When people in the 1920s spoke of Sweden's second rise to power, they were referring to the glory that Ivar Kreuger achieved. A myth was quickly created around him. For the public, he was an exciting, if secretive person, who spoke little about himself. He gave the impression of being able to hold all the strings of his growing empire in his hand. His capacity seemed immense. Because European ministers and the President of the United States sought his advice and assistance, he also seemed to be a person who met the world's leaders as an equal.
The general public in Sweden, and especially the United States, gladly invested large sums of money in Kreuger shares. He promised rapidly rising share prices and high dividends as a result of the expansion of his empire that was based on constantly forging new agreements that granted him a monopoly on match manufacturing. This monopoly was often granted in exchange for large loans to a long list of countries. To obtain funds for lending, Kreuger had to sell new share issues, which in turn required believing in his promises.
Kreuger exploited the fact that there was a surplus of capital in the US, which could be transferred to European governments that needed cash. He became an important player in the international capital markets, and was the first, and perhaps the only Swede to have that role.
Ivar Kreuger had other interests, as well. While achieving a dominant position in the world match industry, he built up an industrial and financial empire in Sweden. He was born in 1880, and started a construction company called Byggnadsaktiebolaget Kreuger & Toll together with a partner in 1910. By 1913, Kreuger had already moved into the match industry, founding Swedish Match (Svenska Tändsticksaktiebolaget) in 1917. The 1920s were a period of unabated expansion. By 1930, he almost completely dominated the world match industry, four of Sweden's largest industrial companies (Swedish Match, Ericsson, SCA and Boliden), the country's largest property company and several newspapers, as well as having major interest in a number of banks and several industrial companies.
The Wall Street crash in 1929 and the ensuing depression destroyed the foundation for Kreuger's operations. Caught in a liquidity crisis, he was temporarily rescued by the Swedish government and the Bank of Sweden, but they demanded a thorough review of his position. Well aware of how hopeless his situation was, Kreuger committed suicide in Paris on March 12, 1932. The suicide was the first serious dent in the Kreuger image. His image was tarnished completely, however, when it was revealed that he through systematic lies had presented an overly optimistic picture of his position. The myth was replaced by a counter-myth. Kreuger was portrayed as a great crook, a view that was embraced by those who had lost large sums of money in the crash.
Ericsson played an important role in Kreuger's fall. After acquiring a majority shareholding in 1930, he sold his shares the following year to Ericsson's competitor International Telephone and Telegraph Corporation (ITT). In early 1932, ITT realized that Kreuger had deceitfully enhanced Ericsson's financial position and forced him to nullify the purchase by repaying the USD 11 million that he had received, which he was unable to do. This happened a few weeks before the shot in Paris and was a contributing factor when Ivar Kreuger pointed the gun at himself.
Author: Björn Gäfvert
