by Professor Bengt Samuelsson, Chairman of the Board of Directors, The Nobel Foundation

Your Majesties, Your Royal Highnesses, Ladies and Gentlemen,

On behalf of the Nobel Foundation, I welcome you to this year’s Prize Award Ceremony, the first of the new century. I would especially like to welcome this year’s Laureates and their families to the Nobel Festivities here in Stockholm. I congratulate you for your outstanding work, adding one more piece to the history of science and culture. Today we celebrate your contributions. Earlier today the Nobel Peace Prize was awarded in Oslo to Kim Daejung for his work for democracy and peace.

This year, I would like to call special attention to a centenarian. On June 29, 2000, the Nobel Foundation celebrated its 100th anniversary. But the Nobel Foundation and the Nobel Prize were very close to never coming into existence.

Alfred Nobel died on December 10, 1896. The opening of his will was an “explosion” fully worthy of the inventor of dynamite. In many respects, the will was flawed from a legal standpoint. Many people tried to have it declared invalid. Certain members of the Nobel family disputed the will, the intended prize-awarding bodies were hesitant about accepting the task it gave them, and many people felt that Alfred Nobel had been insufficiently loyal to his origins by not restricting the prizes to Swedes and other Scandinavians. King Oscar II of Sweden worked behind the scenes to thwart the aims of the will. Some members of the political left dismissed the will as a capitalist delusion.

The waves of debate surged high in the press, which was nevertheless largely favorable toward the donation. A major newspaper praised Nobel for having created “one of the most magnificent dispositions for the good of humanity that any single being has so far been able and willing to make.” According to one newspaper, the will was “Nobel’s gift to humanity.” Another described it as “magnificent intentions – magnificent blunder.” Other writers said that the will was unpatriotic, that they believed the intended prize-awarding bodies could not handle their task, and that there would be attempts at bribery. Some people felt that the Swedish-Norwegian union might be harmed, since the Norwegians would be awarding the Peace Prize.

Only after four years of legal probes and often rather bitter conflicts could the fundamental concepts presented in the will assume solid form with the establishment of the Nobel Foundation. The executors of the will, Nobel’s young assistant Ragnar Sohlman and the engineer Rudolf Lilljequist, played a major role in this process.

On June 29, 1900, the King in Council promulgated the Statutes of the Nobel Foundation at the Royal Palace in Stockholm. In the autumn of the same year, the first Board of Directors of the Foundation was elected, with former Prime Minister Erik Gustaf Boström as Chairman. Effective on January 1, 1901, the Board took over management of the Foundation’s assets. On December 10, 1901 the first Nobel Prizes were awarded.

The Nobel Foundation is entrusted with protecting the common interests of the prize-awarding bodies, as well as representing the Nobel institutions externally. This includes informational activities as well as arrangements related to the presentation of the Nobel Prizes in Stockholm. One vital task of the Nobel Foundation is to manage the Nobel assets in such a way as to safeguard the financial base of the Nobel prizes and guarantee the independence of the prize committees in their prize adjudication work.

Over the past 100 years, there have been a number of changes in the relationship between the Nobel Foundation and the Swedish State. According to the original Statutes, the Foundation was to be represented by a Board consisting of “five Swedish men.” The Chairman of the Board was to be designated by the King in Council, later by the Government. The Trustees of the prize-awarding bodies would appoint the other Board members. The King in Council would also appoint a deputy to the Chairman. These links to the State have gradually been severed. Nowadays the Trustees select all members of the Board and deputy members. Today the Government’s only role in the Foundation is to appoint one auditor, who is also chairman of the Foundation’s auditors.

The first Chairman of the Nobel Foundation also served as Sweden’s prime minister during most of his period as Chairman. His successor had been both foreign minister and chancellor of the Swedish universities. The Chairman was selected from among such high officials or “Gentlemen of the Realm” until 1960, when the King appointed a scientist and Nobel Laureate, Arne Tiselius. Since then the Chairman has been chosen exclusively from among the members of the prize-awarding bodies.

In 1900 the Norwegians refrained from representation on the Board of the Nobel Foundation – being appointed by the King of Sweden at a time when Norway was moving toward a breakup of its union with Sweden was not considered an attractive idea. The Norwegians limited their involvement to serving as Nobel Foundation trustees and auditors. In light of this, it is interesting to note that Henrik Santesson, the lawyer selected as the first Executive Director of the Foundation, also happened to be the legal counsel of the Norwegian Storting (Parliament) in Sweden. Not until 1986 did the Norwegian Nobel Committee gain representation on the Board of the Nobel Foundation. The wording of the Statutes, “Swedish men,” was changed to “Swedish or Norwegian citizens.”

In its role as a financial manager, the Nobel Foundation resembles an in-vestment company. Its investment policy is naturally of the greatest importance in preserving and increasing its funds, thereby ensuring the size of the Nobel Prizes. The provisions of Alfred Nobel’s will stipulated that the capital for the prizes should be invested in “safe securities.” This referred to government bonds with a “gold clause,” i.e. entitling the holder to demand payment in gold. The stock market and real estate holdings were beyond the pale. Stocks were regarded as an excessively risky and speculative form of financial investment. Rigid adherence to outdated investment rules, inflation and rising taxes had a very adverse impact on the Foundation’s finances during its first 50 years. It is remarkable that for a long time, the Nobel Foundation was the largest single taxpayer in Stockholm.

In 1942, the investment rules were eased somewhat, but only in the 1950s did the Foundation achieve more extensive freedom to manage its capital independently. Freedom of investment, combined with tax exemption as well as new rules stating that the Board had to include at least two individuals with financial expertise, marked a turning point. The Board shifted from passive to active asset management.

An important revision of the Nobel Foundation’s Statutes was implemented earlier this year. Among other things, it modernizes the concept of financial return, so that the Foundation may use not only the direct return (interest and dividends) on its portfolio but also realized capital gains from the sale of assets. Today the fund capital of the Nobel Foundation is more than SEK 4 billion, and this year each Nobel Prize is worth SEK 9 million (about USD 900,000 at the current rate). This is well above the value of the original fund and Prize in real terms.

On the occasion of its 300th anniversary in 1968, the Bank of Sweden (Sveriges Riksbank) made a large donation to the Nobel Foundation. The Prize in Economic Sciences in Memory of Alfred Nobel has been awarded since 1969. As with the Physics and Chemistry Prizes, prize adjudication is performed by the Royal Swedish Academy of Sciences. Many people refer to the Economics Prize as a Nobel Prize, but it is and will remain a prize “in memory of Alfred Nobel.”

An important addition to the activities of the Nobel Foundation is its Nobel Symposia on areas of science where breakthroughs are occurring or on topics of primary cultural or social significance. Those who are invited to these Symposia represent the elite of researchers and cultural figures from throughout the world.

The Nobel Foundation is now entering a new century, with many exciting projects underway, while being able to look back at its successful past work. The original criticisms of the Nobel Prize concept and against Alfred Nobel have been completely silenced. Alfred Nobel lives on, because the Prizes that bear his name identify and honor those who “have conferred the greatest benefit to mankind.”

From Les Prix Nobel. The Nobel Prizes 2000, Editor Tore Frängsmyr, [Nobel Foundation], Stockholm, 2001