By providing what was, in effect, a unitary constitution, the constitution-makers had expressed their confidence that eventually national issues would transcend those of provincial concern; but, in the early years of self-government, geography and parochial self-interest ensured that the provincial governments would assume powers and responsibilities not contemplated by the Constitution. Grey's actions, in particular the priority he gave to the establishment of the provincial councils, led to the criticism that he was deliberately seeking to consolidate the position of the councils. This was aided by their passing their own empowering ordinances. It was soon accepted that the revenues coming from the sale of public lands would, after certain deductions, go to the provinces; and the power to determine the price and method of sale of land, combined with control over immigration and public works, allowed the individual provinces to dictate the pattern of their own social and economic development. The southern provinces, without the distraction of the Maori wars and helped by the gold rushes, developed more rapidly than did those in the north. By 1870 only Canterbury and Otago could be said to be flourishing, and there were events during the ensuing five years that had as their inevitable conclusion the abolition of the provinces. The Central Government prohibited further provincial borrowing; it took over immigration and public works; and, by the use of public loans, itself encouraged immigration and developed road and railway communications. Thus the country became an economic unit while the provinces were more and more anachronistic. Their end came when Julius Vogel, irritated by the provincial opposition to his plans for the creation of railway reserves and for afforestation (the provinces saw these as an attack on their lands), was able to obtain support for abolition legislation. This became effective in 1876. Soon after, land revenue was taken over by the Central Government, to be spent on the general needs of the colony.

The General Assembly for the colony was to consist of the Governor, a Legislative Council, and a House of Representatives. The Council was to be a nominated body, and the House was to be elected. The electoral franchise appeared to be almost universal, in that there was no racial distinction and a not very onerous property qualification, but the Maoris were in practice disfranchised because of their communal system of land owning. In each of the provinces there was to be a superintendent and a provincial council of at least nine members. The superintendent and members of the council were to be elected under the same franchise as that for the House of Representatives.

The Assembly would be competent to make laws for the peace, order, and good government of New Zealand, provided those laws were not repugnant to the law of England. The legislative competence of the provincial councils was stated in similarly wide terms, but certain specific topics were reserved to the General Assembly, which was also to have the authority to supersede provincial legislation. Since, therefore, the provincial councils had no exclusive lawmaking powers, the Constitution could not be regarded as establishing a federal system.

After some delay in the calling of the General Assembly, it met for its first session in May 1854. This first session was primarily concerned with the one matter which, although the main objective of the colonists, was not mentioned either in the Constitution or in the accompanying instructions: responsible government. As the position stood immediately before the enactment of the 1852 Act, the Executive Council consisted of Crown servants who were responsible to the Crown. In the absence of any indication to the contrary, Colonel Wynyard, who was by 1854 administering the Government, was of the view that he could not appoint an executive responsible to Parliament until he received instructions from London. Moreover, according to his Attorney-General, he had no authority to dismiss the official members of his Executive Council.

A compromise resulted from an almost unanimous resolution affirming the principle of the responsible executive. Three members of the House of Representatives and, later, one from the Legislative Council were added to the Executive Council as ministers without portfolio. The unofficial members soon found it necessary to withdraw, and it was not until another attempt to establish a mixed Executive Council had failed that Colonel Wynyard received advice from London that responsible government could be introduced without legislation and that he could accept a responsible ministry if adequate pensions were provided for the deposed official members. An election followed, and after the second Parliament assembled in 1856 legislation providing for pensions for the official members was passed and Governor Sir Thomas Gore-Browne asked Henry Sewell to form the first responsible ministry.

Canada provided the prototype for the establishment of responsible government. There Lord Durham had suggested that the Colonial Governor should act on the advice of ministers who could command a majority in the Colonial Assembly except in matters that directly involved “the relations between the mother country and the Colony”. Durham defined these “imperial issues” as being constitutional amendments, foreign relations, external trade, and the disposal of public lands. Governor Gore Browne evidently had these issues in mind when he obtained Sewell's signature to a minute in which the Governor retained his authority “On matters affecting the Queen's prerogative and imperial interests generally …”. The minute continued: “Among imperial subjects the Governor includes all dealings with the native tribes, more especially in the negotiation of purchases of land…. The Governor alone is responsible to Her Majesty for the tranquillity of the Colony….”. The reference to dealings with the Maoris reflected conditions in New Zealand. The Constitution Act had already reserved the purchase of Maori land to the Governor and in other ways ensured that Maori policy and its administration would remain in the hands of officers responsible to the Governor. Nevertheless, the sale of land once acquired by the Crown was to be at the disposal of the General Assembly – a significant concession because the sale of land was an important source of revenue.

