Provident Loan Society
File:ProvidentLoanLogo.jpg | |
Nonprofit Organization | |
Industry | Lending |
Founded | New York, NY (1894) |
Key people
|
Cornelius Vanderbilt, J.P. Morgan, Jacob H. Schiff |
Products | Loans |
Website | providentloan.com |
The Provident Loan Society is a not-for-profit organization created in the 19th century by a group of influential New Yorkers as an alternative to loan sharks of the day. Founders include J.P. Morgan, Jacob H. Schiff, August Belmont, Jr. and Cornelius Vanderbilt.[1] Today Provident Loan provides short-term cash loans for gold and jewelry and is the last remaining of the many not-for-profit loan societies created during the economic crisis of the late 19th and early 20th centuries.[2]
Contents
History
The Provident Loan Society was created during the financial panic of 1893.[3] In an uncertain economic environment amid foreclosures and bank failures, people sought cash from unregulated loan sharks and pawnbrokers.[4] As a result, a group of powerful New York bankers and financiers pooled money together, pledging $35,000 each[5] to establish a not-for-profit organization to provide short term loans at a lower rate than the loan sharks. The organization was modeled on European financial institutions known as mont de piété or mount of piety.[6] The contributors included such famous powerbrokers as: Solomon Loeb, Alfred B. Mason, J.P. Morgan, Gustav H. Schwab, Jacob H. Schiff, James Speyer and Cornelius Vanderbilt among others.
The New York State Legislature passed a special act in 1894 incorporating The Provident Loan Society of New York.[7] At its peak in 1962, the Society had 17 locations around New York. As of 2009, there are 5 remaining locations.[8]
Present
Today, Provident Loan states that it serves approximately 100,000 people annually. The maximum amount that the institution will loan is $100,000[9] for a term of six months at an annual interest rate of 26%.[10] New York State laws governing pawnbrokers allow pawn shops to charge up to 48% annually.[11] Provident Loan will not buy merchandise, however, only lend against its value.
References
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- ↑ John P. Caskey, Fringe Banking, p. 24.
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- ↑ John P. Caskey, Fringe Banking, p. 24.
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