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The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals
At the height of the roaring ’20s, Swedish émigré Ivar Kreuger made a fortune raising money in America and loaning it to Europe in exchange for matchstick monopolies. His enterprise was a rare success story throughout the Great Depression.Yet after Kreuger’s suicide in 1932, the true nature of his empire emerged. Driven by success to adopt ever-more perilous practices, Kreuger had turned to shell companies in tax havens, fudged accounting figures, off-balance-sheet accounting, even forgery. He created a raft of innovative financial products— many of them precursors to instruments wreaking havoc in today’s markets. When his Wall Street empire collapsed, millions went bankrupt.
Frank Partnoy, a frequent commentator on financial disaster for the Financial Times, New York Times, NPR, and CBS’s “60 Minutes,” recasts the life story of a remarkable yet forgotten genius in ways that force us to re-think our ideas about the wisdom of crowds, the invisible hand, and the free and unfettered market.
Frank Partnoy, a frequent commentator on financial disaster for the Financial Times, New York Times, NPR, and CBS’s “60 Minutes,” recasts the life story of a remarkable yet forgotten genius in ways that force us to re-think our ideas about the wisdom of crowds, the invisible hand, and the free and unfettered market.
288 pages, Hardcover
First published February 19, 2009
About the author
Frank Partnoy
12 books65 followersFrank Partnoy is the author of F.I.A.S.C.O., Infectious Greed, and The Match King. Formerly an investment banker at Morgan Stanley and a practicing corporate lawyer, he is one of the world’s leading experts on market regulation and is a frequent commentator for the Financial Times, the New York Times, NPR, and CBS’s 60 Minutes. Partnoy is a graduate of Yale Law School and is the George E. Barrett Professor of Law and Finance and the founding director of the Center for Corporate and Securities Law at the University of San Diego.
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Displaying 1 - 30 of 97 reviews
August 8, 2015
In 1920 Swedish businessman Ivar Kreuger (1880-1932) controlled most of the world’s safety match production, as well as mining, timber, media, banking and construction industries. He was one of the richest men in the world. He took advantage of the financial state of European countries after World War I and managed to push aside J. P. Morgan and Company to become the lender of choice to sovereign governments. He made a deal in 1929 the week the stock market collapsed to lend German 125 million dollars in return for the safety match monopoly that lasted until 1983.
Partnoy asks is the rise and fall of Kreuger a story of what happens to a person when ambition overreaches and maybe edges into the world of fraud? Or is it a tale of a premeditated confidence trick perpetrated by Kreuger?
Partnoy is a Professor of Law at the University of California San Diego and a historian who has studied Kreuger extensively and written a number of books about him. The first part of the book reads like a case for the prosecution. Sort of makes one think of Bernie Madoff but Kreuger was a real business man with real business and most often stayed within the letter of the law. But one must remember how lax the laws were in the 1920s. The collapse of the Kreuger Empire was responsible for the implementation of the 1933-34 security laws in the United States.
The book is meticulously researched and well written. It is more of a business history than a biography. Some of the businesses Kreuger founded or invested in are still standing today such as Swedish Match Company and Ericsson. I read this as an audiobook downloaded from Audible. L. J. Ganser narrated the book.
Partnoy asks is the rise and fall of Kreuger a story of what happens to a person when ambition overreaches and maybe edges into the world of fraud? Or is it a tale of a premeditated confidence trick perpetrated by Kreuger?
Partnoy is a Professor of Law at the University of California San Diego and a historian who has studied Kreuger extensively and written a number of books about him. The first part of the book reads like a case for the prosecution. Sort of makes one think of Bernie Madoff but Kreuger was a real business man with real business and most often stayed within the letter of the law. But one must remember how lax the laws were in the 1920s. The collapse of the Kreuger Empire was responsible for the implementation of the 1933-34 security laws in the United States.
The book is meticulously researched and well written. It is more of a business history than a biography. Some of the businesses Kreuger founded or invested in are still standing today such as Swedish Match Company and Ericsson. I read this as an audiobook downloaded from Audible. L. J. Ganser narrated the book.
September 24, 2015
An interesting biography of one of the forgotten financial wizard's of the the nineteenth century. A Swedish financier who single-handed created a monopoly of the stick match industry, who would have thought to corner the match stick market in the nineteenth century. it is just so interesting to read how they did it then and how it is done now, not much difference from today's TBTF. Who would believe this story? Just goes to show truth is something beyond any fiction you could read.
I am amazed by these early financiers, these self made men who never blinked an eye at how they amassed these great fortunes. Most of them seem to be cheats and scallywags who are no different that that existing oligarchy.
This review was originally posted on THE PFAEFFLE JOURNAL
I am amazed by these early financiers, these self made men who never blinked an eye at how they amassed these great fortunes. Most of them seem to be cheats and scallywags who are no different that that existing oligarchy.
This review was originally posted on THE PFAEFFLE JOURNAL
March 20, 2014
Narrated by: L. J. Ganser
Length: 10 hrs and 48 mins
Publisher's Summary
At the height of the roaring 20s, Swedish émigré Ivar Kreuger made a fortune raising money in America and loaning it to Europe in exchange for matchstick monopolies. His enterprise was a rare success story throughout the Great Depression.
Yet after Kreuger's suicide in 1932, the true nature of his empire emerged. Driven by success to adopt ever-more perilous practices, Kreuger had turned to shell companies in tax havens, fudged accounting figures, off-balance-sheet accounting, even forgery. He created a raft of innovative financial products - many of them precursors to instruments wreaking havoc in today's markets. When his Wall Street empire collapsed, millions went bankrupt.
Frank Partnoy, a frequent commentator on financial disaster for the Financial Times, The New York Times, NPR, and CBS's 60 Minutes, recasts the life story of a remarkable yet forgotten genius in ways that force us to rethink our ideas about the wisdom of crowds, the invisible hand, and the free and unfettered market.
Length: 10 hrs and 48 mins
Publisher's Summary
At the height of the roaring 20s, Swedish émigré Ivar Kreuger made a fortune raising money in America and loaning it to Europe in exchange for matchstick monopolies. His enterprise was a rare success story throughout the Great Depression.
Yet after Kreuger's suicide in 1932, the true nature of his empire emerged. Driven by success to adopt ever-more perilous practices, Kreuger had turned to shell companies in tax havens, fudged accounting figures, off-balance-sheet accounting, even forgery. He created a raft of innovative financial products - many of them precursors to instruments wreaking havoc in today's markets. When his Wall Street empire collapsed, millions went bankrupt.
Frank Partnoy, a frequent commentator on financial disaster for the Financial Times, The New York Times, NPR, and CBS's 60 Minutes, recasts the life story of a remarkable yet forgotten genius in ways that force us to rethink our ideas about the wisdom of crowds, the invisible hand, and the free and unfettered market.
June 22, 2009
This biography offers a very reasonable account of Ivar Kreuger's financial deals in the nineteen-twenties and early thirties up to--and including the details of--his death. However, I feel it devalues somewhat, through lack of reference to, his industrial genius. The reason that he needed to make these semi-moral investment transactions was because Kreuger was so good at match making that he practically put himself out of business. He needed to sell matches in a monopoly situation because he developed ways of producing them too cheaply so that competitors could undercut him and lower prices.
Still, it was a very good book about stock investing pre-nineteen twenty-nine. I recommend reading it on that account alone.
Still, it was a very good book about stock investing pre-nineteen twenty-nine. I recommend reading it on that account alone.
September 22, 2011
A long, repetitive and frequently tedious biography of Swedish financier Ivar Kreuger aka The Match King in the first third of the 20th century. Ivar invented off-balance sheet financing, vote-light B shares, implicit prepayment penalties, complex derivatives issued by offshore subsidiaries, and the loan-for-monopoly concept. He was the first to finance large loans to foreign governments by selling securities to the American public. Ultimately many of his business dealings were found to be fraudulent, he committed suicide, and his empire collapsed. This books tells of Ivar's rise and fall. Given that I hadn't heard of Ivar Kreuger before reading this book, I was shocked at the magnitude of Ivar's business empire and his effects on world events.