The Charter of 1840 specified that the three principal islands of New Zealand were to be known respectively as New Ulster, New Munster, and New Leinster. Under its authority, and in accordance with his instructions, Hobson, who now became Governor, summoned an Executive Council to advise and assist him. This Council comprised the Colonial Secretary, the Attorney-General, and the Treasurer. The Charter and Instructions also authorised Hobson to constitute a Legislative Council of seven persons – the Governor himself, the members of the Executive Council, and three nominated Justices of the Peace – to make laws and ordinances “for the peace, order, and good government” of the colony. Neither Council met at all frequently during the governorships of Hobson and his successors, Lieutenant Willoughby Shortland (administrator), Robert FitzRoy and Sir George Grey. Throughout the Crown colony period each Governor held in the name of the Crown complete control over the executive and legislative functions of government.

Naturally enough, there was a growing agitation from the settlers for representative government. This was particularly the case in Wellington which, as a New Zealand Company settlement, had active supporters in London. Auckland, then the capital, was less interested. Eventually, pressure led to the enactment in 1846 in London of a most intricate constitution. It provided for a three-tiered system of representative government. Municipal corporations were to be created with the powers of English boroughs. Two or more provinces were to be established with assemblies which would include a Governor, a nominated Legislative Council, and a House of Representatives elected by the mayor and councillors of the municipalities in the province. Then there was to be a General Assembly for the whole colony consisting of a Governor-in-Chief, a nominated Legislative Council, and a House of Representatives appointed by the houses of the provinces from their own members.

This constitution was ill-conceived in its complexity; and Grey, the Governor, was able to argue that it would place the Maori majority under the political control of the settlers and so prejudice his efforts to pacify the Maoris. There was also the suspicion that Grey was unwilling to relinquish his own authority. He was able to persuade the British Government that its action was precipitate; and in 1848 (just before Grey divided the colony into two provinces, New Ulster and New Munster) the Imperial Parliament passed a Suspending Act under which those parts of the 1846 Constitution dealing with establishment of provincial assemblies and the General Assembly were not to come into force for another five years. The Charter provisions relating to the Legislative Council for the whole colony were revived, with modifications; and the Governor was authorised to establish Legislative Councils in each of the provinces.

Settler pressure for representative institutions and criticism of Grey intensified, and for the next four years the Governor pursued an erratic course which gave little satisfaction to the settlers. Early in 1848 he had appointed Major-General G. D. Pitt (he was followed by Lieutenant-Colonel R. H. Wynyard) as Lieutenant-Governor of New Ulster, and Edward J. Eyre as Lieutenant-Governor of New Munster. Each had associated with him an Executive Council. Later in the same year Grey, through an Ordinance of the General Legislative Council, established nominated Legislative Councils in each province. The Provincial Council of New Ulster was never summoned. In 1851, under the authority of the 1846 Act, Grey made the town of Auckland a municipality, but this step did not relieve the pressure for a Legislative Council which would be representative of the whole province.

The Provincial Council of New Munster had only one legislative session – in 1849 – before it succumbed to the virulent attacks of the Wellington settlers. Grey, sensible to the pressures, inspired an ordinance of the General Legislative Council under which new Legislative Councils would be established in each province with two-thirds of their members elected on a generous franchise. Grey, however, proceeded to implement the ordinance with such deliberation that neither Council met before advice was received that the Parliament at Westminster had passed the New Zealand Constitution Act of 1852.

The various steps of legal significance associated with New Zealand's inception as a British colony make a confusing story – and there has been uncertainty as to their overall legal implications. Two separate, if related, issues were involved. The first was the need to assert British sovereignty over the New Zealand islands and thus to establish British title to New Zealand from the point of view of international law. The second concerned the manner in which British legal authority – or jurisdiction – was to be asserted over the new British territory. The two formal documents with which Hobson set out recognised these two issues. He held a commission appointing him Her Majesty's Consul in New Zealand for the purpose of negotiating for the recognition of the Queen's sovereignty by the chiefs of New Zealand. He also held a warrant appointing him Lieutenant-Governor over such parts of New Zealand as might be acquired in sovereignty. His appointment as Lieutenant-Governor was evidently regarded as contingent on the successful outcome of his negotiations as Consul.

