The Elder Edda and the Younger Edda/Younger Edda/Origin of the Dwarfs, and Norns of Destiny

ORIGIN OF THE DWARFS.

15. "Then the gods, seating themselves upon their thrones, distributed justice, and bethought them how the dwarfs had been bred in the mould of the earth, just as worms are in a dead body. It was, in fact, in Ymir's flesh that the dwarfs were engendered, and began to move and live. At first they were only maggots, but by the will of the gods they at length partook both of human shape and understanding, although they always dwell in rocks and caverns.

"Modsognir and Durin are the principal ones. As it is said in the Voluspa—

"'Then went the rulers there,
All gods most holy,
To their seats aloft,
And counsel together took,
Who should of dwarfs
The race then fashion,
From the livid bones
And blood of the giant.

Modsognir, chief
Of the dwarfish race,
And Durin too
Were then created.
And like to men
Dwarfs in the earth
Were formed in numbers
As Durin ordered.'"