The Young Canton: From 1798 to the First World War — a part of the book Lugano as an International Financial Centre by Dr Alexander Ressos.
Part C covers the birth of the Canton of Ticino, its liberal struggles, its role as a refuge of the Italian Risorgimento, the opening of the Gotthard railway and the first generation of Ticinese banks, which ended in the banking crash of 1914.
This part belongs to Lugano as an International Financial Centre by Dr Alexander Ressos, published here in full, section by section.
Liberi e Svizzeri: From the Helvetic Republic to the Canton of 1803 — overview and summary
In the early hours of 15 February 1798 a band of armed men landed at the mouth of the Cassarate, entered Lugano by the gate of San Rocco and tried to seize the town for the Cisalpine Republic, the… Read more Lugano · The Young CantonThe spring of 1798: Lugano between Milan and the Confederation
The events of February 1798 in Lugano can only be understood against the transformation of Lombardy in the two preceding years. Read more Lugano · The Young CantonLiberi e Svizzeri: what the crowd demanded
What happened in the evening of 15 February was as important as the fighting of the morning. Read more Lugano · The Young CantonTwo cantons of the Helvetic Republic, 1798–1803
The Helvetic Republic was the first state in which the inhabitants of the former bailiwicks were citizens with equal rights. It was also a state that most of them came to dislike. Read more Lugano · The Young CantonThe new public law: communes, tithes and taxes
The Helvetic Republic tried to remake local government on the French pattern. In the former bailiwicks the comune replaced the old vicinanza, the assembly of the heads of household who shared the… Read more Lugano · The Young CantonWar on the southern passes, 1799–1800
In 1799 the war of the Second Coalition turned Switzerland into a battlefield of foreign armies. Read more Lugano · The Young CantonThe French return and the cost of war
After the Russian retreat the French and the Helvetic authorities regained control of the south. Read more Lugano · The Young CantonThe Act of Mediation and the constitution of 1803
The Canton of Ticino was created in Paris. In the winter of 1802–1803 Bonaparte, then First Consul, received the delegates of the Swiss parties in a Consulta and dictated to them a new federal… Read more Lugano · The Young CantonBuilding a state from nothing: the first months
The Grand Council met for the first time in Bellinzona on 20 May 1803. On 22 May it elected Gottardo Zurini as its first president and Vincenzo Dalberti as president of the Small Council. Read more Lugano · The Young CantonRestoration and Regeneration: the constitutions of 1814 and 1830
The fall of Napoleon put the existence of the new cantons in question. The patricians of Bern hoped to recover Vaud and Aargau, and Uri still regarded the Leventina as its own. Read more Lugano · The Young CantonThe regime of the landamani, 1815–1830
The dominant figure of the Restoration in Ticino was Giovan Battista Quadri, born in Lugano in 1777, who had helped to lead the liberation movement of 1798 and the assembly of Pian Povrò in 1802. Read more Lugano · The Young CantonThree capitals for one canton, 1803–1881
The rivalry between the towns of Ticino had prevented the union of the two Helvetic cantons in 1801 and 1802. Read more Lugano · The Young CantonThe decision of 1878
The rivalry over the capital repeatedly turned violent. In 1870 a conflict over the choice of the chief town was one of the occasions on which the Confederation intervened in Ticino to restore order. Read more Lugano · The Young CantonStefano Franscini: statistics, schools and the federal state
No person embodies the transformation of Ticino between 1798 and 1848 more fully than Stefano Franscini. Read more Lugano · The Young CantonFederal Councillor and statistician of the Confederation
In 1848 Franscini was elected to the new National Council. On 16 November 1848 the Federal Assembly elected him to the first Federal Council, in the third ballot, with 68 of 132 votes. Read more Lugano · The Young CantonRadicals and conservatives, 1839–1892
The reform of 1830 gave Ticino a liberal constitution without giving it a stable way of changing governments. Read more Lugano · The Young CantonThe counter-revolution of July 1841
