A Comprehensive Guide to the Pawn Industry Throughout History
As mankind’s oldest financial institution, pawnbroking carries on a tradition with a rich history. Often called the “the world’s second-oldest profession,” pawnbroking can be traced back at least 3,000 years to ancient China, and has been found in the earliest written histories of ancient Greek and Roman civilizations. Briefly, pawning is a form of collateral lending. Throughout history, pawnbrokers have provided monetary loans in exchange for valuable items. These items are then held by the pawnbroker for a contractual period of time during which the owner of the item can repay the cash loan, plus an amount of interest, to reclaim their goods. If they are unable to come up with the money to buy the item back, the broker has the right to sell the item to another buyer. This is a “pawn.” Unlike other forms of credit, pawnshop loans are typically for small amounts, set at simple interest rates, extend over very brief amounts of time, and can be obtained immediately.
The earliest pawnbrokers were in the 5th Century and were established, owned, and operated by Buddhist monasteries as a method of granting short-term credit to peasants. During the Southern Song dynasty, wealthy laypeople would sometimes form partnerships with Buddhist monasteries and open pawnshops (in doing so they also managed to avoid certain property taxes from which monasteries were sometimes exempt). For example, a 1202 memorial records the practice of ten people coming together to form an association (know as a ju), which would then back the establishment of a pawnshop in a monastery.
In Rome, during the 1st century BC (also known as the “last century BC”), Emperor Augustus Caesar (born Gaius Octavius) rose to power after the assassination of his maternal great-uncle Julius Caesar in 44 BC. —Caesar’s will named Octavius as his adopted son and heir.– One of Augustus’ first acts as Emperor was to converted the surplus of criminal’s confiscated property into a fund from which the state lent money without interest to those who pledged valuables equal to double the amount borrowed.
Our word ‘pawn’ comes from the Latin word ‘patinum’ meaning ‘cloth’ or ‘clothing’.
During the Middle Ages, certain usury* laws imposed by the Church prohibited the charging of interest on loans, thus the popes lent money to the poor only, without interest, and on the sole condition of the advances being covered by the value of the pledges. An institution that costs money to manage and derives no income from its operations must either limit itself or must come to a speedy end, and these primitive efforts, like the later Italian ones, all failed.
In the early 1500’s, Pope Leo X declared that the pawnshop was a lawful and valuable institution, and threatened with excommunication those who expressed doubts on the subject. Later The Vatican saw to the establishment of state or municipal pawnshops and prominent families such as the Lombards of England and the Medicis of Italy became known as money-lending families.
*Usury is the practice of making unethical or immoral monetary loans intended to unfairly enrich the lender. Someone who practices usury can be called a usurer, but the more common term in English is loan shark.
St. Nicholas (also called Nikolaos of Myra) is the patron saint of pawnbrokers and bankers. Born in 280AD in Patara, fifty miles west of Myra in Turkey, to a wealthy Christian family. His wealthy parents died in an epidemic while Nicholas was still young and he was raised by his uncle—also named Nicholas—who was the bishop of Patara. He was ordained into the priesthood at 19 and quickly become renowned for his selfless acts of generosity. When his uncle, Bishop Nicholas, went to Jerusalem, he appointed young Nicholas as his deputy, overseeing the monastery, and the legend of the ‘boy bishop’ began to take shape. Over time, he came to be regarded as a saint by all who knew of him, or his deeds. One of the most famous stories tells that he gave, even before he was ordained, three bags of gold coins to a desperate man, in order that he could save his daughters from poverty and allow them to get married.
The Medicis adopted the three golden “bezants,” or disks, as part of their family crest in the 15th century, though the Lombards had already been using this trademark for the better part of 100 years. Both families became powerful finance houses, and the golden disk symbol came to symbolize the ethics of mutual trust.
When the family later split in two, one half of the family became bankers and the other, pawnbrokers. The pawnbroking side of the family took with it half of the family crest, which incorporated three gold disks. These three golden disks (commonly referred to as the “Lombard”) represented on the Italian Medici Family’s Coat of Arms still remains the trademark for pawnbrokers today.
Because so many people were illiterate, shopkeepers typically hung three-dimensional signs at their entrances representing the goods or services they provided within. Hence, the gold disks, rendered in three dimensions, became balls.
When King Richard II married Queen Anne of Bohemia, he pawned large quantities of jewels with the citizens of London.
England’s King Edward III famously pawned some of his jewels to the Lombard family in 1388, to help raise funds for the Hundred Years’ War against France. And an equally great king Henry V did much the same in 1415.
Queen Isabella I of Castile pawned some crown jewels to pay for Christopher Columbus’ expeditions to the New World. On 3 August 1492 Columbus’ expedition departed and arrived in what is now known as Watling Island on the 12th of October. He named it San Salvador, after Jesus the Savior. He returned the next year and presented his findings to Queen Isabella and her husband, King Ferdinand, bringing natives and gold under a hero’s welcome.
