Showing posts with label Ayn Rand. Show all posts
Showing posts with label Ayn Rand. Show all posts

22 September 2013

The Matchless Swede

by Leigh Lundin

Last week, I published Anton Chekhov's 1884 short story, The Swedish Match, apparently not short enough for a few. To the regret of mystery fans, the anticipated payoff of a detective dénouement evaporated by the end of the story.
E.C. Bentley
E.C. Bentley

The tale reminded me of Trent's Last Case by E.C. Bentley, a send-up of Lord Peter Wimsey, Ellery Queen, and the amateur sleuth genre. The Swedish Match seems less entertaining for modern audiences who must parse a Victorian translation of the original Russian.

When Louis Willis brought Chekhov's story to my attention, I wondered what a Swedish match was. I investigated and illustrated the story with the results, historical photographs of red phosphorus safety matches. In my research, I discovered one of the most interesting bandits of the past century was responsible for the real Swedish Match– and a strong case for murder.

Igniting Flickers into Flame

It turns out Swedish Match is a century-old Swedish company with much older roots and deep American connections. Prior to World War I, the match industry was already decades old and in Sweden alone comprised some twenty manufacturers.

Bear in mind matches were an essential of the era. Every business, every household, every government office needed matches daily for lighting fireplaces and furnaces, lamps and lanterns, and of course tobacco. Matches were a simple must-have product.

Through quiet buy-outs and mergers during the war, a dynamic businessman named Ivar Kreuger consolidated match manufacturers until only two companies remained. The one controlled by Ivar Kreuger became Swedish Match or Svenska Tändsticks, literally Swedish lighter-sticks.

Ivar Kreuger
Ivar Kreuger
Striking a Deal

This is how Kreuger worked it: His father already owned a match company, but Ivar wanted to merge with the nation's largest match-maker, Jönköping-Vulcan. The much larger company was not interested. Kreuger bought up numerous small competitors and controlling interest in raw materials, gaining control of the forest industry in Sweden. But then Kreuger did something that would set him on a path for future business– he inflated the stock value of his company. This time when he approached Jönköping-Vulcan, they believed his holdings much larger than they actually were and agreed not only to a merger but as a subordinate party, turning over control to Kreuger.

The tail wagged the dog. Svenska Tändsticks, now a monopoly, rapidly spread into Norway, Finland, and targeted the rest of Scandinavia. Swedish Match became so wealthy, it lent funds to governments in post-WW-I reparations, in exchange negotiating monopoly rights country by country. With other holdings in America, Kreuger secretly moved on the Diamond Match and Ohio Match companies, hiding his actions from federal antitrust watchdogs. At his zenith, Kreuger controlled roughly 70% of the world market and 100% in many countries. And that's just the tip.

Burning Motivation

Kreuger (or Kreüger– the family apparently used both) was one of those rare entrepreneurs blessed with multiple business talents and the ability to persuade others of his prowess. A fascinating character, he amorally manipulated the enormous sums invested with him.

Before becoming interested in his father's match company and other family businesses, Kreuger studied engineering in the US and, except for opening a restaurant in South Africa, he began working in America. There he came across a new pre-stressed concrete and steel construction technique developed by Julius and Albert Kahn. Kreuger returned to Sweden intent on exploiting this new method in Europe. He began a construction business with his cousin and a friend, soon landing a number of prestigious European contracts. Kreuger's company introduced the concept of completion date commitments and went on to earn hefty bonuses for every project.

A Bed of Coal

Using securities and stock in his own company, he began buying a virtual Monopoly board of businesses– banks, railways, real estate, manufacturing, timber, and mines, especially gold mines, iron and coal. In some industries he grew to dominate half or more of the world's market. He considered taking over Sweden's entire telephone system and owned more than half of a company you know, Ericsson. In fact, you know a lot of companies Kreuger controlled: IG Farben, Bayer, the Diamond and Ohio Match companies, and several banks, as many as 400 enterprises in all.

And while his companies consistently produced quality goods, Kreuger financed his acquisitions in ways that would leave Bernie Madoff gasping. In normalized dollars, Kreuger the engineer, fabricated the largest financial schemes in history.

