1940: New Zealand

The war in Europe gave New Zealand, which celebrated the one hundredth anniversary of white settlement in January and February 1940, still another opportunity to live up to its appellation of 'the most loyal Dominion.' Acclimated to the most far-reaching socialism in existence in any democracy, the New Zealand government was able to institute war controls with relatively little difficulty. Some 80,000 men out of an adult male population of only 350,000 had volunteered for overseas service by July 1940, when a compulsory service scheme was established. Men above and below the conscription age limit were mobilized in a home guard which is eventually to be expanded to a force of 200,000. As it conscripted men, the government also established drastic controls over property. Legislation passed in the spring gave the Cabinet virtually dictatorial powers.

The Labor party, in whose hands the destiny of the country has rested since 1935, is successfully directing the war effort despite internal difficulties. Its leader, Premier Michael J. Savage, died on March 26, 1940 after a long illness, but his office was assumed by Peter Fraser despite intra-party friction over the composition of his Cabinet. At the same time an extremist Left wing group under John Lee was read out of the party, now a smoothly functioning political machine. Strong measures were taken against Communists and other anti-war groups. National unity was preserved, not only by several shifts in the Cabinet during the year but also by the formation of a War Cabinet of five, including two opposition members, which assumed direction of the war effort while the Labor party government continued to administer all other matters.

In the field of social and economic affairs, the stream of new measures continued, although they were now applied primarily to the country's war needs. Tax burdens were heavily increased, particularly in the upper income brackets. Forced loans were floated, in some instances without interest until after the conclusion of hostilities, with subscriptions calculated on the basis of income tax payments. Social legislation, however, was not disregarded. On April 1 a 'universal pension plan' went into effect, guaranteeing many types of social security payments. In August the national Arbitration Court granted a general 5 per cent wage increase to all industrial workers under collective agreements in order to offset the rise in the cost of living. The government tapered off its public works program and threw its energies instead into production of munitions. It did not hesitate to discipline labor organizations which refused to cooperate in expanding output. As the year closed, it was making plans to acquire small farms on which to settle returning war veterans, and was contemplating introduction of a nationwide health insurance plan which had been successfully blocked for many months by the united opposition of New Zealand physicians.

The financial difficulties brought on before the war by the government's social legislation have been eased for the duration of the conflict. Assistance has been forthcoming from the British, and a guaranteed market at good prices is assured in the United Kingdom for New Zealand's major exports: wool, meat, butter and cheese. Since cheese is especially in demand, much of the Dominion's famous butter processing industry is being converted to cheese manufacture under government auspices. The stringent import controls instituted before the war began have been greatly intensified. Thus New Zealand has made the shift from peace socialism to war socialism and seems determined to continue on the progressive path.