Pawnbroking. Pawn is a contract whereby the owner of a thing delivers it to a creditor as security for a debt contracted by himself or by a third party. This contract is of great antiquity, as may be seen on referring to the story of Judah and Tamar (Gen. xxxviii.) and the provisions of the Mosaic law (Exod. xxii.). In modern times the superior class of money-lenders have often advanced money on pledges of plate, &c.; this was the business carried on by the Lombard traders, from whom Lombard Street in London takes its name; and it is said that the three golden balls which figure over every pawnshop were taken from the armorial bearings of the Medici family. Property of considerable value is sometimes pawned with bankers and others; and an equitable Mortgage (q.v.) may be described as a kind of pawn. Among the poorer classes, clothes, tools, &c. are frequently pledged when money runs short; like other small money-lenders, the pawnbroker is regarded by his customers as an extortioner, though the profits of the trade are not particularly high. On the Continent efforts have been made to supersede the pawnshop by establishing what are called Monts de Piété. In England a quasi-charitable institution of the same kind was started in 1708, but it came to a disastrous end in 1731; another scheme, started during the bubble mania of 1824-25, was equally unfortunate. In Ireland there were, in 1841, as many as eight Monts de Piété, but they had all disappeared by 1853. On comparing the rules and charges of the Mont de Piété (q.v.) at Paris (the largest establishment of the kind in the world) with those of English pawnbrokers, it does not appear that there is any striking superiority in the French system. It is understood that the Paris establishment is superior to the London pawnshop in two points—it charges a lower rate of interest, and it gives greater facilities for recovering stolen goods. On the other hand, it is said that officialism, which must prevail where a large staff is employed, makes it more difficult for the poor to obtain advances.
The rules of English common law which apply to a contract of pawn are founded in part upon the Roman law. The pawnbroker acquires what is sometimes called a special property in the goods deposited; he has a right to retain them, and, if the debt be not paid within the stipulated time, he has a right to sell; if the sale produces more than the amount of the debt, he must account for the surplus. The pawner has a right to redeem at any time before sale; interest is not due unless there is an express or implied contract to pay. These rules are considerably modified by the Pawnbrokers Act, 1872, which applies to all persons who make a business of taking chattels in pawn, including the keeping of what in England are called dolly-shops, and what in Scotland used to be called 'wee brokers.' Every pawnbroker is required to take out a license; unless in business before 1872 he must obtain a certificate of fitness from a magistrate or a petty sessions court before taking out a license. Pawnbrokers are required to keep books in a prescribed form; their shops are made liable to be searched under a magistrate's warrant. A ticket must be given on receiving goods in pawn; the pawnbroker may charge one halfpenny per month on each 2s. advanced; and there is also a small charge for the ticket. These charges are high, or rather would be high if the pawnbroker were in the same position as an ordinary money-lender; but it must be remembered that the risks of this business are considerable, and also that the borrower obtains a larger advance by reason of the high interest. Pledges are to be redeemable within twelve months and seven days; if a pledge over 10s. in value is sold for more than the loan and profit due, the pawnbroker must account for the surplus on demand. These rules apply to any loan not above £10; but in the case of a loan of more than £2 the rules of the act may be excluded by special contract. The act extends to Scotland. Special enactments have been made in regard to persons pawning or receiving in pawn property belonging to public authorities—e.g. soldiers' arms and uniforms. See Turner's Contract of Pawn, where the statutes relating to this subject are summarised.
The law of the United States is the English law, as altered by the legislation of each state; but the law of Louisiana, which is French in its origin, approximates more closely to the Roman, and is free from the peculiarities of the English system. In New York the rate is limited to 25 per cent. per annum on articles worth less than $25, and to 7 per cent. on articles of higher value. The rate usually charged is, however, 3 per cent. per month, and there are generally further charges for storage and safe-keeping.