There are thirty-five banks of issue doing business under cantonal law. Of these, eighteen, known as cantonal banks, either are managed or have their notes guaranteed by the respective cantons. Thus, while banking and money-issuing are free, the cantonal banks insure a requisite note circulation, minimizing the rate of interest and reducing its fluctuations. The setting up of cantonal banks, in order to withdraw privileges from licensed banks, was one of the public questions agitated by social reformers and decided in several of the cantons by direct legislation.
Taxes.
The framework of this little volume does not admit so much as an outline of the various methods of taxation practiced in Switzerland. As in all countries, they are complex. But certain significant results of direct legislation are to be pointed out. In all the cantons there is a strong tendency to raise revenue from direct, as opposed to indirect, taxes, and from progressive taxation according to fortune. The following, from an editorial in the "Christian Union," February 12, 1891, so justly and briefly puts the facts that I prefer printing it rather than words of my own, which might lie under suspicion of being tinged with the views of a radical: "With the democratic revolution of 1830 the people demanded that direct taxation should be introduced, and since the greater revolution of 1848 they have been steadily replacing the indirect taxes upon necessities by direct taxes upon wealth. In Zurich, for example—where in the first part of this century there were no direct taxes—in 1832 indirect taxation supplied four-fifths of the local revenue; to-day it supplies but one-seventeenth. The canton raises thirty-two francs per capita by direct taxation where it raises but two by indirect taxation. This change has accompanied the transformation of Switzerland from a nominal to a real democracy. By the use of direct taxation, where every man knows just how much he pays, and by the use of the Referendum, where the sense of justice of the entire public is expressed as to how tax burdens should be distributed, Switzerland has developed a system by which the division of society into the harmfully rich and wretchedly poor has been checked, if not prevented. In the most advanced cantons, as has been brought out by Professor Cohn in the 'Political Science Quarterly,' the taxes, both on incomes and on property, are progressive. In each case a certain minimum is exempted. In the case of incomes, the progression is such that the largest incomes pay a rate five times as heavy as the very moderate ones; while in the case of property, the largest fortunes pay twice as much as the smallest. The tax upon inheritances has been most strongly developed. In the last thirty years it has been increased sixfold. The larger the amount of property, and the more distant the relative to whom it has been bequeathed, the heavier the rate is made. It is sometimes as high as 20 per cent. Speaking upon this point, the New York 'Evening Post' correspondent says: 'Evidently there are few countries that do so much to discourage the accumulation of vast fortunes; and, in fact, Switzerland has few paupers and few millionaires.'"
Until 1848, each canton imposed cantonal tariff duties on imported goods, and, as is yet the case in most continental countries, until a few years ago the larger cities imposed local import duties (octrois). But the octroi is now a thing of the past, and save in one respect the cantons have abolished cantonal tariffs. The mining of salt being under federal control, and the retail price regulated by each canton for itself, supervision of imports of salt into each canton becomes necessary.
The "Statesmen's Year Book" (1891) gives the debts of all the cantons of Switzerland as inconsiderable, while the federal debt, in 1890 but eleven million dollars, is less than half the federal assets in stocks and lands. In summing up at the close of his chapter on "State and Local Finance," Prof. Vincent says: "On the whole, the expenditures of Switzerland are much less than those of neighboring states. This may be ascribed in part to the lighter military burden, in part to the fact that no monarchs and courts must be supported, and further, to the inclinations of the Swiss people for practical rather than ornamental matters." And he might pertinently have added, "and to the fact that the citizens themselves hold the public purse-strings."
Limitations to Swiss Freedom.
Certain stumbling blocks stand in the way of sweeping claims as to the freedom enjoyed in Switzerland. One is asked: What as to the suppression of the Jesuits and the Salvation Army? As to the salt and alcohol monopolies of the State? As to the federal protective tariff? What as to the political war two years ago in Ticino?
Two mutually supporting forms of reply are to be made to these queries. One relates to the immediate circumstances under which each of the departures from freedom cited have taken place; the other to historical conditions affecting the development of the Swiss democracy of to-day.
As to the first of these forms of reply:
In the decade previous to 1848 occurred the religious disturbances that ended in the war of the Sonderbund (secession), when several Catholic cantons endeavored to dissolve the loose federal pact under which Switzerland then existed. On the defeat of the secessionists, the movement for a closer federation—for a Confederation—received an impetus, which resulted in the present union. By an article of the constitution then substituted for the pact, convents were abolished and the order of the Jesuits forbidden on Swiss soil. Both had endangered the State. Mild, indeed, is this proscription when compared with the effects of the religious hatreds fostered for centuries between territories now Swiss cantons. In the judgment of the majority this restriction of the freedom of a part is essential to that enjoyed by the nation as a whole.