The importance of direct democracy for securing social peace

The importance of direct democracy for securing social peace

World War I and the post-war period (Part 1)

by Dr rer publ Werner Wüthrich, Switzerland

In these weeks a number of events will take place in Switzerland the topic of which will be direct democracy in Switzerland. Reform proposals on how the requirement rules for popular initiatives might be tightened are brought forward. The media broadly debate the issue as well. In particular, we frequently hear that the people were unable to cope with the challenging issues in the fields of finance and economy and that EU law, international law or the global world in general would be setting limits to the direct democracy of a single state. The following lines should show that the historical importance of referendums and popular initiatives cannot be estimated high enough for the development of Switzerland. Even more: Especially in difficult times, referendums and popular initiatives have always had beneficial effects on Switzerland’s political development.

The starting point for this analysis is the 14 June vote on a popular initiative that proposes to introduce an inheritance tax at the federal level that will raise a 20 per cent tax on inheritances exceeding two million Swiss francs. It is a kind of tax on wealth that would affect only two percent of the taxpayers. In the following, however, it is not so much the content of this initiative that plays a minor role but the fact that the people are voting on a federal tax. On one hand, this is unique in the world and on the other hand this is a tradition that began in World War I, when the people in Switzerland voted in several polls on how to finance the costs of national defense, and later, after the war, on how to repay the debt.
14 June 2015 reminds us of a very special date. Years ago, almost exactly one hundred years ago – on 6 June 1915 – there was the first vote on a federal tax in Switzerland right in the middle of World War I. Let us recall the events of that time and their impact on the political development of today’s federal state.
One or the other readers may object that there have been earlier nation-wide constitutional referenda. That is right – but not on a federal tax because they have never existed before. Prior to 1915, the Federal Government was exclusively financed by tariffs and duties. Income and wealth taxes were left to the communes and the cantons that used to vote on taxes much earlier.

Test for direct democracy in World War I

When World War I began, it soon became apparent that the funds of the Confederation were by far not sufficient to cover the mobilization and the rapidly increasing expenditures for national defense. As a remedy, the Federal Council considered a progressive direct federal tax on income and assets for the duration of the war. The discussion initially focused on the question of whether this new tax should be introduced via martial law – that is, without a referendum – or whether one should follow the ordinary process during which parliament would submit a constitutional article to the people for decision. Out of a deeply rooted democratic attitude, politicians chose the latter, which was not self-evident at the time, especially in the situation of war. The Swiss people manifested their high political maturity by a 93 percent Yes vote for the so-called “war tax”, despite their difficult living conditions – the highest approval that a federal bill has ever reached to date. A year later a vote on the stamp duty followed, which owners of securities had to pay. Once again, the people agreed – if only by 53 percent. Then, the Social Democrats submitted a popular initiative aiming at introducing the direct federal tax on income and wealth in the long run – that is beyond the war. The demands the state had to address had increased, so more taxes were required to tackle future challenges in the long run. 54 percent of the voters rejected the bill on 2.6.1918. These polls undoubtedly reinforced the sense of unity among the people.
After the war, the question of repaying the “war debts” of approximately 1 billion Swiss francs (the present value is about 10 billion) was raised. While other countries dealt with these domestic debt via inflation, the Federal Council suggested the continuation of the extraordinary tax of 1915 – initially adopted only for the duration of the war, until these debts would be paid back. On 4.5.1919 the people agreed to and accepted the plan of the Federal Council with a high percentage of 63 percent Yes votes. (This tax was to be abolished only 12 years later.) This time, however, there was some opposition. The Social Democrats disagreed. The workers had been hit much harder by the hardships, privations and problems of the war than the middle classes and the rich. They also pointed out that some people had even benefited from the war and that it was more than fair that the rich and profiteers of war would have to pay for the war debts. In 1921, the SP (Socialist Party) submitted the popular initiative for “the imposition of a one-time capital levy” for the rich. A citizen with a fortune in today’s value of 10 million Swiss francs would, for example, have to give 20 percent of his fortune, and the richer ones even more. Legal entities, i.e. mainly public companies, would have to pay 10 percent of the business assets. A small minority of just six per thousand of taxable persons would have been affected, and they had reason to fear that the vast majority would decide against their interests. In order to enable a company to pay them, it was suggested that these new taxes could be paid in securities and treasury shares instead of money. The state would thus have become the co-owner of private enterprises. This would have led to the “nationalization of the means of production” and to communism as the Marxists called for and as Lenin practiced in Russia, the opponents of this bill protested. Income tax – so the SP – should be used to pay off the war debts and support social purposes. The referendum Sunday of 12.3.1922 was to go down in the history of direct democracy. Almost all voters – 86.3 percent – went to the polls and massively rejected the popular initiative with 87 percent of the votes. This is definitely going too far, was the message to the initiators. Large parts of the workers had voted ‘no’. These record-high turnout has never been achieved once more to date.

