This article is from the November 1997 The Mexico File newsletter.
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Monte de Piedad, More Than Household Finance

by jennifer j. rose

jennifer j. rose is a contributing editor to The Mexico File who recently finally did what many of us only dream about doing: she moved from Shenandoah, Iowa, to the house she built in Morelia, Michoacan. Ms. rose has written a number of articles for The Mexico File, including a series on moving to Mexico (Aug/Sept 1996 and October 1996) and a recent article on Patzcuaro (July 1997). Despite her move and in addition to her many other current writing projects, she is active in the American Bar Association and still serves as editor-in-chief of The Compleat Lawyer, Listserv Review columnist for Internet Law Researcher, a contributing editor of Matrimonial Strategist, and moderator of the Mexico Connect Forum. Her e-mail address is jrose@raza.giga.com

The Monte de Piedad, or National Pawnshop, bears little resemblance to the usual perception of the tawdry pawnshop— bordering the bail bondsman's office in a not-so-savory part of town, patronized by the luckless, amid the milieu depicted in Sidney Lumet's film, "The Pawnbroker." A respected government institution, it represents more than the mere lender of last resort — it's a barometer of the Mexican domestic economy, a mother lode of treasures, and a charity.

"Mountain of Pity," or "Mountain of Mercy" by some translations, dates back to 1775, after Charles III of Spain authorized Pedro Romero de Terreros, Count of Regla and owner of the Real de Monte mine, one of Mexico's richest silver mines, to develop this solution to the locals' economic woes. Christened the "Sacred and Royal Mountain of Pity of Souls" or El Sacro y Real Monte de Piedad de Animas, one of its early objectives actually was the saving of souls. In its chapel is the first book of the pawnshop's operations, showing the tally of the first day's loans. Mexico's first credit institution is as strong and vital to its culture and economy as it was over two hundred years ago.

A pawnshop operated with eleemosynary intent was unique to the New World, but its antecedents were French, who introduced the Mont de Píeté to Spain. Mont means "bank" (as in three-card monte), referring to a public or government loan. Píeté originally meant "pity" or "charity," and so the notion of a Bank of Pity would make sense.

The objectives of the Monte de Piedad are three-fold: 1) to provide personal credit to the poor through the public sector, 2) to apply the profits to charitable works such as the poor, orphanages and other needs, and 3) to help small artisans and businessmen sell their wares at modest prices.

A Class-Blind Lending Institution

Because most Mexican banks require customers to deposit at least $500 in an account, reportedly only one in five Mexican adults has a bank account. And without a bank account, it's nigh onto impossible to obtain a conventional loan. Even fewer Mexicans have credit cards, because the widespread cash economy frustrates demonstration of financial ability for debt repayment. Personal financial services may be readily available in urban areas to those earning high incomes through formal employment, but the formal financial sector traditionally has turned its back on the speciously unprofitable rural and low-income. Lacking information about borrowing money from banks and other formal lenders, micro-businesses too have been largely ignored by financial institutions.

Designed paramountly to accommodate the poor's needs for small and short-term capital, the Monte de Piedad doesn't discriminate among its borrowers, lending to anyone with collateral. Even the middle class and the rich are likely to be among its borrowers, for the same reasons that send borrowers to pawnshops elsewhere: a quick loan unfettered by a lengthy application process, credit investigation or nosy inquiries into the need for money. In the time it takes to process an application for a small loan from a formal lending institution, which may extend to months, a short-term loan from Monte de Piedad could be funded and repaid three times over. The rich and privileged often have the same need for emergency cash as do the poor and downtrodden.

Even though the Monte de Piedad borrower may not have the badges of financial power, much less a credit rating, he does have something to hock. The average loan is the peso equivalent of US $20. Entrepreneurs of small businesses often arrange capital investment loans for much more. Fixed by the government, the interest rate hovers around four to five percent per month, comparable to that charged by formal lending institutions. The rate of interest also varies by the type of collateral posted. If the mundane and ordinary — a blender, carpenter's tool or sewing machine, for instance — is offered as collateral, the interest rate is less than that which might be levied against the borrower who pawns a Rolex.

The Rules of Piedad

Monte de Piedad will loan thirty percent of the appraised value of jewelry, and special rules apply.

Borrowers usually have thirty days in which to repay borrowed money and redeem their collateral. More than ninety percent of the pledged property is redeemed, if only to be pawned once again.

The lending offices of Monte de Piedad are always busy, in good economic times as well as bad. In the week preceding Day of the Kings (January 6, the children's holiday toyfest) and Mother's Day, the second biggest shopping day in Mexico, there isn't standing room within two hundred meters of its portals as borrowers pawn valuables — and a similar mob scene is replayed when repayment is due.

Consequently, Monte de Piedad's staff learn to make skilled and quick appraisals of a broad range of property offered up as collateral. If you're searching for an appraisal of a tiger coat or Chinese porcelain, you're most likely to find someone at Mexico's version of Sotheby's — Monte de Piedad. Even independent appraisers confess to using Monte de Piedad's appraisals of ordinary goods as a benchmark.

