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Rh turned it to profit among the strikers no less than among their critics, and received abundant evidence of their personal loyalty and goodwill. Nor between his arrival in Auckland on April 24 1920 and his departure from Lyttleton on May 22 was there anything else to mar the brilliant success of his visit. Speaking broadly, it may be said that the advance of democracy in New Zealand and the development of her national spirit have merely intensified her loyalty to the Crown as an essential link of Empire. She has, of course, her revolutionaries, who profess that one flag is as good for them as another and no better, but the English doctrinaire who toys with republicanism has no ana- logue in a Dominion where Radical and Conservative alike can see in the Crown the symbol and guarantee of the Imperial unity upon which " all that we have and are " depends. The Prince of Wales quickened this opinion and sentiment with a personal enthusiasm unparalleled before. None of his compli- ments was more heartily appreciated than the remark in his speech at the parliamentary luncheon (May 7) that " there is certainly no country more stolidly and unrepentantly British than this Dominion of New Zealand." The stolidity and unre- pentance of the Dominion's attitude to its parent stock have been powerfully fortified by the Prince's visit.

During the recess the Government and the country suffered a severe loss in the retirement of Sir James Allen, who resigned in March in order to take the High Commissionership in succession to Sir Thomas Mackenzie, whose tenure of the office since 1912, and especially during the war years, had given great satisfaction. It was nevertheless with a strong team that Mr. Massey was able to face Parliament on June 24. The names and chief port- folios of the reconstructed Ministry were as follows: Mr. W. F. Massey, Prime Minister, Finance and Railways; Sir William H. Merries, Native Affairs and Labour; Sir William Fraser, Mines; Sir Francis H. D. Bell, Attorney-General and leader of Legisla- tive Council; Mr. D. H. Guthrie, Lands and Repatriation; Mr. W. Nosworthy, Agriculture and Immigration; Mr. J. G. Coates, Public Works and Postmaster-General; Mr. E. P. Lee, Justice and External Affairs; Mr. C. J. Parr, Education and Public Health; Mr. C. J. Anderson, Internal Affairs and Mr. Maui Pomare, Cook and other islands and member of Executive repre- senting native race. Sir R. Heaton Rhodes was shortly after appointed Minister of Defence. Without retiring from the Ministry Sir William Herries and Sir William Fraser later resigned their portfolios, which were distributed as follows: Mines to Mr. Massey, Native Affairs to Mr. Coates and Labour to Mr. Anderson. In March 1921 Mr. W. Downie Stewart joined the Government as Minister of Internal Affairs.

The Opposition's official amendment to the address in reply was rejected by 45 votes to 23, the minority including eight Labour members; and the Government were not seriously chal- lenged throughout this session. The death of the newly elected Liberal leader, Mr. W. D. S. Macdonald, on Aug. 31 greatly increased the difficulties of the Opposition. Internal dissensions in an attenuated party have made the task of his successor, Mr. T. M. Wilford, a very embarrassing one.

Mr. Massey's first budget sounded a note of caution, but in providing for a revenue of 27,712,700, and an expenditure of 26,893,497 (the figures for 1919-20 being 26,081,340 and 23,781,924 respectively), and for loans which, including 10,000,000 for renewals, amounted to 24,800,000, it gave no clear indication of the tapering off which it recommended. There was no general increase of taxation, but a more equitable adjust- ment of its burdens, which recognized for the first time in New Zealand the distinction between earned and unearned income, was effected. Defence is apparently one of the departments in which efficiency is to be sacrificed to economy. The leading features of the new scheme, which is to cost about 600,000 per annum when fully established, are the reduction of the period of Territorial training from seven years to four, the limit now being fixed at the recruit's 22nd year instead of the 2Sth; the establishment of " recruit " or " general training " period in the 1 8th to 1 9th year for both fit and unfit youths; and an increase in the camp training (47 days in all) with greatly re-

duced half-day and evening parades. The scheme is not yet in operation, and there may be no training camps for two or three years. The session passed without any hint of a naval policy.

Though the expiry of the Imperial Government's contracts for the purchase of the Dominion's produce, and the danger threatened to the coming season by that Government's inability to clear the immense accumulations of meat in the cold storage of all the chief ports of the Dominion or to dispose of the wool accumulated in England, had attracted a good deal of attention during the session, the gravity of the approaching crisis was not generally perceived. The suddenness with which the world- wide depression hit the Dominion towards the end of the year surprised not a few even of those who had prophesied trouble. The sheep-farmers were the most serious sufferers from the collapse of prices which the war had " boomed," but butter and cheese to some extent saved the position. The effect of the depreciation of exports was aggravated by an unprecedented glut of imports. Importers had been ordering freely to meet the shortages of recent years, and as orders had usually been only filled pro rata they were often sent sufficiently in excess of requirements to provide for the estimated deduction. .?

The unexpected filling of these liberal and long-standing or- ders resulted in immense importations from Britain and the United States and at high prices. The imports, which had aver- aged about 20,000,000 in the four years before the war, rose from 30,671,439 in 1919 to 61,595,828 in 1920 about 60 a head and 15,153,882 in excess of the exports. Some of the chief items were: Boots and shoes 1919 442,901, 1920 1,189,- 575; woollen goods 1919 527,468, 1920 2,412,428; motor vehi- cles 1919 1,135,320, 1920 2,934,239. The returns for the first quarter of 1921 show that the process had been checked, but the balance was still adverse. The merchant and the banker were having their full share of the farmers' anxieties, and unemploy- ment had begun to show its head. A country which profited for so many years from the troubles of the world could not complain if it was compelled to share them for a while.

External Affairs. The impulse which induced the Ward Government in 1909 to offer a dreadnought to the Admiralty, and the country to confirm the offer, has been justly described as a spasm rather than a policy, and it cannot be said that the Dominion has even yet evolved a policy in these matters. The military defence of the country was put on a reasonable basis by the establishment of compulsory training in 1909-10, but naval policy made no comparable advance. The 20,000 which New Zealand agreed to pay towards the maintenance of a British Squadron in Australasian waters was increased to 40,000 in 1903 and to 100,000 in 1908. At the Imperial Defence Con- ference of 1909 arrangements were made for the establishment of a Pacific fleet, with the Dominion's gift ship as the flagship of its China unit, and 7 vessels of this unit, manned and officered as far as possible by New Zealanders, were to be stationed in peace-time in New Zealand waters. The concentration of the Empire's naval strength in European waters, which was dictated by the growing pressure of the German competition, upset this arrangement, and in 1912 the Mackenzie Government, with the entire approval of the people, assented to the transfer of New Zealand's battle-cruiser to the North Sea. Sir James Allen, who became Minister of Defence in the same year, was a strong advo- cate of a policy of naval self-reliance, and in 1913 a Naval De- fence Act was passed which provided for the establishment of a New Zealand naval force which in time of war was to be at the disposal of the British Government. The scheme was opposed by Sir Joseph Ward on the ground that what the Empire needed was a single undivided navy and that New Zealand did not want and could not afford a navy of her own, and the division on the measure followed party lines. It is certain that public senti- ment would have condemned the scheme if it had not provided for the automatic transfer of the force to the Admiralty in the event of war.

In 1919 Lord Jellicoe, who visited New Zealand in that year (Aug. 23-Oct. 2) on his naval mission, and whom the Domin- ion was proud to welcome back in 1920 (Sept. 27) as its governor-