The 2008 Michael King Memorial Lecture, University of Otago, 9 October 2008. [1]
  

Keywords: Maori; Political Economy & History;
 

Michael King and I were students together. It would not be true to say we were close friends afterwards – for we lived in different parts of New Zealand and worked in different areas. But it was a friendship of genuine affection based on a mutual respect for each other’s work, and a joint understanding of the challenge of being an independent scholar in a country which gives neither independence nor scholarship much value.
 

In 2000 when I was passing through Washington, Michael, who was the Fulbright teaching fellow there, asked me to do a presentation to his New Zealand studies class on the New Zealand economy. I cannibalised my 1994 Hocken memorial lecture and it seemed to go all right, or at least, Michael seemed pleased.
 

That episode was on the path to my current project; to write a history of New Zealand from an economic perspective. My history is very much in the spirit of those who have written histories pointing out that women – say – have been omitted from conventional histories. The same is true in most New Zealand histories for the economy and I want to offset that deficiency.
 

The story of New Zealand starts 650 million years ago, when our first rocks appear. Last year, as the 2007 Claude McCarthy fellow, I wrote the history from those first rocks through to the eighteenth-century Maori economy and society. This year I am the 2008 J. D. Stout Fellow and am using the time to write what may be called the short nineteenth century from 1769, when there was the first exchange between Maori and Cook’s crew, to 1882, when the first shipload of refrigerated meat left these shores. It will take me at least another two years to bring the story up to date.
 

However this is not an occasion to tell you about my current project, so much as one to honour Michael. I am going to do this by taking a topic close to his heart where I would have valued his guidance. True, I can get some from his written works including his History of New Zealand. Still it would be better were he still here.
 

Michael achieved many things in his life, but for me his greatest achievement was in the 1970s when he made that outstanding contribution to New Zealand race relations, including major biographies of Te Puea and Whina Cooper, and the television series Tangata Whenua. He brought it together from the other side in Being Pakeha, recently revised as Being Pakeha Now.
 

Of course, many students of our generation opposed apartheid and fretted over the distinction between integration and assimilation which the Hunn report posed. But Michael went far beyond anything we did, immersing himself in the Maori community, with the aim of making Maori preoccupations more intelligible to non-Maori New Zealanders
 

Hence the topic of this presentation: ‘Race Relations’, because that was much of what Michael’s life was about, ‘and the ‘Economy’, because it enables me to continue the dialogue with Michael.
 

I have a Nigel Brown painting. Trade and Exchange, from his Cook series. It shows a Maori exchanging with a British gentleman a crayfish for an iron spike. I am wont to ask a visitor which of the two is getting the better deal. Is it the Brit who is receiving food, the very basis of life? Or is it the Maori who is receiving a capital good, which will markedly increase his productivity?
 

Economists observe it is a voluntary exchange, so their answer is ‘both’.
 

As it happens, this image of the exchange of food for metal is not historically accurate. (Nor did Brown intend it to be.) The original picture from which the image descends, shows the exchange of the crayfish for (tapa) cloth at Tolaga Bay. It was drawn by Tupaia, the Tahitian chief who escorted Cook around New Zealand on the first voyage. Perhaps the Pacific’s first anthropologist, he died in Batavia (Jakarta) on the return voyage, and never had the opportunity to apply his keen intelligence to British society.
 

However the exchange of food for metal is not ahistorical. Elsdon Best reported ‘Nicholas, who sojourned in the Bay of Islands district in 1815 … [spoke] of the natives being eager to exchange a 10 lb fish for a ten penny nail’.[2]
 

There is the overtone here, I think, that the gullible Maori was exchanging something of value for an almost worthless nail. The Maori on the other hand, would have seen the imbalance the other way around. As a part of a normal day’s catching, the fish probably took him minutes rather than hours. A metal implement would be more efficient than a stone one, whose production takes many days.
 

