Walter Nash (1882–1968) was among the most influential of the group of Labour Party leaders who created the welfare state. He was a member of parliament for almost 40 years and he was one of New Zealand political leaders known internationally. Keith Sinclair's engrossing biography traces Walter Nash's development from his youth through to his determination to build a more just society. Nash grappled with an array of practical problems such as finance, trade, war and international relations. Walter Nash is a riveting account of New Zealand politics and of a man whose enthusiasm, drive and personal quirks aroused admiration laced with exasperation in those who worked with him. This highly readable and important work was enjoyed by many as a New Zealand Listener serial.
Walter Nash stands as one of the key architects of the New Zealand state that emerged from the First Labour government. He created a system that endured until its dismantling by the Fourth Labour Government's 1984 neoliberal reforms. Nash left behind a garage full of notes, memos, meetings, and reports, which Keith Sinclair transformed into an excellent book, chronicling Nash's life in considerable detail.
While I wouldn't claim this book alone will enable a complete understanding of the First Labour Government, nor the intricate details of the welfare state maintained by capital controls and import licensing, it's certainly a vital piece in the puzzle, part of a constellation of books that would fill that picture in for you.
Like all biographies, it begins a little far back, detailing Nash's childhood in England as a bright child from a lower-income family, where he found Christ, socialism, and a strong work ethic. Moving to Wellington, New Zealand, at 27 with his new family, he experienced a turbulent time in business. Rumors of bankruptcy, which Sinclair attempts to dispel, would unfortunately haunt him from this period for the rest of his political career. Nash's greatest business failing, at least seemingly, was his excessive trust and lack of self-protective measures, perhaps explaining his meticulous habit of saving every piece of paper he could acquire.
After some time traveling in Europe, he attended various socialist conferences, with an ultimate intention of procuring literature to open a socialist bookshop. Some of this literature would later be confiscated by authorities upon his return. Around this time, he became more involved in the local politics of the labour movement, which would eventually coalesce into the Labour Party we know today.
He was elected national secretary of the Labour Party, succeeding Savage in the role. Nash applied his considerable talents to organizing and structuring the Labour Party into an effective political movement through expanding membership, raising funds, and centralizing the party structure. It was here that Nash developed the relationships and power base that would enable his central role in the Labour Party for the rest of his life.
Elected to parliament in a 1929 by-election in the Hutt, thanks to a three-way race and vote splitting on the right, he proved to be a popular MP. He transformed a marginal district into a safe Labour seat. He was a very effective MP even before Labour won power, being well-socialized across the political spectrum and well-liked in the Hutt.
He entered parliament at the end of a dramatic political realignment, a response to the third great crisis in New Zealand since the Land Wars (the previous two being the "1879-96 slump" and the Great War). The primary fear born out of this crisis was unemployment and poverty, with all government policy focusing on how to fix these issues and prevent their return. This brought about a political realignment: what remained of the Liberals merged with the more right-wing Reform Party. This left the Labour party to abandon its roots as a radical socialist party focused on nationalizing all major industries and slowly clawing back private land ownership. Instead, the Labour Party focused on unemployment in the form of a social welfare state and finding work for all those seeking it. The proposed solution to the crisis of the capitalist system was no longer socialism, but a revival of the capitalist economy under state direction through the management and control of credit and currency via a Reserve Bank. This approach aimed to lift demand and create employment. All these changes to Labour's political platforms emerged from the crisis of the early 1930s.
This book reinforces the views found in Coates's biography and other works on this period, highlighting the emergence of three approaches to the depression. There was a more right-wing strain by Coates within the Coalition government, who were against an active role for government in the crisis but saw the need for some interventions. Then, a left-wing strain, championed by John A. Lee and other credit reformers, believed in the nationalization of the banking system to print credit. Finally, there was the more moderate path carved out by Nash and Fraser, centered on government control of the Reserve Bank and foreign exchange to control inflation and using excess funds to balance the needs of the greater welfare state. All these forces combined to bring Labour to power in 1935, as the public grew frustrated with Coates's approach, seen as not going far enough by the left and becoming "too socialist" by the right. The split tickets on the right ensured a strong Labour victory , which was sold as "applied Christianity" by Savage and Nash. Nash would later define their policy by stating, "I am a socialist in the sense that I believe that a major responsibility of Government is to provide collectively for the economic welfare and security of the individual. But I am the conservative in the sense that I look upon the family as the foundation of the nation". Ultimately, the deciding factors were either the guaranteed price for exporters or credit reform. There was also widespread rural dissatisfaction with the government, and the poverty of farmers led to a protest vote for Labour.