August 18, 2017
Listened to Audible version. It was an interesting story; I wish the author was up to the task. The story needed a good financial reporter. The book instead took a primarily chronological approach, so it was unclear what financial moves Kruger made were legal but ahead of his time, and which were illegal. I also though the author spent too much time on wild theories about his suicide (he was murdered, he disappeared).
April 21, 2011
The subject matter of this book was fascinating, however I was not impressed with the writing. Ivar Kreuger is the financial genius that most people have never heard of. I wish Kurt Eichenwald had written this book, Frank Partnoy is a capable writer however it seems to me that he often draws the most outrageous conclusion possible. Not too much financial jargon, overall a good read.
January 28, 2022
Well written. A good mix of personal information about Ivar while keeping the story focused on his business dealings and his business partners.
September 8, 2023
He was the Leonardo of their craft
These debts, known as “off balance sheet obligations,” didn’t appear in any of his companies’ financial statements
stocks fell by 25 percent in two days – days that came to be known as Black Monday and Tuesday.
in 1922, 42-year-old Ivar Kreuger boarded Berengaria, the German luxury liner, at Southampton.
he left them feeling that they, not he, had been asking all the questions.
Ivar spent hours every day just preparing to talk. When Ivar knew he would be meeting a new group of people, he planned the first impression he hoped to make in advance: whom to meet first, which nuggets of information to drop, and where to move next. He always formed an exit plan.
Ivar was sailing to America for one simple reason: that’s where the money was.
a post-war boom had ignited the Roaring Twenties, and by 1922 the country was awash in cash. American cities were jammed with new cars – Lexingtons, Maxwells, Briscoes, and Templars, along with Buicks, Dodges, and Fords – and the wealthiest families were buying vacation homes in Miami and California, and sailing to and from Europe
At the New York Stock Exchange, where a seat cost more than $100,000 – a hundred times the average annual income – brokers traded shares of the most prestigious companies, such as American Telephone and General Electric.
Just outside the Stock Exchange, at the so-called “Curb Market,” boys with telephones attached to their heads swung down from windows to relay buy and sell orders to the brokers trading stocks, rain or shine, on the curb of Broad Street below.
The hottest two emerging industries were cars and radio. Annual car sales had doubled from two years earlier
RCA enjoyed a wireless communications monopoly, thanks to Navy Secretary Franklin D. Roosevelt, who had engineered a “marriage of convenience” among the government, General Electric, and Westinghouse, which manufactured wireless devices.
Anyone who held RCA shares during the 1920s earned an average annual return of 60 percent. All of that gain was from share price appreciation, not any periodic payments from the company.
People used matches to light kerosene lamps, gas heaters, stoves, and, of course, tobacco. Everyone carried matches; everyone used them; everyone bought them.
Ivar told the story of the safety match to anyone who would listen.
A German chemist had invented phosphorous matches in 1832, but the German matches had been too dangerous, both because the yellow phosphorous necessary to light the match was poisonous, and because the Germans had put the phosphorous in the match head, which was prone to light accidentally.
the Swedes developed a safer red phosphorous. Then they moved the phosphorous to a striking surface on the match box. Boxes were labeled “safety matches” and were printed with the slogan “Will Only Light on the Box.” They were an instant hit. By 1922, Sweden was the leading exporter of matches, and Swedish Match Corporation made two-thirds of all matches used in the world. Matches were Sweden’s pride, and its most important export.
In the heady US markets, safety matches were the ideal new investment, and Ivar Kreuger was the perfect messenger.
Antitrust regulators had declared monopolies illegal at home, but, by investing in Swedish Match, Americans could earn profi ts from a monopoly abroad. Ivar’s sales pitch was compelling. An investor who heard him talk about Swedish Match for more than a few minutes invariably would pull out a checkbook.
He had been the black sheep of a family
Ivar left Kalmar and graduated from engineering school in Stockholm, his rise was surprisingly fast: he worked construction jobs throughout America and Mexico, formed a construction partnership in London, and then expanded into other industries, including fi lm, real estate, and telecommunications. By the time of the world war, he was a millionaire and an industry leader.
Ivar quietly purchased match factories throughout Sweden.13 He was a pioneer of vertical integration, buying timber tracts and chemical factories to secure the raw materials needed to make matches. Finally, he merged the leading Swedish competitors to form Swedish Match, a single dominant business with initial capital of about $10 million. Ivar owned half of Swedish Match, held all of the senior executive positions, and controlled the company’s board.
Ivar was attracted to the match business, not for what it was, but for what it might become.
Ivar’s plan was to limit competition and increase profits by securing a monopoly on match sales throughout the world, mimicking the nineteenthcentury oil, sugar, and steel trusts. Then, Swedish Match could raise prices without losing sales.
Swedish Match Corporation was just one part of Ivar’s empire. He controlled ten other businesses through his public “holding” company
Ivar formed separate real estate companies to hold his properties,14 and he used separate subsidiaries for each business, in order to avoid registration fees applicable to larger companies.
Kreuger & Toll’s annual fi nancial statements contained no explanation as to how the company had made so much money. One of the largest profi t entries was labeled simply “profits from other investments.”
As Ivar watched the Americans enter a period of buying mania, he saw a new source of funds. Ivar had studied fi nancial history and was aware of infamous periods of mania and later panic, such as the South Sea Bubble of 1720 and the infamous rise and collapse of Dutch tulip bulb trading in 1637.20 In those cases, men became rich as they rode the wave of investors speculating on risky ventures. Ivar knew the timing was crucial; American optimism would not persist forever. When investors were manic, they would purchase just about anything. It was important to strike, and then exit, early.
There were no actual “buckets” at these shops. The term derived from British beer swillers, who walked from pub to pub in London’s East End, filled a bucket at each one, and then carried the dregs back to their own small stores, where they off ered the dubious brew along with even more dubious wagers on stocks and commodities. A patron might overpay for the beer, but his real losses came from bets on future grain prices.
Four of five people believed they were of above average skill when driving a car. A majority of people said they could outsmart the stock market
Americans have always wanted to believe rags-to-riches stories are true, and the more they heard about young men from poor backgrounds who made implausible fortunes, the more they believed those stories could be theirs.
As the story went, young Jesse Livermore left his family’s small Massachusetts farm for a job posting stock quotes at brokerage firm Paine Webber in Boston. In his spare time, he devised a set of trading rules for the most volatile shares bought and sold by the devious bucket shop dealers. By outsmarting them, and by trading on inside information, he turned $5 into $1,000 by the age of fi fteen. He made his fi rst million soon after that.
His stories were so popular that Edwin Lefèvre, the author of the articles in the Saturday Evening Post, assembled them into a bestselling book, Reminiscences of a Stock Operator.24 During the years after the book’s publication, Livermore lost the entire $100 million he had made betting on the markets, and then shot himself with a .32 caliber Colt automatic pistol.
Another example of the irrational exuberance of the era was Charles Ponzi, who had a similar tale, and a similarly unhappy ending.25 Ponzi also was from a poor family, and he skipped school to work odd jobs for more than a decade, including a stint at a bank where he was fi red for forging checks. After he served a prison term for the check forgeries, Ponzi worked a temporary job as a messenger at J. P. Poole, a Boston import/export broker, and he discovered that the value of so-called “postal reply coupons” – slips of paper that substituted for foreign stamps – had been set at fi xed exchange rates in 1919, and not adjusted since then. Meanwhile, the value of several European currencies, particularly the Spanish peseta, had plummeted. Because the value of the postal reply coupon had not been adjusted since then, Ponzi thought he could buy coupons in Spain at a discount and then sell them in America at a profit.
There was only one catch: the entire supply of postal reply coupons was small, less than $1 million. Even if Ponzi could buy every coupon issued in Spain and take them all home, there wasn’t that much money to be made. Moreover, travel was expensive, and he wasn’t the only person who knew about the scheme. Still, Ponzi thought it was worth trying to raise money based on the idea.