The Colonial Office were still maintaining the pretence that New Zealand was a sovereign and independent state, but its intentions were laudable in that it was anxious that, at least in the North Island, “the free intelligent consent of the natives, expressed according to their established usages, shall be first obtained”. In accordance with instructions to this effect, Hobson negotiated the Treaty of Waitangi, which was signed by about 50 chiefs on 6 February 1840 and by over 500 chiefs throughout New Zealand before 15 October 1840. On 8 February a salute of 21 guns was fired “to commemorate the cession to Her Majesty of the right of sovereignty in New Zealand”, but Hobson took more definitive action when on 21 May 1840 he issued two proclamations, – one, relying on the Treaty of Waitangi and the subsequent adherence of “principal Chiefs”, proclaimed that sovereignty over the North Island had been ceded to Her Majesty as from the date of the Treaty; the other asserted, as from its date, sovereignty over “the Islands of New Zealand”, the claim to the North Island being based on cession and to the South Island on discovery. After Hobson's dispatches reporting these proclamations reached London, the British Government gave its formal approval to the assertion of sovereignty over New Zealand by publication of the proclamations in the London Gazette of 2 October 1840. The better view would appear to be that the Treaty of Waitangi is not to be regarded as an agreement between sovereign states in accordance with the usages of international law and, accordingly, that the complicated series of events which preceded that Gazette notice made both the main Islands of New Zealand a British colony by occupation rather than by cession.

These events effectively established British sovereignty over New Zealand so far as international law was concerned; but a different series of events was necessary if provision were to be made for the establishment of a system of government in the newly acquired territory. This need was anticipated when on 15 June 1839 letters patent were issued in London altering the definition of the boundaries of New South Wales to include “any territory which is or may be acquired in sovereignty by Her Majesty … within that group of Islands in the Pacific Ocean, commonly called New Zealand”. It thus became clear that, in the first instance at least, the British Government proposed that New Zealand should begin its constitutional life as an appendage of the Colony of New South Wales, rather than as a separate colony. Just before Hobson departed from Sydney, Governor Sir George Gipps issued a proclamation declaring that the boundaries of New South Wales were extended to include such territory in New Zealand as might be acquired in sovereignty. The authority of the Legislative Council of New South Wales was first asserted when on 16 June 1840 the Council passed an Act extending to New Zealand the laws of New South Wales. The Council also established customs duties and courts of justice for New Zealand. It became clear, however, that the relationship of the new colony with New South Wales was intended as a convenience to cover the period during which British sovereignty was being asserted over New Zealand. Even before Hobson's dispatch reporting his proclamations had reached London, an Imperial Act had authorised the Crown to make New Zealand into a separate colony and to constitute a nominated Legislative Council. This legislation became effective on 16 November 1840 under letters patent described as the “Charter for erecting the Colony of New Zealand …”.

On 13 December 1642 the Dutch navigator, Abel Tasman, sighted “a great land uplifted high”. When its people proved to be inhospitable he sailed away after calling the new country Staten Landt, later to be renamed Nieuw Zeeland, after a Dutch province. International law of the day would have given the Dutch an “inchoate title” to their discovery, but they did not see sufficient commercial advantage in occupying the territory and so converting that title into formal sovereignty.

James Cook was the next captain to sight the New Zealand islands and on 15 November 1769 (at Mercury Bay) and 31 January 1770 (at Queen Charlotte Sound) he took possession of the country in the name of King George III. The British Government, like the Dutch Government, made no attempt to substantiate the claims made on its behalf. Indeed, in the early nineteenth century the Imperial Parliament expressly repudiated British sovereignty.

