Knowledge networks between academia, industry and finance

The machine builders: Escher Wyss and the Maschinenfabrik Oerlikon

The industrial landscape of Zurich in 1855 was dominated by textiles and by the machine-building firms that had grown out of them. The oldest and best known was Escher Wyss & Cie., founded in 1805 by Hans Caspar Escher and Salomon von Wyss as a cotton-spinning business. The company later turned to textile machinery, water wheels, turbines and power transmission, and from 1835 to the construction of ships, boilers and steam engines. Its paddle steamers sailed on the lakes of Zurich and Lucerne.¹ After 1860 Escher Wyss concentrated increasingly on hydraulic machinery and steam engines, fields in which the theoretical training offered by Zeuner, Reuleaux and Clausius was directly useful.

The Maschinenfabrik Oerlikon shows the connection between the Polytechnikum, industry and railway finance even more clearly. Its founder, Peter Emil Huber-Werdmüller, studied mechanical engineering at the Polytechnikum from its opening in 1855 and obtained his diploma in 1858, before gaining further experience in Paris and England. When the Werkzeug- und Maschinenfabrik Oerlikon was established in 1876, Huber-Werdmüller became chairman of its board. He added an electrical department in 1884. Huber-Werdmüller also sat on the board of the Schweizerische Nordostbahn, Escher's railway company, and co-founded the Swiss Electrotechnical Association in 1889.² In 1891 the Oerlikon works demonstrated the first high-voltage transmission line over a distance of 175 kilometres, from Lauffen am Neckar to the international electrotechnical exhibition in Frankfurt am Main.³

Huber-Werdmüller's son Emil Huber-Stockar, also a mechanical engineer trained at the Polytechnikum, took over the direction of the Oerlikon works and devoted himself to the electrification of main-line railways. In 1904 he tested on the line between Seebach and Wettingen a system of single-phase alternating current at 15,000 volts and 15 hertz, which later became the basis of the Bern–Lötschberg–Simplon railway and of a standard still used, at 16.7 hertz, on several European networks today. ETH conferred an honorary doctorate on him in 1925.⁴ Father and son thus embody two generations of the Polytechnikum's contribution to Swiss infrastructure: the first built machines for the railways that Escher had financed, while the second developed the technology that allowed the Federal Railways to electrify the network after nationalisation.

Electricity and finance: Brown, Boveri and the Elektrobank

The electrical industry of the 1890s created a new type of relationship between engineers and bankers, since power stations, transmission lines and tramways required capital on a scale that the industrial firms could not supply from their own resources. Two engineers who had worked at Oerlikon founded the most important Swiss firm of the new industry. Charles Eugene Lancelot Brown, born in Winterthur in 1863 as the son of a British engineer, joined the Maschinenfabrik Oerlikon in 1884 and headed its electrical department from 1887 to 1891. He was responsible for the transmission of alternating current from Lauffen to Frankfurt. Walter Boveri, born in Bamberg in 1865 and trained at the royal school of mechanical engineering in Nuremberg, came to Oerlikon as a volunteer and rose to head its assembly department for electrical installations.⁵

The two men signed an association agreement on 20 December 1890. Brown, Boveri & Cie. was formally established on 2 October 1891 in Baden, where the local Pfister brothers had promoted the site and secured for the new firm its first contract, the municipal power station. The decisive capital came from a personal connection. Boveri had become engaged in 1890 to the daughter of the Zurich silk industrialist Conrad Baumann, who provided a generous loan for the venture.⁶ The financing of BBC is a textbook case of the transfer of wealth from the old textile economy of Zurich to the new electrical economy. Silk money, accumulated over generations in the putting-out system described in Part C, was lent to two engineers without a banking intermediary. The case is also a reminder that neither founder was a graduate of the Polytechnikum. The electrical industry of the region drew on a broader technical milieu that included the Technikum Winterthur, the German technical schools and practical training in the workshops, in which the Polytechnikum formed the centre of a wider field.

