History of Pawnbroking - France

France

The institution was very slow in obtaining a footing in France. It was adopted at Avignon in 1577, and at Arras in 1624. The doctors of the once powerful Sorbonne could not reconcile themselves to the lawfulness of interest, and when a pawnshop was opened in Paris in 1626, it had to be closed within a year. Then it was that Jean Boucher published his Défense des monts de piété in favor of pawnbroking. Marseilles obtained one in 1695; but it was not until 1777 that the first mont de pit was founded in Paris by royal patent. The statistics which have been preserved relative to the business done in the first few years of its existence show that in the twelve years between 1777 and the Revolution, the average value of the pledges was 42 francs 50 centimes, which is double the present average. The interest charged was 10% per annum, and large profits were made upon the sixteen million livres that were lent every year. The National Assembly, in an evil moment, destroyed the monopoly of the monti de pietà, but it struggled on until 1795, when the competition of the money-lenders compelled it to close its doors. So great, however, were the extortions of the usurers that the people began to clamour for its reopening, and in July 1797 it recommenced business with a fund of ~20,000 found by five private capitalists. At first it charged interest at the rate of 36% per annum, which was gradually reduced, the gradations being 30, 24, 18, 15, and finally 12% in 1804. In i806 it fell to 9%, and in 1887 to 7%. In 1806 Napoleon I re-established its monopoly, while Napoleon III, as prince-president, regulated it by new laws that are still in force. In Paris the pledge-shop is, in effect, a department of the administration; in the French provinces it is a municipal monopoly; and this remark holds good, with modifications, for most parts of the continent of Europe.

The Paris mont de piété 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 piCt, 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.

The borrowing of money on the security of goods deposited has been the subject of minute regulations in the Low Countries from an early date. So far back as the year 1600.