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War Economy

Pre-war Price Control

Pre-war Price Control

ONE of the very first economic measures of the war was a price regulation designed to prevent profiteering;1 and extensive controls over prices were to remain a feature of the war economy. However, price control was certainly not new. Price rises had been causing concern before the war, and the Government had found it necessary to take restraining action.

Retail prices had recovered steadily after 1933, when they had reached their lowest point in the depression. In 1936 a Prevention of Profiteering Act had been passed, but at this stage prices, though rising, were still 14 per cent below pre-depression levels. The Act was in the main a party policy measure of the new Labour Government. Wise wrote,2 ‘In 1936, following upon the implementing of its policy of raising wages, the Government considered it necessary to strengthen the existing price control legislation so as to ensure, as far as possible, that benefit of higher wages was not offset by rises in prices. Accordingly the Prevention of Profiteering Act was passed in that year.’ This Act made it an offence to sell goods at a price which exceeded a defined basic price by an unreasonable amount. The Act was not fully effective. In specific cases it was difficult to prove that prices had increased by an unreasonable amount.

Prices continued to rise about 4 per cent a year, on average, and by 1939 they were again approaching pre-depression levels. The rate of increase showed no signs of losing momentum, and in June 1939 the Government, by the Price Investigation Regulations,3 provided for control of prices by a Price Investigation Tribunal. The regulations

1 The Price Stabilisation Emergency Regulations 1939, issued 1 September 1939.

2 H. L. Wise, Wartime Price Control in New Zealand, p. 12.

3 Made on 2 June 1939 under the Board of Trade Act 1919.

page 279 stipulated that goods should not be sold at a higher price than they were offered for on 2 June 1939, unless prior notice had been given to the Tribunal. Reasons for charging higher prices had to be shown.

These regulations did not apply to all goods, but to a fairly comprehensive schedule which included any article of food for human consumption and quite a wide range of other goods and services.

The Tribunal in practice accepted increases in costs of materials from overseas, increased wage rates, and so on, as reasons for increasing prices, but there were occasions when it considered the margin of profit already being obtained was sufficient to allow such increases to be absorbed. The general effect of these regulations was that, for a wide range of goods and services, rises in prices had to be justified if challenged.

By this time the Government already had power under various Acts to fix the prices of a number of items, including rail and road transport, wheat, flour, bread, butter, cheese, tropical fruits and motor spirits.1

1 New Zealand Official Yearbook, 1941, p. 697.