The Great Depression and Collective Memory

Cybèle Locke

The Broken Decade: Prosperity, depression and recovery in New Zealand, 1928–39, by Malcolm McKinnon (Otago University Press, 2016), 556 pp., $49.95

In this magisterial account of the 1930s Depression, Malcolm McKinnon aims to disturb the historical orthodoxy which depicts a conflict between the powerless and powerful – ‘We and They’ – ‘in which the “little guy” finally wins’. The first Labour government transforms the conservative political climate of the early 1930s into a ‘collectivist and interventionist one’ after 1935. McKinnon begins in 1928, which enables an exploration of the continuities between Joseph Ward’s expansive pre-Depression policies and those rapidly introduced by the Labour government during its first term in office. 

McKinnon challenges notions that Labour’s welfare state was a radical departure from what had come before, arguing that Labour restored rather than transformed the political economy between 1935 and 1939. International comparatives, particularly with Australian Labor governments, ably assist this project. This is a political economy of the Depression and is therefore about Party politics and policy-making, with those holding the finance portfolio in sharp focus. In this history, ‘We’ are those in political power and their economic advisors; ‘They’ are the unemployed, on the margins of parliamentary political life. Arresting images and poignant memories of everyday life in the 1930s are scattered across the text, providing glimpses of how political and economic decisions and indecisions were experienced, interpreted or had little impact. However, as McKinnon points out, this book is not a social and cultural history.

Chapter One analyses the United Party victory in 1928 and Ward’s policy-making in the Liberal tradition – land development, state advances, public works – and a new unemployment scheme with the onset of the Depression. Old age forced Ward to step down, and George Forbes became prime minister in 1930. Chapter Two explores the political rhetoric of austerity (‘economy’ and ‘adjustment’) that dominated as the Depression gathered force. McKinnon makes a sound case that all parties, even Labour, agreed that deflation was the required response, but very little political action was taken due to electioneering in 1931. The eventual ‘fusion’ between United and Reform saved the United Party and kept Labour out of government in 1931; and then the loan crisis finally prompted political action. Minister of Finance Downie Stewart oversaw cuts in wages, rent, interest and social services.

The increasingly distressed lives of growing numbers of unemployed and what led to civil unrest in 1932 are the subjects of Chapter Three. McKinnon describes what have traditionally been called riots as ‘disturbances’, and the unemployed certainly disturbed the deflationary policies of the early 1930s. Chapter Four explores the government’s attempts to solve unemployment by redistributing people to the countryside through Schemes 4A and 4B, relief camps and land development schemes for Māori men. City authorities, contending with a lack of finance for urban unemployed men and no provision for unemployed women and youths, became deeply disillusioned with the government’s rural ‘solutions’, seeking expansion in other ways.

The Coalition government placed its hopes in empire-wide action to raise prices, with Stewart and Deputy Prime Minister Gordon Coates representing New Zealand at the British Empire Economic Conference in Ottawa in 1932. When this failed to deliver, and after much debate, the government, attending to the needs of exporters, raised the exchange rate to £NZ125 to £100 sterling; the banks were indemnified against any loss. Stewart resigned over this decision and Coates became minister of finance. The following chapter traces the political and economic fallout from the raised exchange decision due to its unpopularity in urban New Zealand. Urban elites and interest groups argued that the raised exchange would dampen economic activity and this became a self-fulfilling prophecy. Instead, they lobbied for government-led inflation, in line with expansion arguments made by the labour movement, although they differed over how. The dreadful winter of 1933 is documented, exposing the hard line of the Unemployment Board over relief strikes, and the successful Communist Party and Unemployed Workers’ Movement campaign to prevent married men from being drafted to rural relief camps. Impacted by the New Deal in the United States and J.M. Keynes’ ‘reflationary public investment’ ideas, Labour candidates were highly successful in local body elections that year.

