Wallenberg vs Wallenberg.
The first part of this article is based on the information in “The Art of Cloaking Ownership. The Secret Collaboration and Protection of the German War Industry by the Neutrals. The Case of Sweden.” By Gerard Aalders and Cees Wiebes. June 1993. ISBN: 90-5356-179-x. Chapter 4. Enskilda and IG Farben.
The second part is based on my own analysis of the Auschwitz installation as a Mining Engineer. The comments on the effect of Raoul Wallenberg are also my own.
After World War I a great many German companies were confiscated by the British and the Americans. During World War II several German companies looked for companies in neutral countries who would buy German companies. These companies would then sell them back should Germany lose the war according to a secret agreement. This operation was called “cloaking”, i.e. the true owner of a company was hidden.
The largest company in Germany IG Farben tried to do this. This company was a conglomerate of over 700 companies, the largest was IG Farben, today split up and known as Hoechst, BASF and Bayer.
After a series of discussions, the overseas companies owned by IG Farben and held by a Dutch company called Voorindu were considered to be too transparent. They were therefore sold to another dummy Dutch company owned by IG Farben called Chehamij. Chehamij which would buy the Voorindu companies. In addition to IG Farben, Chehamij three Swiss companies and a bank, Ed. Greutert et Cie, later called H Sturzenegger et Cie, were offered shares.
However, one problem remained: how could Chehamij obtain the funds to acquire the IG Farben subsidiaries, mainly in Europe and the Commonwealth since the issued capital of Chehamij was only f200,000, or GBP 50,000? The companies were still held by Voorindu which would require millions of Swiss Francs to obtain them.
A number of IG Farben’s “cloaks” were sold to companies in Holland and these in turn were purchased using credits granted directly or indirectly by companies which were subsidiaries of Stockholm’s Enskilda Bank, the Wallenberg bank.
What was the position in the Swedish economy of Enskilda in 1939? Oscar Wallenberg started the bank as an investment bank in 1856. He was the descendent of a man with the surname Hansson. His son, now named Wallberg, kept that name Wallberg for his first four sons, and then changed it to Wallenberg for his second four sons with another woman.
Oscar turned the bank over to his son Knut Agathon Wallenberg as CEO in 1886, Oscar becoming Chairman. In 1911 Marcus ‘senior’ took over as CEO when Knut Agathon became Chairman. Marcus’ eldest son Jacob took over as CEO in 1927, with his younger brother Marcus, ‘younger’, as deputy CEO, and Marcus ‘senior’ as Chairman.
During WWII the bank collaborated with the Nazi German Government. The American Secretary of State Morgenthau considered Jacob Wallenberg strongly pro-German and the US subjected the Bank to a blockade that was only lifted in 1947.
In 1932 the matchstick king Ivar Kreuger, shot himself in Paris. The Swedish Government considered his affairs too complicated for an outsider and appointed an insider, Jacob Wallenberg, who was already a representative on the board. Kreuger owned the pulp manufacturer SCA, the mining company Boliden and the ball bearing company SKF, among 200 companies. Wallenberg acquired all these.
Another wealthy Swede war Axel Wenner-Gren. He saw an industrial American vacuum cleaner sold by a company under the name Dammsugaren in Vienna. He walked in and persuade the owner to let him sell the Dammsugaren against a share in the company if he sold 500 machines, which he did.
He then sold 5000 units to a German company. It was within two years the bestselling vacuum cleaner in the world. He come home to Sweden and obtained the agency for Lux AB which produced lighting. Wenner-Gren increased sales tenfold. He also arranged with Svenska Elektromekaniska, renamed Electrolux, to sell a modified vacuum cleaner. He had used the First World War to make his vacuum cleaner lighter and cheaper.
In the thirties Wenner-Gren bought shares in Bofors and acted as a front man for a purchase of shares in Bofors by his friend Alfred Krupp. This caused the Americans to consider him German-friendly and to black-list him. In the war he sailed to Bahamas and Mexico where he stayed.
The Wallenberg sphere owned much of the company sector in Sweden. They used the ‘A’ and ‘B’ share system where ‘A’ shares may only be bought by the owners and ‘B’ shares by anyone, but the ‘A’ shares can have 1000 voting rights to the 1 vote by the ‘B’ share owner. Thus, control of a company can be held by the owners with only twenty or thirty percent of the shares.
Enskilda had already had contact with IG Farben since the Hollandsche Koopmans Bank (HKB) was jointly owned by IG Farben and Enskilda following the Kreuger crash.
On 13 July 1939 a secret agreement was worked out between IG Farben, AB Caritas, a company affiliated to Wallenberg, and AB Akront (another Wallenberg company) which enabled the German firm to complete its cloaking operations. The registered office of a Swiss company named Chehamij was transferred to Amsterdam and its new address was the same as that of HKB.
The cloak was worked out thus by Bank Director Rolf Calissendorff: IG Farben would maintain a “special account” at Enskilda’s subsidiary AB Akont, containing funds equivalent to the amount that Chehamij wanted to borrow. The IG Farben deposit of funds with AB Akront would serve as collateral for the loan. AB Caritas would then make a loan to Chehamij of the same amount. In this scheme there would be no clear relationship between Enskilda, or AB Akront and AB Caritas.
Furthermore it was arranged that Chehamij could borrow 3 million Sweden crowns at 5% interest from AB Caritas as long as IG Farben maintained a sufficient deposit at AB Akront. IG Farben also paid a commission of 1% per year to compensate the Wallenbergs for their “trouble” in covering up the operation.
The rate of interest on loans from banks at the time was between 0.5% and 1. 5%.
In July 1939 AB Caritas loaned Chehamij the 3,000,000 Swedish crowns so that it could buy IG Farben’s subsidiaries in Great Britain, the Commonwealth and the neutral states.
The agreement between Enskilda and IG Farben authorized the Wallenberg brothers to call in the loan at any time after giving two weeks notice.
On 3rd September 1939 Germany attacked and overran Poland. There was at Oswiecim a Polish army camp which the Germans called Auschwitz and used as another concentration camp in the spring of 1940.
After Operation Barbarossa in June 1941 Soviet oil supplies to Germany ceased, cutting off their only source of oil.
The Germans were thus desperately short of oil and synthetic rubber, a product of oil. Oswiecim was now primarily chosen as it was at the centre of the Polish coal deposits from which oil and synthetic rubber could be made. Work on the enormous factory began in June 1942 under the leadership of the IG Farben. The gigantic installation was called Auschwitz III.
The Auschwitz III camp was seven kilometres from the Auschwitz I and II camps. Initially workers walked to Auschwitz III but then they were placed in barracks in Auschwitz III. The SS charged 3 RM per day for unskilled labour and 4 RM per day for skilled workers.
The name of the of the whole unit was changed to Monowitz. The actual plant was called Bruna Werke and was run by IG Farben although ownership was with the Wallenberg concern. Alfred Krupp ran a manufacturing unit as did Siemens-Schuckert.
The life expectancy of workers in the factory, mainly Jewish, was three to four months, and for workers in the outlying mines was one month. The number of workers at Monowich was at most 12,000.
In 1943 the Swedish Government decided that companies should state what foreign securities they held. Wallenberg therefore decided on14 September 1943 to return the pledged shares in Consolidated Dyestuff Corporation of Manchester and IG Dystuffs of Montreal held by Caritas. They kept the Swedish company AB Arto. The Wallenbergs had obviously decided to pull out of IG Farben’s cloaking scheme.
At the beginning of October 1944 IG Farben’s directors received a letter from AB Akront in which it was announced that Enskilda wished to dispose of the money in IG Farben’s special account. As was agreed in November 1939, Enskilda could call in the loan from AB Caritas to Chehamij at any time, after giving two weeks notice. Enskilda could claim IG Farben’s deposit with AB Akront in settlement of IG Farben’s debt. This claim against Chehamij would then be transferred to IG Farben. On the 16 October 1944 they became the direct creditor of Chehamij. The conclusion must be that the Caritas credit was after this date 100% German-owned and controlled.
In October 1944 an IG Farben official, Helmut Henze, went to Stockholm and conferred with Calissendorff about the shares which were still deposited with Enskilda. Calissendorff wanted Henze to take the shares back to Berlin, but the latter refused. On 19 October 1944 both men met again. Calissendorff now suggested that the AB Arto shares be handed over to Herbert Lickfett, a German representative. However, since Enskilda had called the loan without the approval of the Swedish authorities Lickfett refused to take these shares. The Wallenbergs were now the secret and unwilling possessors of the AB Arto shares. A final solution was worked out and Enskilda stored the shares in its vaults as a deposit for Chehamij.
At the same time as the Wallenberg brothers ended their ownership of Auschwitz III, later called Monowitch, Raoul Wallenberg actively sought to save the Jews in Hungary from deportation to Auschwitz. In the summer of 1944 half a million Hungarian Jews had already been transferred to Auschwitz-Birkenau.
Raoul Wallenberg’s paternal grandfather was a brother of Knut Wallenberg. His mother was partly Jewish and at the time he went to Hungary he was employed by a Jewish bookseller in Stockholm called Koloman Lauer. Lauer was not a Swedish citizen and could not therefore own a company. Raoul therefore acted as Managing Director.
