As mankind’s oldest financial institutions, pawnbroking carries on a tradition rich with history. Often called the “world’s second oldest profession,” pawnbroking can be traced back at least 3,000 years to ancient China, and has been found in the earliest written histories of Greek and Roman civilizations.
During the Middle Ages, certain usury laws imposed by the church prohibited the charging of interests on loans, thus limiting pawnbroking to people who had religious beliefs outside of the church. Out of economic necessity, and problems in the banking system, pawnshops made a resurgence. The House of The Lombards operated pawnshops throughout Europe counting royalty, such as King Edward III of England, among their clientele during the 14th century. The symbol of the Lombards’ operations were three gold balls that still remain the trademark of pawnshops.
Pawnbrokers, also known as collateral loan brokers, make loans based purely on the intrinsic value of the collateral. A look into the patron’s credit history is not necessary because only the value of the item being pawned needs to be considered. If the loan, or at least the interest, is not paid off during the specified term (usually three or four months), the item is foreclosed and may be resold by the broker.
A typical transaction begins with a potential borrower coming into a local pawnshop with the item he or she wants to pledge. The pawnbroker then determines how much to loan the patron for the item. Loans are paid out at a rate of about one-third to one-half of the price the broker can expect to receive for the sale of a good during the worst of times, therefore assuring a profit will be made.
Pawning has long been a source of capital for people in times of need, as well as a means of financing business ventures. When Christopher Columbus approached Queen Isabella of Spain about securing funds for his voyage, she was prepared to pawn her crown jewels in order to provide him with the necessary finances. Fortunately, the Spanish government agreed to back Columbus, saving the Queen from having to part with her beloved crown.
When settlers came to America, they brought with them the tradition of loaning money for goods. For those early settlers. pawning was their only source of finance. As the nation grew, however, additional sources of credit were needed. Banks and other savings and loan institutions began to spring up modeling themselves after the nation’s first lenders, pawnbrokers.
Today, statutory regulations of banking and finance are based on the legal foundation established by pawnbrokers. Many of the first leaders in the banking industry had roots in pawnbroking. As was the case 3,000 years ago, pawnshops continue to be a source of convenient credit for individuals in need of a short-term loan.
PAWNING PROCEDURES
Empire Loan is licensed and regulated by the local Police Departments. Loans may be received based on the intrinsic value of a client’s personal property. Upon deciding on a loan amount, a pawn ticket is issued stating the amount of the loan and the specified time Empire Loan will hold the client’s property. You must be 18 years of age and have a photo ID to receive a loan. A photo is taken during the transaction.
The client knows exactly what to expect, there are no hidden charges, and he can be assured that his property will be safe and well cared for. A pawnbroker is bound by law to protect the client’s rights as spelled out by the loan agreement. The client is not obligated in any way to come back and pick up his property if he doesn’t want to, although most do: almost 90% of all loans made at Empire Loan are repaid.
The loan process takes just a few minutes. The client has the assurance of knowing that he is dealing with a reputable business that is regulated by law and cooperates closely with local law enforcement agencies.
PAWNBROKING FACT SHEET
- Membership in the National Association of Pawnbrokers has in risen from 50 in the 1970s to more than 1000 today.
- At Empire Loan, approximately 90% of all items pawned are redeemed.
- Formerly a male dominated industry, today women are making their mark as pawnbrokers.
- All items received by a pawnbroker must to be listed with the city/state’s police department, therefore eliminating the chance of a consumer receiving stolen property.
- Free enterprise in the form of pawnbroking has reappeared in communist states such as China to fill the gaps of their national banking system.
- In Beverly Hills, a swank pawnshop caters to the likes of actors, producers and directors. Items one may inquire on purchasing include Rolls Royces, 10 carat diamonds and even jets.
- As many as 10 percent of the adult population are served by pawnshops each year.
- There are nearly 7000 pawnshops in operation throughout the United States today.
- High quality merchandise such as gold and diamond jewelry, VCRs and musical instruments can be found in local pawnshops for about half the price compared with retail stores.
- The Nursery Rhyme “Pop Goes The Weasel” refers to pawning. A weasel is a shoemaker’s tool and to “pop” is to pawn. “That’s the way the money goes . . . Pop goes the weasel.”
- Queen Isabella of Spain was prepared to pawn her crown jewels to finance Columbus’ voyage to America.