes. During the 1950s, interest payments abroad on the public debt did not exceed 2 per cent of the value of exports. Yet the very excellence of the machinery of controls meant that, in some ways, the real burden of the war was postponed rather than lightened. In the post-war years the very high level of liquidity, the barely suppressed demand for imports, and the housing shortage constituted major problems, and perhaps justified retaining key controls until the end of Labour's long period of office in 1949.

For some six years after the war these difficulties, however, were rendered tolerable by the very marked rise in export values, which trebled between 1945 and 1951. This rise combined the effects of increasing volumes of exports and of a sharp rise of export prices, especially of wool; meat and dairy produce prices would have risen more but for the continuance of the bulk purchase schemes until rationing ended in the United Kingdom in 1954. The former trend has continued after 1951, thanks in part to the spectacular post-war innovation of aerial top-dressing, which has worked wonders for the productivity of the more rugged country since the first experiments in 1948. In the years 1948–58, the total sheep population increased from 32½ to over 46 millions – an increase of nearly 42 per cent. This expansion, combined with difficult trading conditions for dairy produce in the late 1950s, has resulted in the sheep becoming once again by far the greatest export earner. The opportunity was taken, during the pre-Korean war years of favourable balance of payments, to reduce further New Zealand's balance of international indebtedness, and to revalue the currency to parity with sterling in 1948 – a move to which Labour had been committed since taking office in 1935, and which helped, though temporarily, to restrain inflationary tendencies.

For New Zealand, as for most of the world outside Russia, the great depression of the early 1930s was the most shattering economic experience ever recorded. Exports fell by 45 per cent in two years, national income by 40 per cent in three. The balance of payments was further weakened by the burden of interest on the overseas debt. At the worst point of the depression, the number of unemployed may have exceeded 70,000 – ambiguities of definition make a precise estimate difficult. The sharpest price fall was that of wool, which declined by 60 per cent from 1929 to 1932; meat fell a good deal less. The dairy price index continued to fall until 1934; dairy farmers tried to make ends meet by increasing production during the depression and in doing so forced the export prices of butter and cheese still lower: butter exported rose from 1,654,000 cwt in 1929 to 2,635,000 in 1933; cheese exports also rose, though much less rapidly.

The depression has rightly been described as a traumatic experience; for the second time at least since the founding of the colony, new New Zealanders found themselves disillusioned by the appearance in their adopted country of conditions they thought they had escaped from. As in the late 1880s, there was some net emigration in the early 1930s; as on the earlier occasion, again, most of the would-be emigrants could not afford the fare to leave. Perhaps as well; for this time, at least, they were not justified in thinking they had made the worst of the bargain. Bad as were conditions in New Zealand, they were perhaps less demoralising than those in Jarrow or on Clydeside, and percentages of the labour force unemployed were a good deal higher in many industrial countries, and in Australia.

The depression was, in fact, aggravated by New Zealand's extreme unpreparedness to meet it. Despite New Zealand's early reputation as a “social laboratory”, her social services had in fact fallen behind those of many other countries in the post-1918 years, and the country entered the depression without even the modest provision for unemployment relief by which the British industrial worker was protected. The policy of the Coalition Government formed in September 1931 was on the whole unenterprising and, perhaps inevitably, unenlightened in the Keynesian sense of the word. As elsewhere, the chief concern was to balance the budget, though overseas borrowing continued until 1933. Some of the public works which formed the main relief measure were, however, useful. Especially notable were the schemes for the development of Maori land (conceived before the depression but speeded up essentially as relief work), which accorded well with the marked resurgence of the Maori people since the late nineteenth century, and the planting of exotic trees in the centre of the North Island, which was to lead to a thriving development of forest products.