Raoul travelled to Hungary in July 1944 on a diplomatic passport with the aim of saving as many Jews as possible by giving them something called a “Skyddspass”, a Safety passport.
Marcus and Jacob Wallenberg knew that Raoul was in Hungary trying to save Jews from transportation to Auschwitz. However, Raoul did not know that the Wallenberg brothers owned the Brune Werke at Monowitz, formerly called Auschwitz III, where male Jews were destined to work.
This in my view was the decisive reason that the Wallenberg brothers, Marcus and Jacob, wanted to end the cloaking operation of IG Farben.
You only live once
In 1958 the socialist government put forward a scheme which they called “The Advanced Service Pension”. There was already a pension scheme called “The Folk Pension” scheme which covered everyone whether they worked to not, paid for out of the current account budget. You paid 5% of your earnings towards this. This was like many of the basic insurance schemes in the west. The state paid these pensions in a similar same manner from the current account and I shall not discuss this pension again.
Sweden had made enormous profits out of the Second World War which had only ended 13 years before. Sweden’s industries were intact, and had prospered by selling at high prices to Germany. In fact, cash flowing into the banks exceeded loans at times.
Pensions were paid in a similar manner to those in the west. There was the difference that those paid per month usually had a pension arranged by the company while those paid weekly did not, and must arrange their own pension. Those working in heavy industry and on the land seldom lived beyond the age of 65, the age set up by the state as the age for a pension.
The ruling socialists put forward a pension scheme to which all employed would be members, both salaried and hourly paid. However, the socialists had one too few votes to pass this scheme, the so-called “The Advanced Service Pension”. However, one liberal member for reasons best known to himself, did not vote and the bill for the “The Advanced Service Pension”, known as the ATP fund, was passed.
The ATP fund was to start in 1962 at 10% of income on top of the 5% for the general fund. However, it was not a fund based on principles common through the west, but was funnelled to three funds, collectively called the AP fund.
The Fund was extremely expensive and its payments extremely cautious. It was not a final salary scheme, but was based on the best of fifteen years out of thirty. It could be paid when you reached 67. It was capped. This was done by taking the average salary and multiplying it by 7.5. But all income above the average times 7.5 was taxed. Thus all incomes above that gave nothing although 10%, and then 13.5%, was deducted. Plus of course the 5% that the state pension took.
In 1974 a fourth fund, the ATP funds were divided into funds, was formed amounting to about 1.5 of the total. This was invested in shares but was of course too small to influence any payback from the other investments, by now over 95% in building tenements. The father of the architect in Stockholm was, for example, a Jewish refugee from Soviet Russia and his buildings remind one of Russia.
The pension was based on an average increase in prices each year, not on the increase in salaries.
The age when you could take out pension was 67, but the age when other payments such as inability to work were paid stopped when you were 65.
From that fund the enormous income streams were directly dispersed to any of the favoured expenditures that the socialists favoured. For example, an enormous rebuilding of the centres of towns and villages throughout the country was undertaken, flattening most of the existing buildings.
Another example was that those given a plot to build a house on were granted a 3% lower interest rate than the bank rate.
Enormous amounts were “lent” to local hospital authorities and councils. The local councils and hospital authorities have the right to levy tax without any recourse to the state. These taxes rose rapidly from a few percent in around 1960 to around thirty percent or more in the 1980s.
In other words this was a distribution system where everything above the pension payments was spent and nothing was saved.
The ability to locally level taxes goes back to the fifteen-hundreds. Sweden had and has a unique set-up with hundreds of Authorities, dating back to the time in the 1560s when the King was fighting in northern Germany against the Catholics. These Authorities, administered by a trusted friend of the King, were set up to prevent the Lords from encroaching on the King’s lands, mines and forests. They have since exploded to several thousand today. The politicians give directions and finance once a year and the Authority is thereafter independent. The 270 Councils and the several dozen health authorities are also independent.
Each Authority has a political appointed General Director or equivalent. You thus have a group that attempt to carry out the directions given while the General Director, usually an old politician, is as active or inactive as he or she wishes.
Councils and Health authorities are as stated also Authorities. They can issue local poll taxes which amount to about 30%, and which start at once at zero income. Before you have paid state tax of 5% you therefore have a 30% tax to pay. Value Added Tax is 25%, and food is included. On top of that there is the 5% state pension payment and then the 10% ATP tax for the employed.
In 1985 the socialist Chancellor of the Exchequer, Mr Kjell-Olof Feldt, decided, with the Head of the Central Bank Bengt Dennis, that he would remove all restrictions on borrowing: money was to be considered like any other “good”, the rate of interest would determine the price. He had taken an economics degree from the north of Sweden. It was the first year of that course with poor quality and ten years before I took the same course.
Unfortunately, the wage rate increase was determined in negotiations between the unions and the employers and bore little relation to the money supply: and the inflation rate was lower than that in other countries since the money supply was traditionally kept constant.
When Mr Feldt introduced these ideas, he said he had consulted the prime minister Olof Palme. According to Feldt, Palme said; “Do what you like, I don’t understand it anyway”. Palme himself was an economist and had spent a year at Kenyon College in the USA writing a refutation of the Austrian School’s ideas, so he was probably better qualified than Feldt. I am therefore sceptical of Feldt’s reported sayings. Palme was shot in February 1986, a few months after all credit restrictions had been lifted, so Feldt’s version is the only one standing.
The general public and the banks were used to credit restrictions and lending after decades of tight, controlled bank lending. Initially it was young bankers who acted as well as the newly formed socialist bank. The Deputy Prime Minister, Ingvar Carlsson had succeeded Palme as Prime Minister and as an economist he should have seen the financial danger Sweden was building up for itself. However, he had gone into politics as Minister of Education and Minister of Housing, not as Chancellor of the Exchequer.
From 1985 the economy flourished, but after five years, in 1990, a major property company went bankrupt. This led to a collapse in the stock market and a change of government. After a series of double-figure overnight bank rate increases, Bengt Dennis, the Head of the Central Bank, two years later increased the overnight rate to 500%. Tens of thousands of businesses with variable interest rates declared bankruptcy. Every hour tens of billions of crowns left the country. On September 21, 1992 the Chancellor of the Exchequer Ann Wibble was forced to let the crown float.
The rate of payment to the pensions authority was increased in 1987 from 10.5% to 13%. An extremely expensive insurance was made even more expensive.
Carl Bildt become Prime Minister in 1991, but he was more concerned with getting Sweden into the Common Market than with the exchange rate and day-to-day problems facing Sweden. The stock market was down 20,000 billion crowns, the budget showed a loss of 200,000 billion crowns, and the interest rate was 11.2%. At the same time thousands of companies went bankrupt. In Björn Häger’s book, “Uppdrag Bildt” he writes that Carl Bildt took 60 billion crowns from the ATP fund immediately before the fall to defend the fixed crown rate.
Eight months before the outbreak of World War II Sweden had agreed that the Labour representatives and the Employers should negotiate wages with no government interference, and this arrangement was still in force. This locked workers, both salaried and hourly paid, into unions with wage agreements operating across the board. So, while wages were agreed at 7% for 6,000,000 workers, Feldt’s idea that interest rates would find a level of their own was fanciful as wages were fixed by negotiation.
The loss in crown value was at least 25 billion and some economists reckoned that the value dropped by up to 100 billion. However, Bildt wrote in his book that the Central Bank had borrowed 250 billion crowns, most of which has no backing as the Bank had no resources.
When the Pound had come under pressure the British Chancellor of the Exchequer Norman Lamont was asked how he dealt with the situation. “We use common sense”, was his reply, referring to Swedish behaviour.
The situation regarding pensions was made worse as all those in committees were state or local employees. These were not subject to the ATP agreements but followed agreements made by their own unions.
In 1992 the height of finance to building finance from the ATP fund was reached at 260 billion crowns: from then on it decreased.
Only a handful of pensioners had completed the 30 years required for a full pension from ATP was reached in 1992 since 1962, the year the ATP system started.
A governmental pensions group had been formed to look at pensions. According to the Head of the State Pension Authority, K.G. Scherman, the purpose of this group was really to find a way to eliminate the widow’s pension. Many women could obtain employment and a pension, they felt. They could find no way to eliminate this despite it being part of the legal 1958 agreement, so they merely declared it void. There were several hundred thousand women who depended on this as there were no jobs in large parts of the country for women. These were such women as the widows of miners, forestry workers and power damn industry builders.
A journalist with the EU, Elisabeth Höglund, had no news to report on Easter Day 1993, Sunday 11th April and she requested an interview with Mr K.G. Scherman. Scherman, to everyone’s shock and surprise, warned that there was no way the ATP pensions could be paid.
He was right that the ATP pensions could not be paid from monies saved as no monies had been saved. Those who should not have been surprised were surprised. But the ATP fund was to be paid out to pensioners in the same way as the state pension fund.
In 1992 the Swedish state was bankrupt. The ruling Right-wing government agreed with the Socialists that a new ATP pension scheme was to be constructed. The Prime Minister, Carl Bildt, was mainly concerned that Sweden should enter the EC, and had no interest in the pension scheme which he did not belong to anyway: Members of Parliament had their own scheme which gave them their salary after six years as an MP.
In 1994 the Socialists came back, with Ingvar Carlsson as Prime Minister. He resigned after two years, perhaps because he was forced to carry out a right-wing economic policy.
