Turn-of-the-century Dutch foreign policy was directed at protecting the colonies and establishing a leading position in international trade and finance. In European power politics, the country adopted a neutral stance. It was anyway too small to exercise much influence. In 1871 the balance of power in Europe shifted dramatically when the German states united to form the German empire, allied to the Austro-Hungarian empire and Italy. The other European power bloc consisted of Britain, France and Russia, which had united in opposition to the growing economic might of Germany. The two blocs invested vast sums in the accumulation of huge arsenals of the most up-to-date weapons. Meanwhile, the Netherlands minded its own business and observed a policy of strict neutrality, as did Belgium and the Grand Duchy of Luxembourg.

Economically, the Netherlands was prospering. In the cities, department stores were being built to sell large ranges of consumer goods. Horse-drawn trams had given way to electric ones, the rubber-tyred bicycle had been introduced, the first few Dutch-built Spyker automobiles were appearing on the roads and in Haarlem Anthony Fokker constructed his first aircraft.

Dutch workers were beginning to organise themselves into unions and the emancipation of women was beginning to be an important issue. The first activist for women's rights and the first woman to enrol at a university on leaving secondary school was Aletta Jacobs (1854-1929). At that time, women were not expected to practise a profession and it was very rare for them to enter higher education. Aletta Jacobs fought principally for women's suffrage and social reform. As a general medical practitioner in Amsterdam, she became extremely concerned about the conditions of working class women's lives and tried to improve their lot by providing free lectures and baby clinics.

The liberal politician P.W.A. Cort van der Linden (1846-1925), prime minister from 1913 to 1918, attempted to reconcile the left and right on the issue of subsidies for denominational schools and universal suffrage. These problems had dominated Dutch politics for many years but were now finally resolved by the 'Pacification' of 1917. The socialists and radical liberals got their way as regards the introduction of universal male suffrage and the religious parties as regards the equal funding of denominational and non-denominational schools. This put an end to the festering 'school conflict'.

On 28 June 1914, the heir to the Austrian throne, Archduke Franz Ferdinand, and his wife were assassinated in Sarajevo by a Serb nationalist called Gavrilo Princip. This sparked a series of accusations and ultimatums between the two opposing power blocs and the long-expected outbreak of hostilities followed in August that year, after Germany invaded neutral Belgium, prompting Britain to declare war on Germany.