Ivar accepted praise from France with humility. He loved being worshipped, but didn’t want to appear arrogant. When Prime Minister Poincaré awarded him the Grand Cross of the Legion of Honor, Ivar wore only a single medal to the ceremony. Traditionally, recipients of the award had come in full decorations, and the attendees were struck by Ivar’s modesty.
Ivar explained that the medal he wore was “given to commemorate the Olympic games at Stockholm.”53 He didn’t cite the fact that he personally had financed the Stockholm games; nor did he mention his numerous other awards and medals. The Paris media grabbed the story, just as Ivar thought they might. One editorial cited Ivar’s one medal as a metaphor for his singular status as a financial hero. It noted that “The French miracle has elevated Ivar Kreuger to the position of superman of finance. From today, he is Olympian.”54
8
THE MATCH PALACE
The French deal and the new 50 million dollar debenture issue catapulted Ivar to a new level of fame and respect. It raised the promise of a New York Stock Exchange listing for International Match, and cemented Ivar’s reputation as a leading man in finance. He remained modest in public, but privately he became increasingly confident in his ability to dominate the financial markets. By late 1927, Ivar held match monopolies in nearly a dozen countries. International Match’s preferred share issues had more than tripled in value since they were floated, from a price of 35 dollars to more than 100 dollars on the Curb Exchange. Ivar still controlled International Match; its common stock was still held by Swedish Match and some Swedish banks. Swedish Match now had 26,000 employees and more than ninety match plants throughout the world, including new factories in Algeria, the Philippines, and throughout South America. Ivar was working on yet more monopoly deals, with Guatemala, Lithuania, Romania, and Turkey, and even another one with Poland. Swedish Match had taken over the two largest match factories in Canada, and International Match had done a deal with Bryant & May, which controlled the British production and sale of matches.
Ivar also had used his highly priced preferred shares as currency to expand beyond the match industry by purchasing other businesses and paying the sellers with securities of his companies instead of cash. Ivar bought banks, mining companies, railways, timber and paper products firms, film distributors, real estate, and even a controlling stake in the Swedish telephone industry, then dominated by L. M. Ericsson & Co. He controlled half of the international market in iron ore and cellulose. He bought mines all over the world, including the Boliden mine in northeast Sweden, which had substantial gold deposits. He bought acres of land in central Berlin, and exclusive buildings in Amsterdam, Oslo, Paris, Stockholm, and Warsaw. Ivar paid taxes on income of over 2 million kronor per year, more than anyone in Stockholm. And, obviously, not all of his income was taxed.1 All of these assets were real, and there was no question that Ivar or one of his companies owned them. He was, legitimately, one of the wealthiest and most powerful businessmen in the world.
Ivar traveled constantly, and was rarely in one city for long. In addition to his corporate real estate holdings, he kept large apartments in several cities in Europe, even though he did not visit some of those cities, including Warsaw, for years at a time. In London, he preferred a particular suite at the Savoy Hotel, which he kept booked for months, even when he had no plans to visit England. In Sweden, he owned three summer homes, which he reached in one of his fleet of cars and boats, including a power boat that was rumored to be the fastest in Sweden.
The apartments, as well as the fast cars and boats, were fleeting, temporary pleasures. Ivar wanted to make a permanent mark, to build something that would survive for centuries, like the castle in his hometown of Kalmar. Moreover, as Ivar’s stock soared, he saw the risk of becoming unmoored. He wanted to retain his Swedish identity and keep Stockholm as his home base.
With the profits from the French deal, he now had the money to finish construction on a building that would become his legacy: a building to house his enterprise physically as well as in spirit. He decided to call it the Match Palace, a fitting title for the place that would symbolize Ivar’s greatness.
