Saturday is high tide at Uptown City Pawners & Jewelers, on Devon west of Broadway. There's invariably a crush of customers, some who come every Saturday to put up valuables as collateral on a loan or to make a purchase on the cheap. The glass cases groan with merchandise: Watches, by Lucien Piccard and Pulsar, go for $59--"40 to 60 percent off retail," says a sign. There are gold chains, tape decks, cameras, TV sets, VCRs, electronic keyboards, and guitars, both electric and acoustic. Emeralds, diamonds, and amethysts lie in felt-lined boxes with "Uptown City Jewelers" etched on the inside of the lid.
"All those diamonds are out of pawn," says Irv Jacobson, the proprietor of Uptown City, a muscular, long-haired man of 38. "There are pieces from all over the world, and all different time periods. We only deal in the real thing." He looks over at a case of watches, the gleam of his own Rolex catching the light. "Those are things people relate to," he says. "Over there are six, maybe eight, maybe ten Rolexes, all out of pawn."
Uptown City maintains three booths where customers can go to pawn their goods. "We don't deal on the floor," says Jacobson. "With a booth, someone can go inside and deal in privacy." A woman in a leopard-skin coat is waiting to be buzzed into one booth ("Security," Jacobson explains), where across bulletproof glass she will strike a deal with the clerk. A man in a leather jacket, shoulders hunched, stands before booth number two.
The pawn personnel at Uptown City are courteous, says Jacobson, and not averse to negotiating--up to a point. The rate of interest on a pawn transaction is set by law at no higher than 3 percent; but few pawnshops ever go lower than that, and a new statute also allows pawnbrokers to charge one-time service fees. So negotiations revolve mainly around the value of the item. "If you say your watch is worth $100 and I say it's worth $10, we have a problem," says Jacobson. "So I'll say, 'Maybe we should forget about the watch. Do you have a ring? A chain? I really want to help you.'"
Sometimes a customer will tell a tale of woe to get the clerk to boost the estimate. "If they break into tears, people think that will convince us to give 'em more," says Jacobson, "but we want to give 'em more anyway. It's not because we're caring, loving people. The higher the value of the thing, the more money we make, plus the more money we can give on the loan."
In his effort to look like a good guy and a fair businessman, Jacobson is straining against centuries of negative references to pawnbroking: proscriptions against usury in Deuteronomy, Shakespeare's character Shylock, damning passages from Dickens. Chicago politicians, aware that their constituents consider hockshops unsavory, have made it increasingly hard for them to open. "My people have been here for 25 years, fighting redlining and crime, going out on community patrols," says 48th Ward Alderman Mary Ann Smith, the City Council's most outspoken opponent of the business. "They don't want pawnshops."
But there's at least some feeling out there that pawnbrokers have gotten a bum rap. John P. Caskey, an economics professor at Swarthmore College who has studied pawnshops, compares pawnbrokers to undertakers. "Inherently it's a sound business. . . . You may not like it, but there's definitely a need there."
And business, after bottoming out in the 70s, is on the rise. The number of potential pawn customers--low earners and others shut out of the conventional lending market--is growing, and many states, particularly in the south, have enabled brokers to charge high interest rates. There are even pawnshop chains, the largest of which is Cash America Investments, based in Fort Worth, Texas.
Pawnbrokers are trying to use that growth to change their image. "We're promoting what we call 'the pawn experience,' says Nashville broker Louise Seawright, a past president and spokesman for the National Pawnbrokers Association, founded in 1987 and now based in Chicago. To Seawright the "pawn experience" means the ability to get a bargain if you're a buyer and to secure a loan if you're a borrower who can't get credit anywhere else. "If you need short-term cash, we should be one of your options," she says.
In Chicago, Jacobson is arguably the most prominent booster of the new style of pawnbrokers. He exemplifies what he calls "a 90s attitude" toward pawning; he is building a little empire of shops on the premise that pawnbrokers must keep up with the times. He recently opened a pawnshop in an Oak Park strip mall; he also helped found the Illinois Pawnbrokers Association, a group that last year managed to get the state to increase the amount a broker can charge.
"If you're talking about Irv Jacobson, you're talking about one of the masters of the business," says Ross Merritt, who co-owns and manages Jacobson's store in Oak Park.
