Alarm Against Foreigners

Buoyed by a rising economy, protected by destiny against the ravages of war and stimulated by a never-ending influx of capital from less fortunate lands, Switzerland has long sat rich and contented in the heart of Europe. Switzerland's economic life, in fact, has ticked along for years with the precision and balance of a fine Swiss clock. Last week the alarm rang loudly, waking the Swiss from their reverie.

Fearing that the nation's current economic boom is turning into dangerous inflation, the Swiss government drafted a series of tough measures to prevent that. It froze at the present level the number of jobs that can be held by foreigners in Switzerland and ordered that foreign deposits in Swiss banks may no longer be invested in the Swiss economy (though banks will still accept foreign deposits in customary secrecy). The government also put a one-year moratorium on the construction of "unnecessary" buildings (luxury homes or apartments, theaters) and curtailed funds for "necessary" public housing. Not since the immediate postwar period had any Western government taken such severe domestic measures.

The conservative Swiss are deeply worried about the rising cost of living (up 11% in the past five years), a balance-of-payments deficit and the franc's declining buying power. Their troubles really stem from an overdose of success. To meet increased demand abroad for Swiss goods, Switzerland in the early 1950s began importing increasing numbers of workers, chiefly from Austria, Italy and Spain; foreigners now comprise one-third of the country's 2,000,000 work force. These workers have helped to raise Switzerland's gross national product by an impressive 9% for the past two years, but the wages that they send home are a principal cause of Switzerland's balance-of-payments deficit. Many foreign workers have been attracted to Switzerland (100,000 last year alone) by a gigantic building boom, which has been reinforced by foreign capital. Building has been intensified by the arrival in recent years of more than 500 U.S. companies, which chose to locate their European headquarters in Switzerland to take advantage of low taxes.

Four big U.S. companies--Campbell Soup, Carborundum, General Foods and Grumman--have already left Switzerland because of local restrictions. If the Swiss Parliament adopts the federal government's tough new program next month, as it is expected to, the exodus of U.S. companies is likely to increase. But the Swiss seem to prefer a possible drastic slowdown in their economy to the risk that foreigners might bring on further inflation.

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