General Strike in 1918

There is another remarkable point in connection with this vote. The “repayment of war debts by the propertied classes” was a central demand during the country’s general strike in November 1918. Just a few facts about this general strike: In Autumn of 1918, some left-wing parties and most trade unions called for a nationwide strike. It was justified by the plight, which many Swiss workers had suffered during the war. Prices had doubled, while wages had not changed much. The food rationing had started only in 1917. The wage replacement during military service was regulated inadequately. The country was generally ill-prepared for the long wartime – with the greatest impact on the working class a situation that had embittered them.
In addition there were other reasons that deepened the political divide. Lenin, Trotsky and other Russian revolutionaries had been staying in Switzerland as asylum seeker for quite some time and had been agitating from there. Especially Lenin commented on domestic issues in Switzerland and radicalized parts of the Left with his revolutionary ideology. So the SP party program of 1920 contained a whole passage about the dictatorship of the proletariat – following the Leninist model. However, this point was discussed controversially even within the party. (cf. “100 Jahre Sozialdemokratische Partei der Schweiz”, Zurich 1988, p. 47)
The general strike planned for November 1918 was announced in newspaper articles and pamphlets with some revolutionary pathos, so that the Federal Council was considering a military operation. Above all, the army leadership was pushing in this direction in order to meet any possibly attempted coup early. The Armed Forces Staff of General Wille even presumed that a coup might succeed and worked out a strategy for a “counter-revolution”. It is obvious that Wille was not the general for the whole Swiss people as Henri Guisan would be during World War II.
When immediately prior to the strike, the Social Democrats all across the country were calling for commemoration of the October Revolution in Russia, which had taken place a year earlier, the Federal Council and the army leadership responded in an exaggerated manner. They mustered large sections of the army – about 95,000 troops – to guard the stations, government buildings, banks, switchboards etc. – facilities that in case of uprisings and revolutions were always the first to be occupied. In some communes vigilantes were founded.
The military presence was so massive that the strikers rightly felt provoked and expressed their protest. At 107 localities in Switzerland 250,000 strikers finally went on strike at the same time.
In the Zurich area, where major riots had been expected, 8,000 men were in service and the cantonal government moved its headquarters temporarily to the barracks. The strike committee called for level-headedness and urged the workers not to allow the huge contingent of the army to provoke them. On the “Fraumünsterplatz” clashes came about and shots were fired. A Swiss soldier lay dead on the square – killed by a pistol shot. It may be assumed that there were snipers who were interested in escalation. The Zurich commandant equipped the soldiers with hand grenades and gave the order to use them if the soldiers were shot at from windows. The strikers usually behaved in a disciplined way. Nevertheless, there was a risk that such situations might result in a bloodbath.
When later the political situation did not significantly become less tense, the Federal Council supported by parliament demanded an ultimatum to end the strike, which the strike committee complied to. Thus the strike ended after only three days.
The main reason this serious situation came out unscathed, was the fact that the demonstrators until only a few days before the event had carried the same uniform as the opposing forces. Both the soldiers and their commanders had done their duty in this difficult situation, in general with a high sense of responsibility. On the other hand, the strike committee had repeatedly called for nonviolence and for moderation and had always observed that a strict ban on alcohol was abided by during the events. Nevertheless, the situation was dangerous, and it is almost a miracle that only one casualty had to be mourned during the strike. In other European cities such as Munich, Berlin, Vienna and Budapest, there was also political unrest in these weeks, which was much more violent and where actually revolutionary attempts were made. In England, France and northern Italy there were big strikes as well.
In the subsequent legal and historical analysis of the events in Switzerland, however, it turned out that here and there a few weapons and some explosives were found. However, there were no plans for a coup, as particularly General Wille had incorrectly assumed. Domestically, these days were undoubtedly the absolutely lowest point in the history of the Confederation. Even with respect to foreign policy the strike had consequences. The Federal Council broke off diplomatic relations with the Soviet Union, because it probably rightly assumed that Lenin had abused Swiss hospitality and had been responsible for the strike. The relations with the Soviet Union were not resumed until after the Second World War. How far Lenin had been responsible for the radicalization of parts of the Left at the end of World War I, is still controversial today.
The country’s general strike was dangerous for another reason, as well. The often fatal Spanish Flu was rampant. Already 300,000 cases had been registered. It must be assumed that the big size of the crowds had led to numerous infections and deaths. The Army statistics showed 200 victims of the Spanish Flu.

