Political and External Affairs
CHAPTER 17 — Pyrrhic Victory
THE sharp fear of Japanese attack; the prolonged strain of a two-front war whose demands could not possibly be met; the need for adjustment to policies of two great overseas allies instead of one; and the impact on the community of a hundred thousand American visitors: these things necessarily had profound effects on New Zealand life.
Their reaction on party politics was indeed somewhat unexpectedly delayed. In December and January the Opposition fought by-election campaigns with full vigour as the Japanese pushed their way through Malaya and the Philippines. On 19 January S. G. Holland, Leader of the Opposition, said that in his tour he had found growing discontent and frustration among the people, and that he was preparing a comprehensive memorandum setting out what was wrong. It was a document which appeared to have considerable relevance to party warfare, and Holland agreed to postpone publication for a few days while those immediately concerned studied it. It was discussed by the House of Representatives in secret session, and in the end War Cabinet seems to have persuaded the Leader of the Opposition that publication would not be in the public interest. When the House resumed open session there was as usual plain speech, but no suggestion that constructive work had been done to bring the parties closer together. Indeed, the most significant indication of political trends was a strong statement by the Prime Minister, emphasising his disagreement with some of his followers in the Labour movement in dealing with an urgent current issue.
The problem was that of industrial trouble in wartime. In Mr Holland's by-election campaigning in January, the core of his criticism of the Government was its alleged weakness in dealing with strikes, and on two occasions later in the year the same issue became of crucial importance. The reasons for this were plain. It is true that so far during the war years New Zealand's record did not compare badly with that of other Commonwealth countries— the number of days lost in strikes per thousand persons engaged in mining, industry and transport was much less than in Australia, less than in Canada, and only slightly more than in Great Britain.page 229
Yet a real economic problem lay in the fact that losses were concentrated in certain key portions of the industrial system—in mining, waterside work and meat-freezing. For instance in 1942, which was to be an exceptionally bad year, nearly one week's work per miner was to be lost through strikes.1
The importance of industrial trouble, however, cannot be estimated in purely economic terms. Every strike seemed to present a glaring contrast between the actions of strikers who, to a greater or less extent, were inflicting loss on the community in pursuit of sectional advantage, and those of the servicemen who had volunteered or been conscripted into risking their lives for the common interest. Naturally enough this produced a bitterness which was strongest in those groups who did not themselves have a tradition of strike action or any need for it. In many cases their members drove a hard bargain with the community for their own services; yet there was in the strike an obvious element of coercion which gave it an especial quality as an irritant. Consequently, the National Party and the press found somewhat the same use for the strikers in 1939–45 as the Labour Party had for the war-profiteer in 1914–18. In each case the Government's critics could accuse it of tolerating the activities of a figure whose anti-social character and party affiliations were hardly debateable.
1 Hare, Industrial Relations in New Zealand, p. 258.
2 NZPD, Vol. 261, p. 60.
Underlying the Prime Minister's outburst was both his exasperation at the irresponsibility of some trade unionists and also his personal conviction, dating at least from 1940, that ‘national unity’ required the further association of non-Labour groups with the administration. It was greeted by Holland as ‘the best and strongest thing that has been said for a very long time2’; on the other hand. it left Fraser's followers still unconvinced of the desirability of cooperation with the Opposition, even if they saw the need to give effective (though critical) support to the Government. The immediate occasion—the Westfield strike—passed within a week. Work was resumed, the cases of the 213 sentenced strikers were re-heard, and the men were ordered to come up for sentence if called within a year.3 But the strike and Fraser's reaction to it overshadowed the annual conferences of both the Federation of Labour and the Labour Party.
1 NZPD, Vol. 261, p. 178.
4 Standard, 9 Apr 1942.
This was an astute move. Fraser confronted his colleagues with an awkward alternative; to accept a broadening of the administration, should he consider it necessary, or to face an election under unfavourable circumstances. The pressure on them would clearly be great. Fraser could, indeed, hardly hope to induce them to consent to a division of domestic cabinet portfolios in a coalition government formed with the National Party. However, if the Nationalists could be induced to agree to some proposal falling short of this, then Fraser was in a strong position to persuade his own party to go halfway to meet them. At the beginning of April 1942 the state of public controversy showed little likelihood that the new and uncompromising leadership of the National Party would be prepared to consent to any such half-measures. Nevertheless, negotiations were actually in progress which in the end enabled Fraser to exert much the same sort of pressure on the Nationalists as he had already brought to bear on his own party.
1 Standard, 16 Apr 1942.
Private negotiations followed, in which, as might have been expected, the new proposals were accepted by the Labour Party and rejected by the Nationalists. Holland pointed out that they continued the division between the domestic and war cabinets and involved the National Party approving in advance the Prime Minister's appointments to the latter. He felt also that the appointment to ministerial office of men from outside Parliament was constitutionally a dangerous departure—‘We have already had far too much domination of Parliament by outside interests2.’