"Hey, how ya doing?" says Irv to a customer in a stocking cap who brushes past him to pawn a watch in booth number one.
"In the olden days everybody in pawnshops was a pushy, aggressive salesman," Jacobson says. "We have a more progressive attitude now. Let the person look. Don't push. Let the person develop with you--no one wants to feel that you're shoving shit down his throat. We want to be helpful, like at Eddie Bauer. Not like at Service Merchandise, where you can lay down on the floor and die and no one will help you.
"Hello, dear, what can I do for you?" Jacobson says to a haggard-looking woman in her 30s, trailed by a child. The woman is eyeing an out-of-hock black-and-white TV, but Jacobson directs her to a more expensive color set priced at $139. Too much money, says the woman. As enticement, Jacobson offers "a nice 30-day guarantee," but the woman just rolls her eyes.
"Now that 30-day guarantee isn't set in stone," Jacobson says. "If your set dies at 31 days, let us know. But you should get several years out of a good TV anyway."
After asking a few more questions--can she get cable on the $139 set?--the woman finds her attention being turned to a $165 19-inch model manufactured by Toshiba. "You're better off with this," says Jacobson, hefting the larger set off a shelf. "I want to get you the product that you need."
The woman weighs the decision. "My boyfriend stole my last set," she says. "I was on vacation in Florida. Then I bought a new one, and he came by and smashed the picture tube on that one."
Jacobson delivers a thin smile. "I think I'll get the Toshiba," concludes the woman, who pays for her purchase in cash. "Henry," Jacobson asks a clerk, "you busy, my friend? Would you take this TV out to this young lady's car?"
Jacobson sets certain restrictions on his wares. He used to play in a rock band, so he's a sucker for musical instruments--especially cymbals and drums. But he doesn't take large appliances or big-screen TVs, "although we'll take a microwave. We don't want toasters or coffeepots, and at this location I don't take tools--they're dirty and greasy and ugly. They display like garbage."
Ninety percent of the merchandise pawned at Uptown City, in dollar value, is jewelry, and Jacobson, who also owns the cut-rate jewelry store next door, maintains a jewelry lab in the back. He requires his longtime employees to get degrees from the Gemological Institute of America, a school based in Santa Monica, California, that issues mail-order diplomas. Jacobson himself is quite the gem analyst, says Ross Merritt. "He doesn't even need a loupe. He can look at a diamond with his bare eyes and tell you what grade it is." Uptown City bases the amount of its loans on the price an item will bring if it remains unclaimed. "It's what I could sell something for that matters," says Jacobson. "If I could sell a watch or ring for $1,000, I might give you $600 to $700 on it. But if it's a run-of-the-mill thing--just another watch or another bracelet--well, we're probably looking at $300." Rolexes are in demand now, he says; on a good Rolex Jacobson will lend three-quarters of his selling price.
Jacobson estimates that Uptown City's average loan is $100, about twice the national average for pawnshop loans. If the pawner defaults, as about 30 percent of Uptown City's do, Jacobson puts the property up for sale. Jacobson claims his jewelry sells for less than half what you'd pay downtown; other items vary. A beat-up stereo can be had for 10 percent of the retail price. "But on a stereo that's just out of the box I'll charge 80 percent of the full value," he says.
The pawn customer is often stereotyped as somebody who is impoverished, but that doesn't square with reality, says Jacobson, because a poor person has little of value to pawn; most patrons, says Jacobson, are people on the verge of poverty caught in a crunch: "You've lost your job. You got hurt or the school tuition is due. Maybe there's been a fire and you've got no insurance. Maybe your son gets arrested. We also get wealthy folks, or should I say people with the facade of wealth. There are lots of people who like diamond rings and watches, yet really they can't make ends meet. There aren't pawnshops in Highland Park, you know, so they come to me."
While Jacobson declined to let any of his customers be interviewed, I did talk to the Saturday-afternoon crowd at American Pawners & Jewelers, on Belmont under the el tracks. A 58-year-old man in a leather jacket was out with his wife scouting for a 35-millimeter camera for less than $200 and having no luck. "The prices are terrible," the man remarked. "You try to argue about it, but what good does it do?" A recent divorcee in her 20s tentatively approached the pawn window, seeking an estimate on her wedding ring, which had cost $2,100. "It doesn't mean much to me," she murmured. The man behind the window would only give her $100 for it, and she walked away. Another man was helping his 17-year-old shop for a tape deck. For a half hour the kid looked at the offerings, but found each one too old-fashioned; finally, despite some misgivings, he settled on one for $75. "There's a little bit of dust on it," the salesman joshed, "but we don't charge for that."
