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Northland, Vernon Cracknell, Social Credit : Keith Rankin

Thought for this Day:
Northland, Vernon Cracknell, Social Credit

Keith Rankin, 9 March 2015

Watching the weekend coverage of the coming Northland by-election, I was hoping to see some mention of the 1966 precedent, when Northland (under the name of Hobson) was centre of attention in a general election.

In the 1960s we were in the full grip of 'first-past-the-post-voting'; the two-party club seemed impregnable. The only politically credible alternative to National and Labour was the Social Credit Political League, still alive today as Democrats for Social Credit.

Social Credit were a party of monetary reformers, inspired by the writings in Britain of Clifford H Douglas, in the 1920s and 1930s. While the full analysis of Douglas does not stand up to scrutiny, it is not inferior to more orthodox misunderstandings of money and finance. Social Credit's policy recommendations were pragmatic, and often effective when put into practice.

Most importantly, the social creditors emphasised the importance of interest rates a cost. Hence high interest rate policies would be inflationary rather than deflationary; and low interest rate policies would be deflationary. It looks somewhat true when we look at Europe and the USA today.

We know these policies were effective because the First Labour Government (1935-49) in New Zealand was a coalition of social credit and socialist influences. Monetary policies in the Savage government – in particular with respect to state housing – were inspired by the social credit faction.

There was a big schism within Labour that came to a head in the 1943 election. The John A Lee faction was politically defeated by the more orthodox Peter Fraser leadership. But social credit monetary ideas around interest rate controls and subsidies of essential foods prevailed from the 1930s to the 1970s.

After 1943, monetary reformers remained a significant force in Parliament. Independent Nelson MP Harry Atmore was certainly one; he served until his death in 1946 as New Zealand's last elected Independent. He generally voted with the Labour Government.

From 1946 to 1966, all New Zealand MPs were either National or Labour. Our Parliament had become a two-party fortress, thanks to a lack of regional politics (which Scotland and Northern Ireland bring to the UK parliament) and especially thanks to the absence of preferential voting (as in Australia) in electorates

In 1954 the Social Credit Political League first contested elections. The appeal of the monetary reformers was in the 1950s, as it had been in the 1930s, most amongst the provincial mortgaged small business (including farming) population. Relative to finance as we know it in the twenty-first century, social credit principles were already in place. So Social Credit had become a somewhat conservative movement; a third force that came to be seen by most as a protest party.

This is how their success in 1966 was certainly interpreted. Social Credit leader Vernon Cracknell won Northland [Hobson], with Labour voters backing Cracknell once it was understood that he had a chance.

Having been elected, Cracknell was seen as largely ineffective. He lost to National in 1969. In 1972 Social Credit split into two factions, with two leaders each more charismatic than Cracknell: Bruce Beetham and John O'Brien. In subsequent years the Social Credit movement gained a numbers of MPs: Beetham, Gary Knapp, Neil Morrison, John Wright and Grant Gillon.

The 2015 by-election looks like being a rerun of 1966. New Zealand First has much of the same socially conservative economically interventionist voting constituency that Social Credit had then. In each case the leader of the 'third' force was/is a local son. Northland is vulnerable, as it was in 1966. Indeed in the 2014 general election, National won less than half of the (party) vote in Northland.

The biggest difference is that Winston Peters is a significant national political presence; indeed our most experienced current parliamentarian. And Peters is undoubtedly more charismatic than the long-forgotten Cracknell. 1966 and 1969 were the first elections which were television events. Cracknell had been unable to gain a national political profile in the TV era. His successors Beetham, O'Brien and Knapp were men of the TV age.


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