Rejection of the class struggle and rapprochement at a difficult time

So what do the events around the general strike have to do with our topic of direct democracy? – Very much. After World War I there were numerous referendums. After the strike had ended some agitators still had their say. So the partly Marxist-indoctrinated strike committee commented on the termination of the general strike as follows:

“[...] We were unable to voice our demands. The workers succumbed to the power of bayonets. But they are not defeated. On the whole, it has gained a weapon of great and terrible meaning for the first time, if need be. This weapon needs to be strengthened and sharpened.”

There was, however, no expansion and intensification of the general strike – because of direct democracy. So almost all points on the list of demands of the general strike were later individually voted on in the months and years to come and the workers experienced that most of their concerns won a majority – a unique process worldwide. The list of these referendums is long and impressive.

  • On 13.10.1918 the people accepted a popular initiative of the Social Democrats with 67 percent calling for the proportional votes for the National Council.
  • On 10.8.1919 the people agreed on the premature dissolution of the National Assembly and new elections under the new procedure by a 71 percent yes-vote. (The Social Democrats nearly doubled their number of seats.)
  • On 21.3.1920 the Federal law establishing the employer-employee order was rejected with a wafer-thin 50.2 per cent No-votes.
  • On 31.10.1920 the people said Yes to shorter working hours on the railways and transport companies (SOEs).
  • On 12.3.1922 they massively refused – as already reported – the popular initiative for the “imposition of a one-time property tax” to pay off the war debt.
  • On 17.2.1924 the people agreed to the legal introduction of the 48-hour week in a referendum with 57 percent yes-votes on.
  • The creation of an old-age and disability insurance was a key point on general strike’s list of demands. In addition, there was a whole series of votes: On 12.6.1925 the people laid the foundation for the introduction of Old-Age and Survivors’ Insurance (OASI) in the Constitution with 65 percent of the votes.

A first attempt to establish the OASI definitely failed in 1931 in a referendum with a clear 60 percent No-votes. The economic crisis and the World War II then delayed this ambitious project, which was resumed immediately after the war. In 1947, the people agreed by 80 percent yes-votes on the OASI in a turnout of 80 percent of the voters – whose outlines still apply today.

  • In the list of demands of the general strike of November 1918 the workers had demanded the “security of food supply in consultation with the agricultural producers”. In three polls – this included a popular initiative – the people decided to a turn away from the liberal agricultural policy before the war. The federal government was given the task of promoting the cultivation of grain, storing supplies, preserving flour mills and monitoring the grain trade. In 1914, 90 percent of the crop had been imported, which became increasingly difficult during the war, therefore there had been incidents of starvation and serious political tensions. That should not happen again. During World War II, Switzerland was significantly better prepared to feed the population adequately.
  • In addition to these economic bills, a popular initiative originating in French-speaking Switzerland was adopted in 1921 with 71 percent yes-votes, which subordinated such international agreements, which were either unlimited or settled for a period of more than 15 years, to the referendum, which meant that also the Swiss foreign policy was democratized in the sense of people‘s rights.

A very large number of the population’s very fundamental concerns – especially of the working class – was decided on direct-democratically in those years. They included two popular initiatives of the Social Democrats on federal taxes. Numerous other polls were to follow over the decades. The workers who had been defeated in the nationwide general strike made the experience that their concerns were taken seriously and that there were better ways to enforce them. This included collective agreements that were increasingly negotiated in the 1920s between the organizations of employers and trade unions. Terms like “revolutionary general strike” or even “strike” lost their importance in the vocabulary of workers. A first sign of a significant change was already manifest in the last months of the year 1920. With a significant majority the Socialist Party refused to join the Third International founded by Lenin – a decision that was also supported by the party‘s basis in a ballot.
The peace agreement between the unions and employers’ associations of watches, machinery and metal industry in 1937 turned out to finally pave the way for a world of work more or less without strike – until today. The counterparties were no longer involved in a class struggle against each other, but faced each other as social partners who shared a common interest in the prosperity of the company. In contrast to the instrument of strike, referendums or collective agreements in Switzerland are not about wresting a concession from the government, the Parliament or an employer; instead they constitute a free decision by the citizens and the contractors and therefore have a very different quality. It is an entirely different political culture that has emerged and which has a balancing and moderating effect.
These considerations can also be continued and deepened for the difficult period of the economic crisis in the 1930s. It may be said that during this time, the great number of referenda and popular initiatives helped to cope with the crisis politically and economically and thus contributed significantly to the sense of unity and the successful development of Switzerland. More on this topic is to follow in the second part.     •

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