The post, a poisoned chalice for a socialist, was first offered to Jan Nygren who said he was just divorced and had to look after his son. Then it was offered to Mona Sahlin who allowed an old economic problem to receive publicity and she was therefore not considered suitable. The it was offered to Göran Persson who accepted. He was an uneducated, but wily politician who had however been Chancellor of the Exchequer in the Carlsson government following the economic collapse after Kjell-Olof Feldt’s failed policies and resignation. Persson said that in his youth he wanted to become a priest and took part of the course at a polytechnic, which was mainly sociology, but he then dropped out. When that college years later was granted university status Persson was granted an honorary PhD in medicine! His first political office was in the small town of Katrineholm south of Stockholm, then with an old-fashioned socialist council. Together with a competent writer he sent dozens of letters to the local newspapers under false names complaining about the results of every aspect of town policy. The socialists were again voted in with Göran Persson as Municipal Commissioner.
Göran Persson often claims to be working class background, but most Europeans would regard his background as lower middle-class. His parents live in a detached two-story house where he was brought up. He married Gunnel Claesson in 1978 with whom he had two daughters. They divorced in 1995. In the same year he married Annika Barthine. She was the perfect politician’s wife, but the marriage only lasted two years though they divorced in 2003. In 2003 he married Anitra Steen.
He was an MP for the second time in 1989 to 1992 as Chancellor of the Exchequer under Prime Minister Carlsson. He was again Chancellor under Carlsson from 1994 to 1996. When Carlsson resigned he became Prime Minister.
In 1999 Göran Persson “discontinued” the ATP scheme, retroactively from 1994.
On September 21, 1992 the Chancellor of the Exchequer Ann Wibble was forced to let the crown float.
Had the ATP been run on western lines by investment in shares and obligations the amount available for pensioners in 1994 based on a share that follows the index would have been 516 billion crowns. In 2018 the amount available to pensioners would have been 22,857 billion crowns. This must be the greatest Pyramid Scheme, or perhaps Ponzi Scheme, far exceeding the 700 billion crown Bernie Madoff Ponzi Scheme.
In the early 2000s Persson took 258 billion crowns from the ATP pension fund. This was motivated by the state having taken over the responsibility for certain costs and because another group had carried out a calculation that showed that the ATP fund had too much money. The certain costs were for such social costs for injuries. But these co In the early 2000s Persson took 258 billion crowns from the ATP pension fund. This was motivated by the state having taken over the responsibility for certain costs and because another group had carried out a calculation that showed that the ATP fund had too much money. The certain costs were for such social costs for injuries. But these were costs in the future, not past costs. The calculation that showed the fund had too much money may have been correct, but these were monies that were for the future.
The idea that the brake in the pension payments was legal is incorrect. A brake is not mentioned in the 1994 agreement.
There are ways in which some of this money could be retrieved.
The first way would be to end the special treatment that civil servants and local government employees receive. They have special arrangements agreed with their unions. As described earlier the unions and the employers made a special agreement so that Nazi Germany would be sure that iron ore and other goods needed would not be stopped by government interference. But the war is over and there is no reason these agreements continue. State and council and health care employees negotiate with a more or less disinterested representative: they have agreements that modify contributions and pension payments in their favour. Most of all, they do not have a brake on their pensions. These bureaucrats are not our masters, they are our servants.
The second method would be for the funds to be invested in the stock market.
The third way would be for so-called investments in local authority schemes should be stopped, even when they are formed as limited companies.
A fourth way would be to repay the 258 billion Göran Persson took and the 60 billion that Carl Bildt took.
"No very deep knowledge of economics is usually needed for grasping the immediate effects of a measure; but the task of economics is to foretell the remoter effects, and so to allow us to avoid such acts as attempt to remedy a present ill by sowing the seeds of a much greater ill for the future."
- Ludwig von Mises
In 1958 the socialist government put forward a scheme which they called “The Advanced Service Pension”. There was already a pension scheme called “The State (Folk) Pension” scheme which covered everyone whether they worked to not, paid for out of the current account budget. You paid 5% of your earnings towards this. This was like many of the basic insurance schemes in the west where in the same way the state paid these pensions from the current account. This State pension started in 1913. That pension I shall leave aside as a common-or-garden state pension fund, if rather expensive.
Sweden had made enormous profits out of the Second World War, which only ended 13 years before and nor were Sweden’s industries damaged. The socialists had, however, one too few votes to pass the “The Advanced Service Pension”. However, one liberal member for reasons best known to himself, did not vote and the “The Advanced Service Pension”, known as the ATP fund was passed.
The ATP fund was to start in 1962. However, it was not a fund based on principles common through the west: it was funnelled to three so-called “funds”, collectively called the AP “fund”; this was funded by a deduction from all employees of 10%; from those three funds the enormous income streams were directly dispersed to any of the expenditures that the socialists favoured, for example, an enormous rebuilding of the centres of towns and villages throughout the country, destroying most of the charming buildings, those given a plot to build a house on were granted a 3% lower interest rate than that charged by the banks, enormous amounts were lent to local hospital authorities and councils without any security whatsoever. Schools, heating plants, and roads were the major recipients of the ATP funds. In the nineteen-sixties and seventies there were only very small outgings for the Fund and the incomes were enormous.
The size of the pension was to be determined according to a income loss principle, whatever that might mean. It was also to be inflation proved. It was to be a distribution system, again all pension systems distribute funds. It was to be deducted by the employer. The previous Chancellor of the Exchequer, Mr Sköld, until 1955, a socialist, considered that a salary and wages increase in the form of a pension was to be preferred before a yearly salary and wages increase that would be received as cash. He considered it to be necessary with some form of collective saving, ignoring the basic pension already deducted at 5%.
In spite of this, it was considered necessary to prevent the large formation of funds which would be the result of a system where the funds were invested. It was deemed at investing the fund of such size it would be hard to find stocks or shares with a reasonable return on the fund capital. This would in its turn jeopardise the possibility of guaranteeing a fixed pension since if the funds are invested the interest on these would be lower. One reasoned that the larger the fund the larger would be the downward pressure on the interest, which in its turn would lead to the premiums having to be increased. This would give a larger fund and even greater pressure on the interest. If the premiums were, on the other hand, distributed to whoever, in the case where no funds were needed, one could determine the size of the Fund as one wished.
All this is rubbish. One sees that the group deciding these matters had pension systems of their own, state and council employees, and that they saw that it would be to their advantage to have an open money heap which could be raided at will. The best that could be said of this deliberation is that none of the participants had ever been near a pension fund as it is understood in London and New York, and behaved as if they were invented the first even pension fund.
The end result was that none of the funds, and they were a conservable annual sum, 10%, of income of the whole populations income, was that the funds were left to drift on their own. It is no wonder that when those who had paid their 10% over 30 years began to ask for their pension in 1995 onwards, the money had been spent.
The managing director of the three funds was Mr. Lennart Erik Reinhold Dahlström who reigned from 1962 until 1981 when Mr. Karl Gustaf Scherman took over. The three funds were run by a total of 200 persons, representing any and every organisation in the country. Over these presided a General Director Mr. Lars-Åke Erik Åström. Mr. Scherman said of Mr. Dahlström that the Councils he lent or gave money to were “well-managed and carried out a responsible economic policy”. Quite how he managed to keep tracks of the 290 Councils in the country I don´t know.
In 1974 a very small fund was created as part of the AP Fund which invested in shares. It was too small to make any difference, though.
It is hard to find out what was in the minds of those who ran these funds. but they were nearly always socialists, and some communists, often without any economic training. Most probably they were either running them and hoping that the governments current account would pay for the ATP pensions, or they thought that the incomings would always outstrip the outgoings. Obviously, this applied initially, but ended in 1978.
The ATP pension was subject to another political problem. Pension payment levels were based on a maximum of 7.5 times the basic amount considered as the subsistence level, excluding housing. In 1994 this maximum was 34000 crowns or 2860 GBP per month. Yet most people earned more than that, but they paid 10% of their total income. So for the percentage above the pension levels when they were 65, the amount above 10% of 3400 crowns received nothing.
The fund board spent a lot of their time worrying about the unfairness would that older members inevitably be getting more than they had paid in. In fact, they had been forced to turn over their company schemes to the ATP scheme, which meant they lost out as the company schemes were run by investing in stocks and bonds in the usual way. Much of the discussion around the ATP fund was bedevilled by such side issues. Another issue was whether the pensions should be based on a the levels arrived at by increasing the Fund by the cost of living or the rise or fall in incomes. There was a 16% devaluation of the crown in 1982. This led to an inrease in sales. A increase in salary and wage levels followed. There was also a fall in sales during the oil price change in the 1970s. There was the question of how the pensions for the post-war baby boom would be paid for. In other words every change in the economy set off a discussion of what to do. This was not forseen strangely enough when the ATP system was passed in legislation in the 1958. The rules for payment of pensions was considered fixed for all time.
A pension fund is a commercial operation. It maintains its viability by protecting the capital involved. It invests in stocks when the stock market is buoyant, and invests in bonds when they are buoyant. Unfortunately, the ATP fund was treated as though it was an adjunct to the state budget. It was counted separately, but was as we shall see open to all sorts of causes, worthy and unworthy.