Exchange involves two sides – two agents, each with their own perceptions. The two sides need not have similar perceptions. If they had, there would be fewer exchanges. But there is a tendency to give an account of the exchange from one of the points of view, ignoring the point of view of the other. If the other is from a different culture, we may be teetering on the edge of racism.
 

As I have struggled to write a history of New Zealand, I have been struck how often only one side of any account is given. That is true for mine, with its focus on an economics perspective. But that perspective highlights the narrowness of other perspectives, and at least I am brazenly aware of my stance.
 

Let me give another example of how one-sided our accounts can be. I got interested in the so-called sex industry in pre-1840 New Zealand, when one report seemed to suggest it was a substantial contributor to ‘foreign exchange earnings’, as one might say in modern parlance. In the end I concluded that the report was surely an exaggeration, but trying to make sense of the industry, I was struck by how easy it was to misunderstand it. It might be presented as a food for metal exchange, but it was clearly more complex. Very often it involved a stable relationship between a sailor whose ship was in port for weeks or months, and a Maori woman – sometimes described as a ‘seasonal wife’.
 

Sure, there was an exchange of goods in the relationship – a musket and a dress seems common. But virtually all the reports we have on these relationships is by disapproving critics. I could not find an account by a sailor, although there are a couple of waiata in which the singer laments that her sailor has gone off and expresses the hope he will come back for the next season. The implication is that there is an affectionate dimension in what was a more complex exchange than a one-night stand. .
 

So the arrangement was not a wysiwyg exchange like that of fish for nail, where ‘what you see is what you get’ and then you go separate ways. In such deals the transactors may be completely unknown to one another and may never meet again; it is unlikely one will write a waiata or song about them, except as a comic turn. Ronald Coase, who was awarded a Nobel economics prize for his profound insights into the modern market economy, points out that one of the advantages of commerce is that it enables transactions to take place between anonymous agents, who may not even ever get to meet one another.
 

That was not the Maori way before the arrival of Cook. Their transactions were based on the ‘gift exchange’. The great New Zealand anthropologist, Raymond Firth, was one of the first to develop the notion, in book The Economics of the New Zealand Maori, on which my study draws. Perhaps the best way of understanding the gift relationship is that the transactors are more important than the transacted – those who are involved more significant than what is being exchanged. In commerce it is the other way around.
 

Of course there were barter transactions among the Maori, in which the individuals less known to one another exchanged for the sake of the goods. Had there not been, they could not have traded so easily with Cook and his crew. Yet it is instructive that Cook was unable to obtain any of the greenstone artifacts he was desperate to collect, probably because in those days pounamu taonga was gift exchanged, not bartered.
 

Once transactions move from wysiwyg, the exchange gets more complicated. That is why we have to have legislation like the Fair Trading Act and the Consumer Guarantees Act.
 

The most complicated early transfer was land. There has been much historical investigation around the question of whether the Maori sold land to the early settlers. If they did not, what was going on?
 

We need to be cautious about the size of the pre-contact land transfers. There were substantial transfers during the Musket Wars, which suggests that it was partly technological limitations which prevented the earlier transfers of land. The wars were over by the early 1830s, perhaps because the equally armed Maori realised that it was now a zero sum game. Had the Maori been left alone for a couple of generations, the traditional pattern might well have reemerged. Ancestral ties were integral to Maori land holdings, and after a few generations the descendants of the conquerors would have intermarried with the original land holders and so could claim the land through their whakapapa, rather than by conquest.
 

But before there could be a settling down after the Musket Wars, Europeans began to occupy the land. Initially they did so with agreement of the Maori. But what was the nature of the agreement? This is a much contested issue. But we can be confident that when Cook first arrived, Maori would have had little idea of the European notion of land alienation, given the primacy they gave to ancestral tenure.
 

