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The Long White Cloud

Chapter I — Farmers in Power

page 327

Chapter I
Farmers in Power

The turn of the century had seen Richard Seddon more firmly established in power in New Zealand than any other man had ever been. He had worked hard to win the votes of the people, never sparing himself in periodical tours of a country where transport was somewhat primitive. But with the departure to England of Reeves as Agent-General something had gone from the Liberal Party which Seddon, with all his immense energy, could not supply. The party needed a progressive philosopher to keep it abreast with the times. It could not stem the rising forces of Labour merely by calling itself the Liberal-Labour party. In a country which, like all new countries, was changing rapidly and bringing with expanding population strong demands for freedom to settle on the land, the first struggle had naturally been against the great run-holders who had bought up large tracts in the Colony's early years. But once the large estates were broken up the tendency was for the small farmers and business men to join for protection against the rising demands of the wage-earners. An independent Labour Party was a natural sequel to this development, though it did not capture any seats in Parliament until 1908. Seddon carried the election of 1905 but the great strain of years in high office was telling on him. He went to Australia to stimulate interest in the exhibition to be held in Christchurch in 1906. On the voyage back from Sydney he died, and I can remember the tolling of the fire bell in Hokitika which gave Seddon's beloved Westland the shattering news of his death. Satirists have made great play of Seddon's excursions into Imperial politics and his desire to keep Pacific islands under the British flag but they cannot alter the fact that he was a great leader who brought his country through critical years and made its name known and esteemed abroad.

Sir Joseph Ward was Seddon's natural successor as Prime Minister. He possessed much the same capacity for hard work and shared the same views on the necessity of strong measures for Imperial defence. His initiative in presenting the page 328 battleship New Zealand to the Royal Navy and in inaugurating compulsory military training in 1909 marks him as a statesman with an appreciation of international affairs. His introduction of universal penny postage when Postmaster-General in 1901 gave New Zealand priority in the realization of an ideal which fell a victim to the war Sir Joseph had so clearly anticipated. The new leader, however, lacked the personal magnetism of the old and had no taste for the constant contact with the electors which was meat and drink to Seddon. He offended some of his supporters by accepting an hereditary title and it was not altogether a surprise when he found himself in a slight minority after the election of 1911. After the short-lived ministry of Sir Thomas Mackenzie, the Conservatives formed a Cabinet in July 1912 with William Ferguson Massey as Prime Minister. No remarkable reversal of Government policy followed and the party adopted a new name—“Reform Party”—to indicate that its policy was to be progressive, not reactionary. This claim was strongly challenged by the rising militant labour movement which became organized as the New Zealand Federation of Labour. The era of peace in industry was closing, as the workers saw that they had apparently exhausted the benefits to be gained through the Arbitration Act. A bitter conflict at Waihi in 1912 led to the death of one striker. Many unions registered under the Act cancelled their registration and regained the right to strike without penalty. Alleged victimization of miners discharged at Taupiri, followed by a strike of Wellington shipwrights, led to the Federation of Labour calling a sympathetic strike in 1913. Waterside workers and crews of New Zealand ships ceased work. The Government invited farmers and their sons to take their place and also to act as special constables to quell rioting which broke out in Wellington. All temporary workers were enrolled in a new Waterside Workers' Union established under the Arbitration Act. Cargoes were loaded and the strike eventually broken. The farmers were indeed in power and the way they used it was neither forgotten nor forgiven by the little band of determined men leading the workers.

A Labour Disputes Investigation Act passed in 1913 made strikes without notice illegal even in unions not registered under the Arbitration Act. Strikes were virtually outlawed and the page 329 militant unions were checked by the free use of the device of enrolling free labourers in separate unions which could obtain Arbitration Court awards binding their industries for three years. When war broke out in 1914, to bring new tests in its train, the Arbitration system had, as Dr. Condliffe records, “successfully withstood a prolonged and well-planned challenge from the side of militant labour, and had emerged from this trial more firmly rooted in popular support and with its machinery not only tested but strengthened.” It is well to remember, as C. J. Wray wrote in his section of the 1924 edition of this work, that a law embodying compulsory arbitration was an absolute novelty when the Act was first passed. “It was the most daring piece of legislation ever passed in New Zealand. Yet it has stood all tests, though at one time or another it has been attacked from every possible quarter.… In the opinion of the author it has proved even more successful than he had hoped, for not only has it reduced the number of strikes, but sweating has been made an impossibility, while dire poverty has been entirely stamped out.”