A censorship request to the press to withhold comment was withdrawn on Holland's request,3 and on 15 May the proposals and the attitude towards them of the political parties were made public. A lively if unfruitful discussion on the matter ensued. However, on 29 May direct talks between the party leaders began, and on 24 June the caucuses of both parties agreed on yet another addition to the structure of New Zealand's wartime government. The war effort was to be the responsibility of a War Administration of seven Government members (Fraser, Jones, Sullivan, Semple, Paikea, McLagan, Nordmeyer) and six Opposition (Holland, Coates, Hamilton, Polson, Bodkin, Broadfoot). Each of these held some portfolio relative to the direction of the war,4 but with the exception of Semple, who relinquished National Service to Broad-foot, the existing members of the domestic cabinet retained their portfolios. There were accordingly some rather ingenious creations, and apparent overlapping in function. Jones, for instance, remained Minister of Defence while Coates became Minister of Armed Forces and War Co-ordination and was given charge of New Zealand's military effort at home and in the South Pacific. The War Cabinet (which Holland joined and of which he became deputy chairman) was to act as the ‘executive’ of the War Administration in matters not dealt with by the full body.
3 Director of Publicity to editors, 11 May 1942.
It was also announced that a Bill was to be introduced extending the life of Parliament ‘for the period of the war and for a period after the war not exceeding twelve months1.’ There were signs of considerable public uneasiness at this proposal, mainly among conservatives, though the Auckland Trades Council also expressed its misgivings.2 In deference to such criticisms and to feeling within Parliament itself, a provision was inserted in the Prolongation of Parliament Act for a vote of the House to be taken on the question each year.
The new arrangement meant, in essence, that the Opposition representatives got portfolios while the members of the Government kept theirs: in spite of his earlier objections, Holland agreed to the continuance of the existing domestic cabinet. Justifying his action to a critical National Party conference a month later, he said that the arrangement was ‘not ideal, but he thought, in common British fairness, that it was entitled to a fair trail.3’ He had, he said, attempted a rapid survey of opinion in New Zealand and found no feeling in favour of a general election in 1942. Moreover, though it was not at the time publicly known, New Zealand troops were being moved from Syria to help check Rommel's advance in Egypt. In such a situation, and when the National Party had already rejected a plan sponsored by the NZRSA, there was a strong inducement to its leaders to avoid the odium of precipitating a renewal of party warfare.
2 Ibid.,8 Jul 1942
5 Press, 24 Jul 1942.
1 NZPD, Vol. 261, p. 568.
2 Round Table, September 1942, p. 527.
4 NZPD, Vol. 261, pp. 695 and 704.
5 Ibid., p. 639. Sir James Fletcher had been appointed Commissioner of Defence Construction in March 1942.
By that time, however, this tiresome matter was overshadowed by graver causes of disagreement arising from a crisis in the vexed field of industrial relations; for a stoppage ostensibly originating in a very minor dispute at the Huntly mines threatened to paralyse the industrial activity of the whole of the North Island. Both the industrial conflict and its associated political crisis were complex, and in some important incidents the facts were hotly disputed. Yet the general course of events at this turning point in New Zealand's wartime politics was clear. Faced with industrial chaos, Labour ministers launched at the strikers threats of legal action and bitter reproaches. They had, said Semple, ‘declared civil war on the civilian community2.’ They had been ‘led by a few wreckers,’ said Webb, ‘and have declared war on the state. Their challenge will be accepted3.’ Sullivan, then acting Prime Minister, spoke of strong steps to be taken, and said that ‘the people will prefer to endure and suffer if need be, rather than surrender to either the internal or external aggressor, each of whom equally threatens the security of the nation4.’ War Cabinet authorised legal proceedings, and Holland, its deputy chairman as well as Leader of the Opposition, stated that ‘this is a time for the strongest action.’ ‘There can be no thought of any arrangement that interferes with the processes of the law by which those who break it are punished,’ he said, and added that ‘the question of who is to rule this country must be settled once and for all5.’
Mr W. A. Bodkin, one of Holland's senior colleagues, later disclosed that Holland had consulted him on this statement and that at first he had urged him not to make it. ‘I said that the Government was mishandling the whole business and getting into an impossible position which it could not sustain.’ Holland had replied that ‘he had asked each member of the War Cabinet whether he really meant that the law must take its course. Each one said that he stood for enforcement of the law, and that the matter had gone too far to do otherwise….’ Could the Opposition refrain from coming out in support of the Government? In these circumstances Bodkin had ‘with grave misgivings’ agreed that Holland's only course was to make the statement ‘as the acting-Prime Minister had virtually asked for it6.’
1 NZPD, Vol. 261, pp. 635ff.
6 NZPD, Vol. 261, p. 704.
A few days later a group of recalcitrant strikers were sentenced to a month's imprisonment, and deadlock seemed to be complete. At this moment Fraser returned from the United States, and a further attempt at negotiation began. Over the weekend, and before the sentences had been enforced, the strikers got wind of a proposal, which had originated before Fraser's return, that the mines should be taken over by the State for the duration of the war, and on this understanding agreed to go back to work. On 21 September Fraser proposed to a joint meeting of the War Administration and domestic cabinet that the mines should be taken over and the sentences on the miners suspended on condition that they dug coal diligently and took part in no more strikes. Holland alone was opposed and the plan was adopted. The mines were taken under state control; the miners' sentences were conditionally suspended and they returned promptly to work; and the original dispute went to the National Disputes Committee, which incidentally pronounced the men to have been wrong. Government policy, said the Prime Minister, had been successful in preventing ‘an industrial catastrophe of great magnitude which would have directly and disastrously affected our war effort…. The position now is,’ he claimed, ‘that the law is upheld and coal production, so vital to the war effort, has been fully resumed1.’