Burning through Money

Indeed, Enron and the banks, brokers, and insurers that precipitated the 2006 Wall Street debacle used techniques pioneered by Kreuger. He invented many of the methods still in use today to avoid oversight and regulation.

Pause for a moment. I'm a devout believer in entrepreneurism and a market economy. But I'm also wary when lobbyists and politicians begin calling for deregulation and tearing down investor protections, claiming they learned their lessons and business needs to grow and expand unhampered by pesky regulations.

The one lesson you can bank on is that business is incapable of policing itself. And that's what regulators do– keep companies on the straight and narrow path.

Hot Stocks

Even so, companies continue to go out of their way to avoid oversight and they use the same arguments today Kreuger used a century ago, among them that investors don't need to know. Modern corporations today use off-balance sheet accounting justified by Kreuger. The rationalization is if you the investor makes money, what do you care if company officers use accounting sleight-of-hand to become extremely wealthy?
Swedish matches

Kreuger invented a number of financial instruments in use today, among them convertible debentures, stock dilution, B-shares, unsecured debt, and junk bonds. As mentioned above, Kreuger would trade stock within his own company to buy other companies, but not just any stock. He invented B-shares worth 1/1000 of his own presumably A-shares. Like other high-flying CEOs each decade sees, Kreuger used companies as his own personal piggy bank, supporting toys and houses around the world and entertaining celebrities and movie stars of his day.

Where there's Smoke…

And then came the crash of 1929. Kreuger was heavily vested in America and America had invested heavily in him. He zipped country to country, continent to continent, trying to bolster his firms that in financial terms had become hollow shells, some worth fractional pennies on the dollar. His indebtedness to Swedish banks alone totaled half of that nation's entire gold reserve. In other countries, his debt was incalculable.

Snuff Said

In March 1932, Kreuger sailed for Europe from the US for the last time. On 12 March, two days before Kreuger was to meet with Riksbank's chairman, his personal maid found him dead in his Paris apartments, apparently shot through the heart. The French Sûreté concluded he'd committed suicide.

But not everyone believed it. Kreuger's brother Torsten contended Ivar's death wasn't suicide, but murder, noting a number of curious anomalies. Three decades later when documents became public, the mystery thickened along with certainty his death was a homicide, possibly by Soviet assassin Leon Birthschansky, thereby spawning numerous theories in articles and books.

The economic devastation following Kreuger's death and revelations his business practices had gone so bad resulted in the financial press giving the fallout his name, the Kreuger Crash, further fueling the now worldwide Great Depression.

The financial world portrayed Kreuger playing with other peoples' monies in a global Ponzi scheme. Some, more thoughtful and suspicious, challenged that notion, noting the man was a positive influence offsetting the rise of the far left and the far right, the demons of Stalin and Hitler. In that light, political forces of evil paid assassins to remove Kreuger from the world stage and then rewarded his complicit competitors like the Wallenbergs, allowing them to raid and gut his companies. Of course it's possible both contentions are true.

Enduring Flame

Ayn Rand
Ayn Rand
Kreuger's such a fascinating character, multiple authors claimed him as a subject, the most recent book coming out just three years ago. Movie makers and playwrights couldn't resist the topic either. And here we turn to another famous Russian author who wrote about the Swedish Match, Али́са Зино́вьевна Розенба́ум– Alisa Zinóvyevna Rosenbaum. You know her as Ayn Rand.

Ayn Rand used Kreuger as a model for the character Björn Faulkner in her 1935 play set as a courtroom drama murder mystery, Night of January 16th. The play is notable for selecting members of the audience as jury members, who decide the verdict resulting in different endings, depending upon the jury's decision.

Thus we end like we began with another great author of Russian origin writing about the same product from the same company, but an entirely different crime. The drama is matchless.

07 September 2012

A "Feyn" Idea?

by Dixon Hill
Richard Feynman
The great physicist Richard Feynman once said: “If I could explain it to the average person, I wouldn’t have been worth the Nobel Prize.”

This is the way I have seen his interview in People (22 July 1985) quoted, though when I’ve heard the quote, that second “I” seems usually to be pronounced as “it” for some reason. Thus, I’m not sure if he really meant that he was worth the recognition of a Nobel Prize, or if he was saying his idea was prize-worthy. But, either way, the sentence works, I suppose. After all, he’s Richard Feynman; I’m not.

