Zurich, Basel and Geneva: three financial places at mid-century

Geneva: private bankers and radical banking

At the time of the founding of the federal state, Zurich was not the leading financial place of Switzerland. Geneva and Basel had older and more internationally connected banking communities. Geneva’s private banks included houses whose names still stand for the city’s wealth management tradition: Hentsch & Cie, founded in 1796, Lombard, Odier & Cie, whose origins go back to 1798, and E. Pictet & Cie, dating from 1805.¹ These houses, closely linked with Paris, were active in international finance, in the placement of French and other foreign loans and in the management of private fortunes.

Geneva was also the scene of a political experiment in banking. The radical leader James Fazy sought to create credit institutions independent of the established patrician bankers. In 1847 he created the Caisse hypothécaire to protect agriculture against what were regarded as exploitative lending practices, followed in 1848 by the Banque de Genève, housed at first in a former hotel on the Place Bel-Air. The conservative merchants had countered with their own institution, the Banque du Commerce, which enjoyed note-issuing privileges. The Banque Générale Suisse de Crédit International Mobilier et Foncier, which Fazy launched in 1853 with an ambitious capital of twenty-five million francs, collapsed in 1865. Geneva also acquired a stock exchange, officially established in 1857.² The companion volume on Geneva describes these institutions in detail. From the Zurich perspective, the important point is that Geneva’s mid-century experiment with politically sponsored mobilier banking ended in failure, while the Zurich version of the same model, the Schweizerische Kreditanstalt of 1856, became the foundation of a great bank.

Basel: private bankers and the franc

Basel combined a strong community of private bankers with close commercial links to France and to the Upper Rhine. Its leading private banks included La Roche & Cie, founded in 1787, and A. Sarasin & Cie, founded in 1841.³ The city’s first bank of issue was the Giro- und Depositenbank, founded in 1843 and operating from January 1844, which was followed by the Bank in Basel, established in March 1845 and issuing its first notes on 15 September 1845.⁴ Basel’s role in the currency debate of 1849 and 1850, through Speiser, gave it a decisive influence over the monetary order of the new federal state. The city later responded to the rise of the joint-stock banks with its own foundations, the Basler Handelsbank in the early 1860s and the Basler Bankverein in 1872, the forerunner of the Swiss Bank Corporation.⁵

Zurich: a secondary centre on the eve of its rise

Zurich’s banking sector at mid-century was modest by comparison. Its oldest private banks, such as Escher & Rahn, founded in 1805, did not match the international connections of the Genevan houses. The historian Malik Mazbouri concludes that Zurich remained a secondary banking centre until the foundation of the Schweizerische Kreditanstalt in 1856, modelled on the French Crédit Mobilier, anchored its rise to financial pre-eminence.⁶ Zurich had, however, institutions of a different kind. Leu & Co., founded in 1755 as a state-sponsored investment institution (Chapter C.II), gave the city an early experience of institutional lending and foreign investment. The savings bank movement reached Zurich in 1805. By 1840 Switzerland counted 132 savings banks, most of them in the industrialised cantons.⁷ Around 1850 some eight banks of issue, numerous local banks and roughly 150 savings institutions formed the Swiss banking landscape.⁸

The decisive advantage of Zurich lay in its industrial base. The Verlag system and the silk and cotton industries (Chapter C.I) had created capital, entrepreneurial skill and a network of merchants and manufacturers. The mechanised spinning mill founded by Hans Caspar Escher in 1805 had launched the industrialisation of the canton.⁹ The first Swiss railway line within the country, the Northern Railway from Zurich to Baden, opened in 1847 and signalled the capital needs that railway construction would bring.¹⁰ The joint-stock banks founded in the 1850s and 1860s, above all the Kreditanstalt of 1856 and the Bank in Winterthur of 1862, were created to finance railways and large industry on the Crédit Mobilier model.¹¹ Mazbouri emphasises that this model, backed by German capital, particularly favoured eastern Swiss locations, a pattern that gave Zurich an advantage over Geneva, whose banking community remained reserved towards the new type of bank.¹²

