From merchant house to private bank

The path of the Schulthess house

The history of the Schulthess house with which this chapter opened illustrates how merchant houses became banks. The silk business founded in 1750 by Caspar and Hans Conrad Schulthess in the house Zum gewundenen Schwert carried on, alongside the trade in silk, a business in securities and bills of exchange. It was this secondary business, which grew out of the need to finance purchases of raw silk and to collect payment for exports, that eventually became the main one. By 1805 the firm Caspar Schulthess sel. Erben & Schinz was listed as a bank. From 1855, under Heinrich Schulthess, it concentrated exclusively on banking.¹ In 1882 Louis Rahn-Bärlocher joined the firm. After the entry into force of the new federal Code of Obligations and changes among the partners, it took the name Escher & Rahn in 1893. With the entry of Max Bodmer-Schindler as partner in 1917 it became Rahn & Bodmer. Bodmer-Schindler was co-author of the statutes and first president of the Swiss Private Bankers Association, founded in 1934.²

The chain from silk merchant to private banker is typical. The Zurich merchant house of the eighteenth century combined in one enterprise functions that later separated: trading in goods, financing production, dealing in bills and currencies, managing the capital of the family and its friends, and investing in securities at home and abroad. As the textile business became industrial in the nineteenth century, requiring fixed capital in factories and machines, some houses turned into industrial enterprises and others into banks. The Escher, Wyss & Cie cotton spinning mill of 1805, founded by Hans Caspar Escher together with the banker Salomon von Wyss, shows the two paths meeting at the threshold of industrialisation.³

The inheritance of the proto-industrial economy

What did the proto-industrial economy of the seventeenth and eighteenth centuries leave to the financial centre of Zurich? Four elements stand out.

The first is capital. The profits of the putting-out system, the trade monopoly and the silk and cotton exports were accumulated over two centuries by a limited number of families and institutions, invested at home and abroad, and preserved through family funds, guild funds and public institutions. The Directorate’s assets of more than 1.1 million gulden in 1834 and the funds invested abroad through the Zinskommission are institutional expressions of that accumulation. When Zurich needed capital for railways, banks and insurance companies after 1848, it could draw on this stock. The founders of the Kreditanstalt in 1856 and of the great insurance companies (see Part D) came in large part from the families discussed in this chapter.

The second is export orientation. Zurich’s proto-industry lived from distant markets, from raw materials bought in Italy, Spain and the Levant and finished goods sold in France, Germany, Austria, England and beyond. The merchants learned to operate across currencies, jurisdictions and legal systems, to rely on correspondents, and to price risk. The Zurich financial centre of today, whose business is to a large extent cross-border, whose clients and assets are international and whose regulatory framework is shaped by international standards, stands in that tradition.

The third is the credit network. The putting-out system was a web of credit relationships linking the city to the countryside and the city to foreign markets. The habits it created, the assessment of creditworthiness, the documentation of claims, the enforcement of debts and the circulation of bills, were the everyday practice of banking before banks existed. The monetisation of rural households and their familiarity with credit prepared the ground for the savings banks and cantonal banks of the nineteenth century.

The fourth is the institutional model of a merchants’ organisation under public law. The Kaufmännisches Direktorium, with its elected directors, its public functions and its own assets, anticipated the chambers of commerce and the self-regulatory bodies of later times. Its replacement by the cantonal chamber of commerce in 1834 marks the transition from the corporate order of the ancien régime to the liberal order of the nineteenth century, but the idea that business associations should share in the governance of the economy survived the transition.

A comparison with Geneva

A brief comparison with Geneva, the subject of the companion volume, sharpens the picture. In both cities the eighteenth century saw the emergence of merchant bankers who lent abroad and placed the capital of their clients in foreign public debt. In Geneva, however, the banking business developed earlier and further, driven by the city’s close ties with France, the Huguenot refuge and the watchmaking and trading economy of a city-state with little territory. In Zurich it grew more slowly from a textile economy rooted in a large rural hinterland, under the close supervision of a guild state that also invested on its own account through the Zinskommission. Geneva’s eighteenth-century bankers were, by and large, specialists in finance. Those of Zurich were textile merchants who also dealt in money. That difference in origin helps to explain why the Zurich financial centre of the nineteenth century developed in close connection with industry, railways and insurance, while Geneva remained more strongly oriented towards private wealth management and international finance.

Notes

1. Rahn+Bodmer Co., “History” and “275 Jahre Innovation und Tradition” (cited above). ↩
2. Rahn+Bodmer Co., “History” (cited above). ↩
3. HLS, Carl and Zeuske, “Escher, Hans Caspar” (cited above). Escher had begun his training as a silk merchant in 1793; the firm developed from 1829 into the largest machine works in Switzerland. ↩

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 September 2025.