An empire trade commission toured New Zealand and other dominions in 1913 to collect information on the ‘natural resources and trade’ of the dominions – it was concerned by the expansion of dominions’ trade with Germany. German exports to New Zealand had doubled between 1909 and 1912, from £327,000 to £653,000 (by place of shipment), and they exceeded £1 million (by place of origin) in 1914 – over $160 million in 2020 values.
After the First World War, UK interests were most concerned about the US, which had expanded trade with British dominions, including New Zealand. New Zealand had offered UK goods a modest degree of favoured treatment since 1904. But whereas it had usually supplied over 50% of New Zealand’s imports before the war, the figure was between 45% and 50% after the war.
British imports and direct investment
From the 1890s the UK was a major purchaser of New Zealand frozen meat, butter and cheese, as well as wool. The UK was New Zealand’s principal customer, taking at least two-thirds of its exports in most years in the decade before the First World War.
British capital was invested in the new pastoral economy:
- two British meat-processing companies – Vesteys and Borthwicks – bought meat freezing plants, and together with Swifts, a US company, controlled about 30% of meat processing in New Zealand
- British companies controlled all shipping from New Zealand after the P&O company bought the Union Steam Ship Company in 1917
- dairy production remained in the hands of New Zealand cooperatives, but British businesses controlled the marketing and sale of dairy produce in the UK, from headquarters on Tooley Street in London.
In 1932 economic and financial pressures saw the UK impose import duties. British farmers lobbied their government for a favoured place in the home market.
Stop the socialists
The election of a Labour government in New Zealand at the end of 1935 made British financial and commercial interests anxious. After New Zealand imposed import and exchange controls at the end of 1938, the British imposed tough conditions on the loans the dominion sought to refinance. Only the outbreak of war in September 1939 soothed feelings on both sides.
New Zealand wanted exemption from UK import duties, but was in a weak bargaining position. The collapse of world trade saw the proportion of its exports going to Britain reach nearly 90% in the early 1930s. New Zealand was heavily indebted to UK lenders, but the UK still supplied only about half of New Zealand’s imports.
New Zealand agreed to maintain an approximate 20% preference on imports from Britain, and to give British producers the right to compete with domestic producers. The UK did not significantly restrict imports from New Zealand, but nor did it exclude suppliers from outside the empire – and it offered financial support to its own farmers. The UK share of New Zealand’s imports increased marginally, to over 50%, for a few years.