Analysis by Keith Rankin.
In November 1928, New Zealand had its own ‘Biden moment’ when the 72-year-old Sir Joseph Ward appeared to promise that, if his party won that year’s election, the New Zealand Government would borrow £70 million in 1 year, as a fiscal super-stimulus that would get New Zealand out of the economic doldrums. In large part as a result of that promise, Ward’s party – United, hitherto in third place – was able to form the next government.
Ward misread his speech notes. One source says the proposed loan was meant to be for 10 years; another source says he meant to say £7 million. Probably both are right, in light of what actually happened in 1929; Ward probably meant to say £7 million over ten years. (The Government borrowed about £2 million in 1929, from the London money market. In 1930 and 1931, the United Kingdom was in a deep financial crisis.)
Joseph Ward was one of the most enigmatic of New Zealand’s political leaders. And, importantly, he was one of the few who were ‘fiscal liberals’; opposite of ‘fiscal conservatives’ like Chris Hipkins and Christopher Luxon. (New Zealand has had comparatively few fiscally liberal Prime Ministers. The most fiscally liberal was undoubtedly Julius Vogel. Two others, who are also household names, were Robert Muldoon and Michael Joseph Savage. Along with John Balance, they were New Zealand’s most ‘progressive’ prime ministers, at least in the sense that Julius Vogel understood that word. But in 1928, Ward was well past his political prime; his ‘promise’ was not an articulation of a new vision.
Joseph Ward and his times – a very short potted history to 1925
Joseph Ward (MP for Awarua, ie Bluff) became New Zealand’s Minister of Finance in 1893, a few weeks after his 37th birthday. He was ‘Colonial Treasurer’ during the country’s most ‘progressive’ period – in the modern sense of that word – prior to that of Savage; following Ballance’s premature death. (Ballance had been both Prime Minister and Treasurer during 1891 and 1892.)
Ward was forced out of Cabinet in 1896 on account of his personal financial situation, and resigned from Parliament in 1897 when he had to file for bankruptcy. But he contested the 1897 by-election, and was re-elected by a wider margin than in the 1896 general election. Ward was reappointed to Cabinet once he had paid off his creditors.
Ward became Prime Minister – and, in what was becoming a tradition, also Finance Minister – in 1906 following Richard Seddon’s death. His government folded in 1912; see my France’s Two-Ballot Voting System, and its New Zealand Antecedent, 12 July 2024. Ward resumed his duties as Finance Minister in the World War 1 coalition government, from 1915 to 1919. Ward lost his seat in the 1919 election; that year Prime Minister Massey was able to re-establish majority government.
In 1923, Ward tried to get back into Parliament; he unsuccessfully stood in the Tauranga by‑election. The 1922 general election had been the first genuinely three-party election. Massey’s Reform Party got 37 seats, Ward’s Liberal Party (now led by Thomas Wilford) got 22 seats; Labour (under Harry Holland, an immigrant [1912] from Australia with Marxist sympathies) got 17 seats. Massey governed with the help of the Liberals, though died in office before the 1925 election.
In 1925, Massey’s Reform Party, now lead by Gordon Coates, swept to victory. One of the Liberal’s small caucus of 11 MPs was Joseph Ward, now MP for Invercargill. The Liberal Party had become New Zealand’s third party; suffering a parallel downfall in the 1920s to Lloyd-George’s Liberals in the United Kingdom, and for the same reason – the rise of the proletariat and its own Labour Party.
1925 to 1931: Crisis Years in New Zealand
It was all downhill for the Coates’ government in 1926, and especially 1927. New Zealand suffered from a triple-financial-whammy: the return of the British pound to the gold standard at an over-valued exchange rate, the British general strike which paralysed Great Britain’s seaborne trade, and a significant downturn in the terms of trade (ie relative prices) of agricultural and pastoral products vis-à-vis manufactures. Additionally for the labour market, it was a period of technological unemployment; marked in New Zealand in particular by the revolution of machine milking on dairy farms.
1927 was a year of wholesale bankruptcy of farmers, and became the biggest year of emigration since the 1888 ‘exodus’; especially emigration to Australia, and migration of young job-seekers from the farms to the cities. However, Australia suffered the same triple-whammy, though not as intensively as New Zealand.
In 1928, Australians and others were coming to New Zealand. It was a crisis in both countries. In New Zealand in 1928 there was a National Industrial Conference; the main conclusion was that the apparent and significant rise in unemployment was mainly due to migrants and machines. (Has much changed since then?)
This was the backdrop for the 1928 election. The Liberal Party was fighting for its survival. It hired a very capable campaign manager, Albert Davy. It changed its name to United. And it chose Sir Joseph Ward to be its leader. Then, thanks in part to Joe Ward’s ‘Joe Biden moment’, United ‘won’ the election; it gained more seats than any other party, once four ‘independent Liberals’ were included in the count. United formed a Government with Labour support. Ward was Prime Minister and Finance Minister.
Labour under Harry Holland, with more seats than it had ever had, was at the ‘power table’. Holland has been New Zealand’s only ever ‘far-Left’ political leader in a position of power.
The dynamic didn’t work. While 1929 was a good year for New Zealand, in the midst of many bad years, Ward’s health deteriorated. And he had to switch to Coates’ Reform Party to gain the confidence of the House. This moment represents the real beginnings of the National Party.
Ward died early in 1930, with his earnest and conservative Deputy – George Forbes – taking over as both Prime Minister and Minister of Finance. United was lean on talent and experience, remembering that in 1928 they only had 11 MPs.
The performance of the minority United government in 1930 and 1931 matched its surviving talent. They sleep-walked into the global Great Depression, which hit New Zealand in around August 1930, later than in most countries. In 1931 they ‘saved money’ by cancelling the five-yearly census.
In the 1931 election, United and Reform went to the electorate as the ‘Coalition’, and won comfortably against a fiscally conservative far-left Labour Party. In the UK, a similarly conservative Labour Party with ‘Left’ principles but not practice was in the process of collapsing.
Once again (ie after his 1925-1928 failures), Reform’s William Downie Stewart junior, New Zealand’s dogmatic precursor to Ruth Richardson and Roger Douglas – a ‘classical liberal’ – became Finance Minister. Forbes, as sitting Prime Minister, stayed on, becoming New Zealand’s least-inspiring political leader
The Great Depression deepened in New Zealand, until Downie Stewart lost a political arm-wrestle with his Reform Party leader Gordon Coates, in January 1933. The New Zealand economy bottomed out in the summer of 1932/33, after Coates won his battle to devalue the New Zealand pound.
Summary
Joseph Ward’s ‘Biden moment’ bisected the 1925 to 1933 period, enabling 1929 and most of 1930 to be relatively good years for New Zealand in the midst of a disastrous run of circumstance compounded by the unbending economic liberalism of William Downie Stewart, one of New Zealand’s worst-ever Ministers of Finance.
Today, we could learn from the failings of fiscal conservatism in those years, and the brief relief gained during Joseph Ward’s brief ‘Lazarus’ administration.
Additional References:
https://nzhistory.govt.nz/people/sir-joseph-ward
https://teara.govt.nz/en/biographies/2w9/ward-joseph-george
https://nzhistory.govt.nz/culture/the-1920s/1928
https://paperspast.natlib.govt.nz/books/ALMA1929-9917504153502836-The-remarkable-life-story-of-Sir Joseph Ward
https://www.odt.co.nz/opinion/today-history-nzs-most-shocking-election-result
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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.