Ivar’s architect, Ivar Justus Tengbom, was one of the leading exponents of Swedish neoclassical architecture of the early twentieth century. Tengbom was a professor at the Royal Swedish College of Art, and already had designed many of the most beautiful buildings in Stockholm: the Stockholm City Hall, the Stockholm School of Economics, and the Stockholm Concert Hall. Tengbom also had worked with Kreuger & Toll on several projects - the Stockholm City Hall was one - and he was familiar with Ivar’s respect for both aesthetics and efficiency. The Match Palace would be a masterpiece, of course. But like all of Ivar’s buildings, it would go up fast. A year after the French deal closed, the Match Palace was complete.2
The long four-story structure was tucked behind heavy wrought iron gates at 15 Västra Trädgårdsgatan, which translates as “Western Garden Street,” in central Stockholm, just west of the Kungsträdgården park.3 From the street, a visitor could see a balcony running along the three windows in the center of the second floor. The blue-gray marble walls were lit at night, and pillars of granite surrounded the courtyard, which was paved with matching stone. The architecture was symmetrical, and there were subtle references to fire throughout. In a portion of the pavement, one could spot an inlaid mosaic of Prometheus, giver of fire.
In the center of the courtyard was a fountain designed by Carl Milles, with a statue of the goddess Diana, a huntress who also nurtured and protected the weak. The main sculpture echoed the smaller Milles statue outside Ivar’s apartment in Stockholm. Diana was surrounded by the strange forest creatures she was waking to life, including a grateful bronzed wild boar. The statue, and the boar’s feet, were off limits and would remain well preserved. No one, including Ivar, developed a habit of patting them.
The building next door had housed the original offices of Ivar and Paul Toll. When the Match Palace was completed, Ivar decided that employees of Kreuger & Toll and its subsidiaries should continue to work in the old building. The new building was for Swedish Match, exclusively. Just as Ivar had effectively walled Paul Toll off from Swedish Match, Ivar refused to permit the barrier between the old and new buildings to be pierced. If Kreuger & Toll employees wanted to speak to people at Swedish Match, or vice versa, they had to walk outdoors and cross the courtyard to the street entrance.4
Ivar didn’t need all of this new space, but it was grand to have it. His corporate office had fewer than 150 employees, including liftboys and chauffeurs. His other 26,000 employees worked elsewhere.
By 1928, Ivar’s closest colleagues - Torsten, Krister Littorin, and Anders Jordahl - were spread around the world. Now, he brought them back to Stockholm to celebrate the new building, and to encourage them to use it as a base. From then on, Littorin would spend most of his time there. Although Torsten would still travel throughout Europe, and Jordahl would focus on America, the Match Palace would accommodate them when they were in town.
The three men toured the building with Ivar soon after it was completed. The board room was the first and last stop on any tour. Tengbom had placed the board room in the curved front part of the building that enclosed the upper arc of the center courtyard’s semicircle. The wall was broken into several flat panels to accommodate the curve.
For the wall panels, Ivar had commissioned a breathtaking work called “Dawn” from Isaac Grünewald, a famous expressionist painter from Stockholm. 5 The boardroom panels echoed the walls and ceiling of another Grünewald design for the Stockholm Concert Hall, Sweden’s version of the Sistine Chapel and the site of the annual Nobel Prize ceremonies. The panels depicted Prometheus on a winged horse, rushing down through a rainbow to bring fire to the men trapped in darkness below. The unmistakable impression was that the deity represented Ivar, bringing matches, and profits from matches, to the people. The unpainted sections of the walls were mahogany inlaid with walnut, and on each short side between the painted pane
ls were fireplaces of marble from Gropptorp in central Sweden, each covered with heavy cast-iron plates. There were panels over each of the fireplaces in the room, made from forty-six different kinds of wood. One depicted Thor’s struggle with the giants; another showed the “Five Continents” worshipping fire.
The boardroom table, made from citron wood, was just as elaborate as the wall panels. The seating places were marked with ivory inlays, each symbolizing one of the countries where Swedish Match sold matches. The leather desk pads were decorated in gold. It appeared to be an appropriately grandiose spot for Ivar’s negotiations with heads of state, although the bulk of those meetings occurred outside Stockholm. More commonly, Ivar and his friends would have lunch there when everyone was in town.