The whalers, the traders, the missionaries, and the settlers who came after Cook entered a country in which there was no central authority to enforce law and order, the Maoris being politically organised on a tribal basis only. In this situation the early years of settlement were marred by lawlessness and bitter tribal warfare. Australian Governors felt some responsibility for these events and there were claims that references in the Commission of the Governor of New South Wales to “islands adjacent in the Pacific Ocean” gave some legal basis for this responsibility. Nevertheless, when Governor Macquarie in 1814 appointed Thomas Kendall, a missionary, as a Justice of the Peace in New Zealand, he was almost certainly acting without authority. The inclination of the Colonial Office in London to adopt the subterfuge of regarding New Zealand as “a Foreign Power under a regular Government” was shown by the appointment in 1833 of a British Resident, James Busby. Busby was to “claim the protection and privileges … accorded in Europe and America to British subjects holding in foreign states situations similar to [his]”. He was expected to apprehend escaped convicts and send them back for trial, to encourage trade, and to establish friendly relations with the Maoris on a permanent basis – all by moral persuasion. He failed, but it was in keeping with Colonial Office and his own pretensions that he should in 1834 arrange a meeting of 30 chiefs at Waitangi to adopt a national flag of New Zealand. The British Government ruled that the flag was to be recognised, and Busby granted New Zealand built vessels certificates of registration in the name of the independent tribes of New Zealand. In 1835 a further gathering of 35 chiefs declared the islands “an independent state under the designation of the United Tribes of New Zealand” with an elaborate constitution providing for a representative Parliament, counties, and towns on the English model. This action was officially stigmatised as “silly and unauthorised” and it did not ever have any practical effect. Thus Busby's activities came to nothing. A period of intense agitation ensued in which the Colonial Office's considered policy of doing as little as possible was encouraged by disputes between the missionaries (who, in their concern for the Maoris, sought British sovereignty but not large-scale colonisation) and the “systematic” colonisers, inspired by Edward Gibbon Wakefield. Eventually, in August 1839, Captain William Hobson, R.N., sailed for New Zealand with instructions to acquire sovereignty over New Zealand.

The next three years saw a continued decline in the reputation of the Government. The Labour Party took a new lease of life in 1957, Nash showed notable energy as a leader, and its programme promised a carefully selected list of benefits to wavering voters: taxation relief, an income tax rebate, and increased benefits. Narrowly, Labour won, and the Social Credit vote sagged to 7 per cent.

This victory might be compared with that of Coates in 1925, though not in magnitude, for it simply presented the victors with problems with which they were not able to cope. Consequently 1960 saw the National Party handsomely returned under the leadership of K. J. Holyoake (he had in fact succeeded Holland as Prime Minister when the latter retired three months before the 1957 election). The Nationalists made full use of the opportunities presented to them by Labour's stringent handling of the crisis of 1957–58.

This crisis, whose advent had been detected by economists before the 1957 election was fought, had a head start thanks to the National Government's understandable preoccupation with electioneering in the latter months of 1957. The Labour victors took office to find themselves embarrassed by a combination of expensive electoral promises and a financial crisis. The crisis arose from a sharp fall in overseas prices for exports accompanied by a grave shrinkage of London reserve funds. Here one might note a certain poetic justice: in 1935 Labour inherited an economic upswing and did well upon it; in 1957 it inherited a crisis which proved abruptly fatal.

The Government's answer to the crisis came with the austerity budget of 1958, presented by the Minister of Finance, A. H. Nordmeyer. Already imports had been severely restricted to safeguard what was left of overseas funds; the chief note of the budget was high taxation, especially upon such articles as beer, tobacco, and petrol. Short-term loans were also raised overseas to tide over the crisis. It has been doubted if even these measures, acutely unpopular as they were, would have proved sufficient had not overseas prices, especially for dairy produce, considerably recovered after 1958. As it was, this recovery of prices, though not permanent, gained sufficient breathing space; but the emergency measures brought sufficient unpopularity to the Labour Party to secure its defeat in the 1960 election.

Subsequently the crisis had resolved itself into a continuing condition – a condition to which the country is readjusting itself with some reluctance. It has become clear that overseas prices, especially for dairy produce, cannot be relied upon to stay high: they go up and down, and their movement affects the general condition of the country. In 1961 the guaranteed price to dairy farmers, the basis of their standard of living, had to be subsidised by the Government to prevent a 5 per cent cut.

But a more serious threat was that the market itself may close up, or at the very least shrink acutely. This arises from the considerable likelihood that Great Britain will join the European Common Market, upon terms which will allow New Zealand only a brief exemption from the restrictions upon non-member countries imposed by the highly protectionist Common Market agricultural policy. Together with increasing European production of dairy products, and with the certainty that European farmers will look upon the United Kingdom as the natural market for their surpluses, this development is full of menace to a country which has for a half century based its economy upon the unrestricted entry of dairy produce, meat (most notably lamb), and wool to the British market.