Ponzi placed some magazine advertisements stating that he could double an investor’s money within six months by purchasing postal reply coupons outside the United States and then redeeming them at home for a higher price. Much to his surprise, 40,000 people sent him money. He distributed some of this money as “profi ts” to the earliest investors, who then spread word about their newfound fortunes. Others heard the news and bought in. And so on. Investors from California to Maine sent him more than $15 million. He had to hire sixteen clerks just to collect and deposit the cash.
The report was simple, just a few lines. It noted Kreuger & Toll’s link to Swedish Match and its 25 percent dividend, but said little about where that money came from. Over half of the company’s profi ts were listed simply as “earnings from various transactions.”
drive the venerable bank into the future.
Lee Higginson wrote to Allen that “As the house grows older, I think it grows more careful.”
Antitrust laws prohibited a match monopoly in the United States, but nothing prevented American investors from buying into monopolies abroad. Ivar’s match monopoly in Sweden was a highly profitable model.
On May 18, 1908, Ivar and Paul Toll formed Kreuger & Toll in London.
He promised that if construction wasn’t fi nished by a particular date, he would give the client a partial refund of 1,200 dollars for each late day.
the client agreed to pay a daily bonus for early completion. Ivar then hired three shifts of laborers to work day and night. He personally took over the permitting process to streamline operations, and persuaded the police to ignore neighbors’ nighttime complaints about searchlights and cement mixers.
Word quickly spread about the firm’s reputation for quality, honesty, and timeliness.
purchased aspen wood (the best wood for matches)
These debts, known as “off balance sheet obligations,” didn’t appear in any of his companies’ financial statements
stocks fell by 25 percent in two days – days that came to be known as Black Monday and Tuesday.
in 1922, 42-year-old Ivar Kreuger boarded Berengaria, the German luxury liner, at Southampton.
he left them feeling that they, not he, had been asking all the questions.
Ivar spent hours every day just preparing to talk. When Ivar knew he would be meeting a new group of people, he planned the first impression he hoped to make in advance: whom to meet first, which nuggets of information to drop, and where to move next. He always formed an exit plan.
Ivar was sailing to America for one simple reason: that’s where the money was.
a post-war boom had ignited the Roaring Twenties, and by 1922 the country was awash in cash. American cities were jammed with new cars – Lexingtons, Maxwells, Briscoes, and Templars, along with Buicks, Dodges, and Fords – and the wealthiest families were buying vacation homes in Miami and California, and sailing to and from Europe
At the New York Stock Exchange, where a seat cost more than $100,000 – a hundred times the average annual income – brokers traded shares of the most prestigious companies, such as American Telephone and General Electric.
Just outside the Stock Exchange, at the so-called “Curb Market,” boys with telephones attached to their heads swung down from windows to relay buy and sell orders to the brokers trading stocks, rain or shine, on the curb of Broad Street below.
The hottest two emerging industries were cars and radio. Annual car sales had doubled from two years earlier
RCA enjoyed a wireless communications monopoly, thanks to Navy Secretary Franklin D. Roosevelt, who had engineered a “marriage of convenience” among the government, General Electric, and Westinghouse, which manufactured wireless devices.
Anyone who held RCA shares during the 1920s earned an average annual return of 60 percent. All of that gain was from share price appreciation, not any periodic payments from the company.
People used matches to light kerosene lamps, gas heaters, stoves, and, of course, tobacco. Everyone carried matches; everyone used them; everyone bought them.
Ivar told the story of the safety match to anyone who would listen.
A German chemist had invented phosphorous matches in 1832, but the German matches had been too dangerous, both because the yellow phosphorous necessary to light the match was poisonous, and because the Germans had put the phosphorous in the match head, which was prone to light accidentally.
the Swedes developed a safer red phosphorous. Then they moved the phosphorous to a striking surface on the match box. Boxes were labeled “safety matches” and were printed with the slogan “Will Only Light on the Box.” They were an instant hit. By 1922, Sweden was the leading exporter of matches, and Swedish Match Corporation made two-thirds of all matches used in the world. Matches were Sweden’s pride, and its most important export.
In the heady US markets, safety matches were the ideal new investment, and Ivar Kreuger was the perfect messenger.
Antitrust regulators had declared monopolies illegal at home, but, by investing in Swedish Match, Americans could earn profi ts from a monopoly abroad. Ivar’s sales pitch was compelling. An investor who heard him talk about Swedish Match for more than a few minutes invariably would pull out a checkbook.
He had been the black sheep of a family
Ivar left Kalmar and graduated from engineering school in Stockholm, his rise was surprisingly fast: he worked construction jobs throughout America and Mexico, formed a construction partnership in London, and then expanded into other industries, including fi lm, real estate, and telecommunications. By the time of the world war, he was a millionaire and an industry leader.
Ivar quietly purchased match factories throughout Sweden.13 He was a pioneer of vertical integration, buying timber tracts and chemical factories to secure the raw materials needed to make matches. Finally, he merged the leading Swedish competitors to form Swedish Match, a single dominant business with initial capital of about $10 million. Ivar owned half of Swedish Match, held all of the senior executive positions, and controlled the company’s board.
Ivar was attracted to the match business, not for what it was, but for what it might become.
Ivar’s plan was to limit competition and increase profits by securing a monopoly on match sales throughout the world, mimicking the nineteenthcentury oil, sugar, and steel trusts. Then, Swedish Match could raise prices without losing sales.
Swedish Match Corporation was just one part of Ivar’s empire. He controlled ten other businesses through his public “holding” company
Ivar formed separate real estate companies to hold his properties,14 and he used separate subsidiaries for each business, in order to avoid registration fees applicable to larger companies.
Kreuger & Toll’s annual fi nancial statements contained no explanation as to how the company had made so much money. One of the largest profi t entries was labeled simply “profits from other investments.”
As Ivar watched the Americans enter a period of buying mania, he saw a new source of funds. Ivar had studied fi nancial history and was aware of infamous periods of mania and later panic, such as the South Sea Bubble of 1720 and the infamous rise and collapse of Dutch tulip bulb trading in 1637.20 In those cases, men became rich as they rode the wave of investors speculating on risky ventures. Ivar knew the timing was crucial; American optimism would not persist forever. When investors were manic, they would purchase just about anything. It was important to strike, and then exit, early.
There were no actual “buckets” at these shops. The term derived from British beer swillers, who walked from pub to pub in London’s East End, filled a bucket at each one, and then carried the dregs back to their own small stores, where they off ered the dubious brew along with even more dubious wagers on stocks and commodities. A patron might overpay for the beer, but his real losses came from bets on future grain prices.
Four of five people believed they were of above average skill when driving a car. A majority of people said they could outsmart the stock market
Americans have always wanted to believe rags-to-riches stories are true, and the more they heard about young men from poor backgrounds who made implausible fortunes, the more they believed those stories could be theirs.
As the story went, young Jesse Livermore left his family’s small Massachusetts farm for a job posting stock quotes at brokerage firm Paine Webber in Boston. In his spare time, he devised a set of trading rules for the most volatile shares bought and sold by the devious bucket shop dealers. By outsmarting them, and by trading on inside information, he turned $5 into $1,000 by the age of fi fteen. He made his fi rst million soon after that.
His stories were so popular that Edwin Lefèvre, the author of the articles in the Saturday Evening Post, assembled them into a bestselling book, Reminiscences of a Stock Operator.24 During the years after the book’s publication, Livermore lost the entire $100 million he had made betting on the markets, and then shot himself with a .32 caliber Colt automatic pistol.
Another example of the irrational exuberance of the era was Charles Ponzi, who had a similar tale, and a similarly unhappy ending.25 Ponzi also was from a poor family, and he skipped school to work odd jobs for more than a decade, including a stint at a bank where he was fi red for forging checks. After he served a prison term for the check forgeries, Ponzi worked a temporary job as a messenger at J. P. Poole, a Boston import/export broker, and he discovered that the value of so-called “postal reply coupons” – slips of paper that substituted for foreign stamps – had been set at fi xed exchange rates in 1919, and not adjusted since then. Meanwhile, the value of several European currencies, particularly the Spanish peseta, had plummeted. Because the value of the postal reply coupon had not been adjusted since then, Ponzi thought he could buy coupons in Spain at a discount and then sell them in America at a profit.
