History, The Great Depression and Reform

New Zealand’s political and economic fortunes were mixed between 1918 and 1935. The protein industries consolidated and expanded in the 1920s, but there were recessions as well, and the country was swept up in the global economic collapse of the Great Depression from 1929. The Reform government ended its long reign in 1928, replaced by various combinations of rightist and centrist parties until 1935. That year, as economic depression began to lift, the first Labour government was elected, and the second of New Zealand’s three great spasms of reform began.

Labour held power from 1935 to 1949, led first by Michael Savage and, from 1940, by Peter Fraser. It set up a comprehensive social security system of welfare benefits and health care; further expanded the free education system; took some initiatives in state support for arts and culture; and extended state regulation into most areas of economics and society. In foreign policy, Labour clashed with Britain over policies toward Italy’s invasion of Ethiopia in 1935 and the Spanish Civil War (1936-1939). When World War II began in 1939, however, New Zealand did not hesitate to back Britain. Once again New Zealand mounted an extraordinary war effort for a small country, mobilizing about 200,000 soldiers, sailors, and pilots. These forces were used mostly at Britain’s discretion. After Japan entered the war in 1941, New Zealand assisted the United States in its Pacific campaign, mostly through increased food and factory production.

The war strengthened New Zealand’s relationship with the United States, leading to increased trade and diplomatic contacts. In 1951 the mutual-defense alliance of Australia, New Zealand, and the United States (ANZUS) was formed, leading to greater policy coordination between the three countries. The United States gradually replaced Britain as New Zealand’s senior partner in international relations. Economic and cultural links between Britain and New Zealand persisted strongly, however, until Britain joined the European Community (now the European Union) in 1973, thereby strengthening its ties with other countries in Europe.