Depression in New Zealand

The depression of the 1930s was a significant event in New Zealand's political and social development. The best available estimates of GDP suggest a fall of up to 30 per cent in current price terms. Prices were also falling, offsetting the decline in money incomes to some extent, and real incomes dropped by an average of somewhere between 10 and 20 percent—about the same as in Australia, greater than in Britain where the peak of 1929 was less pronounced than in most countries, and smaller than in the United States and Germany.

The estimates underlying these judgments are of output produced rather than of income enjoyed. In an international perspective, industrial production generally fell but the prices of industrial products were inflexible; agricultural production was more constant or even increased while the prices of agricultural products declined markedly. When consumption rather than output is the criterion, the disparity of depression experience in Australia and North America is much reduced (Schedvin 1970a, pp. 43–6), and the same is true of New Zealand.

The depression was transmitted to New Zealand through export prices and there was a period in the early 1930s when the balance of payments position seemed critical. But as explained later, this was short-lived as imports were so reduced that external assets were built up during most of the depression years. The reduction in incomes, however, spread through the community and resulted in unemployment levels which were unprecedented for New Zealand, although not high by some overseas standards. The reactions of industries varied, as is explored later, and unemployment affected certain industries and occupations more than others.