Economics identifies three separate functions in the notion of ownership: possession, use and transfer. These dimensions are in (Judge) Francis Fenton’s 1858 statement:
 

Each individual has a right as against the rest of the tribe to a pretty well-defined piece of land, part of the tribal estate, which he could hold and cultivate as against any other member of the tribe; but his power extended no further. He could not alienate it out of the tribe. Such alienation must be an act of the tribe.[3]
 

Unquestionably the Maori community gave Europeans the licence to occupy and use land. Presumably the notion of transforming (as when the bush was replaced by fields) was a part of this agreement. However, the occupier did not have the right to transfer an occupation-and-use licence to another without the permission of the iwi licensor. That third dimension of ownership was not intended to be sold, but was to be retained by the iwi.
 

If consulted in this framework, the eighteenth-century Maori response is likely to have been that this is all back to front. The licence to occupy involved joining the hapu, a practice which had long applied to Maori from other hapu. (The offering of a wife from the hapu to the European occupier – not always accepted, and sometimes misunderstood – was part of the same process and would give any child of the union ancestral connections to the land.) Thus the framework for the transaction was a gift relationship, more about relationships between people than it was about property transfers.
 

So the land transaction was not wysiwyg like fish for nails. Now the difference of perception really matters. One side thought they were obtaining a permanent addition to the family; the other that they were permanently obtaining a piece of land.
 

The Waitangi Tribunal, looking at the issue in the Muriwhenua Land Report, was very critical of the Europeans for assuming that their system of land property rights applied. No doubt the new arrivals were culturally insensitive, but perhaps no more than the Maori who assumed their system of land property rights necessarily applied too. As it happened the British system dominated, to the detriment of the Maori.
 

The Tribunal overlooked one factor which must have influenced the European view. By the 1830s the Maori (in the Far North anyway) had experienced a generation of commercially transacting food and other resources for desired European commodities. It might have seemed ‘obvious’ to the Europeans coming from their different commercial background that they could treat the exchange of land in the same way.
 

But as far as the Maori was concerned, land was very different from fish, something with the benefit of hindsight – and the work of scholars and the Tribunal – we see today. Nor should the distinction surprise us. If someone wants to export (that is, exchange with foreigners) food, we are likely to applaud their enterprise. But if someone wants to exchange (sell) land to a foreigner they, as likely as not, will require permission from the Overseas Investment Commission, which – irrespective of how permissive it is – involves an acknowledgment that the nineteenth-century Maori were right to distinguish a land transfer from other potential exchange transactions.
 

It is not a novel idea that land issues dominated Maori-settler relations for the first hundred and more years of contact. Interestingly, until the late 1850s the official position was to acknowledge the differences in Maori ownership. The head of the Land Purchase Department, Donald McLean, said there was no such thing as a strictly individual right to any particular portion of land, independent of the tribal right over it.[4] The practice was to give the principal chief a veto.
                                                           
In 1862 Parliament passed the first Native Lands Act, whose purpose was that all land over which native title had not yet been extinguished would be converted into a title recognisable under New Zealand – that is British based – law. Now settlers could purchase direct from Maori, once title had been established. It represented progress for Maori insofar as the revoking the right of Crown preemption, meant they were treated less paternalistically. Initially, at least, some Maori were supportive of the legislation.
 

As Richard Boast writes – with irony – ‘[s]upposedly Maori was to get a better title than mere ‘Native’ title; they were in fact about to become the lucky recipients of the highest and best form of title known to common law: the freehold.’ [5]
 

One reason the British settlers imposed this ‘ideal’ form on Maori was because it was the best they knew, or knew how to manage. One is reminded of the corporatisation of state owned enterprises in the 1980s. The pragmatists chose to put the government businesses in the legal form of a private corporation, because it was a well understood institutional form. But is also made the businesses easier to privatise. Thus it was with Maori land. Freeholds and Crown grants were legal categories officials and settlers were used to, but they opened the way for accelerating the alienation.
 

Maori land tenure is famously intricate, so it did not translate directly into the British forms. Nor were Maori consulted over the legislation; British forms were simply imposed. McLean, who would have known better than most, rightly said the legislation would cause ‘endless complications’.[6] (This would not be the last time that parliament would forge ahead against the advice of experts who would prove correct.) Initially the title was to be determined by runanga set up by the Crown, but they had little standing among those not appointed to them. So in 1865 the Native Land Court, with permanent salaried judges, was established. Ultimately the Court and the Native Lands Acts created a new form of tenure, which today is called ‘Maori freehold land’.

