Pawn shops, the first bankers

Throughout history, there has always been times when money was really tight, maybe Christmas was coming, and the only thing a person could do was go to that shop in the high street with the three golden balls on the sign that hung outside.

Strange to think that there was once a kind of social stigma attached to such actions, as though they were only the province of the poorest in society, when the history of pawn broking tells a very different story. It isn’t always the poor who need money in a hurry.

Pawning began in Ancient China, over 3000 years ago, and features in the written histories of Greek and Roman civilizations. The Nursery Rhyme ‘Pop Goes the Weasel’ refers to it; a ‘weasel’ is a shoemaker’s tool and to “pop” is a slang term for pawning. Hence: “That’s the way the money goes… Pop goes the weasel.”

Queen Isabella of Spain pawned some crown jewels to pay for Columbus’s voyages. The word pawn comes from Latin – “patinum” meaning cloth or clothing – and French. In early centuries, all people had were the clothes they wore, and they borrowed money against them.

One of the less well-known legends about the origin of the trademark sign was it that it was based on a Roman coin used in Israel – from A.D.68 onwards, after a revolt against the Roman invaders. Called the ‘Silver Shekel’, it featured a picture of three pomegranates, on a common stalk, on one side.

The bible offers references to pawning. In Deuteronomy 24:6-13 it states: “No man shall take the nether or the upper millstone to pledge, for he taketh a man’s life to pledge”. What this means is: you should not take as a pledge anything a man needs to make a living.

It’s thought that Jesus was wrong to overturn the tables of the money-changers in the temple, because they were only helping people to change coins into the silver ones required for paying the temple tax.

Did you know that St. Nicholas, better known by a different name today, is actually the patron saint of pawnbrokers and bankers? Born in 280AD in Patara, fifty miles west of Myra in Turkey, to a wealthy Christian family, he was ordained into the priesthood at 19, quickly becoming renowned for his selfless acts of generosity.

When his uncle, Bishop Nicholas, went to Jerusalem, he appointed young Nicholas as his deputy, overseeing the monastery, and the legend of the ‘boy bishop’ began to take shape. Over time, he came to be regarded as a saint by all who knew of him, or his deeds.

One of the most famous stories tells that he gave, even before he was ordained, three bags of gold coins to a desperate man, in order that he could save his daughters from poverty. Over time, bankers and pawnbrokers alike would hang three golden balls above the doors of their shops in tribute to him.

Saint Nicholas’s legendary kindness caused his transformation, first in Germany, then in France as Father Christmas, before Dutch Protestant settlers in New Amsterdam (New York City) came up with the idea of Santa Claus, which became popular worldwide.

The English Lombards, and the Medicis of Florence, were moneylenders in Medieval Europe. The Medicis adopted the three balls as part of their family crest in the 15th century, though the Lombards – who counted King Edward III among their clients in the 14th century – had already been using this trademark for the best part of 100 years. Both families became powerful finance houses, and the golden ball symbol came to symbolize the ethics of mutual trust.

Through the middle ages, coats of arms appeared on which symbols such as balls, plates, discs, coins etc. were in threes, representing financial success. Pawn broking is simply the lending of money against the security of items left by the borrower. It was used by everyone, the underprivileged being as grateful for it as the wealthy.

Just after WW2, there were 5000 pawn shops in the British Isles and Ireland, lending against anything from clothing to diamond tiaras. A busy pawnbroker could serve over 1000 customers during a weekend, but the numbers reduced greatly after the introduction of the welfare state, because prosperity grew.

By the 1970′s the number of pawn companies trading had reduced to no more than 50, and high bank rates of the time left the pawnbroker with only a 2-3% annual return on their major loans, making it uneconomic to provide any sort of service.

Early pawn broking was unregulated, and very high rates of interest, charged by the so called ‘Dolly Shops’ of the 18th and 19th centuries, gave the whole trade a bad name that lasted for many decades. Regulations were introduced with the Pawnbrokers Act of 1878, which laid down what could be charged for various loans, and their duration.

This remained in force until these laws were absorbed into the Consumer Credit Act of 1974, laying down new restrictions, but removing others, and making the trade a practical one again, for pawnbroker and customer alike. Since the 1980s, pawnbrokers have increased in numbers, today being an accepted extension of the clearing bank system for customers requiring short-term loans.

Kings and Queens have used pawnbrokers just as freely as ordinary people, simply because the shops which display the famous sign are as dependable – and sometimes as important to a person’s existence – as the biggest golden ball of all, the sun that gives life to us all.