Wincrantz daring deals
Karl Fredrik Wincrantz (1874-1932)
President 1922-25 (together with Hemming Johansson)
It was not without controversy that Karl Fredrik Wincrantz became sole president of Ericsson. Headlines proclaiming "a palace revolution at Ericsson" dominated the newspapers in the early days of the summer of 1925.
Before Wincrantz became Ericsson's sole president in 1925, he had shared the post for three years with Hemming Johansson. Karl Fredrik Wincrantz, who had been president of SAT subsidiary AB Stockholmstelefon and came to Ericsson as a result of the merger between Ericsson and SAT, was an engineer like Johansson. Wincrantz, however, preferred to devote himself to administrative and business tasks. He worked primarily with establishing and developing new business relationships, particularly outside Sweden.
During the first half of the 1920s, Wincrantz spent considerable time in Russia engaged in negotiations on how Ericsson was to be compensated for the manufacturing plants and telephone stations that had been taken over by the Russian state in conjunction with the revolution in 1917. Despite many meetings with commissioners and lawyers, director Wincrantz was able to partake of many pleasures, visiting the Opera in Moscow, for example, where he was impressed by the newly renovated building and the well-dressed people in the audience.
Wincrantz was an outgoing person, who was always at home in social, as well as business and political circles. His mentor during ten years in the early 1900s had been H T Cedergren, a man of the world, who was experienced in business and society.
Sharing the post of president did not appeal to the energetic and temperamental Karl Fredrik Wincrantz, particularly when it had to be shared with the cautious and dutiful Hemming Johansson. His take over as sole president was carefully planned. That same year, Wincrantz had started a company, Ängsvik, through which he purchased a dominant shareholding in Ericsson. Wincrantz influence over Ericsson was thus so great that he at the annual general meeting in 1925 was free to change management as he wished. Several board members were asked to resign, and Hemming Johansson was forced to step down after 16 years as president.
As the sole president, Wincrantz was able to take greater risks. He intensified business efforts to win more concessions abroad for operating telephone networks and devoted considerable time himself to lobbying among political leaders and other decision makers. As an example, Wincrantz promised the Queen of Romania free installation of electric lighting in her castle in Bran if the license to operate the Romanian telephone network was awarded to Ericsson. He also told Ericsson's board of directors that he had been promised the concession in principle and that the bidding procedure that would take place was only of a "formal nature."
Competition in international markets was tough, however, and despite Wincrantz optimistic promises, Ericsson did not win the concession either in Romania, or in Spain, Greece and Yugoslavia. Nonetheless, the company succeeded in Italy, Turkey and Argentina.
There was not only competition for concessions. In a letter from 1926, Wincrantz describes how the expansion of a telephone station in Athens was taken by a competitor, Western Electric, because Ericsson had not sent enough engineers and that a contract for military equipment had been lost because Stockholm had not submitted a bid. Wincrantz concluded the letter by promising to try to repair the damage by winning new business.
Wincrantz sought the support of the finance man Ivar Kreuger, who he regarded as the perfect advisor with his knowledge of international finance and his own considerable financial resources. Wincrantz had in fact already let Kreuger into Ericsson through the back door, since he owned half of Ängsvik, which had acquired the large shareholding that enabled Wincrantz to take control over the company. What Ericsson?s board of directors did not know at that time was that Wincrantz speculative manipulations were about to strike back at him. Ivar Kreuger continued to acquire large numbers of Ericsson shares, and his influence became increasingly great. The former partners began to drift apart. Kreuger, for example, had planned in 1929 to sell Ericsson to its largest competitor, International Telegraph and Telephone Coroporation (ITT). Wincrantz rejected the proposal and refused to sell at any price. In the end, Kreuger also bought Wincrantz shares in both Ericsson and Ängsvik, and the break between the two became final in 1930.
On September 3, 1930, Wincrantz stepped down as president, outmaneuvered by Kreuger. Wincrantz remained on the board for a month, during which time he took the opportunity to formulate a written protest criticizing Kreuger's actions within Ericsson. Wincrantz withdrew his protest, however, after being pressured by Kreuger and resigned from his position on the board due to illness. In the winter of 1932, at the age of 58, Karl Fredrik Wincrantz passed away just months before the Kreuger crash.
Author: Katarina Reinius