Loans on Personal The law of 25 July 1891 was not made with the object of allowing pawnshops to encroach on credit or banking houses by authorizing them to loan money on personal estate security, the property of the bearer. The maximum fixed for these transactions, limited to 500 francs ($100), proves at once that the law merely desired to assist small property holders who had made safe investments, the limited nature of which does not interest large banking concerns, and the facilities granted by pawnshops to under take this kind of business are more in keeping with the momentary needs of small capitalists, The amount of the advances is calculated on the official rate of the Bourse, taking as a basis the last rate for cash transactions of the pre ceding day. The amount of the loan is fixed in the following proportions: (1) French rentes, treasury notes and bonds, 80 per cent; (2) securities bearing annual interest and deemed by the prefectoral authorities to be good holdings, 75 per cent; (3) °Actions de Jouissance," 60 per cent.
The borrower can be called upon, during the duration of the loan, to refund part of the loan if the Bourse rate drops at least 15 per cent, such refund to be made eight days after receipt of notice by registered letter. In case of a drop in the market rate the pawnshop has the right to sell the security on the Bourse in the absence of partial reimbursement, or in the absence of total reimbursement on the expira tion of the loan, without being obliged to no tify the borrower or carry out any formality. Any deficit resulting from the sale is payable by the borrower; if there is a profit, it is kept at his disposal for 10 years, counting from the date of the sale. After this lapse of time any unreclaimed profit reverts to the pawnshop. The financing of loans on personal security must be effected by means of capital distinct from that used for loans on corporal security. All the clauses contained in the regulations which govern pawnshops and are not contrary to the law of 1891 are applicable to transac tions concerning loans on scrip.
Responsibility of Pawnshops in Case of Loss of Goods Pledged.— The Decree of 8 Thermidor Year XIII (27 July 1805) gives borrowers who have not exceeded the date limit fixed for the sale of their pledges the right to claim an indemnity if indemnity property is not re stored to them. This ndemnity is based on the
estimated value of the property at the time of deposit plus one-quarter thereof. (Article 60 of the General Regulations of said Decree). As a general rule, no other claim can be made by the borrower. Exception, however, is made in the case of loss of the pledge as the result of fraud or gross negligence on the part of an employee. In such case ordinary law becomes applicable and the courts decide the amount of indemnity to be awarded, due consideiatio:i being taken of cases of °force majeure when such exist.
The risks of safe keeping of pledges, prin cipally fire, must be covered by the pawnshop, and by virtue of article 67 of the Thermidor Decree all real estate and working capital may be held to constitute the guarantee for de positor's pledges.
Resources and Present Situation of Pawn No pawnshops, with the exception of those of Arras, Besancon, Boulogne-sur-Mer, Douai and Nancy, possess sufficient funds of their own, and they are obliged to borrow to meet their business needs. The working funds of these establishments are derived from an nual loans made to them under decree of 8 Thermidor Year XIII. In Paris, loans are ef fected as required by voluntary deposits of sums of a minimum of 100 francs ($20). The rate of interest on such investments is fixed yearly, or oftener if any modification is neces sary, under the ruling of the prefect of the Seine after approval by the Conseil de Sur veillance. (Decree of 25 March 1852, art. 7). Different rates are fixed, based on the date of expiration of the °Bons" (notes) delivered to the security-holders, which notes may be discounted by the pawnshop. To these sums should be added amounts paid to the pawn shops as gcautionmentsp (surety) and depos its.
As regards gratuitous pawnshops, they de rive their funds from foundations or gifts made to them. These establishments form, however, an exception, as we have already pointed out. The present status of pawnshops in France, or let us say their status before the war, can be seen from the general statistics published in 1910, which are given in another part of this article.