Financing Belgrade’s Growth: Municipal Loans Between 1929 and 1941

Abstract

The article examines the loans taken out by the Municipality of the City of Belgrade from the outbreak of the Great Depression in 1929 until the beginning of the Second World War. It considers the conditions under which the loans were obtained and the allocation of funds for various purposes, as well as the changes that occurred in this regard during the 1930s. During this period, the Municipality concluded a total of 30 loans, all on the domestic market. During the Great Depression, the loans were short- and medium-term, whereas subsequently they were all long-term. The period was marked by increased investment in infrastructure, cultural and social institutions, the construction of schools, kindergartens, and workers’ housing, as well as a decline in investment in the purchase of municipal plots of land.

Summary: Between 1929 and 1941, the Municipality of the City of Belgrade concluded a total of thirty loans on the domestic market, two-thirds of which were long-term, while interest rates remained relatively favorable (5–9%). During this period, there was a certain diversification in the methods and purposes of obtaining such loans. During the Great Depression, the Municipality obtained loans directly from construction companies that simultaneously served as contractors for the works. During this period, loans were also obtained from state social institutions to finance municipal social institutions and workers’ housing, while a loan for defense purposes was also taken out in the late 1930s. The city was then able to use loans to purchase plots of land, while the Municipal Savings Bank played a key role in extending credit to the Municipality. In fact, during this period it provided the Municipality with a total of seven loans, with its greatest significance lying in the fact that the Municipality used its bills of exchange as collateral for loans. Infrastructure accounted for by far the largest share of borrowing, both in terms of the number of loans and their total value, exceeding all other purposes for which loans were obtained. This was followed by loans for the purchase of municipal property and loans for the needs of municipal cultural and social institutions. Throughout the period under study, investment increased in infrastructure, cultural and social institutions, the construction of primary schools, children’s shelters, and workers’ housing. Nevertheless, this remained insufficient to meet the city’s needs, particularly with regard to workers’ housing. At the same time, investment in the purchase of municipal property declined. Explaining this development requires further research into the relationship between the state authorities and the Municipality, which were involved in property disputes over plots of land in the city. Within infrastructure projects, the largest share of funds was allocated to paving and improving streets.