One thing that all people across the world can relate to is the need for cash, fast. And, for thousands of years, there has always been a quick solution to this problem, pawning items for a cash loan. Since the earliest of times, pawnbrokers have offered personal loans in exchange for valuable items. The items are then kept by the pawnbroker for a certain period in which the customer is contractually bound to pay back the loan with interest.
In doing so, the customer is then able to regain possession of the items originally handed into the pawnbroker. If the customer is unable to come up with the money to buy the item back, the pawnbroker has every right to sell the item to another buyer.
In South Africa there are more than 15 000 pawnbrokers nationwide, their shops are filled with a collection of items, from ordinary to eclectic all with their story and past.
How it all began
Pawnshops first began more than 3,000 years ago in Ancient China as a way of helping
pheasants with short term credit.
Pawnbroking also took off in Ancient Greece and Rome, giving locals a way to get small shops off the ground. During the Middle Ages, restrictions by the Catholic Church were put in place on charging interest, which meant the profit margin on running a pawn shop was not great.
In the 14th and 15th centuries, these rules were relaxed in Europe as short-term credit gained popularity by becoming an important way of financing small businesses and granting temporary aid to the poor.
Wealthy families such as the Medicis of Italy and the Lombards of England became known
as money-lending families.
In 1338, King Edward III of England pawned jewels to the Lombards to help finance war against France, and Spain's Queen Isabella is believed to have pawned her jewelry as collateral to fund Christopher Columbus' expeditions to the New World.
The word "pawn" comes from the word "platinum" a Latin word meaning cloth or clothing. For most of the working class, clothes were often the most valuable items they owned. Public pawn shops were set up during the 18th century as charitable funds, offering low-interest loans to the poor to help limit debt. The tradition of pawning clothes on Mondays and retrieving them again on Fridays (ie. Payday) was a common way for poor people to make ends meet during the 19th century.
The Pawnbrokers Act of 1872 in England established regulations protecting pawnbrokers around selling stolen items. This act also regulated the amount of interest that could be charged on pawned items. It described overall guidelines for the industry, hence establishing regulations that continue today.
Pawn Shops Today
In the past 100 years, the number of pawnshops has grown exponentially around the globe. During the Great Depression, pawnshops were the only institutions able to offer cash loans. Today, pawn shops are still rated as the easiest and fastest way for people to turn goods into cash.
Pawnshops almost operate as mini banks, as millions of people don't hold bank accounts. Certified pawn shops offer incredibly low-interest rates and though it may sometimes appear like they are "ripping customers off", most pawn shops offer a practical solution for people in need of cash. They also act as a place of exchange for people from all walks of life, to buy and sell unique items.
From jewelry to electronics, musical instruments, and sporting equipment, you
will find it all and more at your local pawn shop. The pawnshop industry has often been criticized for offering inflated interest rates to the poor and decreasing the value of the goods brought in to make a profit. However, there are organizations and regulatory boards that ensure all pawn shops and pawnbrokers uphold the regulations about the terms of the pawn contract and the amount of interest charged on the cash loans.
Each pawned item is also required to be registered to prevent the sale of stolen items.