Reform had become a multi-interest party by the 1920s. An explicit‘Coun-
try Party’could not achieve prominence in New Zealand as it had in Australia,
thanks to the electoral system. A new 1920s Country Party eventually
morphed into the Social Credit Political League (Gully 1966). Political opin-
ions in rural New Zealand railed against foreign‘middlemen’and foreign-
owned New Zealand banks before and during the Great Depression (Sinclair
[1959] 2001, p. 262). Returning soldiers had acquired farms, at inflated prices,
with low interest loans. Many new farms in remote North Island locations
were, at best, marginal. With the British shipping strike in 1926 and the more
general deterioration of the terms of trade in the late 1920s, New Zealand’s
small farmers were struggling well before the world depression hit during
- These farmers, plus many owners of small businesses in the rural service
towns, looked towards Social Credit for solutions, as many Canadian farmers
and small businesses had. With a different rural–urban balance, Australia
seems to have been somewhat less affected by this form of agrarian radicalism.
With the rise of the Labour Party, the hitherto‘left’Liberal Party became
more like the Australian Liberal Party. Liberal (renamed United), now mainly a
South Island party,‘won’a three-cornered election in 1928. To keep Labour
from benefiting from a split right-of-centre vote, Reform and United effect-
ively merged in 1931; contesting two elections under the‘Coalition’banner
before adopting the name‘National’. The merger did keep Labour at bay in - Absorbing the monetary reform message, Labour swept to power in
1935 thanks to a transfer of allegiance on the part of the credit-starved
provincial and rural self-employed.^24 A new splinter group on the‘far right’
(Sinclair [1959] 2001, p. 277)—the Democrat Party—split the conservative
vote, and Labour ruled until 1949. The rise of the Democrat Party was a
response to the pragmatic recovery policies of 1933– 35 finance minister
(and former prime minister, 1925–28) Gordon Coates, who had gathered
around him a small‘brains trust’, of young economists, who, some thought,
had‘communist sympathies’.^25 His recovery policies included devaluation,
and the establishment of the Reserve Bank of New Zealand.
1911 had been conducted under a two-ballot system; effectively a preferential voting (PV) scheme,
that has otherwise been rare in New Zealand.
(^24) Social Credit advocates supported Labour in the period of Savage’s leadership. Social Credit
contested elections as a stand-alone political party from 1954 to 1990. As the Democrat Party within
the left-wing Alliance Party (1991–2002), it held executive posts in the 1999–2002 Labour-led
government. 25
One of these young economic advisers was W. B. Sutch (Easton 2001, chs 7 and 10), a
significant author of political economy texts such asColony or Nation?andThe Quest for Security
in New Zealand. In the 1950s and 1960s, mainly under National administrations, Sutch was a
significant public servant, as permanent secretary for the Department of Industries and Commerce.
In 1975 Sutch was prosecuted under the 1951 Official Secrets Act, by New Zealand’s then Labour
Government, for passing documents to an emissary of the Soviet Union. Although acquitted, he
died a few months later. Sutch remains one of the more enigmaticfigures in New Zealand’s history.
Australia and New Zealand