Mowinckel's Cabinet's decision to grant the Anglo-Dutch company
Unilever Concession to acquire half the shares in the Norwegian company
Lilleborg caused a political crisis in 1931, leading to the resignation of the cabinet and the formation of the first cabinet from the Farmer's Party. The Farmers' Party had only 25 of the 150 seats in the Parliament; the weakest foundation for a cabinet in Norway to that date. The cabinet would seek support in the parliament from the Liberal Party and the
Conservative Party. The party chose Kolstad as prime minister instead of the party leader
Jens Hundseid to a large degree because he was seen as being moderate and better at cooperating with other parties and politicians than Hundseid. The party also saw it as an advantage that he was well versed in financial policies. Sundby himself originally wanted to stay in the Parliament as leader of the Standing Committee on Agriculture. A controversial choice was major
Vidkun Quisling as
Minister of Defence. Quisling had not been involved in party politics and Sundby did not personally know him. Kolstad stated that Quisling's knowledge about Russia as demonstrated in his writings would be useful for the cabinet.
The Lilleborg case The Mowinckel Cabinet had granted the Norwegian company Lilleborg concession to buy
De-No-Fa's oil mill in Fredrikstad and at the same time given concession for De-No-Fa, which was 50% owned by the Dutch company
Unilever, to acquire half the shared in Lilleborg. This would give Unilever control over Lilleborg. While the Farmer's party opposed the concession as they wanted to protect Norwegian ownership of industry and it led to the fall of the Mowinkel Cabinet, Kolstad's Cabinet found it impossible to revoke the concession. De-No-Fa stated the mill would have to close without a concession and at the same time De-No-Fa and Unilever had negotiated a new contract which would give Unilever control over Lilleborg even without a concession. On 10 July 1931, the Kolstad cabinet confirmed the concession that the Mowinckel's Cabinet had already given.
Eastern Greenland dispute On 26 May 1923, the newly established
Det Norske Ishavsråd (English: The Norwegian Arctic Council) published a proposal to that Norway should claim sovereignty over part of the area near
Scoresbysund. Norwegian whalers and trappers stayed in the area. The Farmer's Party had a post in their program that Norway should assert historical rights in Greenland and whaling interest in the Arctic Oceans. Nevertheless, Kolstad was initially negative to the proposal. In June the same year, the cabinet got a telegram from
Hallvard Devold who led a Norwegian expedition in Greenland which stated that Norwegians had occupied
Myggbukta and declared the nearby area for Norwegian territory, calling it
Erik the Red's Land. After multiple cabinet discussions, the cabinet issued a royal declaration on 10 July 1931 where Eastern Greenland was claimed as Norwegian territory. The decision was met with condemnation from the
Labour Party. Denmark contested the claim and brought the case to the
International Court of Justice where they won in 1933. Although Quisling was not prominent in making the decision, as Minister of Defence the non-socialist parties gave him most of the credit while he became considered an enemy by the labour movement. Following the United Kingdom's decision to leave the gold standard in September 1923, the Kolstad cabinet decided to abandon the standard the same month. At the same time, the cabinet devaluated the Norwegian krone which sank more than most other currencies in Europe, which helped the Norwegian export. In December 1923, Kolstad was informed that the large banks
Bergens Privatbank and
Den norske Creditbank were in grave financial troubles. The cabinet and a majority in the Parliament backed a plan by the
Norwegian Central Bank to help the bank with liquidity, but Kolstad blamed the Central Bank for not having addressed the problem at an earlier stage and argued in favour of more political influence over the Central Bank. == Health problems and death ==