Jose Melendez, a young shipping clerk, has been pawning his belongings regularly for about a year now, to get cash to buy food and clothes for his daughter. Melendez, who frequently pawns a gold nameplate engraved with his nickname, "Kool Aid," has neither a bank account nor a credit card. "At a bank they look at you like you're an animal," he observed, "but here it's no problem. I've come here so many times I've lost count." Banquet waiter Danny Hilson said he'd just pawned his CD player in order to take his girlfriend to the movies. Hilson keeps a bank account, but toward the end of the month, when he's short, he prefers to pawn the CD player or a gold chain he owns to get a quick $25. Joseph DiNardo, a grizzled man in a plaid shirt, said he'd just pawned a bracelet set with 58 diamonds. "I'm a common hustler," he said, "though I don't steal nothin'." He'd just relocated from Florida and said he'd been using a stockpile of jewelry--80 rings, 7 bracelets--to borrow on.
To keep crooks from using the shop to fence stolen goods, Uptown City requires pawners to present two pieces of identification. All city pawnshops send daily reports on their customers and merchandise to the pawnshop review section of the Chicago Police Department. If an item or a customer looks suspicious, the section investigates. "I have here a report on a guy named Timothy who pawned a gold bracelet engraved with the name 'Larry,'" says Detective Irv Nicholson, head of the section. "So who's Larry? Is he lying in the gutter with his head split open? My guys will find out." Or try to. Though Nicholson's four-man unit pursues 15 leads a month, the probes seldom turn up the culprits. "Everyone has the same story," says Nicholson. "The customer didn't know the stuff was stolen, and the pawnshop owner can't remember a thing."
But the procedure keeps proprietors on their toes. "Usually if the shops think something is stolen they back away from it," says Nicholson, "because if it turns out to have been stolen we confiscate it and they lose their money." Jacobson says less than 1 percent of the items pawned with him are hot. "We can make a decent income without dealing with stuff like that," he says.
Moneylending, one of the world's oldest professions, supposedly existed as far back as 2,000 to 3,000 years ago in China. The profession began to flower in Europe during the Middle Ages, when it became a predominantly Jewish calling; Jews stood outside Catholic canon law and its proscriptions against usury. Beginning in the late 1400s charitable pawnshops run by municipalities, which came to be known as "monts-de-piete," sprang up in Italy, France, and Belgium. They were frequented by artisans and small tradesman, though according to legend (but not, evidently, to fact) Isabella of Castile put up her jewels as collateral to finance Christopher Columbus's first trip to the New World.
British pawnshops--which were private from the outset, with rates set by the government--flourished in greatest profusion with the coming of the industrial revolution. It was then that the symbol of the pawnshop became three balls painted gold or blue. There are various explanations as to what the balls mean. One account says they derive from the three gold purses on Saint Thomas of Lombard's shield. They're said to stand for "buy, sell, trade"; they're also said to represent the chances--two to one--against a pawned item being redeemed (though Kenneth Hudson, author of a recent history of British pawnbroking, dismisses that notion). Whatever their origin, the balls are a common sight today. Uptown Pawners displays a set on the orange and yellow face of its building, and there is this sign in Jacobson's office: "Old pawnbrokers never die . . . they just bust their balls."
Industrial-age England hardly brought respect to pawnbroking. In Sketches by Boz, published in 1836, Charles Dickens described a dusty, dirty pawnshop in a crummy neighborhood whose customers included a prostitute, a drunk, a wife beater, and a tuberculosis victim. "Of all the numerous receptacles for misery and distress with which the streets of London happily abound," wrote Dickens, "there are perhaps none which present such striking scenes of vice and poverty as the pawnbrokers' shops. The very nature of these places occasions their being but little known, except to the unfortunate beings whose profligacy or misfortune drives them to seek the temporary relief they offer."