The radical government soon moved against the property of the Church. In July 1841 an order to take an inventory of the property of the convents provoked a conservative uprising. Read more Lugano · The Young CantonThe nuovo indirizzo, 1875–1890
The radical era ended in the elections of 21 February 1875, in which the liberalconservatives won a majority in the Grand Council. Read more Lugano · The Young CantonThe federal state of 1848 and the finances of the canton
The Federal Constitution of 12 September 1848 transformed the Confederation from a league of sovereign states into a federal state. For Ticino the change was double-edged. Read more Lugano · The Young CantonDebt, Church property and the first direct tax
The canton entered the federal state heavily indebted. According to the figures assembled in the cantonal school journal, the public debt stood at 5,054,265.8 lire on 5 June 1846 and at 6,300,000… Read more Lugano · The Young CantonInstitution-building as the precondition of a financial centre
A financial centre is built on institutions that are older than its banks. Lenders need a law of contracts and securities, a register that shows who owns land and what charges it bears, courts that… Read more Lugano · The Young CantonFrom cantonal to federal private law: 1881 and 1912
The unification of private law in Switzerland proceeded in two steps, each of which reduced the scope of the cantonal code. Read more Lugano · The Young CantonCourts, judges and the hierarchy of justice
The judicial organization of the canton grew in layers. The first government of 1803 created a Court of Appeal of thirteen judges, eight district courts and thirty-eight justices of the peace, one… Read more Lugano · The Young CantonRefuge of the Risorgimento: Exiles, Printing Presses and Political Asylum — overview and summary
Between the Restoration of 1815 and the capture of Rome in 1870, the young Canton of Ticino lived next door to one of the most closely policed territories in Europe. Read more Lugano · The Young CantonA border canton as refuge, 1791–1847
Italian political refugees reached the territory of today's Ticino before the canton existed. Read more Lugano · The Young CantonCantonal asylum and the pressure of the powers
Until 1848 asylum was a cantonal matter. After the Federal Treaty of 1815 had restored the sovereignty of the cantons, the liberal cantons that emerged after 1830 admitted large numbers of refugees… Read more Lugano · The Young CantonYoung Italy in Ticino
Giuseppe Mazzini founded Giovine Italia (Young Italy) in Marseilles in 1831. Ticino immediately became one of its bases. Read more Lugano · The Young CantonPrinting for Italy: the presses of Lugano and Capolago
Lugano had printed for Italian readers long before the Risorgimento. The Agnelli press, active in Lugano from 1746 to 1799, published more than 400 titles, books and periodicals, among them the… Read more Lugano · The Young CantonThe Tipografia Elvetica di Capolago
The most important of the exile presses was founded at Capolago, at the southern end of Lake Lugano, on 9 October 1830, a few weeks after the liberal revolution in the canton. Read more Lugano · The Young CantonContraband of ideas: books across the border
A book printed in Capolago reached its readers in Milan by the same routes as other contraband. Read more Lugano · The Young CantonThe Documenti della guerra santa d'Italia
After the revolution of 1848 the Tipografia Elvetica became the main publisher of the democratic account of the war. Read more Lugano · The Young Canton1848: volunteers, refugees and the new federal state
The revolution in Milan began on 18 March 1848, when a crowd of about 10,000 people gathered in front of the town hall and demanded a free press, a civic guard and a national assembly. Read more Lugano · The Young CantonThe exodus of August 1848
The Sardinian army was defeated at Custoza in late July 1848, and Radetzky re-entered Milan in early August. The return of the Austrians set off a mass flight. Read more Lugano · The Young CantonCarlo Cattaneo in Castagnola
Carlo Cattaneo was born in Milan on 15 June 1801, the son of the goldsmith Melchiorre Cattaneo. Read more Lugano · The Young CantonRailways, land reclamation and the public good
Cattaneo's interests in Ticino extended far beyond the school. He promoted the reclamation of the Magadino plain, the marshy delta of the Ticino river between Bellinzona and Lake Maggiore, for which… Read more Lugano · The Young CantonMazzini, conspiracy and the limits of asylum