Sweden had and has a unique set-up with hundreds of Authorities, dating back to the time in the 1560s when the King was fighting in northern Germany against the Catholics. These Authorities, administered up by a trusted friend of the King, were set up to prevent Lords from encroaching on the King’s lands and forests. They have exploded to several thousand today. The politicians give directions annually. They give finance annually too. Then they can act independently.
There are two types of Authorties: those with voting powers, and those who administer a given set of rules or laws. Once a set of rules is determined in the Parliament then a minister is not allowed to interfer or influence the actions of the Authority. There are Authorities on everything from the Police to Corrosion.
Each Authority has a political appointed General Director. You thus have a group that attempt to carry out the directions while the General Director, usually an old politician, makes occasional general comments.
Councils and Health authorities, in particular, attempt to attract residents by providing as many amenities as possible. More importantly, Councils and Health authorities have the power to levy poll taxes on the inhabitants.
The unions and the employers also have an unusual, special power. I 1938 the government expected Nazi Germany to win the war. Hitler feared industrial unrest in his main supplier of iron ore. Sweden also supplied guns and a host of other equipment, all made to German standards. To lessen the danger of Hitler from the unlikely event of attacking Sweden, the unions agreed with the employers that they, and not the government, would agree on wages and industrial matters in return for an agreement not to strike; this agreement was signed eight months before Germany attacked Poland. The agreement is still in force.
For example, the Authority for Schools controls them. Schooling became the responsibility of Councils in 1991 although an Authority issued a syllabus and detailed instructions. Schools do not have the responsibility for games as in the UK: if you wish to play a sport you must join a local club. Schooling begins when a child is seven and is mixed. A child chooses his or her desk and then stays there the rest of the term. Since they start at the age of seven and have no homework a Swedish child when they reach leaving age at 15 has 70% of the schooling a UK child gets. There are two public boarding schools, but they must follow the Authority’s rules. These are also mixed. There is also an Authority for Peoples Health, with overseas health in schools.
Councils and Health authorities are also Authorities. They can issue local poll taxes which amount to about 32% each which start at once. Before you have paid state tax of 5% you therefore have 32% tax to pay. Then state tax comes in at variable rate until you can pay 72% tax, 5%+10%+32%+(25%) : 72%. The state tax is varible and starts at around 500000 crowns at 20% and at 700000 crowns at 25%.
VAT is 25%, and includes food.
The ATP funds seem to have spent their money mainly on tenement buildings for rent, roads, bridges, tunnels and thermal power stations. Funds were also spent on swimming pools, athletic halls and concert halls.
From 1976 to 1981 the center party, original a farmers´ party gained power. They formed a ‘company acute’ whereby failing industries were kept going at a loss. These were the enormous steel, ship-building, textile and aeronautical industries. It was the 1938 wages and salaries agreement that caused these failures as employers could not employ people below the union rate, and they could only fire one person.
In 1978, for example, ATP income was 127 billion crowns, pensioners received 12 billion crowns, the Councils received 10 billion crowns and 50 billion crowns went to tenement building. The remaining funds, 55 billion, went to support failing industries. The reason now given for this largesse was to maintain employment for the hundreds of thousands flooding to the towns from the countryside. The situation was exacerbated by the fixed exchange rate.
In 1982 the Socialists won the election and devalued the crown by 16%. The use of bank credit and non-bank credit cards exploded in the 1970s. The socialists tried at first to discredit these cards and called the increase in the money supply which they created as a “grey credit card” money supply. For the first time the socialists lost control of the credit supply, but tried to ignore this phenomenon. They had controlled the credit supply, and thus the money supply, through the draconian measures. A prison sentence of ten years was given to sawmill owner where I lived who tried to export 1 million crowns in notes of his own money in a suitcase going to Majorca. For a profitable private business there was no alternative but to keep re-investing. The taxation rate could be high as the rich had nowhere to spend their money. It was partly this control of the money supply by the state that meant that the supporters of the ATP system were unconcerned by its inherent weaknesses.
In 1985 the socialist Chancellor of the Exchequer, Mr Kjell-Olof Feldt, decided with the Head of the Central Bank, that he would remove all restrictions on borrowing: money was like any other good and the rate of interest determined the price he stated. He had taken an economics degree from the north of Sweden. It was the first year of that course and ten years before I took the same course. Unfortunately, the rate of interest was determined in negotiations between the unions and the employers and bore no relation to the money supply: the interest rate was in fact lower than that in other countries.
When Feldt introduced his new ideas in 1985 in a pause at a party meeting, he said he consulted the prime minister Olof Palme. According to Feldt, Palme said; “Do what you like, I don’t understand it anyway”. Palme himself was an economist and had spent a year at Kenyon College writing a refutation of the Austrian School’s ideas. Palme was shot in February 1986 so Feldt’s version is the only one standing.
This free credit could lead to an investment in, say, a Swedish property company called Lock 1 entirely based on loaned funds, say 10 million pounds. Now Lock 1 could invest in a new property company in Belgium called Lock 2, entirely based on loaned funds from Lock 1, based on the shares in Lock 1. Lock 2 forms a property company in the UK called Lock 3, backed by the shares in Lock 2. Lock 1 and Lock 2 are sold for 5 million pounds each. Lock 3 goes well and is sold for 2 million pounds. This is possible due to a rising property market and the availability of free credit. And capital has been moved outside Sweden.
Nor did the companies bring their earnings home to Sweden, but kept it abroad.
Sweden was unused to any free credit among the general public. Initially it was young men who took advantage of this “money for old rope” situation. Banks too took part with the socialist’s bank Nordbank in the forefront.
The Deputy Prime Minister took over from Olof Palme. Mr Ingvar Carlsson had succeeded Palme as Prime Minister and had taken an economics course at high school and read politics at university level. He should have seen the financial danger Sweden was building up for itself. However, he had gone into politics as Minister of Education and Minister of Housing, not as Chancellor of the Exchequer.
As mentioned previously, just before the outbreak of World War II Sweden had agreed that the Labour representatives and the Employers should negotiate wages and this arrangement still operated. So, while wage increases were agreed at 7% for 6 000 000 workers, the bank rate was 10%. Feldt’s idea that interest rates would find a level of their own was not going to work. As soon as it didn’t work in 1989 Mr Feldt resigned.
After five years, in 1990, a major property company went bankrupt which led to a collapse in the stock market. The Head of the Central Bank Mr Bengt Dennis decided to fight for the fixed exchange rate.
In 1991 the conservative Mr Carl Bildt came in as Prime Minister. He was more concerned with getting Sweden into the Common Market than with the day to day problems facing Sweden. However, the situation in Sweden in the Fall of 1991 was dire. The market had lost 20mng crowns and the budget showed a loss of 200mng crowns and the interest rate was 11.2%. He also decided wth Dennis to fight for the fixed exchange rate. Swedes, after all, knew best. Dennis increased the bank rate to 500%: and tens of thousands of businesses went bankrupt. On 21 September 1992 the central bank let the crown find a variable exchange rate.
Scherman and his group proposed a further increase in the rate charged from 13% to 17%, and an increase in pensionable age to 67 years. The ATP rate had increased from 10% to 13% in the 1980s. This was kept quiet especially as the Socialists had been the originators of the ATP scheme. A journalist, Elisabeth Höglund, realized that this was a scoop and interview Scherman on Easter Sunday, usually a holiday, on the main TV News channel. He said that pensions should be reduced and that the pensionable age should be 67 years. She asked: “Should today’s pensioners also have their pension reduced”.
“Yes, that’s right”.
This interview lead to a series of violent TV and Radio confrontations. Now the pensions group took charge of affairs. The chair of the parliamentary social insurance sub-committee, Doris Håvik: “I must say that I am completely shocked. I wonder if you (Scherman) speak on behalf of the social insurance agency, or on a personal whim”.
The pensions group turned their attention to the women who had the required marriage with an ATP pensioner and would receive a pension in line with their husband’s pension. Throughout Sweden there were hundreds of thousands of these women. They lived for example in mining communities where there was no work for women, in logging camps, and in heavy industry. The pension group failed to find a logical reason for changing the rules agreed in 1958 and quite simply removed the ATP pension that these women were entitled to. This was the first occasion that a promise in the ATP agreement was wilfully broken.
Swedes think that anything can be done provided it is done in a group. The trouble with that is that it is the group that stands to profit that is the group. Some women in Sweden have no job opportunities, and others have been forced to work even if they prefer to look after their family.
The Swedish woman now dominates in every sphere as the pension rights follow employment. There is no marriage allowance in the tax system. The payment to women who have small children is absurd. They have six months fully paid child allowance for each child. This has led to the daughters of families in the areas where employment for woman was non-existent to move to the university towns to obtain higher education and work. The boys followed too as there were no longer any girls in these areas.
Another problem arises because of Swedish the language´s Germanic roots. They take a vague idea and then find a complicated word to describe that idea. Then they develop ideas and concepts based on that word.
One problem when discussing the course of the ATP system is that a quarter of a million persons employed by the state are not in the system. They have agreements of their own. For example, the Managing Director of the ATP fund, Mr. K. G. Scherman, is not in the ATP system although they pay but recieve another pension. Nor are MPs. Thus all those deciding how the system should be run are unaffected by it and live in Stockholm.