Pawnshops first appeared in Chicago in the 1850s. By the turn of the century there were nearly 67 licensed shops, many of them downtown. Franks Collateral Loan Bank, founded by Leo Franks, father of the boy Leopold and Loeb killed, was on Madison Street until 1918; its successor, the Fidelity Loan Bank, occupied a site on the first floor of the old Morrison Hotel for many years. A cluster of seedier pawnshops made up a small district on South State Street.
There was also a cluster of three shops on 47th Street near the el tracks. Irv Jacobson went to work part-time as a stockboy at one of them, the New South Park Loan Company, when he was 17 and a student at Roosevelt High School; he'd take the el from Albany Park to the south side after school and on weekends. New South Park was owned by Mort Froy. "Mort had been in pawnbroking since he was 16 years old," Jacobson says. "He was my mentor. Without him I'd be nothing today. He took me by the ear and gave me direction." When Froy and Sid Feinberg, a competitor on 47th Street, joined forces to buy Uptown City Pawners from a widow in 1973, they offered Jacobson the chance to manage the place.
He was 21, a junior-college student about to enter Roosevelt University, and his parents, who owned a school-supply store, weren't enthralled by the idea of their son becoming a pawnbroker. The calling was as unattractive as ever. It had only been a few years since Sidney Lumet's movie The Pawnbroker, a stark portrait of Rod Steiger as a Harlem broker and concentration-camp survivor. "But my parents weren't the types who pushed their opinions on me," says Jacobson, who took the job.
Uptown City was then located on Wilson east of Broadway. By his own account, Jacobson worked hard to make the pawnshop a go, slaving six days a week open to close. "I lived like a pauper, and I saved my dimes," he says. "After two years I was able to buy a little piece of the business." In 1976 the pawnshop's building was condemned to make way for a parking lot, and Uptown City moved north to a spot on Broadway just south of Devon.
"People thought we were crazy, moving into what was a halfway decent neighborhood," Jacobson recalls. He vowed to become more service-oriented, to court the middle-class customer. "We went out of our way to kiss their asses," he says. The Edgewater chamber of commerce was not delighted with its new neighbor; Jacobson recalls a representative asking him to drop "Uptown" from the pawnshop's name, saying it bore a negative connotation. "I'll tell you what," offered Jacobson. "If you get Uptown National Bank to drop the name, I'll do the same." The subject was dropped.
In 1983 Jacobson moved Uptown City around the corner to its present location on Devon--technically out of Edgewater and into Rogers Park, as it happened. "I wanted more car traffic going by," he says.
By this time pawning had bottomed out in Chicago. The west-side riots following Martin Luther King's death in 1968 destroyed many buildings that housed pawnshops, and the merchants whose buildings weren't destroyed left of their own accord. The influx of cheap foreign goods and the rise of discount stores slowly put other pawnshops out of business. The block where the State Street pawnshops stood (now the site of the Harold Washington Library) was leveled in 1983. By the next year there were maybe a dozen pawnshops left in the city, according to Irv Nicholson. Some of the remaining brokers had started together under the banner of the Chicagoland Pawnbrokers Association, but the organization did nothing to stem the tide. "Ten guys would sit down, have dinner, and play cards," remembers Jacobson. "Someone would suggest something we could do, and someone else would say that's ridiculous. We'd accomplish nothing."
Jacobson barreled ahead. He bought out Feinberg's share of Uptown City, and then acquired full ownership after Froy died in a traffic accident four years ago; now he has a minority partner, Robert Zeff. In addition, Jacobson has majority stakes in the Mint jewelry store next door, the Mint Pawners on Howard Street, and Crown Jewelry & Loan in Oak Park. By renting the space adjoining Uptown City and the Mint to an independently owned jeweler and another pawnshop, he has also boosted his traffic considerably.
Despite Jacobson's apparent prosperity, he says the public perception that pawnshops profit in recessionary times such as these isn't true. "When the national economy is bad, you have to sell things for less than they're worth. Even if you loan out more money on the street, it comes in slower." It's at the point where the economy starts to recover that pawnshops are likely to do the best, he says.
The Indiana Department of Financial Institutions, which tracks the sales of its state's pawnshops, reports that the average Indiana store grossed about $135,000 in 1990. Jacobson speculates that anybody doing that little business in Illinois couldn't stay afloat. He says a 2,000-square-foot store like his, with two clerks, would have to gross $164,000 just to meet expenses and salaries, "and the owner isn't making shit." Scott Cohen, whose family owns four shops in the city, says a prosperous shop stands to gross about $250,000 annually. "But Uptown would probably make more," says Cohen, "because they're established." When asked how much Uptown City does make, Jacobson says "it's a possibility" his grosses touch $500,000.
