February 10, 2020 - Pawn Resources
Pawn shops have existed for over 3000 years globally, and pawn shops in New York City have existed in one form or another since its founding in 1624. But to truly understand New York City pawn shops, we have to look to the Middle Ages in Europe.
According to Wendy Woloson’s book, In Hock, pawn brokers in Europe emerged “as a distinct profession” in the Middle Ages. She quotes Kenneth Hudson, a writer from the early 20th century, to explain that these proto-modern pawn shops were built to serve the wealthiest of Europe. Hudson wrote that pawn shops in the Middle Ages served to finance “the needs of powerful and ambitious rulers, who required money to finance wars and the building of castles, palaces, and churches, and to maintain a standard of living which they considered appropriate to their rank, power and social position”.
While some European countries experimented with “non-profit” pawn shops, they initially failed because of the corruption of their managers and investors. Independent pawn shops remained common but did not proliferate until the First Industrial Revolution in the 18th century (1700s). They were especially common in England’s industrial centers, like Manchester and London. Pawn shops grew in number to serve not just aristocrats and royalty, but to serve a growing population of city-based consumers and workers. Those workers, unlike their peasant ancestors, had possessions and material goods that could collateralize a loan.
Pawn shops did not make their way to America– let alone to New York City, New York– until the early 19th century, the 1800s. When they came, they raised the same concerns that they did in Europe. Pawn shops were perceived as against feudal Christian order, in which most varieties of money lending were banned. However, early economists and political thinkers like Adam Smith and Jeremy Bentham argued in favor of them. They believed that, as a rule, flexible lines of credit could help grow the economy and wealth of the population.
It’s hard to say exactly when New York City pawn shops first emerged. But like most pawn shops in America, they grew alongside the rest of the city, and their composition reflected its industries. Pawning was essential in New York City. In 1828 there were as many pawned items as there were residents. Today there is 1 pawn shop for every 12,000 residents in New York City. In New York City, use of pawn shops was closely tied to the fortunes of the factory and dock workers in the 19th century. According to Woloson, pawn shops offered low income residents a line of credit which gave them enough of a cushion to allow factory owners to pay their workers low wages.
Pawn shops today give low income residents a chance at lower interest loans than payday lenders. The Provident Loan Society, founded in 1894 in New York City, is the only remaining non-profit loan society in the country from the crisis of the late 19th and early 20th centuries. The Provident Loan Society, located at 346 Park Avenue South, is a community mainstay and a lifeline for low income residents. They currently have 5 branches around the United States.