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The Match King

A biography of Ivar Kreuger – audacious con man and the Bernard Madoff of his era.

By Charles J. Shields / May 14, 2009



Oh, how we love to read about the downfall of the rich and famous! Especially the rich. Especially when they’re corrupt. 

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Consider Swedish industrialist Ivar Kreuger, the Bernard Madoff of his time, whose story is explored in Frank Partnoy’s brisk new biography The Match King.

Not a familiar name to you? Well, in the 1920s, Kreuger was as fascinating to readers of The New York Times and The Wall Street Journal as his rival, Jack Morgan, son of Pierpont Morgan.

Like Jack, Ivar Kreuger loaned money to foreign governments that were broke after World War I. Imagine having Poland or Germany as clients, which Kreuger did. He also blended stupendous mergers as easily as salad dressing. Reputable and powerful men agreed to do business just because Kreuger said it would be to their benefit.

And the financial instruments he created! Gold debentures, participating preferred shares, and B shares – none of them ever seen before. And not too well understood, frankly, even by the sharpest bankers in the United States and abroad. But Kreuger’s companies, all confusingly tied to huge match companies he owned, paid dividends in double digits, so who cared?

A few honest people did, actually – regulators and auditors mainly. (A humble securities regulator from Wisconsin was the most conscientious about looking into Kreuger’s balance sheets – a real terrier biting at the great man’s heels for years.)

But Kreuger used three tactics to baffle his skeptics. First, he would act surprised that anyone would want to look into his businesses; second, he would allow months to go by without responding to queries; and then finally, he wearily would hand over a single sheet listing income and expenses that looked like someone’s household budget, only with more zeroes.

Any discrepancy Kreuger airily attributed to sums being off-balance-sheet. His temerity flabbergasted even the most determined examiner.

Yet he continued to play with more and more fantastic sums of money, shifting gobs of it around in European cities like a check kiter, first under the name of this company and then that one, and all the time using numbers to leverage more loans, more stock offerings.

Who was this remarkable man who was a master of legerdemain with ledgers? Really, we don’t know – not even after reading Partnoy’s competently written book.
Kreuger was brilliant when it came to business and politics (he gave advice to President Hoover) but the inner man remains as opaque as his facial expression in photographs. We don’t know what his motives were or what personal needs he was trying to fulfill.

Was he deprived as a child in some way? Was he an egotist on a monstrous scale? Partnoy makes passing mention of a few disappointments in his subject’s early life, but nothing extraordinary.

The author is very good, on the other hand, at explaining high finance. Krueger’s businesses were real Gordian knots, yet Partnoy briskly unravels them. You can’t help but admire the genius that created such a tangle. (Kreuger’s favorite tactic was finding stooges he could exploit at banking’s highest and lowest levels.)

And the author’s measured approach toward the edge of the financial cliff – the Great Crash of 1929 – plays well against the counterpoint of wildcat investing in the 1920s, when federal regulation was almost nonexistent and profits rushed skyward like one of Rockefeller’s gushers.

But again, who was Ivar Kreuger that he should want to deceive stodgy investment houses and ministers of finance? The author’s implicit premise that everyone wants to be fantastically wealthy doesn’t address this particular man’s – Ivar Kreuger’s – desire to be one of the richest men in the world and the lengths he would go to reach that goal.

How, for instance, could he behave ethically often enough that colleagues would trust him, yet be so craven as to print counterfeit Italian government bonds and fake the signatures with his ridiculous attempts at forgery? Why did he choose to offer inflated dividends of 25 percent when investors would have been happy to get much less?

If he were obsessed with risk, then that should be explained as part of a pattern established early in his life. Tantalizing peccadilloes from his past are included, but just like in a courtroom case, circumstantial evidence isn’t enough to convict.

A biography should persuade us toward conclusions about the person under study, even if, as in this instance, an enormous swindle vies for our attention. But there’s no warm blood coursing through the veins of this waxwork con man in a tuxedo. We just don’t get to know him well enough to understand why he would build his life on a house made of matchsticks.

Charles J. Shields is writing a biography of Kurt Vonnegut.

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