There was only one catch: the entire supply of postal reply coupons was small, less than $1 million. Even if Ponzi could buy every coupon issued in Spain and take them all home, there wasn’t that much money to be made. Moreover, travel was expensive, and he wasn’t the only person who knew about the scheme. Still, Ponzi thought it was worth trying to raise money based on the idea.
Ponzi placed some magazine advertisements stating that he could double an investor’s money within six months by purchasing postal reply coupons outside the United States and then redeeming them at home for a higher price. Much to his surprise, 40,000 people sent him money. He distributed some of this money as “profi ts” to the earliest investors, who then spread word about their newfound fortunes. Others heard the news and bought in. And so on. Investors from California to Maine sent him more than $15 million. He had to hire sixteen clerks just to collect and deposit the cash.
The report was simple, just a few lines. It noted Kreuger & Toll’s link to Swedish Match and its 25 percent dividend, but said little about where that money came from. Over half of the company’s profi ts were listed simply as “earnings from various transactions.”
drive the venerable bank into the future.
Lee Higginson wrote to Allen that “As the house grows older, I think it grows more careful.”
Antitrust laws prohibited a match monopoly in the United States, but nothing prevented American investors from buying into monopolies abroad. Ivar’s match monopoly in Sweden was a highly profitable model.
On May 18, 1908, Ivar and Paul Toll formed Kreuger & Toll in London.
He promised that if construction wasn’t fi nished by a particular date, he would give the client a partial refund of 1,200 dollars for each late day.
the client agreed to pay a daily bonus for early completion. Ivar then hired three shifts of laborers to work day and night. He personally took over the permitting process to streamline operations, and persuaded the police to ignore neighbors’ nighttime complaints about searchlights and cement mixers.
Word quickly spread about the firm’s reputation for quality, honesty, and timeliness.
purchased aspen wood (the best wood for matches)
October 14, 2018
Full review and highlights at https://books.max-nova.com/match-king
"The Match King" was a perfect fit for my year of "Crime and Punishment" because it combined corruption and murder with two of my favorite topics: entrepreneurship and Sweden! Although we don't hear much about him now, Ivar Kreuger rivaled Jack Morgan in the 1920's as one of the captains of international finance. But unlike Morgan, Kreuger turned out to be running quite a scam on top of all of his legitimate business - sort of a 1920's Bernie Madoff. Yale Law grad Frank Partnoy helps us untangle Kreuger's intricate international web of hidden bank accounts, secret deals, bond issues, and government monopolies to understand how Kreuger pulled off one of the greatest swindles in history. Partnoy paints his cast of characters with vibrant detail and shows us how Kreuger expertly controlled his public image (and his auditors!) to dupe America's financial class. This was a guy who was a trusted advisor to President Hoover, a trans-Atlantic cultural icon, and owner of a brain that always seemed two steps ahead. I was almost surprised that he wasn't involved in the Teapot Dome scandal that occurred at about the same time! And to top it all off, his mysterious death in 1932 still has investigators scratching their heads.
Yet Partnoy shows us that Kreuger's legacy is not quite so black and white. He left an enormous physical and cultural imprint on Sweden: constructing the stadium for the 1912 Stockholm Olympics, founding Svenska Filmindustri, promoting (and dating) a young Greta Garbo, and building Stockholm City Hall (where the Nobel Prize is awarded). Although notorious for his innovations like off-balance-sheet financing, Kreuger did create legitimate financial mechanisms (like B shares) that are still in use today. And as Partnoy explains, Kreuger's fraud was the major impetus behind the Securities Act of 1933 which GAAP and other modern financial rules. And to be fair, Swedish Match actually still exists and employs over 12,000 people!
Ivar Kreuger's story has been overshadowed by the two World Wars that bookend it, but his fascinating life set the stage for much of 20th century financial history. Partnoy's retelling is well worth a read.
"The Match King" was a perfect fit for my year of "Crime and Punishment" because it combined corruption and murder with two of my favorite topics: entrepreneurship and Sweden! Although we don't hear much about him now, Ivar Kreuger rivaled Jack Morgan in the 1920's as one of the captains of international finance. But unlike Morgan, Kreuger turned out to be running quite a scam on top of all of his legitimate business - sort of a 1920's Bernie Madoff. Yale Law grad Frank Partnoy helps us untangle Kreuger's intricate international web of hidden bank accounts, secret deals, bond issues, and government monopolies to understand how Kreuger pulled off one of the greatest swindles in history. Partnoy paints his cast of characters with vibrant detail and shows us how Kreuger expertly controlled his public image (and his auditors!) to dupe America's financial class. This was a guy who was a trusted advisor to President Hoover, a trans-Atlantic cultural icon, and owner of a brain that always seemed two steps ahead. I was almost surprised that he wasn't involved in the Teapot Dome scandal that occurred at about the same time! And to top it all off, his mysterious death in 1932 still has investigators scratching their heads.
Yet Partnoy shows us that Kreuger's legacy is not quite so black and white. He left an enormous physical and cultural imprint on Sweden: constructing the stadium for the 1912 Stockholm Olympics, founding Svenska Filmindustri, promoting (and dating) a young Greta Garbo, and building Stockholm City Hall (where the Nobel Prize is awarded). Although notorious for his innovations like off-balance-sheet financing, Kreuger did create legitimate financial mechanisms (like B shares) that are still in use today. And as Partnoy explains, Kreuger's fraud was the major impetus behind the Securities Act of 1933 which GAAP and other modern financial rules. And to be fair, Swedish Match actually still exists and employs over 12,000 people!
Ivar Kreuger's story has been overshadowed by the two World Wars that bookend it, but his fascinating life set the stage for much of 20th century financial history. Partnoy's retelling is well worth a read.
August 8, 2014
I love to find obscure little biographies and here is one of them. The public has basically forgotten Ivar Kreuger, "The Match King", but during the 1920-1930s, he was the one of the most well known financiers in the world, second only the the powerful House of Morgan. And it all started with something called Swedish Match (which incidentally is still extant). It seems odd that one could make a fortune as a match manufacturer but in those days, the match was much more important than it is today. But Kreuger wanted more, so he began to expand his activities, issuing bonds,loaning money to foreign governments in exchange for match monopolies and creating subsidiary companies, some of which were secret stashes for money. The American stock market was booming and Kreuger's companies were the top stock in the Exchange and on the Curb Market. His companies were listed on the Exchange even though there was little, if anything, in the way of financial information about these companies. In this day of monthly/quarterly/annual reports and yearly audits, it is amazing to learn that the most information Kreuger ever presented to stock holders, etc. was a balance sheet containing one paragraph.
The market crash of 1929 finally brought his empire tumbling down and investigations into his business dealings were beginning when he committed suicide. In order to avoid another financial fiasco, the Securities and Exchange Commission came into being.
It helps to know something about the stock market when reading this book but not necessary. This is a fascinating look at the Bernie Madoff of his time.
The market crash of 1929 finally brought his empire tumbling down and investigations into his business dealings were beginning when he committed suicide. In order to avoid another financial fiasco, the Securities and Exchange Commission came into being.
It helps to know something about the stock market when reading this book but not necessary. This is a fascinating look at the Bernie Madoff of his time.
August 15, 2018
It gets the job done. Clearly a lot of work went into collecting all this information. It's a bit dry to follow all the deals unless you're into accounting.
The structure of the book could have been better: There are glimpses of the wealth and luxury Ivar amassed, but it's strange at the end of the book, when you read of his estate being dissolved and there are brief listings of houses and businesses he owned: Where was all this interesting stuff before? He was involved in motion pictures, but you'll find next to nothing about his role in it, other than that he had little success here, financially.
I'd much prefer a Great Gatsby-like telling of the story. Understandably, it would not have been an easy feat, but I would have preferred some attempt to fit in to the chronology some more texture.
