In the 1920s the Liberal Party, although previously dominant in New Zealand party politics, seemed in serious long-term decline following the advent of the Labour Party, and its organisation had decayed to the point of collapse. The United Party represented an unexpected resurgence of the Liberals, and some historians consider it nothing more than the Liberal Party under a new name. The United Party emerged from a faction of the decaying Liberal Party known as "the National Party". George Forbes, a Liberal Party leader, led the faction. In 1927 Forbes joined with Bill Veitch and with Albert Davy. They hoped that the United Party would draw support not only from former Liberals, but from moderates on either the right or left of the Liberals by promoting themselves as a safer alternative than the Labour Party. The new organisation adopted the name "the United Party". This reflected in shortened form the name of the "United New Zealand Political Organisation", which Davy had used after he had left Reform. Forbes and Veitch both contested the leadership, but eventually, Joseph Ward won the position. Although Ward, a former Liberal Prime Minister in 1906 - 1912, did not enjoy the best of health, Davy backed him as a compromise candidate. The reversal of the party fortunes came in Auckland, where the big business group abandoned the Reform Party because of the handling of a licensing bill, and put forward a programme equally appealing to the business community and to the remnants of the Liberal Party. So 42,000 votes and five seats went to United, compared with 8,800 votes and no seats in the previous election.
Success
In the 1928 elections, the new United Party performed surprisingly well, winning twenty-seven seats. The Reform Party also had twenty-seven seats, the Labour Party had nineteen, the Country Party had one, and independents held six. The United Party formed a government with the backing of the Labour Party, and Ward became Prime Minister again. The United Party administration did not run particularly smoothly, however. Ward's ill health persisted, and by the time he finally resigned in 1930, George Forbes had effectively run the party for some time. Ward's deputy, George Forbes became Prime Minister after Ward's departure but faced serious economic problems, including the onset of the Great Depression. Forbes did not project an image of activity or leadership — William Downie Stewart Jr, finance spokesman for Reform, privately described Forbes as "apathetic and fatalistic", and suggested that although he had "a rotten job", Forbes was really simply marking time.
Coalition
In 1931 the United government passed a number of economic measures which appeared unfavourable to workers, and the Labour Party withdrew its support. The United Party continued in office with reluctant support from the Reform Party, which feared that a collapse of government would see large gains for Labour. Later the same year, formal coalition talks took place between United, Reform, and Labour, with a "unity government" proposed to counter the depression. Labour eventually walked out of the talks, but Reform leader Gordon Coates eventually agreed to form a coalition between United and Reform. Forbes, backed by dissident members of Reform, won the leadership of the coalition government, but Downie Stewart of Reform became the Minister of Finance. In the 1931 elections, the coalition worked in close co-operation and won fifty-one out of the eighty seats. United and Reform between them had held a few more seats before, but their combined tally exceeded what many had anticipated in light of the economic conditions. The government did not exhibit great stability, however — particularly strong tensions arose between Coates and Downie Stewart, who clashed over the best response to the country's economic problems. Coates eventually won, and Stewart resigned. Coates, as the new Minister of Finance, became increasingly powerful, and the weary Forbes did not strongly oppose Coates's influence; while Forbes remained Prime Minister, Coates effectively led the government. The economic situation persisted. In the 1935 elections, the coalition of United and Reform once again worked together. Anger at the country's ongoing economic problems remained high, however, and many saw Forbes and Coates as jointly responsible for the situation. In addition, Albert Davy had founded a new "anti-socialist" party, the Democrats, which took votes away from the coalition. Forbes, still the nominal leader of the coalition, appeared tired and apathetic. These factors all added up to a decisive defeat of the coalition by the Labour Party, and the appointment of Michael Joseph Savage as New Zealand's first Labour Prime Minister.
Merger
United and Reform, still in coalition and now holding only nineteen seats, went into opposition. In 1936 they decided to make the coalition permanent and to merge United and Reform into a single party. The new organisation took the name of "the National Party", and - along with Labour - became one of New Zealand's two dominant political parties from that point on.