Whatever the political complexions of governments over the next few decades, this grave problem will, or should, dominate their activities. For it seems that within the next generation New Zealand might be faced with the need for an economic reconstruction quite as great as that change of production, fathered by refrigeration and mothered by the small intensive farm, which gave pre-eminence to butter, cheese, and meat in the generation between the 1880s and the war of 1914. This time the problems will be greater. Then it was a problem of putting people on the land and encouraging them to produce; this time it is one of persuading those already there, and enjoying a high standard of living, to change their ways while there is yet the opportunity.

by William Hosking Oliver, M.A.(N.Z.), D.PHIL.(OXON.), Professor of History, Massey University of Manawatu.

International Relations, Political Parties, etc.

• General Histories: New Zealand – a short history, Beaglehole, J. C. (1936)
• New Zealand, Miller, H. (1951)
• A History of New Zealand Life, Morrell, W. P., and Hall, D. (1957)
• The Long White Cloud, Reeves, W. P. (1950)
• A History of New Zealand, Sinclair, K. (1957)
• The Story of New Zealand, Oliver, W. H. (1960).

• Economic Histories: New Zealand, Belshaw, H., (ed.) (1947)
• New Zealand in the Making, Condliffe, J. B. (1959)
• The Welfare State in New Zealand, Condliffe, J. B. (1959)
• The Instability of a Dependent Economy, Simkin, C. G. F. (1951).

• Special Studies: A History of Canterbury, Vol. I, Hight, J., and Straubel, C. R. (jt. eds.) (1957)
• History of Otago, McLintock, A. H. (1949)
• Crown Colony Government in New Zealand, McLintock, A. H. (1958)
• Early Victorian New Zealand, Miller, J. O. (1958)
• Provincial Government in New Zealand, Morrell, W. P. (1932)
• The Maori People Today, Sutherland, I. L. G. (ed.) (1940)
• New Zealand in the World, Wood, F. L. W. (1940)
• The People at War, Wood, F. L. W. (1958).

• Biographies: King Dick, Burdan, R. M. (1955)
• The Maori King, Gorst, J. E. (1959)
• Sir George Grey, Rutherford, J. (1961).

The National Party took over the Treasury benches in the spirit of crusaders, determined to rescue the country from socialism, bureaucracy, inflation, and high taxation. It went a little way towards these goals. Import and price controls were relaxed, some nationalised enterprises were put under corporation control, property deals were freed from a control that had been far from effective, food subsidies were reduced. But inflation continued as prices and wages maintained their steady climb; the slogan of 1949, “make the pound go further”, was proving ambiguous. In 1951 price controls and food subsidies were re-introduced, and welfare benefits increased. The mood of the National Government, shrewdly led by Sidney Holland, was pragmatic, and pragmatism demanded State action to prevent distress and fend off unpopularity. Had economic issues maintained their pre-eminence, the election due to be held in 1952 would surely have seen the National majority sharply reduced.

But industrial strife caused that election to be anticipated in 1951, and economic issues to be temporarily obliterated by matters of more emotional urgency. The nerve centre of industrial disaffection was the waterfront, where a strong union, to the grave embarrassment of the Labour Government, had for years used its power with some irresponsibility to elevate its members into the status of a working class élite. Other unions, also strategically placed in the economic life of the country, had followed this example, while the great powerless majority had collected the crumbs that fell from the table of arbitration. Holland, with a strong man as Minister of Labour, (Sir) William Sullivan, made it his business to meet this ambitious militancy head on. Behind the vocabulary of conflict – charges of communist conspiracy and industrial wrecking – one can detect an elemental determination on Holland's part not to tolerate a rival authority within the country, an authority personalised in the watersiders' tough leader, J. Barnes. In 1951 the waterside workers ceased work, technically locked out by their employers.

The conflict, now finally joined, had had its prelude in 1950 within the trade union movement, when the militants, led by watersiders, had failed to conquer the conservative Federation of Labour, led by F. P. Walsh, and had formed a rival national body, the Trade Union Congress. The dispute of 1951 lasted for three months, and ended in a total victory for the Government, the port employers, and conservative opinion, notably of businessmen and farmers, throughout the country. Within the Labour movement the militants were isolated: the Federation was hostile, the political Labour Party, led since Fraser's death in 1950 by Nash, was indecisive. By and large, the public were either hostile or apathetic to the watersiders and their allies, the freezing workers and transport workers.

