New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1896-04-06
THE PAWNBROKERS' SIDE.

THINKS SHOULD WEIGH IN HELM r'N'N'"
To the Editor of The Tribune
Sir: To any one ignorant OF the methods OF the
nav,nbrokerage business I; no doubt seems Ike
n gross Injustice 10 allow 30 IS per cent TO the
person who loans money upon personal property
that is deposited with him security, wnie those
who loan upon bonds and mortgages and other IKE
securities are obliged to accept per cent RATE
But there is this great difference between THESE TWO
classes of lenders: Those who loan on pohd anu
mortgage receive their interest without either ex-
perse or detail labor as all incidental expenses are
dcfravcd by the borrower in addition to his inter-
est payments: while on the other hand. tho pawn
broker is obliged to make his interest charges cover
all the expenses incident to the detal OF MS DUST
ness These expenses are exceedingly burdensome;
SO much so that they reduce the pawnbokers prorts
to little above an ordinary interest return on MS
invested capital.
As q preliminary to doing business. he must pay
each wear a License fec o 500 Then there is his
item for rent In connection with his ONCE ne must
have commodous lofts for the storage OF goods
taken In pledge. the cost OF these accommodations
ranging from ST. 200 to $500 year. His outlay Tor
wages Is the largest item In his expense account.
Tho goods offered in pledge must be examined to
ascertain how much safely he loaned on 'hem'
then there Is tho negotiating to reach sum 'hat
Is mutually satisfactory When this Is adjusted. the
broker must enter In book. which the law requires
him TO keep for the purpose description OF the
article pledged the amount VI ihOHVy i"'.'N' -
time OF pledg.ng rate OF interest to be pa.d ana
the name and residence OF the plelger The broker
must then take a ticket with stub attached. the
ticket and the stub both bearing number similar
10 one printed over the entry In his hooN' the
ticket &c torn from the stub. and the same facts
that the law requires the broker to enter In his DOCK
he is also repaired to write upon the ticket 70
which he must also add his signature; the ticket
and tho sum loaned are then handed over to the
p..dgcr: the pledged article IL wrapped up INC
numbered stub pinned the outside In PLAIN sish'
and tho bundle stored away on a sheii uh'r 'ic
plcdger redeems II. When It IS 50 redeemed the
came process IA repeated In the reverse order
The loans made are usually very small: there are
many "a low as 80 cents: but. taken altogether they
average 81 90 The average duration of these loans
ia four months that 10 earn the 30 per cent al
lowed hy law. tho pnwnbroker has 10 ch'o9 'hr''
dlgfinc, transactions. each ono involving me same
amount OF detail labor. So that. with tho YOU
which ,s the average capital OF the NewYork pawn
broker he must take in pledge Just about i"'''
articles yearly IN order 10 make the gross interest
income on his capital II can readily be seen mat
10 run n detail business Of This magnitude requires
the assistance o. Two three clerks. each Of whom
receives from SO to $50 n week
Then there is the brokers' .oss on goods that mr."
claimed rs stolen. The INV requires that all pawn
brokers' ontrv-boo,s shall 10 open 10 the inspection
Of the police authorities II stolen goods have been
received in pawn and they traced and ideni'hed
the broker IA. IN all cases. required TO give the
stolen articles up. he acquires no Hen on thein
for his loan He loses the entire amour, he al
vnnced on them as well the legal expenses inc
dent 20 seizure The average broker loses about 800
in tbs annually.
4 largo percentage OF goods pawned are I'N IN
redeemed and on these the ~ wnbrokcrs suNer an
other loss The law allows pleigcrs twelve months
within which 10 redeem. ~ the expiration OF ms
time tho brokers may sell all articles left unre-
I.
lie auction ~ a licensed aucuoneer. and that 1t be
du.y advertised in at least two daily papers desg-
mated by the Mayor II. otter paying expenses ~
sale and advertise cnt. and after delrciing the
amount OF the loan and tho Interest due thereon
there remains on an article surplus. this surplus
must be held by the pawnbroker TO be pad over
70 the person who would he entitled 20 redeem the
pledge But II there is n dehc on my article soli
the pawn5roker bears the loss Contrary TO the
general bce, these losses foot UP with the average
broker 10 about $50 annually.
The assertion that the pawnbrokers make extra
charges u.s. to some extent true. on certain classes
OF articles small sums. in excess 81 the interest
rates are charged FOR what Is technically known as
a ''hang-up" The common law only Imposes the
duty OF ordinary care respecting articles LETT IN
pledge. II plcdgcr wishes his goods TO receive eN
ira care he pays a small extra rate, for which tho
broker gives extraordinary care and becomes an
insurer Of Their condition. This extra charge Is rec
ognzed as .csa, In London. Philadelphia and vari-
Gus other cities. and. there Is no prohibition In
the Ncw-York statutes. and as the right 10 make II
IS recognized by the common law. the charge IS a
legal
So from these fac.s. the yearly profits and eS-
penses OF the average New York :awnbroker may
b. summarized ms follows: by interest at % per
cent on his capital OF $500 he makes $50 arsur-
ing all Is loaned and By the charge for extra SER
vices and risk $50 more. making gross profit OF
$40 HIS expenses 500 FOR a license. $3.50 for
81. # .t,s. frIso II
$50 for burglar alarm. $50 for insurance 500 for
coal and gas. so for stationery. 500 Tor goods
claimed as stolen. and $50 for loss unrclccmed
pledges making a total expense OF 1890
by deducting the total expense from th- gross
profit the $40 Is left This $50 represent
considered return that Is altogether earned -
nbeI 10 give n HE time and attention for year
by deductng from his return Of 500 sum that
perience. say 5000 we get the amount OF genuine
interest the broker receives his invested capital
j am crcdbly Informed that In Philadelphia per
cent month Is The legal rae in cnGinnail iors -
Chicago Baltimore and san Francisco, 10 per cent.
In Great Britain p ger cent year Is me legal rate
etc. Is considered the rate Is actually higher than
The fact that the phianihroplc Provdent Loan
Association OF New-York Is able to lend money AT a
Goyernmeniai pavnshops OF France. Gerininy and
Italy are able to lend at per cent Is often quoted
rates allowed pawnbrokers here. But 1t should be
remembered that the average loan OF the Proviient
shops S. that OF the German s. and OF the Italian S.
while the average loan OF the New-York pawnbroker
amount OF the average loan makes a marked differ
.nce in The numbe[ OF loans made ara in the eonse
difference in the average amounts OF the loans that
as these small loans are made TO meet the demands
OF the poor people 80 long Will high rate OF inter
ANY decrease OF the present rates Of interest in this