The Twentieth Century: Neutrality, Gold and the “Gnomes” — a part of the book Zurich as an International Financial Centre by Dr Alexander Ressos.
Part F covers the century in which Zurich became a global safe haven and in which its reputation was tested again and again. The Swiss National Bank, founded in 1907 with one of its two seats in Zurich, carried the franc through two world wars, the interwar crisis and the devaluation of 1936. The Banking Act of 1934 placed banking secrecy under criminal protection and gave the financial centre the institution for which it became famous abroad. Wartime gold transactions, the dormant accounts of Holocaust victims and a series of scandals then forced the city to confront the costs of that success.
Chapter I follows the monetary order from the foundation of the SNB through the First World War, the general strike of 1918 and the banking crisis of the 1930s to the devaluation of the franc. Chapter II analyses the Banking Act of 1934 and the origins of Article 47, separating the documented history of banking secrecy from its legends. Chapter III examines the gold transactions with the Reichsbank, the handling of looted assets and the findings of the Bergier Commission. Chapter IV describes the post-war boom, the Zurich gold market, the Euromarkets and the “gnomes of Zurich”. Chapter V traces the path from the Chiasso scandal of 1977 to the criminal offence of money laundering and the Anti-Money Laundering Act of 1997. Chapter VI reconstructs the dispute over dormant accounts, the work of the Volcker Committee and the global settlement of 1998.
Taken together, these chapters explain the reputational inheritance with which the Zurich financial centre entered the twenty-first century. Part G turns to the big banks, whose consolidation, crises and regulation dominate the most recent chapter of that history.
This part belongs to Zurich as an International Financial Centre by Dr Alexander Ressos, published here in full, section by section.
The Swiss National Bank, the First World War and the interwar crisis — overview and summary
Anyone who walks from Paradeplatz down Börsenstrasse towards the lake passes a sober neoclassical building with a stone façade, tall windows and no advertising of any kind. Read more Zurich · The Twentieth CenturyThe long road to a central bank
The Swiss franc, introduced by the federal coinage law of 1850, had a single federal coinage from the beginning, while paper money remained a matter for the banks. Read more Zurich · The Twentieth CenturyBern, Zurich and the opening of 20 June 1907
The seat question, which had contributed to the failure of 1897, was solved in 1905 by division. Read more Zurich · The Twentieth CenturyThe First World War
The international gold standard, which had seemed a permanent feature of the world economy, collapsed within a few days in the summer of 1914. Read more Zurich · The Twentieth CenturyThe general strike of November 1918
The social crisis of the last war year reached the financial centre itself before it reached the rest of the country. Read more Zurich · The Twentieth CenturyThe 1920s: the hard franc and the rise of Zurich
The immediate post-war years were a period of monetary and economic turbulence. The Swiss franc, which had held its value during the war better than the currencies of the belligerents, was at first… Read more Zurich · The Twentieth CenturyThe banking crisis of the 1930s
The world economic crisis reached the European banking systems in the spring of 1931. In May the Austrian Creditanstalt, the largest bank of the former Habsburg monarchy, collapsed. Read more Zurich · The Twentieth CenturyGold bloc, deflation and the devaluation of 1936
While Britain left the gold standard in September 1931 and the United States devalued the dollar in 1933 and 1934, Switzerland held to its parity. Read more Zurich · The Twentieth CenturyLegacy: what the years 1907 to 1936 left in Zurich
The first three decades of the Swiss National Bank left a legacy that can still be traced in the law, the institutions and the habits of the Zurich financial centre. Four elements stand out. Read more Zurich · The Twentieth CenturyThe Banking Act of 1934 and banking secrecy — overview and summary
Few Swiss statutes have acquired a reputation that reaches so far beyond their text as the Federal Act on Banks and Savings Banks of 8 November 1934. Read more Zurich · The Twentieth CenturyThe banking crisis and the call for supervision
Switzerland entered the twentieth century without any federal supervision of its commercial banks. Read more Zurich · The Twentieth CenturyThe Federal Act on Banks and Savings Banks of 8 November 1934
The legislative work began in earnest in 1932 and 1933, under the pressure of the failures just described. Read more Zurich · The Twentieth CenturyArticle 47: the criminal protection of banking secrecy
Article 47 stood in the penal chapter of the Act, among provisions that punished the publication of false accounts, the refusal to provide information to the auditors and other breaches of the… Read more Zurich · The Twentieth CenturyThe legend and the documented history
On the afternoon of 26 or 27 October 1932, depending on the account, the French police entered the Paris premises used by representatives of the Basler Handelsbank and caught its officers in the act… Read more Zurich · The Twentieth CenturyBanking secrecy as a civil-law duty and as a criminal norm