At the beginning of October the six National Party members duly resigned from the War Administration, but Coates and Hamilton, who had been members of the War Cabinet since its inception, immediately accepted Fraser's invitation to rejoin it as individuals. Hamilton served there till the end of the war, and Coates till his death in 1943; he was succeeded by William Perry, who as President of the NZRSA had initiated the negotiations leading to the War Administration. On rejoining the War Cabinet Coates and Hamilton issued a statement trenchantly criticising the policy followed by the majority of their party. The strikers' behaviour, however reprehensible, did not in their view justify the extreme step adopted: the right answer to an industrial strike was not a political strike. Holland's demand for a general election, if agreed to, would transform a caucus issue into an election issue, and disrupt political unity when the enemy was at the gates. ‘Manoeuvring for party advantage by any section in these critical hours’ must hamper the war effort. For themselves, they had decided ‘that our duty to the country is more important than our duty to party. Our plain duty … is to accept the Prime Minister's request, remain at our posts, and continue to render what service we can during our country's peril2.’ Few others spoke so firmly against the party's leadership, yet there was clearly a substantial minority in the members which felt uneasy as to what had been done. A number of opposition newspapers approved of the stand taken by Coates and Hamilton; and when Parliament met on 14 October two other Opposition members voted with them after a confidence motion had been furiously debated3.
2 Ibid., 6 Oct 1942.
3 NZPD, Vol. 261, pp. 717-18.
4 Round Table, December 1942, p. 99.
5 NZPD, Vol. 261, p. 645.
It can be argued further that the very tenacity with which Fraser drove his reluctant colleagues and opponents towards formal cooperation was in the nature of things liable to produce results the opposite of those he intended. In fact it appeared to do just that. The recriminations of October 1942, the sharpening antipathies, and the resumption of party politics were a disappointing sequel to the ‘sincere effort to achieve national political unity’, which, said Fraser, had been ‘succeeding admirably2.’ Yet it may be that the whole incident had not so altered the situation as clarified it.
2 Thorn, Fraser, p. 216.
Even if it be conceded, however, that Fraser took the only really practicable course in his treatment of the strikers, it does not necessarily follow that Holland and his colleagues were wrong in making a startling protest; the remarkable drop in the following year in the number of days lost through strikes suggests that the militant unions had been put on their mettle and had taken to heart the implications of the impending general election.2 From the standpoint of securing industrial peace there was something to be said for a situation in which a sympathetic, even indulgent, Government was under fire from an Opposition behind whom loomed the remembered shades of ‘Massey's Cossacks’.
After the dissolution of the War Administration the conflict between the parties, apparently sharpened by the difference in personality and approach between the two leaders, was so manifest that no further attempt was made to bridge it. It may be doubted, however, whether these disagreements cut deeply at the essentials of New Zealand's unity in wartime purpose, and whether the resumption of party politics absorbed to a serious extent abilities which might have been more effectively expended in a national war effort. On the one hand, during most of 1942, while the crisis remained really acute, there was, after all, widespread agreement on the most important things which had to be done. On the other hand, in 1943, as military tensions eased, the issues were such as could be actively debated, and in September it was possible, by general agreement, to pass through the political system the cleansing winds of a general election.
1 NZPD, Vol. 261, p. 634.
The whole matter came to the front in August 1940, when the Arbitration Court granted a 5 per cent wage increase to those working under awards: an action which illustrated the problem rather than created it. In September the Government convened a widely representative economic conference ‘to consider the possibility of stabilising costs, prices and wages, and to discuss expanding production so that the strain of war expenditure may be page 241 successfully borne and the standard of living be maintained as far as possible.’ This conference, and a committee drawn equally from employers and trade-unionists, was composed of men deeply involved in New Zealand's politico-economic problems; but they produced a unanimous report. This was the basis of the policy of Economic Stabilisation, which was followed with some consistency and considerable success throughout the war. At first its operations depended on general government policy and on the decisions of the Price Tribunal, though the retail prices of thirty-eight essential commodities were stabilised. In December 1942, however, the threads of economic policy were drawn together in an elaborate stabilisation scheme. In principle, prices, costs and incomes were to remain fixed at the level they had reached on 15 December. It was clear, however, that wages could not be held if prices rose substantially. Accordingly, the prices of 110 important items were stabilised—if necessary by subsidies-and a new and elaborate cost of living index was worked out and published quarterly; if this varied widely, wage adjustments would follow. According to this index there was practically no change in the cost of living for the rest of the war period1.
1 Round Table, December 1940, p. 189; March 1941, p. 388; March 1943, p. 193. New Zealand Official Year-Book, 1946, p. 594.
2 L. C. Webb in ed. Belshaw, New Zealand, p. 288.