Economy great - for pawnshops

Carin Dillingham handed over her watch to the pawnbrokers at Society Hill Loan as if she were giving up one of her bones.

The 30-year-old bookkeeper stood pregnant, broke and sad under rows of pawned guitars hanging like curing hams from the ceiling of the ragged South Street shop. She got a $20 loan for her $200 Bulova, a gift from the Harley-Davidson Co., where she used to work.

"It feels so weird," said Dillingham, accompanied by her fiance, Pat Lapetina, 35, an unemployed ironworker doing painting jobs on the side. The couple recently moved to South Philadelphia from Florida to build a life.

"I worked hard for this watch. I'm middle-class, not poor. I can't believe I have to do this to buy gas."

Federal Reserve Chairman Ben S. Bernanke won't call what we're living through a recession. But at Society Hill and other such shops - where they measure economic misery in increasing volumes of pawned bling - they'll tell you that hard times are hard times, whatever label the eggheads affix.

"People are cleaning out their houses of gold, silver, whatever, to get money just to fill their cars with gas," said Nat Leonard, 51, whose grandfather opened Society Hill in 1929. "People are pawning out like crazy."

Business is up maybe 20 percent over last year.

"With this economy, we're not done yet with bad times," Leonard continued. "Not even close."

Things are so awful, he said, he's getting loads of first-time customers.

"I've got business owners coming in to pawn things just to make their payrolls," Leonard said, incredulous. "I've never seen that before."

In this economy, people aren't buying as much jewelry as usual, so retail jewelers on and around South Street have to pawn inventory to pay their workers. "One jeweler owes me $150,000," Leonard said, showing off the pawned collateral in a backroom safe.

Deep in the dark depository, dozens of plastic bags hold a pirate's booty of rings, master-of-the-universe Rolexes, diamonds, and back-of-the-closet Krugerrands. Bunched and intertwined, the pieces collectively look like junk.

But take them out one at a time under Leonard's fluorescent lights, and their inherent worth shines through.

Less valuable jewelry fills Leonard's front-of-the shop glass counters. Typically, a person brings in a piece of jewelry whose worth Leonard or an associate will assess. Leonard may offer around one-third the value in a loan, at 3 percent interest. If the person doesn't return within eight months with principal and interest, Leonard has the right to sell the jewelry.

Increasingly these days, people are forced to pawn signficiant pieces - many of them obviously gifts - and are unable to pay back the loan.

Given in love, they were pawned for gas, food, whatever.

"This makes me sick, sick to my stomach," said Bobby Doran, 42, a South Philly brick repointer. He had just come in to reclaim his gold crucifix, paying back the $70 loan Leonard gave him plus $2.50 interest.

"This thing is sentimental. It's important to me," Doran said, gripping the cross, which Cardinal Justin Rigali had blessed. "I pawned it for gas for the week."

It's not just fuel that's bringing new people to pawnshops. And they're not all brick pointers.

"Upper-income people are in pawnshops nowadays, needing money right away to meet payments," said Bill Stull, chairman of the department of economics at Temple University's Fox School of Business and Management.

"We are in an economy in which many people are living right at the margins, even middle- and upper-income people. They have little savings, they've borrowed so much, their credit-card bills are high, and their house values are going down."

Over at Carver W. Reed & Co., a pawnshop at 10th and Sansom Streets since Lincoln was president, more and more higher-echelon people are filing in, owner Tod Gordon said.

"The upper middle class is feeling the crunch like never before," he said. "They're bringing in diamonds and gold to pay for margin calls on stocks. There's a feeling of despair.

"These people are used to paying their bills, no problem. Now it's a whole new world. They're struggling. So maybe they won't go on vacation this summer, and they'll pawn jewelry to fix the roof."

As a result, pawnshops are more frequently becoming the secret repositories of great local wealth.

Somewhere in the recesses of the Society Hill shop or one of its storage facilities is a huge art collection that a well-to-do patron was compelled to pawn. Also, Leonard's associate Jim Shea said, he recently lent $17,000 on a historic Philadelphia fire hat worth around $50,000.

And the shop is holding 30 guitars, worth $170,000, that a Grammy Award-winning Philadelphia musician owned. "He bought a bunch of properties right when everything in the economy was hitting the fan," Leonard said. "I feel awful about it. I don't want to sell his stuff out."

Of course, as always, things are worse at the bottom of the ladder.

"I'm seeing people extending their loans, unable to pay back their $100 loans for diapers, food, medicine," said Bob Sink, owner of JR Auto Tags & Pawnshop in Bristol Township.

"These folks are making $10 an hour or whatever working at Home Depot and can't cut down on expenses any more," Sink said. "So they borrow against a gold chain or a new tool. The economy is really hurting them."

Also stung are young people, hitting pawnshops in unprecedented numbers.

"We never saw so many people in here 30 and younger," Society Hill associate Damien Robinson said. He spoke as a 22-year-old Neumann College graduate walked out with a $75 loan on her Dell laptop computer. "What are young people going to do for rent now that apartments are so expensive?"

It's a question that Dillingham, currently light one Bulova watch, is straining to figure out.

"I didn't think living in Philly would be so hard," she said. "I thought things would fall into place."

Hearing his fiancee's anguish, Lapetina said quietly, "It was hard to pawn her watch 'cause it's one of her favorite things. It's just been so rough. But I told her I'll get it back for her. Soon."