Match king of Sweden

In 1930 the Swedish match magnate Ivar Kreuger negotiated a legal monopoly with Germany; it lasted for fifty three years.

German box of matches
Rolf Schlagenhaft, CC BY 3.0, via Wikimedia Commons

(Content warning: this article discusses suicide.)

Ivan Kreuger was one of history’s great swindlers. He took advantage of the economic chaos following the First World War to build an empire out of matches. At one point, nearly three quarters of the world supply of matches were Kreuger matches. But fallout from the 1929 stock market crash set that empire on fire.

Sweden had been a centre of world match production ever since Johan Edvard Lundström pioneered the commercial production of safety matches in the 1840s. Kreuger was born in 1880 into a family of Swedish match-makers. By 1917, Kreuger and his relatives successfully united or acquired all Swedish match companies. He then turned his ambitions international.

After the end of the First World War, many European countries were trying to rebuild themselves. To do that, they needed money – and Kreuger was happy to loan them that money. He used his reputation as a business mogul to get large loans from banks (mainly Swedish and American ones), and then loaned that money on to countries undergoing reconstruction. Those loans, however, came with an interesting condition: give Kreuger’s companies monopoly control over certain markets.

The 1930 “Zündwaren monopoly” loan to Germany, for example, made Kreuger the only person who could legally manufacture and sell matches in Germany. He loaned the German government a ridiculous amount of capital – close to two billion dollars in today’s money – and his companies maintained that monopoly until the bond was completely repaid. That finally happened in 1983; the monopoly had lasted fifty three years.

Kreuger made similar deals, with greater or lesser monopolistic control, with more than a dozen other countries. But underneath this canny capitalistic caper was a dirty secret: Kreuger often made the loans without knowing where he’d get the money. He relied on the repayment of earlier loans, profits made from dangerous speculation, and some rather novel financial instruments. The match empire was large, but very fragile.

(Many of Kreuger’s instruments have entered the world financial playbook: splitting stocks into voting and non-voting shares, for example, so that he could get more investors without losing control of his companies; or keeping some debts “off balance” so that the company’s true liability stayed secret. The latter, by the way, was very popular with Enron in the mid- to late-1990s. Thanks Kreuger.)

All this came to a head in 1932. Kreuger, increasingly desperate, asked for yet another large loan from a Swedish bank. The bank, in return, asked for a full account of his companies’ financial position. The day before he was due to give that full account, Kreuger shot himself. The empire collapsed, investors lost millions of dollars, and the banks got the companies.

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