The money lost in the “free lending” spree between 1985 and 1992 can be assessed by reading the books published after the collapse by those concerned. Mr Carl Bildt mentions, for example, that during the run on the crown in 1992 that 60 billion is taken from the ATP system to reduce the employers’ payroll tax. This news is lost as it takes place on the night before the crown was no longer tied to a fixed value.
The Central Bank borrowed 254 billion crowns for the defence of the crown in November 1992. This is on top of the 156 billion crowns the Central Bank borrowed in the Fall.
Now, there is a nominal payment to ATP pensioners that is based on a complicated calculation that is very, very hard to understand. The substitute for the ATP I paid amounts now to 122412 crowns or 10000 GBP per annum. My ATP scheme was stopped in 1994 retroactively in 1998.
If I had worked as a mining engineer for 30 years I would have had about 700000 crowns per year as a pension.
The amount I get that everyone gets as a state pension is 42264 crowns per annum. I get 3108 crowns in the new scheme which has a small part as an investment in stocks and shares.
The total amount received in 1992, 30 years, in the ATP scheme was 456296 million crowns, or 456 billion. If the sums received from the start of ATP in 1962, less pay-outs, had been invested in an index fund the sum in 1992 would have been 359 896 million crowns, or 359 billion crowns, or 359 x 0.10 billion pounds, or 36 billion GBP. The number of pensioners would have been 1,7 million. That would have given an average payment of 200000 crowns.
There were about 300 000 employees in state and quasi-state employees in 1962, including teachers. 25 000 were newly employed. This includes 83 teachers in the compulsory boarding schools for Samer or Lapps as they were then called.
The number of elected representatives in the City Council, the District Council, or Municipalities was 125 000 in 1962. The total population was 7.5 million. In 2015 the number of elected representatives was 36 000. The total population was 9.7 million. In 1962 the number of Municipalities was 1000, in 2015 the number was 290, which explains the drop in elected representatives. These have pension agreements decided entirely by each Municipality.
The number of elected representatives in the Hospital section in 2015, loosely tied to the Municipalities, was 7 000.
In all, the state administration was 253 000 persons; in the municipalities 881 000; the hospitals 263 000; the state companies, state enterprises, and organizations 116 000; the municipal companies and organizations, 97 000; totalling 1 612 000 persons. All these persons have pension funds entirely different and self-determined.
In 1994 if the ATP had been funded instead of being spent on anything the politicians liked, the fund would if spent on an index fund been 1 110 billion pounds. The population was 8 745 000. The population over 65 was 1 302 000. The 1 612 000 in council municipalities and state organisation, etc., would not be in this fund as far as a specific year is concerned, due for eventual pensions.
If we assume that the pensioners over 65 live for 18 years then those entering the scheme would be 1 302 000, less the number in the council scheme, divided by 18.
If we assume that 1 612 000 persons is equally divided by thirty years then the 54 000 persons would be entering their own, separate pension schemes: this leaves 1 248 000 persons in the 1962 system, divided by 18. The 1 110 billion pounds would at least give 3% to be shared: 33.3 billion pounds. If this is divided equally between the 69 000 new pensioners, then they would receive 482 000 GBP or 5 916 000 crowns each. This sum could be divided as one wished. If you wanted to divide it equally over 18 years you would receive 330 000 crowns per year or 27 000 crowns per month.
The capital would be intact and available for the following pensioners. For example, a pensioner who is 65 in 2018 would be in the group where the capital sum has reached 22 857 945 million crowns. If would assume, say, that the amount would give 3%, then that would give 689 billion crowns. With 118 000 new non-state, non-council pensioners, then they would each receive 5 800 000 crowns per year, or 486 000 crowns per month.
The advantage of a system where one invests one’s income is obvious when you look at the figures. The figures ranged from a low in 1994 of
If we look at the original argument that stopped this investment the following factors were cited: the fund would be so big that there would be no shares that could absorb it, the fund would depress interest rates which in turn would required more investment and increased premiums to give a pension. None of these factors would in practice be valid. The market would adjust to any inflow of funds. Those socialist members of the parliament who put forward the ATP scheme had little contact with the markets and were at most rhetorical: maths was not their strong point.
Where did the money go? There were four building companies and towns were rebuilt from 1962 onwards. Garden towns were built, usually consisting of three rings, detached houses, town houses, and tenement buildings. The demand was never-ending, although there were times when the closure of a factory meant that a town died.
In 2014 onwards the government encouraged the influx of third-world refugees, claiming to be asylum-seekers. In 2015 162000 refugees arrived, forcing the government to halt the flood. This was twice the number per 100 000 inhabitants that the number that Germany took. There was no consideration of where they would live or whether the social services could handle the numbers. There was previously a queue for rental flats of about ten years in the larger towns, but the refugees were given priority.
Sweden had managed to absorb 40000 Iranians over a ten years period, starting in 1985. In the 1990s about 50000 Bosnians and 75000 Serbs were absorbed. Also about 70 000 Iraqis arrived during the war with Iran. About 15000 Lebanese were taken in that war. About 28 000 came from Chile. About 60 000 Africans came in the 1990s.
In 2014 onwards about 50 000 came from Syria, and 60 000 from Afghanistan, 40 000 of the latter were under the age of 20, in 2015. Substantial numbers came from Iraq, Eritrea, Somalia and Iran. About 75 000 came from these countries in 2014.
There are 290 counties in Sweden: the government made it obligatory for every county to take and house refugees based on the number of inhabitants.
With the arrival of relatives, the population has risen from 8.4 to 10 million. Integration has not been apparent and each ethnicity and Islamic branch has drifted to a town, mainly filling the tenement buildings that were built in the 1960s and 1970s. Far from being an economic advantage most of the refugees have been of limited education for which there is no demand in Sweden. There has been war in Afghanistan for 20 years, in Syria for 10 years and in Iraq for thirty years,
Each refugee for the first two years costs about 1 million crowns per year, while those under 18 cost 10 million per year. In 2015, 165 000 arrived. 35 369 were unaccompanied under 18. This year alone the refugees that arrived cost 353 690 000 000 crowns per year for unaccompanied under 18, and adults cost 127 000 000 000 crowns per year, a total of 480 billion crowns. The state budget for migration is 17 billion per year and 17 billion crowns for integration. Much of the expense for refugees is, however, forced onto the councils and the local health authorities.
The councils and health authorities increased their loans from “Kommuninvest i Sverige AB” by 38 000 million crowns. This is a company that takes up loans for Councils and Health Authorities. The security is said to be “shared in common”. About the same amount is borrowed by Councils and Health Authorities through other channels. The policy for 2015, as given by the Chancellor of the Exchequer, was “cautious”. This was removed by the socialist Chancellor of the Exchequer, which took over from the conservative Alliance in 2018. The extreme migration crisis put paid to the last chance of ATP pensioners obtaining any return on the enormous paid in, first 10%, then increased to 13%. The pension paid is now roughly the same as the 5% state pension I mentioned at the start of this article.
The most advantageous part of a pension is usually the last ten years or so. At sometime during the 30 or so years of work there will be a period when there is little change, but during the last ten years this period when the economy expands rapidly will give a handsome return. By “stopping” a pension in 1994 the pensioner is denied this last ten years. This is the truly wicked part of the ending of the pension. The first few years of an entirely new system, are seldom of any value.
The Swedish ATP pension was, however, a Ponzi scheme. A new scheme has started with much the same future. Those in the old ATP scheme look to finding a way out, one can not live one's life again.
When the Swedish economy collapsed in 1992. In March 1996 a new socialist prime minister came to do what no one else dared to do: he took the vast funds of the ATP system and stopped that fund retroactively. Two other socialists had been offered the job, but each had made their excuses, starting in August 1995: first a man who wanted to look after his child, then second Mona Sehlin.
The pensioners in the ATP system have been replaced by those born after 1970. There is no solidarity, nor between the state and council workers, and the generation that lost their pension. The head of the pension system, H.G. Scherman, suggests that the ATP contribution to this scheme should be increased from 13 % to 18 %, and the age of pension be increased from 65 to 69 years. H.G. Scherman has his pension in a separate agreement.
The Swedish Model is dead, as is the ATP system. The ATP system lasted 32 years.
18 April, 2017.
Review: A clean, well-lighted place. A private view of Sweden, by Kathleen Nott.
This was the first book about Sweden in English that I managed to find after I came to work in Sweden. It was published in 1961, the year I came to do practical work experience under the IAESTI exchange scheme.
Nott had live for a few years with her husband in Stockholm as a housewife, returned to the UK and worked as a journalist for the Observer. She then decided to write about Sweden by going there again.
On the boat she observed that the Swedes were busy being well-dressed and very formal, though good-looking. I guess she could have ended the book there since the rest of the trip rather merely elaborated on how formal and how boring the Swedes are.
Sweden was in the midst of spending the vast sums they made during the war and similar sums they were making selling to a Europe that had no factories. Even so Nott found them to be absorbed in discussing their problems and how they might solve them. That is the “what” that the short-time journalist can ascertain. I was much later to discover by chance the “why” of this perpetual whining.
