Title: War Economy

Author: Baker, J. V. T.

Publication details: Historical Publications Branch, 1965, Wellington

Part of: The Official History of New Zealand in the Second World War 1939–1945

This text is the subject of: ‘Something of Them Is Here Recorded’: Official History in New Zealand

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Import Controls

One of the strongest weapons to control the use of resources and the direction of expansion of industry was already available to the Government before war broke out, and could easily be used to encourage war industry or to discourage non-essential industry under war conditions. This was the system of quantitative controls over imports which had been introduced in 1938.

The Import Control Regulations 1938 were designed primarily to conserve overseas funds; but if imports were to be restricted, choices had to be made. For example, it was decided to make special provisions for imports of essential raw materials, so that the effort to reduce expenditure on overseas purchases would not adversely affect New Zealand industry. A special committee was set up within the Industries and Commerce Department to recommend to the Comptroller of Customs the action to be taken on applications for import licences relating to supplies of equipment and materials for New Zealand industry.

The committee was in a unique position to implement the Government's industrial policy, having as one of its aims the promotion of manufacture in New Zealand, where this would save overseas funds and where it was considered that the expansion of local industry could be carried out on an efficient basis. A general indication of the committee's functions as seen through Industries and Commerce eyes is given in the following extract:¹

‘… In December, 1938, there were gazetted regulations providing for the control of importations into New Zealand. Apart from the question of limiting the importations of various commodities for general economic reasons, the operation of these regulations was intended to enable scientific selection of imports in order to provide for a balanced development and expansion of manufacturing industries in New Zealand. The system under the import-control policy provided for the making of application for import licences by manufacturers and general importers.

‘To ensure that manufacturers would be able to obtain adequate supplies of raw materials and new and additional forms of plant, machinery, and equipment, etc., the Industries Committee was constituted to examine and make recommendations regarding the applications lodged in respect of manufacturing industries in our Dominion, and to act generally in this regard in an advisory capacity to the Customs Department. The page 62 Industries Committee met representative groups covering over one hundred industries and divisions of industries, and the general scope for economic development and expansion in manufacturing industries was closely investigated. As a result of the Committee's efforts, considerable assistance has been given to enable manufacturers in New Zealand to increase the production required to meet the market demands for various commodities in respect of which the importations of finished products were reduced or prohibited.

‘In addition, proposals were examined for the establishment in New Zealand of manufacturing units representing large overseas manufacturers whose products were previously available to the public only through import channels. The prospects for the success of the policy have been very bright, and already a number of new industries have been established or are in the process of being established in New Zealand; and considerable expansion has occurred in industries already in existence in New Zealand. Apart from the development of their production in lines already manufactured here, they have in many cases engaged in the manufacture of new lines previously imported.’

After the outbreak of war and when the supply position deteriorated, some change in emphasis naturally occurred. When goods were available for the ordering, control over imports could be used as a means of developing industries making munitions and other war supplies and discouraging industries not regarded as essential to the war effort. But imports of many essential materials were soon restricted by their scarcity rather than by shortage of funds. The emphasis then changed to procurement at all costs rather than to an examination of the sterling position and its effects on ability to import. In the circumstances the initiative changed to some extent and the Commissioner of Supply, rather than the Comptroller of Customs or the Industries Committee, tended to make decisions on the importation of goods.