History of Pawnbroking - Medieval Europe

Medieval Europe

In Italy, but in more modern times, the pledge system which became almost universal on the continent of Europe arose. In its origin that system was purely benevolent, the early "monts de piete" established by the authority of the popes lending money to the poor only, without interest, on the sole condition of the advances being covered by the value of the pledges. This was virtually the Augustan system, but it is obvious that an institution which costs money to manage and derives no income from its operations must either limit its usefulness to the extent of the voluntary support it can command, or must come to a speedy end.

In 1198 something of the kind was started at Freising in Bavaria.

In 1350 a similar endeavour was made at Salins in Franche-Comté, where interest at the rate of 7½% was charged.

Nor was England backward, for in 1361 Michael Northbury, or de Northborough, bishop of London, bequeathed 1000 silver marks for the establishment of a free pawnshop.

These primitive efforts, like the later Italian ones, all failed. The Vatican was therefore constrained to allow the Sacri monti di pietà (satisfactory derivation of the phrase has yet been suggested) to charge sufficient interest to their customers to enable them to pay for expenses. Thereupon a learned and tedious controversy arose upon the lawfulness of charging interest, which was only finally set at rest by Pope Leo X, who in the tenth sitting of the First Council of the Lateran, declared that the pawnshop was a lawful and valuable institution, and threatened with excommunication those who should presume to express doubts on the subject. The Council of Trent inferentially confirmed this decision, and at a somewhat later date we find St Charles Borromeo counselling the establishment of state or municipal pawnshops.

Long before this, however, monti di pietà charging interest for their loans had become common in Italy. The date of their establishment was not later than 1464, when the earliest of which there appears to be any record in that country—it was at Orvieto—was confirmed by Pius II. Three years later another was opened at Perugia by the efforts of two Franciscans, Barnabus Interamnensis and Fortunatus de Copolis. 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 the first year.

The Dominicans endeavoured to preach down the lending-house, but without avail. Viterbo obtained one in 1469, and Sixtus IV confirmed another to his native town in Savona in 1479.

After the death of Brother Barnabus in 1474, a strong impulse was given to the creation of these establishments by the preaching of another Franciscan, Father Bernandino di Feltre, who was in due course canonized. By his efforts monti di piet were opened at Assisi, Mantua, Parma, Lucca, Piacenza, Padua, Vicenza, Pavia and a number of places of less importance.

At Florence the veiled opposition of the municipality and the open hostility of the Jews prevailed against him, and it was reserved to Savonarola, a Dominican, to create the first Florentine pawnshop, after the local theologians had declared that there was no sin, even venial, in charging interest. The readiness of the popes to give permission for pawnshops all over Italy, makes it the more remarkable that the papal capital possessed nothing of the kind until 1539, and even then owed the convenience to a Franciscan.

From Italy the pawnshop spread gradually 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 a capital of fivepence taken from an alms-box.