PAWNSHOPS. – Institutions established with the purpose of lending sums of money against pledges, with a minimal charge to cover expenses, to combat usury and assist the less affluent classes of the population. In the economic ideals of the Middle Ages, the prevailing theory held that money lent at interest was unproductive: any interest in such cases was considered usury, and those engaged in such activity—Jews, and abroad Italians (designated as Lombards)—were deemed usurers.
Pawnshops originated in Italy as early as the 14th century. Prior to this, there were some attempts at credit institutions, but these differed in purpose from pawnshops because charity was not part of their remit. Thus, in 1196, there was an initial attempt in Freising, Bavaria; this was followed in 1350 by a kind of mutual fund organized by the burghers of Salins (Franche-Comté); and in 1361, Bishop Michael of Northburg of London bequeathed a sum to the cathedral chapter to be distributed as interest-free loans against pledges for the duration of one year. The first to conceive of true pawnshops were the Franciscans, with the establishment in Florence in 1358 by Francesco da Empoli, though this soon failed due to a lack of organizational experience. In 1454, an institution was founded in Ancona by Marco da Montegallo to assist the city with loans, but this was not a true pawnshop, despite being regarded as such.
Most pawnshops were established in the second half of the 15th century. Fra Domenico founded one in Ascoli in 1458; Michele da Carcano established another in Perugia in 1462, approved by Pius II in 1463, with the necessary capital raised through alms collected by Fra Barnaba da Terni. The initiative spread rapidly, and pawnshops were founded in Orvieto (1464), L’Aquila (1466), S. Giacomo della Marca and Fabriano (1470), and Fano (1471). In the same year, Sixtus IV sanctioned the statutes of the pawnshop in Viterbo, and in 1479 those of the one in Savona. In 1484, Innocent VIII permitted the establishment of one in Mantua. New foundations received Bernardino da Feltre (v.), who established pawnshops in Parma, Rimini, Cesena, Chieti, Narni, Rieti, Lucca, Siena, Padua (in connection with the Bl. Angelo Carletti da Chivasso), Pavia, and Milan.
An examination of their statutes shows that, generally, pawnshops were organized along uniform lines. The staff had a technical character, with the most important roles belonging to the conservator, the depositary, and the notary. The first (also called massario or montista) was tasked with accepting pledges, safeguarding them, and returning them to their owners once the latter had met their obligations. The second (also called treasurer or cashier) handled only cash transactions, while the third was responsible for administrative duties, namely the drafting and custody of records. Other minor employees included: the appraiser of pledged items, the person who sold them if they were not redeemed by the deadline, the auctioneer, and subordinates. Administration was entrusted to both religious and lay personnel, the former by right, the latter selected by lot from among members of specific categories. To cover operating expenses, a small fee was charged, which some theologians condemned as interest, arguing that lending was illicit. In 1496, the Augustinian N. Boriani published a pamphlet *De monte impietatis* (Cremona, 1496), in which he condemned such activity as scandalous. The Dominicans sided with him, while the Franciscans opposed them. The question of whether loans should be interest-free was debated at a General Chapter of the Observants held in Florence at the end of the 15th century, and the position favoring gratuity was upheld by Michele da Segni, who sought thereby to silence the attacks of opponents. Bernardino da Feltre opposed this, affirming the necessity of charging a minimal fee as compensation for expenses, since it was necessary to remunerate those who worked in the pawnshops, and this could not be done without contributions from those who benefited from the service. The latter view prevailed and was also endorsed by the vicar general of the Order, Evangelista da Perugia. Official recognition of the legitimacy of this practice came only with the Fourth Lateran Council (1515). Thus, pawnshops were acknowledged, and it was established that a slight compensation was permissible, provided it did not exceed what was strictly necessary to cover expenses. Only Popes Julius III and Pius IV included in operating expenses a share of interest to be paid to those who provided the necessary capital to the institution.
In the 16th century, pawnshops were established in Rome and Naples. The first was founded in Rome in 1539 by the Franciscan friar Giovanni Calvo; the second in Naples in 1540, to assist the population following the expulsion of Jewish moneylenders from the Kingdom, through the efforts of some philanthropists (Aurelio Paparo and Leonardo di Palma) and, it seems, at the suggestion of St. Cajetan of Thiene.
The establishment of pawnshops was a highly significant social innovation, as it provided credit on favorable terms precisely to the humblest classes of the population, who had the greatest need for II. It benefited those who, in the event of sudden or unforeseen needs, had no reserves to draw upon and would otherwise have been forced to resort to Jewish or Christian usurers, facing exorbitant interest rates.
In other European countries, pawnshops appeared later. They were established in Bruges in 1572 and Lille in 1607. Later still (1643), the one in Paris was founded, which grew to such an extent that, about a century later (1777), it warranted expansion. Even more delayed was the establishment of the pawnshop in Madrid, which began operations in the 18th century. Neither Germany nor England had such institutions. In these two countries, credit institutions were primarily created for small traders and industrialists, while pledging remained in private hands. It is noteworthy that in many cases pawnshops expanded their activities to the point of becoming true credit institutions.