The struggle was not without its ideological elements, even though it was in the main a naked contest for power. The TUC had socialistic overtones, and talked the old radical language of nationalisation, worker control of industry, and the abolition of compulsory arbitration. For their part the Government linked the whole affair to the cold war, and made its appeal to patriotism, loyalty, freedom, and the Western alliance. Defending such values, no hold could be barred; the emergency regulations with which the Government armed itself were stringent to an unprecedented degree. When, after the election of 1951, the National Government attempted to convert these regulations into a permanent Police Offences Act, it met with marginal reverses as a public opinion committed to the liberty of the subject manifested itself and secured the withdrawal of the most illiberal provisions of the Bill.

Holland displayed his astuteness in holding this emergency election; it was the first time in this century that a parliament had not gone its full three-year term. He explicitly sought public endorsement of his Government's handling of the dispute, and this he received. The Labour Opposition, dogged by Nash's injudicious declaration that he was neither for nor against the watersiders, appeared, and was, indecisive; the National Government was returned with an increased majority. A majority of voters, it was manifest, were glad to see the watersiders and the militants put down.

But no economic difficulties had been solved by this flexing of conservative muscles, and in the next three years the old perplexities reasserted their dominance. Taxation was still high, inflation still confronted high incomes with yet higher prices, bureaucratic controls were still applied. It had become clear that in mid-twentieth-century New Zealand no retreat to the golden age of laissez faire could be made. In 1954 the National majority was greatly reduced, and the 11 per cent of the votes collected by a third party, the Social Credit Political League, proved that a minority in the country was disillusioned with both major parties, neither of which seemed in possession of the magic word needed to open the door to unqualified felicity. Though Social Credit, thanks to the dispersion of its vote, gained no seats, the League made it clear that one-tenth of the voters were ready to opt for a new magician with a new formula.

In the future the fifties may be regarded as a watershed decade between two New Zealands: a period of pause and consolidation as far as outward events are concerned, but a decade marked by the beginning of major readjustments under the surface of prosperity. Certainly, there has been continuity and prosperity through the rise and fall of governments, even if, at the outset, it seemed that something new had happened with the election of 1949. Under the surface, however, the fifties have experienced a renewed uncertainty, comparable in temper if not in social effects, to the fluidity of the 1920s. In 1957–58 it became abundantly clear that the roots of prosperity were shallowly set, that a country depending upon a few customers buying a few commodities and paying scarcity prices was uncomfortably vulnerable. Industrialisation, the redirection of rural industry, a major shift in marketing policy – these are among the remedies which have been suggested for this age-old but newly rediscovered insecurity. In the future it may be possible to detect their initial application in this decade.

Domestic politics stagnated early in the war, but from 1942 on are enlivened by the spectacle of a reviving opposition. The National Party which had been formed in 1936 had nothing new to say in the election of 1938 and was easily and thoroughly defeated. Its leader, Adam Hamilton, a Coalition Minister of Reform Party extraction, did not inspire. He was displaced from leadership of the party by Sidney Holland, a young and vigorous politician, who with Hamilton and Coates had become a member of the War Cabinet. This body, far from being a full coalition, had responsibility only for decisions affecting the war, and not even final responsibility for these. In 1942, after a dispute with Labour Ministers, Holland led the National members (all except Coates who thus effectually severed himself from his party) out of the War Cabinet and into a new phase of New Zealand politics. The postponed election was held in 1943; Labour won without much difficulty, but with reduced support. The initiative had passed to the Opposition, even if it took two more elections (1946 and 1949) to bring it to the Treasury benches.

