History of Pawnbroking - Europe

Europe

The fact that on the continent of Europe monts de piété are almost invariably either a state or a municipal monopoly necessarily places them upon an entirely different footing from the British pawnshop, but, compared with the English system, the foreign is very elaborate and rather cumbersome. Moreover, in addition to being slow in its operation, it is, generally speaking, based upon the supposition that the borrower carries in his pockets papers testifying to his identity. On the other hand, it is argued that the English borrower of more than 2 is at the mercy of the pawnbroker in the matter of interest, that sum being the highest for which a legal limit of interest is fixed. The rate of interest upon a special contract may be, and often is, high. For the matter of that, indeed, this system of obtaining loans is always expensive, either in actual interest or in collateral disadvantages, whether the lender be a pawnbroker intent upon profit, or the official of a mont de pit. In Paris the rate charged is 7%, and even then the business is conducted at a loss except in regard to long and valuable pledges. Some of the French provincial rates are as high as 12%, but in almost every case they are less than they were prior to the legislation of 1851 and 1852. The French establishments can only be created by decree of the president of the Republic, with the consent of the local conseil communal. In Paris the prefect of the Seine presides over the business; in the provinces the mayor is the president. The administrative council is drawn one-third each from the conseil communal, the governors of charitable societies, and the townspeople. A large proportion of the capital required for conducting the institutions has to be raised by loan, while some part of the property they possess is the product of gifts and legacies. The profits of the Paris mont de pit are paid over to the Assistance Publique, the comprehensive term used by France to indicate the body of charitable foundations. Originally this was the rule throughout France, but now many of them are entirely independent of the charitable institutions. Counting the head office, the branches and the auxiliary shops, the Paris establishment has its doors open in some fifty or sixty districts; but the volume of its annual business is infinitely smaller than that transacted by the London pawnbrokers. The amount to be advanced by a municipal pawnshop is fixed by an official called the commissaire-priseur, who is compelled to load the scales against the borrower, since, should the pledge remain unredeemed and be sold for less than was lent upon it, he has to make good the difference. This official is paid at the rate of 3/4% upon loans and renewals, and 3% on the amount obtained by the sales of forfeited pledges. This is obviously the weakest part of the French system. The Paris mont de pit undertakes to lend four-fifths of the intrinsic value of articles made from the precious metals, and two-thirds of that of other articles. The maximum and minimum that may be advanced are also fixed. The latter varies in different parts of the country from one to three francs, and the former from a very small sum to the 10,000 francs which is the rule in Paris. Loans are granted for twelve months with right of renewal, and unredeemed pledges may then be sold by auction, but the proceeds may be claimed by the borrower at any time within three years. Pledges may be redeemed by instalments.

Somewhere between forty and fifty French towns possess municipal pawnshops, a few of which, like those of Grenoble and Montpellier, having been endowed, charge no interest. Elsewhere the rate varies from nil in some towns, for very small pledges, to 10%. The constant tendency throughout France has been to reduce the rate. The great establishment in Paris obtains part of its working capital reserves and surplus forming the balance by borrowing money at a rate varying from 2 to 3% according to the length of time for which the loan is made. Under a law passed in 18gf the Paris mont de pit makes advances upon securities at 6%, plus a duty of 5 centimes upon every hundred francs. The maximum that can be lent in this way is 20. Up to 80% is lent on the face value of government stock and on its own bonds, and 75% upon other securities; but 60% only may be advanced on railway shares. These advances are made for six months. Persons wishing to borrow a larger sum than sixteen francs from the Paris mont de pit have to produce their papers of identity. In every case a numbered metal check is given to the customer, and a duplicate is attached to the article itself. The appraising clerks decide upon the sum that can be lent, and the amount is called out with the number. If the borrower is dissatisfied he can take away his property, but if he accepts the offer he has to give I till particulars of his name, address and occupation. The experts calculate that every transaction involving less than twenty-two francs results in a loss to the Paris mont de pit, while it is only those exceeding eighty-five francs which can be counted upon to be invariably profitable. The average loan is under thirty francs.