I blogged a while ago about Switzerland and its origins as a financial centre, dating back to the Knights Templar.Also at Next Bank:
After spending a couple of days in Switzerland, I found a fascinating book that sheds more light on the background to this small, but important, centre of private banking. The book is called Swiss Made: The Untold Story Behind Switzerland's Success by R. James Breiding, and talks about the history of Switzerland’s commerce.
Why has Switzerland - a tiny, land-locked country with few natural advantages - become so successful for so long at so many things? In banking, pharmaceuticals, machinery, even textiles, Swiss companies rank alongside the biggest and most powerful global competitors. How did they get there?
I’m not going to repeat verbatim from the book, as I also discovered quite a lot of history of Switzerland myself whilst there, but thought it might be interesting to amalgamate some of these learnings from history to set the context of Switzerland’s success as a financial centre today.
It’s certainly a fascinating country with the origins of its strength in banking formed from the Knights Templar, who would look after pilgrims’ wealth whilst escorting them to the Holy Land.
After they settled in Switzerland in the 1300s, they became known as good hosts to negotiate trade and finance.
For example, during the Renaissance, the wool traders of Florence found that they could get around the laws of usury, banning interest on payments, by selling their goods in advance at a discount to the bankers of Geneva. The difference in price was effectively a payment of interest.
This is recorded by the Bishop of Geneva, Adhemar Fabri, who permitted the city’s bankers to lend money in exchange for interest in 1387, ‘as long as [it was] held in reasonable restraint’.
The result was the Geneva became a key destination for European trade fairs, with exchange and credit granted as money was transferred between traders.
Swiss neutrality is also a key to its attraction as a financial centre.
Swiss neutrality dates back to the Reformation, and the divide between Catholic and Protestant interests. In Switzerland, as the different cities and cantons split into factions, there were mammoth wars and warrior-style battles.
The Swiss were also known as the most prestigious military in the 15th century, bearing in mind that the country had been the settling place for the fierce legions of Knights Templar who survived the rout by the French King in 1307. In fact, Swiss soldiers were much in demand by all the Kings of Europe, as well as leading to the long-standing tradition of the Swiss Guard at the Vatican.
Then the Reformation started. Switzerland became torn in two thanks to the influence of Huldrych Zwingli, and eventually all of Europe became involved in the religious thirty years war.
What was interesting is that after Zwingli died in battle, his successor, Heinrich Bullinger, sought to achieve strength through the pen, rather than the sword....MORE
Don’t tell mum I work for a bank … she thinks I’m a pianoplayer in a whorehouse!