That said, some of the most memorable moments in the book are details like Ivar apparently having the habit of rubbing the feet of a bear statue:
"In his own flat, he patted the heel of the small wooden bear on the lowest banister of the handrail."
During the roaring 20s is when Ivar made many moves and I was expecting/hoping there would be a clear explanation of the entire fiasco in the end. I was disappointed, that it wasn't quite spelled out how he did what he did, in the end.
The book does give you more material to fill your picture of the 1920s/1930s. Much of modern finance was already in place back then.
Could be given 4/5 stars, but I dont'want to use 4/5 by default :)
The structure of the book could have been better: There are glimpses of the wealth and luxury Ivar amassed, but it's strange at the end of the book, when you read of his estate being dissolved and there are brief listings of houses and businesses he owned: Where was all this interesting stuff before? He was involved in motion pictures, but you'll find next to nothing about his role in it, other than that he had little success here, financially.
I'd much prefer a Great Gatsby-like telling of the story. Understandably, it would not have been an easy feat, but I would have preferred some attempt to fit in to the chronology some more texture.
That said, some of the most memorable moments in the book are details like Ivar apparently having the habit of rubbing the feet of a bear statue:
"In his own flat, he patted the heel of the small wooden bear on the lowest banister of the handrail."
During the roaring 20s is when Ivar made many moves and I was expecting/hoping there would be a clear explanation of the entire fiasco in the end. I was disappointed, that it wasn't quite spelled out how he did what he did, in the end.
The book does give you more material to fill your picture of the 1920s/1930s. Much of modern finance was already in place back then.
Could be given 4/5 stars, but I dont'want to use 4/5 by default :)
October 22, 2018
In reading this book, one is put into the uncomfortable position of being a juror in an Ayn Rand play where a capitalist is being put on trial in the early part of the Great Depression for various reasons. Is Ivar Kreuger a scapegoat for the mistakes of others or was he a fraudulent huckster who made millions off of dangerous and exotic financial instruments, some of which he had invented himself? The author, in this rather balanced and very detailed account, suggests it was a little bit of both. As someone who thinks from time to time about matters related to the stock market [1], I found this book to be a critique of the curious historical blindness that has seen the methods that Kreuger used gain popularity even as the man himself is (wrongly) pilloried as being a mere Ponzi scheme operator. As a result, this book reads like a Greek tragedy, where the reader knows how everything is going to end very badly for everyone involved but where one cannot help but continue all the way until the inevitable destruction of Kreuger's reputation and family name occurs.
This book is fourteen chapters and a bit more than two hundred pages long, and it covers the life and times of one Ivar Kreuger, a complicated Swedish industrialist who sought to become one of the world's most powerful people, moving from the scion to a Swedish match manufacturer to an industralist and financier par excellence, who before he was ruined in the disaster of the Great Depression, had parlayed his inventive financial instruments and complicated off-the-balance-sheet transactions between a baffling array of shell companies into a multiplication of wealth for himself (and others) that included the holding of sovereign debt and the attempts to manipulate the market for matches around the world. Intriguingly, his lack of interest in regulators showing scrutiny to his opaque business dealings was mirrored by an intensely lonely personal life that included a fondness for teenage girls and a strong aversion to intimacy, mirrored by the same tension between glamour and loneliness in Greta Garbo, with whom he was particularly close. Even with the inevitable death (likely through suicide) and financial ruin of his companies, the author finds him a sympathetic figure even if his innovative financial instruments caused havoc whenever they were used in order to hide complicated financial dealings from the scrutiny of complicit auditors, stubborn regulators, and blissfully unaware investors.
Ultimately, the writer comes down on the position that the titular match king does not deserve the obloquy he has suffered as a result of his fall and the resulting scandal. To be sure, he did engage in the fraudulent (if incompetent) copying of Italian bank notes, for reasons few people understand. And he was a person whose financial dealings were shady--but no more shady than that of many other people then and now. The author is quick to remind the reader, though, that what separates Ivar from the great mass of corrupt financiers is that he created real products (matches) and engaged in his financial shenanigans mainly to provide good returns on investment to investors, rather than to eat up potential profits in high fees as is common among contemporary financial middlemen. Even if Ivar Kreuger was not an honest man or a heroic one, he was a man who is morally superior to most of the people on Wall Street, many of whom would look upon Kreuger as a loathsome figure, and it is that moral superiority that gives this book much of its heft and melancholy, as it appears Kreuger was most interested in cutting a fine figure and living a high life and gaining a lasting and enduring good reputation for serving the best interests of ordinary investors as well as various nations seeking to recover from the horrors of World War I. If he went about it the wrong way, and he surely did, there is at least something worth appreciating in him, and this book does a good job at presenting an honest account of a complicated man.
[1] See, for example:
https://edgeinducedcohesion.blog/2016...
https://edgeinducedcohesion.blog/2016...
https://edgeinducedcohesion.blog/2013...
https://edgeinducedcohesion.blog/2011...
https://edgeinducedcohesion.blog/2011...
This book is fourteen chapters and a bit more than two hundred pages long, and it covers the life and times of one Ivar Kreuger, a complicated Swedish industrialist who sought to become one of the world's most powerful people, moving from the scion to a Swedish match manufacturer to an industralist and financier par excellence, who before he was ruined in the disaster of the Great Depression, had parlayed his inventive financial instruments and complicated off-the-balance-sheet transactions between a baffling array of shell companies into a multiplication of wealth for himself (and others) that included the holding of sovereign debt and the attempts to manipulate the market for matches around the world. Intriguingly, his lack of interest in regulators showing scrutiny to his opaque business dealings was mirrored by an intensely lonely personal life that included a fondness for teenage girls and a strong aversion to intimacy, mirrored by the same tension between glamour and loneliness in Greta Garbo, with whom he was particularly close. Even with the inevitable death (likely through suicide) and financial ruin of his companies, the author finds him a sympathetic figure even if his innovative financial instruments caused havoc whenever they were used in order to hide complicated financial dealings from the scrutiny of complicit auditors, stubborn regulators, and blissfully unaware investors.
Ultimately, the writer comes down on the position that the titular match king does not deserve the obloquy he has suffered as a result of his fall and the resulting scandal. To be sure, he did engage in the fraudulent (if incompetent) copying of Italian bank notes, for reasons few people understand. And he was a person whose financial dealings were shady--but no more shady than that of many other people then and now. The author is quick to remind the reader, though, that what separates Ivar from the great mass of corrupt financiers is that he created real products (matches) and engaged in his financial shenanigans mainly to provide good returns on investment to investors, rather than to eat up potential profits in high fees as is common among contemporary financial middlemen. Even if Ivar Kreuger was not an honest man or a heroic one, he was a man who is morally superior to most of the people on Wall Street, many of whom would look upon Kreuger as a loathsome figure, and it is that moral superiority that gives this book much of its heft and melancholy, as it appears Kreuger was most interested in cutting a fine figure and living a high life and gaining a lasting and enduring good reputation for serving the best interests of ordinary investors as well as various nations seeking to recover from the horrors of World War I. If he went about it the wrong way, and he surely did, there is at least something worth appreciating in him, and this book does a good job at presenting an honest account of a complicated man.
[1] See, for example:
https://edgeinducedcohesion.blog/2016...
https://edgeinducedcohesion.blog/2016...
https://edgeinducedcohesion.blog/2013...
https://edgeinducedcohesion.blog/2011...
https://edgeinducedcohesion.blog/2011...
August 23, 2018
Frank Partnoy is a Professor of Law and Finance and he is an expert in complex financial structures and regulation. Before becoming a professor he worked on Wall Street and wrote F.I.A.S.C.O about his experiences during the 90’s. Besides writing several other books, he works as a financial consultant. He spent 6 years doing research for this book which resulted in an impressive bibliography.
In the first chapter Mr Ivar Kreuger sails to the US, and the reader immediately understands that he is master of deception. The author presents the Kreuger saga with plenty of color and details. The first 12 chapters are a chronological story about Kreuger’s rise and fall. With the exception of J.P. Morgan, he managed to convince the entire US financial market, the political elite and the leading journalists that he was among the World’s most brilliant business men. This at one point in time made him one of the World’s wealthiest men.
