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War Economy

Living Standards Rise and Fall

Living Standards Rise and Fall

What was happening to living standards while these momentous influences were changing the economy? Goods available increased steadily from 1931–32 to 1937–38 but then fell slightly under the influence of falling overseas earnings and import restrictions. However, goods supply part only of people's needs.

There is no comprehensive measure of living standards; all the statistician can provide is an approximate measure of the physical things which people use. These figures, taken on a per head basis, give some indication of potential living standards. The depression year 1931–32 stands out as a low point in the series and a good deal of the immediately following increase represents post-depression recovery.

One of the features of the depression period was that at the very time when overseas price changes were reducing the ability of New Zealand exports to purchase overseas manufactures, New Zealand's own production of manufactured goods was also drastically reduced. Expressed in 1938–39 prices, goods to the value of £116 million were available for use in New Zealand in the June page 24 year 1929–30.1 This was made up of £69 million which remained from local production after allowing for exports, together with £47 million worth of imported goods. Imports (again valued at 1938–39 prices) fell to £27 million in 1931–32 and, partly as a result of an £8 million fall in local production, goods remaining from local production after exports fell to £57 million. Thus a fall of £20 million from imports was accompanied by a fall from local production, and the volume of goods available for use in New Zealand fell staggeringly by 27 per cent in these two years.

Thereafter the volume of goods available for use in New Zealand increased slowly until 1933–34 and then rapidly until 1937–38. In the next two years it fell once more, as a result of declining imports.

Chart 10 shows changes in the volume of goods available and also in goods available per head of population, and throws some light on the more material aspects of living standards. It is of interest that the 1929–30 volume available per head was not again reached until 1936–37.


Chart 10

page 25

Goods available per head reached a low point in 1931–32 and then increased yearly, accelerating in the period 1934–35 to 1936–37, with a more moderate increase in 1937–38. However, overseas prices fell, and there was not sufficient insulation to prevent falling export earnings from pulling down living standards by 2 per cent in the following year. This was only a forerunner of more drastic cuts in living standards which would become necessary under war conditions.

1 New Zealand Official Yearbook, 1945, p. 598.