Long before 1934 the discretion of bankers was an established custom. Vogler describes the emergence of a pronounced relationship of trust between banks and clients that became usage in the manner of… Read more Zurich · The Twentieth CenturySecrecy as a business model
The commercial logic of banking secrecy was established well before 1934. Guex shows that after the First World War foreign capital, especially from France, Germany, Italy and Austria, poured into… Read more Zurich · The Twentieth CenturySecrecy as a political symbol
Banking secrecy was contested in Swiss domestic politics from the beginning. The parliamentary votes on the war taxes of 1915 and 1920, recorded in section I, show that the question of the tax… Read more Zurich · The Twentieth CenturyThe Federal Banking Commission from 1935 to 2009
The Federal Banking Commission began its work in 1935 with a mandate that its first president described as difficult. Read more Zurich · The Twentieth CenturyThe turning point of 2009: an outlook
This book tells the end of banking secrecy for foreign clients in Part G, and only the outline of the turning point needs to be recorded here. Read more Zurich · The Twentieth CenturyLegacy and a practitioner’s view
For a Zurich practitioner in 2026, Article 47 is a provision of daily practical relevance. It remains the criminal backbone of the duty of confidentiality that every Swiss bank owes its clients. Read more Zurich · The Twentieth CenturyThe Second World War: gold, looted assets and the Bergier Commission — overview and summary
No period of Swiss financial history has been examined as closely as the six years between September 1939 and May 1945. Read more Zurich · The Twentieth CenturyAn economy under encirclement, 1939–1945
Switzerland entered the war as a highly industrialised country without raw materials, dependent on imports for most of its coal, iron, oil and a large part of its food. Read more Zurich · The Twentieth CenturyThe gold of the Reichsbank
The figures on which all later discussion rests were established by the Independent Commission of Experts in a statistical overview published in December 1997 and refined in its interim report on… Read more Zurich · The Twentieth CenturyThe commercial banks, the securities market and German camouflage
The Zurich big banks entered the war weakened by a decade of losses on their German business. In the 1920s the Swiss banks had lent heavily to German industry, municipalities and banks. Read more Zurich · The Twentieth CenturyRefugee policy, flight capital and the assets of the persecuted
A chapter on gold and banks might seem an odd place for a discussion of refugee policy. The connection is nevertheless close. Read more Zurich · The Twentieth CenturyAllied pressure: Safehaven, blacklists and the Currie mission
From 1943 onwards, as the military situation turned in favour of the Allies, the pressure on Switzerland shifted from the Axis to the Allied side. Read more Zurich · The Twentieth CenturyThe Washington Agreement of 1946 and the settlement of 1952
The Currie agreement resolved some of the disputes but left the most important ones open. Read more Zurich · The Twentieth CenturyThe return of the past: the Independent Commission of Experts
The questions that the governments of 1946 and 1952 had considered settled came back in the mid-1990s with a speed and intensity that no one had foreseen. Read more Zurich · The Twentieth CenturyPublic debate and the Swiss self-image
The intensity of the debate of the late 1990s can only be understood against the background of the memory that it challenged. Read more Zurich · The Twentieth CenturyLegacy for the financial centre
The most obvious legacy of the war years and of their reappraisal in the 1990s is reputational. Read more Zurich · The Twentieth CenturyThe post-war boom, the “gnomes of Zurich” and the Euromarkets — overview and summary
The quarter of a century that followed the Second World War made Zurich a household name in finance far beyond Switzerland. Read more Zurich · The Twentieth CenturyBretton Woods and a country outside it
The conference held at Bretton Woods, New Hampshire, in July 1944 set up the International Monetary Fund and the International Bank for Reconstruction and Development, the two institutions that were… Read more Zurich · The Twentieth CenturyThe post-war boom and Zurich as an international asset manager
The growth of the Swiss banking system after 1945 was spectacular even by the standards of the European economic miracle. Read more Zurich · The Twentieth CenturyThe “gnomes of Zurich”
The phrase that attached itself to the Zurich bankers was older than the crisis that made it famous. Read more Zurich · The Twentieth CenturyFrom the London gold pool to the Zurich gold market
Under the Bretton Woods system the United States undertook to convert dollars held by foreign monetary authorities into gold at 35 dollars an ounce. Read more Zurich · The Twentieth CenturyThe Euromarkets, fiduciary deposits and the Swiss franc foreign bond
The Euromarkets, whose growth dominated international finance from the late 1950s onwards, were markets in deposits and loans denominated in a currency other than that of the country in which the… Read more Zurich · The Twentieth CenturyThe 1970s: floating, negative interest and the defence of the franc
The strains that had shown themselves in the gold market in 1968 reached the exchange markets in the following years. Read more Zurich · The Twentieth CenturyThe Zurich stock exchange and the creation of SOFFEX
