ABSTRACT
MACROECONOMIC PERFORMANCE The decision of the German army to respect the neutrality of the Netherlands —because it might need the country for the supply of goods-in a way determined Dutch (economic) development in the fifteen years before the Great Depression. During the war large parts of the Dutch economy benefited from the neutral status. Agriculture and international trade (which supplied the Germans with many goods in spite of the Allied blockade) and large parts of industry were able to reap substantial war profits. Once peace was established in 1918 the bonus was probably even larger, because industry was eager to supply war damaged Europe with all the goods it needed. As a result the Dutch economy made great progress during the period 1914 to 1921, certainly in comparison with its neighbours (Van der Bie 1995:85). Moreover, the return to a ‘peacetime economy’ was relatively successful. Whereas most neutral countries found it difficult to adapt to the postwar economy and were confronted in the 1920s with the backlash effects of overexpansion during the 1910s, the Netherlands fared relatively well. For a number of reasons the international downturn of 1921-3 did not do much damage to the Dutch economy; only banking went through a major crisis. The boom that followed after 1923 was in many ways a continuation of the industrialization process that had started in the second half of the nineteenth century.
