Navajo Pawn: A Misunderstood Traditional Trading Practice

Navajo trading has been a crucial component of that tribe’s localized economy for generations and has been the subject of much scholarship over the years. The role of the Navajo trader in influencing the types and styles of crafts that Navajos created as well as providing tribal members with an outlet for those items remains important to their traditional culture. However, a subsidiary component of trading, known as Navajo pawn, also comprises an important element of their craft-based economy and has been analyzed in less detail. Despite the contentious nature of pawn as it exists among the Navajos, it remains vital and has withstood the test of innumerable lawsuits and legislative maneuverings. This work examines the controversial role of pawn in the Navajo economy with an emphasis on legal and regulatory issues surrounding on- and off-reservation pawning practices.

Navajo trading posts originated in the mid-nineteenth century, tracing their roots to 1868, when the tribe returned to its homelands from a devastating five-year captivity at the Bosque Redondo reservation in southeastern New Mexico. Beginning in the early 1870s, European American settlers slowly filtered into the Navajo realm and built trading posts in order to exploit a growing demand among easterners for Indian-made goods. In the case of the Navajo tribe, the most predominant items of trade were jewelry and blankets, for which the tribe has now become known worldwide. Along with the practice of trading with the Navajos, there emerged another similar economic pursuit, that of pawning. The story of pawn in the Navajo Nation is one of great complexity, having continuously evolved over many decades from a primitive undertaking to a widespread, highly important component of Navajo culture. As the market for Navajo goods grew among the European American population, so too did the trading and pawn business proliferate. In 1868, when the Navajos returned from Bosque Redondo, trading posts represented a new entity on the newly formed reservation. However, the enterprise spread quickly: there were 79 trading posts by 1900 and 154 in 1930, excluding the dozens of posts located off the reservation.¹

Pawning on the reservation came under fire from government officials as early as 1887, when Indian agent S. S. Patterson attempted to put an end to Navajo pawn altogether. He cited the practice as being “frequently the cause of a vast amount of trouble and angry disputes . . . which I saw might lead to serious results.” Patterson approached the various traders, hoping to persuade them “to agree to receive no more goods on pawn . . . which agreement has been carried out. As a result of this act both traders and Indians are well satisfied.”² If Patterson believed his exertions to have succeeded, he was mistaken, as pawning in fact never ceased at all. If anything, it continued to grow and evolve throughout that early period.

Not all trading posts accepted pawn; each respective Indian trader made the decision whether or not to engage in the practice. Many in fact did not, as the profitability of pawn often proved marginal at best, especially when compared to the more lucrative business of straight trading. Pawn required that a trader hold an item for an extended period of time and collect interest, whereas trading consisted of a simple one-time transaction and a more immediate monetary turnaround for traders.

Pawn was and remains an essential component of the Navajos’ culture and economy, providing them with a means of obtaining quick cash on credit and also serving as their banking system. “Banks won’t do small loans, which is usually what the Navajo needs,” notes Bill Malone, who has been involved in trading since 1961 and now operates a business in Gallup, New Mexico. “They come in and they need $50 or $100 on an item. And banks, they won’t mess with loans that small, so the pawnshop becomes their banking system. Their pawn is their bank.”³ Former trader Elijah Blair reiterates the importance of pawn as a Navajo banking system, pointing out, “[They] cannot go to conventional financial institutions and borrow money. [The Navajo] has no collateral...