Why do people use pawn shops? At what point in history did this practice begin? How has it evolved over time?
If you’ve ever been interested in the field of pawnbroking and how it got to where it is today, you’re in luck. We’ve put together a brief history of pawnbroking that will give you greater insight into the process and why it continues to be popular both for sellers and buyers.
The origins of pawnbroking
Pawnbroking has its origins in ancient China, when people began using high-value items as collateral for loans. The word pawn itself comes from the Latin platinum, meaning cloth or clothing. Peasants would often pawn clothing because it was the only item of value in their possession.
There is also evidence of the practice occurring in ancient Greece and Rome. Pawnbroking was ideal for merchants who wanted an easier way to get their shops up and running. Entrepreneurs would even use pawn shops as a way to finance their business ventures.
By the medieval and Renaissance eras, the nobility was beginning to get into the moneylending game, using pawning as a key method. The Lombards of England and the Medicis of Florence both became well known as moneylending families with powerful clients. In fact, King Edward III used the Lombards for lending when he pawned a portion of his jewelry collection to help pay for ongoing war against France. Queen Isabella of Spain famously pawned some of her jewelry as collateral to be able to finance Columbus’s voyages to the New World.
But pawning items certainly wasn’t limited to the wealthy and powerful. The working class also relied on pawnbrokers for funding. In the 19th century, there would be members of the working class who would pawn much of their clothing and receive it back on Friday after they got their paychecks.
Regulation and evolution
The pawnbroking industry was relatively unregulated until the middle of the 19th century, when the Pawnbrokers Act of 1872 implemented regulations that would protect pawnbrokers if they accidentally sold stolen items. This helped set the precedent for pawnbrokers that continues to be important to this day.
During the Great Depression, pawn shops played an important role, as citizens were desperate for money and low-cost products. They began to be used almost as miniature banks.
Today, the National Pawnbrokers Association ensures pawn shops hold up their end of pawn contracts and also the interest that is accrued. All items are registered to ensure they are not stolen and unwittingly sold to others.
Pawning has seen a resurgence in recent years thanks to the rise of a variety of reality shows depicting the industry; however, real reality is much more boring than what these shows depict. Most pawnbrokers are in the business to help people and because they have an interest in the various collectibles that come their way.
For more information about the history of pawnbroking and how the industry works, get in touch with the team at Harrison Street Pawn and Gun.