Pawnbrokers: A History of the Trade

Pawn Broking is one of the oldest trades in the world, tracing all the way back to almost 3,000 years ago. While the trade of pawn broking has evolved over time, responding to contemporary needs, it remains a strong and valued part of today’s society. Here is a brief history of the trade.

What is a Pawnbroker?             

A pawnbroker is an individual or business (colloquially known as a pawn shop) that offers secured loans to people with personal items as collateral (jewelry, electronics, musical instruments, sporting equipment, clothing, antiques, power tools, etc.). Once an item is pawned to the broker (the pawnbroker), it’s called a pledge or a pawn.

While pawnshops are virtually ubiquitous in many of today’s societies, not many people realize that the history of the trade dates back to ancient times.

International Origins

The origins of pawnbroking can be traced all across the world, from China to Greece to Italy. Indeed, evidence of pawn broking has been located in ancient Greece, Italy, France, England, Bavaria, and China, dating from Roman times to the Middle Ages. Pawnbroking is not only one of the oldest trades in the world; it’s also one of the most international! In the late 19th and 20th centuries, there were nearly as many pawn shops as there were pubs in Britain, indicating the level of the trade’s popularity and necessity.

Many ancient cultures from Greece to Rome had set rules and regulations for pawn brokers. Even the Mosaic Law in the Torah has rules laid out for pawn broking. Pope Leo X was a notorious pawn shop customer for his frequent pawning of palace furniture and silver to cover the costs of play tickets. He was also the pope when the Catholic Church gave the official okay for pawn shops to operate.

The earliest pawnbrokers have been located in 5th century China. These early pawn shops were established, owned and operated by Buddhist monasteries before moving into secular and mainstream society. In some cases, wealthy laypeople would enter in the pawn broking business with the monasteries, forming partnerships that allowed them to open pawnshops, and subsequently avoid certain property taxes that Buddhist monasteries didn’t have to pay.

The Discovery of the (New) World

Pawn broking soon spread to other parts of the world, truly establishing itself as an international trade. In England, the history of pawn broking is tied to England’s monarchical history. The pawnbroker came in with William the Conqueror. In 1338, King Edward III actually pawned his jewels to the Lombards to raise money to finance the war with France. Henry V followed a similar strategy in 1415. Pawnbroking has a long and illustrious history of financing great moments and developments in history!

According to the National Association of Pawnbrokers, pawnbroking played a part in the discovery of the Americas, as the voyages of Niña, Santa Maria, and Pinta (led by no other than Christopher Columbus) were partially funded by Queen Isabella of Spain’s pawned jewels.

Pawn Shops around the World

China – Pawnshops existed in China as far back at the 5th century and were run out of Buddist monasteries. Occasionally wealthy entrepreneurs would form partnerships with these monasteries and help run the pawnshops.

Italy – Ancient Roman law allowed pawn shops, however items such as clothing and furniture were restricted from being pawned. In addition the Catholic Church mandated that all interest rates charged to poor people be reasonable.

England – Originally forbidden from charging interest, pawn shops in England survived on funds from the state. When that idea eventually failed many different iterations of pawn shops were tried until the government settled on allowed the shops to charge a yearly interest rate of 20%, or 1.6% a month.

America – Modern pawn shops are widespread across the United States with the average store charging 4% interest per month for a period of 4 months.

Russia – Pawn shops in Russia are only allowed to sell gold, silver and other precious metals and gems.

Canada – Pawn shops have been around in Canada for a long time. They are required to hold an item for a set amount of time which is regulated by the provincial government and will be agreed upon by the seller and pawn broker. You must also be over 18 to sell something at a pawn shop in Alberta.

The Pawnbroker’s License

The pawnbroker’s license was established in 1785. In London, the duty for a pawnbroker’s licence was fixed at £10 in London and £5 in the country. In 1790, the interest rates on advances in England rose to 15 per cent. After many repeals and amendments, the pawnbroker’s license came to resemble (at least in the UK) shortly thereafter what the modern pawn broking industry looks like. Restrictions on interest rates and licensing costs vary from region to region and country to country. The rates in the US will not, for example, be the same as pawn broking rates in England, Canada or Spain.

In Canada, our first laws regarding pawn brokering appeared in 1886 with the Federal Pawnbrokers Act. The act still exists today, with additional rules and regulations about pawn shops laid out by provincial governments.

The Patron of Pawn broking

Did you know? Pawn broking is such an esteemed and long-standing trade that it even has its own patron saint – Saint Nicolas (sound familiar)? Saint Nicolas is a rather busy guy, as he is not only the patron saint of pawnbroking, but also of children, sailors, broadcasters, archers, and fishermen, just to name a few!