The slow and uneven recovery of the economy between 1933 and 1935 is the subject of Chapter Seven. Improved wool and beef prices did not flow on to the domestic economy. However, the Reserve Bank, instituted in 1934, allowed for ‘the £23 million in exchange that the government had accumulated in London since January 1933’, due to the indemnity arrangement, to ‘be used for imports’, which did flow on to city businesses. An impasse over whether the private sector or the government should drive the expansion meant unemployed, wage earners and poor households were sidelined from this ‘recovery’. Chapter Eight brings unemployed men, women and youth back into focus and pays particular attention to the political career of Elizabeth McCombs, New Zealand’s first female MP, elected in 1933. Drawing on the language of ‘economic citizenship’, many effective campaigns were waged in the cities for sustenance, better provision for unemployed, restoration of wage cuts, access to affordable healthcare and housing, which elicited, at best, partial responses from the government.

The 1935 election campaign, rather than the result, is the subject of Chapter Nine. McKinnon explores the three-way race between the Coalition, Labour and the newly-formed Democrat Party. Labour strategised to ensure the Democrats did not split the Labour vote, but this fear was eased when the Democrats imploded in mid-1935. Other electoral contestants are briefly mentioned – the Country Party (which espoused Douglas Credit), the Communist Party of New Zealand and the Rātana movement Māori candidates. While McKinnon describes the rise of the Country Party and Labour’s electioneering response, there is no exploration of the platform of the Communist Party or the rise of the Rātana movement.

All the way through Broken Decade, McKinnon helpfully assesses the Labour Party’s movement away from the objective of socialism to managed capitalism. It would have been interesting to assess this changing position in relation to the Communist Party (CPNZ). Perhaps this was a casualty of McKinnon’s desire to displace the working class-based historical orthodoxy of the Depression. Māori MPs are mentioned, but are not major players in this history, and what the Rātana movement was, is never detailed. Instead, Māori unemployed are subsumed in the rural unemployment story. Greater attention to the Rātana movement, and what it meant for the Labour Party to endorse Rātana candidates as opposed to Liberal Apirana Ngata, operating from a tribal basis by the 1930s, would have added emphasis to the Labour government’s radical transformation of Māori policy, post-1935. Despite the lack of discussion of the Māori political economy, Chapter Ten, as I indicated earlier, builds a convincing case for the Labour government as restorative rather than transformative, centring on the role of Walter Nash. The chapter ends with the imminent financial crisis of 1939, only saved by the outbreak of World War Two; the war enabled the institution of stabilisation policies to insulate the economy. This, I think, is where the book should have ended.

The final chapter, ‘The Depression as History and Memory, 1940–2015’ was the only chapter I found dissatisfying. It very briefly plots economic history from 1940 to 1993 as if this is outside memory, and then takes issue with how popular memory of the Depression has ‘shaded out the experiences of hundreds of thousands of people who were affected by the Depression but were not as damaged by it as those who lost jobs, houses or livelihood’ (p. 401). I take McKinnon’s point, and he has produced a magnificent work that brings other perspectives into view, but this view is also partial. In Broken Decade we focus, for example, on Downie Stewart’s recollection of the loan crisis (p. 96) or Horace Belshaw’s reading of how to solve the 1939 financial crisis (p. 393). Rather than dismiss people’s memories of certain iconic images and moments of the Depression as ahistorical, surely it would be more fruitful to ponder why those particular memories remain, what work they did in the moment those experiences were told, and how those moments became housed in collective memory.¹

Malcolm McKinnon’s book is an elegantly-written, meticulously researched and authoritative account of the 1930s Depression in New Zealand.

1. Michael Frisch, ‘Oral History and Hard Times: A review essay’, Oral History Review, vol. 7, 1979, 70–79.

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CYBÈLE LOCKE is a New Zealand history lecturer at Victoria University of Wellington. She wrote Workers in the Margins: Union radicals in post-war New Zealand, which explores how working-class unionists (including the organised unemployed) negotiated neoliberalism, deindustrialisation and welfare retrenchment. Her current project is a biography of communist trade union leader Bill Andersen.