Friday, December 10, 2010

The More Things Change ...

by Alexandra Lebenthal

You probably have seen The Provident Loan Society but never really noticed it. You have walked by the tiny neo-classical temple on 72nd between Lexington and Third dozens of times. You assumed it was a bank, or some landmarked building that time has forgotten.

Ironically, it’s as relevant today as when it was created in 1893. Most people don’t even know there was a great financial panic then, but after excessive and questionable financing of railroads, credit was unavailable and there was concern about the stability of the financial system. Sound familiar? To learn more about how the more things change, the more they stay the same, click here.
But even as bad as things have been during the crisis of 2008-?, believe it or not, today we are in much better shape given the number of social and government agencies that exist to help the needy. Indeed, the work and dollars raised by many of the social agencies are written about and pictured on the pages of this website every day.

But in 1893, virtually the only available option was to go to a Pawnbroker. They thrived in the city, and often had bad reputations, requiring borrowers to pay usurious rates of interest on short term loans. Then, a group of the City’s leading figures, (names that still resonate with us today; Loeb, Morgan, Schiff, Schwab, and Vanderbilt amongst others), decided to create a non-profit organization that would provide low-interest short term loans to individuals who could pledge personal property. A special act of the New York State Legislature was passed in 1894 incorporating The Provident Loan Society of New York and the doors of its first office soon opened.
Today, nearly 117 years later, with more than one financial crisis behind it, Provident still makes six month loans up to $50,000, upon pledge of diamond and gold jewelry.

My mother of all people first told me about The Provident Loan Society when I was in high school. She said that many women used it as a quick and reliable source of cash. While I would guess most women weren’t using it for business purposes, it’s shocking to realize that as recently as thirty years ago a woman would often have to get her father or husband to co-sign a loan from a traditional bank. We have come a long way baby.
Well, perhaps not. I didn’t really think much about Provident or how a woman could get access to cash quickly, until I started writing The Recessionistas when I wondered what a very well to do woman, down on her husband’s luck, (temporarily she assumed), would do to maintain her lifestyle.

Of course there are resale stores for designer clothing and bags, and there is Ebay, but that takes ready buyers, and the time to wait. Inevitably, I remembered that tiny building tucked away uptown.

Walking inside is like taking a step back in time. The décor is simple to non-existent. Old magazines are strewn about on tables next to sofas that seem at least twenty or thirty years old. The walls are plain except for enormous, framed blow ups of the interest rates and terms charged — large enough for anyone to read, though not necessarily understood. Plexiglas dividers separate the staff from the "clients."

For a woman used to the usual décor of Upper East Side establishments I imagined it would be daunting to step inside and seem like a slap in the face of how her circumstances have changed.

Yet, in a way it’s quite simple. With the right jewelry, a Cartier Francaise watch or Seamen Schepps Earrings, or perhaps a Schlumberger bracelet, and she can walk out with cash. In The Recessionistas Grigsby Somerset hocked a few choice items to keep her maid. Luckily (spoiler alert), her circumstances were such that she was ultimately able to repay the loan and get her jewelry back.

Happy is the novelist who can make everyone fade off into the sunset.

But they don’t all end that way. Not everyone who walks out of the door finds that everything does return to normal. Sometimes the interest cannot be paid and the money doesn’t materialize to pay back the loan in order to get the jewelry back.

So, just as they have been doing since the mid 1980s, there are auctions of jewelry, silver and coins at Doyle Auction house every six months.

You probably do know of Doyle Auction House on 87th Street between Lexington and Third Avenues. While perhaps not as well known as some of its competitors further downtown, since its founding in 1962, it has auctioned the estates of some well known Hollywood personalities, decorators and members of society. This writer herself has picked up an item or two at its sales.

With the backdrop of the Grigsby Somerset’s of the world and my ongoing portrayal of the financial crisis on New York Social Diary, I decided to stop in at their most recent sale last month to get a glimpse not only what but who is at the auction. Unlike most of Doyle’s events, I couldn’t see the pictures of the individual items on the website, so I went briefly to the preview the weekend before. Dozens of items were cluttered on velvet trays. While it was all real, it clearly would take a patient buyer, or an expert to carefully examine each item, determine its worth and decide whether it was worth bidding on.
It caught my breath to see so many pieces of peoples’ lives junked in trays for buyers or just the curious to pour over. I had to back away as I imagined all the financial troubles that brought these items here to an unceremonious parting from their prior owners.

