Switzerland Economic Conditions and Finance

Economic conditions. – According to the 1941 census, the agricultural population amounted to 866,720 (22.1% of the total); the production area exceeded 3 million ha. distributed roughly in equal parts between arable land, meadows-pastures and woods. In 1946 there were 211,350 ha. to cereals (of which 93,852 to wheat), and almost 80,000 ha. with potatoes, generally with a very high unit yield. There is also a high production of fruit (over 10 million q.) And wine (over 700,000 hl.). In 1939 the farms amounted to almost 240,000 with a total area of ​​1,350,000 ha. and with a production of over 2,085 million francs. Livestock farming is still developing. The same applies to industries: food, textile and mechanical industries are particularly flourishing.

The production and use of electricity over the decade have made enormous progress. From a total production of 5 billion kW / h in 1930 to a production of 9 and a half billion in 1944-45, of which no less than 2 billion and 600 million used as a subsidy for crafts.

To then give an idea of ​​the place occupied by industry and respectively by the other main branches of activity in the country, it is enough to mention that out of 1,992,487 people who resulted, from the 1941 census, to exercise a profession, 860,528 were employed in industries; 414,936 to agriculture; 198,472 to trade and banks; 84,969 to the hotel industries. The rest carried on various activities.

The overall geographic framework of the economic regions of Switzerland has not changed much, except for an intensification in performance: the northern portion, consisting of a more or less wide band and which creeps in some direction towards the interior of the country, where they are located. the major human agglomerations, has a predominantly industrial economy; the rest of the country is essentially agricultural with a prevalence of meadows and crops in the central area (Nihelland), while in the mountainous part of the Oberland, pastures and mountain economy predominate.

Here are the trade balance data for the period 1941-47:

The deficit continues to be significant, but the same elements that have already been pointed out in XXXIII, p. 87.

Not many changes have occurred in the field of railway communications (excluding tramways and funiculars: 5,192 km. In 1945, of which 2,950 under state management); the development of electrification is noteworthy (over 94% of the railways under state administration). Civilian airlines are also gradually developing, which in 1946 took advantage of more than 150,000 passengers and on which there was a movement of over two million kg. of freight, mail, etc.

Finances. – During the Second World War, the Confederation’s expenses increased significantly due to the financial burden represented by the military and economic defense of the country and exceptional financial measures had to be used to cover them. 325 million francs were withdrawn from the National Bank’s exchange stabilization fund, set up in 1936, and a series of new extraordinary direct and indirect taxes were introduced, which were gradually increased during the course of the war and from which proceeds flowed into the extraordinary balance sheet. (separate from the ordinary one from 1940 to 1946) with which the exceptional expenses for the defense of the country and for the fight against unemployment were financed.

The contribution of the internal capital market – characterized up to the end of 1946, like the monetary market, by a large amount of liquidity – also contributed to covering the exceptional expenses of the Confederation and the recourse to the issuing institution was therefore only sporadic and never inflationary. The federal budget has varied as follows since 1939:

At the end of 1947, the federal public debt (entirely internal) amounted to 8,151 million francs, and the consolidated debt of the cantons to 1,908 million. The National Bank, which continued to align its monetary policy with the 1936 decree establishing the new gold content of the franc, had to face the situation created by the war and in particular neutralize the internal inflationary effects of gold and foreign exchange movements. with foreign countries. From the outbreak of the war until mid-1940, the National Bank was forced to give up considerable quantities of foreign exchange for the payment of imports, but – immediately after the Franco-German armistice – it happened, particularly following the liquidation of the foreign exchange reserves set up by Swiss companies for the settlement of imports that no longer took place and the conversion of dollar holdings into francs, a reverse movement of foreign exchange inflows, which the Bank tried to stop by accepting only foreign currencies of Swiss relevance; these movements ended in June 1941 when the American government blocked Swiss assets in the United States. From 1941 onwards, however, the influx of gold and currencies to the Issuing Bank increased as, while exports increased, the possibilities for importation were reduced. To avoid the continuous creation of means of payment, which would – despite price controls and rationing – lead to inflation, Measures of various kinds were taken, ranging from quotas on certain exports, to the Bank’s refusal to accept non-commercial dollars, to the obligation to pay for imports with export dollars, to the sales of gold on the market, to the sterilization of gold originating from foreign operations carried out by the Confederation with capital borrowed from the market. The serious financial burden of this sterilization policy, which made it possible to avoid an excessive compression of exports and at the same time accentuated inflationary developments, was partly borne by the exporters. At the end of 1946, the gold reserves of the Confederation amounted to 1.

After the war, the restrictions were gradually eased and the National Bank, in addition to taking back some of the gold placed at its expense from the Confederation, also began to accept currencies not originating from commercial operations. The National Bank’s gold sales were suspended in September 1947 due to international speculation and the smuggling they gave rise to. Since the National Bank did not accept all the dollars offered, a free market for dollars from financial transactions arose in early 1947; in July 1948 the financial dollar was quoted at 3,948 francs (official exchange rate, 4,315 francs). On 15 February 1949 the National Bank’s gold and foreign exchange reserves amounted to 6,097.6 million francs; those in gold of the Confederation to 181.9 million.

Since 1947 the money market and the capital market, due to the great development of productive activity and the resumption of imports, presented a lower level of liquidity and in 1948 the issuance of loans began to encounter difficulties; in the second half of the year, however, there was a certain relaxation. The circulation of notes (2.4 milliards in 1938) had risen on 15 February 1949 to 4.2 milliards. At the end of September 1948, sight bank deposits amounted to 3.5 billion francs (1938 = 1.6 milliard), term deposits at 1.2 milliard (1938 = 0.8 milliard).

Switzerland Economic Conditions and Finance