Nott describes the series of festivals and parties that occur throughout the year. She finds them as curious and dull as I do. The Swedes just don’t seem to indulge in conversation and as practice makes perfect a formalised festival is about what you must expect. Some, like crayfish parties, mean you drink a lot of vodka and then Swedes become over-talkative, though this is hardly conversation. Once again, Nott does at comment that the women are very beautiful and the men very tall and very attractive. In fact, I began to wonder if Miss Nott didn’t find the women a mite too attractive, but in the beginning she met mostly women so I suppose that comments on women would be more common that comments on men.
She meets Professor Ohlin who finishes the conversation by saying, “You see, Miss Nott, our people is rather dull”. Not perhaps what you want to read in a book that is a series of travel essays.
I was working during the week and went to Stockholm to see some family friends of my father, the head of the Swedish submarine fleet. They had a son my age, 21, who had just returned after a year working on a Swedish Lloyd ship. When I arrived he threw open a suitcase filled with money and said, “That is a year’s wages and you and I are going to spend it”. My monied friend seemed to know all the Stockholm aristocracy and he worked his way through his little black book, phoning girlfriends to find out who was still available after his year’s absence. After he found two we went out on various jaunts while I tried in vain to get my partner into bed. I found them to be as beautiful as did Miss Nott, so this was frustrating, but I experienced the summer festivals she described. Swedish girls could, I found, drink far more vodka than I could manage so I was left feeling unwell at the end of the party while everyone else was disappearing into the bushes or to an apartment somewhere. Though well-dressed the men had a revolting habit of vomiting half-way through a party to return refreshed and ready for more revelry. I had, too, to consider that I had to be down a mine four hours away by train at 5 a.m. while the young Swedes could sleep it off in their summer cottages.
Nott discussed the Swedish suicide rate, a subject Swedes always brought up, but which both she and I were to polite to mention. There was always the same explanation that Swedish suicides are always reported while other countries do not, a current explanation for the high frequency of rape. ”Plus ça change, plus c’est la même chose.”, as Alphonse Karr once wrote.
Nott notes the Falu red houses and the copper roofs on public buildings. This was before the Swedes set about destroying every building of architectural merit in the 1960s. I have since learned that this was set in motion by Marxist immigrants from the pogroms in the SSSR. These were members of the Jewish Labour Bund, a secular Jewish Marxist movement from Lithuania, Poland and Russia, who had seized the levers of power in Sweden. They were backed by poorly-educated socialist party members who had risen in the wake of the defeat of the Third Reich when the Swedish conservatives who might appreciate fine architecture were still reeling. Many palaces from the eighteenth century were pulled down by excavators to be replaced by granite-faced bank bunkers.
Nott goes with the head social worker on a night expedition to find tadpole prostitutes. Rosaline von Ossietzky-Palm and Nott find they had been to the same English girls’ boarding school, an experiment in extremely ‘free’ schooling. All they see are big American cars, also a sign of post-war luxury, cruising around looking for girls who want to drink vodka and be impregnated. “The important thing is to establish contact,” Rosaline von Ossietzky-Palm says.
She was the daughter of Carl von Ossietzky, the 1935 Nobel peace prize winner. Carl had received the prize for revealing in 1929 to the Allied Control Commission that the Weimar Republic was breaching the terms of the Treatment of Versailles by training an air force in Germany and Russia. He was tried for treason and imprisoned. When the Nazis came to power he was sent to a concentration camp, tortured, and killed in 1935. The Allies had tried to convict war criminals after the First World War, but had failed as no German court would convict them, an embarrassing debacle. They, and especially the British, were thus wary of acting on Ossietzky’s information as they expected any action against the Germans to end much as their actions against war criminals had ended. Appeasement did not begin with Neville Chamberlain.
Nott had herself been a social worker in London’s East End, though Mrs v. Ossietzky-Palm did not ask her what she had done. I have also found that even if I ask a person what they do or have done they never ask me what I have done, or seem to have the slightest curiosity. This apart from “What do you think of Sweden?”, which is really again a request for discussing themselves, or at least their country. I was a part-time journalist for some ten years and found that you could find out everything about everybody as everything about you was in the public domain. I thought perhaps that the Swedish lack of curiosity was due to this availability, but in practice few bother to find out anything about others. The Swedes are simply not interested in other people.
During the night trip Nott finds that Rosalinde seems to think that, given time and enough ‘contact’, her tadpoles will realize that work is the only worthwhile way of life even though they live just as well without it. Today the Swedes are trying to persuade half a million Muslim refugees of the same thing, even though they would lose money by working.
A Swedish farmer would soon starve to death if he did not work throughout the summer months cutting hay from water meadows for winter fodder, and cutting timber for winter fuel. Winter with sub-zero temperatures and snow can last from October to May. However, refugees are houses in the rent-controlled ‘panel’ Soviet-style apartment blocks placed around every town during the sixties and seventies. These were needed for industries desperate for workers who were at work all day. Now, no one needs Swedes with only high school education, let alone Muslims who cannot read or write Swedish. Every Swede is unionised and paid extravagant amounts of money with endless holidays and a plethora of days off with pay for a wild variety of reasons. They are unlikely to give up their jobs to admit Muslims. Even so the belief in work as the meaning of life lives on.
Nott finally wonders whether the social workers she meets ever examine their own motives for what they do, as this seems to her to be ever less apparent.
The first time you read a book you find out about others. Reading a book a second time reveals much about oneself. The same text seems to have changed its spirit, its inner meaning entirely. You are no longer the centre of the universe, but a mere speck, a dot in eternity.
Nott goes to Dalecarlia, to Lake Siljan, to Leksand. She discovers that there are no porters and finds, as I did, that one should have one’s baggage in the luggage van by way of an extremely complicated system which is not explained, as nothing ever is in Sweden. A youth who offers no help with the luggage explains that the last taxi has gone. I remember that it then took two weeks to book a taxi in Stockholm. I did not know this and had to borrow a Canadian friend’s Porsche to drive to Arlanda. Scared of this monster, I drove it with my fiancée in second gear all the way. Nott knows no foreign friend and therefore arrives, hot and sweaty because of a slight limp, at her hotel.
If there is no wind in the summer it is hot and sticky. If there is a wind it is cold as the lakes and rivers that are everywhere in Sweden are still cold. Winter temperatures be as low as minus 20 in the northern part, and minus 10 in the southern part. It is overcast throughout most of the winter creating depression in many, a condition called by the slang term ‘Lapp illness’. When I first arrived at the mine in the norther tundra part where I was to work I told people that I thought it would be better if the workforce were flown up from the south by helicopter for a working stretch of a couple of weeks followed by two weeks off back in the south. Swedes looked askance at me.
Nott sets out to find an eccentric in Sweden. She runs into the problem that there is no word for an eccentric. Still, she arrives at a vegetarian school where the headmaster believes that children should be educated at home which he does with his own children. That eccentricity has now been eliminated so that everyone must send their children to a comprehensive school. High taxes of between 34 % and 55 % for most people and VAT at 20 % mean that few can afford to send their children to private boarding schools. There are only two of them anyway.
Leksand apparently has churches with onion shaped cupolas on the top instead of spires. Why? wonders Nott. I once saw such a church at Upper Torneå on the border with Finland which once belonged to Russia. The Swedish Lutheran Church has always been able to charge a poll tax on its citizens. So churches are usually clean, light and pleasant. Nowadays new ones outside look like a factory or a storage building. I sang in a church choir for thirteen years and visited a great number of churches in small towns and villages. Unlike English churches then they locked them so people only went to church when they had business there. And the clergy seem to treat what they do more as a job than a calling. They have a trade union which determines their salaries and holidays and arranges their insurance. No rumpled surplices in Sweden will you find.
Nott is in Leksand for a modern miracle play that is performed every summer. The population dress up in traditional dress and Nott wonders whether they wear these clothes all the time. Some did around 1900 when the resurgence of the romantic movement meant that many went back to wearing dress based on local costumes from a hundred years earlier. Today, there are many traditional dance groups who have revived dances similar to the Scottish reels I learned as a teenager.
Nott travels up to the Northland to visit the Kiruna iron ore mine. I have frequently visited this mine, either taking visitors with me who had first visited the Boliden mines where I worked, or as a member of one of state boards on which I sat as Bolidens representative. The Kiruna mine is shallow and wide and, as mines go, comfortable. You can drive into it in a car. Nott’s account differs little for the many I have heard. She remarks on the simplicity of the locals, the down-to-earth twopenny plains as she calls them. This refers to the cheapest grain type there is, called maize in England and corn in the USA.
On her way to the mine she passes the local state monopoly liquor store and discusses the drinking habits of the Swedes. Oddly enough this system is still in place nearly sixty years later. So many organisations and temperance movements owe their existence to the enormously tax revenues from this monopoly that it has become impossible to remove. Many a drunkard of both sexes owes a good living to being on the board of one of these.
Nott also arranges to go on a trip into Lappland, or Sameland as it is called today, with the provincial or area doctor, Einar Wallqvist. Oddly enough she never mentions his name which rather disproves her claim to being a journalist. Perhaps she was put off by the many ways such a name can be spelled in Swedish if she only had heard it. Einar is the name of one who fights in Odin’s army and means literally ‘one of the army’. They are the spirits of fallen warriors and they fight alone. Wallqvist is made up of ‘wall’ or ‘bank’ and ‘twig’ or ‘branch’. Many Swedish surnames are composed of common geographical features, partly to avoid the traditional method of taking one’s father’s Christian name and adding ‘son’ to it as all ‘son’ names are extremely common. The ‘W’ is also spelled ‘V’ and both are sounded as a ‘V’. The ‘q’ is also spelled ‘k’ and is sounded as a hard ‘ch’ or a ‘k’. The second ‘v’ is in the name and can be spelled ‘u’ although it is sounded as a ‘v’. Some even vary the way they are spelled, although that is less common now. Getting the name spelled correctly can be the hardest part of a letter to a Swede.
