If you wandered the streets of England in the late 19th century and early 20th century, you’d see as many pawnbrokers as pubs.
Back then, the poor would pawn their things to get some much-needed, quick cash. Once they felt financially comfortable again, they could get their belongings back.
You might be surprised to learn that pawnbroking is humanity’s oldest form of finance. The history of pawn goes back thousands of years – and it’s fascinating. Here, we cover some key moments and movements.
Where did the term “pawn” originate?
“Pawn” got its name from the Latin word “pignus”, meaning “pledge”. Back in the day, items given to a broker were called “pledges” or “pawns”. Over time, “pawn” became shorthand for both the item and the transaction itself.
Ancient origins: Who invented pawning?
When was pawning created, and by whom?
Estimates trace pawnbroking back to China, around 2000-3000 years ago, when Buddhist monks began loaning to peasants and small businesses. However, it was Ancient Greece and Rome that built the legal foundations into the practice. That was the first sign of the modern regulations still used today.
Pawnbroking made its way to England with the Normans and the settlement of the Jewish community. It’s said that these groups were ostracised from most professions, which pushed them into pawnbroking.
Fun fact: The pawning of Queen Isabella of Spain’s jewels funded Christopher Columbus’s voyage, which led to the discovery of America!
The history of pawnbroking, continued
The modern European finance world can thank the House of Medici, one of Europe’s most influential families, known for its part in pioneering early banking and pawnbroking practices. The family helped develop the concept of “secured loans”. Rather than lending to individuals, they financed rulers, merchants and officials using luxury assets. This laid the foundations for the pawnbroking industry we know today – many of the standards and trust markers put in place are still relevant.
The history of pawn in England is slightly messier.
Christians were loudly against pawnbrokering, which was mostly the domain of the Jews. Tensions between creditors and debtors added to an anti-Jewish sentiment (which already existed thanks to social, political and religious differences). Plus, many Jews had become rich, much to the contempt of Christians. Around 150 Jews were massacred by Crusaders and debtors in 1189 and 1190.
In 1275, King Edward I wanted access to the wealth of the Jews. To get it, he made usury (charging a high interest rate when lending money) illegal. This led to the arresting and hanging of many Jews, but it didn’t spell the end of pawnbroking in England.
In 1361, the Bishop of London gave 1000 silver coins for the set-up of a free pawnshop. Poor people weren’t the only ones who turned to pawnbroking. Figures like Edward III reportedly pawned his jewels to raise money for his war with France.
The three spheres: What is the history of the pawn shop symbol?
You might have seen the traditional pawn shop symbol: Three gold spheres suspended from a bar. The history of the pawn symbol is a little murky, with more than one origin story attached to it. Here are three possible explanations:
- It’s derived from the Medici crest: The crest featured three balls, since gold balls were used as a symbol of prosperity throughout the Middle Ages.
- The St. Nicholas legend: St. Nicholas, patron saint of pawnbrokers (yes, that’s a thing), reportedly gave three bags of gold to a poor man’s daughters so they could marry. This later triggered the symbol of pawnbroking.
- Lombard banking: The Lombards were a well-known English money-lending family. Medieval Lombard merchants used three spheres as their own symbol, and they are said to have hung spheres in front of their homes.
The history of pawn shops in the UK
The oldest pawnbroking shop in London was TM Suttons, which was founded in 1770. The shop specialised in diamonds, jewellery, watches and silverware, and rumour has it that the principal could measure the number of carats in a piece of gold jewellery by hand.
Some much-needed structure and regulations came into play in 1785. Compulsory pawnbrokers’ licenses were introduced, and interest was fixed at 0.5% per month.
In 1800, a further Act pushed interest up to around 1.67% a month, and gave customers 15 months to repay loans (up from 12 months). Lord Eldon – who later became Lord Chancellor – had a big part to pay in the Act.
He said he was influenced by his own usage of pawnshops in his younger days. Pawnbrokers were pleased with the new Act, and are said to have toasted Lord Eldon at their dinners.
The Act lasted for 72 years, and was amended three times, according to Wikipedia:
- 1815: Licence fees were raised to £15 in London and around £7 elsewhere.
- 1840: Rewards for informing about illegal interest rates were abolished.
- 1860: Pawnbrokers were allowed to charge a halfpenny for a “pawn ticket”, when loans were under five shillings. (A pawn ticket is a receipt given to customers who leave their valuables as security for a loan.)
The 1980s credit boom and more recent recession helped to shift the lending industry away from bank and payday loans, with more people preferring to pawn their items.
Pawnbroking is now prominent in UK culture. Pawn shop Barlow’s Buys opened on ITV soap, ‘Coronation Street’, and shows like ‘Pawn Stars UK’ and ‘Million Pound Pawn’ have helped the industry gain momentum by demystifying the pawning process.