Dag Hammarskjöld was the second Secretary-General of the United Nations. He held the post from 1953 until his death in a plane crash while on a UN mission in Africa. He had also served as a senior civil servant in both the Swedish Ministry of Finance and its central bank. For the better part of two decades including the Great Depression, the Second World War, and the immediate post-war years, he guided Sweden’s economic policy, particularly with respect to its monetary system, through several major changes. Still, most short biographies of Dag Hammarskjöld only briefly mention his career before the United Nations.


           Born in 1905, Dag Hammarskjöld grew up in Uppsala where his father, Hjalmar Hammarskjöld, was the Governor. Hjalmar would soon after serve as a delegate to the Hague international law convention in 1907 and was the Prime Minister of Sweden during the First World War. Dag Hammarskjöld studied economics and law and taught for a year at the University of Stockholm. As a young economist, he was recruited to serve on a government committee on unemployment in 1930, just before the Great Depression arrived. He developed a consumer price index for Sweden the following year.

           Hammarskjöld was hired by the Ministry of Finance in 1934 and was offered a job by the Riksbank, Sweden’s central bank, two weeks later. Ivar Rooth, who led the Riksbank, reached an agreement with the Ministry which stipulated that Hammarskjöld’s services would be shared by the Ministry and the bank, all on top of his continuing work on the unemployment committee. Hammarskjöld would take rotating leaves of absence from one entity to focus on his work with another.

Dag Hammarskjöld, 1959

           In 1936, at 31, he became the highest serving civil servant in the Ministry of Finance, directly below the relevant cabinet minister, Ernst Wigforss. As a civil servant, he remained a technocrat and not a politician. In the role, he divided the 1937 state budget to include a separate capital budget, for infrastructure and other tangible projects, and operating budget, for everything else. The idea was that borrowing to make up persistent deficits was acceptable in the former but improper in the latter, at least through a complete business cycle.

           However, at this point in his life, Hammarskjöld was no politician. While technically sound, this division was politically bedeviling because demands for decreased taxes or increased spending would arise if any one of the two budgets were in surplus, regardless of which budget it was or the overall situation. Two budgets were one too many and the approach was scrapped in the mid-1950s.

Riksbanksfullmäktiges Ordförande

           In 1935, Hammarskjöld had become a secretary responsible for international economic analysis at the Riksbank. From here, he embarked on an international tour of central banks and the Bank for International Settlements, lunching with John Maynard Keynes while in Britain before visiting Paris, Basel, Geneva, Zurich, and Berlin. In this period, several countries were abandoning the gold standard, including Sweden. This allowed for a more innovative and aggressive management of the monetary system. Several tools were available to control the financial system, from meddling in bond markets to adjusting regulations on bank reserves. Each provided a way to regulate credit.

“The modern central bank in a world without fixed exchange rates is forced to recognise its responsibility, since no line of action can be regarded as given independently of the political assessment of its economic and political consequences. The stability of exchange rates, which was of such self-evident value that it became an end in itself, emerges after the gold standard’s fall in a truer light, namely as one of many possible means of achieving the intended result.”

Hammarskjöld, 1935   

           Hammarskjöld became Chairman of the General Council of the Riksbank (Riksbanksfullmäktiges Ordförande) in 1941. As second-in-command of both the Ministry of Finance and the Riksbank, Hammarskjöld was able to marry fiscal and monetary policy during the Second World War. This was controversial, especially at a time when the new possibilities afforded by the abandonment of the gold standard put into question what exactly the role of a central bank was. To some, these new powers meant that the bank should be brought under closer government control. Others felt that independence was in order because monetary authorities were better equipped to engage in new countercyclical policies, smoothing the performance of the larger economy.

           While Hammarskjöld spanned both worlds, he did believe that the central bank should be kept out of politics even if coordination was desirable, a careful balancing act. Though purportedly in favor of a liberal economic system, this did not mean he opposed careful planning. Hammarskjöld favored coordination not only between different public entities but also between countries. He had earlier proposed a common monetary policy among Nordic countries and would soon contribute to Sweden’s entry into the Bretton Woods monetary system, the post-war rearrangement of the global financial system.

           Indeed, back in the 1930s, Hammarskjöld envisioned a world monetary system where smaller countries would peg their currencies either to the pound sterling, the French franc, or the U.S. dollar. Countries would be allowed to adjust currency valuations along predetermined criteria, but gold would retain a role as a reserve currency even if the gold standard, a strict link between everyday money and gold, would remain a thing of the past.

