1930s >> 1932 >> no-333-may-1932

Kreuger: A Product of His Time

When enumerating the virtues of the present order of society and the difficulties that bar the road to social change in the direction of common ownership, one of the essential points brought forward by our opponents is the part played by the so-called “captain of industry” to-day. It is urged that production on a large scale is impossible without them, that their energy and enterprise depends upon self-interest which signifies the pursuit of wealth and power, and that such incentives being absent from the proposed new social order captains of industry will not develop and large scale production will therefore languish.

Events constantly make plain the weakness of this position, but its supporters continue their advocacy unabashed, partly from interested motives and partly from the sheer incapacity to see and understand the facts in front of them.

One of the periodical sensational cases has now come up for judgment, which again shatters this great man theory and at the same time lays bare the rottenness at the basis of the present social system and the misery this rottenness causes.

A bright star of big industry, Ivar Kreuger, the “Swedish Match King,” shot himself in Paris recently, and when the news was first broadcast the Press united in eulogising him and his achievements; publishing sketches of his life to show how by industry and ability he had built up from a small and insignificant beginning the huge Kreuger organisation that stretched its tentacles across national boundaries, financed governments and brought the whole world into its web. There is no narrow patriotism about big industry, it only uses this sentiment at times to further its economic aims.

Kreuger’s achievement was hailed as a triumph of the principle of “self-help,” the beloved child of Samuel Smiles. One striking feature of this case, however, was the withholding of the news of his death for several hours lest it should have an adverse effect upon dealings in Kreuger stocks. Uneasiness was abroad, and the taking of his life by an apparently successful and prosperous business magnate raised doubts about the stability of the concerns he controlled.

That the fears were well-founded was very rapidly proved. Whereas in 1928 the price of Kreuger & Toll “B” shares stood at £56, on April 19th they fell to 1s. 6d. (See News-Chronicle, April 20th.) Other shares suffered a similar devastating fall and shareholders organisations are being formed to see if anything at all can be saved from the ruin of these vast concerns.

The paeans of praise have turned into torrents of wrath and vilification. The change has been brought about by sensational disclosures alleging gigantic frauds of one kind and another in carrying out the schemes of these companies. It is another sad blow for the captains of industry and self-help worshippers, and comes before they have had time to recover from the Hatry frauds. Yet the path of capitalist enterprise has been marked by constantly recurring instances of this kind, and the explanation is simple.

Leaving aside those who set out from a fraudulent beginning, ambitious men, brought up on maxims of wealth and power, set out to build up large enterprises and use all the capital and credit they can lay their hands on. A business slump, which these optimists rarely foresee, a shortage of available capital, or something similar, interferes with, their projects or stands in the way of some greater achievement, and induces them temporarily to resort to methods which come under the legal heading of fraud, in the expectation that they will be able to put matters right when their designs have been accomplished. Sometimes they are successful and live on as highly respected pillars of society, with the probability of a monument after their deaths. Sometimes they are unfortunate, then economic rivals, frightened financiers, maddened shareholders, and the moralists, unite in condemning them and bringing them to “justice.”

The larger the concerns involved the larger is the scale of fraud, and, in the event of the fraud being discovered or the promoter of it over-reaching himself the greater is the confusion and ruin resulting. Thus, when Hatry fell, there was considerable financial confusion, and many went down in the wreck.

Big industry strives to utilise all the funds it can lay hands on for the purpose of expansion and of enriching those at its head. It puts its hand in the pocket of small capitalists,, shopkeepers, and the better-paid “professional” men, utilising their savings for its schemes. Consequently, it is the heartbroken cry of the small shareholder that usually makes the most noise when a collapse comes, because it is just these people, with economic security in sight, struggling fiercely to get there, who are being constantly ruined and flung into the more hopeless sections of the propertyless class. And yet they are the fruitful soil for the blooming of all the pernicious doctrines of self-help and the like. Striving for economic freedom, unable to accomplish it by their own efforts, they look hopefully to company promoters, provide funds for all kinds of hare-brained schemes, and sing the praises of “great” men whom they trustfully expect will lift them out of the mud. Like all huggers of narrow, petty ideals, they cannot find words hard enough for those who let them down and shatter their delusions.

Another side to this question of relying upon individuals of alleged great directive ability is also seen when crashes such as those we are discussing occur. If the main threads of such large concerns are in the hands of one individual, when he is removed no one knows where to turn and a sound undertaking may be wrecked by the confusion involved. When Hatry was convicted he had to be brought back to help sort out the tangle. Kreuger is dead and apparently no one knows what may happen, because no one has a clear knowledge of what strings Kreuger was pulling.

Of late, doubts have even crept into the capitalist’s breast, and the wisdom of building up organisations that outstrip the powers of control is being questioned.

The trouble, however, does not lie in the size of .the organisation but in the method of control that has to be adopted on account of the private property basis of the organisation.

To-day the duty of the captain of industry is to overreach other captains of industry and collect under him groups of willing tools to aid him in the work of extracting the greatest amount of surplus value from the working class. It is not a question of running an industry but of piling up profits, and the captain sometimes seeks to obtain the lion’s share of these profits.

When industry comes to be organised to meet the needs of everybody without distinction, the various tasks necessary will be distributed and controlled on behalf of all. There will be neither opportunity nor incentive for one to achieve power and wealth at the expense of another, and there will be every inducement for each to give of his best in the way that is most congenial for the benefit of himself and the rest of society.

Kreuger, Hatry, and their like, are really only victims of a society that puts wealth and power among the principal virtues.