The First Pawn Shops
More than 3,000 years ago, pawn shops first emerged in Ancient China
as a method of granting short-term credit to peasants. Some pawnbrokers
operated independently, but over time most of these businesses were run
through pawn shops. Pawnbroking thrived in ancient Greece and Rome,
giving merchants a way to get small shops off the ground. During the
Middle Ages, some restrictions were placed on charging interest by the
Catholic Church, halting the growth of pawn shops. These rules were
relaxed in the 14th and 15th centuries in Europe as short-term credit
became an important way of financing business endeavors and granting
temporary aid to the poor. Prominent families such as the Lombards of
England and the Medicis of Italy became known as money-lending families.
England’s King Edward III famously pawned his jewels to the Lombards in
1388 to help finance war against France, and Queen Isabella of Spain is
said to have put up her jewelry as collateral to fund Christopher
Columbus’ expeditions to the New World.
The word “pawn” stems from the Latin word “patinum” meaning cloth or
clothing. For the working class, clothes were often the most valuable
items they owned. Though the majority of pawn shops have always been
privately operated, some public pawn shops were set up as charitable
funds in Europe in the 18th century, offering low interest loans to the
poor to help curb debt. The practice of pawning clothes on Monday and
retrieving them on Friday--“payday”--was a common way for poor people to
make it through the week during the 19th century. Since people in need
of quick cash were more apt to be on the fringes of society during this
era, protections were put in place to try to prevent the pawning of
stolen items. The Pawnbrokers Act of 1872 in England established
regulations protecting pawnbrokers who inadvertently sold stolen items.
This act also stipulated the amount of interest that could be charged on
pawned items, and set out overall guidelines for the industry,
establishing a pattern of regulation that continues today.
Pawn Shops Today
In the past 100 years, the number of pawn shops has skyrocketed in
the United States. During the Great Depression era, pawn shops were
among the only institutions offering cash as banks failed and people
were forced to give up their cherished items to make ends meet. Today,
whether in big cities and small towns, pawn shops are still a primary
place people can go to turn their items into cash. These shops operate
as mini-banks for millions of Americans who do not hold checking
accounts, and they also serve as an area of exchange for people of all
class backgrounds to buy and sell unique, rare or coveted items.
Electronics, musical instruments and distinctive pieces of clothing are
also commonly pawned items.
The pawn shop industry has been criticized at times for preying upon
the poor with inflated interest rates and low-balling the value of goods
in order to turn a profit. But organizations such as the National
Pawnbrokers Association, established in 1988, contend that their
industry offers a viable solution for those in need of cash. Pawn shops
are required to uphold clear regulations about the terms of the pawn
contract and the amount of interest on the cash loans. Each pawned item
is also registered to prevent the sale of stolen items.
Pawn shops are repositories of history, holding antiques, jewelry,
furniture and other items that have been passed from generation to
generation. Their owners may genuinely know their source, or offer tales
of where they believe items came from and how much they are worth. Of
course, pawn brokers do their own assessment of each item, estimating
its age, authenticity and value on the open market. Along the way, they
develop a unique set of skills, sniffing out the authentic from the
fake, the valuable from the worthless and the art of driving a hard
bargain.