On the outbreak of war Massey declared New Zealand's loyalty to the Crown and threw himself into the struggle with characteristic energy. He did not, however, receive an unqualified mandate from the people in the general election of December 1914. In a House of eighty his Reform supporters numbered forty while Ward had thirty-four and a Labour Party of six emerged. Massey accordingly made overtures for a National Government, and in August 1915, a new Cabinet was sworn in with Massey as Prime Minister, Ward as Minister of Finance, and Allen as Minister of Defence. Ward, in a speech in London in 1928, said that during the Coalition “there was no trace of party conflict or any attempt to gain a party advantage.”

New Zealand's part in the war can be outlined only briefly. On 15th August, 1914, nine days after the Government had received a request that the German wireless station at Samoa should be seized, an expedition embarked and attained its objective on 29th August. The main body of New Zealand troops sailed for Egypt on 16th October. The landing on Gallipoli on 25th April, 1915, the heroic campaign and the ultimate evacuation proved that New Zealand soldiers were second to page 330 none. Transferred to the fields of France in April, 1916, they were conspicuous in operations east and south-east of Armentières, in front of Lille, and around Flers. Their efforts contributed materially to the success of the long struggle to relieve Verdun. In the bitter battles of 1917 the New Zealand Division formed part of General Godley's Ninth Corps. A successful attack on the Messines-Wytschaete ridge was followed by the capture of La Basseville and a march through ruined Ypres to drive the Germans from a network of trenches on the Gravenstafel Spur in the Battle of Broodseinde. After desperate fighting in the earlier stages of the campaign to capture Passchendaele, the New Zealand Division's next major engagement followed the reverse sustained by the British Fifth Army in the Somme area in March 1918. The New Zealanders defeated German forces in a brilliant attack near Beaumont-Hamel and later took part in the swift advance eastwards in August. In twelve days' fighting around Bapaume the Division sustained more than 2,000 casualties, but captured 47 officers and 1,600 men. The New Zealanders' last exploit was the capture on 4th November of the fortress of Le Quesnoy.

More than ten per cent of the Dominion's 1914 population served abroad in the war. The total casualties were 58,000, of whom 16,700 were killed in action or died. Belgium, with seven times more people, lost 13,000 killed in the war. The Public Debt of the Dominion rose from £94,000,000 in 1914 to £219,000,000 in 1922, direct war expenditure accounting for eighty millions. During the war both Massey and Ward paid frequent visits to England to attend meetings of the Imperial War Cabinet. When the Imperial War Conference of 1917 considered the status of the Dominions it was laid down, in a resolution seconded by Massey, that each Dominion was autonomous, and that all were entitled to be consulted before the Imperial Government entered upon any act of foreign policy. The implications of this doctrine have been the subject of discussion ever since.

Experience of Government control of the sale of primary produce during the war and immediately after it, when prices were high, butter-fat reaching the unprecedented price of 2s. 6d. a pound, led New Zealand farmers, when prices fell in 1921, to turn to projects for organized marketing. The Meat Export page 331 Control Act, 1921–2, provided for the appointment of a Meat Producers' Board of two Government representatives and five representatives of the producers to control the meat export trade. A similar Act was passed to control the export of dairy produce, after a referendum in which 24,000 of 56,000 producers did not even bother to vote, apparently confident that the farmers' Government would watch their interests.

Massey had split with Ward on the question of the best policy for placing returned men on the land and had formed a new Cabinet in August 1919. He was never free from anxiety about his majority and the election of December 1922, after a strenuous campaign in which Massey met with considerable hostility in some places, resulted: Reform 38; Liberal 21; Labour 17; Independent Labour 1; Independent 3. With difficulties of returned soldier settlement pressing upon him and labour restive with the continuous increase in the cost of living, Massey's health suffered severely and he died on 10th May, 1925.