Ayn Rand
Which, is why I find it rather surprising that we (he and I, that is) seem to have so many feelings in common – particularly when I extrapolate his musings in terms of my own quest to generate a synopsis for a novel.

I think it was Ayn Rand who said something akin to: “If I could explain it in 200 words, I wouldn’t have written a 1,200-page novel to explain it in the first place.” And, frankly, this is how I wind up feeling when trying to distill a 300-page book into an 8-page synopsis.

 In a word: Stymied.

For those who don’t understand my problem, let me explain it in terms of this poetic excerpt (the ellipses are his, incidentally) from The Feynman Lectures on Physics (1964):

here it is standing...
atoms with consciousness
...matter with curiosity.

Stands at the sea...
wonders at wondering... I...
a universe of atoms...
an atom in the universe.

Here we see the human body and brain as a collection of atoms buzzing in tight harmony, working together to produce the human mind, the very intellect.

So, too, do I see a novel after I have written it.

Yes. I know a novel is a body of work. (And, to me, that’s a very living, breathing body!) But, when I approach close enough to work with it, I find it’s atomic structure nearly spectral. As if it were a body whose atoms were not held fast together the way yours and mine are. My hands and mind seem to pass through the epidermis; I fall into a molecular word-cloud, the minute parts and pieces buzzing around me like a swarming cloud of thousands of bees.

I cannot see the body, for its atomic structure. And, this causes me great confusion in the distillation of it’s bodily parts—such separation as required for any synopsis to make sense.

But, I’ve kept at it, grabbing words or phrases that made sense, trying to tie them into others that might define the body. The problem is, the atomic parts I grab tend to be organically connected with large clumps of other matter that come along with my selection when I pull it out of the whirling molecular word-cloud.

Perhaps that’s the price I pay for writing without an outline – permitting my stories to grow organically. Maybe organic stories grow naturally in clumps (they seem to come to my mind that way, when I’m working on them, after all), and thus it’s only natural that when I stick my hand in and grab a part it comes away with a cluster far larger than I’d first targeted.

Of late, however, a new modus operandi has come to me. Instead of reaching into the story, what if I work only at its periphery, painting a thin layer on the skin — a sort of topographic construct that follows only the planes and curves along the outer edge of the body itself. But, would not such a thing typically be called an “outline”? Because it would outline the body. And, as such, render the body’s shape.

My concern is that it will be perceived as such, and will prove too hollow, that a prospective agent or editor will peer through this thin topographic layer and find the emptiness behind it disappointing. However, I have another idea that might hopefully fix that problem.

Might I complete this topographic construct, then return later, salting in a few bits and pieces of its intellect? Thus, an in-depth examination might not result in disappointment. That’s the idea I’ve come up with, and so far things seem to be “shaping up” nicely.

And, as I’m sure you can understand, I need to get back to work in the salt mines of my computer. However, I’ll leave you with a few other Feynman quotes, in hopes you’ll enjoy them.

On the infrequent occasions when I have been called upon in a formal place to play the bongo drums, the introducer never seems to find it necessary to mention that I also do theoretical physics.
 --Statement made during Messenger Lectures at Cornell University (1964-65), after the person who introduced him mentioned that Feynman also played the bongos.

One time I was in the men's room of the bar and there was a guy at the urinal. He was kind of drunk, and said to me in a mean-sounding voice, "I don't like your face. I think I'll push it in." 
I was scared green. I replied in an equally mean voice, "Get out of my way, or I'll pee right through ya!" 
 -- From Cornell to Caltech, With A Touch of Brazil

Why would I quote Feynman on a writing blog? Perhaps for this last quote.

Our imagination is stretched to the utmost, not, as in fiction, to imagine things which are not really there, but just to comprehend those things which are there.

At first blush (and maybe second and third) the quote doesn’t seem very pro-fiction. However, pondering this quote consistently drives me toward producing something that goes a little beyond the norm. I always like to think good fiction – particularly mystery fiction -- highlights the underlying little truths that lie everywhere out there, even if these particular truths have more to do with love, honesty and courage than with murderers, swindlers and thieves.