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The Ancient History of Pawnbroking
While researching information about a book that I am writing, I thought I would share some very interesting factoids about the Pawn Industry that many may not know.
The art of Pawnbroking is very Ancient and has a history dating back more than 3000 years in China.
I am going to attempt to structure some of the main facts as they are shared on the history of the industry in this this Blog and Journey.
- Mosaic Law – Mosaic Law Precluded pawnbroking as it forbade the acceptance of interest from a poor borrower, and Jews were forbidden to lend money at interest to each other, although they could charge interest to non-Jews – Until the Reformation, Christians were also forbidden to lend to each other for interest
- China – Some of the earliest Chinese pawnbrokers in the 5th century, were established, owned and operated by Buddhist monasteries, and it wasn’t till later that they were more widely seen – They were known by a number of names – (long life treasures) originally referred to Buddhist monasteries in general. During the Southern Song dynasty, wealthy lay people sometimes formed partnerships with Buddhist monasteries and opened pawnshops (avoiding property taxes from which monasteries were exempt) A 1202 document records ten people forming a (ju), which would support the establishment of a pawnshop in a monastery
- Ancient Greece and Rome – Pawning was common in Ancient Greece ad Rome, most contemporary law on the subject is derived from Roman Sources – Many pawnbrokers were professional or semi-professional and operated from private shops. Under Roman Law, certain items (such as wearing apparel, furniture, and instruments of tillage) could not be pledged. The emperor Augustus converted the proceeds from property confiscated from criminals into a fund from the which the state lent money without interest to those who pledged valuables equal to double the amount borrowed
- Medieval Europe – Jewish and Lombard pawnbrokers and money-lenders were common in medieval Europe, where they were often licensed by authorities, despite opposition from the Catholic Church. The expulsion of Jewish pawnbrokers enabled Lombard merchants to settle in England. Edward III pawned his jewels to the Lombard’s to raise money for his war with France in 1338, and Henry V did the same in 1415. In medieval Italy, the pledge system arose which became almost universal in Europe. The system was benevolent, with early “mounts of piety” established by popes lending money to the poor without interest if the money was covered by the value of the pledges.
- Pawnbroking – Spread to England with the Norman conquest. Many pawnbrokers in England were Jewish, and despite services rendered (often to the Crown), they were often unpopular, prompting greater restrictions and eventually the Expulsion of Jews from England in 1290.
- United States – Pawnbrokers are strictly regulated. Each pawnbroker must have a criminal background check. Those pawning items must present a photo ID and are often asked for a thumbprint. Criminals know to avoid pawnshops since the items purchased or pawned are reported to the police each day. Many crimes are solved when pawnshop owners turn in a list of the items pawned or purchased when the match up with a stolen item on a police database. Each state has its own regulations, with those of New York and Massachusetts fairly representative. Pawnbrokers are usually licensed by the mayor or by the mayor and aldermen; in Boston, however, they are licensed by the police commissioner. In New York, permits are renewable annually and a pawnbroker must file a surety bond with the state. Business is conducted on much the same lines as in England. Loans are made for four months, with an additional 30-day grace period. Exceeding the interest rate is a misdemeanor. Unredeemed pledges may be sold at any time after the loan expires. New York has one pawnshop for every 12,000 residents. In Massachusetts, unredeemed pledges may be sold four months after the date of deposit. The licensing authority fixes the interest rate, which may vary for different amounts. In Boston, every pawnbroker must submit a daily list of pledges taken (including the time and amount lent) to the police. Pawnshop chains include Cash America International and First Cash Financial Services, both headquartered in Texas.
Early Origins of Prominent Pawn Families and the Three Balls
- In the 15th Century the Medici Family of Italy was a dominant financial Power
- At some point, this prominent family split in two, and one half of the family remained in the banking industry, and the other half became Pawnbrokers
- The Pawnbroking side of the family took the Medici Family Crest and utilized it as part of their branding, the famous three balls
- It was rumored that the origins of the three balls on the Medici coat of arms were when they allegedly hired Charlemagne to slay a giant using 3 bags of rocks – from which the family utilized the three balls on their crest from that point forward
- Other families adopted the use of the three balls because of the financial success of the Medici’s
- The three gold balls were utilized throughout the middle ages on crests as a symbol of success!
- Utilization of the three Balls were at a time when many people were illiterate and were unable to read or write, the three balls symbolized where they could go to obtain money for their goods in medieval times
- In as much as they (the three balls) came from the Medici family, the Medieval Lombard Merchants used the three balls as their symbol as Pawn Shops were called Lombard, or the act of Pawning (Lombard) was derived from the House of Lombard during these early times
Patron Saint of Pawn – Saint Nicholas
- Another common story about the origins of the of the three gold balls is about Saint Nicholas
- Saint Nicholas (Santa) is the patron saint of Pawnbrokers
- Many believe the three gold balls symbolize the story or Saint Nicholas giving a bag of gold to each of a poor man’s three daughters to allow them the financial means to get married
- IN any case, the mystery, and magic captured in these stories provides a rich history behind the three gold balls found outside of Pawn Shops
- It’s interesting when visiting Pawn Shops, listening the various owners and operators around the world indicating what their personal interpretations are of origins of the three balls to them
- The beauty of the symbol is that everyone can find their own meaning in those three gold balls!
What has the Industry done for Mankind?
- Pawnbrokers – Funded the discovery of the America’s in the 15th Century
- Queen Isabella of Spain – Pawned or Hocked her Jewel’s with a prominent Pawn Lending family in Spain at that time to fund – Christopher Columbus, which later led to the discovery of the America’s!
Significant Events in the Pawn Industry
- 1998 – Cash America in Fort Worth Texas founded by Jack Daugherty raises 14.5 Million in its Initial Public Offering
- 2003 – Cash America becomes the worlds Largest Public Pawn Company with close to 600 stores, USA, Great Britain, Sweden
- Acquisition & Modern Valuations come into play for mainstream Pawn Shops during this time
- 1991 – First Cash Goes Public – Ft. Worth Texas
- 1991 – EZ Corp / EZ Pawn goes public – Austin Texas
- 2016 – First Cash & Cash America merge for a 950 Million dollar tax free stock swap, today operate more than 2800 stores on two continents, has a market cap value in excess of 3.35 billion today
- Public Money has been the most significant event for the Pawn Industry in it’s 3000+ year known existence
- When are the banks going to get in the Pawn Business?
- Check out the institutional stockholders of these companies!
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