His character is thus summed up in the Dictionary of New Zealand Biography: “Massey possessed many of the characteristics of his predecessor Seddon. Hearty, straightforward and genial, he had a faculty for drawing men to him, and he was not lacking in the power of weighing them up. He had most of the traits also of the north of Ireland Protestant, deep religious feeling, robust loyalty, boundless energy and industry and unflinching determination in moving towards a goal, which he generally saw plainly. … As a political leader Massey was very successful with the electorate. He was an astute and capable parliamentarian, but he was unfortunate in that he was only for a short time free of anxiety regarding his parliamentary majority. A farmer himself, he enjoyed the unwavering support of the farming community. Some of his dilemmas could be traced to his dependence on that support at times when his own judgment pointed in other directions.”

Joseph Gordon Coates succeeded Massey as Prime Minister. A farmer with a fine war record, an administrator of remarkable ability, he was nevertheless unable to maintain the party fortunes in a country divided by conflicting interests well described by Downie Stewart, Minister of Finance, in a speech at Dunedin: “The manufacturers for the most part want high page 332 protection. The farmers for the most part want free trade. The critics want loan expenditure reduced. The public want millions more borrowed for housing advances and public works. The business men say the Government is too Socialistic—the workers say the Government is not Socialistic enough. The farmers want the Arbitration Court abolished. The manufacturers want its powers limited. The workers want its powers increased. The North Island complains of the South Island wheat duties. The South Island complains that its interests are subordinated to those of the North Island in the matter of tourists, trade and public expenditure. Amid all these contending voices on these and many other questions, such as the licensing question, Samoa and unemployment, the task of the Government is not easy.”

Ward was in England during the early stages of the 1928 election campaign and I remember discussing with him the likely issues on which it would be fought. He said the licensing laws would be the main issue and that it was impossible to forecast the result. Optimistic as he was by nature it is unlikely that he envisaged himself in office as Prime Minister once more, but that is what happened. Elected to leadership of the “United” Party—a new name for the Liberals—he proposed to raise £70,000,000, to be raised and spent, over eight to ten years, to provide loans to settlers and complete railway lines. Coates's manifesto was colourless in comparison though it included, like the Labour Party's, proposals for unemployment insurance. The polling resulted: Reform 28, United 28, Labour 19, Independent 5. Labour voted with United to defeat Coates by 50 votes to 28, and Ward headed a ministry of thirteen, four of whom were in Parliament for the first time. Despite declining health he made a brave attempt to grapple with the problem of growing unemployment but failed to satisfy the Labour Party. After a moving message of farewell and a characteristic prophecy that the Dominion would overcome her difficulties, he gave up the premiership to George William Forbes in May 1930, and died in July. He has a secure place in the history of New Zealand, for he contributed greatly by his financial acumen and vision to the development of the Dominion. It was pleasant to hear his former colleague, Reeves, complimenting him at a London gathering in 1928, page 333 on that dramatic gesture—the gift of a battleship—which should at least have given notice to Germany of Dominion support for the Mother Country.

Forbes was probably even more surprised than Ward had been in finding himself in the highest place in politics. He had farmed the same property at Cheviot since 1893 when he drew a section in the first ballot for land after the estate had been acquired for closer settlement. He entered Parliament in 1908 and from 1912 to 1928 was Liberal Whip. He showed no marked originality of thought but when he came to London in 1930 to represent New Zealand at the Imperial Conference he did at least startle Whitehall by giving an interview in which he said the conference seemed to be drifting and getting nowhere. It was customary to be more diplomatic in talking of such failures to achieve any constructive policy, but Forbes was a plain honest man lacking political guile despite his years in Parliament. His financial policy was uncompromisingly severe, winning the plaudits of the newspapers but not increasing his popularity with the general public. In January 1931, Downie Stewart made a strong speech in favour of fusion of the United and Reform Parties, since a true National Government was impracticable through the refusal of the Labour Party to ally itself with other parties. Stewart said a strong party was necessary “to try to cope with the serious price level situation and to put a stop to the huge uneconomic loan expenditure.” Forbes was scarcely back from the Imperial Conference when the Hawke's Bay earthquake further aggravated the financial situation. His budget presented to a special session of Parliament provided for a ten per cent reduction in all State salaries and a general reduction of wages of those employed on public works, except tunnellers, to 12s. 6d. a day, and of those employed on relief work to 12s. 6d. daily for married men and 9s. for single men. Income tax and postal charges were raised and Forbes said he was also investigating means of reducing the annual educational bill of £4,500,000 without lowering the standard of education. Labour protested vigorously against the Government's retrenchment policy but Reform joined with United to defeat a no-confidence motion by 50 votes to 20.