His idea was to sell various types of innovative debt products to the American public, lending the proceeds to the cash-hungry European governments in exchange for a national monopoly in match production. Clearly this was a very risky proposition for US investors, but early on he was hugely successful which usually tends to convince the few initial doubters. Those aiding him, such as accounting firms, lawyers and investment bankers, made an enormous amount of commission and fees which eventually made them dependent on him for their careers. The book ends with two chapters that reflect on to what extent he was a simple crook or not, and whether he was murdered or not.
Kreuger fooled everyone, from presidents to friends, most notably Herbert Hoover. In Sweden even the prime minister was caught in his downfall. Carl Gustaf Ekman was handed a check of 10.000 dollars for helping out with last minute financing at a critical time. He was later forced to resign. In the beginning of the book, the author presents a quote by Kreuger which is quite telling. “Everything in life is founded on confidence”. Clearly Kreuger was a master at getting others to trust him. Hadn’t it been for his ego in making a deal with Germany’s government post the market crash he might have stayed in business much longer (he could have walked away, but he committed himself to provide $ 125 million to Germany at 6 percent interest, even though he had only raised a fraction of that). In the end successful people tend to believe they can walk on water and often lose common sense.
This book has an American perspective and the books I have read before on the subject have been from a local Swedish perspective. Kreuger created many new complex financial instruments, shares with 1/1000 vote, and used the very lax accounting rules in the US fully to his advantage.
So how big was the fraud? Some think it’s a top 5 ever. In total Kreuger provided around 20 governments, mainly in Europe, with roughly $ 400 million. How much is that in today’s terms? It’s a bit like asking how long is a string. Just using CPI you multiply the loans by 17 but using a stock index you would end up multiplying with over 200. My guess is still that the latter (200 x 400 = 80 billion dollars in today’s money) underestimates the impact. The author of the book however claims that a lot of the lost money eventually was recovered and that the final return was not much worse than the general market decline. Kreuger did have some legitimate business and owned many of Sweden’s largest companies like Ericsson (1/3 of the company was sold to ITT for $ 11 million. This post is worth over 100 times that today).
One of the more chocking revelations to me was that the accounting firm, and the person at the accountancy firm who was bribed by Kreuger, managed to float above all issues. Enron’s shareholders who saw $ 90 billion of market cap disappear, would have appreciated a tougher stance on accounting firms already then.
In the first chapter Mr Ivar Kreuger sails to the US, and the reader immediately understands that he is master of deception. The author presents the Kreuger saga with plenty of color and details. The first 12 chapters are a chronological story about Kreuger’s rise and fall. With the exception of J.P. Morgan, he managed to convince the entire US financial market, the political elite and the leading journalists that he was among the World’s most brilliant business men. This at one point in time made him one of the World’s wealthiest men.
His idea was to sell various types of innovative debt products to the American public, lending the proceeds to the cash-hungry European governments in exchange for a national monopoly in match production. Clearly this was a very risky proposition for US investors, but early on he was hugely successful which usually tends to convince the few initial doubters. Those aiding him, such as accounting firms, lawyers and investment bankers, made an enormous amount of commission and fees which eventually made them dependent on him for their careers. The book ends with two chapters that reflect on to what extent he was a simple crook or not, and whether he was murdered or not.
Kreuger fooled everyone, from presidents to friends, most notably Herbert Hoover. In Sweden even the prime minister was caught in his downfall. Carl Gustaf Ekman was handed a check of 10.000 dollars for helping out with last minute financing at a critical time. He was later forced to resign. In the beginning of the book, the author presents a quote by Kreuger which is quite telling. “Everything in life is founded on confidence”. Clearly Kreuger was a master at getting others to trust him. Hadn’t it been for his ego in making a deal with Germany’s government post the market crash he might have stayed in business much longer (he could have walked away, but he committed himself to provide $ 125 million to Germany at 6 percent interest, even though he had only raised a fraction of that). In the end successful people tend to believe they can walk on water and often lose common sense.
This book has an American perspective and the books I have read before on the subject have been from a local Swedish perspective. Kreuger created many new complex financial instruments, shares with 1/1000 vote, and used the very lax accounting rules in the US fully to his advantage.
So how big was the fraud? Some think it’s a top 5 ever. In total Kreuger provided around 20 governments, mainly in Europe, with roughly $ 400 million. How much is that in today’s terms? It’s a bit like asking how long is a string. Just using CPI you multiply the loans by 17 but using a stock index you would end up multiplying with over 200. My guess is still that the latter (200 x 400 = 80 billion dollars in today’s money) underestimates the impact. The author of the book however claims that a lot of the lost money eventually was recovered and that the final return was not much worse than the general market decline. Kreuger did have some legitimate business and owned many of Sweden’s largest companies like Ericsson (1/3 of the company was sold to ITT for $ 11 million. This post is worth over 100 times that today).
One of the more chocking revelations to me was that the accounting firm, and the person at the accountancy firm who was bribed by Kreuger, managed to float above all issues. Enron’s shareholders who saw $ 90 billion of market cap disappear, would have appreciated a tougher stance on accounting firms already then.
July 4, 2018
Ivar Krueger tried to corner the market on matches in the 1920's-30's. He took over his father's Swedish Match company and through ambition, hard work and greed built an empire of international match production that also entailed moneylending to European nations suffering economically after the Great War. The Match King is a detailed blow-by-blow account of the rise and eventual fall of the intriguing raconteur and would-be industrialist and financier. The author Frank Partnoy is a law professor who spent a decade researching and writing this impressive book.
A hundred years ago matches were an important part of the household: used to ignite furnaces, stoves and smoking material. Ivar Krueger is a multidimensional character who studied engineering and perfected and patented the safety match. Kruger's matches were made of a less-flammable phosphorous that were lit only when struck on the box and therefore did not pose a risk of spontaneous ignition that was a common fire hazard at the time.
He parlayed this into a burgeoning company and attempted to control monopolies in Poland, Germany, France and other countries, lending the countries money in return for the exclusive rights to sell matches in the respective countries. Anti-trust laws in the US prevented such monopolies here so Krueger created financial products to allow cash-rich American investors to take part in the industry--- and they did with a vengeance. At one time International Match shares were among the most widely held on the New York Stock Exchange.
Krueger's enigmatic personality, apparent wealth and flashy lifestyle made him a pop culture phenomenon during the Jazz Age. His manic habits and consequences became an object lesson on the dangers of greed and the gullibility of investors. Krueger borrowed and lent money though opaque machinations that Partnoy describes perfectly. Ivar Krueger convinced worldwide bankers and prime ministers that he was solvent when his businesses were actually overextended and failing.
Partnoy does a yeoman job explaining complex financial products-- convertible bonds, equity B-shares, gold debentures, etc-- in an understandable way. Krueger engineered these products to increase the population of individuals who could invest in this companies, but the products also were designed to successfully obfuscate even the most seasoned professionals.
In the end, the Match King predictably failed in glorious fashion. His bankruptcy cascaded through some of the the most prestigious investment houses in the world, with a gargantuan loss of capital and respect for the industry. Partnoy makes the point that the high visibility of the Match King's fall-- rather than the Great Depression--was the primary impetus for the Wall Street reforms under FDR in 1933. The Securities and Exchange Commission, Glass-Steagell and other laws came about in the wake of Ivar Krueger's demise.
This is a quick read, easy to digest, and full of great characters including bankers, politicians, engineers, Greta Garbo and cameos by Herbert Hoover and even Benito Mussolini. Partnoy is an excellent author and no matter if your interest is financial history, post-WW1 economics, or just a good story about a willful and ambitious businessman and his cult of personality, this book is recommended.
A hundred years ago matches were an important part of the household: used to ignite furnaces, stoves and smoking material. Ivar Krueger is a multidimensional character who studied engineering and perfected and patented the safety match. Kruger's matches were made of a less-flammable phosphorous that were lit only when struck on the box and therefore did not pose a risk of spontaneous ignition that was a common fire hazard at the time.
