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War Economy



Completion of United States Lend-Lease arrangements was to mark a new era in wartime supplies for New Zealand. As wartime pressures increased, it had become more and more difficult for the United Kingdom to fill New Zealand orders. Australian capacity to produce was expanding rapidly, but was, at this stage, unable to cope with any great proportion of New Zealand's requirements. There had been an increasing tendency to turn to the United States, but soon New Zealand, in common with other Commonwealth countries, was faced with a serious shortage of dollar exchange and was forced to restrict orders.

It was to cope with this situation that the United States Lend-Lease Act was passed in March 1941. New Zealand became eligible to trade under the Act in November 1941, and a New Zealand Supply Mission was set up in Washington to deal with Lend-Lease and cash requisitions. In June 1942 delays were reduced when a United States Joint Purchasing Board was established in New Zealand, strengthening United States administrative representation here and making it possible to fix, in New Zealand, the eligibility and priority of local requirements. Lend-Lease requests from New Zealand were screened by an ‘Allied Committee’ of representatives of the Lend-Lease Administration, the Joint Purchasing Board and the Commissioner of Supply.

In 1942 New Zealand imports under Lend-Lease were valued at £11 million out of a total of £54 million of imports for the year. As a result, the volume of imports, which had fallen each year since 1937, now showed a moderate increase, still, however, leaving arrivals at 26 per cent below the average of the three pre-war years. In 1943 Lend-Lease imports were £27 million and total imports £95 million. The volume of imports moved, in this year, to 28 per cent above the pre-war figure. Substantial arrivals of defence materials and equipment from the United Kingdom and increased imports from Canada also augmented the total, which was a record not to be equalled again until 1950.

Reciprocal Aid provided by New Zealand under the Lend-Lease arrangements totalled nearly £7 million in 1943, compared with £27 million of United States supplies received. There was to be a page 126 closer balance in 1944, with Lend-Lease Aid from the United States valued at £32 million and Reciprocal Aid provided by New Zealand at £24 million, and in the following two years Reciprocal Aid provided by New Zealand would exceed in value Lend-Lease Aid received from the United States.

Nearly 70 per cent of the Lend-Lease Aid received from the United States was in the form of direct war materials, but substantial quantities of commodities such as oil, petrol, tinplate and wire were also received, as well as producers' equipment. Nearly half of the Reciprocal Aid provided by New Zealand was foodstuffs.

One important contribution to production made by Lend-Lease Aid was the supply of considerable quantities of mechanical equipment for farms. For example, over seven thousand farm tractors were supplied in the years 1943 to 1945. Some idea of the significance of these 7000 tractors can be gathered from the fact that, in 1940, there were only about eleven thousand tractors on New Zealand farms. The rapid mechanisation of farming played an important part in extending allied food supplies. Only in this way could farming step up its production to meet wartime demands, in spite of shortages of labour.

Chart 28 shows the accounting values of Lend-Lease and Reciprocal Aid in successive years.

chart of economic statistics

Chart 28

page 127

The Lend-Lease arrangements solved many of New Zealand's very embarrassing problems of inadequate supplies of munitions and war stores, and also made available scarce farming and manufacturing equipment. New Zealand's contribution under the Reciprocal Aid arrangements helped maintain the United States Forces in the Pacific, but added to pressure for New Zealand farm produce and, in various ways, aggravated the shortage of civilian manpower. These and other effects are discussed later.1 Much of the Reciprocal Aid went to United States forces in New Zealand, whose arrival in June 1942 had reduced the threat of Japanese invasion.

1 Chapters 14 and 17.