Secret of Switzerland

October 2, 1961

ZURICH—Apart from reports of international conferences, Switzerland is less in the news than any other country of comparable importance. No revolutions, popular or palace, no upheavals, no government crises, no new five-year economic plans, no “austerity” programs, no inflation or deflation crises, no “dollar shortage,” no demands for aid. Unlike so many other countries, in short, Switzerland is not constantly being threatened with collapse and as constantly being saved.

In part this must be attributed to the character of the people. The passion for tidiness, order, and good management seems more widespread here than among any other people in the world. It is reflected not only in the cities and parks, but in a countryside so beautifully kept that it seems like one enormous golf course.

But at least as much credit must go to Switzerland’s form of government and the spirit in which it is carried on. It is first of all a federal government, like our own—or like what our government was originally, and largely remained, until the tremendous centralization of power in Washington following two world wars. Most of the governmental power is in the 22 cantons, as ours was originally in the States. And there is no final power even in the federal Parliament. If 30,000 citizens don’t like a law, they can force a referendum on it and the people can veto it. Such referendums may occur two or three times a year. The upper house is modeled on our Senate, with two members from each canton. The lower house is elected on the basis of population.

NO VETO

But the great blessing of Switzerland is that it has no “strong” man, no “indispensable” man, and cannot have under its constitution. The two houses of Parliament together elect a Federal Council, consisting of seven members, and one of these is elected President of the Confederation for a term of one year. He cannot succeed himself (except theoretically after the expiration of another year) and in practice the Presidency is rotated annually among the seven members of the council. The President has few powers, and cannot veto bills. The result is that not many outside of Switzerland even know the incumbent President’s name. (It happens at the moment to be Wahlen.)

So, while people everywhere wonder what would happen in France without de Gaulle, in Spain without Franco, in India without Nehru, and so on, no one worries what would happen in Switzerland without Wahlen. Everything, it is assumed, would continue to be stable, orderly, and predictable with or without him.

And Switzerland has managed very well. In the calendar year 1960 it had a budget surplus of 279 million francs. In 1959 the budget surplus was 163 million. This year another surplus is expected. The national debt has been reduced from 8.5 billion francs in 1945 to 6.2 billion today.

GOLD BASIS

For a number of years now, Switzerland has boasted “the hardest currency in the world.” It is on a real gold basis. Any citizen can turn in his francs for gold. The gold coverage—about 10.5 billion francs—is more than 150 percent of the 6.8 billion francs in circulation. Gold has come to Switzerland as a result of its hard-money policy, and the Swiss today deliberately “sterilize” part of their gold supply to prevent inflation. But little Switzerland is like an island threatened by the great tidal waves of international currency disturbances, and such disturbances anywhere—inflation in the U.S., the drop in the Canadian dollar, even the recent upward valuations of the Dutch and German currency units—worry Swiss economists and bankers.

The Swiss economy is bursting at the seams. Not only is there practically no unemployment, but Switzerland has had to import about 500,000 foreign workers, mainly Italian and Spanish. As the population of Switzerland is only 5.4 million, this foreign influx of workers is substantial.

One of Switzerland’s most important problems at the moment is the future of its foreign trade. It does not like the idea of joining the Common Market, which it regards as a political organization not compatible with Switzerland’s traditional neutrality (It is not a member either of the IMF or even the U.N.) But, if Britain joins, Switzerland’s hand may be forced.