Larry Cohen, Scott's brother and the owner of American Pawners on Belmont, says Jacobson is "the number one guy in pawnshops." Still, he doubts Uptown City makes $500,000 a year. "He's fucking with you," says Cohen.
In recent years demographic factors have begun to work in favor of pawnshops, argues Swarthmore College's John Caskey. In a recent speech at Bard College, Caskey reported that in 1989 seven million more Americans had incomes below the poverty line than a decade before. In the early 80s, meanwhile, deregulation forced banks to hike checking-account charges and other fees; as a consequence, more families now can't afford to bank conventionally. Even if they could, observed Caskey, "because of low incomes, unstable employment histories, or bad credit ratings, many would not be able to pass a bank or finance company's credit screening process." The upshot is a "stimulated demand" for currency exchanges and pawnshops.
Pawnbroking has exploded the most in some southern states, where laws allow a pawnshop to charge 20 percent or more a month in interest. According to Caskey, there are now 1,270 pawnshops in Texas. In Florida, where there is no ceiling on the interest rate, there are some 2,000 shops, says Michael O'Neal, operator of the Happy Hocker pawnshop in Fort Lauderdale and spokesman for the Florida Pawnbrokers Association.
The latest trend, though, is chain pawnshops, the largest of which is Cash America Investments, founded in 1983 and headquartered in Fort Worth, Texas. The publicly held firm has 185 outlets in eight states, many located in strip malls. "And they are well-lit, nice stores," says O'Neal, "not some guy downtown with a gun on his hip." Cash America, which tracks its inventory and the transaction histories of its borrowers by computer, reported 1991 gross sales of $138 million. That's not counting revenues from a 26-store English chain the firm acquired February 12.
Cash America defines its average customer glowingly. "The cash-only customer makes up the backbone of America," reads Cash America's 1989 annual report as quoted by Caskey. "He's the hard-working next-door neighbor, the guy at the corner gas station, or the lady who works as a checker at the local supermarket. . . . Why do these people need a pawnshop? First, there are times when they need extra cash. Maybe a child is ill and the doctor's bill must be paid. Maybe the car needs a new transmission. There are countless reasons why the customer might have an emergency need for cash."
Writing in the Journal of Money, Credit, and Banking in 1991, Caskey said there are 6,900 pawnshops in the United States, half the total number of banks in the country but more than twice the number of savings and loans. At the end of 1988 pawnshops accounted for $689 million in extended consumer credit, which was only one-tenth of 1 percent of the national total. But though the total dollar amount pawnshops lend out may be just a drop in the bucket, the number of loans they make is pretty high--35 million in 1988, says Caskey. "Even allowing for multiple loans to a core group of customers, pawnshops must serve several million Americans each year, and perhaps as much as 10 percent of the adult population." Pawnshops have become "a key credit source for lower-income Americans," he says.
The heightened power of pawnbroking has not been lost on operators. In the late 1980s pawnshop owners in several states--Florida, Texas, Tennessee, and others--organized into state associations; now 34 states boast such groups. In 1987 Miley O'Neal, Michael's father, led the way to the founding of the National Pawnbrokers Association. The 1,000-member NPA publishes a quarterly magazine, promulgates a code of ethics, and hosts an annual convention.
Steve Greenfield, the suave owner of the Fidelity Loan Bank--an upscale shop in the Loop that deals in fine jewelry, gold coins, and watches and draws its customers from Lake Shore Drive and the North Shore--was impressed by the NPA's activities. In October 1990 Greenfield convened a meeting at the Rosemont Holiday Inn, and 40 brokers showed up; in no time the Illinois Pawnbrokers Association was established. The IPA set an agenda that included improving the pawnbroker's image, policing unlicensed operators, and offering group insurance. The chief item on the agenda, however, was to change the state pawning statute to enable brokers to make more money.
