For roads, the maximum permissible grade is lower. The steepest road in the world is about 37% grade; the exit on a highway signed "Truckers: DO NOT USE" was 13% grade. In general, anything above about 5% grade requires excessive grade warning signs.
Railroads have even stricter grade tolerances. The original B&O used "inclined planes" (effectively stationary locomotives providing extra pulling power) to navigate the tortuous 5% grade in Mt. Airy. This was quickly replaced with a 1.5% grade loop and eventually a tunnel (.8% grade). In general, freight railroads like the max grade to be around .5-1%, although mountainous terrain is usually not so forgiving (most of the major passes in the Rocky Mountains run about ~2-2.5% grade). The steeper grades require either extra locomotives to be put on the trains or the weight of the trains to be drastically reduced.
The maximum commercially viable (due to weight restriction) grade for freight railroads is 2.2% ...
When you're pulling something along a road or a railtrack on level ground, the primary force you need to overcome is rolling friction, which is proportional to µ×N, where µ is in the range of 0.001 (rail) to 0.01 (road) and N is the normal force against the surface. For a 10 kN car (that's about 1000 kilos), this means that you need a force of about 10 N for a railcar. When you go up an incline, the rolling friction decreases according to the cosine of the angle, but now you need to overcome gravity--and this amount goes up by the sine of the angle. A measly 2% grade requires pulling a force of about 210 N, a factor of 21×.
Basically, grade really kills because you actually have to counteract gravity as opposed to friction.
Second... why's gravity gotta be such a dick? :)
A 2.2% grade seems insignificant to the average person, but to a freight train it is no laughing matter. Here's a serious derailment that happened in California: https://en.wikipedia.org/wiki/San_Bernardino_train_disaster#...
At that grade it's not sufficient to use brakes in the individual rail cars, it's also necessary to use dynamic braking by turning electric traction motors into generators, then dissipating energy in giant resistive grids.
This megalink shows, I hope, a Google Maps 3D rendering of the pass and the rail route:
https://www.google.co.uk/maps/dir/Schwyz,+Switzerland/Locarn...
Note that the big loops are inside the mountain.
Also, this tunnel probably increases transportation capacity as well.
What else should a society, that has almost everything, invest in? It's not like they are neglecting anything for it, they literally sit on gold.