AMSTERDAM -- For years the five Bulldog coffeehouses in this port city were renowned for their "space cake" and other baked treats containing marijuana or hashish. But last week police moved against the confectionery chain to dry up its cannabis trade and discourage the growing commercialization of soft drugs.

"These guys had a bakery. It had nothing do with the liberal atmosphere here in Amsterdam. This was money, big money," said police spokeswoman Heleen van der Weijden.

The Bulldog coffeehouses were shut down, police said, because the chain had grown too large, it was selling soft drugs in pounds as well as small quantities, and there were signs that profits were being used to finance cocaine trafficking.

Nonetheless, more than 200 coffee shops continue to sell openly pot pastries as well as small plastic packets of marijuana and hashish. Many of the establishments post price lists, and they are identified by names such as "High Times Cafe" and by pictures of a green marijuana leaf outside their doors.

The Netherlands has officially tolerated the low-profile, small-scale public sale of marijuana and hashish for more than a decade, and the policy is widely considered to have been successful.

The policy has fulfilled one of its principal goals, which was to establish a barrier between the soft drug and hard drug cultures, health officials and other analysts say. Police immediately shut down any coffeehouses discovered to be peddling heroin, cocaine, pills or LSD.

The experience here challenges the so-called "stepping-stone theory" that soft drug consumption plays a major role in encouraging hard drug use. Heroin use has remained stable or even dropped somewhat in recent years. Cocaine consumption, while rising, has not reached alarming levels.

Perhaps most importantly, ready availability of soft drugs has not led to widespread abuse of them, according to health officials, police, social workers and several surveys. Only a small percentage of people are so stoned so frequently that it seriously impedes their work or social interaction, they say.

Only 6 percent of Dutch aged 15 or older have ever tried hashish or marijuana, according to a national, government-backed survey of 977 households in September.

By contrast, a 1982 study by the U.S. National Institute on Drug Abuse showed that marijuana or hashish has been tried by 64 percent of Americans aged 18 to 25 and by 23 percent aged 26 and up.

Public health authorities are convinced that the irregular use of marijuana or hashish is not significantly harmful "unless you want to become a U.S. Supreme Court justice," said Ernst Buning, a staff psychologist at the drug department of the Amsterdam Municipal Health Service. He referred to Judge Douglas H. Ginsburg, who withdrew as a nominee to the Supreme Court after he admitted that he had used marijuana as a law professor.

Soft drug use is much higher in Amsterdam and Rotterdam, the nation's two largest cities, than elsewhere. But even polls in the cities consistently have shown that frequent use of soft drugs is comparatively rare.

A survey this year of Amsterdam students found that 13 percent of youths aged 18 to 20 had used marijuana or hashish within the preceding 30 days. The percentage dropped to 8 percent for students aged 16 or 17, according to the study by an Amsterdam university.

"It seems that the use of marijuana has not extended in the Netherlands since 1971," the report said. "Dutch prevalence estimates compare favorably with figures from the United States."

Psychologist Buning said, "What you find {in Holland} is that people are not wild animals. They exert self-control. People don't want to get . . . drunk every day, either."

He added, "We are the city drug department. If there were such a thing as a large-scale soft drug problem, we would know about it."

Dutch officials, who are very sensitive about their country's reputation as a haven for drug users, emphasize that their soft drug policy is pragmatic rather than tolerant. It is impossible to prevent soft drug use, so it is best to allow it within a carefully limited framework, they say.

"We know that if a government says, 'Just Say No' to drugs, then it cannot expect all of its citizens to go along with it," said Eddy Engelsman, head of the Alcohol, Drugs and Tobacco Branch at the national Directorate General of Health. He was referring to the antidrug campaign of U.S. First Lady Nancy Reagan.

In the latest sign of Dutch pragmatism, the government plans to start forcing the coffee shops to pay taxes on their profits from marijuana and hashish sales. Until now, it has only taxed their income from sales of legal products, which often include beer and liquor as well as coffee.

The government also tolerates the appointment of "house dealers" by neighborhood youth associations, which arrange music concerts and other events. The dealers are made to promise that they will not sell hard drugs.

The legal distinction between soft and hard drugs was widened in 1976 by amendments to the Opium Act. The maximum penalty for possessing or selling an ounce or less of marijuana or hashish was lowered to a month in jail or a $2,600 fine.

The maximum penalties were raised for possessing or trafficking in drugs "presenting unacceptable risks," such as heroin and cocaine. Selling hard drugs can bring up to eight years in jail or a $53,000 fine.

More importantly, police were instructed that their lowest priority was prosecuting small-scale sellers or possessors of soft drugs. Instead, police seek to prevent sales of soft drugs in large quantities, sales to persons under 16 and coffee-shop advertising.

Amsterdam police have shut down 60 coffee shops in the past two years, each for a minimum of six months, when they caught the shops selling hard drugs.

At one Amsterdam coffee shop, next to a poorly lit canal, the barman asked visitors, "Drink or smoke?"

When the drug list was requested, he reached under the counter and handed over a battered, red plastic loose-leaf binder. Inside were flat, plastic packages, 2 by 2 1/2 inches, containing marijuana and hashish.

The hashish was labeled "Afghan" and "Lebanese," while marijuana was listed as "Colombian," "Jamaican" and "seedless." A slot marked "Swaziland" was empty.

Each package was priced at 25 Dutch guilders, or about $13, a price also found at other establishments.

At the Milky Way discotheque and coffee shop, a particularly well-known dealership, a slice of greenish-brown "space cake" sold for $2.60. "Space balls" also were on sale. Asked what they contained, a bearded man at the counter responded, "Hash, honey and nuts. The cakes are stronger."