They leave at the urgent request of a Lapp in a village ten miles from Kiruna for an old man who needs help urgently. He had ‘gone nuts’ in the words of the doctor. Nott notices the monotonous forest which is really a plantation as the timber has been farmed for centuries, and then the endless, featureless flat tundra with nothing in sight as far as the eye can see as they bounce alone the dirt road. They arrive at Jukkasjärvi, a Lapp settlement which in winter now is the place with the Ice Hotel. On arrival the family eye the visitor up and await some statement. I have often been the object of such silent regard, being expected to utter something. Nott tries some Swedish which satisfies the family. Finally, the madman comes in. As soon as he sees the doctor he takes to his heels into the woods. The doctor gives chase and returns with the madman, now calmed. He takes off his clothes without being asked and lies on the narrow settee, a special type which can be made up as a bed. Nott did not notice it, but the doctor was doubtless paid with some silver object as the Lapps did not use Swedish money. They traditionally obtained silver by trading it for reindeer furs. During the sixteenth and seventeenth centuries taxes were paid in Sweden in furs. Silver was of high value, lasted and could be transported in the narrow ledges used by the Lapps in winter.
On their way back the doctor ran out of petrol. I myself have done this once when travelling to a mine deep in the heart of Lappland towards the Norwegian border. I was using one of the company’s cars and the transport division had forgotten to put an extra can in the car. Nor did I have the sleeping bag I also had in my own car. I was in trouble as it was in winter and the temperature was twenty degrees below zero. The car was warm when the engine was on, but without petrol it was also twenty degrees below zero inside the car. I only had the winter military overcoat which I had bought at a sale in a town near Boliden. I did not know it at the time, but it was the same overcoat which the German armies froze in on their way to Moscow in 1941. Nott’s doctor did as I did; patiently sat down to wait. In my case the road was packed white snow with high snow banks towering above the car on each side. Cars seldom used the road. A car arrived at the doctor’s car after half-an-hour and stopped as they always do in the Northland to see what the trouble was. The driver agrees to drive back the few miles back to Kiruna and to ask a taxi to drive out with a can of petrol. Soon, all was well. In my case I wondered what would happen if a car did not pass in a couple of hours. German tourists on survival trips for youngsters to the Northland often died as their tasks were unrealistic. The Germans misunderstood the situation: the task was to survive as things were and you were properly equipped since the unexpected happens, not to arrange problems in advance.
On another occasion in the summer my wife and I travelled into the hinterland towards the hills near the Norwegian border in a Volvo 404, the black sedans that looked like pre-war American cars. The water hose to the radiator split after a hundred kilometres. We trudged a few hundred yards up to an old traditional farmhouse off the highway. My wife was in the summer dress of the time, a yellow shift that ended just below her knickers that was in fact a longish T-shirt. Four weird-looking men who were obviously brothers sat on the kitchen top, silently eyeing us up. Yes, the oldest said they had in fact a spare hose as they had an old Volvo 404 in a field behind the farmhouse. He left to get the hose while two others left room for my wife on the kitchen top. These two sat on the bench where I sat, eyeing my wife and not, I hoped, her knickers. I wondered if she might get raped. I considered, though, that they had lived alone in an isolated farmhouse long enough getting on without seeing a woman to find the sight just one of curiosity rather than of lust. Physically, they looked deranged, but were clearly clued up enough to know in detail how a Volvo worked. My wife, an outgoing, cheerful young woman, asked them what they cooked. They smiled, grunted and nodded towards the wood-fired stove as though everyone cooked the same food in Sweden. I suppose they bought a barrel of pickled herring for the winter, and ate bread from the wheat they grew in the summer. Perhaps they shot elk in the summer. The eldest son returned with the water hose which I compared with my split one. It was identical, but in one piece. They did not ask if they could mount it, assuming I suppose that they thought everyone knew how to fix a Volvo 404. The price was exorbitant, about the price of new piece of hose, so I assumed we were not the first ones to have broken down near the farmhouse. Part of the point of an isolated farm is that can swap services with its neighbours and we had nothing but money we wanted to trade. Anyway, my wife was in one piece so I handed over the money, thanked them profusely, and left.
Nott’s doctor had not money with him so he borrowed some from Nott and they drove back to Kiruna.
Back in Stockholm, Nott stayed with her wealthy hostess and attended another festival with reflections on the Swedes. I began to tire of the stories as I now know that Nott’s wealthy hostess was only representative of about one thousandth of the population. Nott, however, also returns to her impressions gained during her stay in Sweden while her husband was working. She met men mainly as the husband of women she knew at dinner parties. She, as I did, heard of the suffering the Swedes went through during the war as Swedish ships had to escort German freighters carrying the iron ore from the Northern port of Luleå down through the archipelago to Germany. The German freighters were within the three mile limit and thus avoided attacks by Soviet submarines from across the Baltic. Since the Swedes made the Germans pay for everything provided to the Germans I see this as crying all the way to the Wallenberg bank. Fortunately, they did not know that the Wallenberg brothers, Jacob and Marcus, owned and ran the factories which used the labour from the Auschwitz concentration camp. The I.G.Farben shareholders had sold the company to the Wallenbergs to avoid being confiscated should Germany lose the war by turning a German company into a company owned by a neutral nation. Such losses had been experienced by many German companies after the First World War. I.G. Farben was an enormous conglomerate, roughly similar to I.C.I. The German word ‘Farben’ means ‘colour’ in English. The women and children of Polish and Jewish families were gassed to death as most know, while the men between 14 and 60 were worked to death in the Wallenberg factories surrounding the extermination camp. Germany lacked oil. Nor did it have access to the rubber of the plantations in Malaya. The largest camp, at Monowitz, sometimes called Auschwitz II, sometimes Monowitz, provided labour for a gigantic plant to produce synthetic rubber and petrol from coal called the Buna works. Buna is an acronym for Butadien Natrium, a chemical used to produce synthetic rubber. About 10 000 workers were needed to run the plant. When the men became too weak to work after about three to four months they were sent to the extermination camp at Birkenau. About 40 000 Jews thus died working at a plant owned by Swedes each year. The Americans attempted to confiscate the hundreds of German companies that had used a Swedish ownership during the war, and to indict Jakob and Markus Wallenberg. The strategy of the brothers was to negotiate and to delay with a defence based on legal niceties. Churchill’s speech in 1946 referring to an iron curtain descending over Europe changed the strategy of the Allies to one of supporting Western Germany rather than of confiscating German Companies.
The details of the Swedish support to Nazi German only became fully available after an enormous search into hundreds of archives by two Dutch researchers in 1961. I.G. Farben was formally sold to the Wallenberg concern. However, there are a secret, written agreement that the shares in I.G. Farben would be sold back to the original shareholders within two years of the war ending. Wallenberg would receive the dividends of the company throughout the period they owned the company and they would run it as owners.
I.G. Farben is only one of several large Swedish companies such as S.KF. which makes roller bearings, and Bosch which makes starters for motors, which used this construction. It has been called ‘cloaking’ ownership.
No Swede wishes to discuss this or indeed any other support to the Germans. However, Sweden and Swedes including workers were extremely wealthy after the war. In 1938 owners and workers signed an agreement not to strike unless a detailed series of negotiations had first taken place. It was clear in 1938 that there would be plenty of money for all if Swedish factories could continue to supply the Third Reich without production being disturbed by strikes. This agreement might well be described as a contract by Swedish industry to supply Nazi Germany with anything they might need from Sweden. This covered a vast range of primary products such as iron ore to finished factory products such as bullets and dynamite.
The Swedes thus had the money to travel around Europe, but were viewed with suspicion and often perceived as Germans as Swedish is a Germanic language and the Nordic peoples look Germanic. There was a series of small encyclopaedic books produced each year containing details of Swedish life and the production of various goods in Sweden. These were called ‘conversation’ Encyclopaedias and every educated Swedish family had a subscription for these. However, the openly revealed the high levels of production during the war which had to go somewhere and Germany was the only outlet. This problem came to a head when the Swedish Council, which likes to call itself the Swedish Institute, was to produce its usual brochures, films and programme in the years immediately after the war. The British Council performs a similar task. As well as attractive Swedish blondes dancing around maypoles there were films and accounts of cultural achievements and of industrial and factory production. When I was eight years old I saw a film of timber being floated down an enormous river to a sawmill and was fascinated. The problem for the Labour government was how to avoid showing achievements which might invite questions about the war. The socialists wished to promote the ‘Swedish Model’ of state care from the cradle to the grave only looking into a Utopian future, while the industrialists who provided much of the finance for the Swedish Council wished to show the past and present achievements of Swedish industry to produce export orders. Films were produced and discarded. In the end the socialists prevailed. The term ‘information’ could easily be changed by those receiving it to be ‘propaganda’ as it had a distinctly Marxist and Soviet flavour. So the word ‘enlightenment’ was to be used instead throughout, both in information to foreigners and to Swedes.
