of Justice and Marine; and after Mr. Herdman's resignation on Feb. 4 1918 to take a seat on the Supreme Court bench, Mr. H. D. Guthrie (Reform) joined the Government as Minister of Lands, Sir Francis Bell taking the attorney-generalship. With these changes the National Government remained in office throughout the war, the life of Parliament, which in ordinary course should have expired in Dec. 1917, being extended for two years. The Government was never popular, and during its last year was extremely unpopular. But by enabling the country to concentrate its energies upon the prosecution of the war, and to make the necessary provision for meeting the cost, it accomplished a great work which dwarfed that of every other government in the history of the Dominion and would have been beyond the power of either of the parties standing alone.
Nearly 63,000 voluntary recruits had been accepted for serv- ice or registered as medically fit in 21 months of war, and more than 46,000 had been despatched oversea, before it became nec- essary to think of conscription. The patriotism of the people and the suspension of party government saved the National Cabinet from any serious difficulty in making the change. The Military Service bill was wisely brought in while the voluntary system, though weakening in its appeal, was still giving excel- lent results. The justice of compulsion commended it to popu- lar sentiment almost as much as its necessity, and the bill, which was introduced by Sir James Allen on May 24 1916, passed its second reading in the House of Representatives by 49 votes to 5, and became law on Aug. i 1916. Except from some of the Labour members the bill met with no opposition. The men who were selected in the first ballot under the Act taken on Nov. 23 1916 went into camp without trouble or hitch of any kind, and the Act worked for the most part with remarkable smoothness throughout a result in large measure due to the quiet determina- tion of Sir James Allen, upon whom, both as Minister of Defence throughout, and as acting Prime Minister during the long ab- sences of Mr. Massey and Sir Joseph Ward on War Cabinet and Imperial Conference business, the whole burden fell.
His most serious difficulty was a coal strike in April 1917, which was avowedly inspired by hostility to conscription, despite the fact that miners were being treated by the Military Service boards even more indulgently than the farmers as per- sons engaged in an essential industry. A settlement which apparently recognized this right to exemption as absolute and condoned an illegal strike was generally considered to have pur- chased peace at too high a price, but the fear that the trouble would recur was not realized. A few months later the opponents of conscription received encouragement from an unexpected quarter. In July 1917, shortly after their return from the first Imperial War Cabinet meetings, it was suggested by both lead- ers that it was time to consider how many more men the country could send. But Sir James Allen, who had already called up 10,000 men under the Military Service Act and was then pro- ceeding with his ninth ballot, made it clear a few days later that the suggestion implied no faltering with the compulsory scheme, and a united Cabinet saw it through. Class C of the Second Division of the Expeditionary Force Reserve married men with two children had just received their summons when Germany collapsed. The total number of men provided was 124,211, of whom 91,941 were volunteers. A country 10,000 m. from the main theatre of war had, from a population of 1,090,000, sent 100,444 soldiers and nurses across the seas.
War Finance. The first three of Sir Joseph Ward's four war budgets placed the burden of the new taxation in an in- creasing degree on incomes. That of 1915 effected no drastic increase but established an important change in principle which seems likely to be permanent. The exemption from income-tax which income derived directly from land or mortgages of land had hitherto enjoyed, on the ground that land and mortgages were liable to land-tax on their capital value, was removed. In 1916 a tax of 45% on excess profits arising during the war was tried, but its operation proved to be so inequitable that it was not renewed. In 1917 the land-tax, which before the war had ranged on a graduated scale from id. to 7d. in the pound on the
unimproved value, with an exemption of 500, was increased 50%, with an additional 50% in the case of absentees. The exemption of incomes not exceeding 300 was retained, but on higher incomes the tax, which before the war began at 6d. for persons and is. for companies and rose to is. 4d. when the in- come exceeded 2,400, was made to range from is. 3d. for per- sons and 2s. 3d. for companies to a maximum of 75. 6d. on incomes exceeding 6,700. Additional revenue was also obtained from increased stamp duties, customs duties, postages, railway fares and freights and in other ways, but these items were small in comparison with the income-tax. The total revenue derived from taxation rose from 5,918,084 in 1913-4 to 13,801,643 in 1918-9, the contributions of. land-tax and income-tax being 767,451 and 554,271 respectively in 1913-4, and 1,512,683 and 6,219,336 respectively in 1918-9. The taxation per head was 5 IDS. in 1913-4 and 12 73. 8d. in 1918-9; the estimate for 1920-1 was 15 75. 6d.
No attempt was made, however, to meet the cost of the war from revenue, and in 1916, with the war expenditure approaching 1,000,000 a month and the London market no longer able to supply all the Dominion's needs, the Government was compelled for the first time to float a large loan locally. The 8,000,000 asked for in Sept. 1916 was over-subscribed to the extent of 1,250,000 within the eleven days allowed, and shortly after- wards the subscriptions totalled 11,000,000. Subsequent loans were less eagerly taken up, but there were no failures. The success was due in part to the provision which from 1917 onwards enforced contributions to these loans from taxpayers whose taxable income exceeded 700. Between March 31 1914 and 1920 the gross debt of the Dominion rose from 99,730,427 to 201,170,755. The net indebtedness per head on the dates named was 84 2s. 8d. and 165 35. id. respectively. Of the gross increase of 101,440,328 no less than 85,157,459 had been raised in the Dominion, 80,089,025 being for war loans. The percentage of the total debt raised in each of the money markets and outstanding on March 31 1910 and 1920 respectively was: 1910 London 77-09, New Zealand 17-42, Australia 5-49; 1920 London 47-58, New Zealand 50-74, Australia 1-68.
Imperial Government War Supplies. New Zealand was well able to bear the drastic increase in taxation and to find the loan moneys needed, owing to the high prices ruling for her produce throughout the war and the terms on which the greater part of it was disposed of. 1 Not merely did the British navy keep the sea-ways open for her trade, but the British Government supplied the tonnage to take her produce away and paid for it almost regardless of the risks of ocean traffic in time of war. Through the agency of the New Zealand Government, all the Dominion's exportable mutton, lamb and beef were purchased by the Imperial Government as from March 3 1915, and con- tracts for other produce followed, viz. scheelite (Sept. 20 1915); cheese (Nov. 4 1915); wool (Dec. i 1916); sheepskins (Feb. 5 1917); hides (March 31 1917); freezing companies' slipe wool (March 31 1917); and butter (Nov. 20 1917). The Imperial Government Supplies Department, which the Dominion Gov- ernment organized for the purchase and control of all this prod- uce, was one of the most efficient of its business enterprises. The prices paid for the wool were fixed at 55% above those ruling in 1913-4; the Imperial Government also undertook to return to the wool-growers half the profits in wool sold for other than military purposes. 2 In other cases the schedules of
1 The bank returns illustrate the Dominion's war prosperity. The deposits, which were 25,733,187 in 1913, rose subsequently as follows: 1915 31,433,653: 1916 37,757,917; 1917 4 2 ,930,7I3; 1918 45,562,939; 1919 50,489,444; 1920 59,405,341. The ratio of advances to deposits in 1916 was 71-48, the lowest yet recorded. On the other hand, the effect of excessive importing and the lower prices of produce is shown in the withdrawal of 11,775,290 during the Dec. quarter of 1920, and in the excess of advances over deposits during the March quarter of 1921, amounting to 5,290,610. The deposits in the Post Office Savings Bank increased from 17,131,414 in 1913 to 38,393,131 in 1919.
2 Of some 2,000,000 bales of wool purchased by the Imperial Government only 9,668 were lost in transit, representing less than 0-1% of the war-time purchases. In 1920, when the wool-growers