He parlayed this into a burgeoning company and attempted to control monopolies in Poland, Germany, France and other countries, lending the countries money in return for the exclusive rights to sell matches in the respective countries. Anti-trust laws in the US prevented such monopolies here so Krueger created financial products to allow cash-rich American investors to take part in the industry--- and they did with a vengeance. At one time International Match shares were among the most widely held on the New York Stock Exchange.
Krueger's enigmatic personality, apparent wealth and flashy lifestyle made him a pop culture phenomenon during the Jazz Age. His manic habits and consequences became an object lesson on the dangers of greed and the gullibility of investors. Krueger borrowed and lent money though opaque machinations that Partnoy describes perfectly. Ivar Krueger convinced worldwide bankers and prime ministers that he was solvent when his businesses were actually overextended and failing.
Partnoy does a yeoman job explaining complex financial products-- convertible bonds, equity B-shares, gold debentures, etc-- in an understandable way. Krueger engineered these products to increase the population of individuals who could invest in this companies, but the products also were designed to successfully obfuscate even the most seasoned professionals.
In the end, the Match King predictably failed in glorious fashion. His bankruptcy cascaded through some of the the most prestigious investment houses in the world, with a gargantuan loss of capital and respect for the industry. Partnoy makes the point that the high visibility of the Match King's fall-- rather than the Great Depression--was the primary impetus for the Wall Street reforms under FDR in 1933. The Securities and Exchange Commission, Glass-Steagell and other laws came about in the wake of Ivar Krueger's demise.
This is a quick read, easy to digest, and full of great characters including bankers, politicians, engineers, Greta Garbo and cameos by Herbert Hoover and even Benito Mussolini. Partnoy is an excellent author and no matter if your interest is financial history, post-WW1 economics, or just a good story about a willful and ambitious businessman and his cult of personality, this book is recommended.
February 8, 2021
Ivar Kreuger
was a Swedish civil engineer, financier, entrepreneur and industrialist. In 1908, he co-founded the construction company Kreuger & Toll Byggnads AB, which specialized in new building techniques. By aggressive investments and innovative financial instruments, he built a global match and financial empire. Between the two world wars, he negotiated match monopolies with European, Central American and South American governments, and finally controlled between two thirds and three quarters of worldwide match production, becoming known as the "Match King". This group eventually came to control almost 75% of the world production in matches.
Random well thought and well phrased quote: Both parties to a deal can gain when the party most in a position to deal with the risk takes on the risk. - Ivar Kreuger who did this in his construction business.
Ig notes: This book traces Ivar’s meteoric rise from the obscurity of provincial Sweden, to become a construction mogul and then a global business oligarch. Ivar acquired match monopolies throughout the world and usurped J. P. Morgan to become the leading lender to foreign governments. His financial innovations resonate today. A self made media figure, he discovered and promoted Greta Garbo but also advised politicians, including President Hoover.
It should be remembered that in the early part of the 20th century matches were a necessity for smoking and the lighting of stoves and gas appliances among other uses and therefore demand for them was highly inelastic, meaning that a monopolist could raise prices (and hence profits) significantly without much affecting the quantity sold.
he invented dual class ownership shares since he did not want to lose control of his companies. He called the class of shares with reduced voting power B shares.
Even in the midst of the growing panic investors went crazy for some of his invented financial instruments and promised to buy 28 million dollars of the new securities. And this happened two days after Black Monday in 1929.
was a Swedish civil engineer, financier, entrepreneur and industrialist. In 1908, he co-founded the construction company Kreuger & Toll Byggnads AB, which specialized in new building techniques. By aggressive investments and innovative financial instruments, he built a global match and financial empire. Between the two world wars, he negotiated match monopolies with European, Central American and South American governments, and finally controlled between two thirds and three quarters of worldwide match production, becoming known as the "Match King". This group eventually came to control almost 75% of the world production in matches.
Random well thought and well phrased quote: Both parties to a deal can gain when the party most in a position to deal with the risk takes on the risk. - Ivar Kreuger who did this in his construction business.
Ig notes: This book traces Ivar’s meteoric rise from the obscurity of provincial Sweden, to become a construction mogul and then a global business oligarch. Ivar acquired match monopolies throughout the world and usurped J. P. Morgan to become the leading lender to foreign governments. His financial innovations resonate today. A self made media figure, he discovered and promoted Greta Garbo but also advised politicians, including President Hoover.
It should be remembered that in the early part of the 20th century matches were a necessity for smoking and the lighting of stoves and gas appliances among other uses and therefore demand for them was highly inelastic, meaning that a monopolist could raise prices (and hence profits) significantly without much affecting the quantity sold.
he invented dual class ownership shares since he did not want to lose control of his companies. He called the class of shares with reduced voting power B shares.
Even in the midst of the growing panic investors went crazy for some of his invented financial instruments and promised to buy 28 million dollars of the new securities. And this happened two days after Black Monday in 1929.
This entire review has been hidden because of spoilers.
January 21, 2023
When I was a kid, I read in Look & Learn about Kreuger: how he would make his desk telephone ring by pressing a foot button, and then impress visitors by seeming to speak familiarly with world leaders.
Usually I lap up books about fallen financial fraudsters, say Enron or Bernie Madoff. But I found this one difficult to read at times, not because of any problem with the writing, but because of how it describes the mental abyss that Kreuger fell into towards the end. In other words, I felt sorry for Kreuger. He doubled down on techniques that'd worked for him in the past, such as bamboozling critics with screeds of memorized statistics, but they weren't enough to stop the chain of bankruptcies after the 1929 crash.
Unlike Ponzi or Madoff, Kreuger ran genuine businesses that generated income from real goods and services, and not just the matches he was famous for. His construction company was the first in Europe to guarantee completion dates. He had a controlling stake in Ericsson telecom (still a multinational) and owned a film company which brought Greta Garbo to America. Although few could understand the complexity of his financial deals, he also learned, like today's Silicon Valley entrepreneurs, that, for better or worse, he needed to sell himself to potential investors.
Keynes said Kreuger was "perhaps the greatest constructive business intelligence of his age". He invented new types of financial deals, such as issuing shares with different voting rights, and debentures convertible to shares. But, starting as a child, he had no qualms about making up details that would help him get what he wanted. Towards the end, he relied more and more on falsehoods, but his audience was less and less credulous.
The author is an academic with a detailed grasp of Kreuger's business dealings, but also manages to convey the man's character. My only criticism is the poetic licence by which he gets into the heads of people meeting 100 years ago.
Usually I lap up books about fallen financial fraudsters, say Enron or Bernie Madoff. But I found this one difficult to read at times, not because of any problem with the writing, but because of how it describes the mental abyss that Kreuger fell into towards the end. In other words, I felt sorry for Kreuger. He doubled down on techniques that'd worked for him in the past, such as bamboozling critics with screeds of memorized statistics, but they weren't enough to stop the chain of bankruptcies after the 1929 crash.
Unlike Ponzi or Madoff, Kreuger ran genuine businesses that generated income from real goods and services, and not just the matches he was famous for. His construction company was the first in Europe to guarantee completion dates. He had a controlling stake in Ericsson telecom (still a multinational) and owned a film company which brought Greta Garbo to America. Although few could understand the complexity of his financial deals, he also learned, like today's Silicon Valley entrepreneurs, that, for better or worse, he needed to sell himself to potential investors.
Keynes said Kreuger was "perhaps the greatest constructive business intelligence of his age". He invented new types of financial deals, such as issuing shares with different voting rights, and debentures convertible to shares. But, starting as a child, he had no qualms about making up details that would help him get what he wanted. Towards the end, he relied more and more on falsehoods, but his audience was less and less credulous.
The author is an academic with a detailed grasp of Kreuger's business dealings, but also manages to convey the man's character. My only criticism is the poetic licence by which he gets into the heads of people meeting 100 years ago.
