The legacy for the financial centre

Infrastructure and the capital market

The first and most durable legacy of the railway era is the connection between infrastructure and the capital market. The Railway Act of 1852 created, within a few years, a volume of securities that dwarfed anything the Swiss market had previously known. Shares and bonds of the Nordostbahn, the Centralbahn, the Vereinigte Schweizerbahnen and the western companies became the staple assets of Swiss investors, from wealthy merchant families to the “thousands of small savers” whom the Swiss National Museum identifies as the target of the Kreditanstalt’s railway business.¹ The banks, brokers and eventually the stock exchange of Zurich grew up around this business (see Chapters D.II and D.IV). When nationalisation replaced the shares with federal railway bonds, the connection persisted in another form. The bond market, which has remained the backbone of the Swiss franc capital market, took its early shape from the financing needs of the railways.

The experience of the 1870s also taught the market to distinguish between types of infrastructure risk. Bondholders of the Nordostbahn were protected by their seniority and by the moratorium. Shareholders were not. The guarantor towns of the Nationalbahn, which had combined the role of owner and guarantor, fared worst of all. These lessons, learned at great cost, fit well with the preference for senior debt and public-sector credit that has long characterised Swiss investors. They also anticipated the modern analysis of project finance, in which the allocation of construction risk, traffic risk and refinancing risk among sponsors, lenders and public authorities determines whether a project survives its first crisis.

Governance lessons

The second legacy concerns governance. The Nordostbahn under Escher combined in one person the chief executive, the chairman of the principal lender and the leading legislator of the canton that granted concessions and supported the company politically. Modern corporate governance and financial regulation are, to a considerable extent, a catalogue of rules against precisely this kind of concentration: requirements of independence for board members, rules on related-party transactions, limits on the combination of chairman and chief executive, disclosure of interests by members of parliament and cooling-off periods for officials moving into regulated firms. None of these rules existed in Escher’s time. The democratic movement answered with political instruments, direct democracy and a public bank, which worked on their own terms.

The federal legislation of the 1880s and 1890s shows a second, more technical line of response. The accounting acts of 1883 and 1896 imposed standardised financial reporting on companies of public importance and made the valuation of their assets reviewable by the courts. The voting-rights act of 1895 addressed the risk of a hostile takeover of strategic infrastructure through anonymous share purchases.² These acts were among the first pieces of Swiss federal legislation to regulate the internal affairs of joint-stock companies in the public interest. They anticipated the logic of later securities and banking regulation, which likewise relies on standardised disclosure, the registration of owners and the right of the authorities to see behind the corporate veil.

Foreign capital and national control

The third legacy is ambivalence towards foreign capital. Without investors from Paris, Stuttgart and Leipzig the Swiss railways could not have been built, since their participation brought both capital and expertise. Yet each episode of foreign influence provoked a defensive reaction: the voting limits of the Centralbahn, the foundation of the Kreditanstalt to secure Swiss independence, the anxiety over foreign majorities in Nordostbahn shares after the crisis. The Gotthard railway, financed with German and Italian state subsidies, is the most striking case. According to one account, 95 per cent of its shares were held by foreign investors after the line’s completion, a fact that fed arguments for nationalisation on grounds of national security. The HLS lists concerns about dependence on foreign capital, together with bankruptcies and labour disputes, among the reasons for the growing demand for state ownership in the 1890s.³

The pattern has shaped Swiss attitudes ever since. Switzerland has combined an open capital market with recurring measures to preserve domestic control over assets considered strategic, ranging from registered-share structures and transfer restrictions in company articles to rules on the acquisition of real estate by persons abroad. The contemporary debate on the screening of foreign investments in critical infrastructure continues a discussion that began with the shares of the Centralbahn on the Paris bourse in the 1850s.⁴

The entanglement of politics and finance

The fourth legacy is a lasting public sensitivity to the entanglement of politics and finance. The “Escher system” became a byword in Swiss political language for the capture of the state by economic interests. The reaction against it produced the institutions of direct democracy that distinguish Swiss politics today. The Zürcher Kantonalbank, founded in 1870, embodied the democratic alternative to Escher’s bank. The Kreditanstalt itself remained, for more than a century and a half, one of the pillars of the Swiss financial centre until its collapse in March 2023, when UBS acquired it for 3 billion francs with guarantees from the Confederation.⁵ The irony is hard to miss: the bank created to keep Swiss railway finance independent of foreign influence ended in a rescue arranged by the federal authorities.⁶

The comparison with Geneva, the subject of the companion volume, is instructive at this point. Geneva’s financial centre grew primarily from private banking, from the management of the fortunes of families at home and abroad and from lending to foreign sovereigns. Zurich’s grew, in the decisive decades after 1852, from the financing of domestic infrastructure by joint-stock banks closely linked to politics. The two traditions still leave their mark: the discreet, partnership-based private bank on the one side and the large, publicly listed universal bank on the other. The Escher era explains why the second model took root in Zurich.

