Part 1

The process of economic development is generally very complex. Firstly, it would be useful, perhaps to use the classification by Joe Studwell where he separates economic development (upgradation of individuals through improvements in education, healthcare, access to safe drinking water and other basic necessities) and economic efficiency (output of goods and services per capita, advancement of technique in Industry, sophistication of technology in production, development of markets etc). On both these counts, Switzerland does come out very well.

So, what are the causes for it?

[1].Development of Agriculture

For any successful country, the key to kickstarting the Industrial Revolution and becoming rich lies in the development of agriculture. The reason for this is, increase in productivity in farms allows for increase in income for farmers which allows them to save some of it and deposit in a bank or any financial institution which can be then loaned to Entrepreneurs in Industry. It was especially necessary in today's developed countries which Industrialized in the 19th century, since unlike developing countries in the 20th century they couldn't rely on foreign loans or investment. All developed countries today have a very successful agricultural sector with the probable exception of Singapore and Hong Kong SAR. The economic boom in East Asian Tigers like South Korea, Japan and China started with reform in agriculture.

The Government of Helevistic Republic abolished the requirement of paying of taxes to large landlords thereby freeing farmers and leading to creation of dynamic small and medium sized farms which later went to dominate the agricultural sector. This provided great incentive for farmers to increase production and consequently improve their standard of living which was very poor initially. Farmers were still required to pay their debt though the period of time for doing so was long enough to reduce pressure. The constraint of space allowed farmers to form co-operatives and required a healthy mixture of competition (because of rise in imports) and coopearation (diffusion of technologies throughout the sector) between enterprises. The co-operatives and private enterprises were quick in importing the latest machinery from abroad to increase output. There were few restrictions on doing so by the government. The free importation of food from foreign countries made quick development by local agricultural districts all the more important.

This did not mean that farmers and workers had it easy. There was a major famine in the year 1815-16 because of end of blockade leading to sharp increase in unemployment and poverty. It required a large amount of money in bailout by Russia, Italy, France and Germany which was invested in the project of draining the floodplain of the Linth River. Nonetheless because of this and the above mentioned factors, there was a creation of local surplus of labour which was willing to be employed for very low wages. Now, the action shifted to Industry.

[2].Development of Industry

The general scheme for development of a particular branch in an Industry is importation of advanced machinery and technical know how from an advanced country, learning how to produce it domestically and then using exports to subject the producers to foreign competition after establishing itself in the home market.The Swiss industry had the further advantage of low wages because of low price of imported foreign goods. Lack of natural resources were of no real disadvantage to Switzerland any more it was to China in 2000's. They were imported from abroad and the Swiss factories produced goods that were very quality and competitively priced which allowed them to pay for imports. Just like China, Switzerland quickly advanced in manufacturing goods and started exporting it.Swiss industries had to export earlier than most because of small size of domestic market.More and more of goods and services has turned into a luxury, aiming at products of highest quality

Initially, there was the rapid growth in textile industry. While the textile Industry was competitive, the appearance of cotton and the development of cotton spinning and weaving/ and for printing fabrics soon displaced it. Swiss cotton manufacturing went on to lay the basis for the development of machine making and chemical Industry along with presence of localized industry like watchmaking in Geneva and silk in Zurich thanks to a large population of skilled craftsmen. Switzerland's many rivers were an inexpensive source of energy. This allowed the Swiss to stand on it's own against tough competition from English and later German manufacturing and the blockade by Napoleon till 1815 gave the manufacturers enough time to make the Industry "competition proof". The Swiss built competitiveness in niche Industries rather than engaging in mass production in direct competition with other countries. Even today, it is a leading supplier in industrial machines and installations, such as weaving machines, paper and printing machinery, blanking tools for metalworking, elevators and escalators, packaging equipment and rack-and-pinion railways.

[3].Peaceful relations between workers and employers.

The condition of labour (in terms of wages) were generally better off than most parts of the world because of rapid Industrialization. However, it was still extremely low and the conditions in modern factories were very poor and workers were forced to work for a very long periods. The Swiss government passed a law in 1864 that targeted adult males and fixed the length of working day between 11-15 hours. In addition, six weeks were allowed for maternity leave, child labour was limited and factory inspections were established.

This was further complimented in 1877 which abolished the labour of children who were under 14. The law prevented children and women from working at night. The work week was reduced to 65 hours. In 1901, the International Labour Office was established since peaceful relations between employers and employees was necessary for progress.The most significant was the agreement reached in 1937 which created the Tripartite structure i.e consensus based Industrial policy.This was to be done through a dialogue between Labour (through a National Association of Employees), Capital (through a National Association of Employers) and the State.

