credit extended for the needs of the municipal economy and housing construction. In the capitalist countries, municipal credit is one of the varieties of bank credit. Municipal credit funds are usually mobilized by the issuing of municipal loan obligations by the local authorities or credit institutions. Since the municipal credit is often secured by the pledge of municipal structures and land, it is actually close to mortgage credit.
Municipal credit has been greatly developed because of the rapid growth of the cities in the 19th century and particularly in the 20th. In the age of imperialism, the independent role of municipal loans has declined, since they are issued only with permission from the central government. In various countries, municipal credits are issued by municipal banks, municipal mortgage banks, municipal savings banks, deposit banks of the ministry of finance, life insurance companies, commercial banks, and credit construction associations. Municipal credit is used by the local authorities and by factory and large property owners, the latter receiving credit against the collateral of land, housing, and industrial buildings.
After World War II, long-term consumer credit was widely used for the purchase of small houses and cottages. Municipal credit is used by the financial oligarchy of the capitalist states for obtaining monopolistic profits, primarily from profiteering in municipal land.
In prerevolutionary Russia, municipal credit was not widely developed. Together with the entire mortgage credit system, it was eliminated by Soviet power along with the abolition of private ownership of land. The crediting of the housing and municipal systems was entrusted to the municipal banks set up for that purpose; their functions were turned over in 1959 to the Gos-bank (State Bank) of the USSR and the Stroibank (Construction Investment Bank) of the USSR.
M. IU. BORTNIK