Most of the positive measures were conceived to help the farm community whose net income, according to one expert calculation, was zero in 1930–31 and a negative quantity in 1931–32. From 1931 the Government adopted a scheme first tried privately on the initiative of the Canterbury Chamber of Commerce, whereby mortgage commitments were scaled down by agreement between the farmer and his mortgagee. In 1933 the New Zealand pound, which had already slipped to a discount of about 10 per cent, was devalued, £125 equalling 100 sterling at the new rate of exchange. The year before, the Imperial Conference at Ottawa had set up the structure of Imperial preference which has since remained the basis of New Zealand's trade with the United Kingdom, though the importance of the concessions, particularly as regards New Zealand exports to Britain, has been somewhat eroded with the passage of time. However, a British proposal to impose quota restrictions on butter imports and an unsuccessful experiment in placing such quotas on meat, shocked New Zealand opinion into its first acquaintance with an idea which has since become only too familiar – that the British market is not a bottomless pit into which anything New Zealand can produce may be profitably poured. Belief that Coates, Minister of Finance in the Coalition Government, had aided and abetted the British government's plan for a butter quota, was one reason for the loss of confidence in the Administration on the part of the dairy farmers, and their readiness to vote for a Labour Party which promised a guaranteed price for their products.

New Zealand emerged from the war with the pattern of her economy substantially unchanged. Pastoral production was running at only slightly higher levels, though owing to the rise of prices the value of exports had increased very sharply, from £22.8 million in 1913 to £53.9 million in 1919. Local manufacturers had received a considerable stimulus from the wartime shortage of consumer goods, the number of factory workers having risen from 42,000 in 1910–11 to 63,000 in 1920–21. The most substantial economic legacy of the war was the increase in the National Debt, which rose by more than 70 per cent per head between 1914 and 1919. This burden, which was substantially increased by further borrowing during the 1920s, was to press heavily on the springs of New Zealand's economic life during the depression of the early 1930s; most of the money was borrowed abroad and in 1932 the remittance of interest amounted to 26 per cent of the value of exports. In the immediate post-war years, most of the borrowed money was spent on settling returned ex-servicemen on the farms. This policy, combined with the sharp rise of prices in the early post-war years, drove land values up to extreme heights, and it has been estimated that just on half the occupied land changed hands between 1915 and 1924. When the short post-war boom burst in 1921–22, many newly established farmers therefore found themselves with an almost insupportable deadweight of mortgage commitments.

In such circumstances the farming community looked about for a solution for its ills; and some thought to find it in a modification of the traditional free marketing of the pre-1914 period. During the war bulk purchase schemes had been instituted for all major exports, and this experience had convinced many farmers of the advantages of controlled marketing. When the slump came, marketing boards were set up, in 1922 for meat, and in 1923 for dairy produce as well as for some of the minor products. Their experience varied, the Meat Board playing a modest but useful coordinating role, the Dairy Board attempting more ambitiously to institute complete control of marketing, and failing disastrously. Controlled marketing, in fact, did not really come into its own until a somewhat later date.

Meanwhile, despite an overall feeling of pessimism which recalled the temper of the 1880s, and the reappearance of some unemployment, the development of the country continued. Though the number of sheep continued to rise gradually, the most marked progress was in butter production consequent on the rapid development of the area south of Auckland. In 1905 the Auckland province had accounted for only 83,000 cwt, out of a total production of 463,000. By 1919 the figure was 271,000 out of 509,000; and 10 years later it had shot up to 1,219,000 out of a Dominion total of 1,951,000. Nor was this increase solely the result of geographical expansion. Dairy farming became more efficient: butterfat production per cow had risen from 125 Ib per annum in 1906–7 to 152 Ib in 1919–20; by 1928 it was 211 Ib. In 1929, indeed, butter was on the eve of becoming the country's largest earner of foreign exchange. It was suddenly pushed on to that eminence in 1930 by the collapse of wool prices which heralded the onset of the depression.

To revert, however, to the period 1895–1914, one may fairly claim that, if the basic forces making for returning prosperity are to be found in trends in the world economy and in techniques borrowed from the outside world, the legislation of the 1890s at least operated in the direction of strengthening those forces, rather than of weakening them. Thus the introduction of a graduated land tax in 1892 has been considered by some historians a powerful influence in breaking up the larger estates and facilitating that closer settlement which was characteristic both of the North Island dairy farm and of the mixed farming of the coastal plains of the South Island. Pember Reeves it is true, gave his opinion that “nothing startling is being done by the land-tax”, and certainly the gradation was exceedingly gentle, yet there was a very substantial reduction in the 20 years before the First World War in the total area of the largest freehold estates, and it is probable that the graduated tax was at least a subsidiary cause of this. It is well known, however, that much land had been locked up in big estates during the long depression, which neither its owners nor its mortgagees could sell save at a grave loss, and it is thus likely that the rapid sale and subdivision of many large freehold estates after about the mid-1890s represented in part the belated accomplishment of intentions which had been thwarted during the long years of depressed prices and land values.

