page_title: Great Depression in the Netherlands
section_title: Government policy
hierarchical_section_title: Great Depression in the Netherlands / Government policy
caption_attribution_description: English: Hendrik Colijn, Dutch prime-minister. Photographer: Franz Ziegler (1893-1939).
context_page_description: The Great Depression in the Netherlands occurred between 1933 and 1936, significantly later than in most other countries. It was a period of severe economic crisis in the 1930s which affected countries around the world, including the Netherlands.
  In the United States, the Wall Street Crash of 1929 is understood as the start of the Great Depression. But in the Netherlands the depression started more gradually, in 1929–1931, while the economy had been in a gradual decline for a longer period. In the Netherlands the depression lasted significantly longer than in most countries, partly because of structural characteristics of the Dutch economy and partly because of the policy of the government. The refusal to drop the gold standard plays a central role. The Great Depression led to political instability and riots, and can be linked to the rise of the National Socialist Movement in the Netherlands. The depression in the Netherlands lessened at the end of 1936, but real economic stability did not return until after World War II.
context_section_description: An important difference between the Great Depression in the Netherlands and the situation in most other affected countries was the role of the government. Until the late 1930s the Dutch government, headed from 1933 to 1939 by the Anti-Revolutionary statesman Hendrik Colijn, could be described as non-interventionist and strongly internationalist. Its economic policy focussed mainly on keeping a balanced budget for government spending and income. While this government policy was typical for contemporary European and American governments, it was applied especially strictly in the Netherlands until the late stages of the depression.
  In the first years of the depression government policy limited itself to supporting the most heavily affected sectors of the economy. In 1931 a wheat law was issued (Dutch: Tarwewet), which forced importers of foreign wheat to add a quantity of more expensive Dutch wheat before sale, to promote the troubled Dutch agriculture. Starting in 1932 a series of "crisis laws" was issued to further subsidise the agricultural and shipping sectors, and to enable a measure of government control on import, export and capital flows. From 1934 onward the Dutch government also experimented with a Labour Fund (Dutch: Werkfonds) to provide subsidised workplaces for the unemployed, often on large scale public works (comparable with the New Deal in the United States). 
  The scale of these government interventions was however too small to really change the situation.
  While government intervention on the economy was very limited, the Dutch government did lower its spending (including income support to the poor and unemployed) and raised taxes to keep its budget balanced. The effect of this was that while poverty increased, government support to the poor decreased. Such a government policy is heavily criticised by the Keynesian school of economics, which at that time was still in its infancy. Keynesianism stresses that governments should play an active role in promoting public and private consumption during an economic depression, so a balanced government budget should only be aimed at on the long run.
  The Dutch government was also very reluctant to intervene in its trade policy. While most industrialised countries strongly increased their trade restrictions from the early stages of the Great Depression onward, the Dutch government still hoped for international cooperation to solve the economic crisis. Only after the failed 1933 World Economic Conference, when it became clear that countries had to solve their economic problems by themselves, did the Netherlands increase its trade barriers to a more significant level. But as described earlier the Netherlands was still unwilling to drop the gold standard, and instead joined an agreement between the last European countries to maintain the gold standard. This subjected the Dutch economy to fierce foreign competition, forcing Dutch firms to strongly cut their costs in order to survive this situation. In the process wages and employment were cut, and the depression deepened. While the economic situation gradually improved in most industrialised countries around 1933-1934, the Great Depression was still getting worse in the Netherlands.
caption: Hendrik Colijn, Prime Minister during much of the Great Depression.
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