Dutch uncle is a term for a person who issues frank, harsh, and severe comments and criticism to educate, encourage, or admonish someone. Thus, a "Dutch uncle" is a person who is rather the reverse of what is normally thought of as avuncular or uncle-like (which would be indulgent and permissive).
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These colorful (though now incongruous) phrases became part of English usage worldwide, and some are still in use.
Alternative explanations 
One other proposed explanation is that the term, often expressed as "talk to one like a Dutch uncle," originated in the early 19th century as an allusion to the sternness and sobriety attributed to the Dutch. Dutch behaviour is defined in the book Culture Shock! Netherlands: A Survival Guide To Customs and Etiquette as "practical, direct, outspoken, stubborn, well-organised, blunt and thinking they are always right." According to that particular source, these are the alleged reasons behind the English term "Dutch uncle." Another book that advocates this theory is The UnDutchables, which assigns comparable characteristics to Dutch people: "not lacking in self-esteem ... caught up in a cycle of endless envy ... always speak their mind ... frank, obstinate, blunt", basically summed up by the phrase "the natives thrive on shaking their fingers at and scolding each other." 
- Bolt, Rodney. The Xenophobe's Guide to the Dutch. ISBN 1-902825-25-X