This article is about the occupation of a pawnbroker. For the 1960's novel and film, see The Pawnbroker. A pawnbroker offers monetary loans in exchange for an item of value to the given pawn broker. The word pawn is derived from the Latin pignus, for pledge, and the items having been pawned to the broker are themselves called pledges or pawns, or simply the collateral.
How the pawning process works
A customer will bring in an item, whereby the pawnbroker assess the item for its condition and saleability, as well as the amount the customer may need for the item. If the pawnbroker is interested in the item, he will offer the customer an amount for it. The customer can either sell the item outright, or offer the item as collateral on a loan.
If an item is pawned for a loan, within a certain contractual period of time the pawner of an item may purchase it back for the amount of the loan plus some agreed upon amount for interest. The amount of time, and rate of interest, is governed by state law and the pawnbroker's policies. If the loan is not paid (or extended, if applicable) within the time period, the customer forfeits title of the item to the pawnbroker. Unlike other lenders, though, the pawnbroker does not report the defaulted loan on the customer's credit report – since the pawnbroker has title to (and physical possession of) the item; the pawnbroker may recoup the loan value through outright sale of the item at his place of business, called a pawnshop or pawn shop. The pawn shop also sells items that have been sold outright by customers to the pawnbroker.
The pawnbroker assumes the risk, though, that an item purchased was actually stolen property. In the interests of the community in not allowing a legitimate businessman to act as a fence, laws to protect both the pawnbroker and the community at large exist in some jurisdictions in the United States. These laws often require the pawnbroker to establish positive identification of the seller through photo identification (such as a drivers license or government-issued ID), as well as a holding period placed on an item purchased by a pawnbroker (to allow for local law enforcement authorities to track down stolen items).
Common items pawned by customers include jewelry, electronics (this includes hardware such as televisions and computers and software such as video games, as well as movies), musical instruments, firearms, and tools (both hand tools and power tools). Gold is a very popular item which is almost always purchased; even if the source (such as a piece of broken jewelry) has little value, the gold can still be sold in bulk to a bullion dealer or smelter for the value of the gold content.
History
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Ancient world
In the west, pawnbroking existed in the Ancient Greek and Roman Empires. Most contemporary Western law on the subject is derived from the Roman jurisprudence. As the empire spread its culture, pawnbroking went with it.
Likewise, in the East, the business model existed in China 3000 years ago no different than today, through the ages strictly regulated by Imperial or other authorities.
Middle Ages
In spite of early Roman Catholic Church prohibitions against charging interest on loans, there is some evidence that the Franciscans were permitted to begin the practice as an aid to the poor.citation needed
In England the pawnshop came in with William the Conqueror, with an Italian name, Lombard. In 1338 Edward III pawned his jewels to the Lombards to raise money for his war with France. King Henry V did much the same in 1415.
The Lombards were not a popular class and Henry VII Tudor harried them a good deal. In the very first year of James I Stuart an Act against Brokers was passed and remained on the statute-book until Queen Victoria had been on the throne thirty-five years. It was aimed at the many counterfeit brokers in London. This type of broker was evidently regarded as a fence. It is also known that Queen Isabella of Spain pawned her jewelry in order to send Christopher Columbus out to what he believed was western India.
Modern time
The Chinese conditions are decidedly favorable to a borrower. He may, as a rule, take three years to redeem his property, and he cannot be charged a higher rate than 3% per annum.citation needed
Modern pawnbroker storefront.
In the United Kingdom typical high street pawn interest rates vary between 5% (79.59% AER[1]) to 12% (289.6% AER) gross per month and the average annual equivalent rate is 85%.[2]
The pawnbroker in the United States is generally subject to considerable legal restriction.citation needed Each state has its own regulations regarding pawnbrokers, generally regulating the amount of interest that is allowed to be charged on a collateral loan. In Massachusetts, a 2007 Boston Globe investigation suggested 10% monthly interest was not uncommon.[3] In the state of New York, interest at pawnshops is limited to 4% per month.[4]
Symbol
Symbol of pawnbrokers.
The pawnbroker's symbol is three spheres suspended from a bar. The three sphere symbol is attributed to the Medici Family of Florence, Italy, owing to its symbolic meaning of Lombard. This refers to the Italian province of Lombardy, where pawn shop banking originated under the name of Lombard banking. The three golden spheres were originally the symbol which medieval Lombard merchants hung in front of their houses, and not the arms of the Medici family. It has been conjectured that the golden spheres were originally three flat yellow effigies of byzants, or gold coins, laid heraldically upon a sable field, but that they were converted into spheres to better attract attention.
Most European towns called the pawn shop the "Lombard". The House of Lombard was a banking family in medieval London, England. According to legend, a Medici employed by Charles the Great slew a giant using three bags of rocks. The three ball symbol became the family crest. Since the Medicis were so successful in the financial, banking, and moneylending industries, other families also adopted the symbol. Throughout the Middle Ages, coats of arms bore three balls, orbs, plates, discs, coins and more as symbols of monetary success. Pawnbrokers (and their detractors) joke that the three balls mean "Two to one, you won't get your stuff back".
Saint Nicholas is the patron saint of pawnbrokers. The symbol has also been attributed to the story of Nicholas and the three bags of gold.
Pawn shops in Asia
A typical Hong Kong pawn shop sign: a bat holding a coin.
In Hong Kong it follows the Chinese tradition, and the counter of the shop is typically higher than the average person for security. A customer can only hold up his hand to offer belongings and there is a wooden screen between the door and the counter for customers' privacy. The symbol of a pawn shop in Hong Kong is a bat (the animal) holding a coin (Cantonese: fuk shu tiu kam chin; in Chinese letters: 蝠鼠吊金錢). The bat signifies fortune and the coin signifies benefits.
In Japan, the usual symbol for a pawn shop is a circled digit seven, as "shichi", the Japanese word for seven, sounds similar to the word for "pawn" (質).
In India, the Marwari Jain community pioneered the pawnbroking business but today this phenomenon will be changed; this work is done by many agents called "saudagar". They play role as a freely not in shop style. They reach needy people's homes and motivate them to involving in system. It is a general practice to run a pawn shop as part of jewelry store. Gold, silver, and diamonds are especially accepted as collateral.
Pawnbroking is also a traditional trade in Thailand.
See also
Sources and external links
References
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