Bill Phillips’ revolutionary economic analysis little recognised in NZ, writes Andrew Stone.

Alan Bollard has written two books about Bill Phillips, a visionary New Zealander who changed the world of economics.

His first account was about a fictional Bill Phillips who Bollard called Adam Godley, a tinkerer who could create whatever he turned his mind to.

The real Phillips is the subject of Bollard's new biography, A Few Hares to Chase, an account which the author started 40 years ago but which belatedly honours a fiercely original thinker who beat a path from a Manawatu backwater to academic distinction in Britain.

Such was Phillips' influence on the work of others that Bollard, a former Reserve Bank Governor and Treasury Secretary, estimates as many as a dozen Nobel laureates owe some sort of debt to the intuitive New Zealander, who struggled through a sociology degree yet became an economics professor a bare nine years later.


"All I did", remarked Phillips towards the end of his life when his colleagues gave him a book of grateful tributes honouring his impact on economic studies, "was set a few hares running for other people to chase".

Tick them off: Phillips, who left Dannevirke High with a couple of years' schooling under his belt, created the world's first economic computer - the extraordinary Moniac - devised theories on economic stabilisation, produced the first economic model from an early computer, conceived the Phillips Curve, which explores the relationship between unemployment and inflation, and late in life turned his attention on the Chinese economy torn apart by the Cultural Revolution. His revolutionary work remained a cornerstone of economic analysis for three decades, yet outside of university circles his place among the influencers in his field flies under the radar.

He rates a brief mention in Te Ara, the Encyclopedia of New Zealand, but not a separate entry among the more than 3000 individuals in the Dictionary of New Zealand Biography. He fares better in Britain, where he lived for nearly 30 years. The Oxford Dictionary of National Biography devotes three pages to his achievements.

Bollard met Phillips once. The future central banker was a graduate student at Auckland University. Phillips was 60, in poor health, and had returned to New Zealand from a job in Canberra.

Recalls Bollard: "He was a small man, not very distinguished looking, sitting at the table in the common room in a wheel-chair. He said very little."

Only later did Bollard learn that the frail individual was actually an intellectual giant. Within a few months of the university encounter, the prematurely aged academic was dead, his health shot to bits by a lifetime of heavy smoking and a psyche scarred by war years spent as a prisoner of the Japanese Imperial Army.

"He was a genius," Bollard told the Weekend Herald by email from Singapore, where he is the executive director of the Apec Secretariat.

"And you don't meet real geniuses many times in your life."

Bill Phillips was born Alban William Housego Phillips in Te Rehunga, a tiny farming settlement at the foot of the Ruahine Ranges, in November 1914.

From his mother Edith, a teacher and one of the few educated women in the district, he inherited an inquiring mind. His energetic father, Housego, taught his youngest son, a fast learner, how to build things.

The four-bedroom Phillips house had a flush toilet and electricity, years ahead of other properties. Power came from a water-wheel hitched to a generator, which Housego used to run a milking shed and heat water for the house. Young Bill absorbed his father's creativity and, with older brother Reg, built crystal radio sets and developed black and white photographs taken with Housego's camera.

Determined not to miss a beat on a two-hour bike ride to school, Bill made a book stand which he clamped to the handlebars. He studied as he cycled. At 14, he swapped the bike for a 5 wrecked truck, which he pulled apart and rebuilt. The youngster drove it to school and took neighbouring pupils along for the ride.

Bollard writes that the unlicensed teenager got in trouble with teachers and was told to stop, a ban Bill ignored. As a precaution he parked the truck a few streets away from the school grounds.

Leaving school at 15, just as the Depression started to bite, Phillips got his first job as a Public Works Department apprentice on the Tuai hydroelectric scheme near Lake Waikaremoana. He stayed five years, long enough to earn a certificate in electrical wiring and run the camp cinema, where he seems to have figured a way to play a soundtrack with the silent film, bringing the wonder of talkies to the remote Urewera campsite.

At 20, Bill Phillips decided to spread his wings. He sailed to Sydney and, insulted by an employer who cut their pay offer after learning the New Zealander was not yet 21, rolled up swag and went bush. Phillips ranged over northern Australia for a couple of exciting years, fitting in a electrical correspondence course, and shooting a few crocodiles near the Gulf of Carpentaria.

Restless and keen to work in Britain, the unconventional Phillips opted to travel via China and Russia.

