by Vonda J. Sines

Created on: May 11, 2009   Last Updated: May 17, 2009

Once on the fringes of the retail world, pawn shops are enjoying a brisk business as the result of the recession. For many for have unfortunately lost a source of income, they provide a way to get cash by parting with some valued possessions. For the newly frugal, they've been added as places to shop for bargains.

The word "pawn" comes from the Latin word "pignus," which means to pledge. The principle of pawning is simple. Someone has an item of worth against which they'd like a monetary loan. A pawn broker accepts it as a pledge - or collateral or pawn - in exchange for money. If the loan isn't repaid according to its terms, the pawned item is offered for sale to the public.

The history of pawn broking dates to the days of Moses. The Mosaic law forbade the taking of interest from a poor borrower. In Imperial China, the pawn shop was familiar 2000 to 3000 years ago. The practice was common in both ancient Greece and Rome. However, Roman law prohibited some items from being pledge as collateral. Among them were wearing apparel, furniture and tilling implements.

Although the early Roman Catholic Church prohibited the practice, Franciscan monks in effect worked as pawnbrokers to help the poor. The Orden de Menores Observantes de San Francisco, which began in Italy in 1450, asked borrowers to make donations to the Church in lieu of paying interest.

William the Conqueror introduced pawn shops to England. The House of Lombard subsequently arose as a large medieval banking family and pawnbroker in England. The Lombards actually helped Edward III finance his kingdom's war with France by agreeing to the use of the king's jewelry as collateral for large loans. He apparently was the first of several monarchs to risk parting with his jewels.

The pawnbroker symbol includes three spheres suspended from a bar. The three golden globes originated as the symbol the medieval Lombard merchants hung in front of their houses. Eventually, the three-ball symbol became the family crest of the famed Medici family. Saint Nicholas is the patron saint of pawnbrokers. Some stories attribute the three golden globes as his three bags of gold.

During the reign of James I, England passed an "Act Against Brokers." It remained on the books until Queen Victoria had been on the throne for 35 years. Stories also suggest that Queen Isabella of Spain pawned her jewelry to send Christopher Columbus on the journey to what he thought was the West Indies.

In the United States, pawn shops are generally subject to legal restrictions. Each state issues its own regulations. Among other provisions, they specify the amount of interest allowable on a collateral loan. However, regardless of the pawn shop's location, the broker assumes the risk that an item he purchases was not stolen property. Some states require pawnbrokers to establish positive identification of the seller through a photo ID. In some areas, they must furnish local law enforcement with a list of all newly-pawned items.

Many believe that the concepts that evolved into modern-day pawn shops in the United States arrived with early English settlers. However, the current laws and practices are actually derived from the days of the Roman Empire.

References:

http://www.sandiegojewelrybuyers.com

http://en.wikipedia.org/wiki/History_of_pawnbroking

http://www.answers.com/topic/pawnbroker

Learn more about this author, Vonda J. Sines.
Click here to send this author comments or questions.