pawnbroking

pawnbroking

Business of advancing loans to customers who have pledged household goods or personal belongings as security. The pawnbroker's trade is one of the oldest known, having existed 2,000–3,000 years ago in China, as well as in ancient Greece and Rome. Pawnbroking was common in medieval Europe despite laws against usury. Private pawnbrokers were usually those exempt from the laws, notably the Jews. In 1462 the Franciscans set up the montes pietatis, which granted interest-free loans to the poor, though they were later forced to charge interest to prevent premature exhaustion of their funds. Public pawnshops existed briefly in the Middle Ages but were reestablished in the 18th century to free debtors from the high interest rates of private pawnshops. Most European countries now maintain public pawnshops; in the U.S. only private pawnshops exist. Social-welfare programs and increased access to easy credit has led to a decline in pawnbroking's importance. See also interest, consumer credit, credit card.