How Ivar Kreuger Disrupted the Match Industry
In order to appreciate the genius of financial wizard Ivar Kreuger (1880 – 1932), you need to first understand just how important matches were in his time to everyone. People used them throughout the day to light the fire-place when it got cold, to light oil lamps at dusk, to light the stove when it was time to cook a meal, to light cigars and cigarettes. Everyone over the age of 8 carried a box of match sticks with them at all times.
Next you need to remember that after WWI ended most European nations were buried in debt as a result of their wartime spending. Seeing an opportunity to become the dominant match supplier in Europe and the USA, Ivar Kreuger came up with a plan to capitalize on it. In a nutshell, he would raise funds from investors in the USA and elsewhere to help the European governments pay off their debts. In return for this aid he would ask to be granted a monopoly on match production by each nation.
Since Kreuger was already in the match business in his native country of Sweden he had the credibility to pull this strategy off. In order to avoid spoiling a great story I will just say that things started off well but complications quickly arose that forced him to start juggling cashflows in a desperate attempt to keep his global empire from collapsing. In other words, it became a colossal Ponzi Scheme involving entire nations and not just individuals. The story is quite riveting if you have an interest in how great fortunes are made and lost.
Here is a video with Jon Stewart interviewing the book’s author Frank Partnoy.