Even though the redemption rate is fairly high, the sheer volume of transactions assures plenty of unredeemed loot left to stock the showrooms of the Republic's thirty-four branches. And here's when the fun begins.

The Fun Part

Monte de Piedad evokes a warm memory of my favorite childhood haunt in St. Joseph, Missouri, where "I Buy Anything" was the proud mercantile run by an ageless character known only as "I Buy." Discards of ordinary lives were categorized with the same detailed attention that might be found in a Regent Street haberdashery. A shelf of wooden legs, eye cups, and false teeth stood alongside old dishes and World War I memorabilia. I loved to look, but I never bought.

Monte de Piedad's sales floor is no Salvation Army or Goodwill Store or even an ORT resale shop. Better stocked than Marshall Field's with anything that might fit through its portals, from grand pianos to dentists' chairs, soup tureens and plumbers' tools, this is the place to wander, snoop, stare and sometimes even shop among neat and well-organized departments. The imagined history of the merchandise is as interesting as the wares are intrinsically.

The art room might have anything from a paint-by-numbers portrayal of Elvis to perhaps even a genuine Old Master. This is the place for ersatz heirlooms and instant heritage. In need of ancestral portraits to grace your parlor? Look no further. There's sure to be a rendition of some dour sort old enough to be your long-dead great grand-progenitor.

The household appliances department might be lined with refrigerators old enough to have been rusty during the Porfiriate, as well as microwave ovens that were on sale last week at Aurrera. Furniture may range from a lone tattered oilcloth-covered folding chair to a genuine Chippendale fainting couch. Miles of gray metal military-issue desks may fill the office furnishings department. Anything from a pure acrylic bathmat to a genuine Persian finely woven carpet might be found among the rugs. Artesania might include a carved Tarascan post or a mask from Tocuaro.

And the jewelry — everything from a Barstow Senior High School class ring and a gold wedding band to a six-carat diamond.

This museum of modern Mexican life is a near-voyeuristic opportunity to enter the lives of ordinary people, to wander inside their homes, and to speculate upon the circumstances leading to their sacrifice of those pieces of their lives. How did a key ring engraved "In Appreciation for Ten Years' Service to Sears" end up here?

Just like Bloomingdale's, the merchandise is price-tagged, and there's no bargaining. And just like any other full-service department store, major credit cards are accepted and deliveries are made.

Savvy antique scavengers and dealers make regular rounds to snare the rare finds before the best of each branch’s wares which remain unsold after a month or two are shipped off to the mother store in Mexico City. The Casa Matrix, part of the flagship store since 1936, was first dedicated to the sale of jewelry. And it's here that the most valuable objets d’art, sculptures, and real treasures become the Mexican version of Harrod's Egyptian Hall or Gump’s.

Periodic remates, or auctions, are held to sell off unsold inventory in the hinterland as well at in the capital, heavily attended by the pros.

Obviously, Monte de Piedad's not the place to shop with the expectation that you'll find exactly what you're looking for on the first venture. While you might leave empty-handed after twenty visits, you never know when you'll find exactly what you weren't looking for and absolutely couldn't live without. I know. I've bought an oriental rug, seven carved dining table chairs, a stone sculpture, and a heavy antique carved door. And a strange little wooden door, for which I still haven't figured out a use — but in time the door will tell me what to do with it, just as it spoke "buy me."

© jennifer j. rose 1997

DEALMAKING IN LA CAPITÁL

Five centuries ago and more, at the site of Mexico City's present-day Zocalo, then known as Tenochtitlán, stood the Aztec's covered market (petlacalco) and the chiefs’ houses (calpixcali). While the Pilgrims were setting foot on New England's shores, Cortés and his Conquistadores were checking out the real estate at the House of Axayacatl in what would later become downtown Mexico City. Settling in and closing the deal, Cortés rebuilt his newly acquired fortress, which eventually covered the area between the modern streets Monte de Piedad, Francisco I. Madero, Isabel la Católica, and Tacuba, the equivalent of several city blocks. After it burned in 1636, it was rebuilt on an altered plan.

The managers of Monte de Piedad bought a portion of the property around 1836 from Lucas Alaman, the representative of the Duke of Montelione, heir of Cortés, and built the flagship store, now located at Calle de Monte de Piedad 7. Renovated and reconstructed many times since then, including the addition of a third floor in 1948, few distinctly historic architectural details remain, but the tezontle (volcanic rock) and cantera (quarried stone) facades still lend an air of grandeur to the stately and majestic edifice. Gracing the main entrance is the national shield and a bust of Don Pedro Romero de Terreros. Only a small wall plaque reading Aqui Estuverion Las Casas Viejas de Moctezuma Hasta 1521 lends any hint to its heritage.

© jennifer j. rose 1997

WHERE AND WHEN

Mexico City. Located at the northwest corner of the Zocalo. Open Mon. to Sat. 10 a.m. to 7 p.m. (may close for siesta).

Guadalajara has 3 branches: Calz. Independencia y Av. La Paz, Parque Morelos, and Alvaro Obregon 58. Open daily from 8 a.m. to 1 p.m.

Morelia. Rendón and Serdán, one block north of Av. Madero. Hours vary.

© jennifer j. rose 1997