Fraser's Government presided over the readjustments of peace as it had over the stresses of war – in a spirit of paternalism (becoming increasingly rigid and touchy), and with a readiness to intervene in economic life in the interests of stability and welfare. Its members were getting old and the problems were insuperable in any case. The ancient enemy, inflation, still threatened, and counter-measures, unpopular but tolerable in wartime, in peace were merely unpopular. On the one hand farmers clamoured for and secured a greater share of the sharply increasing earnings of their products; on the other the unions grumbled at wage restraint, and the more tough-minded of them, notably the watersiders, secured major increases by strikes or threats of strikes. Less advantageously placed wage earners contented themselves with modest increases through Arbitration Court wage orders, again allowed after 1945. Internal prices climbed high, higher than increasing incomes; housing was short, and there were still scarcities. In brief, stabilisation was crumbling before a popular demand for relaxation of controls and increase of rewards. The Labour Party, traditionally allied to the unions, was weakened by the intransigence of the industrial left wing; the National Party saw power at the end of a road paved with promises to dismantle control, defeat inflation, and reduce taxation. Had not the Labour Party abolished the country quota (a device that had artificially weighted the rural vote) and had not Maori voters stayed faithful, Labour would have been defeated in 1946.

The years immediately before this election saw the successful implementation of a generous rehabilitation policy for returned servicemen. Low interest loans and grants were provided by the State for farm and house purchase, for education, and for setting up businesses. The State bought a good deal of farm land, developed it even to the extent of fencing and building, and passed it on to ballot-selected servicemen. An elaborate, and not wholly successful attempt was made to control property values, both as a measure against inflation and as an aid to rehabilitation. The contrast with the post-1918 programme was striking.

Labour's last three years, 1946–49, were among its most inglorious. Industrial relations, notably on the waterfront, evolved towards the crisis which was to come in 1951. The continued intimacy between political and industrial Labour enabled the Opposition to attack the Government for its softness towards “the wreckers”. The situation was not unlike that of 1911, with Holland and Fraser occupying the positions of Massey and Ward. Fraser, in these years, convinced himself that the international situation required a reversal of Labour's traditional policy towards conscription, and, after arousing dangerous enemies in the Labour movement, had his way through a referendum in 1949.

With his hostility to international communism grew his antipathy to critical left wing elements in his party and in the country at large – and the two were assumed to be not far from identical. Labour was indeed fighting for its life; its majority was so narrow that any dissidence on its left wing would play straight into the hands of the Opposition. In fact the National Party hardly needed such assistance. Popular anger at inflation and impatience with controls (a paradoxical union of antipathies, for the dismantling of controls would only liberate inflationary forces, as the National Party discovered when it exchanged the exuberance of opposition for the sobriety of administration in 1949) were sufficient to carry the day. In 1949 the new men took over. It is probably not too much to say that an era, comparable in its formative character to the Liberal period, had come to an end.

But idealism did not preclude realism. In 1939 preparation of a War Book was undertaken – a plan of defence measures to be taken if war broke out. In particular New Zealand looked warily to Japan, and sought guarantees from Great Britain against Japanese attack. In 1939 (though not in 1942) the enemy proved to be European, and New Zealand once more set about fighting her battles half a world away. Again, a volunteer expeditionary force was raised; again, it was sent (the first detachments in 1940) to the Middle East for training. Recruitment into the Air Force and the Navy was also considerable. While the New Zealand Division, placed under the command of General Bernard Freyberg was in the Middle East, the “phoney” war ended, France collapsed, Italy joined Germany, and Great Britain faced the enemy alone apart from her Commonwealth allies. The Italian drive for Suez meant that the Division was in the heart of a war theatre. Thus the Mediterranean region was the scene of New Zealand's major fighting effort – the tragic campaigns in Greece and Crete in 1941, the successful battle against Rommel's army for North Africa in 1942, and the bitter campaign north up the Italian peninsula in the closing period of the European war. The end of the war saw a weary Division established at Trieste facing the Yugoslavs when the United Kingdom and France were reverting to the methods of traditional diplomacy, and when the United States continued to show its indifference in an early round in the cold war.

During this time, of course, the Pacific had acquired its own war. The Japanese attack in 1942 had turned New Zealand's worst dreams into stark reality. Singapore had fallen, the United States Pacific fleet had been knocked out at Pearl Harbour, British naval reinforcements had been quickly sunk; New Zealand and Australia, for a time, were defenceless. Rather than pull her forces out of Europe (as Australia did), New Zealand was persuaded to leave her division in Italy. Already with her resources under great strain and totally mobilised (conscription had been introduced in 1940), the country set about maintaining a further division in Fiji. An attempt was made, with naval and air forces as well as the army, to play a full part in the Pacific war under the overall control of the Americans, and to set up an effective home defence force. At the same time an intense domestic effort was made to step up food and raw material production (and also to produce munitions and other manufactured goods) for Great Britain and for the American forces. The effort proved too much; in 1943 the Pacific Division was reduced to reinforce the Division in Europe. Nevertheless, the point had been made, if less emphatically than New Zealand and Australian policy makers desired: if, as was necessary in the nature of the case, the Americans had taken a major part in defeating Japan and so dominated peace making in the Pacific, Australia, and New Zealand had earned a place at the conference table. The protracted peace negotiations, and the setting up of the United Nations Organisation, saw New Zealand playing as full a part as her size could merit.

