HISTORY OF WHEAT PRODUCTION IN NEW ZEALAND 105 



3. Depression. 



But the decade 1881-90 witnessed a great change, 

 and was probably the gloomiest in the history of New 

 Zealand. A general world-wide depression had been 

 experienced in the late "seventies," and this was reflected 

 in New Zealand by falling prices of the staple exports 

 wool and grain. The average annual price of wheat 

 per bushel for the decade was 3s. 8d., while in 1885 

 it had fallen to 2s. lid. But the production of gold had 

 declined, and m 1887 was only 50 per cent, of what it 

 had been in 1877. Vogel's policy had been carried far 

 beyond expectation, and nearly twenty millions of debt 

 had been contracted in the previous decade. The 

 country was now as pessimistic as it had been optimistic, 

 and Vogel's policy was bitterly resented, though it 

 merely had the effect of accentuating a depression caused 

 by the fall in prices of the staple exports. It was not 

 in itself the cause of the depression as many will 

 endeavour to prove, but there is no doubt that it greatly 

 increased the force of the depression, which was the 

 result of falling prices of the staple exports wool and 

 wheat. And for the realisation of the extent and nature of 

 this economic gloom of the ' ' eighties ' ' a slight digression 

 will be of interest. General prices were falling through- 

 out the world from 1875-1895, and the great increases 

 in the world's production of wheat had caused a general 

 world-wide reduction in price. Now the depression was 

 accentuated in New Zealand because of the operation of 

 two forces. Our imports are mainly manufactured gooda 

 and our exports products of the soil. The general 

 tendency, in a time of falling prices is for the prices of 

 the former to fall less than the fall in the general level 

 of prices, while the prices of the latter fall to a greater 

 extent. That is, while the general level of prices was 

 falling the prices of the exports of New Zealand were 

 falling to a greater extent than the prices of imports. 