  

Again in a situation familiar today, the proponent of change underestimated or ignored the costs of the transition. There was an often substantial  top slice that went to lawyers and surveyors and those who provided the litigants with hospitality as they struggled with the ambiguities of their customary practices through courts far from their homes. It is no accident that survey costs and survey liens, which could account for as much as a fifth of the land value,  feature prominently in much of the evidence brought before today’s Waitangi Tribunal.
 

Until 1873, the practice of the Native Land Court was to register up to ten names on a title. Frequently the ten were leading chiefs, indicating that Maori regarded the grantees as representative owners or trustees rather than absolute owners. But that was not how the law worked. The  individualised ten found they could sell without reference to their kin group. Some did. (The modern practice is to enter all names into the title, created a different set of problems. Some blocks today have thousands of owners; the cost of administering some Maori freehold land being considerably more than it is capable of earning.)
 

In traditional society, Maori boundaries had often been ambiguous, so that different Maori groups had overlapping interests in the land. The situation was usually workable in practice, because there were not specific usage pressures for ownership. If common sense between hapu or iwi failed, they might eventually turn to war to settle ownership disputes.
 

On the other hand the British system required precision of boundaries, with Ngati Tahi having the property rights on one side and Nga Rua on the other. Maori customary titles did not easily fit with tidy lines on a map. Instead of the traditional ambiguities being ultimately resolved by the physical warfare, the warfare ended up in litigation in the courts. Where large or valuable blocks of land were involved, there could be many claimant groups, all vigorously and tenaciously advancing their claims.
 

Such disputes occurred well over a hundred years a go. Yet they are not just of historical interest. They flared up at a Waitangi Tribunal case in which I was involved last year. In the course of the hearings, lawyer Annette Sykes became extremely emotional, saying that the Crown was doing what it did in the nineteenth century, pitting Maori against Maori. One heard the weeping in her heart for the past wrongs and their repetition today.
 

The Waitangi Tribunal issue concerned the 170,000 hectares of  Central North Island Forests, mainly to the east and north east of Lake Taupo. It was agreed that the cutting rights to the forests were owned by the Crown which sold them to forestry corporations in the late 1980s. However ownership of the land on which the trees grew was disputed. Those with the cutting rights paid a rental to the Crown Forest Rental Trust, the proceeds from which was to be released to the owners when ownership was settled.
 

But who owned the land? The answer could not be Maori generally; it had to be some local hapu and iwi if it were not the Crown. Obviously the Arawa and Tuwharetoa peoples had an interest, but they became divided within themselves. Meanwhile others – including Tuhoe to the east, Ngati Awa to the north and Raukawa to the west – had cross-claims. In the debate before the Tribunal there were extreme tensions between Maori, including the labelling of some groups as ‘kupapa’, which in Maoridom does not have the English meaning of ‘loyalist’, but something considerably less pleasant – ‘traitor’ perhaps?
 

In her submission to the Tribunal, Sykes argued that the Maori should settle these disputes themselves, rather than have the Crown impose a solution. That is the essence of the Treelords deal. As the name suggests, there are similarities to the Sealords deal where Maori had to devise a formula to share among themselves the fishing assets that the Crown handed over.
 

I do not want to imply that Sykes is entirely happy with the deal – she has publicly expressed reservations.[7] However the deal represents an attempt by the Crown to minimise imposing its judgements on Maori. Even so, I expect there to be recourse to the courts and a need for further parliamentary legislation, just as there was for Sealords. However, any legislation will enact what Maori have agreed among themselves, rather than imposing a Crown view.
 