In 1485 the Earl of Richmond, before becoming King Henry VII, borrowed money from the French King, leaving two live pledges (the Marquis of Dorset and Sir Thomas Boucher). He won the crown at Bosworth Field, borrowed 6,000 marks from the patient citizens of London and then redeemed the two noblemen!
Despite the fact that a pawn had earned him the crown, Henry VII persistently harassed the Lombard Family and in the very first year of James I’s reign (in 1603) an Act against Brokers was passed. The act was aimed at individual brokers, of whom there were many in London, since this type of broker was regarded as a mere receiver of stolen goods. The act stated that no sale or pawn of any stolen goods to a pawnbroker shall alter the rightful possession of the property, and that pawnbrokers refusing to return the goods to the person from whom the goods were stolen, shall forfeit double the value. This act remained on the statute-book until Queen Victoria had been on the throne for 35 years.
Charles I passed another act to make it clear that the pawnbroker was not deemed a respectable or trustworthy person. Nevertheless a plan was raised for setting the king up in the business. The English Civil War was fast approaching and supplies were badly needed, when an ingenious Royalist proposed the establishment of a state pawnhouse. The proposition stated how “the intolerable injuries done to the poore subjects by brokers and usurers that take 30, 40, 50, 60, and more in the hundredth, may be remedied and redressed, the poor thereby greatly relieved and eased, and His Majestie much benefited”. That the king would have benefited is obvious, since he was to enjoy two-thirds of the profits, while the working capital of £100,000 was to be found by the city of London. In 1638 he granted the citizens of London a Charter called ‘Fees to be taken by the Register for Brokers – for the Bond to be entered into by every Broaker, Brogger & Huckster to the Chamber – Eightpence.’ ‘For every bargain, contract & pawn for and upon which shall be lent or given one shilling or above and under five shillings – one farthing.’. The rate for transactions of 5 to 20 shillings – a fee of one halfpenny: 20-40 shillings a fee of one penny.
In England in 1872 an act was passed called the Pawnbrokers Act, which established guidelines and restrictions for interest rates, regulation of the industry and prevented brokers from selling stolen items. This law contained the following provisions:
- The pawnbroker was now held responsible for any work done by any apprentices or servants.
- The shops were required to have a sign over their shop that contained the pawnbroker’s “christian and surname, and the word ‘pawnbroker’.”
- If anyone pretended to be a pawnbroker and did not have a license, the fine could be 50%.
- Business was not permitted on Sunday, Good Friday, Christmas Day, or other days designated for feasts or thanksgivings (in England, law not applied to Ireland).
- The license would be revoked if the pawnbroker knew the goods they held were stolen.
- The pawnbroker had to protect the property s/he held. If it was damaged by fire, the pawnbroker had to pay whatever was pledged plus 25%.
- The pawnbrokers were required to keep records of their business.
This act still stands today.
The first places in the U.S. to identify themselves as pawnshops, usually marked by a Lombard, were established in the second decade of the 19th century. The number of pawnshops dotting urban landscapes only increased, thanks to the growth of the domestic manufacturing sector, which generally paid its workforce low wages. A pawnshop loan could be a crucial bridge between paydays, providing cash for basic necessities such as food and rent on the security of personal possessions, usually clothes. These loans also helped business owners meet payroll and the rich to finance their vacations. Pawnshop loans were so essential to so many that there was one item in pawn for every man, woman and child living in New York City in the year 1828 alone.
The list below comes from the only existing business records of a 19th-century pawnshop. It’s just a sample of the 130 pieces of collateral that pawnbroker John Simpson took in — and the amount he loaned on them — at his pawnshop at 25 Chatham Street in New York City on Aug. 21, 1838, a typical day:
2 coats & razor 3.50
blanket, coat, and book .75
gown .18 3/4
3 books 2.37 1/2
pair spectacles .62 1/2
rasp .12 1/2
2 sheets & petticoat .50
cloak & 4 books 1.00
silver watch with broken hands 2.00
lever watch 5.00
saw .37 1/2
broach .37 1/2
gold watch chain and key 18.00
8 collars .37 1/2
pair of lamps .12
pair of pants 1.00
box of jewelry 1.00
gown and cape .75
jacket, pants & vest 4.00
sheet .18 3/4
music box 1.00
handkerchief .12 1/2
coffee box 30.00
table cover 1.00
silver medal 2.50
From the lowly 6-cent apron to the prized coffee box, they represent the great variety of commodities in circulation at the time. Although vastly different in particular from today’s pawns, they are very much the same in nature.
By providing short-term loans collateralized by the material stuff of everyday life, the pawnshop serves an important economic function as it has done for thousands of years.