Sweden's long-standing policy of neutrality was severely tested on numerous occasions during the 1930s. The challenges came from a strongly rejuvenated, nationalistic Germany. From 1919 until 1935, Sweden had been an active supporter of the League of Nations. Most of Sweden's energy in the international arena had been directed towards preservation of the League. However, the Anglo-German Naval Agreement (AGNA) of 1935 seriously jeopardised both Sweden's independence and its long-standing policy of peaceful neutrality. Signed on June 18, 1935, the agreement was a great shock to many Swedes. AGNA allowed Germany to increase the size of its navy to one-third the size of the British Royal Navy, despite the provisions agreed in the Treaty of Versailles. At the same time, Britain agreed to withdraw its navy from the Baltic Sea, leaving the Kriegsmarine the dominant power in that sea. This became a potential threat to Sweden and other countries in region.

Pre-War Militarization

Beginning in 1936, the Swedish government regularly increased its defense budget to strengthen its military preparedness as the international situation was seen to worsen. Military spending went from $37 million in 1936, to $50 million in 1937, to $58.575 million in 1938, and then increased over five-fold to $322.325 million in 1939. During the war itself, military spending peaked in 1942 at $527.575 million.

During European hostilities, Swedish industry had to supply an increased share of domestic goods, due the German blockade of the North Sea, as well as to satisfy the vastly increased demand for armaments. Before the war, annual production of armaments typically totalled tens of millions of Swedish kronor, but during the war, output exceeded SEK 1 billion (US$240 million).

Not only was the Swedish government buying materiel to strengthen its defenses, it began drafting conscripts. On May 6, 1938, the government called up the entire conscript class of 1923, then at the age of 35, for short periods of training. In addition to this, the Swedish Cabinet ordered that one quarter of the 1938 military draft intake be retained for further training.

In 1940, the Swedish Home Guard, or Hemvarnet, was created. Its units comprised small groups of former professional soldiers who were equipped with rifles, machine guns, ammunition, medicine and uniforms. They had the option to buy additional materials such as skis, sweaters and marching boots. The Swedish Women's Voluntary Defence Service, or Lottorna, had been created in 1924.

While arming itself, Sweden felt that it was necessary to articulate and enforce its policy of neutrality. Prime Minister Per Albin Hansson stated shortly before the Second World War began: "Friendly with all other nations and strongly linked to our neighbors, we look on no one as our enemy. There is no place in the thoughts of our people for aggression against any other country, and we note with gratitude assurances from others that they have no wish to disturb our peace, our freedom, or our independence. The strengthening of our defense preparations serves merely to underline our fixed determination to keep our country outside the conflicts among others and, during such conflicts, to safeguard the existence of our people." Other members of the Swedish government expressed similar sentiments. However, in the first years of the war, Sweden remained amiable to Nazi Germany and provided it with important goods like iron ore, essential to the war effort.

Georg Homin, a captain on the General Staff, said, "without a defensive force we cannot follow any policy of our own, our declarations become merely empty words, and we leave the country's fate to chance or to the decision of others. With a defense as strong as Swedish conditions allow we secure for ourselves the basis of a continued independent Swedish policy."

The Defence of Finland

When the Soviet Union attacked Finland in 1939, an overwhelming number of Swedes favoured some sort of involvement in the conflict, both on a humanitarian and a military basis. Sweden's interest in Finland lay in the fact that Finland had been an integrated part of Sweden for more than six hundred years, Sweden losing control of the eastern provinces in 1809. Despite the government's policy of neutrality, as many as 8,000 Swedes voluntarily went to Finland to help the Finns defend their homeland against the advancing Red Army during the Winter War. The Swedish government did send food, clothing, medicine and a small quantity of weapons and ammunition to aid the Finns at the beginning of the war, but avoided any official military involvement. In addition, some 70,000 Finnish children were sent to safety from Finland to Sweden during the 1940s [1].

Press Freedom and Public Perceptions

The public's sentiments were widely published in the Swedish press, causing many protests from the German government and prompting the Swedish government to censor areas of the press on a limited basis. In Sweden, the Press fell under the control of several councils, despite contemporary claims that the Swedish press was free. The Swedish Government War Information Board determined what military information was released and what information remained secret. The Swedish Press Council served as a "promotion of good relations between the press and the public authorities and to serve as an instrument of self-discipline for the press." The Press Council issued warnings, public or confidential, to those who abused the freedom of the press.

To say that Sweden had a truly free press was somewhat false. Sweden was concerned that its neutrality might run the risk of being unbalanced should its Press be too vocal in its opinions. Both the Press Council and the Information Board issued comments such as "As far as the material received permits, attempts should be made not to give prominence to the reports of one side at the expense of the other", or "headlines, whether on the billboards or in the newspapers, should be worded in such a way as to avoid favouring one side or the other", and finally, "editorials and surveys as well as articles discussing military events or the military situation, should be strictly objective...".

Foreign Trade

A vital factor in Sweden's relations with the great powers, particularly Germany and Britain, was trade. Prior to the war Sweden had important trade connections with both countries. If Sweden had shown preference to either side, it would have threatened its neutrality and even its independence. Maintaining such trading partnerships was not only important politically, but in an economic sense as well. For example, in 1938 24 percent of Sweden's total exports went to Britain and another 18 percent to Germany.

The outbreak of war greatly affected trade with both countries. At the beginning of the war, agreements were signed between Sweden and the two great powers in order to sustain these vital export markets. However when Germany invaded Denmark and Norway in April 1940, coupled with a German blockade of the North Sea, Sweden's trade with Britain was cut by a total of 70 percent. Within the blockade trade with Germany increased, until 37 percent of Sweden's exports were shipped to Germany.

Potential Allied Invasion

There was much speculation as to whether the Allies would consider an invasion of the European continent by way of Scandinavia rather than across the English Channel. Hitler was very concerned by such a prospect and was almost convinced that the Allies would invade Europe by way of Norway. Hitler's letter to Sweden's King Gustaf V, dated April 24, 1940, said, "I have no doubt that our action (the invasion of Norway and Denmark), which at the last moment forestalled the execution of the Allied plan and which under all circumstances will stop France and England from getting a foothold in Scandinavia, will have consequences which will be a blessing to the Scandinavian peoples."

Had such an Allied invasion of Norway occurred, Sweden would have undoubtedly been grievously affected. Sweden was considered to be situated in a prime location for air bases for Allied planes to effect air raids into Germany. Even towards the end of the war, when German capitulation seemed imminent, the Allies considered an invasion of Sweden, due in large part to Sweden's strategic location in relation to Germany.

German Pressure

When Germany invaded Norway and Denmark on the 9th of April, 1940, demands were made stating that Sweden was to keep neutral and refrain from mobilizing to aid her neighbours. German communications were to continue uninterrupted through Swedish channels and the trade with iron ore was not to be disturbed. The Swedish government agreed, but secretly increased her armed forces during the following weeks, from 100,000 men to 320,000. More demands followed during the spring and summer, particularly for the transit of medical personnel, later stepped up to include ammunition and soldiers on leave. During the summer of 1941, the Swedish government was forced to accept the transit of a fully equipped German division headed to Finland, bound for the recently opened eastern front. In February, 1942, German presence in Norway was stepped up in preparation of an invasion of Sweden. Hitler was dissatisfied with Swedish cooperation and doubted its ability to defend against an allied attack through Norway, threatening ore resources. 300,000 Swedish soldiers were sent to the western border to train and prepare, but no invasion came and the crisis dissipated.