Giuseppe Mazzini was born in Genoa on 22 June 1805 and went into exile in 1831 after his arrest as a member of the carboneria. Read more Lugano · The Young CantonArticle 57 of the Federal Constitution of 1848
The Federal Constitution of 12 September 1848 left asylum in the hands of the cantons. Read more Lugano · The Young CantonAustria strikes back: the Capuchins, the blockade and the expulsion of 1853
The radical government of Ticino pursued in the early 1850s a programme of secularization that combined school reform, the suppression of religious houses and the transfer of their property to the… Read more Lugano · The Young CantonDiplomacy: Bern, Vienna, London and Milan
The conflict became an international affair. The British chargé d'affaires in Bern, William Dougal Christie, wrote to the Federal President Wilhelm Naeff that "the blockade of the Tessin has not been… Read more Lugano · The Young CantonMoney for the nation: financing the Risorgimento across the border
Exile politics was expensive. Newspapers and pamphlets had to be printed and smuggled, agents and couriers paid, weapons bought and stored, families of prisoners supported and journeys financed. Read more Lugano · The Young CantonCouriers, arms and the cantonal war commissioner
Arms followed money. In 1848 the volunteers needed rifles, powder and ammunition, which were bought in Switzerland or brought from Piedmont and stored near the frontier. Read more Lugano · The Young CantonAfter unification: Ticino, Italy and the new exiles, 1861–1914
The proclamation of the Kingdom of Italy in 1861 changed the position of Ticino fundamentally. Read more Lugano · The Young CantonPietro Gori, 1898 and the socialists
The 1890s brought a sharper federal response. After a wave of anarchist attacks in Europe, the Federal Council prepared a partial revision of the federal criminal code to punish anarchist crimes,… Read more Lugano · The Young CantonIrredentism and italianità
Olivetti's expulsion points to a new sensitivity of the federal authorities. Italian nationalism after unification looked chiefly at Trento and Trieste, which remained Austrian, and occasionally also… Read more Lugano · The Young CantonFrom political refuge to financial refuge: the modern legal frame
The history told in this chapter gave Lugano a reputation that outlived its causes. Read more Lugano · The Young CantonThe political-offence exception and the fiscal exception
The nineteenth-century practice described above, that persons who had fled because of political offences were not extradited, survives in the Federal Act on International Mutual Assistance in… Read more Lugano · The Young CantonForeign pressure then and now
The parallels between the crisis of 1853 and the pressure on the Swiss financial centre in the early twenty-first century are close enough to deserve a brief comparison. Read more Lugano · The Young CantonThe Gotthard Railway: Capital, Treaties and the Opening of the South — overview and summary
The previous chapters followed the political birth of the canton (Chapter C.I) and the Italian exiles who made Lugano and Capolago a refuge of the Risorgimento (Chapter C.II). Read more Lugano · The Young CantonThe Alpine railway question, 1845–1869
The railway question reached Ticino almost as soon as railways reached Switzerland. Read more Lugano · The Young CantonItalian unification and Escher's conversion
Two events in the early 1860s decided the question. The first was the unification of Italy. Read more Lugano · The Young CantonThe treaties of 1869 and 1871 and the subsidies
The decisive negotiations took place in Bern in September and October 1869. Representatives of Switzerland, Italy, the North German Confederation, Baden and Württemberg met at a conference chaired by… Read more Lugano · The Young CantonThe accession of the German Empire in 1871
The war of 1870 and 1871 delayed the German contribution. After the proclamation of the German Empire in January 1871 the new Reich took over the obligations that the North German Confederation and… Read more Lugano · The Young CantonCapital: the Gotthardbahn-Gesellschaft, Alfred Escher and the banks