"I just wanted to see what those places looked like," he later said.

On January 1, 1937, Phillips boarded a Japanese ship for Shanghai. A day after leaving port, the captain received sensational instructions - Japan had declared war on China, and the vessel was redirected to Yokohama, Tokyo's seaport.

The New Zealander disembarked to a Japan bristling with militaristic fervour. Venturing south to Hiroshima, he somewhat naively photographed troops preparing for conflict and was promptly arrested as a Western spy. His detention was brief, though his film was confiscated, and according to one account his captors gave him a tour of the city.

But his presence was clearly recorded because, as he resumed his journey through East Asia towards the Soviet Union, he was met by authorities who escorted him to official hotels. Phillips' itinerary took him north on the Korean Peninsula and across Japanese-ruled Manchuria, where a guerrilla war was being waged against the occupation forces. Trains he used passed troops, members of the resistance and plodding lines of refugees. The New Zealander kept going, crossing into Stalin's Russia from Mongolia and taking the trans-Siberian railway all the way to Moscow. As his funds ran low, he booked his final passage across Western Europe in late 1937 - through Poland to Berlin, where Hitler's Nazi Party was flexing its muscles, before he reached Britain just before Christmas.

In Britain, Phillips began his association with the London School of Economics, only to be interrupted by the outbreak of World War II. His engineering skills saw him posted to an RAF unit before, as a newly promoted flying officer, he was posted in mid 1941 to Singapore, with instructions to rearm aircraft for the defence of the colonial outpost.

His technical gifts were in demand immediately as the failings of the RAF Far East fleet of Brewster Buffalo fighter planes became clear.

Nicknamed the "flying coffin" by laconic pilots, the lumbering United States-built aircraft were sitting ducks for Japanese attack planes. Phillips fixed a firing shortcoming, calibrating two guns to fire through the propeller.

His inventive solution earned him an MBE from a grateful Britain, but the repaired aircraft could not cope with the enemy assault.

As Japanese forces overwhelmed Singapore in February 1942, Phillips joined the Allied exodus to Dutch East Indies on board the Empire Star, a cargo ship. Within hours of leaving port, the vessel came under attack.

As six enemy dive bombers strafed the ship, Flying Officer Phillips calmly mounted a machine gun on the deck and returned fire.

His actions meant the ship and its 2000 desperate passengers reached the Dutch East Indies.

On Java, Bill Phillips' luck ran out. Caught as he prepared to evade capture, the New Zealander spent three-and-a-half years as a POW.

In that time his weight dropped to seven stone (44.5kg), he learned Chinese, Russian and Dutch, devised immersion heaters for nightly cuppas and built clandestine radios which were hidden in coffee tins and wooden clogs. It was on one of his sets that the prisoners learned a bomb had been dropped on Hiroshima.

He never spoke of his years in captivity, but others did. The late South African writer Laurens van der Post - godfather of Prince William - was held at the same camp. Van der Post wrote about "the gifted young New Zealand officer " in his account of the camps, Night of the New Moon, and later identified Phillips as "one of the most singularly contained people I knew, quiet, true and without any trace of exhibitionism".

The observation rings true. When the Phillips Curve caught on, the Kiwi economist, ever modest, called it "a wet weekend's bit of work".

Phillips emerged from the war with a nicotine addiction and, Bollard believes, a desire to understand the world. His post-war economic focus, sharpened by the privations of conflict, was on stability.

At the LSE, where he resumed his studies in 1946, the phenomenal talent in the New Zealander surfaced in the shape of a machine no one had ever seen.

Using perspex scavenged from a Lancaster bomber and a pump stripped from a Spitfire, Phillips modelled an economy with pipes, hoses and tanks. Called somewhat clumsily the Moniac - Monetary National Income Analogue Computer - the machine used water to show the flow of money through an economy.

Run by electric pumps, the leaky device created a sensation in the media. One newspaper dubbed it Mr Weasel because "that's the way the money goes ..."

"People laughed at it," remarked Bollard, " but it is much more sophisticated and modern than most realise."

The author was so captivated by Phillips' invention that he helped reassemble the original machine after it was brought to New Zealand. It is on display in the Reserve Bank museum, a permanent tribute, says Bollard, to one of the most original - and unsung - minds ever to emerge from this country.

A Few Hares to Chase
The Life & Economics of Bill Phillips
By Alan Bollard
$39.99, Auckland University Press