Even in medieval Amsterdam, prostitution was viewed as a social necessity and part of city life, although it could be a public nuisance, thus requiring the court and sheriff to have discretion in dealing with it. As a result, licensed brothels first appeared in Amsterdam almost 600 years ago. Ever since, the city has worried about its image abroad, as well as the crime and other vices that are associated with prostitution. Nevertheless, the essence of the system of regulation through tolerance and discretion remained unchanged through the centuries. Many countries look to the Netherlands for suggestions about "progressive" policies on prostitution. There is a problem in this regard, however, in that Dutch attitudes toward such issues are based in social, political, and legal tradition, such that the "Dutch solution" to prostitution is not easily transferred to other cultures. Moreover, there is much that is ambivalent in the way in which the Netherlands addresses its social problems. In describing the current situation in Amsterdam, this paper shows how the pragmatic tolerance of the Dutch is firmly rooted in a culture of compromise that inevitably leads to contradictions in policy and therefore to new problems for which new compromises must be sought. 19 footnotes