"Poor Kreuger"

Ivar Kreuger, 52, matchmaker and moneylender to many nations, arrived in Paris last week. His pallid face was whiter than usual, and drawn. He had just been in the U. S., seeking loans for his labyrinth of companies. He had failed to get the loans. He did not look forward to a meeting he had called for Saturday noon to discuss his companies' financial position with their leading executives and certain international bankers. When on Friday his doctor told him he was in poor shape and should watch his heart he became very depressed. Saturday morning he arose, dressed, wrote three letters. Then, while his associates and bankers were growing impatient at his tardiness, he went to his bedroom, undid his waistcoat, lay down on the bed, put a bullet through his heart (see p. 15).

News of Ivar Kreuger's death was withheld by the Paris police until after the stockmarkets of the world had closed for the weekend. When it reached Sweden it caused something akin to panic. In London a "high Swedish authority" received a representative of the Times with a sad face. "Poor Kreuger," he said. "Creditors were closing in on him. . . ."

How many were his creditors, how much they were owed will not be known for a long time. Ivar Kreuger's business life was known to only a handful of men. In making important transactions he usually revealed only part of the details to any one person. The main holdings of his companies are common knowledge, but it is certain that they also had many investments which have never been revealed. How much money he had, no one knew, not even himself. He said he did not care. Others said that next to Sir Basil Zaharoff he must have been, for a time at least, Europe's richest man.

Principal Kreuger company is Swedish Match--Svenska Taendsticks. It makes 66% of the world's matches, controlling 250 plants in 43 nations. In 1930 its earnings came to $13,000,000. This company's growth was due to Ivar Kreuger's efforts and its rise paralleled his own. Sweden's match industry began in the latter part of the 19th Century. Small factories sprang up all over the country. In 1903 a merger of many of the companies formed Vulcan Match Manufacturing Co. which began to force the smaller companies out. In 1907 Ivar Kreuger, then 27, arrived in Stockholm after several years spent in the U. S. as a construction engineer. (He built Syracuse University's Stadium.) He and Paul Toll formed Kreuger & Toll Co. to do engineering work, but in a few years the company's function had changed to a holding company for the expanding of Kreuger match interests.

Ivan Kreuger's father had a small match factory which was not making money. Young Kreuger saw that a merger with other independents was the solution. In 1913 he put through the deal which created United Swedish Match Factories Co. and four years later this firm merged with the Vulcan group, eliminating competition in the home market. The next years were spent in pushing exports, building factories abroad, forming alliances with competitors. One of these alliances was a sales agreement with Diamond Match Co. to cover safety matches in the U. S. When in 1930 a U. S. tariff was placed on safety matches Kreuger began acquiring factories in the U. S. Last year he bought Federal Match Corp. of Chicago.

Another alliance was with Bryant & May, Britain's leading match house. Bryant & May and Swedish were always friendly but in 1927 they united their interests in the British Empire by formation of British Match Corp. in which Swedish was given a 30% interest. Match-man Kreuger at the time was so well entrenched in India that he could afford to exclude that vast market from the Bryant & May deal. Swedish Match operates chiefly through subsidiaries. Of these the most important is International Match, a U. S. corporation which holds the bulk of Swedish Match's foreign interests and earned $20,000,000 in 1930.

Although by the early 1920's Swedish Match had a firm hold on the world's markets, Matchman Kreuger wished to make it impregnable. He saw an opportunity in the unsettled financial condition of most of the world, realizing that cash-poor nations would grant match monopolies in return for loans. The first loan was to Poland in 1925 and consisted of $6,000,000. Greece followed and then France offered a match monopoly for a loan of $75,000,000. This large financing was accomplished through the sale of $50.000,000 worth of International Match bonds in the U. S. and Ivar Kreuger's monopolizing got into its full stride. More than a score of nations were approached and persuaded. In 1929 the biggest loan of all was made--$125.000,000 to Germany. It was secured not by a direct monopoly but by an agreement to ban all Russian matches. Since Swedish makes a good 70% of all matches used in Germany the terms were satisfactory. Worry over the safety of this loan was known to be one of the things depressing Ivar Kreuger last week.

Key company to the entirgroup was the original engineering and real estate firm of Kreuger & Toll, controlled by Class A voting shares capitalized at $50,000, the majority of which Ivar Kreuger held himself. This small amount of stock carried control of properties capitalized at over a billion dollars.

Kreuger & Toll has many activities in addition to control of the match companies. It handles much of the financing the monopolies make necessary. It has a 20% interest in the Grangesberg Co. of Sweden, biggest iron producer in Europe, and an 80% interest in the Boliden gold mine in northern Sweden, thought to be the richest in the world. It owns Swedish Pulp Co. with 4,900,000 acres of fine forest, valuable power properties and rights. It controls financial institutions throughout Europe, including commercial and mortgage banks. A typical deal was its purchase of Sweden's $29,000,000 share in the Young Plan Loan in 1930. It has real estate companies with properties throughout Europe, including 87 buildings in Stockholm. By selling control of L. M. Ericsson Telephone Co. (acquired in 1930) to International Telephone & Telegraph for 400,000 shares of I. T. & T. stock, Ivar Kreuger connected his empire with the worldwide communications skein of the Behn Brothers.

There was a central thought in the great conglomeration of Kreuger companies, although the very size of the enterprise made some conservative bankers keep away from it even before Depression. Making his fortune in matches, Ivar Kreuger decided to concentrate on basic industries with large, scattered consumption. His company had great cash resources and these had to be invested, kept fruitful. For this reason he bought control or made close affiliations with banks throughout the world, feeling that banks were in position to judge their countries' investment opportunities better than a foreign delegation of statisticians. They also could handle his transactions with complete privacy. Another rule he stuck to was to buy only into institutions with long and successful careers, ones in which problems of management and operation would not arise.

While Matchman Kreuger made no matches in the U. S., he raised much cash there. Through his U. S. bankers, Lee, Higginson & Co., the Kreuger companies floated about $200,000,000 worth of securities in the past few years. These issues include an issue of participating Kreuger & Toll debentures which are listed on the New York Stock Exchange. For some months the Kreuger securities have been weak and on his last visit Ivar Kreuger spent much time consulting with market manipulators. Last week the Kreuger & Toll shares were especially weak, dropping from $7 3/8 to $5 on tremendous volume. On the day preceding his suicide it was the most active stock on the New York Stock Exchange. This was also true on Saturday when it accounted for 25% of trading although no word of Ivar Kreuger's death had leaked out.

The drop was accompanied by rumors regarding the whole Kreuger group's solvency. While its earnings have held up (Kreuger & Toll reported $33,000,000 net in 1930) it has been hurt by fluctuations in foreign exchange and the weakening credit position of countries whose bonds it holds. Ivar Kreuger is believed to have borrowed from bankers. Last September Kreuger & Toll had a floating debt of only $50,000,000. The sum was thought to be much higher last week. Much of the selling was from Europe. Kreuger & Toll has 11,000,000 participating debentures outstanding, of which 4,000,000 were issued to pay for the Boliden mine. Eight months ago only 4,000,000 of the remaining 6,000,000 debentures were represented by U. S. shares. Last week all but 500,000 had been transferred to U. S. certificates, a fact which on the surface would indicate that Europe's investors have long known that Ivar Kreuger's creditors might be closing in, that the match's mighty financial flame might be nearly out.

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