Since 1909, the state has set a limit of 3 percent a month on the amount of interest a pawnbroker can charge. For decades pawnbrokers understood the law to mean they were obligated to keep a pawned item for 13 months before they could consider it unredeemed. But in 1987 that long loan period began to trouble Scott Cohen, who with his father runs State Pawners & Jewelers downtown. Cohen contacted his attorney, who found that the 1909 law provided a loophole whereby brokers could get their customers to sign a waiver to shorten the loan period. Now waivers are customary. State Pawners' loan period varies, ranging from 60 to 90 days. Jacobson will give 30 to 90 days on electronic items but nine months on a desirable piece of jewelry.
Despite the shortened loan periods, Illinois brokers were still feeling pinched by increased insurance and storage costs. In 1991 the IPA decided to follow the lead of other states and ask the state legislature to authorize brokers to charge a service fee on top of interest. There was no one more passionate on the issue than Jacobson, according to Scott Cohen, though it was Greenfield and IPA president Joe Brooks who took the cause to Springfield. Jacobson, the IPA's treasurer, tempered his role. "I'm too boisterous," he says. The IPA also hired Springfield lobbyist Joe Mudd.
According to Greenfield, the brokers originally wanted to charge a 5-percent-a-month service fee on top of the 3 percent interest; in other words, customers would end up paying 8 percent a month. But the legislators, notably state senators Arthur Berman, a Chicago Democrat, and Roger Keats, a Kenilworth Republican, balked. Berman felt that granting the monthly service fee was "an invitation to consumer rip-off." To both Berman's and Mudd's recollection, Keats demanded a fixed schedule of one-time fees. A schedule was eventually agreed on that ranged from $12 on a loan of $100 or less to a limit of 5 percent of the loan amount on a deal exceeding $1,000. The new law, which disappointed the IPA but was at least something, went into effect on January 1.
But all this monkeying with the bill muddied its language, and the law as it was passed makes it appear that brokers can charge more than one service fee per loan, when only one was intended. "There are a couple of different ways to read the law," contends Jacobson, who passes a one-time fee and a "minimal" monthly service fee on to customers.
The service-fee scheme has its critics. "I don't like the new system," says Scott Cohen. "It's a pain in the ass." Cohen says he only kept quiet at IPA meetings because "my asshole brothers told me to." Counters Jacobson, "There's no question [the service fees] will add to the competition, but before we were all stifled. The law as it was written was insufficient for companies to survive in this high-rent, high-insurance day and age."
Of course, there are those consumers who think the 3-percent-a-month interest was exorbitant enough even before all those service fees. Not so, says Steve Greenfield. He argues that banks, more interested in corporate customers than individual ones these days, ultimately bleed their clientele to about the same extent as pawnshops, what with extraneous fees and requirements like having a minimum balance or a minimum number of accounts. "You talk to any bank officer who's honest," says Greenfield, "and he'll tell you he won't make a loan unless he can clear 30 percent on it." Then there's the problem of qualifying for a loan. "Banks are scared as shit to make loans now unless you put up your fucking house," says Irv Jacobson.
That's not exactly true, says Bill Hocter, executive vice president of the Illinois Bankers Association. Hocter says holders of marginal deposits (a $5,000 CD, for instance) can borrow at or below the prime interest rate, "as long as they can manage [the loan] on their salary. . . . Why, you can borrow at only 18 percent a year just off your credit card," he says. As for Greenfield's contention that banks no longer care about the little guy, Hocter sounds the same note as Cash America. "Today the average working man and woman are the backbone of the banking system."
John Caskey says that while pawnshops do charge substantially more than banks in interest, the discrepancy is necessary. "If you go lower than three you're killing the industry, and the industry serves a purpose. After all, where else can people with no borrowing power except their possessions go? It's better to have a regulated industry than one where people have to borrow informally in the streets."
Officially all it takes to open a pawnshop is to post a $1,000 bond with the city, pass a background check, fork over a $1,200 annual fee, and make sure you're located in a building with high-intensity retail zoning. But many operators have found that community opposition can make it much more difficult than that. In 1987, for example, residents in Beverly forced Michael Sheahan, then 19th Ward alderman, to downgrade the zoning on a site in Beverly to block a pawnshop.
By then Ross Merritt, just a teenager, was working for Jacobson at Uptown City. "I broke him in," says Jacobson. "I taught him the game." From there Merritt briefly managed the Mint Pawners on Howard Street. But in 1988 he left to launch a pawn operation of his own on Broadway, two blocks away from Uptown City. "I was not very happy with him," recalls Jacobson.
