PAWNBROKING is the business of lending money on the security of goods taken in pledge. If we desire to trace with minuteness the history of pawnbroking we must go back to the earliest ages of the world, since the business of lending money on portable security (see MONEY-LENDING, and USURY) is one of the most ancient of human occupations.
In China the pawnshop was probably as familiar two or three thousand years ago as it is to-day, and at all events down to the outbreak of the long period of successive civil wars which began in the first quarter of the present century its conduct was still regu lated quite as strictly as in England. The Chinese conditions, too, were decidedly favourable to the borrower. He might, as a rule, take three years to redeem his property, and he could not be charged a higher rate than 3% per annum—a regulation which would close every pawnshop in England in a month. Both Rome and Greece were as familiar with the operation of pawning as the modern poor all the world over ; indeed, from the Roman juris prudence most of the contemporary law on the subject is derived.
It was, indeed, in Italy, and in more modern times, that the pledge system which is now almost uni versal on the continent of Europe arose. In its origin that system was purely benevolent, the early monts de piete established by the authority of the popes lending money to the poor only, without interest, on the sole condition of the advances being covered by the value of the pledges. Thus as early as 1198 something of this nature was started at Freising in Bavaria; while in 1350 a similar endeavour was made at Salins in Franche Comte, where interest at the rate of 7,4% was charged. Nor was England backward, for in 1361 Michael Northbury, or de Northborough, bishop of Lon don, bequeathed i
silver marks for the establishment of a free pawnshop. These primitive efforts, like the later Italian ones, all failed. The Vatican was therefore constrained to allow the Sacri monti di pieta to charge sufficient interest to their customers to enable them to defray expenses. Thereupon a learned and tedious
controversy arose upon the lawfulness of charging interest, which was only finally set at rest by Pope Leo X., who, in the tenth sit ting of the Council of the Lateran, declared that the pawnshop was a lawful and valuable institution, and threatened with excommuni cation those who should presume to express doubts on the subject. The Council of Trent inferentially confirmed this decision.
Long before this, however, monti di pieta charging interest for their loans had become common in Italy. The date of their establishment was not later than
when the earliest of which there appears to be any record in that country—it was at Orvieto—was confirmed by Pius II. Three years later another was opened at Perugia by the efforts of two Franciscans, Barnabus Interamnensis and Fortunatus de Copolis. They collected the necessary capital by preaching, and the Pe rugian pawnshop was opened with such success that there was a substantial balance of profit at the end of the first year. The Dominicans endeavoured to preach down the "lending-house," but without avail. Viterbo obtained one in 1469, and Sixtus IV. confirmed another to his native town of Savona in 1479. After the death of Brother Barnabus in 1474 a strong impulse was given to the creation of these establishments by the preaching of another Franciscan, Father Bernandino di Feltre, who was in due course canonized. By his efforts monti di pieta were opened at Assisi, Mantua, Parma, Padua, Pavia and elsewhere. From Italy the pawnshop spread gradually all over Europe. Augsburg adopted the system in 1591, Nuremberg copied the Augsburg regulations in 1618, and by 1622 it was established at Amsterdam, Brussels, Antwerp and Ghent. Madrid followed suit in 1705, when a priest opened a charitable pawnshop with a capital of fivepence.