In ancient society, without credit cards, how did people borrow money?

For this type, some individuals are influenced by Western thinking, while others simply do not wish to borrow money from relatives and friends.

Everyone says “talking about money hurts feelings”, and borrowing money is even more sensitive. To avoid the awkwardness of being refused when asking to borrow money, today’s youth often opt for credit cards. But in ancient society, without credit cards, how did people borrow money?

The First Method of Borrowing Money in Ancient Times – Pawnshops

We often see scenes like this in historical dramas: A wealthy young man falls from grace, and he takes something ancestral to a pawnshop to hock it. Pawnshops, also known as “pawn shops” or “pawn stores”, are establishments in ancient China that used goods as collateral to issue high-interest loans. The “pawn industry” is also one of the oldest industries in humanity, being the precursor to modern finance and the foundation of mortgage banking.

“The pawn industry is one of the oldest industries in humanity.”

Pawn services in China flourished during the Han Dynasty, starting from the Buddhist temples at the Great Wall, penetrating the market during the Tang and Five Dynasties, and established during the Northern and Southern Song Dynasties. It thrived during the Ming and Qing Dynasties and declined in the late Qing Dynasty and early Republic of China period.

Why Did Pawnshops Start from Buddhist Temples?

This was primarily because during the Northern and Southern Dynasties, the rulers of previous dynasties placed great importance on Buddhist temples. These temples not only had fertile lands, but they were also exempt from taxes. Furthermore, due to the peak of Buddhism, devotees often donated money for incense offerings to the temples. The monasteries used these donations to establish pawn services, lending money at high interest to the common people. At that time, it was called “public treasury” and was the earliest form of pawnshop. When people urgently needed money, they could use practical and valuable items such as farming tools, clothing, and jewelry as collateral, repaying the principal and interest upon maturity.

During the Tang and Song Dynasties, the income from “quality banks” became one of the main sources of income for monasteries. By the time of the Qing Dynasty, the pawn industry had moved from cities to rural areas and quickly became an important lending organization across the country. Statistics show that during the Kangxi period of the Qing Dynasty, there were at least 20,000 pawn shops nationwide. During the Qianlong period, there were between 600-700 pawn shops in Beijing. After the Opium Wars, as life became increasingly difficult for urban and rural residents, the pawn business diversified into various tiers. People could choose different pawn methods to borrow money according to their needs.

The Second Method of Borrowing Money in Ancient Times – Private Banks

Private banks emerged during the later period of feudal Chinese society. (Illustration).

Compared to pawnshops, private banks emerged much later. They appeared during the later period of feudal Chinese society. Initially, private banks only provided foreign exchange services, gradually expanding to deposit, lending, and currency exchange services. During the reign of Emperor Yingzong of the Ming Dynasty, the value of paper money depreciated, prompting the government to relax the ban on silver, leading to the public circulation of money. In subsequent generations, with various private currencies and colorful coins, the exchange industry became more developed, and financial sectors such as private banking began to thrive.

By the end of the Ming Dynasty, private banks had become independent financial institutions, managing exchanges and facilitating the deposit and withdrawal of funds. By the time of the Qianlong period of the Qing Dynasty, banks had reached considerable scale, with Shanghai serving as the center of the banking industry, highlighting its historical status as a financial hub in China.

The Third Method of Borrowing Money in Ancient Times – Borrowing from Relatives and Friends

The first step is to borrow from acquaintances, and only as a last resort seek out pawn shops. (Illustration).

In general, the first step for ancient people to borrow money was to seek assistance from relatives and friends. Only when there was truly no other option would they turn to pawnshops and banks.