The Zurich stock exchange, whose nineteenth-century origins are described in Part D, grew with the rest of the financial centre after the war and remained the largest of the Swiss exchanges. Read more Zurich · The Twentieth CenturyLegacy: asset management, gold and the safe-haven franc
The most important legacy of the post-war decades is the position of Zurich as one of the world’s leading centres for the management of private wealth. Read more Zurich · The Twentieth CenturyChiasso (1977) and the birth of Swiss anti-money-laundering law — overview and summary
On 14 April 1977 the Schweizerische Kreditanstalt, one of the three Swiss big banks and headquartered in Zurich, issued a short press communiqué that set off the most consequential banking scandal in… Read more Zurich · The Twentieth CenturyChiasso, April 1977: the bank within the bank
Chiasso was an unlikely place for a banking crisis of national dimensions. The town lies directly on the Italian border, a few kilometres from Como and less than an hour by car from Milan. Read more Zurich · The Twentieth CenturyThe Convention on due diligence of 1977
The Chiasso affair produced the first Swiss rules on customer identification with remarkable speed. Read more Zurich · The Twentieth CenturyThe 1980s: drug money, the Lebanon Connection and the Kopp affair
The Chiasso affair concerned flight capital, meaning money that was legally earned but illegally exported from Italy and hidden from the Italian tax authorities. Read more Zurich · The Twentieth CenturyThe criminal law of 1990 and 1994
The Federal Council adopted its dispatch on the amendment of the Criminal Code on 12 June 1989. Parliament dealt with the bill within a year. Read more Zurich · The Twentieth CenturyThe Anti-Money Laundering Act of 1997
By the mid-1990s the banks were subject to three layers of anti-money-laundering rules: the due diligence agreement, the guidelines of the Federal Banking Commission and the criminal provisions of… Read more Zurich · The Twentieth CenturyPotentate funds and the return of stolen assets
The development of Swiss money laundering law ran in parallel with a second line of practice that concerned the assets of deposed rulers. Its starting point was the fall of Ferdinand Marcos. Read more Zurich · The Twentieth CenturyZurich's institutions in the new regime
The cases described in this chapter show how often the decisive steps were taken in Zurich. Read more Zurich · The Twentieth CenturyLegacy: from self-regulation to statute
The history told in this chapter can be read as a sequence of shocks and responses. The Chiasso affair of 1977 produced the due diligence agreement. Read more Zurich · The Twentieth CenturyDormant accounts, the Volcker Committee and the 1998 settlement — overview and summary
Few episodes have shaped the modern reputation of the Swiss financial centre as deeply as the controversy over dormant accounts that broke out in the middle of the 1990s. Read more Zurich · The Twentieth CenturyDormant assets in the post-war decades
The German term nachrichtenlose Vermögen, literally assets “without news”, describes values held by a bank or another custodian whose owner can no longer be found. Read more Zurich · The Twentieth CenturyThe Federal Decree of 1962 and its limited results
The first statutory attempt to deal with dormant assets of victims of persecution came seventeen years after the end of the war. Read more Zurich · The Twentieth CenturyRenewed pressure from 1995
Several developments combined to reopen the question in the middle of the 1990s. The end of the Cold War opened archives in Eastern Europe and in the United States and allowed survivors and heirs in… Read more Zurich · The Twentieth CenturySwiss reactions
The Swiss government was slow to grasp the scale of the crisis. Its first institutional response came in the autumn of 1996. Read more Zurich · The Twentieth CenturyThe Meili affair
On the evening of 8 January 1997, Christoph Meili, a security guard employed by an outside company at a building of the Union Bank of Switzerland in Zurich, noticed two containers of old files and… Read more Zurich · The Twentieth CenturyThe Independent Committee of Eminent Persons
The memorandum of understanding of 2 May 1996 between the Swiss Bankers Association, the World Jewish Restitution Organization and the World Jewish Congress created a committee of six members and a… Read more Zurich · The Twentieth CenturyThe class actions and the global settlement of 1998
While the Volcker Committee was beginning its work, lawyers in the United States chose a different path. On 3 October 1996 the first class action, Weisshaus v. Read more Zurich · The Twentieth CenturyThe Claims Resolution Tribunal in Zurich
The distribution of the funds of the Deposited Assets Class was entrusted to the Claims Resolution Tribunal, known after the settlement as CRT-II to distinguish it from the arbitral tribunal of 1997. Read more Zurich · The Twentieth CenturyInsurers and the International Commission on Holocaust Era Insurance Claims
The controversy over bank accounts drew attention to a parallel problem in the insurance sector, which Part E of this book examined from the perspective of the Zurich insurers’ history. Read more Zurich · The Twentieth CenturyThe legal aftermath: Swiss rules on dormant assets today
The controversy of the 1990s exposed the absence of any general statutory framework for dormant assets in Swiss law. The first response came from the banks themselves. Read more Zurich · The Twentieth CenturyLegacy
The dormant accounts controversy was the first great reputational crisis of the Swiss financial centre in the age of globalised media and markets. Read more