Nott’s dinner couples during the fifties had usually been Swedish business executives during the war and faced the same dilemma. Conversation was, as I myself found, formal and I wondered why Swedes were so afraid of saying just what they mean. My father-in-law had been the designer from 1932 of a plant to extract copper, zinc and gold from the mines where I worked. It included a gold refinery. I wondered after reading the book on cloaking on where my father-in-law imagined the bins of dental gold that were refined to Swedish stamped bars came from. German engineers helped build the plant and provide equipment. The whole family of my in-laws spoke fluent German and often had German dinner guests. My wife described lining up for the two boys to shake hands and for her to curtsy. Most of the gold came initially from German captures of central bank holdings in the nations that were conquered in rapid succession. The capacity of the Swedish refinery was in fact far in excess of anything my mines produced. Sweden offered no credit to the Germans as did the Swiss and shipments of gold arrived continually after central bank holdings had been emptied and transformed into neutral Swedish stamped gold. The Reich Bank gold was melted down and re-stamped as Swedish gold. When I studied Political Economy in Sweden in 1969 I asked what holdings the Swedish currency was based on. The lecturer replied that the Swedish central bank had no holdings, and that the Swedish currency was backed by Swedish production capacity and the competence and education of the Swedes.
Nott’s dinner party couples always drank too much and the husband lapsed into a diatribe about problems, everything being the fault of the Socialists or of the Jews or Olaf Palme. Swedish National Socialist leanings had been transformed into Socialist Nationalist leanings, thus saving the wealthy workers. Company Swedes and Swedish officers were left to nurse their disappointment in silence and only thirty years later was the Right able to publicly make their case with any chance of success. In the meantime, every town, large or tiny, was provided with an indoor swimming pool, indoor tennis courts, a library, after-school classes in music, singing or any subject you wished. There were and are associations with excellent finances for travel and camps for everything under the sun. This flood of opportunity was later to emerge as international Swedish successes in swimming, tennis, music and internet systems.
On her second visit to her wealthy lawyer couple in Saltsjöbaden Nott gives some clever insights into the matter of Swedish crypto-boredom, as she puts it. They work hard, are on the way to somewhere, but never arrive.
A friend who had been to Sweden once described the Swedes to me as like eggs: they are hard on the outside but once you break the shell there is nothing inside.
I was well-aware of all this on my second reading of the book and I began to find it a drudge. However, the story suddenly sprang to life at the very end.
Nott had on her return to England written a couple of articles about Sweden in her paper, the Observer. These had apparently been entitled ‘A clean, well-lighted place’. They had mostly dealt with Nott’s visit to the social workers’ night patrol, something Nott describes as the Vice Squad. To a post-war English readership the term Night Patrol sounds rather military and I can understand Nott finding some other term. And they were indeed looking for teenage prostitutes, then an illegal business. The leader of the Night Patrol, Ms von Ossietzky-Palm, felt affronted and insulted by the articles. She pathetically writes that ‘We represent a section of an official institution, the municipal child council of Stockholm’. The English reader does not care much who they represent; the Feudal System is long-dead in England.
She went through the articles in detail, self-righteously explaining every description which she deemed derogatory. Nott mentioned that the patrol ‘was whisked away in a high-powered car’ which I suspect was a Volvo Amazon, then certainly a high-powered car. My fellow-student and I saw many of them being whisked past us as we tried unsuccessfully to hitch-hike through Sweden to our mine. I had not met a social welfare officer in England by 1961, but I expect they at most were provided with a bicycle by the council. I was, though, surprised that all the mine workers I worked with then had new cars, and that even the students I met had new Volkswagens. This would have been of interest to a British readership.
Nott’s main criticism was a more subtle one, though. She felt that the Night Patrol all believed that psychologists and psychiatrists really had a firm grasp of what the psychological ‘norm’ was. I have several acquaintances who are social workers, one who ceased being a manager because he felt he could do more good just by simply being himself among those at the needy end of society, Utopia not yet having been attained. I have another acquaintance who strangely enough now has Ms. Rosalinda von Ossietzky-Palm’s post. Little has changed, except that Swedish eccentrics at the bottom of the pile may still have a chance of retaining their individuality. This because my acquaintance seems to spend much of her well-paid time and taxpayer’s money on being on holiday or on holding courses at home and abroad at spa hotels with a large jacuzzi.
The Luftwaffe over Sicily: a squadron leader’s diary (In Swedish). "Messerschmitts over Sicily: Diary of a Luftwaffe Fighter Commander" (Stackpole Military History Series Paperback)
By Johannes Steinhoff
I bought this book because my father was on an escort aircraft carrier in Operation Torch that landed Allied troops in North Africa, and he also took part in Operation Avalanche where the Allies landed at Salerno. His service in the Mediterranean spanned the period of this diary. The aircraft on his carrier could have been the aircraft that attacked Steinhoff’s squadron, first in North Africa in Tripoli where the Germans were driven out to Sicily, and also when the Germans were in Sicily. It would be interesting to hear the account of a German after the many British books I had read.
I was also on an Outward Bound trip to climb Mount Etna in the 1950s and know the landscape, Catania and Toarmina which then had not changed since the war.
The German original, or perhaps the English translation has been translated to Swedish which detracts little as Swedish is a Germanic language and little has been lost in translation.
In June 1943 Steinhoff was stationed at a small airstrip at Trapani after the squadron hastily fled from Tripoli. The Messerschmitt 109 fighters were intact, but they had left most of their spares and some of their mechanics behind. They had taken one mechanic crammed into the back of the aircraft by removing the plate behind the pilot. I was two years old at this time, and as we had pilots billeted on us knew them as surrogate fathers.
A fighter pilot has to be determined, skilled and an egotist, pathologically entirely directed towards shooting down his opponent. His personality is that of the twelve-year-old, especially with regard to avoiding the realization that he may be killed as well as kill. He is a narcissistic predator. This type of person is often a pain in the neck, but are the only type that survive as pilots although they are incompetent in social situations. Steinhoff seems to have been no exception. Even though he writes well and honestly he fails to mention a girlfriend and he appears to have no interest in women. These often only serve as a mother figure. The kill is his only interest.
Hermann Goering, the arch narcissist is Steinhoff’s chief and his role model, at least until Goering turns nasty when the war turns against the Luftwaffe.
There is a photograph of Steinhoff on the inside cover taken after he had been shot down and burned in a jet Messerschmitt. Here Steinhoff looks more like a slightly comical clerk than a fighter pilot due to his facial reconstruction. Photos before the accident show a man that looks like a German foreman on a building site with the gleam in his eye of a man who has never faced failure.
He had a great many kills to his name after campaigns in France, Britain, Poland and Russia against vastly inferior planes and pilots. In Sicily however, the Allies had an enormous number of four-engined Boeing 24 flying fortresses to bomb Sicily and a great many fighters to cover them, usually Lightnings and Spitfires.
He initially seems vaguely confused by the change in the fortunes of the Luftwaffe, but carries on as before. Much has not changed. If he needs a new machine one arrives, if new parts are needed they arrive, if he needs more fuel that arrives. The main shortage is of experienced pilots. Newly-trained ones seldom last more than one or two missions. The population of Greater Germany of fifty million supplied thousands of seventeen-year-olds who could be thrown into the war effort.
Hitler’s strategy was of slave labour for the factories, mines and forests. His ally to the North, Sweden supplied weapons-quality iron ore, minerals, arms, explosives, timber, furs and a host of other materials as well as a protected testing ground for prototypes. His strategy of confiscating the property of Germany’s half a million Jews enable him to buy these goods from his northern ally. For a few years Stockholm became the centre of the diamond trade, Germans selling stolen Jewish diamonds through Swedes to the rest of the world.
The oil wells in Rumania continued to supply the oil required.
About 800,000 German men became of military age each year. It is this supply that became the bottleneck to Germany’s conduct of the war by the time of the Sicily campaign. In 1943 there were twice this number of casualties, mainly on the Eastern Front. Hitler chose to have German women primarily as mothers of the master race and initially did not encourage them to join the forces as was the case in Britain.
The protagonist and main character is Steinhoff. This usually causes a reader willy-nilly to side with them. However, it was easy for me to remember that Steinhoff was fighting for the Fuehrer as he frequently mentioned him. I myself grew up in the shadow of families devastated by the Germans so that I could not forget them.
I had not been aware of the dominance of allied air power in 1943, but this appears to have been overwhelming. The moral of Steinhoff’s squadron slowly crumbles. Senior German officers began to blame pilots for defeats and accused them of showing too little will-power. This is in marked contrast to the attitude of senior British officers when the going seemed hopeless.
Finally Steinhoff is forced to retreat with his squadron to Italy.
Perhaps the main difference between this German airman and British airmen was their behaviour when things went against them.
Steinhoff spent three years recovering from burns after a crash in 1945. He would have gone through the denazification process that all Germans went through after the war. This process was to see if the German was a Nazi or had been a Nazi and if so to educate him in democratic values.
He writes a section at the end when he joins the West German Air Force. Here his writing is formal and stilted and uninteresting official jargon.
This is an interesting account of a part of the war where my father’s contribution on an aircraft carrier might directly have caused Steinhoff’s crash and his flight from Sicily.