Art and the recession

[gans]

Not a bad article, in my opinion. A bit simplistic of course, but perhaps someone will be interested.

art market was susceptible to crises since its inception. However, its ups and downs do not always coincide with turmoil in the financial

A year ago, Sept. 15, 2008, the world's largest investment bank Lehman Brothers was bankrupt overnight, causing panic on the stock exchanges around the world. That initiated a global financial crisis, whose consequences will be felt for a very long time. "The great recession" could not help but reflect on the art market: the first sign was the failure of the autumn auction contemporary art. However, the results of auctions in other categories have also been disappointing. The largest auction houses forced to focus on improving costs and reduce the number of staff. Throughout the world were lifted several art fairs, including the Moscow Fine Art Fair (MWFAF).

While it is difficult to judge, whether behind the most difficult times for the art market. 'll Have to await the results of at least the first major auction of the new season, such as auctions of contemporary art in London in mid-October. And yet, instead of guessing, should refer to the history of world art market that has survived for four hundred years its history is not a crisis. Perhaps the experience of the past would surely predict how events will develop further.

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Art has become part of the economy recently, in the XVII century, in the Netherlands. Relieved of the governors of the Spanish King and the Pope, local artists were suddenly and without wealthy patrons. So they were in a situation of free market and were forced to replicate his landscapes and still lifes to as long as they were in demand. At that time, Holland was the largest maritime power, and a network of sales agents to quickly flooded Europe pictures of "small Dutch. Then something happened and the main thing - art become a commodity.

The new system of relations between the artist and the customer or the buyer has brought many dangers: the price of art is now regulated only by supply and demand. Known example of Rembrandt - a great artist at the end of life is not to avoid bankruptcy and was forced to sell assets to pay for the house. Prototype of the modern mortgage ruined his career, though Rembrandt was still alive was valued very highly.

However, economic difficulties affected not only artists - by the end of XVII century the Netherlands lost its naval supremacy, and gave place to the British. It is time for Britain to become the world center was still a small art market - it is no coincidence there were founded the oldest auction houses Sotheby's and Christie's and collected the magnificent museum collections. The French Revolution, which led to chaos and outflow of art from France, only confirmed this status in London.

end of the XIX century

Real revolution in the art market made the Impressionists. First, their work was rejected by most critics, as clearly did not fit into the earlier tradition. However, after the sentencing to the artists came to the unexpected popularity. Not the last role here was played by art dealers, or marshal, as they were called - Paul Durand-Ruel and Ambroise Vollar. They were able to quickly "roll out" of the Impressionists, so that prices for works by Cezanne, for example, grew over 10 years (s1895 and 1905) from 30 to 30 thousand francs. His contribution to the extraordinary market success of modern French painting made and Russian collectors Shchukin and Morozov, actively buy this art.

Then, at the turn of the XIX-XX century has changed and the market itself: a sharp increase in the number of independent gallery owners, dealers and critics - all sorts of intermediaries between the artist and buyer. Since the beginning of XX century art market has entered a phase of long-term recovery. Even such events as the revolution in Russia and the First World War, only temporarily halted its growth.

Great Depression

Economic recovery "Roaring Twenties" raised even higher prices for art. But the sudden followed by the Great Depression in the United States has made in the development of the art market their adjustments. Sales in America declined to near zero, inflation is raging in Europe, galleries and dealers were ruined. However, some of them were able to benefit from a difficult situation. One of these was a well known dealer Joseph Dyuvin, creator of the National Gallery of Art in Washington. Even in the darkest years of Dyuvinu managed to stay afloat thanks to inventive tactics of sales: it provides our customers unlimited credit, and most importantly, he was always ready to buy now back for an initial amount of minus ten percent. He managed to sell so few major works two or three times.

