What Zurich traded: railways, banks, industry, the state and foreign issuers

Railway securities

Railway shares and bonds were the foundation of the Zurich market. As the largest issues with the widest ownership, they had prices that the whole country watched as a barometer of economic confidence. The Nordostbahn, the Centralbahn, the Vereinigte Schweizerbahnen, the Jura-Simplon-Bahn and the Gotthardbahn together accounted for a large share of the capital raised in Switzerland in the second half of the nineteenth century. The crisis of the 1870s had shown how volatile these securities could be. The recovery that followed produced a new wave of speculation, which the centenary history of the exchange calls “Das Eisenbahnfieber um 1890”, the railway fever of around 1890.¹

The most conspicuous figure of that period was Adolf Guyer-Zeller, a textile industrialist from the Zurich Oberland. He had made large investments during the railway crisis of the 1870s and acquired a controlling shareholding in the Nordostbahn. He then dismissed its management and board in order to direct the reorganisation of the company himself.² A finance group led by him won a voting majority at the general meeting and restructured the company’s debt to improve returns to shareholders.³ The episode was one of the first contests for corporate control fought through the purchase of listed shares in Switzerland. It showed that the exchange had become more than a place for the placement of savings. Through it, control of the largest companies of the country could change hands.

The end of the railway era on the exchange came with nationalisation. After an earlier attempt to buy the Centralbahn failed in a referendum on 6 December 1891, the voters approved the federal law on the purchase of the main railways on 20 February 1898 with 67.9 per cent of the vote. The Confederation acquired the Centralbahn, the Nordostbahn, the Vereinigte Schweizerbahnen and the Jura-Simplon-Bahn, whose lines the new Swiss Federal Railways took over from 1902.⁴ The Nordostbahn transferred its network of 853 kilometres to the SBB on 1 January 1902.⁵ For the exchange, nationalisation meant the disappearance of its most important shares. While the shareholders received compensation, the railway debt became federal debt. The market lost its leading equities but gained a large supply of federal bonds, a change that reshaped the Zurich exchange in the decade before the war.

Bank and finance company shares

The second group of listed securities consisted of the shares of banks and finance companies. The Kreditanstalt was the leading Zurich bank share throughout the period (see Chapter D.II). Other banks followed it to Zurich. The Eidgenössische Bank, founded in Bern in 1863 with the help of two Parisian banks as a commercial, securities and note-issuing bank, moved its head office to Zurich in 1892 after a reorganisation and rose to become a respected major bank.⁶ The Basler Bankverein, which grew out of a consortium of six Basel private bankers formed in 1854, merged in 1895 with the Zürcher Bankverein and took the name Schweizerischer Bankverein. Between 1906 and 1912 it expanded as a universal bank across Switzerland.⁷ In 1912 the Bank in Winterthur and the Toggenburger Bank merged to form the Schweizerische Bankgesellschaft, which moved into its new building in the Münzhof on the Bahnhofstrasse in 1917.⁸

By 1914 Zurich was thus the seat or the main business centre of several of the large Swiss banks, whose shares formed a core of the listed market. The banks were also the principal members of the exchange and the underwriters of the securities traded there. This triple role, as issuers, intermediaries and investors, gave them a dominant position in the Zurich market that the later history of the exchange would confirm. The Historisches Lexikon article on the financial centre, by Sébastien Guex, observes that the large banks, mostly founded between 1850 and 1875, grew slowly at first. Around 1900 they built national branch networks and formed an influential cartel.⁹

A new type of listed company appeared in the 1890s: the finance company (Finanzierungsgesellschaft), which held participations in industrial enterprises, usually in the electricity sector. The Bank für elektrische Unternehmungen, known as Elektrobank, was founded in Zurich in 1895 by the German electrical company AEG and a banking consortium led by the Kreditanstalt. It financed electrical undertakings through participations, mostly via bonds, without conducting operating business itself.¹⁰ Companies of this type made Zurich a centre for financing electrification abroad. Their shares and bonds gave Swiss investors indirect access to electrical undertakings in Germany and Italy, where the Elektrobank held most of its assets, and later also in South America.¹¹

Industrial shares

Industrial companies were slower to come to the exchange. Many Swiss industrial firms were family-owned partnerships or companies with a narrow circle of shareholders and saw no need for a public listing. The machine builders, textile firms and chemical companies of north-eastern Switzerland financed themselves largely from retained earnings and bank credit. Where industrial shares were listed, they were often those of companies in which a bank had a stake or that needed capital for rapid expansion, such as electrical engineering and later the chemical industry. The Springer handbook on Swiss equity markets attributes the late development of the stock market to the high proportion of privately held companies.¹² That structural feature persisted well into the twentieth century and still explains why a number of large Swiss companies remain in family or foundation ownership.

State bonds and the bank cartels

The most important change in the composition of the listed market before 1914 was the rise of public bonds. The Historisches Lexikon article on the capital market states that railway construction and the financing of the new industries of the second industrial revolution, especially electricity, increased private demand for capital considerably. Yet only the growing intervention of the state, and above all the federal purchase of the principal private railways from 1898, created a genuine market for public bonds.¹³ Federal, cantonal and municipal bonds became the largest category of securities listed in Zurich. The Zürcher Kantonalbank, the canton and the city of Zurich were regular issuers alongside the Confederation and the SBB.