For those of us born after 1946, the "country quota" at the time meant urban electorates were more populous than rural ones, making rural votes effectively worth more than urban votes. Thus, winning rural electorates with policies appealing to farmers was key to any Labour victory.
As Labour assumed office in 1935, Nash became Minister of Finance, Customs, and was put in charge of government life insurance, state advances, and land and income tax. This review won't delve deeply into the inter-caucus disputes with credit reformers, but Lee and others frequently challenged Labour from the left regarding credit reform. These party disputes ultimately resulted in Lee's expulsion in 1939, orchestrated by Savage from his deathbed. Labour faced initial difficulties, lacking experienced ministers and dealing with a civil service largely accustomed to supporting the coalition government. I will summarize the various disputes below, but the book does an excellent job of weighing the various conflicts around budgetary and economic policy.
Nash focused on three key policies: RBNZ nationalization, fixing the price of dairy, and securing cheap loans for farmers. The first policy brought the Reserve Bank under firmer government control by buying out private shares from other banks. However, disputes with the existing governor and board would plague Nash throughout the coming term. Nash aimed to keep interest rates low and raise loans at lower rates than what the governor and board would permit. The second policy meant the government would purchase butter and cheese from the Dairy Board at a fixed price, which would then be sold to London markets. This would smooth out the wild swings the economy suffered from volatile prices, providing dairy farmers "a degree of security they had never known". The third policy nationalized the Mortgage Corporation, allowing the minister to lower interest rates and stimulate housing construction by cutting out land agents and speculators. This first year, coupled with a budget surplus, reversed public sector pay cuts and increased pensions.
Nash would undertake several trips to London, advocating for a more insulated economy. This often conflicted with a British government more interested in freer trade and market forces. Nash's approach ran contrary to imperial economic policy and threatened the Ottawa conference, which had secured "imperial preference" for New Zealand, granting privileged access to the British Market. New Zealand faced contradictory demands: to develop a balanced economy, which would threaten British exports, but also to remain a reliable primary exporter. There are many arguments surrounding these points.
The National Security Act of 1938 became the focal point of that year's election, leading to a landslide victory for Labour. It was the first of its kind globally, securing universal pensions and guaranteeing a minimal standard of living, including free medical treatment.
The exchange crisis emerged after that election and was the primary reason I wanted to read this book! During the depression, New Zealand accumulated a large amount of foreign exchange due to a lack of spending power domestically. Over time, as Labour raised wages and stimulated the economy, this reserve began to deplete. Many New Zealanders moved capital abroad, fearing the solvency of various banks. The Reserve Bank governor advised a traditional response of government cuts to reduce demand through unemployment. Nash rejected these calls, instead reducing imports by controlling foreign exchange and using import selection.
Ultimately, what saved the government was the beginning of World War II. Nash needed to borrow a large sum to fill the gap, but money was tight in anticipation of war in Europe. However, as Poland was invaded, the British government cabled to buy the entire New Zealand exportable surplus of meat and and dairy, saving the currency reserves and hastily building them back up. As the country entered World War II, prices were stabilized to keep inflation in check, and the social security net was expanded. Doctors finally accepted social security, on the proviso that they could ask patients to pay more than the state's contribution.
As the war progressed and tensions emerged between the ANZACs and Britain over war priorities, Nash was eventually sent as the "Minister to Washington," owing mostly to a lack of trusted staff to execute such an important role. While he was unable to persuade Roosevelt for an early, more focused offensive on Japan, he did manage to secure weapons, anti-aircraft guns, and American troops on the ground. Nash effectively kept New Zealand, and its role in WWII, in the minds of both the American government and its people, both being important to keeping the country secure from the Axis.
One interesting point Sinclair raises is the tension around Fraser and Nash not being New Zealand-born, which he contends might have given them more of an imperial bias rather than prioritizing New Zealand's interests. He argues that when New Zealand was most threatened, it was extraordinary that they did not pull New Zealand troops out of Europe, as Australia had done. This might have left New Zealand supporting perhaps too many troops in the field, leading to a lack of manpower in providing vital foodstuffs to Britain and American forces in the Pacific.
Towards the end of the war, the Bretton Woods conference aimed to set the future for international trade and currency control. This posed a threat to New Zealand's import licensing and exchange control, upon which the New Zealand economy was carefully balanced. Australia and New Zealand believed the aim of international economic collaboration should be full employment, driven by the desperation of the depression years. Key to this would be the right to retain government control of imports. Nash brought up this point and secured assurance that import licensing and exchange controls would remain viable within this system, which would become the IMF. However, ratification of the IMF at home was delayed until the 1960s, due to an electorate hostile to surrendering sovereignty to an international organization, with "the opposition [] powerful, immoderate and wildly emotional" , leading the government to take no action. Ultimately, the ITO, which was intended to act as the administering agency of GATT, failed to materialize without Soviet involvement and due to American criticism of continued exchange controls.