The financing of the power stations themselves required specialised institutions. In 1895 Walter Boveri founded Motor AG, a company for the planning, financing and construction of power plants, which later became Motor-Columbus.⁷ In the same year the Berlin Allgemeine Elektricitäts-Gesellschaft (AEG) established the Bank für elektrische Unternehmungen, known as the Elektrobank, in Zurich. The standard encyclopaedia describes it as a holding company for the financing and operation of electrical enterprises, whose capital was invested in its early years predominantly in Germany and Italy. AEG founded it in association with a banking consortium led by the Schweizerische Kreditanstalt. It had no operations of its own and held participations in electrical companies, financed largely by bonds.⁸

The Elektrobank and Motor AG belong to the family of so-called financing companies (Finanzierungsgesellschaften) that the European electrical industry created in the 1890s to spread the high capital requirements and entrepreneurial risks of electrification. Their choice of Zurich as a seat was no accident. Zurich offered a capital market with experience of railway bonds, a large bank with international connections in the Kreditanstalt, a stable currency, a favourable legal environment for holding companies and, not least, a pool of engineers who could evaluate projects in Italy, Spain or South America. Here the human capital created by the Polytechnikum became directly bankable. Engineers assessed the projects and lawyers drafted the concession and bond documentation, after which the banks placed the securities with investors. The combination of these three professions in one city made Zurich a seat of companies that financed electrical undertakings abroad before the First World War. The Elektrobank, founded in Zurich in 1895, held its assets mainly in Germany (about half) and Italy (about a fifth).⁹ The history of the Zurich stock exchange, on which many of these securities were traded, is told in Chapter D.IV.

The association of former students (1869) and the Patents Act (1887)

The graduates of the Polytechnikum organised themselves early. In 1869 they founded the Gesellschaft ehemaliger Studierender des eidgenössischen Polytechnikums, known as the GEP. Its purpose was twofold: to maintain friendly and social relations among the alumni and to advance their professional interests. One of its first actions was the creation of a placement service that matched graduates with employers. In a petition to the Federal Council of 1877 the GEP complained that technicians were not granted the position that their competence deserved, pressing at the same time for better general education at the secondary schools and at the Polytechnikum itself. The reorganisation of the school in 1881 has been described as a successful initiative of the association.¹⁰

The civil engineer Andreas Harlacher led the founding effort together with Heinrich Paur and August Waldner and became the first president of the association. By 1894 membership had grown from 185 to more than 1,600, roughly half of whom lived abroad. The association also campaigned successfully for patent protection and contributed to the adoption of the federal Patents Act of 1887.¹¹ The patent law is an important element of the story for the financial historian. Switzerland had long been reluctant to protect inventions, which allowed its industry to profit from copying foreign technology.¹² Once Swiss firms began to produce their own innovations, they needed legal protection to make those innovations saleable, licensable and financeable. The alumni of the Polytechnikum, who were both the inventors and the managers of the new industries, were natural advocates of that change.

The alumni network had a further significance that is easy to overlook. Half of its members lived abroad in 1894. Swiss engineers worked on railways, bridges and power stations in many foreign countries, and a number of these projects were financed through Zurich. The personal connections between engineers abroad and bankers at home were among the channels through which Swiss capital found its way into foreign infrastructure. The GEP's directories and meetings maintained those connections in an age before professional networking platforms. The practitioner who today relies on the ETH alumni network to find a technical expert in a foreign market is drawing on a tradition that began in 1869.

The diploma and the value of a credential

The social standing of the Polytechnikum's graduates depended on the value of their qualification, a value that developed slowly. In the nineteenth century the diploma served as an additional distinction alongside the final certificates. An educator described it in 1871 as having only an indirect value, as a recommendation. Fewer than a third of all students, or about forty per cent of those in the upper classes, obtained it. Many left early to continue their studies elsewhere or to enter practice. Only in the twentieth century, when competition in the labour market intensified, did the diploma become the normal conclusion of studies, so that by the 1930s about ninety per cent of graduating students held the title “dipl. ETH”.¹³

The history of the diploma offers an interesting parallel to the history of professional qualifications in finance. For a long time Zurich's bankers were trained in practice, and formal credentials counted for less than reputation and personal recommendation. The spread of the ETH diploma in the early twentieth century and the later spread of professional titles in banking, insurance and asset management follow the same pattern. A labour market that grows in size and anonymity gradually replaces personal recommendation with certified qualification.

