‘In Hock’ tells how pawnshops helped build capitalism

IN HOCK: Pawning in America from Independence through the Great Depression, by Wendy A. Woloson. 233 pages, illustrated. Chicago


Like a lot of people, social hisrorian Wendy Woloson had never been in a pawnshop, but she’d heard bad things about them. After a lot of research, mostly in obscure 19th century archives, she came to a different conclusion.


In “In Hock” she concludes that American industrial capitalism (the “second industrial revolution”) could not have occurred without pawnbrokers.


Industrialists depended on low-wage workers who were periodically no-wage workers as plants laid off workers, especially in the financial panics that swept the nation every decade or so before the New Deal tried to control banks. There were almost no provisions for out-of-work workers, and large classes (women, African-Americans, Irish, children) were paid subsistence or less-than-subsistence wages when they were working.


Only the pawnbroker stood between them and starvation.


No thanks did he get for it. Pawnbrokers, like their customers, were on the fringe, and the economic powers did what they could to destroy, or at least limit pawnbroking. Only a very few men – usually those with personal experience of the successful municipal pawnshops of Europe – understood the benefits of pawn lending.


Respectable” businessmen and bankers, much later, had to be forced to treat customers without prejudice by regulation. There were plenty of regulations of pawnbrokers, but there has never been a law requiring pawnbrokers to treat all people the same.


At a time when bankers would not deal with women, blacks, Jews or people with shabby clothes, pawnbrokers stood ready to lend cash to all comers. The only thing that mattered was that the pawner had something valuable to pledge.


For the truly destitute, even the pawnbroker was no help.


In her lively, but sometimes repetitive book, Woloson ferrets out the pawnbroker in popular novels and advertisements, in rapidly growing cities, in small towns.


According to respectable opinion, pawnbrokers served only to provide money for drunkards to drink. A long statement by Woloson is worth quoting because it exposes the falsehood behind the capitalist program:


Industrial capitalism begat wealth and poverty, winners and losers. It remained in the winners’ collective self-interest to create consensus among the larger public that capitalism was good for all of society, that wholesale and retail exchange were the ‘normal’ and ‘mainstream’ ways of doing business, and that this particular economic system was the only one befitting a modern, civilized nation. By its continued existence, however, pawnbroking demonstrated quite clearly that the promise of capitalism was broken for countless Americans. The true character of emergent industrial capitalism can be found beyond the shiny surfaces of retail show windows and the smooth pages of ledgers, revealing life at it was actually lived by most Americans, not simply the privileged few.


Tellingly, pawning remained a popular coping strategy throughout the nineteenth century, from the very dawn of capitalism through the second industrial revolution. The endurance of pawnbroking through radical economic shifts and perennial boom and bust cycles was an indication both of its ability to adapt to changing times and more important, of Americans’ enduring need for such an institution. Regardless of the rhetoric championing capitalism as a democratizing force, it created inequities that led pawners to their local pawnshops. Pawnbroking could not have survived without the continued expansion of capitalism. Yet at every turn pawners, pawnbrokers, and the institution of pawnbroking were denigrated and demonized. Why was this so? Counting the great number who put things in hock makes it evident that there were many more losers than winners. What did it say about capitalism that it generated so many pawners? The symbiosis of pawning and capitalism warrants further examination if we are to fully understand the living and working lives of those who came before us and comprehend the economic exigencies of the people who continue to struggle today.”


Woloson ends her history in the Great Depression. The New Deal and the postwar liberal economic system were nearly fatal to pawnshops. For a while, it was predicted that they would fade out.


The rise of brutal finance capitalism has created wonderful business for pawnshops, which are doing better today than ever.