Just as France was being chas­tised for exces­sive national bor­row­ing with a sov­er­eign debt down­grade, thou­sands of lucky French peo­ple had their finan­cial oblig­a­tions for­given after the country’s old­est bank decided to sim­ply wipe their slate clean.

Granted, it’s a small slate. The 3,500 clients who ben­e­fit­ted from the bank’s largesse had debts of 150 euros or less (about $190) with the Crédit Munic­i­pal de Paris, also known as the “Mont-de-piété,” the bank of the poor, which has for cen­turies allowed the needy to get loans against their valu­ables — a kind of eth­i­cal pawn­shop, or the orig­i­nal microlen­der. The small kind­ness was wel­come for many.

“I’m very happy, it’s the first time I get some­thing for noth­ing,” said Geneviève, an ele­gant woman in her fifties who was at the bank to get back a gold coin and a small wed­ding band she had pawned three years ago. “There came a point when I needed money. They’re not worth much but they’re impor­tant to me.”

The unex­pected gift is a way for the bank to cel­e­brate its 375th anniver­sary. The Crédit Munic­i­pal de Paris was cre­ated in 1637 by Théophraste Renau­dot, a doc­tor, jour­nal­ist and phil­an­thropist who wanted to com­bat poverty by giv­ing the needy access to fair banking.

“The goal was to com­bat usury,” explains Thierry Halay, who authored a his­tory of the Mont-de-piété. “Inter­est rates at the time could go up to 130 per­cent,” which quickly turned small loans into unman­age­able debt.

The good doctor’s idea was to give the poor peo­ple of Paris loans they could rea­son­ably hope to repay, at decent rates for the time (about 10 per­cent annu­ally) against what­ever col­lat­eral they could pro­duce: pots and pans, linens, sil­ver­ware, arti­sans’ tools. Halay found evi­dence of a 19th-century woman so des­ti­tute her only pos­ses­sion was her mat­tress. Every morn­ing, she would carry it to the bank and pawn it. With that money, she’d buy pota­toes, sell them for a profit dur­ing the day and buy back her mat­tress at night.

Today, the bank stores more than a mil­lion objects, from the puny piece of jew­elry to the grand mas­ter­piece, in head­quar­ters cov­er­ing a city block in the his­tor­i­cal cen­ter of Paris. With a cap­i­tal­iza­tion of 60 mil­lion euros, the bank had 93 mil­lion euros in pawn-broking loans out­stand­ing in 2010. Its 2010 profit of 1.3 mil­lion euros was partly assigned to improv­ing shel­ters for the homeless.

“It was the country’s first sec­u­lar, wel­fare insti­tu­tion. It was a safety net,” Halay says.

Sim­i­lar city-owned, not-for-profit banks opened all over the coun­try on the same prin­ci­ple: Pawn an object and you get a year­long loan. Pay off the inter­est (4 to 8.9 per­cent annu­ally) and you can extend the loan; pay off the prin­ci­pal and you get your prop­erty back. If your valu­able is sold for more than you owe, the profit is yours. These banks were even­tu­ally granted a state monop­oly on pawn-broking loans, which con­tin­ues to this day; France is thus a coun­try with­out pawnshops.

Celebri­ties of the day secretly used the bank: Vic­tor Hugo, Claude Monet and Napoleon’s first wife, Joséphine de Beauhar­nais, among oth­ers. Prince François d’Orléans, third son of King Louis-Philippe, once pawned his watch to set­tle a gam­bling debt. Ashamed when asked what hap­pened to his pre­cious time­piece, he answered, “I left it at my aunt’s (ma tante).” To this day, get­ting help from “ma tante” is a dis­crete way of say­ing one’s been going to the “poor people’s bank.”

“Peo­ple were never very proud to go to the Mont-de-piété,” Halay says. It may be why peo­ple turned away from it: With the pros­per­ity of the 20th cen­tury, peo­ple wanted to for­get this sym­bol of poverty.

But it is no longer for­got­ten. As the eco­nomic cri­sis rip­pled through Europe, the Crédit Munic­i­pal de Paris saw a 29-percent jump in atten­dance in Decem­ber 2011, com­pared with the same month in 2010. France’s econ­omy grew about 1.75 per­cent in 2011, but econ­o­mists expect less than one per­cent in 2012, maybe even a reces­sion. Unem­ploy­ment is at 9.8 per­cent, reach­ing 10-year highs and still climbing.

“We get more and more young peo­ple, stu­dents and retirees, too,” says Flo­rence Maram­bat, a spokes­woman for the bank. “Peo­ple used to get their prop­erty back after 11 to 13 months; now it’s closer to 24 months. But nine out of 10 still get it back.”

“Our direc­tor likes to say our wait­ing room is like that of a hos­pi­tal emer­gency room,” she adds “Every­one comes to it at some point.”

Nearly 700 peo­ple come through here every day, on awk­ward hall­ways and too-small wait­ing rooms. Some are clutch­ing a jew­elry pouch, oth­ers have a let­ter, which the bank started send­ing out last week, noti­fy­ing them to come claim their valu­ables for free. The oper­a­tion will con­tinue in waves through the end of February.

Photo via Wiki­me­dia