The placement of these bonds was organised by the banks through cartels. According to the Historisches Lexikon, the large banks formed the Kartell schweizerischer Banken in 1897, while the cantonal banks formed the Verband Schweizerischer Kantonalbanken in 1907. In 1911 the two organisations combined to form the Emissionssyndikat der Schweizer Banken, which undertook to place all public loans above a certain, relatively low amount.¹⁴ Guex adds that the large banks progressively displaced French financial institutions in the placement of federal bonds. The syndicate structure had direct consequences for the exchange. New issues were placed by the syndicate banks with their clients and then admitted to trading on the exchanges. Their subsequent price determined the terms of the next issue. The Zurich exchange became the place where the success of public borrowing was measured.

Foreign securities and capital export

The last group of securities in Zurich before 1914 consisted of foreign bonds and shares. Switzerland became a significant capital exporter in the decades before the war. Guex writes that by 1913 the country ranked among the largest investors in the world in relation to its population.¹⁵ Much of this capital was invested through foreign issues placed by Swiss banks, through the finance companies and through foreign securities traded in Zurich, Basel and Geneva. Geneva, with its ties to Paris, is generally regarded as the leading Swiss market for French securities in this period, while Basel looked more towards Germany and Alsace.

This international orientation was a source of strength and of vulnerability. It gave Swiss investors a wider choice of investments and gave the Zurich banks business that went beyond the limits of the domestic economy. It also tied the Zurich exchange to the financial cycles of the great European markets. When those markets were in crisis, as in 1873 or in the summer of 1914, the Swiss exchanges could not escape the consequences.

Notes

1. Schmid and Meier, Die Geschichte der Zürcher Börse, table of contents, https://urn.ub.unibe.ch/urn:ch:slsp:zbz:991132393929705501:ihv:pdf. ↩
2. Hans Bauer, “Guyer-Zeller, Adolf”, Neue Deutsche Biographie 7 (1966), p. 360, online at https://www.deutsche-biographie.de/sfz24839.html. Guyer-Zeller (1839–1897) is best remembered as the initiator and founder of the Jungfraubahn. ↩
3. “Schweizerische Nordostbahn”, Wikipedia (German), https://de.wikipedia.org/wiki/Schweizerische_Nordostbahn. ↩
4. sozialgeschichte.ch, “Verkehr – Von der Spanisch-Brötli-Bahn bis zur Gründung der SBB”, https://www.sozialgeschichte.ch/themen/von-der-spanisch-broetli-bahn-bis-zur-gruendung-der-sbb/. ↩
5. HLS, Bärtschi, “Schweizerische Nordostbahn (NOB)”, https://hls-dhs-dss.ch/de/articles/042011/2011-11-30/. ↩
6. HLS, “Eidgenössische Bank”, version of 27.08.2004, https://hls-dhs-dss.ch/de/articles/042023/2004-08-27/. The bank gave up note issue in 1882. Most of its business passed to the Schweizerische Bankgesellschaft in 1945. ↩
7. HLS, Peter Püntener, “Schweizerischer Bankverein (SBV)”, version of 27.11.2012, https://hls-dhs-dss.ch/de/articles/041896/2012-11-27. ↩
8. UBS, “1912–1928”, corporate history, https://www.ubs.com/global/de/our-firm/our-history/ubs-in-the-world/1912-1928.html. ↩
9. HLS, Sébastien Guex, “Finanzplatz”, version of 27.09.2017, https://hls-dhs-dss.ch/textes/d/D45549.php. ↩
10. “Elektrowatt”, Wikipedia (German), https://de.wikipedia.org/wiki/Elektrowatt. Elektrobank was the predecessor of Elektrowatt. ↩
11. HLS, “Elektrowatt”, version of 14 November 2005, https://hls-dhs-dss.ch/de/articles/041791/2005-11-14/: in its early years the Elektrobank invested its assets mainly in Germany (50 per cent) and Italy (20 per cent). HLS, Andreas Steigmeier, “Motor-Columbus”, https://hls-dhs-dss.ch/articles/041847: Motor AG (1895) financed the plant business of Brown, Boveri & Cie. in Switzerland and northern Italy, and AG Columbus (1913) was active mainly in South America. ↩
12. “Swiss Equity Markets”, Springer (2023), https://link.springer.com/chapter/10.1007/978-3-031-23194-0_9. ↩
13. HLS, Altorfer and Mazbouri, “Kapitalmarkt”, https://hls-dhs-dss.ch/de/articles/013913/2010-02-18/. ↩
14. HLS, Altorfer and Mazbouri, “Kapitalmarkt”, https://hls-dhs-dss.ch/de/articles/013913/2010-02-18/. ↩
15. HLS, Guex, “Finanzplatz”, https://hls-dhs-dss.ch/textes/d/D45549.php. ↩

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.