The crash of January 1914

Ten days in Locarno

The crisis broke in Locarno in the first days of 1914. The most detailed account of its beginning comes from an unexpected source, a civil judgment of the Federal Court of 13 September 1917 in a dispute between a small investor and the Banca della Svizzera Italiana. Its findings of fact reconstruct the last days of the Credito Ticinese almost hour by hour.¹ In November 1913 shares of the Credito Ticinese were still offered at 515 francs. On 2 January 1914 the director of the Credito Ticinese, Schmid, disclosed the disastrous situation of the bank to members of its board. On the same day he approached Pernsch, the director of the BSI, for a loan of CHF 200,000 to 300,000 against mortgage securities. Pernsch declined, explaining that his authority was limited to CHF 100,000. On 6 January the board of the Credito Ticinese met. Its president declared that the bank had a deficit of about two or three million francs, roughly the amount of its entire share capital.²

On the morning of 7 January a client named Rezzonico bought six shares of the Credito Ticinese at 495 francs each, a total of 2,970 francs, through Attilio Rimoldi, the agent of the BSI in Locarno. In the afternoon of the same day, representatives of the Credito Ticinese met the directors of the other Ticinese banks in Bellinzona to discuss a rescue. Pernsch attended for the BSI. A second meeting on 10 January was larger. It included Kundert, the representative of the Swiss National Bank, and Dubois of the Swiss Bank Corporation. Dubois reported a deficit of CHF 5 million. Pernsch thought the situation worse still and suspected hidden liabilities of up to CHF 20 million.³ No rescue was possible on such numbers. The Credito Ticinese closed its doors on 10 January 1914, was declared insolvent on 12 January and was declared bankrupt on 17 January.⁴

Contagion to Bellinzona

The failure of the conservative bank of Locarno spread immediately to the liberal bank of Bellinzona. Wetter, writing a few months later, describes the sequence: the Credito Ticinese and the Banca Cantonale Ticinese failed first, after which depositors ran on other banks, among them the Banca Popolare Ticinese in Bellinzona. Expert reports commissioned after the failures revealed serious irregularities. Some of the collapsed institutions, Wetter adds, had resorted to desperate measures to save their position in the months before.⁵ The Swiss National Bank's annual report for 1914 records the consequence for the central bank itself. Because of the suspension of payments of the Banca Cantonale Ticinese, which had served as the SNB's agent in Bellinzona, the National Bank had to run its Bellinzona agency temporarily with its own staff and then closed it until further notice on 4 February 1914.⁶

The crisis reached Bern within days. At an extraordinary session of the Federal Council on 19 January 1914, the Ticinese Federal Councillor Giuseppe Motta reported on the crisis of the Credito Ticinese. The next day, 20 January, representatives of the federal government and of the Swiss National Bank met in the National Bank's building in Bern with a delegation of the cantonal government and of Swiss and Ticinese banks to look for ways to contain a crisis that had meanwhile engulfed the Banca Cantonale Ticinese as well.⁷ On 19 January 1914 the Grand Council of Ticino adopted the legislative decree that would lead, in the following year, to the creation of the Banca dello Stato.⁸

Date Event Nov. 1913 Credito Ticinese shares offered at 515 francs 2 Jan. 1914 Director of Credito Ticinese discloses losses to board members 6 Jan. 1914 Board of Credito Ticinese acknowledges deficit of about CHF 2–3 million 7 Jan. 1914 Sale of shares at 495 francs; bankers' meeting in Bellinzona 10 Jan. 1914 Second meeting with SNB; Credito Ticinese closes 12 Jan. 1914 Credito Ticinese declared insolvent 17 Jan. 1914 Bankruptcy of Credito Ticinese opened 19 Jan. 1914 Federal Council extraordinary session; cantonal legislative decree 20 Jan. 1914 Crisis meeting at the SNB in Bern 4 Feb. 1914 SNB closes its Bellinzona agency after failure of Banca Cantonale Ticinese 1914 Banca del Ticino founded to assist liquidation 6 May 1915 Cantonal law on the Banca dello Stato

Sources: BGE 43 II 487, Nosetti, SNB annual report 1914, Wetter and cantonal legislation, as cited in the footnotes.

Notes

1. Federal Court, judgment of 13 September 1917, Rezzonico c. Banca della Svizzera Italiana, BGE 43 II 487, https://www.servat.unibe.ch/dfr/c2043487.html and https://servat.unibe.ch/dfr/pdf/c2043487.pdf. ↩
2. BGE 43 II 487 (as above): the bank was "passivo per due o tre milioni all'incirca". ↩
3. BGE 43 II 487 (as above). The judgment gives only surnames for Schmid, Pernsch, Kundert and Dubois. ↩
4. BGE 43 II 487 (as above). ↩
5. Wetter, Die Lokal- und Mittelbanken der Schweiz (as above), 89. ↩
6. Swiss National Bank, Geschäftsbericht 1914 (as above): "Infolge der Zahlungseinstellung der Banca Cantonale Ticinese sahen wir uns genötigt, unsere Agentur Bellinzona vorübergehend durch eigenes Personal führen zu lassen und am 4. Februar bis auf weiteres zu schliessen." French version: Banque nationale suisse, Rapport annuel 1914 , https://www.snb.ch/dam/jcr:a06110a5-70b3-43c0-a486-db666d2b9b51/annrep_1914_komplett.fr.pdf. ↩
7. Nosetti, Le secteur bancaire tessinois (as above), extract: "Durant la séance extraordinaire du Conseil fédéral du 19 janvier 1914, Giuseppe Motta détaille la situation de crise dans laquelle se trouve le Credito Ticinese de Locarno." ↩
8. Gran Consiglio, Commissione della gestione e delle finanze, Rapporto n. 5117 R / 5117A R of 11 February 2003, https://www4.ti.ch/fileadmin/POTERI/GC/allegati/rapporti/9097_5117r-5117ar.pdf ("A seguito del Decreto legislativo del 19 gennaio 1914 è stata costituita nel 1915 la Banca dello Stato del Cantone Ticino"); Legge sulla Banca dello Stato del Cantone Ticino of 25 October 1988, RL 960.100, https://m3.ti.ch/CAN/RLeggi/public/index.php/raccolta-leggi/pdfatto/atto/622 (reference to the decree of 19 January 1914 and repeal of the law of 6 May 1915). ↩

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.