The History of Pawnbroking

Chances are if you walk down any high street, you’ll encounter at least one shop with the pawnbroker three balls hanging outside it. Pawnbroking is a staple of our modern world as it’s a very convenient way to access a cash loan against your valuables. But have you ever paused to wonder how it all began and what the history of pawnbroking truly is? It may surprise you just how far back the practice dates.

Ancient China and the very beginning of pawnbroking

The history of pawnbroking goes back to ancient China, where Buddhist monasteries loaned money to peasant farmers at affordable rates of interest as a service to the community. The monasteries would accept a simple possession as security against the loan, and so began pawnbroking, a democratic kind of loan that anybody could afford. 

Ancient Babylon, Greece and Rome all had pawnbrokers too, a testament to the need of people in those civilizations for a quick and easy type of secured loan.

Christopher Columbus pawned his way across the Atlantic

In the Middle Ages, kings and queens often used pawnbrokers when they were short of a bob or two. Queen Isabel of Spain pawned some of her crown jewels to fund Christopher Columbus’s jaunt across the Atlantic to “discover” America. The English kings Edward III and Henry V both pawned their crowns to finance wars against France. Henry VII even pawned two of his noblemen, Sir Thomas Boucher and the Marquis of Dorset, to pay for troops in his battles against Richard III.

Origins of the pawnbroker three balls

Back in those days, not many people could read, so shops had signs to tell customers what they were. The pawnbrokers’ sign was three balls, originally the symbol of the Italian Medici family, who rose from humble origins as apothecaries and moneylenders to become an important banking firm and rulers of Florence. Their supporters even used to run into battle shouting the Italian equivalent of, “Balls! Balls! Balls!”. 

Other Italian bankers and moneylenders wanted to associate themselves with the Medicis’ success, so they adopted the “balls” symbol too. One of the most important was the House of Lombard, who set up pawnbroking shops right across Europe, all with the three balls sign. But in China, where it all began, the pawnbrokers’ symbol was – and still is – a bat holding a coin, the bat representing good fortune.

The development of pawnbroking laws

In the 16th and 17th centuries, England’s parliament passed a series of laws to regulate pawnbroking and keep out sharp operators. Nowadays all respectable pawnbrokers in England and the rest of the UK are registered and follow strict guidelines. As opposed to loan sharks who operate outside the law, charge illegal rates of interest, and enforce repayment with methods that don’t bear thinking about.

Pawnbroking and the industrial revolution

Pawnbroking really took off in Britain with the industrial revolution, when the number of pawnbrokers in the country shot up from just 750 in 1750 to around 4,500 a century later. 

William Hogarth’s famous 1751 Gin Lane etching features a pawnbroker’s shop, used by gin addicts to borrow money for more drinks (not a good idea!).

Pop goes the weasel was about pawnbroking

In the nursery rhyme Pop goes the Weasel, “pop” means pawn (a pawnbroker was often called a “pop shop”), and the weasel (weasel and stoat, that is) means your coat. Poor families often had to pawn their best coat during the week to pay for provisions like half a pound of tuppenny rice or half a pound of treacle, but they’d redeem it on payday so they could wear it for church on Sunday. Then they’d more than likely pawn it again during the week.

The decline and rise of pawn shops

Pawnbrokers became less important after World War II when state social security came in, and people didn’t have to live so much from hand to mouth. In the 1980s, pawnbroking became popular again as an easy form of credit that was available to anyone.

The passing of the Consumer Credit Act

In 1974, the passing of the Consumer Credit Act meant that all pawnbrokers had to be licensed by the Office of Fair Trading, and they had to make their terms and conditions plain and clear to customers pawning goods. Pawnbrokers are now regulated by the FCA and have to adhere to strict rules and guidelines.

The pawnbroking industry today

Pawnbroking, once the preserve of the very poor, who might have to pawn their Sunday best coat or maybe their wedding ring to tide them over for a week, is now used by all sorts of people to solve their cash flow problems. Nowadays you can pawn a hi-fi, a TV, or even a car. Unfortunately, however, pawning noblemen isn’t really an option anymore, not even for the King.

Now you know all about the history of pawnbroking! Looking for more information on the pawn industry? Read our guide on what pawn shops are and how they work next.