Monopolist

(See front cover)

In every country (excepting only Russia) matches are distributed by one of the 225 subsidiaries of Swedish Match Co. Of every four matches, three are made in its home or foreign factories. Big customer of Swedish Match has been Germany, where the company controls 70% of the match production. Last month it was rumored that there had arrived in Berlin the man who is behind the great Swedish Trust, Ivar Kreuger, mainspring of Kreuger & Toll Co. which holds the majority interest in Swedish Match. As usual with Kreuger visits, his object was not known, his movements veiled in mystery. Germans wondered if it were in connection with one of the several German banks in which he is heavily interested, or the German ballbearing industry in which he controls about 75% of production, or one of the great steel mills that consume the ore obtained from his Swedish mines. Last week the reason was clear. In the past there had been but two factors in the German match market. One was Swedish Match, the other the government-protected cartel* of independent manufacturers. Recently a new, disturbing agent had appeared. Matches from the vast timberlands of Russia were underselling the western manufactured product. It appeared evident that Matchmaker Kreuger had come to establish a 100% monopoly in Germany as he had done in other countries. Indignant, the patriotic German press published premature announcements of the plan. It was stated that Swedish Match Co. would buy the monopoly by offering the government a loan of 600,000,000 marks (about $144,000,000). Last week despite public opposition Ivar Kreuger made the match, a more clever and less offensive match than had been first suggested. Terms of the new monopoly provided for a continuation of independent operations, but stipulated that Russian products would be barred. The price of matches was increased from 25 pfennigs for ten boxes to 30 pfennigs, giving the independents larger profits, the government larger revenue from taxes. To Kreuger & Toll the terms mean a continuation of its German profits. To Matchmaker Kreuger they mean another triumph in the diplomatic relations that exist between Swedish Match and the rest of the world. Although Herr Kreuger has been Great Matchman for the past dozen years, it was only last year that alert U. S. investors first became familiar with him (TIME, Oct. i, 1928). Then it was that Manhattan's Lee, Higginson Co. floated part of a $60,000,000 Kreuger & Toll bond issue. Since then, however, Kreuger-lore has been eagerly collected. There have been stories of his private island in the North Sea, of his apartments in Manhattan, Paris, Berlin, of his never carrying matches, of the statue of Diana in the courtyard of his home office. Herr Kreuger has all the qualities necessary for the creation of a legend. He is remote; he is powerful; he is--to the anti-monopolist-- sinister. Yet Herr Kreuger has not consciously made himself a Mystery Man and no great secret have been the facts of his personal or corporate life. Simplest division of his adult career would be threefold --a Wanderjahre period, a period of building construction in Sweden, and the present match period. The Wander-years (they numbered seven) included the U. S., Mexico, England, South Africa, India, Canada, were spent chiefly in the erection of tall buildings. Such famed Manhattan structures as the Flatiron Building, the Metropolitan Life Building, Macy's, the Hotels Plaza and St. Regis were among the jobs on which Herr Kreuger worked as engineer. He also helped to plan and build the Syracuse Stadium, which the late, great Rockefeller-partner John D. Archbold paid for. In 1907 Herr Kreuger returned to Stockholm where, with Paul Toll, he formed the construction firm of Kreuger & Toll. Soon office buildings, apartments, hotels, began to change the Stockholm skyline. Real estate and construction have now become a Kreuger sideline, but most of the modern business structures of Stockholm are Kreuger-built and many are Kreuger-owned. The Construction Period lasted six years; then in 1913, Herr Kreuger entered the match business. At that time the greatest Swedish match company was the Joenkoeping-Vulcan combination. Herr Kreuger's first step was to unite all the independent match companies into United Swedish Match Factories, Ltd. He then reorganized Kreuger & Toll as a holding company for the match factories, left Herr Toll to look out for the construction end of his business. In 1917, Joenkoeping-Vulcan and United Swedish were merged into Swedish Match Co.--Svenska Tands-ticksaktiebolaget--and Herr Kreuger had achieved the first of his many monopolies. The monopolistic aspect of Herr Kreuger's activities have caused most comment and criticism. In Poland, Peru, Greece, Ecuador, Hungary, Esthonia, Jugo-Slavia, Rumania, Latvia he has an absolute match monopoly, guaranteed by the governments concerned in return for money loaned them by Herr Kreuger. From the standpoint of a government that is not too proud to monopolize, business done with Herr Kreuger is good business. The government gets large sums of needed cash and then repays the loan by a tax on matches. As for the match-users, they get excellent matches and the price is fixed by an agreement between Herr Kreuger and a government committee. In 1927 Herr Kreuger enabled Premier Raymond Poincare of France to complete the stabilization of the franc with a $75,000,000 loan in return for a semimonopoly in French matches. Although Herr Kreuger is always willing to make a large loan investment in order to eliminate competition, he has also succeeded in reducing competition to a minimum even in Great Britain, Germany and Italy, where no government-monopoly has aided him. In this country, his International Match Co. controls about 75% of all match production in the U. S.

Although Herr Kreuger has raised many millions of dollars in foreign countries, none of his expansion program has been attended with any risk of loss of control. Class A shares of Kreuger & Toll, central Kreuger company, must be held by Swedes; Class B shares, permissible to foreigners, carry only one vote per thousand shares.

Herr Kreuger is a rather slight man with a large, somewhat bald head, a high forehead and prominent cheekbones. He is a great admirer of Cecil Rhodes and Dr. Jameson. He would rather be called engineer than chief or president. He has a motor boat, three yachts, six or seven homes, but has no particular hobbies, seldom accepts invitations to dinner, and even in Stockholm has become rather a legendary figure. Over the door of his office is a carved torch. In addition to his office, he has also a silent room, to which only he and the janitor have keys and in which he must not be disturbed. Unostentatious, he is not incapable of an occasional princely gesture. For example, he one day lunched with two U. S. visitors who complained that the late spring had deprived them of an opportunity to see the countryside aglow with Sweden's famed roses. Herr Kreuger asked the visitors to tea at one of his country homes. When they arrived they discovered everywhere rosebushes in full bloom: adroit Herr Kreuger had gone to Stockholm hothouses, arranged for roses to meet the visiting eye.

That the matchmaker rivals or out-tops princes and statesmen in importance was indicated when the Saturday Evening Post's Isaac Marcosson, "world's most famed" interviewer, chose him as prime subject for investigation last summer. During an interview which extended over days, the matchmaker said: "There is not a single competitor with sufficient influence upon the different markets to cause us any really serious harm. No market is sufficiently significant to be of importance to us. The reason is that the whole world is our field."

*A cartel is an association of independent manufacturers formed for the purpose of eliminating competition.