It is extremely confusing, for example, sales history painting "Aristotle with a Bust of Homer" by Rembrandt. New Dyuvin sold the work in 1907 and then bought back at the request of the heirs and resold Alfred Erickson, founder of advertising company McCann-Erickson Worldwide, a $ 700 thousand in 1929 dealer in anticipation of an offensive hard times, invited Erickson to buy Rembrandt's back, but $ 500 thousand most striking that after the depression he was able to re-sell this thing Erickson, but for $ 590 thousand in 1961 that Rembrandt brought to their owners at the time a record sum of $ 2.3 million and landed in a collection of the Metropolitan Museum .

In addition, few participants in the art market, who, like Andrew Mellon and Calouste Gulbenkian, in the years of depression were able to save considerable sums of money, had the perfect opportunity to buy the recognized masterpieces of old masters sales at the Hermitage, which has organized the Soviet government. This story is once again confirmed that during the crisis more likely to win in the one who buys, sells and not art.

In Europe, the prewar years the art market, too, is very unstable. Attractiveness of art for investment fell. When in 1938 the war with Germany seemed imminent already known painter Albert Marquet came to his friend Henri Matisse, and said: "Henry, I have a little cash. All fear of devaluation. Everything is so uncertain, and I thought I would ask you to give me something for a friendly price. " "You really think that Matisse - is a good investment? - Replied the artist. - I have put all their money in gold bullion.

The post-war decades

Since the beginning of World War II, the art market in Europe and the Middle East was virtually destroyed. Many things have moved to a neutral country and, of course, in the U.S. - this country for many years a worldwide leader in the trade skill.

Several sales meetings known American industrial magnates, in particular William and Cornelius Vanderbilt (mostly paintings by old masters) have shown that a big name has quite a collector of material value. Work with "origins" to sell more expensive, and auction houses to acquire a growing social prestige. Regular marketing technologies and competent PR auctions affect the price of not less than the vague notion of artistic quality, and prices went up again.

Rising prices on the art of the game almost brought collectors from London and Paris, can not cope with the new prices. Europe became a place of export, and the U.S. - the main importer of art. In the United States 1950-1960-s were marked by fierce competition in New York's Park Bernet auction and Sotheby's. This rivalry, which ended with the merger of Park Bernet Sotheby's in 1964, forcing both companies to embark on various tricks. For example, Sotheby's first to launch into use questionable practices set secret reserve - reserve price. This tacit amount below which the work is not sold, actually recorded a lower price bracket, allowing them to move only upward. And until 1971 Sotheby's noted in its price lists purchased by the auction house works as sold, thus overstating the true prices and sales volumes.

Swelled price bubble. Prices for works by Impressionists grown in twenty to forty times (Cézanne), on contemporary art of pop art - a few dozen, but the old masters - in only seven. The market situation would not have developed so fast if higher prices on the art of XX century at this time does not coincide with the growth of liquidity - the art of pouring money financiers, before playing the currency markets.

In the late 1960's sharp devaluation of the pound sterling and the franc led to price indexation, and investment attractiveness of the French school of artists has only increased. In Germany, the growth rate of German mark made richer several German collectors, and after that went up the price of German expressionism and American pop art. The reason for this is simple: one of the main buyers of Andy Warhol and Roy Lichtenstein was a German - chocolate magnate Peter Ludwig, whose name are now more than 30 museums of modern art in Germany and around the world.

On the instability of financial markets, the art market answered the rise, and the oil crisis of 1973, which brought to Europe and America rising gasoline prices and hyperinflation, and altogether they have been barely noticed. On the contrary, in 1973 in London with great success was a major auction of contemporary art, timed to the Fourth International Art Fair in Basel. Among the main anonymous buyers was newly formed Museum of Modern Art in Paris (Pompidou Center). Only in 1974 the market will feel the consequences of the crisis and falling stock markets, but no collapse will not happen. The next two years can be called a period of lull, after which came an unprecedented growth.

«Art-boom" and the collapse of 1980-1990-x

The economic successes of the Reagan and Thatcher governments to ensure a flow of money in the artistic sphere, creating a new class of rich - potential buyers of the art market. Stock growth of 1984, raised the price of art and auction houses, sensing opportunity, began to work more closely with banks, developing investment programs and the art of selling on credit. Prices for works by Impressionists grew by 35%per year - more than during the last rise in 1950.

