The Schweizerische Nordostbahn

From the Zürich-Bodensee-Bahn to the merger of 1853

Escher did not wait for the Railway Act to be in force before organising a Zurich company. The Zürich-Bodensee-Bahn was constituted on 28 February 1853 to build a line from Zurich through Winterthur to Romanshorn on Lake Constance, where steamers connected with the ports of Baden, Württemberg and Bavaria. Its promoters placed shares in Zurich, Winterthur and Frauenfeld with the aim of raising two thirds of the required capital from shareholders, while the remaining third was to come from loans raised on the market.¹ The two-to-one ratio of equity to debt is worth noting. Reflecting the caution of a first issue in an untested market, it contrasts sharply with the heavily indebted structure that the Nordostbahn developed twenty years later.

Within a few months Escher had engineered a merger with the struggling Nordbahn. At his proposal an extraordinary general meeting of the Zürich-Bodensee-Bahn, called for 17 June 1853, approved the fusion of the two companies into the Schweizerische Nordostbahn, which came into existence on 1 July 1853.² The logic of the merger was simple. The Nordbahn contributed an operating line, rolling stock and the concession towards Basel, while the Zürich-Bodensee-Bahn contributed fresh capital, a concession towards the east and Escher’s political backing. Together they formed a company that could aspire to control the traffic between the Rhine at Basel and Lake Constance, and thus a section of the transit route between France, southern Germany and Austria. The Rheinfallbahn, which linked Winterthur with Schaffhausen, joined the group a few years later.³

Escher himself presided over the directorate of the Nordostbahn from 1853 to 1872 and then over its board of directors until his death in 1882. The distinction between the two bodies matters. The directorate was the executive organ that managed construction, operations and finance, while the board represented the shareholders and supervised management. For almost twenty years, therefore, Escher was the chief executive of the largest railway company in German-speaking Switzerland while also sitting in the cantonal government until 1855, presiding over the cantonal parliament and leading the Zurich delegation in the National Council. The HLS names him without qualification as the principal economic and political initiator of the company.⁴

Building the network

Construction proceeded quickly once the company had its capital. The line from Romanshorn to Winterthur opened on 16 May 1855, the section from Winterthur to Oerlikon on 27 December of the same year and the final stretch into Zurich on 26 June 1856. Towards the west, the Nordostbahn extended the old Nordbahn from Baden to Brugg in 1856 and on to Aarau by 1858, where it met the Centralbahn and thereby completed the long-delayed connection between Zurich and Basel.⁵ On 18 August 1859 the branch from Turgi to Waldshut crossed the Rhine and linked the Swiss network with the Baden state railway. The line from Zurich to Zug and Lucerne followed on 1 June 1864, the railway along the left bank of Lake Zurich in 1875.

The physical centre of this network was the Zurich station. The monumental hall designed by Jakob Friedrich Wanner and opened in 1871 was the Nordostbahn’s statement of confidence. It gave Zurich a station of European rank at a time when the city was still smaller than Geneva or Basel. The station building still stands and houses the main concourse of Zurich Hauptbahnhof. More consequential than the architecture was the network effect. By concentrating the lines of north-eastern Switzerland on Zurich, the Nordostbahn made the city the principal railway hub of the country and, in the words of the Swiss National Museum, turned it within a few decades into Switzerland’s largest city, overtaking Basel and Geneva, which had been larger at the beginning of the century.⁶ The later concentration of banks, insurers and exchanges in Zurich presupposed this hub. Capital follows traffic, which in the second half of the nineteenth century followed the rails.

Capital structure and returns

The Nordostbahn financed itself, like all Swiss private railways of the period, through a combination of shares and bonds. Its shares carried the risk and the control, while its bonds, which bore fixed interest and ranked ahead of the shareholders, supplied an increasing share of the capital as the network grew. In the good years the formula worked. In 1875 the company distributed dividends of 2.9 million francs, corresponding to 7.5 per cent on its share capital.⁷ Its share price stood at about 670 francs in 1871, well above the nominal value of 500 francs customary for Swiss railway shares of the time, which made Nordostbahn shares one of the favoured investments of Zurich’s propertied classes.⁸

The weight of debt grew rapidly during the expansion of the early 1870s. The company’s bonded debt stood at 36.5 million francs in 1870 and had risen to 142 million francs by 1880, almost a fourfold increase within a decade. The cause was a construction programme of unprecedented scale. According to Röll, the new lines that the Nordostbahn undertook to build in this period amounted to 346 kilometres, compared with an original network of 214 kilometres, so that the company set out to more than double its size within a few years.⁹ Many of these lines were secondary routes of doubtful profitability, taken on in order to block competitors or to satisfy communities whose political support the company needed. The financing of this programme by bonds meant that fixed interest charges rose faster than traffic revenue. Once the economic climate turned in the mid-1870s, the leverage that had magnified shareholders’ returns in the boom began to magnify their losses.

Notes

1. Wikipedia (de), “Zürich-Bodenseebahn”, https://de.wikipedia.org/wiki/Z%C3%BCrich-Bodenseebahn. The article names Escher as one of the driving minds of the company. ↩
2. Wikipedia (de), “Zürich-Bodenseebahn” (cited above), which describes the fusion as the first railway merger in Switzerland; see also Wikipedia (de), “Schweizerische Nordostbahn”, https://de.wikipedia.org/wiki/Schweizerische_Nordostbahn. ↩
3. Röll, Enzyklopädie des Eisenbahnwesens, “Schweizerische Nordostbahn”, http://www.zeno.org/Roell-1912/A/Schweizerische+Nordostbahn. Röll dates the integration of the Rheinfallbahn to 1856; the HLS describes the Nordostbahn as the product of a merger of the Nordbahn with the Bodensee- and Rheinfallbahn. ↩
4. HLS, “Escher, Alfred” (cited above), section on economic activity; HLS, Hans-Peter Bärtschi, “Schweizerische Nordostbahn (NOB)”, version of 30 November 2011, https://hls-dhs-dss.ch/de/articles/042011/2011-11-30/. ↩
5. Wikipedia (de), “Schweizerische Nordostbahn” (cited above), timeline of openings; HLS, “Schweizerische Nordostbahn (NOB)” (cited above). The HLS gives the dates 1856–1858 for the Baden–Brugg–Aarau line and mentions the Rhine viaducts of 1856, 1859 and 1894 among the company’s engineering achievements. ↩
6. HLS, “Schweizerische Nordostbahn (NOB)” (cited above), which names the main station of 1871 among the company’s achievements; the architect is named in Wikipedia (de), “Schweizerische Nordostbahn” (cited above); Meyer, “Alfred Escher und die Züge für Zürich” (cited above). ↩
7. Bahndaten, “Schweizerische Nordostbahn”, https://www.bahndaten.ch/content/bahnen-detail/121/schweizerische-nordostbahn. The database draws on the federal railway statistics; the figures quoted imply a share capital of the order of 39 million francs in 1875. ↩
8. HLS, “Schweizerische Nordostbahn (NOB)” (cited above), for the price of 670 francs. The nominal value of 500 francs is attested for the shares of the Centralbahn in Huber, “Basel und die Eisenbahn” (cited above). ↩
9. Bahndaten, “Schweizerische Nordostbahn” (cited above); Röll, “Schweizerische Nordostbahn” (cited above), section on the extension period. ↩

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.