There was another part of the story, which is worth telling. One of the precipitants of the hearing was the settlement the Crown had made with an Arawa group called Te Pumautanga o Te Arawa. Their settlement was based on the ‘fiscal envelope’ approach, of a cash grant which would be used to purchase the forest lands. The affiliate group was offered a range of forests which would cost more than the cash they had available, with the intention that they should select what they could afford. But instead of selecting from what was offered, the group purchased the lot, borrowing to cover the cash deficit .
 

That was a bit of a surprise. After all, good corporate practice is to diversify rather than putting all the eggs in a single basket. Te Pumautanga had gone against such principles by holding their entire portfolio in land, which meant they risked everything on it and what it could produce. The borrowing would increase that risk.
 

Were they being unwise? On reflection – for I too was initially surprised – I think not. The group was not approaching the issue in merely the corporate terms of the best investment. Rather they were acquiring ‘mana whenua’ – the power associated with possession and occupation of tribal land. The more land they owned, the greater their mana. So concerns of 150 and more years ago continue to influence their thinking today. And, of course, that applies not only Te Pumautanga o Te Arawa but to most iwi.
 

In my and others’ misunderstandings there is a repeat of those of the earlier land transactions. The settler perspective was that land deals were solely commercial transactions; the Maori perspective is that they are certainly not. Non-commercial aspects such as mana whenua are important too.
 

Perhaps saying the settler perspective was commercial, is an oversimplification. Underlying the settler thirst for land was the government’s pursuit of sovereignty, which was in part settled when British-based law was imposed effectively on all the land. From that perspective there was a struggle between mana whenua and imperial sovereignty, which was initiated with Te Tiriti o Waitangi, but was not resolved until much later in the nineteenth century. Once again one side imposed its view on the other side of the transaction, without realising that its view was  parochial.
 

What happened to the Maori economy following the New Zealand wars and other Maori land alienations? We know from Hazel Petrie’s work it had flourished in the 1850s, in the Auckland region;[8] and Brad Patterson confirms the same happened in Wellington. By then the Maori economy had switched from provisioning visiting ships and sailors to provisioning settlements such as Auckland and Wellington and even the goldfields of Victoria. The provisioning wound down at the end of the 1850s, in part because the settlements became more self-sufficient (and the Victoria gold rush ended), but also because the agricultural practices were often not sustainable. .
 

I can fill in details of why this happened, but the greater puzzle is why in the late nineteenth century the Maori economy did not move past the provisioning phase into the evolving New Zealand economy based on exporting wool, as did the settlers, especially as in the past they had showed such adaptability as the political economy changed.
 

The economics issue was this. The classical Maori economy was sustainable, but the New Zealand economy for at least a hundred years after Cook’s arrival was not. This was partly the increased population, but even more important was the demand for imports. Initially the foreign exchange to pay for them was generated by a variety of unsustainable economic activities: sealing, whaling, felling native timber, gold mining, kauri gum collecting, borrowing, land speculation, and warring paid by Britain. Even the early farming was unsustainable because it was based on exploitation of the soil and vegetation. Patterson called it ‘robber pastoralism’. More generally, we might describe the economy of the hundred years after Cook as ‘robber development’, although a less provocative term is the political economist’s ‘quarry’.
 

In order to survive, the New Zealand economy had to find a ‘staple’, that is a product it could export sustainably to generate the required foreign exchange to pay for imports (and the accumulated debt servicing). The way that the production of the staple was organised would shape society. The first such staple was wool. Later, refrigeration would extend it to meat and dairy products – to what Bill Sutch called ‘processed grass’. That story – and the different political economy which resulted – belongs to next year’s work. This year the sustainable story is about that first staple, wool.
 

I have been long aware of this political economy story, although I shall refine it as the book progresses. What I had not thought about, until this year, was how the Maori economy fitted in. With hindsight the answer is both obvious and intriguing. In order to develop, the Maori economy had to get into the staple too. It did not. While we dont have quantitative estimates of income, the consensus is that the Maori economy stagnated in the late nineteenth century. They largely retreated to the margins of the New Zealand economy.
 