All this was not accomplished without intense internal strain. The war effort made great demands upon leadership, and generally it proved sufficient for the task. Labour Ministers, Fraser (who had succeeded Savage on the latter's death in 1940) and Nash in particular, kept the affairs of the country under detailed control, and on a remarkably even keel. The war was financed without recourse to the overseas loans which proved such a crippling liability after the First World War. Instead, the cost of the war effort was met out of current revenue and from domestic war loans; both these devices had the added merit of mopping up surplus spending power at a time when high incomes and scarcities made inflation unavoidable. After the war began, the Government, elected to dispel depression, found, paradoxically enough, that its main task was to discipline a dangerously inflationary boom. Farm exports were taken over by the Government for bulk sale to the United Kingdom at prices lower than the prevailing world level, but still high. A share of the farmers' earnings was held back in reserve accounts as an anti-inflationary measure. War conditions, further, stimulated secondary industry by limiting imports; this, combined with a labour shortage, tended to send wages up, and of course retail prices, rents, charges for services, all tended to rise sharply in a situation of scarcity. The Government's remedy was a system labelled “stabilisation”: in 1942 steps were taken to stabilise prices, wages, and rents at the level of that year. Subsidies were paid to local producers who would have suffered without help. The system was not foolproof, but its success can be measured by the fact that the overall rise in the cost of living in New Zealand in wartime was considerably less than with most Allied powers. The chief political architect of this system, as of the whole structure of wartime finance, was Walter Nash; it was probably the greatest single accomplishment of his long career.

Sending armed men to battle was not the most important part of the war effort; farm production, helping to feed and clothe the United Kingdom and also allied forces, was less heroic and more profitable, but also more significant. In spite of manpower shortages and others such as farm equipment and machinery, production rose to impressive heights. The totality of the war effort was reflected in a system of manpower direction which gave priority to essential occupations, especially farming, processing farm products, munitions, and other secondary industries. Industrial growth was very considerable upon New Zealand standards, a development begun in wartime which is still continuing.

Among its many social effects may be singled out that acceleration of the process by which the urban section of Maori population began to increase – a process which has continued, and which, combined with the high Maori birthrate, has introduced the germ of a radical problem into the life of New Zealand towns. Labour policy towards the Maori people had since 1935 been both energetic and enlightened, but mainly directed to raising the standard of living of the Maoris in more or less isolated rural communities. Housing, farming, health, and education improvements were the aim of policies summed up in the 1945 Maori Development Act. The spirit of the policies was that of Sir Apirana Ngata who, as a leader of the “Young Maori Party” had begun a reformer's career among his own people early in the century, and, as a Minister of the Crown, had continued it nationally after 1928. The goals were his, but the energy was that of the Labour Party rather than of the Reform Party to which Ngata belonged. More recent developments of policy have come closer, but probably not close enough as yet, to the newer problem of the urban Maori.

Among the most important wartime developments was in external affairs – and developments here were equally the fruit of the complexity of the problems facing the country and the determination of Fraser that New Zealand's interests should not lack vehement advocacy. Decisions over the use of New Zealand troops, and in particular the distinctive identity claimed for the Middle East Division, involved New Zealand and Fraser in problems of high command and overall strategy. These were intensified by the dominant role of the United States, especially in Pacific fighting – an area in which New Zealand, with Australia, believed she had special interests and so a special claim to be heard. Fraser was a realist above all else; he did not expect to force Churchill and Roosevelt to do his bidding. But he, aided by Nash as Minister at Washington from 1942 to 1944, did expect an opportunity to make known the New Zealand standpoint. This he continued to do after the war, and in the process achieved greater international celebrity than has fallen to the lot of any other New Zealand leader.