The First Pawn Shops
More than 3,000 years ago, pawn shops first emerged in China to grant loans to peasants. These pawn shops were first owned and operated by Buddhist monks and later widely seen in society. The business model thrived later in faraway Greece and Rome, giving merchants a way to get small shops off the ground. Restrictions were placed on loan interest rates by the Catholic church during medieval times. Indeed, it wasn’t until the 14th and 15th century when restrictions were lessened to support business and state endeavors. King Edward III famously pawned his jewels to the Lombards in 1388 to help finance war against France, and Queen Isabella of Spain is said to have put up her jewelry as collateral to fund Christopher Columbus’ expeditions to the New World.
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The symbol of pawnbrokers is three spheres suspended from a bar. The symbols are attributed to the Medici Family of Florence, Italy. They were a banking family, political dynasty, and later a royal family during the late 14th century.
Pawn Shops Today
In the past century, the number of pawn shops has skyrocketed in the United States – but under very strict regulations. Pawn shops are required to uphold clear regulations about the terms of the pawn contract and the amount of interest on the cash loans. Each pawned item is also registered to prevent the sale of stolen items. About 25 million Americans visit a pawn shop annually.
They were present During the Great Depression when banks failed, and the 2008 financial crisis when people were losing their jobs. The business model has remained the same and they continue to be the world’s repositories of history, holding antiques, jewelry, furniture and other items that have been passed from generation to generation.
How They Work
People across the word have used pawn shops to get money out of their assets quickly for thousands of years. Ancient pawnbrokers initially offered loans to people and businesses, with personal or business property used as collateral. These items were (and are still) held by the pawnbroker for a contractual period of time during which the owner of the item could repay the secured loan, plus an amount of interest, to reclaim their items. If the owner was unable to repay the loan to buy the item back, the broker had the right to sell the item to another buyer. This system, though evolved, remains largely in place.
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