Why did Maori not get into the staple of wool production? A popular view is that Maori were demoralised by the New Zealand Wars. That is hard to establish. Not all Maori were on the losing side or even involved, and one is struck by the subsequent displays of dignity of those that were.
 

Keith Sorrenson argued that it was not the raupatu (confiscations) which followed the wars that was critical, but the loss by Maori of their land by whatever means it was alienated.[9] Even those groups who chose a strategy of alliance with the government still tended to end up as marginalised and impoverished as the rest.
 

There is some quantified support for this thesis from Ian Pool’s work on Maori demography.[10] While the Maori population fell throughout most of the nineteenth century, he shows that the population in each region was at its most fragile at about the time the Maori land was alienated, irrespective of the form of the dispossession.
 

However, Pool argues the chief cause of the population deterioration was diseases such as measles, whooping cough, typhoid, influenza and gonorrhea, which were new to Maori, and hence far more destructive to their immunologically virgin population, especially to fertility and children. Land alienation to settlers would have been the time that the Europeans moved in, so perhaps the causality of the association which Sorrenson observed is the diseases they brought with them, rather than the land they took over.
 
But to what degree did the loss of land limit Maori opportunities? After all, Maori land holdings were greater per capita than settler ones until the 1930s. Perhaps the lands they were left with were not as fertile as those which were taken, and were further away from the main population centres. But much of late nineteenth-century Maori land is highly productive today.
 

Surely one factor was capital. Breaking in bush for sheep farming could be a tedious and expensive activity. Patterson calculates that in the heavily forested Hutt Valley, an acre took the equivalent of five or so years’ wages. The capital to do this came from merchants capitalists who were proto-stock and station agents, and who had social – even familial – links with those they financed. They were reluctant to lend on Maori land which was not owned under a simple individual title. Generally, there were not Maori who had capacity to be merchant capitalists, so there were not the financial institutions to enable Maori to develop their lands for sheep farming.
 

Another complication may be that while the hapu system may have been suitable for dealing with a seasonal industry like potato growing (which involved clearing only a small area of bush), it was neither large enough nor ongoing enough to care for livestock all year. It is perhaps instructive that Ngati Porou on the East Coast began to farm sheep successfully in the early twentieth century after its hapu became more subject to an overall iwi.
 

So there appears to be no single element in the story of the inability of Maori to shift into the late nineteenth century staple of wool. Let me add another. In 1891 one fifth (21 percent) of the settlers lived in the Auckland region, which ran from Northland to the King Country to East Cape, while over two-thirds (68 percent) of Maori lived there. Yet only slightly less than 8 percent of New Zealand’s sheep were in the Auckland region.
 

This lack of sheep was not just a Maori problem. Indeed the Auckland settler flocks were smaller – on a per capita basis – than the Maori flocks in the rest of the country. Sheep were an Auckland regional problem, not an Auckland Maori one.
 

There were subregional differences. Even though the land was still being broken in, sheep flourished in the East Cape, which had over half the Auckland flock.
 

On the other hand, the triangle from Lake Taupo to the Bay of Plenty had a very small flock. This would not surprise us today for we now know that two major volcanic eruptions, Taupo (about 200 CE) and Kaharoa (about 1314 CE), deposited layers of cobalt-deficient, soil-forming ash, on which livestock cannot thrive. Its paltry flock may even be an overestimate. Half were at Rotorua; one suspects some entrepreneurial Arawa were trying out sheep farming. Five years later, presumably having lost their flock from bush sickness, they were back to potatoes.
 

The east side of Lake Taupo, was also cobalt deficient, but the King Country, to which the Tainui Maori had retreated, had some of the largest Auckland Maori flocks, albeit considerable smaller than those to the south. The Waikato was too swampy for sheep, and the dairy industry had yet to be established, while Northland has notoriously poor quality soils.
 

The same problems applied for the Taranaki region. Including it, and excluding East Cape, two thirds of Maori were in the wrong place to hitch onto the sheep economy. In contrast, in Wellington and the South Island Maori sheep numbers were only slightly below settler ones, measured on a per capital basis.