New-York tribune., 1912-01-21
GOVERNMENT PAWNSHOPS.
United States May Try Loaning
Money on Personality.
AN OLD STORY IN EUROPE
Success of System in Other
Lands Has Aroused Interest
in Official Circles.


Shall Uncle sam turn pawnbroker? Shall
he become uncle to any part of his nine
ty-odd million nephews and nieces who
may care TO put anything, from bedclothes
TO diamond tiaras, in soak" at reasonable
interest rates? Shall he follow the example
Of France, Germany; Holland and other
foreign countries and make il possible for
the temporarily embarrassed to obtain
money on personal collateral without pay
ing from So to 100 per cent interest per
annum?
This question is now receiving serious
consideration by the Department of Com
merce and Labor. A number of consular
reports recently received bear the strong
est sort OF evidence in favor of govern
mental and municipal pawnshops. They
show how, in other countries. a paternal,
national or city government makes ii pos
sible for citizens to avoid the clutches OF
greedy private concerns and the exorbi-
tant rates of interest charged by these con-
Germs
In the countries where the plan has been
tried longest it's success has been most
marked. The citizen is furnished with what
on personal collateral his interests are
protected far beyond the point 20 be ex-
pected from a private copcern, every pos
sibe incentive to redeem his property is
furnished, and the average rate of interest
charged is less than L. per cent per an
mum. Moreover, with the possible exception
of France, where the government exercises
a complete monopoly Of the pawnbroking
tutions have succeeded in the face of strong
competition from private concerns that
have been permitted to charge much higher
rates of interest. and to take greater
chances. at the expense of the public.
The pawnshop of Amsterdam, the oldest
and probably the most successful public
pawnshop i'm the world, is known as the
Bank Won Leening. Ii has been under the
control of the municipality since 1914, and
has fifteen branches throughout the city.
The average rate of interest is less than
10 per cent per annum. Surpluses over
amounts loaned, minus interest and per
cent for administration, are returned to the
owners of unredeemed pledges after sale
whenever possible, and still the bank Is
able to show profits of nearly $l,0OO,OO an
nually besides providing handsome pen
sions for old employees.
The Amsterdam bank consists of man
ager and five directors, appointed by the
City Council three of whom must be men,
bers of that body The manager has the
power to decide all ordinary questions of
loans. The revenue of the bank is derived
from the following sources: Interest on
pledges, amount of mills to 10 cents
charged on each loan for administering ex-
penses in addition to the interest: amounts
received from the sale of pledges, percent
age paid by the buyers of pledges in addi-
ton to the auction price, and rent for
parts of the building owned by the pawn
shop but not required for It's service.
The minimum amount loaned is l6 cents
and the maximum $20l. No loans are made
on ornaments or other articles belonging
TO a religious society or which are used
in religious services nor are loans made
on goods which are suspected as coming
from a charitable institution. The scale
OF interest rates begins at per cent per
annum, and stops at 13 per cent.
The pawnbroking business in France is
strictly a government monopoly, and for
any losses on the sale of unredeemed
pledges they seldom err against themselves
This policy. by the way, of advancing only
small percentage Of the actual worth
Of the pledge is followed in most European
countries where there are national or mu-
nlcipal pawnshops and furnishes the owner
with further incentive to redeem his pledge.
In France nonlnally the contract is for
ves- but every effort is made TO give the
pledger chance TO redeem his goods.
The sole rate Of interest charged by
the Mont de Piete is per cent, plus l
per cent fixed, interest being charged by
the half month, at the rate Of per cent
pcr aunum. The valuation is performed
b. a syndicate OF auctioneers. They are
supposed TO advance four-ifths OF the
value OF jewelry, and two-thirds OF the
value Of apparel, but as they are haole
twenty months before they come to the
hammer facilities are furnished for paying
off the money by instalments at the option
Of the pledger. the money loaned and the
interest charges thus diminishing until the
amount Is paid and the pledge redeemed.
III is doubtful" says Frank Ii. Mason.
Conspl General at Paris. whether private
enterprises now prohibited by law could
compete against the Mont de Piete, as it
borrows the money It requires at very
low rate of interest and could easily com
pete against private pawnbrokers.'
Much the same characteristics mark the
policy followed in municipal and govern
mental pawnshops of German, Rumanian'
Italian and Russian cities. The patrons
are more fully protected, the rate OF in
terest is nowhere higher than "A per cent
/? per cent is the general charge-and every
incentive 10 redeem the pledge and every
possible orportunity are furnished the pa
ton