The subsidies covered less than half of the estimated cost. The remaining CHF 102 million had to come from investors, who had to be found in 1871, in a Europe that had just emerged from the… Read more Lugano · The Young CantonThe company of 6 December 1871
With the financing secured, the Gotthard Association transferred its rights to a company limited by shares. The Gotthardbahn-Gesellschaft was constituted in Lucerne on 6 December 1871. Read more Lugano · The Young CantonBuilding the tunnel: Louis Favre, labour and the strike of Göschenen
The great tunnel between Göschenen and Airolo was the critical work of the whole enterprise, which the company let as a single lump-sum contract. Read more Lugano · The Young CantonThe strike of 27 and 28 July 1875
In July 1875 the miners at Göschenen stopped work. The immediate causes were the bad air in the tunnel and the low pay. Read more Lugano · The Young CantonThe financing crisis of 1876–1878
The financial plan of 1869 rested on an estimate that proved far too low. When the first chief engineer, Robert Gerwig, left the company in 1875, he identified a shortfall of about CHF 34 million. Read more Lugano · The Young CantonThe federal subsidy and the referendum of 19 January 1879
The Swiss share of CHF 8 million could no longer be raised from the cantons alone. Zurich's voters refused a further cantonal contribution in 1878, and other cantons hesitated. Read more Lugano · The Young CantonThe legal aftermath: the Zug case
The reduction of the programme had consequences for the cantons that had pledged subsidies for particular lines. Read more Lugano · The Young CantonThe Ticino lines and the opening of 1882
The first trains in Ticino ran eight years before the tunnel opened. As the convention of 1869 required, the company built the lines in the Ticino plain first. Read more Lugano · The Young CantonThe opening of the south: the railway and Ticino's economy
The railway changed the economic geography of Ticino within a generation, and Bellinzona felt the change first. Read more Lugano · The Young CantonLugano: tourism, hotels and local capital
For Lugano the railway opened a new industry. The Gotthard tunnel marked, in the words of the Historical Dictionary of Switzerland, the beginning of the great conquest of the Swiss Alps by tourism,… Read more Lugano · The Young CantonNationalization and the Gotthard Convention of 1909
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… Read more Lugano · The Young CantonThe Gotthard controversy and the treaty referendum
The convention provoked one of the strongest popular protest movements of the period before the First World War. Read more Lugano · The Young CantonThe Gotthard axis in the twentieth century: from the road tunnel to AlpTransit
Under the Federal Railways the Gotthard line was among the first main lines to be electrified. Read more Lugano · The Young CantonFrom the "tunnel war" to the NRLA
The idea of a base tunnel, a flat railway through the Alps at the level of the valleys, was discussed from the 1960s. Read more Lugano · The Young CantonInfrastructure finance and law today: from the Gotthard syndicate to the railway fund
The financing of the NRLA reversed the structure of 1869. The original Gotthard railway was built by a private company with CHF 102 million of market capital and CHF 85 million of grants from three… Read more Lugano · The Young CantonThe transit charge and the Land Transport Agreement
The second pillar of the modern Gotthard regime is the charge on road freight. Art. Read more Lugano · The Young CantonWhat the Gotthard means for Lugano as a financial centre
The base tunnels have moved Lugano closer to the two financial centres that define its market. Read more Lugano · The Young CantonThe First Ticinese Banks and the Crash of 1914 — overview and summary
The Canton of Ticino had no bank of its own until the middle of the nineteenth century. Read more Lugano · The Young CantonCredit before banks
Before 1858 the territory of Ticino had a dense web of credit but no bank. Loans were made between persons, recorded by notaries and secured on land, houses, livestock and future harvests. Read more Lugano · The Young CantonThe savings bank of 1833 and the Banca Cantonale Ticinese
The first financial institution of the canton was the Cassa Ticinese di Risparmio, founded in 1833. Read more Lugano · The Young CantonA cantonal bank that was not a State bank