The Match Palace was more than a visible reminder of Ivar’s financial prowess. Ivar designed it to keep himself safe and secluded. On the fourth floor, at the end of a long corridor, Ivar had built a small private working space that became known as his “Silence Room.” It contained a writing desk and a sofa but was otherwise unfurnished. The room connected to a dressing area, and - most importantly - the door locked from the inside. Ivar would shut himself in the Silence Room for days at a time. It was a special spot where his hidden demons could safely surface. Only Ivar and the janitor had keys.6
The executive suite at the Match Palace was a dark wood version of a military bunker. It was immediately opposite the tall windows of the boardroom, through a waiting hall facing the semicircular courtyard. There were twin offices for Ivar and Krister Littorin, and a room for Karin Bökman, his assistant, next to Ivar. The architecture told visitors it would be a high hurdle to get to Ivar. Outside Ivar’s door was a green and red light, which indicated whether he could be disturbed. When a guest arrived it would shine red at first, and would switch to green only after Miss Bökman had called one of the phones in Ivar’s office.
Ivar’s office was designed for show more than work. Over the entrance was a wood mosaic of Sweden’s oldest match factory, and a crest with two torches and three stars. Inside, the walls were covered with rosewood and mahogany paneling. Near the door, the paneling hid a safe in the wall, so that Ivar could playfully show guests where any secret documents might have gone. The safe was typically open and unlocked. In case of an emergency, Karin Bökman knew the lock’s combination.
On one side of the room was a comfortable sofa with two armchairs and a small round table. To the side was a small library and a cupboard. Behind the sofa was a large Gobelin tapestry on the wall. The setup was every bit as formal and sophisticated as Ivar’s apartment. It conveyed precisely the message he wanted, of a wealthy man with a clean, clear mind and impeccable taste. It looked like the two armchairs had never been used.
Ivar’s desk stood near the first window on the left side of the room. This desk, too, was mostly for display. Ivar did much of his real work elsewhere in the Match Palace, but he liked to greet guests from behind a desk. Next to the desk was a table with three telephones. The phone on the right connected directly to Karin Bökman. The one on the left was one of the world’s first speakerphones, known as a “chief’s telephone,” built by L. M. Ericsson.
The middle phone was a dummy, like the third funnel on Berengaria, a non-working phone that Ivar could cause to ring by stepping on a button under the desk. That button was a way to speed the exit of talkative visitors who were staying too long.7 Ivar also used the middle phone to impress his supporters. When Percy Rockefeller, a director of International Match, visited the Match Palace, Ivar pretended to receive calls from various European government officials, including Mussolini and Stalin. That evening, Ivar threw a lavish party and introduced Rockefeller to numerous “ambassadors” from various countries, who actually were movie extras he had hired for the night. Rockefeller returned from Stockholm with a glowing report, telling his fellow directors, “That man is the salt of the earth. He is on most intimate terms with the heads of European governments. Gentlemen, we are fortunate indeed to be associated with Ivar Kreuger.”8
When Ivar had real work to do, he would pick an unused room at the Match Palace and set up several tables, each for a country he was working on. He would move among graphs and statistics his assistants placed on each table, memorizing the numbers and cramming financial details for future use. Ivar was perfectly comfortable working among vast amounts of paper clutter.9 He just didn’t want any of that mess in his office.
The Match Palace reflected not only Ivar’s tastes, but his mental state. Nearly three decades earlier, during his first trip to America, Ivar had reformed his “public” personality to suit his business ambitions. His “true” personality, if there was such a thing, became lost. It was no longer possible to connect the dots from the charming, persuasive Match King back to the introverted and poker-faced child from Kalmar. Over time, Ivar had locked away the bad memories of his childhood: of boys from school who mocked him for gathering flowers; of the teenage Norwegian girl who refused his hand in marriage; of the mother who avoided him and the father who underwhelmed him. One of the world’s most powerful men had no use for such a past.
Overall, the protective surroundings of the Match Palace suggested that the real Ivar Kreuger was no longer easily accessible. It was now as hard to get an in-person meeting with Ivar as it was to identify who he really was. Even Ivar’s closest friends, the people who had watched the transformation of his personality, found it difficult to understand who Ivar had become. When unwelcome thoughts came, Ivar escaped to the Silence Room to confront them alone. To all of the men in his life, Ivar was a closed book. The closest he came to opening up was when he dictated cables to Karin Bökman, danced with Greta Garbo, or listened to his neighbor Ingeborg Eberth play piano.
