At its simplest, pawnbroking is a way of borrowing money against a portable form of security. Rather than having to sell an item to turn its value into cash with the hope of someday buying it again, pawnbrokers offer people an alternative whereby they can get their security back so long as they service the debt under the agreed terms. This is why, of course, pawnbroking is so popular when people want to use personal items, such as engagement rings, as collateral. Anything with a sentimental value is more likely to be pawned than sold outright when cash is needed for something important. It is hardly surprising, therefore, that pawnbroking has been around for thousands of years.
In fact, no one is exactly sure when pawnbroking was first invented. It seems to have been a feature of all advanced societies which have used money to buy and exchange goods. In other words, so long as people have wanted to borrow cash, there have been pawnbrokers or people offering these sorts of services. Indeed, the only places where pawnbroking doesn’t seem to have developed is in societies which have not used cash historically and instead relied on bartering as a means of exchange. As such, the origins of pawnbroking are often traced back to China where this form of lending has been in operation for about 3,000 years. That said, pawnbroking has been found to have existed in Ancient Greece and, later, in Ancient Rome, too.
Some also say that Christopher Columbus was able to fund his voyage of discovery across the Atlantic Ocean because of pawnbroking. He is said to have received the necessary funds to equip his expedition by pawning some of the royal jewels owned by Queen Isabella of Spain. Nevertheless, it was in Italy that pawnbroking really took off. As attitudes to money lending changed somewhat during the Renaissance period, banking firms began to be established whereby interest charges on borrowed sums were first allowed.
Back in the early period of banking, banks tended to be run by powerful families in city-states, such as the Medici clan in Florence. Incidentally, although the origin of the famous three-ball symbol that pawnbrokers still use today is contested, many people say that it was first used by the Medicis themselves. As Italian money-lending practices began to become more commonplace in Europe, so pawnbroking eventually became a feature of life in the British Isles, as well.
Even after the English Reformation which relaxed religious orthodoxy surrounding money lending, pawnbrokers were sometimes viewed by aristocrats as not being respectable. That changed during the English Civil War, however, when the King needed to raise funds fast and Royalists set up a state pawnbroking business. Later, when the monarchy was re-established in England, the Bank of England was even considering setting up pawnbroking shops in its name to help ‘the poor’ access cheap credit.
By 1800, pawnbroking had established itself as a respectable trade. An Act of Parliament in that year set out the basic rules that are still in place today. The Pawnbrokers Act of 1872 updated the law and meant that pawnbrokers needed to provide a seven-day grace period in addition to the year-long pledges they offered. This act also outlawed the pawning of goods that were not the property of the person pawning them, something that went a good way to stamp out the practice of people using pawn shops to illegally pass on stolen goods. From that point on, every pawnbroker in the country had to be licensed to operate, too. Furthermore, all pawnbroking shops had to have the term ‘pawnbroker’ displayed prominently over their door.
According to Bonds of Brentwood, a pawnbroking firm that operates in Essex, people tended to use pawnbrokers less after the Second World War as the UK introduced more social welfare measures. However, this didn’t mean that there was no longer any need for pawnbrokers to exist and well-run establishments have continued to thrive in their communities ever since. Indeed, from about 1980, the number of pawnbrokers operating in the UK has remained relatively stable.
As such, people all over the country now have access to a convenient form of secured credit from pawnbrokers who ply their trade with a raft of personal possessions. These days, you are just as likely to see pawnbrokers lending money secured by electronic goods and musical instruments as you are of jewellery and luxury watches. In many ways, this sort of diversity in pawnbroking has always been part of the trade going right back to its earliest days in Ancient China.