The Art Market CrashEven the most historically challenged amongst us are familiar with the significance of October 1929. It was, of course, the date of the calamitous stock market collapse that signalled the start of the Great Depression. However, very few people are aware of the fact that some sixty years later, there was a similar collapse of the art market. All during the 1980s, there was a speculative run-up of prices at auction for various art masterpieces, with particular emphasis on those of the Impressionists. Works such as van Gogh's Portrait of Dr. Gachet, sold for a record $82 million, while Renoir's Moulin de la Galette sold for $78 million. This was the high-water mark. Shortly thereafter there was a downturn, and while it might not have been as precipitous as that which led to the Depression, if you were a high-rolling Japanese art speculator, it probably seemed that way.
With the downturn in the Japanese economy during the early 1990s, Ryoei Saito, who purchased both paintings, went bankrupt. He even asked to be cremated with his van Gogh. Fortunately, he'd already "lost" his painting of Dr. Gachet before he died, and strangely enough, it appears to still be lost, at least no one is saying where it is. If Saito's plight were a single occurrence, the story might be interesting, but hardly very significant. However, today, there is an estimated $200 million worth of other fine art as well, (with signatures like Chagall, Picasso, and Braque) sitting in bank vaults in Japan, confiscated by creditors from high-rolling Japanese businessmen who found themselves in a similar position as Saito. And the worst part is, the banks and trust cartels (many of which have also been bankrupt) have no idea what to do with them.
The problem is, they find themselves in something of the classic "Catch-22" situation. On the one hand, as assets, the works of art earn no interest, and indeed, cost money to store and protect. Yet on the other hand, dumping them on the art market would not only likely cause them to bring far less than their 1980s inflated prices, but would also serve to depress the entire marketplace for such top-drawer collectibles as well. Given this situation, there is every likelihood that these beautiful, painted masterpieces will remain locked down for some time to come. There are two reasons for this. The first is the one mentioned earlier, the second is that, hiding them away from the public serves to enhance the "aura" of fine art in general, making them, in effect, something like "divine," untouchable, unattainable objects of veneration on a par with the Mona Lisa or the Hope Diamond. Of course the sad part is, these works were meant to be seen, to bring joy, to expose us to the expressive beauty seen through the eyes of the greatest artists of our time. Stored away in bank vaults, they might as well be junk bonds.
Contributed by Lane, Jim
24 August 1999