A further measure dating from this period provided for the compulsory purchase by the State of large estates, and their subdivision into small farms to be let on long leases. Probably greater importance should be attached to the Advances to Settlers Act of 1894, which cheapened credit for the smaller farmer and especially for the dairy farmer, for whom working capital is and always has been of crucial importance and who has, therefore, had an especial interest in credit facilities. Finally, a Department of Agriculture was established in 1892 and was soon doing excellent work in the field of agricultural extension, which was also of great benefit, especially to the dairy farmers learning new techniques.

Land measures were by no means the only important aspect of the economic legislation of the Liberal Government. Pember Reeves, the intellectual of the Liberal Ministry, was primarily responsible for a series of Acts prescribing conditions and hours of work, the background to which was the allegations of sweated labour which had been made during the later years of the long depression. As a result of these measures, New Zealand, from being one of the most backward of nations regarding her industrial code, became perhaps the most progressive. Of greater interest, however, was the Industrial Conciliation and Arbitration Act of 1894, which initiated the distinctive New Zealand system of dealing with industrial disputes and helped to earn for New Zealand the reputation of being “the country without strikes”. Since that time, New Zealand has undoubtedly enjoyed a good record as far as losses of working time through disputes are concerned, though whether this is entirely the result of the I.C.A. system might perhaps be disputed.

One important consequence of these developments in farming was to accentuate the slow change in the balance of population, as between the North and South Islands. In the early years of the colony's history, the North Island, with its more thriving trading settlements and with its whaling, timber, and flax resources, had a large majority of the European population. It was the gold rushes of the early 1860s which first put the South Island ahead; and by about 1867 the “Main” Island, as its champions like to call it, had reached its apogee, relatively speaking, with over 63 per cent of the total population. Then, as the gold rushes died down and the end of the Maori troubles permitted development of the North Island, the South's proportion gradually declined. It was between the censuses of 1881 and 1886 that the North Island first registered a bigger absolute gain of population than did the South; but in 1891 the latter still had 55 per cent of the population of about 625,000. In the next 20 years the North Island, with a climate and terrain better suited to dairying, a relatively intensive form of farming, went ahead rapidly; and by 1911 the South Island had only 44 per cent of the total population of upwards of 1 million. (Inclusion of the Maori population – all the above figures are exclusive of Maoris – would increase the North Island percentage in all cases.) Since 1911 the North Island has further increased its lead, though until recent years at a somewhat slower rate, and now (1961) accounts for over 71 per cent of the total population, including Maoris.

Another characteristic feature of the New Zealand economy which became more pronounced during the period just reviewed was the country's high degree of dependence on the British market – particularly as the major recipient of her exports. In the years before British annexation, and for a good many years afterwards, New South Wales was the most obvious trading partner; most of the timber, the agricultural produce, and the gold (on account of the Mint in Sydney) went there, and during the gold rushes (1861–65) Australia took 63 per cent of New Zealand's exports and supplied 54 per cent of her imports. From the later 1860s onwards, however, as wool grew and gold declined in relative importance, the position of the United Kingdom in New Zealand's trade became more marked, and in 1881–90 the mother country took 72 per cent and in 1911–14, 79 per cent of all exports. These figures are in fact somewhat spurious, in that substantial proportions of New Zealand's exports to Britain, particularly of wool, were re-exported, London acting merely as a convenient distributing centre. Nevertheless, the importance of the United Kingdom as a market for New Zealand produce, and particularly for her meat and dairy produce, has been a characteristic and, at times, disturbing feature of the country's trading pattern: between the 1890s, when pastoral products came to account for a very large majority of the country's exports, and the Second World War, the percentage of exports directed to the United Kingdom (ignoring the qualification just mentioned) rarely fell outside the range 75 to 85 per cent.