THE BUSINESS OF

WORDS: CAITLIN SYKES ILLUSTRATIONS: JASPER BERLIN

Gallipoli, the Western Front, the misery of life in the trenches… such are the words and images that conjure up the horror stories many of us know of World War I. But there is, notes Gavin McLean, a senior historian at the Ministry for Culture and Heritage, another side to that story. “That’s the economic one. Many people and many businesses actually had a very good war. It was not, for all, unrelieved gloom.”

Maintaining the flow of goods on which Britain depended was a major part of New Zealand’s war effort, and shipping firms, woollen and textile mills and the primary industries were among those sectors of our economy that were called on to ramp up activity and production on the home front.

In his recent paper The Impact of the Great War on the New Zealand Economy , economist Brian Easton writes that while there would have been much attention given to the individual events that made up the Great War in the following four years, less was likely to have been made of their long-term impacts, particularly on the economy. “In contrast, it is my contention that the war experience fundamentally affected the way we governed New Zealand,” he writes.

So how did our economy actually fare in this period? Brian’s interpretation of the data available suggests that while the economy grew in the Liberal boom to 1908, it was followed by a long period of stagnation in terms of per capita GDP, which came to an end 27 years later as the economy emerged from the Great Depression. “There is little evidence of a boom in production during the Great War (in contrast to the boom of the Second World War), probably because of the withdrawal from the labour force of overseas service personnel. Given that there was not a drop in production (as far as we can tell), productivity must have risen,” he notes.

It is clear that certain industries and specific businesses did well during World War I and Gavin talks about the three Fs when describing the sectors that did best: fibre, food and fuel. Wool was one of our major exports at the time and was an industry vital to supplying the war effort. Demand took off strongly due to the need to clothe not just our own troops but those of the rest of the Empire.

Based on the solid reputation it had gained during the South African War, the Kaiapoi Woollen Mill (a Category 2 Historic Place) was able to secure contracts to supply cloth for uniforms and blankets, giving it a steady income during World War I, according to a local history of the mill recorded by

Waimakariri Libraries. As a sign of support, the mill also paid partial wages to its employees on military service. In fact, demand was so strong in the sector that shift work was introduced for the first time at some mills; orders for khaki-coloured fabric stretched to the limit the capacity of Lane Walker Rudkin’s Ashburton mill, where machines ran 24 hours a day.

Among the sites included on Auckland’s First World War Heritage Trail (see story on page 46) is Onehunga’s Jellicoe Park, where particular mention is made of the Onehunga Woollen Mills (another Category 2 Historic Place) on Neilson Street. In 1917 the mill received a government order worth £95,341

Processing Power

Meat processing was an important industry for New Zealand’s war effort, with 10 new freezing works built during that time. The industry was also significant for the suburb of Otahuhu in Auckland, where prominent meat-processing businesses of the time included plants such as the Auckland Freezing Company, the Westfield Freezing Company and R&W Hellaby Ltd (Shortland Freezing Company). Bell Avenue in Otahuhu is one of the sites being recognised for its economic significance on the Auckland First World War Heritage Trail, which includes a note that Prime Minister William Massey opened the Westfield plant on 29 May 1916. The works closed in 1989.

to produce khaki material, according to notes from the trail, which also mention that the mill was the site of experiments conducted in 1916 by Professor Worley of Auckland University to create a waterproofing process. The findings of his research were later employed by the military to apply waterproofing to uniforms, tents and other materials.

The farming sector was another major contributor to the war effort, as maintaining the flow of food to Britain was seen as being of critical importance. In 1915 Britain and New Zealand negotiated a bulkpurchase agreement whereby Britain agreed to take most of New Zealand’s surplus exportable produce – dairy products, meat and wool – at fixed prices. For farmers, used to the uncertain ebb and flow of commodity prices, this was a period of guaranteed relative prosperity.

(Former) Union Steamship Company

Peter Andrewa

Sending offshore what was produced, however, was another matter. Shipping was a major issue, due to capacity being diverted directly to the war effort and suppliers such as Argentina being closer to the United Kingdom. To accommodate this scarcity of shipping, says James Watson, Associate Professor of History at Massey University, there was a significant development of freezing works and refrigerated capacity in New Zealand during World War I.

In fact, he notes that New Zealand ended the war with vast quantities of meat in cold storage, bringing with it a collapse in prices. Some farmers who had bought land at high prices or sold their land on mortgage during the prosperous war and immediatepost-war years later found themselves in financial trouble with unsustainably large debts or holding mortgages that mortgagors could no longer service.

Indeed, Gavin describes shipping as the most crucial business for New Zealand during World War I and central to that was the Union Steam Ship Company, started in Dunedin in 1875 by James Mills. “The Union Steam Ship Company was our first multinational company,” Gavin explains. “It had a fleet of about 70 ships at the outbreak of World War I which was as many as the next five largest Australian shipping companies put together. That capacity enabled a huge amount of work to be done and goods to be transported; through that we were able to supply hospital ships, freighters and, of course, troopships.”

Gavin describes the profits the company made during World War I as “almost obscene”, with the firm reaping more than a 100 percent return on capital at the peak of the war. “All of the Empire shipping companies were making more money than they knew what to do with,” he says. “And they were all desperate to hide it, which led to a series of takeovers. That’s really why P&O took over the Union Steam Ship Company in 1917. You saw a massive consolidation of British shipping companies during the war, partly to hide profits.”

While fuel, specifically coal production, played a vital role in the war effort, Gavin notes that by the second half of the war coal was in short supply. Increased requirements from shipping and ramped-up factory production along with strike activity, mainly on the West Coast, meant that by late 1917 episodic shortages of coal were becoming serious.

Labour shortages were another characteristic of New Zealand’s wartime economy and in his paper Brian notes that more than a fifth of the labour force would not have been available for civilian production during World War I. “A lot of businessesf ound themselves struggling with skilled workers being called up,” says James, “and although they could appeal, very often they found themselves in difficulty.” Slaughtermen in freezing works,waterfront workers and coal miners were among the occupations more likely to gain exemptions.

Inevitably, however, some decisions regarding exemptions proved contentious, such as the case of Robert Laidlaw. When he was called up for military service in 1918 he applied for exemption on the basis that his thriving mail-order business, Laidlaw Leeds (which later merged with the Farmers’ Union Trading Company) could not operate without him, putting his employees and investors in jeopardy. He was effectively excused by the Military Service Board after it granted an indefinite adjournment of his case, leading to criticism that it showed favouritism to the wealthy.