April 14, 2021
2.55
Not a bad biography, and the author (a corporate lawyer and banker) tries every hard to give a balanced view of an obvious conman. This is perhaps the fault of neoliberalism, much like the "random citizens" in The Matrix who turn into "agents" to protect the system; the author does the same. No real criticism of the system is presented, a system that obvious profits and enjoys this form of opaque and sketchy profits. Without complicit actors, without greed, and without further research, how would so many prestigious firms like Ernst & Ernst, or the Boston Brahmin house of Lee, Higginson & Company fall for such an obvious scam? Most of the tactics employed by conmen like Krueger and Madoff are readily executed to the laudable applause of the NYTimes and Financial Times' market pages. This is the system. Capitalism accrues capital by conning other out of their resources — sometimes it even invents the capital (or the capital doesn't even exist.)
— The same argument can be made of Madoff, who was notorious for never disclosing any financial advice and even forbade his investors from speaking to one another. How could other financial wizards ignore such red flags? The answer is that they don't ignore it, they make small moral comprises and sell themselves for money. This is the feeling you're left with by the author's depiction of Kreuger. At the end of the day, the author is a banker, and will do anything to protect a broken system.
Ponzi enterprises come about not as sudden inspirations of criminal masterminds but as the gradual culmination of small moral compromises made by financiers, accountants, "financial wizards," "Wall Street Wolves," who aren’t quite as ingenious as they think.
Not a bad biography, and the author (a corporate lawyer and banker) tries every hard to give a balanced view of an obvious conman. This is perhaps the fault of neoliberalism, much like the "random citizens" in The Matrix who turn into "agents" to protect the system; the author does the same. No real criticism of the system is presented, a system that obvious profits and enjoys this form of opaque and sketchy profits. Without complicit actors, without greed, and without further research, how would so many prestigious firms like Ernst & Ernst, or the Boston Brahmin house of Lee, Higginson & Company fall for such an obvious scam? Most of the tactics employed by conmen like Krueger and Madoff are readily executed to the laudable applause of the NYTimes and Financial Times' market pages. This is the system. Capitalism accrues capital by conning other out of their resources — sometimes it even invents the capital (or the capital doesn't even exist.)
— The same argument can be made of Madoff, who was notorious for never disclosing any financial advice and even forbade his investors from speaking to one another. How could other financial wizards ignore such red flags? The answer is that they don't ignore it, they make small moral comprises and sell themselves for money. This is the feeling you're left with by the author's depiction of Kreuger. At the end of the day, the author is a banker, and will do anything to protect a broken system.
Ponzi enterprises come about not as sudden inspirations of criminal masterminds but as the gradual culmination of small moral compromises made by financiers, accountants, "financial wizards," "Wall Street Wolves," who aren’t quite as ingenious as they think.
March 21, 2018
About as breezy and cheeky as a book about the complications of early 20th century financial securities can be. Maybe too much so. Simple facts are continually repeated and it makes me wish the author had been more of an editor.
The portrait is compelling but limited. Kreuger’s early life isn’t much explored. And all the memorable oddball side characters still seem very much off to the side, researched but only so much. Giants of history who pass through this story don’t feel sufficiently contextualized — or at least maximized. The pieces are all there to bring the international world of this story to life, but they are left as pieces. Forrest Gump status.
Check this out if you want to know more about the boom and depression of the twenties and thirties. It’s an easy read with a unbelievable central figure who personifies the whole thing.
The portrait is compelling but limited. Kreuger’s early life isn’t much explored. And all the memorable oddball side characters still seem very much off to the side, researched but only so much. Giants of history who pass through this story don’t feel sufficiently contextualized — or at least maximized. The pieces are all there to bring the international world of this story to life, but they are left as pieces. Forrest Gump status.
Check this out if you want to know more about the boom and depression of the twenties and thirties. It’s an easy read with a unbelievable central figure who personifies the whole thing.
February 2, 2021
I read /The Match King: Ivar Kreuger, the Financial Genius Behind a Century of Wall Street Scandals/, by Frank Partnoy.
https://www.nytimes.com/2009/08/16/bo...
I remember, as a child, reading The Silver Bears, about cornering the market for silver. The Match King is a real-life tale of Ivan Kreuger garnering a monopoly in matches (and taking large stakes in other industries such as mining, timber, telephony, media, banking and construction).
Despite Kreuger's scams and wrong-doings on top of smart business, the book was somewhat dry at times... but still a tale everyone should be familiar with.
https://www.nytimes.com/2009/08/16/bo...
I remember, as a child, reading The Silver Bears, about cornering the market for silver. The Match King is a real-life tale of Ivan Kreuger garnering a monopoly in matches (and taking large stakes in other industries such as mining, timber, telephony, media, banking and construction).
Despite Kreuger's scams and wrong-doings on top of smart business, the book was somewhat dry at times... but still a tale everyone should be familiar with.
October 16, 2018
Had read a different book (The Incredible Ivar Krueger) nearly 45 years ago. This book documents Ivar Krueger very well. This book should be required reading for all investment professionals. Ivar is an important milestone in Securities Regulation and holds many lessons for investors.
The writing is easy and fast paced. And he does justice to the character.
The way Ivar Kruger used Wall Street greed to fuel his dreams ( unfulfilled) and ended up being labelled a fraud, is compelling reading. Ivar puts to shame the modern day robin hoods like IL&FS ..
The writing is easy and fast paced. And he does justice to the character.
The way Ivar Kruger used Wall Street greed to fuel his dreams ( unfulfilled) and ended up being labelled a fraud, is compelling reading. Ivar puts to shame the modern day robin hoods like IL&FS ..
June 19, 2019
Must read for anyone with interest in financial history. Ivar Krueger may be largely forgotten today, but his scam was so much larger than Ponzi and drove the SEC act of 1933 and investor protection from greater disclosure in financial statements and the use of GAAP. Ivar's financial creativity is still alive today through dual class shares, blame the short sellers and off balance sheet financing.
August 8, 2020
This is a fascinating book about Ivar Kreuger, who came over from Sweden in the 1920s and was one of the pioneers in a variety of investment offerings. He built an international empire primarily focused on matches and refused to give his accountants or investment bankers any detailed information. According to the author, Kreuger is most responsible for the SEC Act of '33 and the Securities and Exchange Act of '34. A fascinating read.
November 16, 2020
The author is a professor of American financial law and so this focuses primarily on Kreuger's American securities fraud and pays very little attention to his youth, his spectacular success in the construction business or his colossal portfolio of businesses outside the match monopoly. This is not sufficient as a standalone examination of Kreuger; it needs to be paired with another book on the subject.
November 5, 2017
Fabulous read. Very well researched and balanced view on an innovative and tragic character from the roaring 20's. I recommend this book for those who want to learn about financial innovation, novel business models, and also the dark side of off-balance sheet risk, financial obfuscation, self-dealing, willful blindness to red flags, and ultimately... human folly.
July 7, 2020
If you never heard of the greatest swindler in history then this is a must-read. There is some mystery and some surprises at the end. Most of the rules & laws protecting investments are as a result of Ivar Kreuger. He built many iconic buildings, owned many well-known companies and the workings of the match industry and Swedish Match.
August 26, 2023
There's nothing like a great story about how smart individuals become victims of a great scam. Its hard to believe that this story has been lost in time and perhaps so will Bernie Madoff, the great scammer of our generation be lost over time. Goes to show how as humans we repeat ourselves over and over again because we forget the lessons from the past. Great story with well researched details.
October 29, 2018
Boken är väldigt intressant, Kreuger var en riktig skojare som var en otroligt duktig finansman och en av de som byggt upp Sverige med storföretag. Mycket av dagens stora ftg härstammar från Kreugers imperium. Sköt sig själv i Paris.
March 17, 2021
I appreciate the well-researched detail, but all the financial facts and figures for most of the 1920's are rather tedious. Finally things get interesting when the Great Depression hits.
All in all a comprehensive bio of a major figure now faded by time.
All in all a comprehensive bio of a major figure now faded by time.
December 9, 2017
A Jim Chanos recommendation and well worth reading to rekindle knowledge of 1920’s post-war Wall St and to remind us should we face similar situations.
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