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War Economy

Overseas Service

Overseas Service

Early in 1941 some thirty thousand New Zealanders were serving overseas. By the middle of the year there were forty thousand, and this number was to be considerably exceeded for the rest of the war. Pearl Harbour, in December 1941, renewed the danger of Japanese invasion and led to a rapid strengthening of the home army; but still the numbers serving overseas continued to increase.

At the peak of recruitment New Zealand had 50,000 men and women serving overseas and well over 100,000 serving in New Zealand. This was in September 1942, but it was not until November 1943 that the highest point was reached for men and women serving outside New Zealand. There were then 70,000 serving overseas and nearly 66,000 in New Zealand.

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Wherever they were serving, men in the armed forces had to be fed, clothed, equipped and sheltered, while their services were withheld from their usual contribution to production. But the financial effects differed. The men serving in New Zealand added the financial impact of their pay to the demands on the New Zealand economy in the same way as if they had been producing. This expenditure, without any accompanying production reaching the market, aggravated the tendency to an excess of money demand for goods and services.

Chart 13 shows relationships between New Zealand's overseas and home forces over the war years.

chart of army statistics

Chart 13

To the extent that those serving overseas allotted portions of their pay to dependants in New Zealand they, also, added to the potential money demand on the New Zealand market. However, the more significant financial impact of overseas service was the expenditure of overseas funds which had to be found to equip, pay and maintain the forces. Unless this extra expenditure was to be matched by overseas borrowing, funds had to come out of export earnings at a time when shortages of overseas funds had page 73 already led to restrictions on imports. As we have seen,1 the Labour Government had decided against raising money for war by overseas borrowing. New Zealand would pay for the war as it went along. In so far as the war led to overseas payments, this meant, in the main, that New Zealanders would do without a corresponding quantum of imported goods.

black and white photograph of New Zealand farm

high-country sheep farming
A typical scene at mustering time on a Canterbury station

black and white photograph of milking cows

modern dairy farming methods
New Zealand has been among the world leaders in the development

black and white photograph of road work

state housing
Road planning on a pre-war state housing scheme at Wellington

black and white photograph of road works

heavy earthmoving equipment, pre-war
Construction of the Ngahauranga Gorge road in 1938-39

black and white photograph of air field construction

pre-war defence construction
Plant assembled for levelling work at RNZAF Station, Whenuapai, January 1939

black and white photograph of enlisting recruits

manpower for the services
Enlisting for the First Echelon, 2 NZEF, at Wellington. Within three weeks of the declaration of war nearly 12,000 men had volunteered

black and white photograph of construction workers

mobilisation camps
Construction work at Trentham in the early weeks of war. Mobilisation camps were completed in record time

black and white photograph of troop ship

overseas service

1 p. 21. There is also a fuller discussion in Chapter 10.