A FINANCIAL MAGNATE.

New Zealand Herald, Volume LXIX, Issue 21142, 28 March 1932, Page 8

A FINANCIAL MAGNATE.

A preliminary inquiry concerning the widespread financial affairs of Mr. Ivar Kreuger. head of the firm of Kreuger and Toll and the Swedish match companies, who committed suicide, suggests a deficit in the event of liquidation—a financial calamity which, by reason of its vastness, will throw many bright floodlights of inquiry upon post-war international banking practice, particularly in relation to Central Europe. If is not- too much to say that the tragic end of this magnate may have consequences as serious as the collapse of a great bank of international scope. Mr. Krouger's whole policy was directed toward rehabilitation* and reconstruction —"a salvage agent of Europe" he has been described. The Westminster Bank, in one of its reviews last year, stated that some of the smaller countries had blazed a trail in the matter of foreign lending, and instanced the Kreuger and Toll firm, which had shown how security on foreign loans could be reconciled with the prejudice against any form of external control by obtaining match monopolies arid securing them on royalties payable by its subsidiary manufacturing companies. "The company has demonstrated the possibilities of expert institutional lending as distinct from direct subscriptions from indivicfeials to particular foreign issues," said the * bank's review, "and much more will doubtless be heard of this method in the future."

Kreuger became a "financial irrigator" of Central Europe by tapping the American money market, giving his personal guarantee for loans, and relending the proceeds to countries which could not have secured this credit. But his financial structure has been exposed to the fury of the economic blasts from every quarter and it has collapsed and crushed him. The unknown factor in his remarkable operations was the value placed upon his personal guarantee. It seems improbable that American lenders would place the common interpretation upon this terra when operating on a large scale. The most likely conclusion seems to be that the lending and relending groups failed to foresee what depth a world depression could reach and to what length it could be prolonged.