Coates, contending that the problem of unemployment was page 334 only being “tinkered with,” proposed a five-year programme for preparing idle Crown lands for settlement. Finance would be provided by a levy on all wages, salary and income. In April Coates declined Forbes's invitation to join in the formation of a National Party.

Reeves, as chairman of the National Bank of New Zealand, reviewed the Dominion's “serious position” at the annual meeting in June. “To the effects of heavy falls in the prices of almost every important article of export had been added those of a disastrous earthquake, a demoralized rate of exchange, and the exaction of further taxation by an embarrassed Government. The result of sharp contraction of trade had brought down imports and exports by many millions and depressed every branch of internal commerce.… In nearly every case the methods adopted by Mr. Forbes's Government in the way of economy, retrenchment and taxation were faithful copies of those of the Ministries in the years of depression between 1879 and 1891. The Government policy for dealing with the economic crisis had, however, contained one very interesting novelty. An Emergency Act had been carried empowering the Court of Industrial Arbitration to break its awards and revise wage rates in view of changed conditions. An all-round cut of ten per cent had been decreed.” Reeves also referred to the quadrupling of Canada's tariff on New Zealand butter which had cut New Zealand's export of butter to Canada to one-twelfth and led to reprisals by New Zealand in depriving Canada of Imperial preferences.

In August Coates moved in the House of Representatives that “in view of the serious economic and financial position the representatives of all parties should confer on the question of the adjustment of the national expenditure and to provide for equality of sacrifice and a proper distribution of burdens.” The proposal was accepted and Labour was represented at the conference by H. E. Holland, M. J. Savage and J. McCombs. In September the United and Reform parties combined to form a Coalition Government with Forbes as Prime Minister and Coates as Leader of the House. Holland strongly criticized the Coalition and said Labour would resist to the utmost any move to reduce wages and pensions or to postpone the elections.

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Coates, with the grim title of “Minister of Unemployment,” told Parliament that 50,000 men were registered as unemployed and that the Unemployment Board was spending at the annual rate of 2 ½ millions, nine-tenths of which was on road work. He proposed to divert more money to productive works, particularly on land, and would endeavour to take men off the roads and place them “over the fence” on the farm lands in new areas to be opened up.

The Coalition went to the country in December 1931, and was returned, after a campaign marked by considerable disorder, with 51 seats (United 21, Reform 29, Independent 1) against Labour 24, Independent (including Speaker) 4, Country Party 1. Regulations were gazetted introducing a system of export licensing in order to bring all exchange credits into a pool to meet the Government's requirements, and enable it to meet its commitments. A commission of economists was appointed by the Government to consider representations from farmers that the exchange rate of ten per cent should be raised. The commission made no definite recommendations but summed up in favour of a course resembling the Copland plan in Australia. It stated that the national income had fallen from 150 to 110 millions and was still declining rapidly. About 28 millions of the loss had fallen on export producers. A reduction of costs could be facilitated by the raising of the export price level in local currency but a very high rate was inadvisable. The New Zealand currency, like sterling, was temporarily off gold, and the commission held that it was legitimate to consider whether New Zealand should return to gold or adopt a new basis. A 20 per cent reduction of fixed money claims, including interest and rent, would make a substantial and equitable contribution towards bridging the gap between costs and selling prices. If this were effected a further 10 per cent reduction of wages and salary would be necessary.

A. D. Park, Secretary of the Treasury, dissented from the commission's statements on higher exchange and stipulated that any permanent change of currency basis was inadvisable without full discussion with the British authorities. This Treasury view was accepted by the Government for the time being.

