<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Wendy Woloson</p> <p>Cable television has lately been bringing the art and science of owning a pawnshop to life -- even for those fortunate enough to experience it only vicariously. But pawning has been integral to Americans' financial lives for centuries.</p> <p>History Channel's "Pawn Stars" features the oversized Harrison family and their Las Vegas pawnshop, Gold &amp; Silver. Old paper currency, antique pistols, classic guitars and works of art are typical of the items offered up for appraisal there, making the series seem like a less genteel version of "Antiques Roadshow."</p> <p>On truTV is "Hardcore Pawn," set in Detroit and featuring the aptly named Gold family. The clientele at the Golds' American Jewelry and Pawn is notably downscale, and when not yelling at each other or at the store's staff, customers are shown pawning and redeeming fairly mundane possessions (save the stripper pole with shag-carpet platform featured in the first season). And "Pawn Queens," on TLC, chronicles the business of two women who run a "female friendly" pawnshop in Naperville, Illinois.</p> <p>These shows have domesticated the pawnshop, opening its doors to those curious about what transpires behind the bullet-proof glass, metal bars and high counters that characterize many of these enterprises. And if the pawnshop's cultural capital is on the upswing, it's due in large part to straitened financial circumstances, in which many more people are finding themselves in the role of pawners -- taking personal items to the pawnshop to use as collateral to secure modest loans.</p> <p>According to the National Pawnbrokers Association, a trade group, there are now more than 30 million pawnshop customers per year. The value of the average loan in 2009 was $100, up 20 percent from the previous year. About 80 percent of pawners pay off their loans and redeem their collateral, though redemptions are on the decline.</p> <p>Although pawnbrokers, being in the credit business, profit from interest on loans, they are also active buyers and sellers, and make money on retail sales (which are down) and the purchase of items made of precious metals and gems that they can reconstitute and trade as commodities (those transactions are up).</p> <p>"Pawn Stars," "Hardcore Pawn" and "Pawn Queens" do show quite effectively that pawnshops are, and have always been, equal-opportunity lenders, providing small short-term loans to those -- often women, minorities and the working poor -- who have lacked access to forms of credit available to the elite.</p> <p>The first places in the U.S. to identify themselves as pawnshops, usually marked by a sign showing three balls, were established in the second decade of the 19th century. The number of pawnshops dotting urban landscapes only increased, thanks to the growth of the domestic manufacturing sector, which generally paid its workforce low wages. A pawnshop loan could be a crucial bridge between paydays, providing cash for basic necessities such as food and rent on the security of personal possessions. These loans also helped business owners meet payroll and the rich to finance their vacations.</p> <p>Pawnshop loans were so essential to so many that there was one item in pawn for every man, woman and child living in New York City in the year 1828 alone.</p> <p>While the brand names have changed, pawns themselves continue to be the same types of moveable property brought to the first pawnshops, including clothing, jewelry, watches, tools and entertainment devices. The list below comes from the only existing business records of a 19th-century pawnshop. It's just a sample of the 130 pieces of collateral that pawnbroker John Simpson took in -- and the amount he loaned on them -- at his pawnshop at 25 Chatham Street in New York City on Aug. 21, 1838, a typical day:</p> <blockquote> <p>cloak .75</p> <p>2 coats &amp; razor 3.50</p> <p>coat 4.00</p> <p>accordion 2.00</p> <p>pistol .50</p> <p>blanket, coat, and book .75</p> <p>apron .06</p> <p>gown .18 3/4</p> <p>3 books 2.37 1/2</p> <p>pair spectacles .62 1/2</p> <p>vest .25</p> <p>tablespoon 1.50</p> <p>rasp .12 1/2</p> <p>2 sheets &amp; petticoat .50</p> <p>cloak &amp; 4 books 1.00</p> <p>silver watch with broken hands 2.00</p> <p>lever watch 5.00</p> <p>eyeglass .25</p> <p>saw .37 1/2</p> <p>shawl .25</p> <p>shirt .50</p> <p>broach .37 1/2</p> <p>gold watch chain and key 18.00</p> <p>fur 4.00</p> <p>quilt 3.00</p> <p>8 collars .37 1/2</p> <p>pair of lamps .12</p> <p>violin 4.00</p> <p>pair of pants 1.00</p> <p>box of jewelry 1.00</p> <p>gown and cape .75</p> <p>jacket, pants &amp; vest 4.00</p> <p>sheet .18 3/4</p> <p>necklace 1.00</p> <p>music box 1.00</p> <p>handkerchief .12 1/2</p> <p>coffee box 30.00</p> <p>table cover 1.00</p> <p>umbrella .50</p> <p>silver medal 2.50</p> </blockquote> <p>From the lowly 6-cent apron to the prized coffee box, they represent the great variety of commodities in circulation at the time. Although vastly different in particular from today's pawns, they are very much the same in nature. Yesterday's music box is today's DVD player; a violin has become an electric guitar; a silver pocket watch is now a Rolex; a wool cape like a leather jacket. Some items of predictable value -- such as guns, tools and goods made of precious metals -- remain pawnshop staples.</p> <p>However exaggerated, the reality shows remind us that by providing short-term loans collateralized by the material stuff of everyday life, the pawnshop serves an important economic function. It has done so in this country for two centuries.</p> <p>(Wendy Woloson is an independent scholar and consulting historian. Her most recent book is "In Hock: Pawning in America from the Revolution to the Great Depression," due out in paperback this spring. The opinions expressed are her own.)</p> <p>To read more from Echoes, Bloomberg View's economic history blog, <a href="http://www.bloomberg.com/view/echoes/">click here</a>.</p> <p>To contact the writer of this post: Wendy Woloson at wewo99@gmail.com.</p> <p>To contact the editor responsible for this post: Timothy Lavin at tlavin1@bloomberg.net.</p> </body> </html>