1939: New Zealand

In November 1939 New Zealand celebrated the completion of its first century as an inhabited British territory, but the great Centennial Exhibition marking the event was overshadowed by the pressing problems of peace and war. The early portion of the year saw Premier Michal J. Savage contending with a difficult economic situation despite the unprecedented prosperity of 1938. On the one hand the world prices of dairy products, wool and other New Zealand exports had sharply declined; on the other, the Labor Government was pushing forward its program of social welfare measures which raised the cost of production. Meanwhile, important loans amounting to about 18,500,000 New Zealand pounds fell due in Britain, and further expenses were incurred abroad for defense equipment.

To meet the situation, the Government imposed a sharply restrictive control of imports and managed to secure renewed loans and credits in London. Attacked by a Left Wing faction within the Labor party for its conservatism, and by farm and propertied interests for its socialism, the Cabinet has vigorously continued to foster infant industries and generally to support labor in frequent wage and working disputes. The outstanding progressive development of the year occurred on April 1, when the augmented social security plan adopted in September 1938 formally went into effect. The scheme provides for a well-rounded group of services; contributory old-age pensions, widows' and disability benefits, and an elaborate plan for socialized medicine and free health facilities. On the latter project the Government at once met with insuperable difficulties, since the New Zealand Medical Association refused its cooperation on the ground that the bureaucratic control involved would destroy the customary doctor-patient relationship. In consequence the medical portion of the Government system has not been applied and seems destined to remain a dead letter at least until after the war.

True to its strong British ties, the Dominion has responded wholeheartedly to the war emergency. It has organized a fully equipped volunteer division, containing perhaps 20,000 men, for service overseas and has expanded its air training program to provide the Empire with 10,000 pilots, gunners and other personnel who will receive a part of their instruction in Canada. The financial charges are being met by renewed borrowing in the British market and inflationary advances from the Central Reserve Bank, now fully controlled by the Government. Difficulties over exports have been removed for the time being by an agreement under which the British are to absorb surpluses of meat, wool, butter and cheese. For the duration of the emergency the Government has assumed sweeping powers of censorship; control over industry, prices, marketing and transport; and command of labor itself. Strikes and lockouts are forbidden. On the Left these steps have been viewed as fascist measures, but the country as a whole hailed them as a prerequisite to national political unity — which seemed to be near as the year ended.