The Reform Party, though its antecedents may be traced at least to the beginning of the century, emerged as a separate party in 1909, closely allied to the Farmers' Union and to business organisations. Town and country property had not always been averse to Liberals; it had become so by 1911, largely because the condition of the country had become disturbed, and it became plausible to link the Liberals with the cause of this discontent. After 1906 a number of larger unions – of freezing workers and miners especially, whose unions could hit the exporting farmer and the businessman hard – broke away from the arbitration system, partly prompted by a desire for higher wages, and partly under the stimulus of socialist ideas. Another reflection of the same process was the emergence of separate political Labour groups, strong enough to return four M.P.s in 1911. The Liberals were traditionally of the left, even if not in actual policy, and indeed there were radicals in the Liberal ranks – some were cabinet ministers under Ward. Ward himself was not the vehement strike repressor that Massey later proved himself to be. It was possible to identify the Liberals with the currents of opinion which threatened prosperity. The link was tenuous, but it was polemically plausible and electorally profitable. Further, the Liberals, 20 years in power, had grown slack, and a faint breath of scandal hung over the administration.

A further issue had relevance in country districts particularly – how much it is not possible to say. This is the matter of the leasehold tenure. Over 10,000 farmers had taken land on 999-year leases by 1907, most of them in the North Island. Once they had become established, the advantages of leasehold tenure receded. Once they had capital, thanks to their easy start and subsequent prosperity, they (or at least some of them) wanted to use it to buy the freehold at the so-called “prairie value” – i.e. at a price very near the value of the land at the point of initial occupancy. It was a period of rising land values and a major motive was a desire to realise upon these rising values and sell at the greatest advantage. No doubt many 999-year leaseholders saw with envy their freehold neighbours doing just that. “Every man his own landlord” became Massey's most prominent slogan, and it seems to have swayed all and sundry in the Reform ranks, businessmen and freeholders as well as the allegedly deprived leaseholders. Ownership had an emotional as well as a financial appeal. The issue was an efficient stick to beat the Government's back with, the more so because doctrinaire elements in the Liberal party, chafing at last at the conservatism that Seddon had consolidated, began to agitate after his death for an extension of the leasehold principle and an increase of the leaseholder's rentals. The Reform Party could and did represent this pressure (to which Ward had no intention of yielding) as the beginning of a process which could end in land nationalisation and socialism.

The leasehold issue carried a fair emotional charge, as an item in a general indictment of Liberal socialism and corruption. The upshot was a close result in 1911 (36 Reform to 30 Liberals and four Labour), with Ward's resignation and brief replacement by Thomas MacKenzie, and his defeat in 1912 when a small group of freehold Liberals crossed to the other side. Massey, thus slenderly supported, began a premiership which lasted till his death in 1925; the Reform Government lasted three more years under J. G. Coates, one of the Liberal freeholders who had crossed over in 1911. Massey's pre-war years were marked, first, by an Act giving the 999-year leaseholders the right to buy the freehold at prairie value (less than 30 per cent took the chance) and secondly by a fierce social conflict arising from an industrial dispute. A 1912 strike of gold-miners at Waihi had been the prelude; the 1913 conflict saw the same methods employed by Government, employers, and farmers on a much more significant scale against watersiders, railwaymen, and freezing workers. The arbitration system was used to outlaw the strikers through the organisation and recognition of “tame” splinter unions in the place of the actual unions which had cut themselves off from the system. This legal device was enforced by the use of troops and special constables, typically farmers, to back up the police. The infant Labour movement was shattered in its first, unequal, trial of strength.

Nevertheless, the Labour movement had grown up in the generation before the war. Since the 1890 election the unions, typically small, and locally organised into trades and labour councils, had been a moderate pressure group within the Liberal alliance. In 1906 the Arbitration Court began to stabilise wages where before it had increased them; around the same time socialist and syndicalist propaganda began to sway small but vigorous groups. From this disillusionment and this ferment arose the “Red” Federation of Labour with its political ally the Social Democrat Party, bent upon social revolution. The moderate Labour elements were still important, and the two branches of the movement were by no means unified when the disaster of 1912–13 came. Adversity was a stern master, and succeeding years saw the emergence of a unified and moderate Labour movement, both political and unionist.

That the Labour movements were able to alarm the well-to-do so thoroughly was a reflection of the economic structure of the country. As dairy and fat-lamb production expanded, more and more people, the farmers themselves and urban businessmen, came to depend wholly upon the export trade. The unions who could paralyse the flow of exports were the most disputatious: hence the acrimony surrounding the 1913 strike and the repressive energy of a Government based upon rural and urban property.

This same expansion of farming increased the weight of the North Island; the 1901 census showed that once again the majority of Europeans lived there. The intensification of farming entailed the growth of a multitude of small and a few large towns, again notably in the North Island: a basic factor in the subsequent growth of the Labour Party. Both demographic trends have continued through the twentieth century.

Denser North Island settlement renewed the pressure upon the Maori population – hence the massive land transfers of the period. But politicians began to realise that the expropriation of the Maori had gone far enough, though little was done in the early twentieth century. Among the Maoris themselves significant changes began. Their population ceased its downward movement – the 1901 census shows a small increase from the low point of 42,000 shown in 1896. This increase was most striking among those tribes which had kept much of their land and had been remotest from European penetration. All through the later nineteenth century the assimilation of the Maori, through farming, through road and railway construction, through wage labour generally, had been going on. At the end of the century some effort was made by Maoris to guide the process. A “Young Maori Party” (not a political party but a social movement of a youthful elite) began to campaign for a selective acceptance of European ways, especially in health and sanitation, and a determined retention of “Maoritanga” – the distinguishing qualities of tribal Maori life. Leaders like Apirana Ngata, Te Rangi Hiroa (Peter Buck), and Maui Pomare rose from this movement to become leaders of national eminence.

The strife of 1913 was followed by a greater struggle – the Great War of 1914–18. New Zealand automatically ranged herself alongside the United Kingdom, but this did not mean that there had not been significant developments in external affairs in the previous 20 years. Vogel and Stout in the 1870s and 1880s had combined a strong British patriotism with a vocal New Zealand nationalism – and this combination was continued with Seddon and Ward. On the one hand these leaders looked north to a potential island empire in the Pacific, and were outraged when Great Britain permitted German and French annexation of islands; on the other, they journeyed with increasing frequency to London for conferences which drew the self-governing parts of the British Empire together. The two trends were not disconnected; these men were world-wide as well as local British patriots, and they saw in closer imperial ties a chance for greater influence upon British policy. Emotion and calculation joined hands – in, for instance, their advocacy (partly tongue-in-cheek) of Imperial Federation, their firm belief in Imperial preference, and their participation in the Boer War. The First World War played much the same role: on the one hand local nationalism was reinforced by the exploits of New Zealand's forces, especially at Gallipoli; on the other, the solidarity of the self-governing empire was increased.

The war profoundly affected the course of domestic politics. In the 1914 election Massey was returned with a very narrow majority over Liberal and Labour combined – too unstable a situation, many thought, for a wartime Government. Neither Reform nor Liberal was anxious to coalesce, but newspaper pressure and public opinion forced the two antipathetic leaders, Massey and Ward, into a National Government in 1915. The Governor played an important part in bringing them together; and Labour remained obstinately aloof. Massey was still Premier, but Ward, in charge of finance, was a good deal more than second in command, and was responsible for the crucial matter of war finance. At the end of the war the two leaders were glad to part company and resume party conflict.