Pawnbroker is a person who lends small sums of money on articles of clothing, watches, jewelry, and other belongings that are left with the pawnbroker as security. The articles that are left are pawned. The pawnbroker has the right to sell these articles if the loan is not repaid with interest and charges within a certain time after the debt becomes due.
The pawnbroker usually limits the loan to a small fraction of the value of the article, which provides security for the loan. For this reason, pawnshop customers do not usually regard the transaction as a sale of their goods. Customers pay back the loan with high interest to redeem their property. The pawnbroker is sometimes called the poor person’s banker. He or she makes it possible for a person without employment or in financial distress to obtain credit quickly, even in a strange city. Pawnshops are disappearing from many areas due to the widespread availability of credit cards, which provide easy access to small loans at lower interest rates.
Pawnbroking dates back to the time when there were no banks. Many American cities had pawnshops as early as 1800. But the business was not generally recognized throughout the nation by law until the late 1800’s. Then laws were passed by states and cities to curb abuses, such as unfair charges. In most cases, state laws restrict the maximum interest rates pawnbrokers may charge.
In general, regulations require the pawnbroker to keep a record book. It contains a description of every article received. This book must be submitted upon request to the police or other authorities who may be looking for stolen goods. The pawnbroker is not allowed to receive goods from anyone under the influence of liquor, or from anyone under a specified age.
Three golden balls, an old trade sign of the pawnbroker, usually hang outside the pawnshop. They originated with the moneylenders of Lombardy in Italy, who were important bankers in medieval England. The three golden balls were also the coat of arms of the Medici family, the richest merchants and moneylenders of Florence.
