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War Economy

Early Supply Difficulties

page 105

Early Supply Difficulties

NEW ZEALAND, before the war, depended on overseas producers for 40 per cent of the goods she used. Her supply problems in the early war years were made critical by a pitiful shortage of overseas funds to pay for these imports. Becoming painfully apparent in the second half of 1938, this shortage of overseas funds had made it difficult to maintain normal imported supplies, let alone to build up the special reserves whose need was indicated by the threat of war. In the early war years the supply problems grew in urgency, but the shortage of funds was still restrictive. In fact it became even more hampering, as wartime interferences with traditional overseas sources necessitated a search for new suppliers.

From the supply viewpoint, New Zealand entered the war most inauspiciously, with inadequate military equipment for even small armed forces, with manufacturers' and other stocks generally below normal, and with import and exchange restrictions hindering overseas ordering.

To tell the full story, imports had been high in 1937 and 1938, but, in those years, insufficient attention was given to building up strategic reserves. Thus many of New Zealand's wartime supply difficulties stem from an unfortunate combination of pre-war circumstances. At the time when New Zealand imports were high, the Government did not take sufficient notice of official recommendations to build up supply reserves, whereas, when the Government did ultimately decide to act, the effect of its decision was to a large extent cancelled out because shortages of overseas funds had forced an overall reduction of the level of private importing.