Notes

1. Wikipedia, “Escher Wyss & Cie.”, https://en.wikipedia.org/wiki/Escher_Wyss_%26_Cie.. Cited for orientation. The company was taken over by Sulzer in 1969. ↩
2. Wikipedia, “Peter Emil Huber-Werdmüller”, https://en.wikipedia.org/wiki/Peter_Emil_Huber-Werdm%C3%BCller. Cited for orientation. ↩
3. ALTA PETE Oerlikon, “Maschinenfabrik Oerlikon (MFO)”, Industriegeschichte, https://www.alta-pete-oerlikon.ch/industriegeschichte/industrie/maschinenfabrik_oerlikon_mfo. The site also records that MFO was acquired by Brown, Boveri & Cie. in 1967. ↩
4. Wikipedia, “Emil Huber-Stockar”, https://en.wikipedia.org/wiki/Emil_Huber-Stockar. Cited for orientation. ↩
5. Wikipedia, “Charles Eugene Lancelot Brown”, https://en.wikipedia.org/wiki/Charles_Eugene_Lancelot_Brown, and “Walter Boveri”, https://en.wikipedia.org/wiki/Walter_Boveri. Both cited for orientation. ↩
6. Wikipedia (German), “Brown, Boveri & Cie.”, https://de.wikipedia.org/wiki/Brown,_Boveri_%26_Cie.. Cited for orientation. Manufacturing began in February 1892. ↩
7. Wikipedia, “Walter Boveri”, https://en.wikipedia.org/wiki/Walter_Boveri. Cited for orientation. Boveri had founded the Elektrizitätswerk Olten-Aarburg AG in 1894 to build the Ruppoldingen hydroelectric plant. ↩
8. Barbara Bonhage, “Elektrowatt”, Historisches Lexikon der Schweiz (HLS), version of 14 November 2005, https://hls-dhs-dss.ch/de/articles/041791/2005-11-14/ (the company took the name Elektrowatt in 1946). The role of the consortium led by the Kreditanstalt is stated in Wikipedia (German), “Elektrowatt”, https://de.wikipedia.org/wiki/Elektrowatt, cited for orientation. ↩
9. HLS, “Elektrowatt”, version of 14 November 2005, https://hls-dhs-dss.ch/de/articles/041791/2005-11-14/: founded in Zurich in 1895 by the AEG as Elektrobank for the financing, construction and operation of electrical undertakings, with its assets invested mainly in Germany (50 per cent) and Italy (20 per cent). On Motor AG (1895, financing of the plant business of Brown, Boveri & Cie. in Switzerland and northern Italy) and AG Columbus (1913, active mainly in South America), see HLS, Andreas Steigmeier, “Motor-Columbus”, https://hls-dhs-dss.ch/articles/041847. ↩
10. ETHistory 1855–2005, “Berufsständische Pressure-Group: Die Gesellschaft ehemaliger Polytechniker GEP”, https://www.ethistory.ethz.ch/besichtigungen/touren/vitrinen/konjunkturkurven/vitrine21/. The GEP later published the Schweizerische Bauzeitung together with the Swiss Society of Engineers and Architects (SIA). ↩
11. ETH Zurich, “Gold chains and patents”, ETH News, May 2019, https://ethz.ch/en/news-and-events/eth-news/news/2019/05/alumni-anniversary.html. The article marked the 150th anniversary of the association, which today counts more than 30,000 members in about 60 member organisations. ↩
12. Swissvotes, vote no. 32 of 10 July 1887, short description, https://swissvotes.ch/vote/32.00/kurzbeschreibung-de.pdf: the constitutional amendment giving the Confederation competence for the protection of inventions was accepted with 77.9 per cent of the vote after the attempts of 1866 and 1882 had failed. Message of the Federal Council on the revision of Art. 64 of the Federal Constitution of 13 November 1903, https://swissvotes.ch/vote/64.00/botschaft-de.pdf: on this basis the Bundesgesetz betreffend die Erfindungspatente was enacted on 29 June 1888 and entered into force on 15 November 1888. ↩
13. ETHistory 1855–2005, “Das Diplom”, https://ethistory.ethz.ch/besichtigungen/objekte/diplom/. ↩

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.