Nationalization and the Gotthard Convention of 1909

The repurchase of the private railways

The crisis of the 1870s had shown the weaknesses of a railway system built by competing private companies: duplicated lines, uncoordinated timetables, speculative financing and the dependence of the network on foreign shareholders. The federal railway law of 1872 had already transferred the supervision of construction, operation, tariffs and accounting to the Confederation.¹ In the 1890s the idea of a state railway, which Escher had defeated in 1852, gained a majority. The Federal Act of 15 October 1897 on the acquisition and operation of railways for the account of the Confederation and the organization of the administration of the Swiss Federal Railways (the Rückkaufsgesetz) was approved by the people on 20 February 1898 with 386,634 votes against 182,718, a majority of about 68 per cent.² The Swiss Federal Railways (SBB, in Italian Ferrovie federali svizzere, FFS) began operations on 1 January 1902, when the Nordostbahn was taken over, after the Centralbahn had already been operated on behalf of the Confederation from 1901.

Between 1900 and 1909 the Confederation acquired the five main private railways: the Jura–Simplon railway (937 kilometres), the Nordostbahn (771), the Centralbahn (398), the Vereinigte Schweizerbahnen (269) and the Gotthardbahn (273).³ The Gotthardbahn came last because its acquisition raised an international question. The company's concession allowed repurchase at a price based on a multiple of its average net revenues, and the Gotthard was the most profitable of the Swiss main lines. The Confederation agreed with the company to take over its 3.5 per cent mortgage loan of CHF 117.09 million as principal debtor and to pay CHF 6 million in cash on 1 May 1909. The general meeting of shareholders approved the arrangement on 29 April 1909 and resolved to liquidate the company.⁴ On 1 May 1909 the Gotthard railway became part of the SBB.

The dispute with Germany and Italy

The Federal Council regarded the repurchase as a sovereign right that required no approval from the states that had subsidized the line. Germany and Italy disagreed. In a note of 11 February 1909 they claimed that the repurchase depended on their prior consent, since their subsidies of 1869, 1871 and 1878 had been granted to a private company under conditions that included a share in its profits once the dividend exceeded 7 per cent and tariff obligations in their favour.⁵ A conference of the three governments met from 24 March to 20 April 1909. Its result was a new convention, signed on 13 October 1909. In return for the renunciation of their rights to share in the capital and the operating profits of the line, Germany and Italy received tariff concessions on the whole Swiss railway network serving transit traffic, which amounted to most-favoured-nation treatment for their transit traffic.⁶

The convention was accompanied by bilateral agreements. One agreement of the same day between Switzerland and Italy, which entered into force on 1 May 1910 with retroactive effect from 1 May 1909, gave Italian grain stored in the warehouses of Brunnen the same facilities as goods in transit and introduced a preferential rate for citrus fruits from Italy, reduced from 11 to 7.4 centimes per tonne-kilometre from 1 November 1909.⁷ Article 10 of the main convention regulated the passenger and baggage tariffs on the Gotthard line, and a further Swiss-Italian agreement of 30 April 1940 extended the application of internal Swiss tariffs and surcharges on the line until 1945.⁸

Notes

1. HLS, art. "Eisenbahnen" (as above). ↩
2. SBB, "History", https://company.sbb.ch/en/company/about-us/history.html, for the vote of 20 February 1898 (386,634 to 182,718) and the start of operations in 1901 and 1902; Swissvotes, vote no. 53, text of the vote, https://swissvotes.ch/vote/53.00/abstimmungstext-de.pdf: "Bundesgesetz betreffend die Erwerbung und den Betrieb von Eisenbahnen für Rechnung des Bundes und die Organisation der Verwaltung der schweizerischen Bundesbahnen" of 15 October 1897; Swissvotes, https://swissvotes.ch/vote/53.00, for the yes share of 67.91 per cent. ↩
3. HLS, art. "Eisenbahnen" (as above). ↩
4. Handbuch der deutschen Aktiengesellschaften (as above), p. 553, for the assumption of the 3.5 per cent mortgage loan of CHF 117,090,000 by the Confederation as Selbstschuldner, the cash payment of CHF 6 million on 1 May 1909 and the general meeting of 29 April 1909. ↩
5. HLS, art. "Gotthardvertrag" (Gérard Benz, German translation Ernst Grell, version of 06.12.2005), https://hls-dhs-dss.ch/de/articles/017251/2005-12-06/, for the Federal Council's view and the note of 11 February 1909; Convention of 15 October 1869 (as above), Art. 18: "Les Etats ne se réservent un droit de participation aux résultats financiers de l'entreprise que dans le cas où le dividende à répartir sur les actions dépasserait le 7%". ↩
6. HLS, art. "Gotthardvertrag" (as above), for the conference of 24 March to 20 April 1909 and the content of the treaty; Staatsvertrag vom 13. Oktober 1909 zwischen der Schweiz, Deutschland und Italien betreffend die Gotthardbahn (mit Schlussprotokoll), SR 0.742.140.11, https://www.droit-bilingue.ch/de-fr/0.7/0.74/0.742.140.11-index.html. ↩
7. Übereinkommen zwischen der Schweiz und Italien betreffend die Gotthardbahn vom 13. Oktober 1909, SR 0.742.140.111, Art. 1–4, text at lexaris.de, https://www.lexaris.de/book/version/documentflat/head/238760. ↩
8. Abkommen zwischen der Schweiz und Italien betreffend die Gotthardbahn vom 30. April 1940, SR 0.742.140.112, text at lexfind.ch, https://www.lexfind.ch/tolv/159041/de. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.