Children performed all sorts of jobs including working on machines in factories, selling newspapers on street corners, breaking up coal at the coal mines, and as chimney sweeps. Sometimes children were preferred to adults because they were small and could easily fit between machines and into small spaces.
source: https://www.ducksters.com/history/us_1800s/child_labor_industrial_revolution.php
The bank wants to give you an incentive to pay back the loan. If they did not hold your assets as collateral, you could simply fail to pay back the loan and really not lose anything other than your credit score. Many borrowers already have tarnished credit scores, so that is rarely enough incentive to base a loan on.
I would put this into your own words considering I copied and pasted it. Other than that I hope this helps!
