History of Pawnbroking loans
The story of pawnbroking and pawn loans date back to more than 3,000 years in the heart of the Shang dynasty of the Chinese Empire. The earliest pawn shops were built with the intention of supporting low-waged workers and peasants who required a short-term credit. Pawn shops were present in the streets of ancient Greece as well as the Roman Empire; in fact the word ‘pawn’ is borrowed from the Latin word "patinum", translated to English it would mean to pledge. For ages, people in need of quick money have been able to trade their valuable items, acting as security collateral, in exchange of cash loans with an interest fee added on top. Much the same as today, if customers neglected to reimburse their cash advances, in addition to the interest, the pawnbroker held the items to sell them later or closeout to another purchaser who will be the highest bidder.
Pawnbroking during Middle Ages
In its traditional structure, "mont de piété" was a type of pawnbroking initially built by the Roman Popes to loan cash to the impoverished. Such loans would not carry any interest charge and would be secured by the value of the pledge itself, for instance, warm apparel or a tool used to construct something. Clearly, the first foundations required investment to fully work as a commerce considering that no profit was being made, therefore the introduction of charging interest on pawn loans became common practice to take care of business costs and other expenses. Courteously originating from Italy, the pawn shop charging interest for cash advances started to expand throughout the entire European continent. As of 1622, pawn shops were founded in London, Paris, Brussels and other significant European urban areas that pursued this pattern.
The roots of Lombard banks additionally emerge from the famous "mont de piété" pawnbrokers and initiated in the rich Italian region of Lombardy. Pawnbrokers would be quickly referred as Lombards all over the European territory and Great Britain. It will come as no surprise to discover Lombard Streets and Lombard Alleys in greater metropolitan areas around the world, meaning they were at one time the place where renowned pawn shops ran their businesses. Lombard credit transactions are still relevant today and most significant financial institutions will allow borrowing against valuable collaterals utilizing their secured loan policies. The three gold-colored hanging balls, which represents pawnbrokers, were initially an iconic indication of the Lombard pawn banks and the Medici group in the city of Florence. However, they have now become the main emblem for pawnbrokers around the globe.
In Great Britain, pawnbrokers required a license as of 1785 and forward. A pawnbroker's permit cost £10 in the Greater London area, and £5 in the regions, with a suitable fixed interest rate of 0.5% on a month-to-month plan with one year being the longest period for the loan. The enactment functioned admirably for a few decades, liable to the terms of service, yet was spoiled by the Pawnbroker's License Law of 1872, shaping most of today’s regulations concerning pawnbroking.
In today’s times of innovative technology advancements, a great number of pawn shops have turned into the storehouses of history, holding significant collectibles, valuable pearls, gems and heirlooms which had been passed on from one family to the next.