Neither, it turned out, was the greater Edgewater community. In partnership with his brother-in-law, Merritt planned to turn what had been a furniture store into a high-end pawnshop dealing in diamonds, gold, precious stones, art, cars, motorcycles, and bikes. Alderman Kathy Osterman and her then-chief of staff Mary Ann Smith had two meetings with Merritt. Osterman was particularly disturbed at the prospect of cars and motorcycles being pawned, which Merritt had seen done in Indiana. While Merritt had the proper zoning, the alderman concluded that such an establishment affronted her community's sensibilities.
She certainly had reason to think so. When a Russian immigrant couple had tried earlier that year to open a pawnshop on Bryn Mawr, neighbors had gone up in arms; but the couple had had improper zoning, so their store was easy enough to close.
Letters opposing Merritt's plans flooded the alderman's office. "Pawnshops symbolize economic instability," wrote Jack O'Callaghan, a representative of the Mundelein Neighbors Organization. "In this community they are seen as businesses which facilitate conversion of items obtained through petty thievery into cash." Chimed in Gloria Aykroid, president of the Edgewater Glen Block Club, "Local merchants would be adversely affected as residents become reluctant to walk into the area of the proposed business." Jack Markowski, executive director of the Edgewater Community Council, argued that "a pawnshop sends out a negative message about our commercial district and makes it more difficult for us to attract the good businesses that are so badly needed."
Just to see what a pawnshop was really like, Mary Ann Smith went to visit Uptown City. She remembers observing "a poor mother trying to pawn something small, a watch or something. I was uncomfortable. As a casual observer, I couldn't be sure of the fairness of the transactions."
Osterman wrote to Maurice Parrish, commissioner of inspectional services, saying she was "alarmed" by Merritt's plans and asking him to hold up the necessary permits. "She just didn't like that I could open in her area without permission," says Merritt. "She wanted me to fall on my face. She didn't come out and threaten me per se, but she made it clear she could do anything she wanted in her ward." Osterman denies she ever muscled Merritt, "but I was responsive to the needs of the people who voted for me, and there was opposition to this pawnshop from every quarter of the 48th Ward." Merritt's lawyer told him that could mean the hassle of daily police and fire inspections. Figuring he couldn't win, Merritt backed off.
Meanwhile, Osterman passed an ordinance in the City Council that requires pawn operators to obtain a special-use permit on top of the proper zoning in order to open. The provision for a special-use permit enables residents living within 250 feet of a pawnshop to have a say before the permit is granted by the city's Zoning Board of Appeals.
Jacobson has had his own problems branching out. Three years ago he tried to open a pawnshop near the intersection of Irving Park, Cicero, and Milwaukee, called Six Corners by nearby residents. Jacobson felt Six Corners was a respectable locale where solid middle-class citizens might use his services.
He knew he needed a special-use permit, so he approached 45th Ward Alderman Patrick Levar for his backing. "I'm in your corner," Jacobson says Levar told him. "But I've got one problem. I sit on the chamber of commerce. If they're behind you, I'm behind you." Levar has a different recollection. "I wasn't going to approve anything that was going to deteriorate the neighborhood," he says. Nevertheless, he called the Portage Park chamber of commerce, where he received a chilly reaction to the idea of a pawnshop at Six Corners. "I suggested he go to Roosevelt Road or Madison Street," says Levar.
Jacobson says Six Corners didn't want him because they assume all pawnbrokers are seedy. He also thinks the Six Corners merchants felt financially threatened by his competitive prices. "If I'd been a shoe store, they'd have opposed me too," he says.
In his next stab at expansion Jacobson headed outside the city limits, where he figured he'd meet less opposition. He was strongly interested in a site that had been a jewelry store in central Oak Park, but was it situated in what had once been a pedestrian mall, and the area was zoned to exclude pawnshops, among other things.
In a January 1990 meeting, Jacobson made his case to the village clerk and other city officials, who could have granted him a variance. "It was a good discussion," says Christine Burdick, executive director of Downtown Oak Park, the quasi-public agency that administers the area. "We learned a lot about Mr. Jacobson's business, but it was felt it wasn't best for downtown." Jacobson was realistic: "I could have gone ahead and pushed to change the laws of the city, but that would have taken months or years."
