History of Collateralized Loans



Did you know that Christopher Columbus might never have discovered America without the aid of a Pawn Loan?! That's right, Queen Isabella of Spain did not have the cash available to finance old Chris's adventure. She actually pawned her crown jewels so that Chris could have enough money to sail the oceans blue in 1492!  I wonder if the pawnbroker who made that loan knew just what he was starting?

Did you know that MANY European Kings and Queens have utilized the pawn industry to finance everything from wars to banquets. In 1338 Edward III pawned his jewels to the House of Medici (pawn brokers of Florence, Italy) to raise money for his Hundred Years War with France? An equally great king, Henry V, did much the same thing in 1415.

In 1641, King Charles I of England, needed money to fund his portion of the English Civil War between England, Ireland, and Scotland. He instructed his wife, Henrietta Maria, to pawn the crown jewels of England. Unfortunately for Charles, he lost the war to the Scots in 1646 and was beheaded in 1649.

The pawn industry is mentioned in the Old Testament of the Bible and some of the earliest pawn lenders for which we have transaction records, were started in China over 3,000 years ago and were established, owned, and operated by Buddhist monasteries. Both the Greeks and Romans were familiar with the operation of pawning, and from Roman jurisprudence most of our contemporary law on the pawn industry is derived.

In Medieval Italy, the pledge system that became universally known as the pawn industry on the continent of Europe, first began. Initially, the system was purely benevolent and was established by the authority of the Popes for lending money only to the poor. The only condition being that the advances were to be covered by the value of the pledges, without charging interest. It soon became obvious that a business that costs money to manage and derives no income from its operations must soon come to a speedy end. The first pawn business in England was started in 1361 by Michael Northbury, the Bishop of London. However, it too soon failed because it was also a "free" pawnshop.

Pope Leo X, understanding the great need for the pawn industry,  issued a papal bull in 1515 confirming that charitable pawnshops were exempt from the prohibition on lending at interest; and in the tenth sitting of the First Council of the Lateran, it was declared that the pawnshop was a lawful and valuable institution and excommunication was threatened to anyone who should presume to express doubts on the subject. The Council of Trent (1545 - 1563), confirmed this decision; and at a somewhat later date, St. Charles Borromeo began the establishment of state or municipal pawnshops.

Long before the Council of Trent, however, monti di pietà commonly charged interest for loans in Italy. The date of their establishment was not later than 1464, when the earliest of these businesses appears in the records of that country. Three years later another was opened in Perugia, Italy by the efforts of two Franciscan Monks. They collected the necessary capital by preaching, and the Perugian pawnshop was opened with such success that there was a substantial balance of profit at the end of their first year.

From Italy, the pawn industry gradually spread 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 the capital of five pence taken from an alms box. In Europe, pawn shops are often referred to as the “Lombard”, in reference to the House of Lombard, a prominent lending family in medieval London.

Despite some opposition to the pawn industry in Europe, these businesses persisted. The mont de piété of Paris survived the French Revolution and two World Wars to become the Crédit Municipal of today and Mexico City’s Monte de Piedad is still in operation. These and other similar lending institutions played a crucial role in making the business of finance culturally acceptable and laying the foundations of the modern European banking industry.

By the late 19th and early 20th century, there were almost as many pawn shops as pubs in the UK; and today, there are more than 12,000 pawn shops operating in the United States alone.



The symbol of the pawnbroker is three spheres suspended from a bar. The symbol of the three spheres or balls was part of the coat of arms of the Medici family, who established the Medici trading and banking empire in Florence, Italy. The Medici’s were a 15th century Italian family of bankers and lenders, with considerable fame and fortune.

Legend states that one of the Medicis working for Emperor Charles the Great killed a giant with three sacks of rocks. The three balls or globes was later adopted as part of their family crest, and ultimately, the sign of the pawnbroker.

The Medici family became so well known in the finance and lending profession that other lenders, wanting to share in their success, adopted similar coats of arms, signs, shields and symbols; with three golden balls being the most popular.

Once other merchants involved in monetary dealing adopted the three golden balls as their symbol, the three balls came to symbolize the entire profession founded on the ethic of mutual trust.

Throughout the middle ages you can find many coats of arms bearing three balls, orbs, plates, disks, coins, and more as symbolic of monetary success.

When Italian bankers began to open branches abroad, the symbol of the three golden balls spread to the European west. The symbol of the three golden balls was brought to the United States from England, where pawnbrokers still display the symbol to this day.

Saint Nicolas is the patron saint of pawnbrokers (and children and thieves). The symbolism of the three balls or spheres associated with pawnbrokers has also been connected with his gift of three bags of coins to the three daughters of a poor man so that they could marry.


Below is an example of the professional coat of arms of British pawnbrokers:

The coat of arms of the Pawnbrokers of Great Britain

The coat of arms of the Pawnbrokers of Great Britain, featuring the design motif of three balls. (Detail from the illustration “Balls or Roundels as a Symbol of the Money-Lenders,” in Raymond de Roover’s article, “The Three Golden Balls of the Pawnbrokers,” from the Bulletin of the Business Historical Society, 1946.).


Because so many people were illiterate in Medieval Europe, shopkeepers typically hung three-dimensional signs at their entrances representing the goods or services they provided within. Hence, the gold disks, rendered in three dimensions, became balls. Here is a detail of William Hogarth’s 18th-century print, “Gin Lane,” showing pawnbroker S. Gripe’s sign prominently displayed:

William Hogarth’s “Gin Lane”

The three balls, shown here hanging outside an 18th-century London pawnshop, became the universal symbol of pawnbroking. (Detail from William Hogarth’s “Gin Lane,” first published in London in 1751 and reissued in The Original Works of William Hogarth, 1790.)


When pawnbrokers established themselves in American cities in the early 19th century, they used these same signs, which would have been quite familiar to immigrants who had seen them in their home countries. An early example is this 1828 advertisement from a city directory for Philadelphia pawnbroker Stephen Blatchford, which contains a depiction of his sign of the three balls:

Advertisement for Stephen Blatchford’s County Money Office, 1828.

Because the sign of the three balls would have been easily recognizable to European immigrants, early American pawnbrokers often used it in advertisements to attract customers. (Advertisement for Stephen Blatchford’s County Money Office, in Desilver’s Philadelphia City Directory and Stranger’s Guide, 1828.)


What is remarkable is how enduring this symbol became, hung outside of pawnshops throughout the nineteenth century and well into the twentieth.

Illustration from the article “The Pawnbrokers of New York,” 1859.

Throughout the 19th century pawnshops were an important part of the urban landscape, and they could not be missed. Their windows were crammed with unredeemed collateral and the sign of the three balls hung prominently outside, often painted bright gold. (Illustration from the article “The Pawnbrokers of New York,” published in The Great Republic Monthly, 1859.)

B. Berkowitz Loan Office. New York, ca. 1924.

The business of pawnshops changed relatively little over time. This New York City pawnshop from the 1920s looks remarkably similar to the one shown above, dating from over a half a century earlier. (B. Berkowitz Loan Office. New York, ca. 1924. From the George Grantham Bain Collection, Library of Congress, Prints and Photographs Division.)






1) Your APR will range between 10% and 300% depending upon the value and type of your collateral.
2) Loans do not auto renew.
3) The client can come into the office and sign new paperwork to extend the loan.
4) There are no additional fees to extend the loan.


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