A trade that was almost forgotten is now staging a revival. Hashi Syedain reports.
"I like a good bit of recession," says Phil Murphy, apparently without irony. It is an admission that ought to confirm a thousand prejudices about his profession - associated, as it is in the popular mind, with poverty and exploitation. Murphy is a pawnbroker, founder and managing director of Albemarle and Bond. For him, hard times are good for business. But his honest optimism, far from being gleeful, is quite refreshing. It is nice to know that someone is doing well in this gloomy economic climate.
As a profession, pawnbroking is in a singular situation - many people do not realise it still exists. And even if they did, their impressions of pawnbrokers are so coloured by images from Dickens and Dostoyevsky that it would never occur to them actually to use one.
Yet Murphy, like all pawnbrokers, is full of touching tales of happy customers - customers, one might add, taken from all walks of life. His biggest loan ever, for example, was £12,000 lent not to an individual but to a small company facing a cash flow crisis. The bank had closed its doors on the company, and would have signalled the end of the road had the directors' wives not stepped in and offered to pledge their jewellery. "It was all done very correctly," recalls Murphy. "The company secretary brought in the jewellery and took the money. A few weeks later they paid it back and three years on the company is still going. I see them sometimes on social occasions and it's our little secret," he smiles.
Pawnbroking has seen quite a renaissance in the past few years what with high interest rates, lower state benefits and the easy availability of credit. (The latter, claims Murphy "has been our biggest ally".) Following long years of decline after the Second World War, membership of the National Association of Pawnbrokers (NAP) has jumped from fewer than 50 in the 1970s to 220 today.
But the pawnbrokers of the 1990s are desperate to shake off their Victorian legacy, and with it the notion that pawnbrokers are the preserve of the poor. For a start, the vast majority of pawnbrokers only accept jewellery and silver - so anyone using them cannot be destitute. On the contrary, some of the newer companies, like Islington-based London Pledge Company, made their name taking Porsches and BMWs from crash-fallen City yuppies. Or there is TM Sutton, an old business, universally acknowledged as the Rolls-Royce among pawnbrokers, now owned by the Crown jeweller, Garrards.
Suttons is situated, somewhat improbably, right opposite Victoria station, and claims to possess the only purpose-built pawnshop in the country. In addition to jewellery and silver, it takes fine art, musical instruments and antiques - valued by Sotheby's and sold by it if unredeemed.
Thirty-three-year-old manager Andrew Brown, an unexpected figure in his striped shirt and yuppie braces, seems entirely unflustered by the wealth which he guards in Sutton's vaults. Gold watches, diamond tiaras and exquisite jewels are all in a day's work for Brown. Looking around the musty strongroom, he reaches for a small impressionist painting: security, he points out, for a five-figure sum. "I don't know what people see in this. You wouldn't hang it in your toilet, would you?" And while we are on the subject of bathrooms, he makes for a solid gold wash and vanity set. "I bet you've never seen one of these," he says, holding up a 24-carat chamber pot. "There's £75,000 out on this lot."
Visiting Sutton's the point is clear: pawnbroking is for the rich and needy as well as the poor. This should perhaps be no surprise - the attractions of instant cash, no moralising, are strong indeed. And really, points out Nicholas Charles of London Pledge Company, "we're no different to the banks. They take your house as security and we take jewellery."
But what about relative interest rates? Pawnbrokers charge between 3 and 4% a month depending on the company and the amount of money being lent. That works out at an APR of up to 80% - a hefty whack by any measure. In addition, some companies levy a ticket charge, typically 4% of the loan. But pawnbrokers are quick to point out that the loans which they make are supposed to be short term only. "If you want to borrow money for a year you're better off with a bank. But if you want it for a month you're better off with a pawnbroker," says Harvey Bell Roberts, president of the NAP.
In fact pawnbrokers are quite disparaging about banks, with their hidden charges and unfriendly service. "I couldn't get away with service like that," rails Murphy. "My customers wouldn't take it." Says Joshua Fish, of Fish Brothers pawnbrokers in the East End of London: "Most pledge offices are friendly places and a good 60% of our customers are regulars."
Indeed, Murphy and Fish like to feel that pawnbrokers have a social responsibility. "We don't increase indebtedness," says Murphy. "People come to us to pay off their other debts. We're a lender of last resort. We keep them away from the loan sharks." More than this, Fish maintains: "I'll lend someone £1 if they need it, though it costs me more than it brings." And Murphy echoes: "There are people out there who need to borrow £10 till their next giro or wage packet. I ask all my managers before I employ them if they've ever been broke. If they haven't they're no good to me."