| By :
Nick Messe
As the earliest form of lending and banking, the existence of pawnbrokers can be traced back over 3000 years in China. Early records in the show that they practiced money lending in Greek and Roman times. There is even mention of the practice in the Bible. The Bible advises not to make loans on the tools a man uses to make a living. It also states that the moneylender was not to go to the house of the borrower but to let him come to the moneylender. These early pawnbrokers served two purposes in Biblical times. They exchanged the common currency for that used in temple offerings, and they served the purpose of lenders and bankers. In all cases, the practice revolved around lending money on some form of property as security against the loan. The existence of specialized pawn shops is noted in the records from China from the 5th century. Prior to this there was no permanent location where lending took place. By the end of the 5th century the practice was widespread in Southern China. By contrast, the first pawn shops in Europe did not come into existence until the 11th century. Throughout the history of Europe and England, pawnbrokers have played a part in helping both the common man and royalty in times of need. Collateral based lending was used to finance wars and great adventures. It is well known that Queen Isabella of Spain used her jewelry as collateral to finance the voyage of Christopher Columbus. In England, King Henry V and King Edward III both pawned the royal jewels to finance wars. The earliest pawnshops in Europe were restricted to no interest loans by the laws of the church. These early shops were unsuccessful because expenses could not be covered. In the 15th and 16th centuries it became acceptable to charge enough interest to pay the expenses of the business and allow some profit. Italy was the site of the most successful pawnshops and the practice spread from there across Europe. By the 17th century pawnshops were in existence in Germany, Belgium and Spain. The symbol of the pawnbroker is three golden balls hanging outside the shop or in the window. The origin of this symbol comes from the Medici family of Italy who were powerful bankers and collateral based lenders. The three golden balls, part of the family's coat of arms, probably represented gold coins. They were flat when first used as a symbol by the lenders. In order to be more visible and attract more attention, the circles later became spheres. The practice of pawnshops spread throughout Europe from Italy, and so too did the three golden balls symbol. It is still used today to identify pawnshops. In modern times the pawnshop is a convenient alternative to loans from banks. Because property is collateral for the short-term loan, no credit check is required. A price is set along with a rate of interest to be paid on the loan. If the borrower defaults on the loan there is no strike against his credit score. The property that was used as collateral then covers the loan.
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