Wednesday, March 12, 2008

Match King Snuffed Out

Reading my morning copy of The Daily Perspective (no, I am not being paid by to advertise this service, but now I mention it, a free subscription would come in handy), I see that 76 years ago today, Ivar Kreuger - the Swedish Match King - shot himself dead in his Paris apartment. This reminded me of a story I had read in Jean Monnet's memoirs, so I went in search of it.

Kreuger was one of the wealthiest international capitalists of the interwar period. He was also - surprise, surprise - a bit of a crook. His fortune was built on matches and his International Match Corporation held a virtual monopoly on the production of matches in Europe. He gained his monopoly in an interesting way - he would make large financial loans to European governments in return for a monopoly on supplying matches in that country. His loans were considerable - they ran into hundreds of millions of pounds - and in several cases they helped save national economies from collapse. His actions were not driven by financial gain alone : he had a genuine belief in European unity and was anxious to foster economic co-operation in the inter-war period. As a celebrated international banker, Jean Monnet - who was later to become the architect of the European Union - was often involved in the negotiations between Kreuger and national governments.

The story I had in mind dates back to 1928 when Monnet was acting on behalf of the near-bankrupt Government of Romania in their negotiations with Kreuger for a loan of $100 million. According to Monnet the negotiations were long and drawn out and Kreuger was playing hard to get. Suddenly Kreuger asks for a 5 minute break, went into a corner of the room and, in full view of the exasperated bankers started scribbling on the stiff white cuff of his shirt. He then returned to the bankers and agreed to lend an additional $30 million, sufficient to seal the deal. Later Monnet asked him what he had been doing. Kreuger replied : "I worked out that if I put one less match in each box, I should make out".

All this took place in 1928 of course. A year later came the Great Crash and Kreuger's empire - based on some over-ambitious financial leverage - began to suffer. He managed to avoid a collapse for a time by issuing some dodgy debentures, but these eventually started to come home to roost and Kreuger shot himself. In many ways, Kreuger was built from the same mould as so many other international capitalists - the story of Robert Maxwell springs to mind. But in other ways, Kreuger was a more restrained, more thoughtful character, driven to destruction by his mindless pursuit of an ideal rather than by personal gain. A journalist once asked him the secret behind his success in business. "Silence, more silence, and even more silence", he replied.

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