One amusing thread from this point onwards was Nash's tendency to hoard paper. He accumulated files and files in his office, didn't trust others easily, and failed to delegate. This habit involved hoarding every document, letter, file, government files which definitely should not have been in his house, and even drawers (not only his own, but Peter Fraser's along with other ministers' after they died), tickets, and bills. It's particularly strange, but I imagine it made writing this book a lot easier. He loved the power of making decisions, but he would take a long time before making them, wanting to read every file. He would not tolerate being rushed and resisted those who demanded urgent decisions from him.
Coming into 1949, Labour was losing its grip on the electorate, owing to Nash's frequent international travel, the management of difficult issues pertaining to the development of the coming world order, and the emergence of Sidney Holland as a ruthless and aggressive Leader of the Opposition. Ultimately, Holland became Prime Minister. Labour had won power by insulating the economy, but lost office because the emerging world order led citizens to desire a less insulated economy. Nash left office with three lorry loads of paper.
Like many books on the 1950s, this one does not paint a flattering view of Holland , and to be fair, I've yet to find one with a positive defence of him. Sinclair comments that Holland's average minister was generally more competent than their Labour's predecessors , supporting a continued theme in many books about how the first Labour government struggled to have many competent ministers. The book covers the 1951 Waterside Strike, detailing how Nash tried to encourage a gentler path, and how many of the extreme actions taken at the time need to be contextualized by the Korean War and the perceived threat of communist agitation.
Nash took time to grow into an effective Leader of the Opposition , but he was at least able to witness his import controls reintroduced as "exchange allocation" when Holland failed to manage the balance of payments. Ultimately, despite Holland's and Nash's rhetoric, the two parties became very similar, far from the days of the 1920s and 30s. This similarity would lead to a growing disillusionment with political change from this point onwards.
The 1957 election reverted to form with "election bribes," as both parties advocated for introducing Pay As You Earn (PAYE), which would include a rebate of either 100 or 75 pounds. Nash returned to power as Prime Minister with a one-vote margin, leading a mostly old Cabinet. With most of the credit reformers removed, Nash had consolidated power, resulting in what was essentially an alternative administration that inherited a major balance of payments crisis. This crisis was likely hidden by National during the election year, leading to the infamous "Black Budget" of 1957. The budget, sensible in its reduction of spending and limiting of expenditure, its tax increases, and increased duties on beer, spirits, tobacco, and cars, along with the tax on petrol, doomed Labour for years to come. It made Nash and his Minister of Finance Nordmeyer (a Presbyterian minister) seem out of touch with the core working class.
Nash would go on to spend much of his Prime Ministership out of the country, attempting to negotiate trade deals with Britain, disarmament between the USSR and USA, and addressing rising tensions in Malay, Lebanon, Laos, and Formosa (Taiwan). He even visited the USSR and Khrushchev as a relatively neutral figure from the West to negotiate disarmament in 1959. However, the shooting down of the U-2 spy plane scuttled many of these plans. The other shadow on the horizon was the UK drawing closer to the new European Economic Community, which would threaten New Zealand imports. It was striking to see how involved he was with major powers during various high-tension moments in the Cold War, yet he received little credit for any of this from the New Zealand electorate. Losing the 1960 election was a foregone conclusion, and he took quite some time stepping down as leader of the party.
In his later years, his vanity was a persistent criticism. I think this is a bit unfair after reading all he achieved, but perhaps a bit more humility in his public actions was needed to avoid coming across as out of touch and too sure of his grandeur. His last major political action before he died was being a vocal critic of escalation in Vietnam, which recaptured a lot of admiration within the party base before his death in 1968 from a heart attack. His death galvanized support for building a hospital in Vietnam, which, to my understanding, materialized as the Children's Ward in Quy Nhon.
Some interesting side notes: advice Nash gave to an aspiring MP included studying world trade, New Zealand's resources, banking practice, currency theory, and war and peace. He also advised: 1. Cultivate Self-Control , 2. Cultivate the habit of thinking and don't be satisfied with ready-made opinions from books and 3. Study so you have some knowledge of the purpose of life (Sinclair omits number 4, and I'm very curious as to what it was!). 5. Remember that while you may have a well-grounded view of the subject, the other person's thoughts might also be right.
I know that Savage's reputation recovered in the late 80s, but it's interesting to read a book written prior to that which portrays him as less than the holy figure he's often depicted as now. As the book recounts: "The PM got annoyed and suddenly cleared out the table and sat away like a sulky kid for about half an hour”. This early instance of Savage's "petulance, emotional responses hardly or not controlled, was ominous for the government's future