Pawnbroking has been with us for thousands of years. Being a pawnbroker was a respected profession in the ancient Greek and Roman empires. Our current laws pertaining to pawn shops crafted on the same laws that have been passed down from the ancient Roman law. As the Roman empire spread throughout the entire world, pawnbroking went along with it. The same thing happened in the East as well. The pawnbroker business model existed in China over 3000 years ago, and it remains largely unchanged today. Back then, it was strongly regulated by the Imperial government and other local governments much as it is for us in the United States today.
In Europe, in the middle ages, the House of Lombard in England owned and operated a group of pawn shops throughout the city. As a matter of fact, the three golden spheres that we associate with pawn shops today came directly from the House of Lombard all those hundreds of years ago. They used the three golden spheres symbol on all of their signs and correspondence.
The pawn industry became more or less established in the United States just after the turn of the 19th century. These shops were usually designated by the three-sphere symbol that the House of Lombard used many years earlier in England. Once established, the pawn industry grew rapidly. This was fueled by the new industrial manufacturing sector’s practice of paying its rapidly growing supply of workers low wages. Even then, a pawn shop worked as a very important helping-hand for workers between paydays. These pawnshops would provide ready cash for food and other basics or even rent on the security of other goods and services while they waited for payday.
The United States has experienced rapid growth of pawn shops in the past 100 years. When banks were failing during the Great Depression era, local pawn shops were frequently the only place someone could get cash. It was a very tough time in the United States, and pawn shops helped the community by offering scarce cash. They were sometimes the only place where people could go to turn their items into cash. Actually acting as mini-banks for millions of Depression-era Americans, these pawn shops served as a salvation for millions of Americans who didn’t hold traditional bank accounts. They also served as a go-between for the sudden mixing of people from different cultures and class backgrounds to buy and sell rare and unusual expensive cultural items.
During that era, these pawn shops were so essential and widely used that in 1828 in New York City, there was one item in pawn for every person – man, woman and child, living in that great city.
But time moved on, and the economy changed with the introduction of the substantial consumer “money” institutions such as credit unions, loan associations, and other financial institutions. This change made it so that pawn shops were no longer a major source of consumer credit like they were in times of the old days. However, they still play a very important role in providing instant consumer credit for a significant portion of our society.
The rise and popularity of pawn shops was a cultural reaction to the need of the general public to get small loans quickly. It is because traditional sources are not willing to write a fast loan for small amounts that we have seen the rise in popularity of pawn shops. Imagine trying to secure a $300 or smaller loan from a traditional financial institution such as a bank for a 30 to 90 period? It simply wouldn’t be possible. You would be quickly shown the door. The cost of the paperwork alone would put a roadblock in the process.