Klemann@fhk.eur.nl Hein A.M. Klemann German Dutch Monetary Relations, 1871-1939 Klemann@fhk.eur.nl

Monetary policy after 1945 Target: strong international competitiveness Stable monetary relations with Germany: Already before ECU, Guilder linked to D-mark Monetary stability with most important trading partner Keeping internal price levels low From 1945-1960: Coordinated wage policy 1960s: Tensions on labour market too strong 1982: Agreement of Wassenaar Pleading for wage restrain almost a Pavlov reaction in times of economic problems Katzenstein: typical for small, highly developed open economies.

Table 1: The importance of German trade for the Netherlands, 1862-1938 Trade in per cent of the Dutch GDP Trade with Germany in per cent of total Dutch trade Trade with Germany in per cents of the Dutch GDP Imports Exports Total 1862 43 86 14 23 6 10 16 1875 64 62 126 22 28 1910 71 133 42 47 30 60 1921 31 24 55 18 7 4 11 1925 32 75 26 8 1929 74 17 1933 25 15 40 21 3 1938 27 20 9 Sources: CBS, Tweehonderd jaar statistiek in tijdreeksen, 1800-1999 (Voorburg 2001); CBS, Zeventig jaren statistiek in tijdreeksen, 1899-1969 (The Hague 1970); ‘Economische nalezingen en berigten’, in De Economist, 1864, 41-44; I.J. Brugmans, Paardenkracht en mensenmacht. Sociaal-Economische geschiedenis van Nederland 1795-1940 (Den Haag 19692) 386; Own calculations.

Causes of importance Germany in from 1890s on Growth of German heavy industry: Imports of raw materials and foodstuffs of growing importance Exports of coal grew spectacularly From 1890 on, transport by barge became rapidly cheaper than competing ways of transport For mass transport Rhine more important than rail Rotterdam more important than Antwerp

Graph 1 Cost of transport 1870-1913, 1870=100

Graph 2 Nominal exchange rates 1870-1939

Graph 3 Internal price development 1870-1913. 1870=100

Graph 4 Real Exchange rates 1870-1913

Graph 5 Internal price levels 1892=100

Graph 6 Real exchange rate Mark in guilders. Gold parity=100 Graph 6 Real exchange rate Mark in guilders. Gold parity=100. Internal price levels 1913=100.

Graph 7 Purcasing power Dutch guilder in Germany, 1913=100

Graph 8 Real exchange rate of the Reichsmark, 1925-1939

Graph 9: Clearing between Germany and foreign countries Germany Netherlands German Exporters Dutch Exporters Exports German Importers Dutch Importers Verrechnungskasse Berlin Nederlandsch Clearing Instituut Payments Goods and services Dotted arrows: Financial streams. Strait arrows: Goods and services