A few days later I managed to get uptown between meetings and watched part of the sale. There was such speed to the process if one hadn’t spent the time during the preview there would have been no chance to make a proper bid. I sat next to one man who must have been a dealer. He had circled many items in the book and successfully won several of them, diligently marking the price he was paying for each.
Provident Loan Society: Jewelry, Watches, Silverware & Coins
Wednesday, November 17, 2010 at 10am
Lot 58 27 Pieces of Silverware, 37 ozs., 6 handles $900 Sold
Lot 59 30 Pieces of Silverware, 31 ozs., 17 handles, Gorham $800 Sold
Lot 60 4 Pieces of Silverware, 5 ozs., 1 handle, Gorham $125 Sold
Lot 61 35 Pieces of Silverware, 43 ozs. $900 Sold
Lot 65 2 Pieces of Silver, 30 ozs. $600 Sold
Lot 67 12 Pieces of Silver, 44 ozs. all, damaged $950 Sold
Lot 68 4 Silver Dishes, weighted, damaged $200 Sold
Lot 73 16 Pieces of Silver, 22 ozs., damaged $550 Sold
Lot 76 Gold Flexible Bracelet, 10K 11 dwt. $275 Sold
Lot 78 Diamond Flexible Bracelet, 34 diamonds about 1.25 cts., 14K 21 dwt. $900 Sold
Lot 79 Diamond Flexible Bracelet, 62 diamonds about 1.00 ct., 14K 14 dwt. $600 Sold
Lot 89 Mans Gold Wrist Watch, 17 Jewels, Franck Muller, 18K $5,500 Sold
Lot 90 Diamond Engagement Ring, 3 diamonds about 4.40 cts., 14K 3 dwt. $8,000 Sold
Lot 91 Diamond Necklace about 3.10 cts., 14K 2 dwt. $9,500 Sold
Lot 93 Diamond Engagement Ring, 54 diamonds, center stone about 1.00 ct., 53 stones 3.75 cts., Platinum 5 dwt. $4,700 Sold
Lot 94 Ladys Diamond Watch Bracelet, 82 diamonds about 0.70 ct., Cartier, Quartz, 18K 45 dwt. all $6,500 Sold
I saw a neighbor of mine out of the corner of my eye and wondered what she was there for. I haven’t seen her in the elevator recently to ask her.

The only real human moment was when an older couple successfully bid on a diamond engagement ring. They kissed when the auctioneer said “sold!" It made me happy to imagine that ring once again creating joy in someone’s life, but I also wondered what the circumstances were that led it from its first love story to become part of a loan and then abandoned collateral.

Lot 280
Diamond Engagement Ring, 3 diamonds, center stone about 1.40 cts., Platinum 2 dwt.
Estimate: $2,100  - $2,300
Sold for $3,500

With each silver tea service, set of gold tuxedo studs and gold bangles I felt a pang. How many of them had events that didn’t end neatly with the conclusion of a book? This auction raised a total of $1.3 million. Many of the items sold for well above their estimates. From what I could see there were clearly some bargains.

According to Doyle over the last 2 years auctions from Provident have been larger in terms of number of lots, and they assume the recession is a factor. Also, the sale totals have been higher, because of the strong price of gold and the greater demand for jewelry, which is seen as an investment that maintains its value over time. Gold continues its inexorable climb as counties question the value of their own currencies. Although word to the wise and those who noted the cartoon at the beginning of this article; inexorable is never a word that fulfills its promise in the financial world.

The next auction will be on March 22, 2011. In the months that will have passed since the November sale, lives will have changed. Some fortunes will go up.

Some will go down.

And some of them will be represented in the fifteen block journey from The Provident Loan Society to Doyle New York.
Alexandra Lebenthal learned from her father, Jim Lebenthal, and grandmother before, about the basics of finances and investments. Today she is the CEO of Lebenthal & Co., LLC and its wealth management division, Alexandra & James Co.