Mr Micawber’s Outcome
I trust most people are familiar with the works of Charles Dickens, not least because they will tell you far more about the social history of mid Victorian England than any number of academic studies. I’m referring to them because if you want to know about what happened here in the nineteen thirties, Charles Dickens is a good place to begin.
Dickens had a genius for inventing archetypal characters. One of his greatest creations was Wilkins Micawber in David Copperfield. Micawber’s England was a society in turmoil and middle class people like him found themselves on a downwardly mobile path. While he waited, famously, for something to turn up he invented the great cost of living equation. Income nineteen and six pence; expenditure one pound; result misery. Income one pound; expenditure nineteen and six pence; result happiness. He solved his dilemma eventually by emigrating.
In creating this aphorism Dickens may have inadvertently stated the solution to the cost of living problem. If you ensure that people have enough income to pay for the basics and a bit more left over to come and go on you won’t have a cost of living problem. We may have set out to achieve that here starting in Micawber’s day, but we haven’t been all that successful sometimes in reaching that objective for our society.
People don’t bring nothing with them when they come to a new country. Along with their goods and chattels, those who came here – over half a million between 1851 and 1882 – had expectations of a better life free of poverty and anxiety. As the historian James Belich has remarked: “No-one came to New Zealand to be worse off”, and those who did come were astonished at what they found. They could eat meat three times a day if they wanted to for instance. You can catch the flavour of that astonishment if you read Rollo Arnold’s book The Farthest Promised Land.
They were also delighted to find work readily available at good wages and shorter hours, and land available for a small freeholding. You could almost say they had left the need to think about the cost of living behind when they took ship for here.
Unfortunately it didn’t last because they also discovered that you couldn’t run away from international economic circumstances. In the eighteen eighties for example Britain and its colonies entered an economic depression which lasted a decade and a half and pushed New Zealand back into the same sorts of conditions many people had come here thinking they would get away from them. The poet Rex Fairburn says in his poem “One Race, One Flag”:
“Consider the curious fate of the English immigrant/ His wages were taken from him and exported to the colonies/ Sated with abstinence, gorged on deprivation/ He followed them: to be confronted on arrival/ With the ghost of his back wages; a load of debt/ The bond of kinship; the heritage of Empire”
The cost of living, you might say, was back on the agenda. What eventually pulled us out of this Long Depression as it’s usually called was the application of technology – refrigeration – to the international export of food. By that time we also had a reforming Liberal government which understood that decent basic wages were not a cost but an investment, and if you wanted to protect this without recourse to industrial action you needed to have some sort of system which set a floor price for labour in general at a reasonable minimum as a matter of course. They legislated for this accordingly through the Industrial Conciliation and Arbitration Act along with a number of other reforms including infrastructural investment in railways, and farming based on farmer co-operatives, which was encouraged by the government who gave generous loans through a state agency to those who wanted to go into dairy farming and could join ballots for available land. Most of it available I should add by the way because it was stolen from its Maori owners in one way or another but that’s another matter.
If you consult the government yearbooks for that period you’ll see the result was more or less full employment at one of the highest levels of wages of any country in the world. European social scientists were fascinated and came here and wrote books about us as an example of what an egalitarian and democratic society should look like. One French commentator, Andre Siegfried called it “socialism without doctrine”. He was right to the extent that it was all done without any ideology much although some writers such as Henry George and his land tax movement had a significant influence on people’s thinking.
Not everyone liked it of course. Sir John Hall, a prominent Canterbury landowner wrote of it to his friend William Rolleston that what he called ‘the larrikin pothouse element’ had captured the government. He was seconded by his friend Alexander Turnbull who was outraged by what he saw as a vulgar crowd of the lower classes – bricklayers, butchers and such – taking over. But by the nineteen twenties most people figured they had the problem of making ends meet licked.
Unfortunately, as it was bound to do, an economic train wreck then happened all over again because of something I’ve come to call Oliver’s conundrum after the historian Bill Oliver who first drew attention to it. New Zealand, he said, can never stop external forces in the shape of bankers or ship owners or other factors outside our control such as imperialist other governments intervening in our economy in a way which suits them, but prevents us from achieving our social ambitions. You can see that at work in the period leading up to the Great Depression of the thirties.
New Zealand emerged from the First World War as quite a prosperous country. But that was based on a false foundation – the wartime purchase of our export produce at artificially high prices. In 1922 that came abruptly to an end and export prices halved almost overnight. With 92.4% of our exports accounted for by dairy production the impact was devastating. A lot of farmers went broke. Others clung grimly on hoping for the best but the crisis in international finance commencing in 1928 more or less finished the job. Between 1929 and 1932 our export receipts fell from the equivalent of $100 million to $64 million.
You can see the result down on the farm. In 1928 on average farmers paid 25% of their income in land charges, 15% on wages, and 26% on other farm expenses. By 1931 35% of greatly reduced incomes was going on land charges, 24% on wages and 41% on other charges. Even to someone whose arithmetic is as bad as mine that adds up to disaster in a country in which farm incomes accounted for about half of GDP. That meant off farm expenditure dried up and with it domestic demand. The result was at a conservative estimate 20% of the workforce unemployed – creating possibly the most serious cost of living crisis we have ever experienced. Large numbers of people were too poor to afford even the necessities of life.
What that meant in human terms you can explore by reading the oral history I compiled some years ago – The Sugarbag Years. There’s also a recently published substantial work on the period worth consulting – The Broken Decade by Malcolm McKinnon.
There were forms of unemployment relief available but they proved entirely inadequate because they were based on an insurance scheme into which all workers paid but which had never been designed to cope with such vast numbers. Even when restrictions were placed on who qualified (no women, or Maori, for instance), the whole thing quickly broke down. For the unemployed it was a nightmare and one which seemed to go on for ever.
The governments of the period, a coalition of conservatives, were largely helpless. They had some members who could think creatively, notably Gordon Coates, and they cut loose our pound from Britain and set up our own Reserve Bank. This gave them some control over our economy although not a lot. But mostly their only policy was one of austerity. There was no relief without work – much of it useless. And after unemployed demonstrations which turned violent in the main cities unemployed men were sent to work camps far out into the country while a panicked government passed draconian laws to suppress such future gestures of desperation. Government expenditure was cut to the bone. It got to a ludicrous level. John A Lee told me once that the last straw was the government announcing a cut in the milk allocation for public service cats. (They were there to keep the mice out of the official records.)
Ultimately, of course, the political response was a Labour government (although still with significantly less than 50% of the vote in 1935). This was led by people who had spent quite a lot of time thinking about alternatives and who realised that the only viable response was high levels of government investment, a comprehensive welfare state, and the complete restructure of such social amenities as housing under state oversight. In other words the restoration of purchasing power in what became known as orthodox Keynesianism.
The depression of the thirties opened people’s eyes to some social realities they hadn’t previously thought about. The writer John Mulgan sums it up in his account of the thirties Report on Experience:
He said: “It is not true that the road to hell is paved with good intentions. We have been some way down the road to hell as a community and we have seen who did the paving. The groundwork of this royal road was laid by the ignorant and oblivious; the tarmac trimmings and side-walks were added by smart fellows who cashed in on a deteriorating contract”.
It was an experience which that generation at least never forgot and which created a political consensus which lasted into the nineteen eighties. But looking back over the last forty years I am led to wonder what we really learned from the thirties, because the ignorant and the oblivious – not to mention the smart fellows – are still with us, along with the Sir John Halls of this world. Have we really learned that we can’t solve Oliver’s conundrum by starving cats; or did Mr Micawber emigrate in vain?