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After prolonged resistance by the Labour Party the Arbitration Act Amendment Bill was passed. It provided for compulsory reference of disputes to conciliation councils; conditional power to review existing awards; exemption of industries from the operation of the Act if necessary; authority for the negotiation of piece-work agreements; and restriction of arbitration to disputes in which both parties accepted it. Labour condemned the measure as equivalent to killing arbitration, but Forbes contended that the country was passing through its greatest crisis and that it was necessary to introduce conditions permitting employers and workers to meet and arrange terms under which goods were to be produced at a cost within the reduced income of purchasers. Otherwise, he said, unemployment would increase.

Downie Stewart, Minister of Finance, introduced his budget on 7th April, 1932. He provided, after rigid economies, for a “manageable” deficit of two millions. A week later rioting broke out in Auckland after a procession of civil servants was joined by a crowd of unemployed. Windows were smashed and looting began in Queen Street. Three policemen were seriously hurt and twenty others slightly injured in trying to suppress the disturbance. In the House, Holland blamed Government policy for the trouble. Forbes and Coates condemned the excesses committed by the mob and insisted that law and order must be maintained. Unrest among unemployed in Dunedin also culminated in disturbances in which several people were injured. A Public Safety (Conservation) Bill was passed after strong Labour opposition but there were more disturbances on 10th May when demonstrators smashed many windows in Wellington shops.

The Economy Commission set up by the Government-recommended reductions in expenditure of nearly three millions. Reductions in pensions, in the contribution to the Singapore Naval Base, and in education were recommended, in addition to a ten per cent cut in all State salaries and wages. To reduce expenditure under the Naval Defence vote it was even suggested that ships on the New Zealand coast should be placed under Imperial control.

Greater buoyancy in the wool market and expectations of intensified economic co-operation of Empire countries arising page 337 from the Ottawa Conference, where Coates and Stewart represented New Zealand, provided the first break in the clouds for the Dominion. When Parliament met in September Holland condemned the Government for its policy of deflation, wage reduction and failure to grapple with unemployment by using the State's credit resources and currency facilities to increase purchasing power. The Dominion, he said, could not continue to pay the value of one-third of its exports to cover the interest on its debt, as against one-sixth which was all that was necessary two years before.

After a long Cabinet meeting Forbes announced in the early hours of 20th January, 1933, that the Government had decided to raise the exchange rate on London to 25 per cent discount on sterling. Downie Stewart opposed this step and resigned, Coates becoming Minister of Finance. Explaining why the Government had overruled the banks, Forbes said that conditions had so deteriorated that Government action had become imperative. At the busiest season of the year the number of unemployed had risen to 68,000. He felt confident that the exchange stimulus would relieve this and other problems. A sales tax of 5 per cent, described by Forbes as obnoxious but necessary, was introduced. Many kinds of goods were exempted and the estimated revenue from the tax was 1 ½ millions.

With butter retailing in Wellington at eightpence a pound the situation of dairy farmers was still precarious. Coates advocated in a pamphlet a butter export quota system to bring order from chaos. Forbes, on arrival in London for the abortive World Economic Conference of 1933, expressed his anxiety about quota proposals which he feared might imperil the Dominion's solvency. With the Government not always completely in harmony, the prospects of Labour succeeding to power at the next election were improving. The Opposition, however, sustained a double blow in 1933 with the deaths of two of its leaders—Henry Holland and James McCombs. McCombs was succeeded in Parliament by his wife—the first woman M.P. Holland was succeeded as leader of the party by Michael Joseph Savage.

Coates, in a rather more optimistic Budget statement providing for a deficit of two millions, thought it necessary to page 338 give an assurance that the exchange rate on London would be maintained at the 25 per cent level until the end of the export season, “in the absence of abnormal world developments.” As it turned out the rate remained the same until 1948.

The Government Bill establishing a Reserve Bank was strongly criticized at a Wellington protest meeting because of the lack of safeguards against political interference. The provision in the Bill to expropriate the gold held by the trading banks without provision for the assessment of its value by an independent tribunal was described as a “flagrant breach of public policy and public morality which would establish a disastrous precedent and gravely prejudice the credit of the country.”

