Ivar Kreuger - Other Business

Other Business

From 1925 to 1930, years when many countries in Europe were suffering after the First World War, Kreuger's companies gave loans to governments to speed up reconstruction. As a security, the governments would grant him the match monopoly in their country. This means that Kreuger gained a monopoly in match production, sales, or distribution, or a complete monopoly. The monopoly agreements differed from country to country. The capital was raised to a large extent through loans from Swedish and American banks, combined with issuing a large amount of participating debentures. Kreuger also often moved money from one corporation he controlled to another.

Kreuger did not limit himself to matches, but gained control of most of the forestry industry in northern Sweden and planned to become head of a cellulose cartel. He also attempted to create a telephone phone monopoly in Sweden.

After founding the pulp manufacturer SCA, in 1929 Kreuger was able to acquire the majority shares in the telephone company Ericsson; the mining company Boliden (gold); major interests in the ball bearing manufacturer SKF; the bank Skandinaviska Kreditaktiebolaget and others.

Abroad he acquired Deutsche Unionsbank in Germany and Union de Banques à Paris in France, often with the acquired company's own money. These maneuvers were made both necessary and possible by his invention, decades ahead of his time, of Enron-style financial engineering, which reported profits when there were none and paid out ever increasing dividends by attracting new investment and/or looting the treasury of a newly acquired company.

By 1931 Kreuger controlled some 200 companies. However, the Stock Market Crash of 1929 turned out to be a major factor in exposing his accounting that ultimately proved fatal to both him and his empire.

In the spring of 1930 he visited the United States and gave a lecture about the situation in world economics at the Industrial Club of Chicago with the title "The transfer problem and its importance to the United States". He was invited by President Hoover to the White House to discuss the subject and in June he was awarded the title Doctor of Business Administration by Syracuse University, where he had worked as a young chief engineer when Archbold Stadium was built there in 1907.

In 1929, at the peak of his career, the Kreuger fortune was thought to be worth 30bn Swedish kronor, equivalent to approximately US$100bn USD in 2000, and consisting of more than 200 companies. In the same year the total loans made by Swedish banks were barely 4bn SEK.