His next stop was a new strip mall on North Avenue in Oak Park, just over the border from Chicago. "Irv called me every month for four months," says center owner Richard Blaurock. "Finally I spent half a day at his place on Devon, and I began to understand his business a little bit." Blaurock concluded that a pawnshop would add "synergy" to his shopping center, which also includes a pharmacy, a video store, and a Dairy Queen.
Before Crown Jewelry & Loan opened in August 1990, Blaurock got some flak from neighbors. "But then some people were upset with me that I put in a Dairy Queen instead of a Bresler's," says Blaurock. "I went with the feeling that Irv would do a good job. He's a solid citizen. Besides, I had a big mortgage to pay in the middle of a recession, so the calls I got didn't bother me a bit."
To the casual observer, Crown Jewelry is just another pawnshop. But co-owner Merritt, now reconciled with Jacobson, feels the sleek, gray-carpeted shop also bespeaks the coming trend in pawning. "We have Formica displays and lit windows like you'd see on Michigan Avenue," he points out. Plus the store has location. "We're not off the beaten track, paying low rent," he says. "We opted to pay more and be in a mall. A bus turnaround is across the street. People drive by and stop. They may be coming in to snatch a video, and they decide to give us a chance."
So far Crown is just getting by financially, according to Merritt, "but we're here and we're going to make a run of it. Hopefully we'll be around in 20 years. You watch."
The Cohen family, which has been pawnbroking in Chicago since 1911, tend to complain about their trade. "I remember when running a pawnshop was a quiet business," says Scott Cohen. "When I was a kid a TV was worth $10 for three years. Now, because of Highland and Fretter, you take a TV in pawn at $100, and 90 days later, when you own it, the TV is worth $100 new. So you have to sell it at $50, and you lose $50. This has become a fast-paced business, like McDonald's. Who needs it?"
"Every person who comes through your door needs more money than you can give them," says Larry Cohen. "It's negotiate this, negotiate that--you wake up in the morning, and you negotiate your way out of the bed. Your days are 50 minutes of bullshit, 45 minutes of crap, and the rest of the time you have coffee. Sure I make a living, but there's money to be made in other businesses too, and without the grief and aggravation. I'd get out of this in a New York heartbeat except it would break my father's heart."
Neither of the brothers puts much stock in the varnishing now being given to the pawnbroker's image. Scott, for one, can't envision pawnshops in malls. "Imagine a pawnshop trying to go into Woodfield Mall or Water Tower," he says. "It'll never happen--the image just isn't there. They can work on the image for another 500 years, and it still won't be there."
Jacobson remains sanguine, though his troubles of late may have gotten him down. Twice during interviews Jacobson was interrupted by police officers wanting to question him. He would say later he had purchased workout equipment that turned out to have been stolen. On March 12, Jacobson and his partner Robert Zeff were indicted for possession of stolen property after police found two Lifecycle exercise bikes and two StairMasters that had been stolen from a Bally's Chicago Health Club in their homes. Jacobson contends that he never knew the equipment, which he claims was sold to him by a Cicero man, had been stolen.
His enthusiasm for pawnbroking seems undiminished. "Now there have been guys who got into pawnbroking who never made dick and got out," he says. "You have to be heavily capitalized and you have to work hard, but I do both. The politicians are a problem now, but it's the little guy who tends to get fucked with that. In general this is a good business. Not scuzzy but classy. It's the recycling of merchandise, a chance to get bargains with great guarantees.
"But then that's the attitude an entrepreneur should have about his business, whether he sells hats, shoes, or gloves, or is in pawning. My glass is always half full is the way I look at things."
Jacobson doesn't fear that the chain pawnshops will push him out of business; they've generally steered clear of states with low interest rates. He says the chains deal in low-end items ("lawn chairs and fishing equipment") whereas he takes the high road: jewelry. Midwestern customers are different from southern ones, he maintains, tougher and savvier--the kind of customer Jacobson likes.
He intends to keep expanding. "I must open another store," he says. "I must go forward. There are going to be more and more pawnshops, and if I'm not behind one of 'em I'm going to lose a portion of the market share."
Art accompanying story in printed newspaper (not available in this archive): photos/Kathy Richland.