The legal form of the Banca Cantonale Ticinese explains much of its later history. Read more Lugano · The Young CantonLugano's bank: the Banca della Svizzera Italiana
Lugano received its first bank of significance in 1873, when the Banca della Svizzera Italiana (BSI) opened in the town. Read more Lugano · The Young CantonItalian connections
The Italian link established at the foundation grew stronger over time. A research project of the University of Milan on industry and banking in Ticino between 1880 and 1915 identifies the control of… Read more Lugano · The Young CantonPopular banks, party banks and the wave of the 1880s and 1890s
The erosion of the Banca Cantonale Ticinese's privileged position and the economic change brought by the Gotthard railway opened the way for new banks. Read more Lugano · The Young CantonParty banks
The defining feature of the Ticinese banking system before 1914 was its link with party politics. Read more Lugano · The Young CantonMoney from overseas: remittances and the Banca Svizzera Americana
The emigration of the second half of the nineteenth century created a flow of money into the Sopraceneri that had no precedent in the canton's history. Read more Lugano · The Young CantonThe San Francisco agency
For more than a decade the agency in San Francisco was the heart of the bank. By 1909 it held deposits of about CHF 6 million, against only about CHF 1 million at the head office in Locarno. Read more Lugano · The Young CantonEmigrant savings and the crash
The connection between emigration and banking had a darker side that became visible in 1914. The deposits of emigrant families were among the main sources of funding of the Locarnese banks. Read more Lugano · The Young CantonHotels, funiculars, local railways and Italian credit
The opening of the Gotthard line in 1882 gave Lugano and Locarno access to the travellers of northern Europe. Read more Lugano · The Young CantonLocal railways
The same pattern applied with larger sums to the local railways that connected the valleys with the Gotthard line. Read more Lugano · The Young CantonLending in Italy
Beyond tourism and railways, the Ticinese banks lent heavily in Italy. Wetter observed in 1914 that the banks, unable to employ their deposits in the canton, had been forced to "go abroad", above all… Read more Lugano · The Young CantonThe crash of January 1914
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… Read more Lugano · The Young CantonThe scale of the collapse
Three of the seven principal Ticinese banks failed in 1914: the Banca Cantonale Ticinese, the Credito Ticinese and the Banca Popolare Ticinese. Read more Lugano · The Young CantonAfter the crash: liquidation, liability and politics
The depositors of 1914 stood at the end of the line. Swiss law gave them no deposit insurance, no priority over other creditors and no claim against the canton, whatever the name of the bank they had… Read more Lugano · The Young CantonIrregularities and responsibility
The expert reports commissioned after the failures revealed serious irregularities in the management of the collapsed banks. Read more Lugano · The Young CantonA bank of the State and the arrival of the big banks
The canton's answer to the crash was a bank that it owned and guaranteed. The legislative decree of 19 January 1914, adopted while the Credito Ticinese was in bankruptcy and the Banca Cantonale… Read more Lugano · The Young CantonThe big banks come south
The crisis also opened Ticino to the large Swiss banks. Two of them had arrived before the crash. Read more Lugano · The Young CantonCantonal banks and the State guarantee today
The lesson of 1914, that a bank bearing the name of the canton should be backed by the canton, shaped Swiss banking law for most of the twentieth century. Read more Lugano · The Young CantonRevision of 2003 and governance
The most significant revision of the law took place in 2003 and entered into force on 30 June 2004. Read more Lugano · The Young CantonDepositor protection, supervision and too big to fail
Federal banking supervision began two decades after the Ticinese crash. A first federal banking bill was drafted in 1916 and then shelved. Read more Lugano · The Young CantonToo big to fail and the Credit Suisse crisis of 2023
The failure of a large bank is governed by the provisions on systemically important banks in the Banking Act, introduced after the financial crisis of 2008. Read more