Throughout the tense seventeenth century, it was only shared economic interests that kept the Confederation together: a lucrative system of textile processing developed, in which merchants in the cities (generally Protestant) supplied raw materials to peasants in the countryside (generally Catholic), who worked up the finished product and delivered it back to the city merchants for trading on or export. Politics, however, remained in deadlock. No new regions could be admitted to the Confederation, since to do so would upset the delicate balance between Catholic and Protestant cantons. Mistrust on the part of Catholics of a perceived Protestant agenda for domination of the Confederation prevented reorganization or redistribution of jointly administered subject territories, which included Graubünden and Valais.

This wariness filtered over into foreign policy, with the continuing traffic in mercenaries entangling the Confederation in a complex web of armed neutrality. All the cantons had pledged to supply France with manpower; in addition, the Catholic ones had links with Spain and Savoy, the Protestant ones with various German principalities and the Netherlands. (The Battle of Malplaquet in 1709 between France and Holland is the most famous example of Swiss mercenaries taking to the battlefield against each other.) The Confederation stayed out of the Thirty Years’ War (1618–48) – the first significant test of its neutrality – but still imposed new taxes to strengthen its frontier defences and assumed state control of trade in staple foodstuffs. In 1645, a peasants’ rebellion in the east of the country against the new austerities was suppressed with violence and executions. In 1653, after the currency was devalued without warning, wiping out the meagre savings of the rural peasantry overnight, a full-scale Peasants’ Revolt set out to reclaim ancient rights enshrined in agreements from the early days of the Confederation. Without any ado, the urban patricians of Bern and Luzern called in the army to crush the revolt with ruthlessness, and then launched a campaign to reform the Confederate charter in favour of themselves. This was blocked by the rural cantons, who then went to war to safeguard their interests. In a mark of the turbulence of the period, Protestant urban aristocrats and Catholic rural aristocrats first combined to crush the peasantry, then within a few years turned to face each other in bloody conflict. After two separate battles at Villmergen, in 1656 and 1712, Catholics conceded Protestant rights both in confederal matters and in administering the joint dependencies.