The Second World War and the chaos it wrought through the use of nuclear weapons changed the emphasis of science in a world of rapidly developing nuclear technology. Marsden, who gave up his position as Secretary of the Department of Scientific and Industrial Research during the war years to become Scientific Liaison Officer at London, provided the stimulus needed to encourage younger scientists to study nuclear science. Just prior to the war, Marsden had encouraged a young New Zealand physicist, C. Watson-Munro, to make a re-evaluation of the radioactivity of New Zealand soils and rocks, again in an attempt to discover any correlation between high radioactivity and the incidence of goitre. Through Marsden's efforts, Watson-Munro in 1945 led a group of physicists and engineers to work on the development of nuclear reactors, first, at Chalk River in Canada and, later, at Harwell, England.

During the war years in New Zealand, work on the geology of uranium and thorium minerals had been undertaken mainly by C. O. Hutton, of the Geological Survey, and on the chemistry of these elements by F. T. Seelye and T. A. Rafter, of the Dominion Laboratory.

In January 1946, Cabinet first considered the possibilities of establishing a group of scientists in the D.S.I.R. to undertake nuclear research and, in the following August, Marsden was asked to inquire whether artificially produced radioactive elements would be available for analytical and research experiments. Ultimately in June 1947 the first artificially produced radioactive material, produced in the cyclotron of the Carnegie Institute of Technology, was forwarded to New Zealand with the request that separation from the target radioactive iron, cobalt, and manganese should be carried out, and these isotopes be made available for tracer studies in soil science.

On 3 June 1947, a meeting was held at the Dominion Laboratory to consider the problem of handling radioactive substances. It was agreed that the physical laboratory would supply measuring equipment, and attempts were made at organising procedures for the safe handling and storage of radioactive materials. The radioactive iron, cobalt, and manganese extracted from the target were to be handed over to N. H. Taylor and Dr Strzmienski of the Soil Bureau for iron fixation studies in soils, and for cobalt and manganese deficiency experiments in plants. The first nuclear-reactor-produced radioactive isotopes arrived at the Dominion Laboratory on 4 July 1947. This was radioactive phosphorus produced by the irradiation of “Fos-Cop” solder consisting of 5 per cent P and 95 per cent Cu, the phosphorus being in the form of yellow ammonium phospho-molybdate. The phosphorus was converted into the form of phosphate fertilisers for the first phosphate fertiliser pot experiments.

On 19 September 1947, Cabinet empowered the Secretary of D.S.I.R. to convene a meeting between representatives of D.S.I.R., Health, and Agriculture Departments to ensure the safe and orderly use of radioactive isotopes in New Zealand. The outcome was the drafting of the X-Ray and Radioactive Substances Act which is now administered by the Dominion X-Ray and Radium Laboratory.

In 1947 C. N. Watson-Munro returned to New Zealand through America and made arrangements for a chemist to study at the Radiochemical Centre at M.I.T. Boston, and the Mass Spectrometer Laboratory of Columbia University, New York. T. A. Rafter, who was selected for this work, left New Zealand in August 1948 to study nuclear chemistry and, after visiting nuclear establishments in America, Canada, and England, returned to New Zealand in October 1949.

C. N. Watson-Munro, then an Assistant Secretary of D.S.I.R., and Sir E. Marsden, then New Zealand's scientific adviser in the United Kingdom, with the support of J. D. Cockcroft, advised the New Zealand Government on the feasibility of constructing in this country a low-energy atomic pile. At that time New Zealand had 10 highly trained physicists and engineers, including C. Dalton, who became director of the Australian Atomic Energy Establishment, R. M. Williams, later director of Applied Mathematics Division of D.S.I.R., and I. K. Walker, director of the Dominion Laboratory. The plan for construction of the reactor did not receive final Government approval, and this group of scientists broke up to become leaders in other countries or in other branches of science.