Escher’s image today

Escher’s reputation has passed through several phases. At his death he was a diminished figure, defeated in his canton, forced out of the Gotthard company and associated with the losses of Nordostbahn shareholders. The monument of 1889 at the main station marked a first rehabilitation, only seven years after his death. In the twentieth century historians such as Ernst Gagliardi, whose biography appeared in 1919 and 1920, restored him to the pantheon of the Federal State. The official Swiss portal abroad now presents him as a visionary of modern Switzerland whose reputation historical research has rehabilitated.⁷

The most important modern contribution came from Joseph Jung, chief historian of Credit Suisse, whose biography Alfred Escher 1819–1882. Aufstieg, Macht, Tragik, published by NZZ Libro, reached a sixth edition in 2017 and became a Swiss bestseller.⁸ The Alfred Escher Foundation, established in 2006 with support from Credit Suisse, Swiss Life, cantonal authorities and other donors, published Escher’s correspondence in a six-volume printed edition between 2008 and 2015 and in a digital edition. Its board decided in September 2021 to wind up the foundation, considering its purpose fulfilled, while the digital letter edition remains accessible.⁹

In the same years, the research on the Cuban plantation added a critical dimension. A study by historians of the University of Zurich, published in September 2020, documented the extent to which the city and its inhabitants had been involved in slavery and the slave trade, including the Escher family’s plantation. The city president, Corine Mauch, declined to reduce the question to the figure of Escher and announced a broader review of the city’s monuments.¹⁰ The revised HLS article of 2024 now integrates the plantation into Escher’s biography, a sign that the older heroic narrative and the newer critical research have been brought together in the standard reference work.¹¹ The statue still stands at the station. Its meaning has become more complicated, which is perhaps the most accurate tribute that a modern financial centre can pay to its founding figure.

Notes

1. Meyer, “Alfred Escher und die Züge für Zürich” (cited above). ↩
2. “Der steinige Weg zur Staatsbahn” (cited above). ↩
3. sozialgeschichte.ch, “Verkehr – Von der Spanisch-Brötli-Bahn bis zur Gründung der SBB” (cited above), section on foreign capital and the Gotthard tunnel. The Gotthard financing is treated in detail in Chapter D.VI; HLS, “Eisenbahnen” (cited above), section “Alpenbahnen und Rückkauf/Verstaatlichung”. ↩
4. SECO, “Investitionsprüfung”, https://www.seco.admin.ch/de/investitionspruefung: Parliament adopted the Federal Act on the Screening of Foreign Investments (Investitionsprüfgesetz, IPG; business 23.086) on 19 December 2025, and entry into force is planned for 2027. The Federal Council opened the consultation on the implementing ordinance on 12 June 2026, running until 5 October 2026 (admin.ch press release of 12 June 2026, https://www.admin.ch/de/newnsb/Di8EBcLj9hGfoojQjcLis). The act is treated in Part F. ↩
5. Finanzmuseum, “Bye bye Credit Suisse” (cited above), which gives the purchase price of 3 billion francs and federal guarantees of 9 billion francs. The events of 2023 are treated in Part F. ↩
6. Froelicher, “The turbulent history of Credit Suisse” (cited above), which describes the end of the “steam engine of credit” after some 167 years. ↩
7. HLS, “Escher, Alfred” (cited above), bibliography, which lists Ernst Gagliardi, Alfred Escher. Vier Jahrzehnte neuerer Schweizer Geschichte (1919–1920); Presence Switzerland, “Alfred Escher, ein Visionär der modernen Schweiz” (cited above). ↩
8. Wikipedia (en), “Joseph Jung”, https://en.wikipedia.org/wiki/Joseph_Jung. The article states that Jung served as managing director and head of research of the Alfred Escher Foundation from 2006 to 2016. ↩
9. Alfred Escher-Stiftung, home page (English version) (cited above); for the printed edition of 2008–2015 and the digital edition of 2022 see the bibliography of HLS, “Escher, Alfred” (cited above). The commercial-register data reproduced on the foundation database Fundraiso, https://www.fundraiso.com/en/organisations/alfred-escher-stiftung, record the foundation as dissolved as of 15 June 2023, presumably the date of its deletion from the register. ↩
10. SRF, “Reaktion auf Sklaverei-Studie – Zürich: Wackelt jetzt die Statue von Alfred Escher?”, 29 September 2020, https://www.srf.ch/news/schweiz/reaktion-auf-sklaverei-studie-zuerich-wackelt-jetzt-die-statue-von-alfred-escher. The study is by Marcel Brengard, Frank Schubert and Lukas Zürcher, “Die Beteiligung der Stadt Zürich sowie der Zürcherinnen und Zürcher an Sklaverei und Sklavenhandel vom 17. bis ins 19. Jahrhundert”, September 2020, https://www.hist.uzh.ch/dam/jcr:7fd2e80c-fd5c-4954-b702-65f3ea94a419/BrengardSchubertZ%C3%BCrcher_Bericht_Sklaverei_Sep2020.pdf (title as listed; the full text was not opened). ↩
11. HLS, “Escher, Alfred” (cited above), version of 26 August 2024, section on the family fortune and the controversy. ↩

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.