Sam Bankman-Fried vs. The Match King (Enigmatic Charlatans Are As Old As Time)

Sam Bankman-Fried vs. The Match King  (Enigmatic Charlatans Are As Old As Time)

Posted November 13, 2022 by Ben Carlson

“Everything in life is founded on confidence.” – Ivar Kreuger

On October 28, 1929, Swedish businessman Ivar Kreuger appeared on the cover of Time Magazine.

He was one of the most talked about people in the United States at the time because he was rich, powerful and mysterious. Kreuger controlled three-quarters of the production and sales of matches, owning more than 200 match factories in 35 different countries all around the globe.1

The Match King, as he was called, owned a private island in the North Sea and apartments all over the world. He was friends with actress Greta Garbo and an advisor to President Herbert Hoover. Kreuger played a prominent role in the Nobel Prize ceremonies and had business dealings with world leaders and prime ministers.

The man was treated like a celebrity.

There were even plans to use his story to depict the American dream in a full feature-length film. That movie never saw the light of day because he shot and killed himself shortly thereafter as his empire of fraud came crumbling down in the Great Depression.

Before it all came to an end, he created one of the biggest business empires in the world.

Kreuger’s take-no-prisoners approach to business quickly allowed him to turn his match company, International Match Corporation, into a monopoly in the space.

Many countries were cash-strapped from their World War I debts. So Kreuger’s strategy for world domination of the match industry was to loan money to needy countries at favorable terms so government officials would allow him to buy up the match companies and factories within their borders.

The problem is International Match was only getting 6-8% in interest on those loans while Kreuger’s financial holding company was paying out double-digit dividends to investors, upwards of 15-30% in some cases.

It doesn’t take a genius to understand that spread does not make for a sustainable business model. But Kreuger was a master at deception when it came to the financials of his various holding companies.

He was the only one who knew what the actual profit and loss numbers looked like for International Match and all his various financial holding companies. In fact, Kreuger created some four hundred different off-the-book conduits to move money around and hide what was really going on.

He was so good at hiding what was really going on that his board and investors had no clue what was really going on. In fact, they had total faith in the Match King because he was so well-connected politically.

Percy Rockefeller, the nephew of John Rockefeller, was a member of the board of directors. Rockefeller gushed to other board members, “He [Kreuger] is on the most intimate terms with the heads of European Governments. Gentlemen, we are fortunate indeed to be associated with Ivar Kreuger.”

Little did Rockefeller know that Kreuger faked calls to prime ministers and presidents to prove how powerful he was.

He had some relationships but not nearly as many as his board thought.

 Kreuger’s match business was on the way out as a profitable business once electricity became more ubiquitous but the stock market was on its way in as all sorts of new and exciting financial products were created during the roaring 20s.

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https://awealthofcommonsense.com/2022/11/sam-bankman-fried-vs-the-match-king/