           After the war, Hammarskjöld had to plan a transition to a peace-time economy. Sweden’s neutrality did not make this a simple task. Unlike after the First World War, there was not a slump that came with peace; rather, Sweden experienced domestic inflation. Hammarskjöld believed it essential to allow prices to return to their lower pre-war levels and so allowed an appreciation of the Swedish krona against sterling and the dollar in July 1946. He was wary of inflation on the grounds that it would violate the state’s other ‘neutrality’, that between borrowers and creditors in the financial system.

           Despite having a foot in both the central bank and in the Ministry of Finance, he was not successful in containing prices and inflation rose after the war. Wartime economic controls remained in place to counter this. Controversial today, Hammarskjöld seemed to favor these controls, at least temporarily, over higher interest rates as a means of controlling inflation because he believed it was costs, and not demand, that drove prices.

           That said, whether or not to maintain these controls was not the decision of the Riksbank, but of the Swedish parliament. Regardless, Hammarskjöld took the very political role of leading discussions on the matter between the government and opposition parties. As an outsider, he had to convince rival factions of politicians, all of whom were operating in an unfamiliar world, to take difficult measures.

United Nations          

           Given the diplomatic challenges of the role Hammarskjöld had filled at home, it is less surprising that he would find himself involved in Sweden’s international diplomacy. His transition to the Foreign Ministry began in 1945 and Hammarskjöld was appointed as Deputy Foreign Minister in 1951. In this role, he worked on the establishment of the Organisation for Economic Co-operation and Development and the Bretton Woods system. All this done while maintaining Sweden’s neutrality and negotiating around its somewhat warmer relations with the Soviet Union during the Cold War, a fact which handicapped its early relations with the western Allies.

           Hammarskjöld led the Swedish delegation to the United Nations. In those days, the UN’s legitimacy was threatened, especially by the Korean War, in which the UN itself was a combatant on the anti-communist side. The Soviet Union’s boycott of the United Nations meant it refrained from using its veto to block the UN’s intervention in Korea. However, this threatened the ability of the body to serve as a neutral chamber for peaceful dialogue. 

           The UN was in need of a neutral leader and, in 1953, Hammarskjöld was selected to be the second Secretary-General of the United Nations. He was what the UN needed, a compromise candidate from neutral Sweden, acceptable to both the West and the Soviet Union. Hammarskjöld wasn’t even asked if he wanted the job before his selection was unanimously supported by the UN Security Council. Swedes were finding success in other global bodies; Hammarskjöld’s old boss at the Riksbank, Ivar Rooth, was chairman of the International Monetary Fund.

           The ethos of the Swedish civil service was transported to the UN headquarters in New York; just as he valued independence from political parties at home, Hammarskjöld hoped to make the UN independent from the great powers of the day. He also established the UN’s peacekeeping operations and put them to use in Egypt and the Congo during their respective crises. Hammarskjöld died in a 1961 plane crash while on a UN mission to the Congo.


           It may have been Sweden’s policy of neutrality during the 20th century that gave Dag Hammarskjöld his chance to lead the UN but there was much more that prepared him for the role. Hammarskjöld was internationally minded since his days at the Riksbank, afterward involving himself in Sweden’s entry into post-war organizations. At the Riksbank and the Ministry of Finance, he also employed some diplomatic skill to convince the politicians of the merits of actions he recommended.

           Whether because of his family background or his career amidst depression and war, Hammarskjöld succeeded in filling the role of a ‘political civil servant’. Perhaps a leader in any central bank must develop these skills since he must be a technocrat but one far too important to be blind to political concerns even if he tries to maintain independence from them.

More from the Tontine Coffee-House

         Learn about the origins of the Riksbank and how it and other central banks reacted to the start of the Second World War. Lastly, consider subscribing to this blog’s newsletter here

Further Reading

1.     “Dag Hammarskjöld’s Life and Legacy.” Dag Hammarskjöld Foundation, 25 Sept. 2018.

2.     Lipsey, Roger. Hammarskjold: A Life. University of Michigan Press, 2013.

3.     “Special Issue: Dag Hammarskjöld 100th Anniversary.” Sveriges Riksbank Economic Review: Published By Sveriges Riksbank, 2005.

4.     Wallensteen, Peter. Dag Hammarskjöld. Swedish Institute, 2004.

5.     Wetterberg, Gunnar. “From the First War to the Second.” Money and Power – the History of Sveriges Riksbank, Atlantis, pp. 255–320.

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