Settlement Since 1912
By 1912 development in the North Island had made small farmers a numerous and important class. The extension of the freehold was a live issue during 1912 and when the Reform Party under W. F. Massey came into power the following year, this issue was resolved. Himself a small farmer, Massey extended the right to freehold Crown leases, made the terms on which leases in perpetuity could be purchased more favourable to the tenants, and in later years freeholding rights, with limitations, were extended to lessees of National Endowment lands. Following investigations in 1920 into deterioration of South Island high-country land held under short-term leases, the right to freehold was extended to these leases. In fact, few pastoral lessees exercised this right and the overall effect of the extension of freeholding rights was small.
The 1914–18 war marked the end of an era of general land settlement. From then until 1961, Government land settlement was designed primarily to place restricted classes of settlers on the land – the ex-servicemen of the two world wars and the unemployed of the depression which intervened. The Discharged Soldiers Settlement Act 1915 marked the adoption of a major scheme of settling returned soldiers on the land. Crown land as well as private land bought by the Crown was subdivided and loans were granted for development and for the purchase of existing properties. Nine thousand five hundred men were financed on to farms, 4,000 following subdivision of 1·4 million acres by the Crown and 5,500 by purchase of existing properties totalling 1·2 million acres. High post-war produce prices and the heavy demand for land forced prices up. The Crown paid £6 million for the 305 estates it purchased for soldier settlement and advanced another £9 million to finance men into existing farms. Substantial areas changed hands reaching a peak in 1921 when 4½ million acres was sold in 55,746 transactions for a consideration of £818 million. Once produce prices fell, the new settlers, many of them with little or no farming experience, found themselves in financial difficulties. Some abandoned their farms and more than 5,000 applied to have their properties revalued by a Revaluation Board set up in 1923. As a result £29 million was written off capital values of leases and mortgage principal.
Faced with growing unemployment caused by the onset of the severe depression of the early 1930s, the Government decided to embark on the development of remaining areas of vacant Crown land – most of it unattractive and too costly for private enterprise to develop – to prepare it for settlement. Legislation introduced in 1929 by the United Government set up a Lands Development Board to undertake this work, and a start was made on the pumice plateau in the centre of the North Island. The intention had been to make extensive use of machines, but increasing unemployment put the emphasis on the use of manpower to clear the land and land development became a part of a programme which included incentives and subsidies for farmers to provide work for the unemployed. A scheme to settle farmers on 10-acre sections was tried, but in the majority of cases it failed because the limited produce could not readily be sold, and casual work was seldom available to augment earnings from the farmlets.
The Small Farms Board established under legislation in 1932–33 was given the task of settling on small areas men registered as unemployed and others suitable for rural occupations whose settlement on the land would tend to reduce unemployment. Camps were established on blocks of unimproved or deteriorated Crown land manned by men from the cities who learned something of farming as the land came in out of the rough. As properties were developed, future occupiers were chosen from the ranks of the employees. Some of the men were placed as managers on reverted Crown properties and were promised permanent settlement if they proved their worth. By 1935, 1,305 men were employed on small farms scheme projects.
When the Labour Government came into power in 1935, it tackled the problem of overmortgaging of existing farms. State rural lending, transferred by the previous National Government from the State Advances Department to a Mortgage Corporation, was returned to complete Government control under the State Advances Corporation. Mortgage indebtedness on farm land had risen sharply because of high values from an estimated £48,000,000 in 1913 to £88,000,000 in 1920 and £130,000,000 in 1930. The depression left many farms heavily overmortgaged and legislation was enacted in 1936 to adjust liabilities secured on any property – farm or urban – to no more than the property's value: 15,621 farm applicants sought adjustments. Mortgage principal was reduced in 5,406 cases and rent under leases in 2,477 cases. Total remissions amounted to £85 million. Large-scale land development was continued but no more employees on development schemes were promised sections, and the tenure available to those who had been promised farms was changed from a 10-year lease with right of purchase to a 33-year renewable lease with no right of purchase.
Land development was being carried out by two boards – the Lands Development Board and the Small Farms Board – operating through a single department, the Department of Lands and Survey. By 1941, 388 families had been settled on 28,692 acres developed under the Small Farms Scheme, most of it in North and South Auckland and in Hawke's Bay. By 1941 the Lands Development Board had settled 113 farms comprising 17,358 acres, all in North and South Auckland. Another 214,560 acres were in various stages of development when the shortage of materials, particularly fertiliser, during the 1939–45 war brought development to a halt.
The Government's proposals for rehabilitation of ex-servicemen of the Second World War included settlement on the land. The existing boards were abolished in 1941 and replaced by a Land Settlement Board, and legislation was enacted giving ex-servicemen absolute preference for Crown land. Provision was made to finance ex-servicemen by rehabilitation loans at low rates of interest into State developed farms and farms purchased privately. To avoid a repetition of the inflation in land values which took place after the 1914–18 war, legislation was passed in 1943 to peg land prices at 1942 values and control all sales of land through the operation of a Land Sales Court and to give the Crown the power to take land at the price fixed by the Court. Control on sale prices of farm land remained until it was removed in 1950 by the National Government. However, ex-servicemen eligible for rehabilitation loan finance continued to be settled on Crown land on the basis of values ruling in 1942. By 1961, when only a few eligible ex-servicemen were still awaiting settlement, the rehabilitation scheme had settled 3,452 men on State developed farms and another 8,727 on farms purchased privately, loans for both purposes totalling £736 million. In that year the Government announced a policy of civilian settlement.