[4]. Weak Protection of Intellectual Property till it became fully developed country

"Agitation for the introduction of patent protection in Switzerland is passe", wrote eleven leading industrialists, among them Messrs Benziger, Buhler, Geigy, Jenny, Rieter, Steiger, Schwarzenbach and Ziegler which was written as a manifesto to the State in 1883. Switzerland basically abolished IP rights in the mid 19th century. Swiss firms therefore were free to copy any advancements made by their domestic and foreign rivals when they operated in Switzerland. Some enterprises even manged to go to other countries to register their IP rights there. Swiss industries took great advantage of this situation, earning the reputation of "La Suisse, le pays des contrefacteurs" in France and as "pirate state" and "predatory state" in the German Reichstag. The Swiss chemical Industry made use of this situation by pirating, stealing and copying the inventions of German companies in Switzerland, reproducing it and then selling it in Germany at a lower price.

The Government did pass Patent laws after it was passed by a referendum in 1887 but it was still weak and IP laws weren't established seriously till 1906 under German pressure.It wasn't upto international standards until 1978. In that sense, patents are fully opposite to tariffs. It makes sense in case of tariffs(though not always) to have it at a relatively high level till an industry is nurtured and keep on slowly exposing it to free competition while for IP, it is better to have a weak system that allows technology to be adopted as quickly as possible and then strengthen it.

It's hard to work out why any one country got rich. It's not like we can put countries in a lab, recreate their starting context, and try different policies to see which ones were key for their time.

That said, "rich country without many natural resources" is an identifiable thing in economics, other famous examples are Singapore and Hong Kong. Conversely there's a number of resource-rich poor, undemocratic, countries (eg until recently, Brazil and Nigeria). This has led to the idea of The Resource Curse: that lots of natural resources can actually harm economic development. There are a number of ways this curse could operate, one speculated one is that in a resource-rich country the political leaders get their wealth from the natural resources, and thus don't have a monetary incentive to care about their subjects' prosperity, while in a resource-poor country the government's income depends on taxes based on its citizens' income, so governments need to care about their citizens' prosperity. And thus, bring them into government in various ways. To reverse the American Revolutionaries' slogan: "No representation without taxation!" Although here I will also note that there are also many examples of rich democratic countries with loads of natural resources, eg Australia, Chile, Norway, and statistical tests of the resource curse hypothesis produce varying results, so at best the resource curse isn't the whole story. I think the current consensus can be summed up as "natural resources aren't that bad if you already had good institutions".

Whew, that was a lot of economic theory, to set some context. How does this apply to Switzerland? Well Switzerland is not only resource-poor but highly democratic. And, with the exception of female suffrage, it was very democratic in the 19th and early 20th centuries. And not only democratic, but decentralized. Swiss cantons have a lot of powers relative to the federal system and since citizens can move between cantons, they have political incentives to compete to provide good infrastructure (not just physical stuff like trains, but also more immaterial things like education and justice) efficiently. Anyone who has been to Switzerland knows how good the infrastructure is and how clean the place is. So one argument is that Switzerland is rich at least in part because it was very democratic and politically competitive (see Weder in the sources). The good institutions argument also could help explain Switzerland's banking success - you could store your wealth there with little fear of its being stolen by the government of the day.

Switzerland had other aids, eg lots of rich customers in nearby France, Benelux and Germany.

So to summarize, Switzerland got rich because it was resource poor and already had democratic, decentralized, institutions.

Sources: Decan & Rhode, Rent seeking and the resource curse, chapter 14 of Companion to the Political Economy of Rent Seeking, Editors R. D. Congleton, A. L. Hillman, 2015, has a reasonably recent summary of resource curse research.

Research Paper No. 2009/25, Switzerland’s Rise to a Wealthy Nation: Competition and Contestability as Key Success Factors, Beatrice Weder and Rolf Weder, April 2009.

Studer, Roman. "" When Did the Swiss Get so Rich?" Comparing Living Standards in Switzerland and Europe, 1800-1913." The Journal of European Economic History 37.2/3 (2008): 405.

Some great answers regarding the first part of your question. Regarding the second part, there is the extensive Bergier Report resulting from an investigation the Swiss government launched in the late 1990s.

Your question seems to commingle two different Swiss activities here:

• The Swiss National Bank acquired a lot of gold from the German government during WWII, and that gold was often outright looted from the central banks of occupied countries. This matter was settled sometime in the 1950s.
• Swiss banks were dragging their feet in dealing with dormant accounts (i.e. accounts with no activity, and their account holder presumably dead), and putting up outrageous hurdles for family members to claim the balances (e.g. asking for death certificates of account holders murdered in Auschwitz).
• For decades, the US turned a blind eye to Swiss banking practices, presumably due to Cold War realpolitik considerations, and while domestic opposition to those practices existed, it was always a minority position. In the 1990s, the US govt finally decided to apply pressure on Swiss banks to come clean regarding their dormant accounts, and the banks & Swiss govt folded rather quickly.
• The result of the investigation was that there was less money held in accounts in the name of Holocaust victims than had generally been expected. It was suggested that often the funds had been invested through private intermediaries, and that those intermediaries then had absconded with the money once the real owner was dead.