Enormous role in this was played as Japanese corporations in 1980 were buying up a third to half of all available in the market of works by Impressionists. Tax breaks and some semi-legal schemes businesses have made the acquisition of art in Japan is extremely profitable. From 1973 to 1987 there was founded more than 500 museums, one for each municipality and large firms. Japanese have sought not so much to the quality, as to the number: in 1986 alone the Tokyo Museum Matsuoka just bought 38 works of Monet, Renoir, Chagall and Pissarro. Famous record "Sunflowers" Van Gogh, $ 39.7 million paid for this painting insurance company "Yasuda" in 1987 - a kind of apogee of the Japanese "art-fever".
However, the next financial crisis will not have to wait long: "Black Monday" Oct. 19, 1987 was a day of record lows index Dow Jones. Following collapse of London and other exchanges. This not only brought down the market of art, but, conversely, provided a massive influx of money at him: the financiers, saving their investments, buying up everything. From 1988 till 1989 were placed twenty of World Records for most expensive painting, six of them - for Picasso (from $ 40 to $ 50 million for each job). Modern art, especially the work of Jasper Johns, has reached unprecedented heights, selling twice, three times higher than initial estimates ($ 7 for "White Flag" and then an incredible $ 17 million for "Falshstart").


The collapse of the art market late in comparison with the financial crisis nearly three years. The end of decades of continuous growth in prices put the May 1990 auction in New York. At these auctions, paradoxically, have set new world records in the most expensive price segment ( "Portrait of Dr. Gachet, Van Gogh went for $ 82.5 million at Christie's, and" Moulin de la Galette "by Renoir - for $ 78.1 million at Sotheby's), a third of other works remained unsold. Trades brought both home with only $ 96.4 million versus $ 138 million expected, and this meant that the market needs a serious correction. Prices for the art of rapidly falling, closed galleries, auction houses have suffered losses, and prices of the past "favorites" were more than half that two years ago.

Our time

The crisis of the early 1990's was the most serious challenge to the art market for the entire postwar period. Neither the collapse of Internet companies in the early 2000's, nor the events of September 11 have caused significant damage to the art trade.

As for Russia, the 1998 bailout was a serious blow to Russia's young art market. Worse then had corporate collections developed in the early 1990's - the majority of assembly was sold for debt, as banks and corporations went bankrupt. For example, the portraits of Kazimir Malevich from Incombank were purchased by the Moscow Museum of Modern Art virtually for a song - all for $ 50 and $ 90 thousand

Many modern Russia's gallery owners, art dealers and collectors of fine remember this time. They recognize that while all had difficult: there was a sharp reduction in sales, but prices are not reduced. Moreover, when the economic situation improved, the Russian market has continued to grow by leaps and bounds, many times exceeding the pre-crisis level. The fact that none of them did not have to look for another job, once again confirms that the test of economic difficulties, the Art Market in Russia passed successfully - to put it simply, survived.

Today, if we talk about the impact of the global financial crisis on the art market, the analogy with the situation in the early nineties. As then, the market shows a sharp rise before the fall: the artistic leap Mei-Moses index for 2006-2007 is comparable only with what was in the years of "art-boom" (1984-1990). Then the collapse of the art market has proved that the price of art can not raise with impunity. Until now doubt the liquidity of many price records previous "boom": whether the Japanese to sell their Impressionists at least for half the cost? And while the names of some popular contemporary artists - Julian Schnabel, David Salle, Eric Fischl, Francesco Clemente, Enzo Kuchchi, Sandro Kia - now most often mentioned in connection with the very collapse of prices, overnight, make them work non-liquids. In the current crisis situation is so dramatic collapse in prices for postwar art has not happened. However, the market is seriously "subsided", and there is no assurance that contemporary art is to regain its position as the price level of the most expensive living artist - Lucian Freud, Jeff Koons and Damien Hirst - will return shortly to the pre-crisis level.

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