The Match Palace gave Ivar a new set of physical defenses. They went up much more quickly than his mental defenses, which had taken a lifetime. In his new fortress, Ivar finally could feel secure in body and mind. Or so he hoped.
Ivar didn’t invite A.D. Berning to visit the Match Palace, at least not right away. In fact, even though Berning was arguably the most important person in Ivar’s professional life, Ivar almost entirely ignored him during late 1927 and early 1928. After Ivar returned from an extended trip, and gave the first tours of the Match Palace, he finally wrote to BerningI have to acknowledge your three letters of November 10th, your letter of November 23rd, your four letters of December 3rd, as well as your letter of January 25th, and thank you for same. I have just returned to Sweden after nearly half a year’s absence and this is the reason for my not having answered your different letters previously.10
Even Ivar’s belated response to his auditor was abrupt. He focused on a few tax issues and a crucial task Ivar still wanted Berning to complete: get International Match listed on the New York Stock Exchange.
As Ivar settled into his new space, Berning finished the listing application. Since Ivar first visited the Exchange almost thirty years earlier, he had dreamed of having his own company’s securities traded on the floor there. With the French deal, Ivar’s business was now big enough. Durant and Lee Higginson had agreed to support him. The remaining question was whether A.D. Berning could persuade the Exchange to agree that International Match’s financial statements met the requirements for a listing.
After seeing the stacks of paper in Anton Wendler’s office, Berning knew he could never get all of the details about Ivar’s subsidiaries. Only Ivar, and perhaps Wendler, saw the entire picture. Ivar seemed to have memorized the assets, liabilities, income, and expenses of every one of his subsidiaries, quarter by quarter. He could recite those numbers from memory. Berning ultimately decided he had no choice but to rely on, and trust, Ivar.
Berning’s faith in the Swedish audit was reinforced by the fact that Ivar indirectly owned half of the shares of International Match. Berning was preparing an application to list International Match’s participating preferred shares, not its common shares. The preferred shares had priority over Ivar’s common shares;
they would receive payments before Ivar’s common shares did. In other words, if International Match lost money, Ivar would feel the pain first before holders of the securities that would be listed on the Exchange. That made it easier for Berning, and Ernst & Ernst, to vouch for Ivar and International Match’s financial statements. After all, he owned the company. If his financial statements were false, and the preferred didn’t receive any money, neither would he. Why would Ivar cheat himself?
Berning didn’t request much additional information from Anton Wendler, who was working on Ivar’s audit in Stockholm.11 Berning just needed enough to persuade the Exchange that the summary disclosures in International Match’s reports were accurate. When Berning had gathered what he thought was a sufficient amount of detail, and the Ernsts were comfortable with the latest numbers, they filed the application.
The Stock Listing Committee of the Exchange immediately asked Berning for more detail about International Match’s sources of income. Although they took a lax approach to many American companies, they must have been suspicious of Ivar and his foreign businesses. In particular, the Committee requested that Berning split out the company’s income into different categories, so that investors could see how much profit was from the sale of matches compared to other sources. This was the same kind of question everyone had been asking for years, including Donald Durant, the Wisconsin regulators, and several large investors. Ivar had never given anyone an answer.
Some auditors might have pressed their clients for additional information. But Berning knew Ivar wouldn’t give up the detailed disclosure requested by the Exchange. At this point, Ivar probably wouldn’t even respond to one of Berning’s cables, at least not for a while. So Berning decided to tell the New York Stock Exchange no. If the Exchange wanted to list Ivar Kreuger’s securities, it could only do so on Ivar’s terms. There were plenty of companies listed on the Exchange that did not give out much detail, and many of those companies were controlled by managers without substantial ownership, who had less to lose from lying about results. In contrast, International Match was essentially Ivar’s company. Here was Berning’s reply:It is my position that practically all of the International Match Corporation’s income is derived from the manufacture and sale of matches and related enterprises such as chemicals, timber, technical services, etc. together with interest and other income on its investments required to maintain its position in those respects. It is therefore unnecessary to make any subdivision of the corporation’s income and possibly inadvisable owing to the probable fluctuations which might occur in any substantial items which might be shown.12
The Match King Page 16