A 375 Year Old French Bank Forgives Debts of Paris' Poorest
"Our waiting room is like that of a hospital emergency room. Everyone comes to it at some point."
Just as France was being chastised for excessive national borrowing with a sovereign debt downgrade, thousands of lucky French people had their financial obligations forgiven after the country's oldest bank decided to simply wipe their slate clean.
Granted, it's a small slate. The 3,500 clients who benefitted from the bank’s largesse had debts of 150 euros or less (about $190) with the Crédit Municipal de Paris, also known as the "Mont-de-piété," the bank of the poor, which has for centuries allowed the needy to get loans against their valuables—a kind of ethical pawnshop, or the original microlender. The small kindness was welcome for many.
"I'm very happy, it's the first time I get something for nothing," said Geneviève, an elegant woman in her fifties who was at the bank to get back a gold coin and a small wedding band she had pawned three years ago. "There came a point when I needed money. They're not worth much but they're important to me."
The unexpected gift is a way for the bank to celebrate its 375th anniversary. The Crédit Municipal de Paris was created in 1637 by Théophraste Renaudot, a doctor, journalist and philanthropist who wanted to combat poverty by giving the needy access to fair banking.
"The goal was to combat usury," explains Thierry Halay, who authored a history of the Mont-de-piété. "Interest rates at the time could go up to 130 percent," which quickly turned small loans into unmanageable debt.
The good doctor's idea was to give the poor people of Paris loans they could reasonably hope to repay, at decent rates for the time (about 10 percent annually) against whatever collateral they could produce: pots and pans, linens, silverware, artisans' tools. Halay found evidence of a 19th-century woman so destitute her only possession was her mattress. Every morning, she would carry it to the bank and pawn it. With that money, she'd buy potatoes, sell them for a profit during the day and buy back her mattress at night.
Today, the bank stores more than a million objects, from the puny piece of jewelry to the grand masterpiece, in headquarters covering a city block in the historical center of Paris. With a capitalization of 60 million euros, the bank had 93 million euros in pawn-broking loans outstanding in 2010. Its 2010 profit of 1.3 million euros was partly assigned to improving shelters for the homeless.
"It was the country's first secular, welfare institution. It was a safety net," Halay says.
Similar city-owned, not-for-profit banks opened all over the country on the same principle: Pawn an object and you get a yearlong loan. Pay off the interest (4 to 8.9 percent annually) and you can extend the loan; pay off the principal and you get your property back. If your valuable is sold for more than you owe, the profit is yours. These banks were eventually granted a state monopoly on pawn-broking loans, which continues to this day; France is thus a country without pawnshops.
Celebrities of the day secretly used the bank: Victor Hugo, Claude Monet and Napoleon’s first wife, Joséphine de Beauharnais, among others. Prince François d'Orléans, third son of King Louis-Philippe, once pawned his watch to settle a gambling debt. Ashamed when asked what happened to his precious timepiece, he answered, "I left it at my aunt's (ma tante)." To this day, getting help from "ma tante" is a discrete way of saying one's been going to the "poor people's bank."
"People were never very proud to go to the Mont-de-piété," Halay says. It may be why people turned away from it: With the prosperity of the 20th century, people wanted to forget this symbol of poverty.
But it is no longer forgotten. As the economic crisis rippled through Europe, the Crédit Municipal de Paris saw a 29-percent jump in attendance in December 2011, compared with the same month in 2010. France’s economy grew about 1.75 percent in 2011, but economists expect less than one percent in 2012, maybe even a recession. Unemployment is at 9.8 percent, reaching 10-year highs and still climbing.
"We get more and more young people, students and retirees, too," says Florence Marambat, a spokeswoman for the bank. "People used to get their property back after 11 to 13 months; now it's closer to 24 months. But nine out of 10 still get it back."
"Our director likes to say our waiting room is like that of a hospital emergency room," she adds "Everyone comes to it at some point."
Nearly 700 people come through here every day, on awkward hallways and too-small waiting rooms. Some are clutching a jewelry pouch, others have a letter, which the bank started sending out last week, notifying them to come claim their valuables for free. The operation will continue in waves through the end of February.
Photo via Wikimedia