1938: Netherlands

The menace of war in Europe and in the Far East forced the Government of the Netherlands to resort to military expenditures which were a severe strain on the Treasury. In January, the 1938 Budget showed a deficit of 13,000,000 guilders. It was impossible to restore the financial reserves of the Treasury which had been consumed during the years of the economic crisis because of the increased expenditure for defense. For financial reasons the Government was forced to reject various proposals put forward by several deputies for the extension of the number in receipt of old-age pensions, for an increase in the wages of all State servants, and for smaller classes in primary schools to combat the unemployment among teachers.

Defense Policies.

The Military Service Act was revised, the annual contingent of conscripts was increased from 19,500 men to 32,000, and for unmounted troops the first training period was extended from 5½ to 11 months. In explaining the necessity for increasing defense appropriations, the Government declared that the Netherlands could no longer rely on the League of Nations as a guarantee of collective security. Action was planned to check any possible Japanese drive toward the rich oil fields in the Netherlands East Indies. A radical change of defense policy in the Far East took place. Hitherto the Netherlands had relied upon naval craft to protect her colonies. Now more confidence is given to a strong air fleet of bombing planes. The navy has been strengthened by additional mine layers, torpedo craft and submarines, but it is hoped that the air fleet alone will be strong enough to destroy any likely invader. The Netherlands Government announced that, even without mobilization, the country must be able to resist any attempts by foreign aircraft to cross the territory of the Netherlands in Europe. The flight of foreign airmen over the Netherlands to commit acts of war would be regarded by the Government as a breach of neutrality and would be resisted by force. Since the Czechoslovakian crisis military preparations have been pushed forward more rapidly. Further precautions against air attacks have taken place in the larger cities. It was stated that at the time of the crisis there were only 5,000 gas masks in the Netherlands for a civil population of 8,000,000.

Birth of an Heir to the Throne.

Demonstrations of joy took place throughout the Netherlands on the news of the birth of a Royal Princess to Crown Princess Juliana at the Palace of Soestdyk, in Baarn, near Amsterdam on January 31. The baby Princess was named Beatrix Wilhelmina Armgard. Salutes of fifty-one guns in various parts of the country announced the happy event. It was the first birth in the Palace since that of Princess Juliana herself in 1909, and before that there had been only two in nearly sixty years, that of Queen Wilhelmina in 1880 and in 1843 that of her half-brother, Alexander, Prince of Orange, who died in 1884.

Jubilee of Queen Wilhelmina.

Later in the year Netherlanders had another opportunity to show their loyalty to the House of Orange. Sept. 6 marked the beginning of the forty-first year of the reign of Wilhelmina Helene Pauline Marie of Orange-Nassau, Queen of the Netherlands, who has ruled longer than any other living monarch in Europe. A week earlier the Queen celebrated her fifty-eighth birthday. At that time she broadcast a speech to her subjects at home and in the colonies in which she pleaded for the preservation of democratic institutions and the peaceful settlement of international disputes.

An indication of the harmony and good feeling which existed between the Queen and her subjects is shown by the removal, on Sept. 13, of the ban which hitherto excluded members of the Socialist party from holding rank in the defense forces. This royal decree was a sequel to an earlier announcement of the Premier that the attitude of the Government toward certain parties would depend upon their loyalty.

Foreign Relations.

United States.

The first step in a program for the development and intensification of trade between the Netherlands and the United States was taken by the formation, in the United States, of the Holland House Corporation of the Netherlands which is to serve as a center for the establishment of contacts, and for initiating and carrying on negotiations. The new corporation, now located in Rockefeller Center, New York City, is to have a building of its own which will also contain the Netherlands Chamber of Commerce in New York, the Netherland-American Foundation (cultural), the Netherland Club (social), and the Holland Society of New York (historical). The project is of particular significance for, in 1937, the Netherlands including its possessions ranked fifth among the buyers of American goods. It is estimated that Netherlanders have $1,500,000,000 invested in American industry.

Italy.

Italy's conquest of Ethiopia was formally recognized when Dr. J. B. Hubrecht was appointed Minister of Rome early in the year. At a meeting in Copenhagen of the Foreign Ministers representing the seven 'Oslo powers,' Belgium, Luxembourg, Norway, Sweden, Denmark, Finland, and the Netherlands, a declaration was adopted at the closing session of the conference that the covenant of the League of Nations did not require any member of the League to apply sanctions against an aggressor. The influential liberal press in the Netherlands was pleased with this declaration but was disappointed in the failure of the Oslo states to develop closer economic collaboration which might set an example to the rest of the world. At the sessions of the League of Nations, Dr. Jan Patijn, Foreign Minister of the Netherlands, declared that his country was temporarily suspending the obligatory sanction provisions of Article XVI of the League Covenant. He took care to specify that he included not only economic sanctions but also the obligation to allow troops from countries that were enforcing the League Covenant to pass through the Netherlands. He reserved the right of his Government to decide each case on its merits.

Germany.

At the close of the year 1938 relations between Germany and the Netherlands became somewhat strained. The German Government made representations at The Hague in regard to criticism in the Netherlands press of Germany's anti-Jewish policy. Germany severed all contact with the Netherlands in the world of sport and threatened to take economic measures against the Netherlands if the criticism of the press continued. Consequently, Prime Minister Hendrik Colijn asked the press to adopt a less unfriendly attitude toward Germany.

Finances.

For the fiscal year 1939 the ordinary budget deficit was estimated at 142,500,000 guilders. Measures were taken to meet the greater part of this deficit by a new income tax of 2 per cent on all salaries, rents and profits. It was decided to lower indirect taxes in order to effect a more just distribution of the burden. Indirect taxes will yield about 40,000,000 guilders less than before. One hundred thousand on the dole will be put to work reclaiming the Zuyder Zee and on other projects. There has been economic stagnation in the Netherlands during 1938. Therefore, new measures of a mildly protective character to defend certain national industries from inequitable foreign competition have been announced.