The next three years saw a continued decline in the reputation of the Government. The Labour Party took a new lease of life in 1957, Nash showed notable energy as a leader, and its programme promised a carefully selected list of benefits to wavering voters: taxation relief, an income tax rebate, and increased benefits. Narrowly, Labour won, and the Social Credit vote sagged to 7 per cent.

This victory might be compared with that of Coates in 1925, though not in magnitude, for it simply presented the victors with problems with which they were not able to cope. Consequently 1960 saw the National Party handsomely returned under the leadership of K. J. Holyoake (he had in fact succeeded Holland as Prime Minister when the latter retired three months before the 1957 election). The Nationalists made full use of the opportunities presented to them by Labour's stringent handling of the crisis of 1957–58.

This crisis, whose advent had been detected by economists before the 1957 election was fought, had a head start thanks to the National Government's understandable preoccupation with electioneering in the latter months of 1957. The Labour victors took office to find themselves embarrassed by a combination of expensive electoral promises and a financial crisis. The crisis arose from a sharp fall in overseas prices for exports accompanied by a grave shrinkage of London reserve funds. Here one might note a certain poetic justice: in 1935 Labour inherited an economic upswing and did well upon it; in 1957 it inherited a crisis which proved abruptly fatal.

The Government's answer to the crisis came with the austerity budget of 1958, presented by the Minister of Finance, A. H. Nordmeyer. Already imports had been severely restricted to safeguard what was left of overseas funds; the chief note of the budget was high taxation, especially upon such articles as beer, tobacco, and petrol. Short-term loans were also raised overseas to tide over the crisis. It has been doubted if even these measures, acutely unpopular as they were, would have proved sufficient had not overseas prices, especially for dairy produce, considerably recovered after 1958. As it was, this recovery of prices, though not permanent, gained sufficient breathing space; but the emergency measures brought sufficient unpopularity to the Labour Party to secure its defeat in the 1960 election.

Subsequently the crisis had resolved itself into a continuing condition – a condition to which the country is readjusting itself with some reluctance. It has become clear that overseas prices, especially for dairy produce, cannot be relied upon to stay high: they go up and down, and their movement affects the general condition of the country. In 1961 the guaranteed price to dairy farmers, the basis of their standard of living, had to be subsidised by the Government to prevent a 5 per cent cut.

But a more serious threat was that the market itself may close up, or at the very least shrink acutely. This arises from the considerable likelihood that Great Britain will join the European Common Market, upon terms which will allow New Zealand only a brief exemption from the restrictions upon non-member countries imposed by the highly protectionist Common Market agricultural policy. Together with increasing European production of dairy products, and with the certainty that European farmers will look upon the United Kingdom as the natural market for their surpluses, this development is full of menace to a country which has for a half century based its economy upon the unrestricted entry of dairy produce, meat (most notably lamb), and wool to the British market.

Whatever the political complexions of governments over the next few decades, this grave problem will, or should, dominate their activities. For it seems that within the next generation New Zealand might be faced with the need for an economic reconstruction quite as great as that change of production, fathered by refrigeration and mothered by the small intensive farm, which gave pre-eminence to butter, cheese, and meat in the generation between the 1880s and the war of 1914. This time the problems will be greater. Then it was a problem of putting people on the land and encouraging them to produce; this time it is one of persuading those already there, and enjoying a high standard of living, to change their ways while there is yet the opportunity.

by William Hosking Oliver, M.A.(N.Z.), D.PHIL.(OXON.), Professor of History, Massey University of Manawatu.

International Relations, Political Parties, etc.

• General Histories: New Zealand – a short history, Beaglehole, J. C. (1936)
• New Zealand, Miller, H. (1951)
• A History of New Zealand Life, Morrell, W. P., and Hall, D. (1957)
• The Long White Cloud, Reeves, W. P. (1950)
• A History of New Zealand, Sinclair, K. (1957)
• The Story of New Zealand, Oliver, W. H. (1960).

• Economic Histories: New Zealand, Belshaw, H., (ed.) (1947)
• New Zealand in the Making, Condliffe, J. B. (1959)
• The Welfare State in New Zealand, Condliffe, J. B. (1959)
• The Instability of a Dependent Economy, Simkin, C. G. F. (1951).

• Special Studies: A History of Canterbury, Vol. I, Hight, J., and Straubel, C. R. (jt. eds.) (1957)
• History of Otago, McLintock, A. H. (1949)
• Crown Colony Government in New Zealand, McLintock, A. H. (1958)
• Early Victorian New Zealand, Miller, J. O. (1958)
• Provincial Government in New Zealand, Morrell, W. P. (1932)
• The Maori People Today, Sutherland, I. L. G. (ed.) (1940)
• New Zealand in the World, Wood, F. L. W. (1940)
• The People at War, Wood, F. L. W. (1958).

• Biographies: King Dick, Burdan, R. M. (1955)
• The Maori King, Gorst, J. E. (1959)
• Sir George Grey, Rutherford, J. (1961).