The prospectus of the Bank issued in January 1934, provided for a share capital of £500,000 in 100,000 £5 shares, the maximum for one applicant being 500. Some 8,000 applications were received. Coates described the Bank's objective in an official publication: “The Reserve Bank will exist to carry out such monetary policy as Parliament may enact, the administration being a matter for the Reserve Bank Board. It will provide a uniform note issue. It is expected to assist the taxpayer not only by its anticipated lower rates of interest on Treasury Bills, but also by any profits made by the Reserve Bank, which apart from the £25,000 payable to shareholders, will accrue to the State. It will assist the banks by pooling their reserves, extending them credit in a crisis, relieving them of note-tax and freeing them of dead gold reserves which earn no profit. It will assist the people by providing a conscious monetary policy in place of the competitive extension of credit which aims at providing dividends for shareholders rather than at promoting the economic welfare of New Zealand.”

The trading banks had not failed the country but, in the words of Sir Austin Harris, chairman of the National Bank, “the development of the international banking situation had indicated a need for establishing Central Banks for the purpose of effecting international co-operation.”

Coates outlined in Parliament in July 1934, tariff concessions including the total abolition of duties on many British articles and reductions in duty on others. Forbes said that the estimated Budget deficit of two millions had been reduced to page 339 £700,000. By September the deficit had been changed to a small surplus and the Government felt able to increase Civil Service salaries by five per cent. A barometer of the crisis through which the country might now be said to have passed was provided by the Post Office Savings Bank returns. From April 1931 to April 1933, the withdrawals each month exceeded the deposits by sums varying from £114,000 to £1,148,000. From May 1933, each month showed excess of deposits over withdrawals, the amount in July 1934 being £500,000.

The brighter outlook was temporarily darkened once more by the British Government's request for a restriction of meat exports from the Dominion. A Royal Commission on the dairy industry reported that the conditions confronting the industry had assumed the proportions of a national crisis owing to the flooding of the British market by the dumping of subsidized dairy produce from countries in the Northern Hemisphere and Australia. Unless early and effective measures were taken, there would be a general breakdown in the financial relations of mortgagors and mortgagees, making it impossible to meet in full its overseas interest charges. The guaranteeing of a price for butter was opposed as inherently unsound.

In February 1935, Coates introduced the Mortgage Corporation Bill which he said did not mean a State monopoly in financing farmers but the merging of the best ideas of private and State control, the lowering of interest charges, and the establishment of a system which would better meet farmers' requirements. The Corporation would have a capital of £1,000,000, half subscribed by the Government and half issued to shareholders, who would elect three directors while the State would appoint a Treasury representative and four others. Coates took the view that it was idle to look for a return to the level of prices ruling before 1930. He said that in good times many farmers paid their interest charges on flat mortgages regularly, but never dreamed of reducing the principal. Repayments of principal under a table mortgage could have been made quite easily, but the money went in other directions. It was now necessary to extend the facilities for granting long-term mortgages and to encourage people to make use of them. One of the heaviest of farmers' costs was interest on capital and to save the farming industry mortgage finance page 340 must be made available as cheaply as possible. The Government had decided that the best method was to establish a national institution to handle mortgage business in a comprehensive manner. The proposed institution was intended to be a permanent part of the financial fabric of the Dominion and in some respects would be analogous to the Reserve Bank. It was intended to merge the State Advances Office, the Rural Intermediate Credit Board, and the lending operations of the Lands Department in the Corporation, which would thus immediately be placed in business on a large scale. On the second reading Independents voted with Labour against the Bill, which passed by 36 votes to 28. Labour objected to the State lending departments being transferred to corporation control.

The Government established an Executive Commission of Agriculture involving, as Forbes admitted, “a certain amount of regimentation of secondary industries.” The setting up of the Commission was due, he said, to the special conditions for the regulation of marketing proposed by the British Government. It was not a deliberate step towards socialization of or interference in industry.

Both Forbes and Coates were in London in 1935 to negotiate with the British Government on its proposals to restrict meat imports by levy or quota. The agreement eventually made removed the fear of a levy on mutton and lamb, saving New Zealand producers, it was estimated, £800,000 anually. The quota of beef exports allotted to New Zealand to the end of 1935 was regarded as adequate.

