The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals

by Frank Partnoy

Overview

At the height of the roaring '20s, Swedish 'migr' Ivar Kreuger made a fortune raising money in America and loaning it to Europe in exchange for matchstick monopolies. His enterprise was a rare success story throughout the Great Depression.

Yet after Kreuger's suicide in 1932, the true nature of his empire emerged. Driven by success to adopt ever-more perilous practices, Kreuger had turned to shell companies in tax havens, fudged accounting figures, off-balance-sheet accounting, even forgery. He created a raft of innovative financial products -- many of them precursors to instruments wreaking havoc in today's markets. When his Wall Street empire collapsed, millions went bankrupt.

Frank Partnoy, a frequent commentator on financial disaster for the Financial Times, New York Times, NPR, and CBS's "60 Minutes," recasts the life story of a remarkable yet forgotten genius in ways that force us to re-think our ideas about the wisdom of crowds, the invisible hand, and the free and unfettered market.

Product Details

ISBN-13:	9780786741540
Publisher:	PublicAffairs
Publication date:	03/09/2010
Sold by:	Hachette Digital, Inc.
Format:	eBook
Pages:	288
Sales rank:	1,022,458
File size:	2 MB

About the Author

Frank Partnoy is the author of F.I.A.S.C.O., Infectious Greed, and The Match King. Formerly an investment banker at Morgan Stanley and a practicing corporate lawyer, he is one of the world's leading experts on market regulation and is a frequent commentator for the Financial Times, the New York Times, NPR, and CBS's 60 Minutes. Partnoy is a graduate of Yale Law School and is the George E. Barrett Professor of Law and Finance and the founding director of the Center for Corporate and Securities Law at the University of San Diego.

Table of Contents

Preface ix

1 Coming to America 1

2 Getting to Lee Higg 15

3 The Speech 29

4 Trouble at Home 46

5 The Green Eye Shade 59

6 Poland First 70

7 Le Boom 91

8 The Match Palace 112

9 A Weekend in Germany 135

10 One Last Chance 156

11 Coming Back to America 179

12 Death in the Air 193

13 Greatness? 201

14 Coda 218

A Note on Sources and Acknowledgements 227

Bibliography 230

Notes 236

Index 263

Editorial Reviews

Partnoy (F.I.A.S.C.O.) delivers a thrilling account of the grandfather of all Ponzi and Madoff schemes-Ivar Kreuger (1880-1932), who made his fortune in the 1920s by raising money from American investors to lend to European governments in exchange for match monopolies. Kreuger was creating more than matches, it turned out; the "master of investor psychology" created "the forerunners of today's derivatives" and techniques that are still used by hedge funds and investment banks. Shortly after his suicide in 1932, his schemes finally unraveled. The "Kreuger crash" bankrupted millions and led to the securities laws of 1933 and 1934-a "political reaction to a single event and to one man." Partnoy achieves a nuanced portrait of the charismatic and corrupt financial genius whose advice was sought by Herbert Hoover and other heads of state. A fascinating depiction of a man and his era (Greta Garbo makes memorable cameos), this book is a snapshot of a time all too familiar now: a speculative real estate bubble, unbridled consumer spending, investors buying derivatives based on sketchy information and a Wall Street operating by its own rules. (May)

Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

Publishers Weekly

Ivar Kreuger, known to aficionados of fraud cases as "the Match King," flourished 80 years ago. As this latest biography shows, his complex schemes could have occurred just yesterday-or might again tomorrow. Partnoy (Law/Univ. of San Diego; Infectious Greed: How Deceit and Risk Corrupted the Financial Markets, 2003, etc.) traces the fabulous rise and spectacular fall of the financier. Once counted among the wealthiest men on earth, Kreuger charmed royalty, tycoons and reporters, as well as Greta Garbo and Herbert Hoover. Along with dubious secret enterprises, he ran some legitimate businesses, including mining, construction and the manufacture of much of the world's matchsticks, financing sovereign governments in exchange for match monopolies. With fancy, arcane footwork, Krueger embellished real deals with shady transactions involving many of his dozens of affiliated firms. Money flowed from Wall Street to Stockholm, the Netherlands to Poland with scant documentation. He booked false gains to pay consistent 25 percent dividends. He kept real liabilities off balance sheets. Politicians, investors, brokers and bankers-with the notable exception of J.P. Morgan-were pleased to join the fun, no questions asked. It all unraveled in 1932 when Kreuger committed suicide and his transgressions were exposed. Estimates of losses vary, notes Partnoy, but millions worldwide were bankrupted. The author assiduously parses the data and pays special attention to the way Kreuger's American accountant was hustled. He also emphasizes that, despite clear deceit and a touch of forgery, the Match King wasn't entirely bad. After all, he made real money with a few real businesses. A pertinent, timely tale offinancial fraud and how it was maintained for so long. Agent: Theresa Park/Park Literary Group

Kirkus Reviews

George A. Needham, Founder and Chairman of Needham & Company
"The tale of Ivar Krueger, vividly brought to life by Frank Partnoy, is a reminder that Wall Street has not changed much since the late 1920's. The players change, but the animal spirits remain the same. Anyone interested in today's financial crisis will be captivated by this story."

"Time," January 13, 2009
"Frank Partnoy has an exceptionally well-timed book on Ivar Kreuger coming out."

Robert A. G. Monks, author of "Corpocracy" and "The New Global Investors"
""The Match King" is a skillfully told tale of the romance and the corruption involved in attempting to be on top of the world. How did Krueger enlisted the loyalty of the people essential to him? Yes, some he bought, but most -- he beguiled."

From the Publisher