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War Economy

Government Action in August and September 1941

Government Action in August and September 1941

The futility of any attempt at stabilisation which was not fully comprehensive was becoming increasingly obvious. But the carefully reasoned and deliberately emphasised statement by the Economic Stabilisation Conference, in October 1940, that the first objective was to stabilise ‘prices, wages and costs’, did not yet result in really comprehensive government action.

In August 1941 part of the recommendations of the Conference were put into effect, when the prices of 38 essential items were stabilised as from 1 September 1941. They comprised 17 foodstuffs, 16 items of New Zealand made clothing and footwear, tram fares, electric light, gas, coal, and coke.1 The price of each individual item was to be held, first through ordinary price control methods, including downward pressure on costs and squeezing of margins, and then, if necessary, by the use of subsidies. On 1 September 1941 prices of a number of the food items were still at their pre-war level, where they had been held by government controls, assisted in some cases by subsidies, such as those on sugar and wheat.

This new government action was much too narrow in its scope to provide a firm basis for stabilisation, a fact which the Government recognised by setting up an Economic Stabilisation Committee, in September 1941, to work out details of a comprehensive plan.

To give the Economic Stabilisation Conference its proper place in the struggle for stability, it should be recalled that this Conference unanimously urged the Government to stabilise ‘prices, wages and costs so that the cost of the war is not thrown unfairly on one group to the benefit of another.’ It was in furtherance of this aim that the Government set up the Economic Stabilisation Committee, from whose deliberations was to emerge ultimately a successful stabilisation scheme.

1 The full list was:

Foodstuffs: Meat, flour, milk, sugar, bacon, cheese, honey, bread, eggs, butter, coffee, condensed milk, tea, rolled oats, oatmeal, baking powder, salt.

New Zealand made clothing and footwear: Men's, women's, boys', and girls' shoes (New Zealand leather in each case), men's all wool underwear, women's woollen underwear, boys' all wool underwear, boys' all wool jerseys, girls' all wool underwear, men's woollen socks, boys' school hose, woollen piece goods, knitting wools, blankets, suitings (from New Zealand wools), shoe repairs.

Public services, fuel and light: Tram fares, electric light, gas, coal, and coke.