The Sharp End: The pawnbroker's chain

Beneath the golden balls sign, Dave Waller views this arcane trade through a lupe.

Last Updated: 31 Aug 2010

Two to one you won't get your stuff back. So goes the old pawnbrokers' joke to explain the three golden balls hanging over their doorway. I don't like those odds. But as I head off for a day at Harvey & Thompson in Hammersmith, I wonder if the recession is driving more people to play them.

When I think of pawnbrokers, I picture a dark and dusty version of Cash Converters, run by a leering vulture like the bloke who lusts after the late Mr Scrooge's stash in A Christmas Carol. Ignorant, perhaps, but then I don't know anyone who's ever used one. Until recently, getting a loan was easy enough without letting someone run their claws over your family jewels.

So it's a surprise when I arrive at 10am to find what could almost pass for a regular high-street branch of HSBC, complete with glass-paned counters and framed posters offering services such as cheque-cashing and low-interest loans.

This is modern pawnbroking, says Robert Greville, H&T's regional manager. He tells me H&T is the UK's largest pawnbroker by size of pledgebook, with profits last year up 52% to £10.9m. But footfall, apparently, hasn't increased since the downturn. The chain deals primarily in jewellery, and Robert attributes its recent success to the strong price of gold, not to people wheeling in heirlooms by the barrow-load because they can't afford petrol any more. Most regular customers just seek a quick cash injection while they pay the rent or clear up quarterly bills, with an average loan of £130.

All jewellery pledges are valued by weight and carat. Robert takes me behind the counter to see how the testing works. Always ask permission before you test, he says - the process involves filing a section of the piece and then dropping acid on it to see how it reacts. Robert goes to work with the file, then puts a pair of goggles on and reaches for the acid. It's all highly incongruous, like Johnny Ball revealing all in a bureau de change.

Through a lupe, I watch the filed area develop a brown stain: it's 9-carat. If it wasn't, Robert would use another acid, timing how long before a yellow stain appeared. Within seven seconds, it's 18ct; if it takes 14, it's 22ct. The platinum rule is: never tell a customer that their jewellery isn't gold - the piece may have been a gift. Instead, you say it doesn't meet the requirements.

But this law isn't applied when a grunty man shuffles in to pawn a diamond ring his girlfriend bought him. 'That's not a diamond,' the girl behind the counter tells him. 'How is that not a diamond?' he replies. His beloved seems to have conned him. Or is he just trying to put one over on the broker? He seems the sort. Later, he's back trying to pawn some earrings, and she asks him for ID. 'Well, I got my name badge from work,' he says, pointing where it says 'Murray'.

Robert doesn't deny that the odd dodgy item comes through, but he says it's not in H&T's interest to handle stolen goods. You can't be too judgmental, though, he says - plenty of honest people need to raise collateral, and you can't just write them off as thieves. He reckons you develop an instinct for spotting them.

A man swaggers in wearing a parka, and collects a chunky gold bracelet that looks like it would snap your wrist if you put it on. He pays £500 for the privilege. Another visitor is wearing a black baseball cap with a sequinned double-dice logo on the front. It's an apt emblem to see at a pawnbroker's. Next to him, two Muslim women are paying the price of gambling with their memories: they'd pawned £400-worth of jewellery but failed to reclaim it in time, so it went to auction. Luckily, they retrieved it and are now in feverish discussion about a new loan, flourishing £20 notes to settle the interest on the old one. With rates at 8% a month, a half-year contract with these risks seems a mug's game.

But that doesn't stop the punters - the store has plenty of regulars. One turns up most mornings, makes a pledge of around £300, then zips next door to William Hill - returning with his winnings to collect his stuff. Another pledged a gold tooth.

With just a handful of customers all morning, there's time for me to do some testing. I put the lupe to my eye and file away at a heavy gold bracelet. The damage is minimal, but through the lens it looks like horrific vandalism. It's as if I'm hacking huge chunks out of someone's dreams, and putting them to the acid test to see if they're worth anything. Even if they are, it's a risky game: that hefty interest rate might turn them into a nightmare.

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