History of Pawnbroking - Germany

Germany

Pawnbroking in Germany is conducted at once by the state, by the municipalities, and by private enterprise; but of all these institutions the state loan office in Berlin is the most interesting. It dates from 1834, and the working capital was found, and still continues to be in part provided, by the Prussian State Bank. The profits are invested, and the interest devoted to charitable purposes. The maximum and minimum rates of interest are fixed, but the rate varies, and often stands at about 12%. Two-thirds of the estimated value is the usual extent of a loan; four-fifths is advanced on silver, and five-sixths on fine gold. State and municipal bonds may be pledged up to a maximum of L150, the advance being 80% of the value, and a fixed interest of 6% is charged upon these securities. The values are fixed by professional valuers, who are liable to make good any loss that may result from over-estimation. The bulk of the loans are under 5, and the state office is used less by the poor than by the middle classes. Loans run for six months, but a further six months' grace is allowed for redemption before the article pledged can be sold by auction. The net annual profit usually amounts to little more than I % upon the capital employed. The pawnbroking laws of Austria-Hungary are very similar to those which prevail in England. Free trade exists, and the private trader, who does most of the business, has to obtain a government concession and deposit caution-money varying in amount from 80 to 800, according to the size of the town. He has, however, to compete with the monts de pit or Versatzaemter, which are sometimes municipal and sometimes state institutions. The chief of these is the imperial pawn office of Vienna, which was founded with charitable objects by the emperor Joseph I in 1707, and one-half of the annual surplus has still to be paid over to the Vienna poor fund. Here, as in Berlin, the profits are relatively small. Interest is charged at the uniform rate of 10%, which is calculated in fortnightly periods, however speedily redemption may follow upon pawning. For small loans varying from two to three kronen, 5% only is charged. The Hungarian state and municipal institutions appear, on the whole, to compete somewhat more successfully with the private firms than is the case in Vienna.