As one measure of economy the life of Parliament had been extended for a year but the verdict of the country on the Coalition's efforts could not be delayed beyond 1935. A third party, “of ambiguous origin and unusually chaotic tenets,” adopted the title of “Democrats” and added confusion to an electoral scene already sufficiently confused by the “New Deal” activities of Coates. As one reads the records of the depression years, one might be forgiven for thinking they were consciously designed as a prelude to Labour's rise to power. The setting up of the Reserve Bank, the Royal Commission on Dairying, the Mortgage Corporation—all provided foundations for the Labour building. Even the loss of Holland, embittered page 341 to some extent by long years of uphill fight, may be said to have helped the Labour cause, for its new leader, Savage, exercised a remarkable charm wherever he went. His chief quality was a devastating simplicity which made it as easy for him to endure the rigours of London ceremonial in Coronation year as to listen to local grievances on tours through New Zealand which became one long succession of ovations. Savage did not adopt simplicity as a pose. He would have lived quite happily in a cottage with three or four pounds a week and his books. He never married but he had a wonderful power of attracting children. Here was no ogre to be denounced in election leaflets with any great chance of convincing the electors.

Coates's pre-election Budget made no glittering promises, though it took a hopeful view of the prospects of the country and provided reduced taxation, partial restoration of salary cuts, and a comprehensive housing scheme. It also indicated the Government's intention to institute a scheme of pensions for all, on a contributory basis, as soon as this could be done without imposing an additional burden on the taxpayer. The unemployment emergency tax was reduced from tenpence to eightpence in the pound. Some Government supporters expressed dissatisfaction with the Budget, declaring that it lacked sufficient appeal to the electorate. There were also suggestions that a change in leadership might benefit the Coalition Party's chances.

Savage, in his election campaign, gave his version of the achievements of the Coalition and by implication an indication of his policy if placed in power: (1) It destroyed the foundation of trade and industry in New Zealand by reducing wages and pensions; (2) it destroyed the usefulness of the conciliation and arbitration system as a means of settling disputes and safeguarding wages; (3) it created an army of unemployed, ranging from 51,000 after it took office to more than 79,000 in 1933, the present number being 57,000; (4) it destroyed the Public Works policy of the Dominion, and discharged thousands of standard-rate workers, re-employing them on relief rates of pay; (5) it destroyed apprenticeship contracts and turned thousands of partly-trained apprentices into the street; (6) it weakened the education system of the Dominion and excluded 5-year-old children from the schools; (7) it destroyed the page 342 State Advances Department and substituted a semi-privately controlled Mortgage Corporation, presided over by the managing director of a competitive private lending company; (8) it introduced a virtual dictatorship in primary industries by the passing of the Agriculture (Emergency Powers) Act and the appointment of the Executive Commission of Agriculture; (9) it instituted the equivalent of a receivership in cases of farmers who were in financial difficulties, by passing the Rural Mortgagors' Final Adjustment Act, which provided for enforced budgetary conditions in the homes of the producers concerned; (10) it discharged hundreds of men from the public services, and by legislation interfered with the superannuation rights of a large number of those who were dismissed; (11) it failed to honour its obligations under the Superannuation Act, and postponed consideration of the difficulties arising therefrom until after the General Election; (12) it extended the life of Parliament from three to four years without consulting the people, thus striking a blow at the foundation of constitutional government.

In his election campaign Walter Nash, Savage's financial expert, outlined Labour's proposals for a national health insurance scheme and for guaranteed prices for farm products. The Labour Party would purchase the private shares in the Reserve Bank, making it a Government credit authority which would stand the deficit between world prices and guaranteed prices, the excess in boom years to create a reserve fund.

The election resulted: Labour 53, Nationalists 19, Independents 8. Though gaining 29 seats, nine of them apparently through the intervention of Democrat candidates, Labour did not command a majority of the total votes polled, but it was nevertheless a signal triumph for Savage and his principal lieutenants Fraser and Nash. Savage's immediate programme included the abolition of salary cuts and the sales tax and the alleviation of the lot of the unemployed. “It is scarcely too much to say,” I wrote in The New Zealand News, “that the outgoing Government might have done all these things before the election. That it did not do so may be regarded either as a failure in political strategy or as an example of pre-election caution of which there have not been many previous examples page 343 in New Zealand history. Mr. Coates has had the unenviable task of stabilizing the Dominion's finances in a period of acute stress. His methods have been criticized, but at least they have provided the new Government with a sound foundation on which to build.” Maori carving