The settlement of 1848 to 1852 played into Zurich’s hands in two ways. The single internal market and the abolition of internal tolls gave the most productive industrial region of the country unrestricted access to a national market, and freedom of establishment allowed it to draw labour and talent from other cantons. The unified currency eliminated the monetary disadvantage of eastern Switzerland, whose gulden orientation had separated it from the French-oriented west. Zurich had lost the debate over the franc, yet the franc gave Zurich a currency in which its industrial and commercial strength could be converted into national financial leadership. The Körner article in the Historical Lexicon notes, perhaps paradoxically, that the economic unification of 1848 dampened the success of some older regional institutions. The beneficiaries were the new national institutions, many of them in Zurich.¹³

Notes

1. Malik Mazbouri, “La banque privée comme métaphore: ‘vieille banque’ et ‘banque nouvelle’ en Suisse (1800–1930)”, Schweizerische Zeitschrift für Geschichte / Revue suisse d’histoire 70/2 (2020), https://www.sgg-ssh.ch/wp-content/uploads/2024/04/007_07_-_mazbouri_miszellen_szg_2_2020.pdf. ↩
2. Jean-François Bergier, Armand Brulhart, Robert Iselin, Marian Stepczynski and Jean-Daniel Vermeil, “La banque et la finance”, Encyclopédie de Genève, https://encycloge.org/la-banque-et-la-financejean-francois-bergier-armand-brulhart-robert-iselinmarian-stepczynski-jean-daniel-vermeil.html. The encyclopaedia dates the Banque du Commerce to 1846, whereas the HLS and Landmann give 1845. ↩
3. Mazbouri, “La banque privée comme métaphore”, SZG 70/2 (2020), https://www.sgg-ssh.ch/wp-content/uploads/2024/04/007_07_-_mazbouri_miszellen_szg_2_2020.pdf. ↩
4. Trafina Privatbank, “Basler Banknoten”, https://www.trafina.ch/aktuell/basler-banknoten. ↩
5. Mazbouri, “La banque privée comme métaphore”, SZG 70/2 (2020), https://www.sgg-ssh.ch/wp-content/uploads/2024/04/007_07_-_mazbouri_miszellen_szg_2_2020.pdf, which dates the Basler Handelsbank to 1863; HLS, Martin Körner, “Banken”, http://www.hls-dhs-dss.ch/textes/d/D14061.php, gives 1862. ↩
6. Mazbouri, “La banque privée comme métaphore”, SZG 70/2 (2020), https://www.sgg-ssh.ch/wp-content/uploads/2024/04/007_07_-_mazbouri_miszellen_szg_2_2020.pdf. ↩
7. HLS, Martin Körner, “Banken”, http://www.hls-dhs-dss.ch/textes/d/D14061.php. Körner dates the first Swiss savings banks to Bern (1787), Geneva (1789) and Basel (1792). ↩
8. Mazbouri, “La banque privée comme métaphore”, SZG 70/2 (2020), https://www.sgg-ssh.ch/wp-content/uploads/2024/04/007_07_-_mazbouri_miszellen_szg_2_2020.pdf. ↩
9. MünzenWoche, “Einleitung ‘Die Zürcher und ihr Geld’ Teil 2”, https://neu.muenzenwoche.de/nationen/einleitung-die-zuercher-und-ihr-geld-teil-2/. ↩
10. Wikipedia (English), “Swiss Northern Railway”, https://en.wikipedia.org/wiki/Swiss_Northern_Railway, which states that the Zurich–Baden line opened on 7 August 1847 and was the first line located entirely on Swiss territory. ↩
11. HLS, Martin Körner, “Banken”, http://www.hls-dhs-dss.ch/textes/d/D14061.php. ↩
12. Mazbouri, “La banque privée comme métaphore”, SZG 70/2 (2020), https://www.sgg-ssh.ch/wp-content/uploads/2024/04/007_07_-_mazbouri_miszellen_szg_2_2020.pdf. ↩
13. HLS, Martin Körner, “Banken”, http://www.hls-dhs-dss.ch/textes/d/D14061.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.