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Recent Acquisitions (And Some Thoughts on the Current Art Market)

June 20, 2000 to September 08, 2000

It is time, once again, for the Galerie St. Etienne’s summer survey of Recent Acquisitions, and along with it, for our annual “state of the market” report. There is no doubt that the key art-world event of the past season was the announcement that the two major auction houses, Christie’s and Sotheby’s, may have colluded in a price-fixing scheme. Sotheby’s is facing indictment on anti-trust charges, and while Christie’s seems to have dodged this fate by turning state’s evidence, both houses have also been confronted by a related barrage of potentially draining civil lawsuits. As of this writing, no criminal charges have been handed down, and it is still possible that the entire episode will fizzle out. On the other hand, there are those who are predicting nothing less than the financial hobbling of the mighty auction empires and a major transformation in the nature of the art market. It is probably safe to say that the eventual outcome will lie somewhere between these two extremes. More to the point, however, the art market has already changed, and in this regard, the auction-house upheaval may be seen more as effect than cause.

It is surprising how many art-world insiders, though hardly fans of the auction houses, fail to see any great harm in the alleged collusion. Why shouldn’t Sotheby’s and Christie’s charge identical commissions (as do most European auctioneers), and what difference does it make if those commissions were in fact discussed between the houses in advance or were merely the result of copy-cat maneuvering? On the other hand, one dealer commented shortly after the scandal broke that the legal thrust was comparable to prosecuting Al Capone on tax evasion charges: the auctioneers’ true crimes were greater but largely unprovable. Indeed, almost everyone with extensive auction-house experience has had his or her share of disappointments: of estimates proffered to entice a consignment and then lowered before the sale; of reserves not met or not honored; of undisclosed condition problems and even of outright forgeries. Mostly these problems arise not as a result of deliberate misrepresentation, but as the natural outcome of the volume of business handled by the large houses; it is simply not possible for their “experts” to be truly expert in everything. More disturbing is the fact that auction theatrics belie the commonly held belief that the hammer price represents a genuine "fair market value” as between willing buyer and willing seller. Auctioneers routinely pluck fictive bids from the air until the undisclosed reserve price is met. And auctioneers, ostensibly neutral intermediaries between buyer and seller, increasingly have a financial stake in the property they sell.

The current legal woes of Sotheby's and Christie's reflect a number of systemic problems resulting from the houses' shift in focus from wholesale to retail over the course of the past twenty-odd years. So long as auctioneers sold primarily to the art trade, a caveat-emptor approach seemed justifiable, since the buyers frequently were more knowledgeable than the sellers and served as vetting agents for the general public. And dealers historically served a second key function in the marketplace, by holding inventory for which there was no immediate buyer. For despite the massive efforts made by the auction houses to expand the retail art market beyond the inherently limited class of committed collectors, even today 20% to 30% of all lots fail to sell, and many more sell poorly. The press is happy to support the auction houses by publicizing record prices, but these represent a minute fraction of all sales results. A gambler's ethos drives many sellers to auctions, which are fueled by heady dreams of striking it rich. But as in Vegas, there will always be more losers than winners at this game. On any given day, there is far more art available for sale than there are ready buyers. The dealer's mark-up is essentially an earned reward for investing time, energy and capital in this art until it can be sold, as well as for his or her carefully cultivated expertise.

Depending on the circumstances of a particular sale, auction results can range from below wholesale to above retail. Some believe that the Internet will bring greater transparency to the art market by placing buyers and sellers in direct contact and by making auction records more widely accessible. So far, although many dealers (including Galerie St. Etienne, have found the Internet to be useful for disseminating information, e-commerce per se has not proven terribly effective for selling higher-priced artworks. The unsold rate at Internet auctions is even greater than for bricks-and-mortar sales, and misrepresentation and forgeries (witting or not) are rampant. A recent article in The New York Times drew parallels between the dot-com stock mania and the quest for underpriced flea-market treasures, as popularized by the television program Antiques Road Show. The myth of the valuable yard-sale find is one that dealers have long had to contend with; the issue now is that, instead of wasting a few dollars on worthless trash, speculators sometimes spend thousands (or, as in one well-publicized case, many tens of thousands) on the Internet auction site eBay. Truly impressive flea-market finds are exceedingly rare. (Since its founding in 1939, the Galerie St. Etienne has encountered only one such instance: a Schiele drawing discovered at a Southern California yard sale.) But if the value of a given item is what the market will bear, who is to say what anything is worth?

Good art dealers have traditionally operated on the premise that at any single point in time, every object does have its correct price. In order to come up with this price, dealers weigh a number of factors: not just auction results, but knowledge of private sales, constant feedback from collectors, as well as the quality, condition and art-historical importance of the object in question. Yet auction mania (not just for art, but for consumer goods and products like airline tickets) has convinced some that nothing should have a fixed price. According to the current wisdom, the market is smarter than the experts. Collectors today play both ends against the middle, pointing to the lowest auction results when buying and the highest ones when selling. Unfortunately, many times when the seller hits the jackpot, the buyer has overpaid, and when the buyer gets a bargain, the seller has been cheated. Buyers and sellers go it alone in the art market at their peril.

Arcane though it may seem to the uninitiated, the art market has on a certain level always been transparent. As one of the last unregulated markets, it exemplifies laissez-faire capitalism at its purest: prices are determined by balancing supply with demand, and inequities eventually sort themselves out among knowledgeable players. The problem, however, is that art is no longer the sole province of the knowledgeable few. Today art serves many audiences beyond the dedicated connoisseurs who remain at the core of the market. Art may be an investment to some, a consumer product to others; for many, it is the ultimate luxury good in our new, top-heavy economy. That economy has brought widening income disparities between the upper and lower echelons of society, and a parallel gap can be seen in the art market. The much vaunted "flight to quality" is actually nothing but the result of a handful of billionaires fighting over items they have been led to believe are superior, often at the expense of equally good but less spectacular art works. Understandably, dealers and auctioneers follow these big spenders like dogs chasing a juicy bone. But this leaves the vast majority of lesser collectors and art works under-represented and under-served.

Sotheby's and others are betting on a business paradigm the splits the market between bricks-and-mortar auctions and the Internet, with higher-priced lots consigned to the sales rooms and less expensive art selling on-line. Nevertheless, there seems to be a fundamental contradiction between the corporate structures of the big auction houses and the anti-hierarchical, free-flowing nature of the Internet. Furthermore, corporate hierarchies are not all that well-suited to selling art. Large corporations tend to rely on standardization and bureaucracy, whereas the uniqueness of art objects resists commodification and demands personal attention. In the past two decades, Sotheby's and Christie's, simply by virtue of their enormous capitalization, have managed to take over a significant percentage of the global art market. However, whether this hegemony was achieved by sheer might or by illegal practices (or some combination of the two), it may well turn out that the auction houses have reached their natural limits. In the Internet era, centralized power is trumped by honest information, expertise and personal service. And good dealers have the advantage in the latter areas. The paradigm seems to be shifting, the pendulum swinging back to the fundamentals that have always been at the heart of the art market.

As always, the Galerie St. Etienne’s Recent Acquisitions exhibition features both newly acquired works and highlights of the past season. Works by self-taught artists make a particularly strong showing here this summer. The gallery has been fortunate in acquiring several major Grandma Moses paintings, as well as a selection of “new” works by Henry Darger, Minnie Evans, John Kane, Nellie Mae Rowe, Ellis Ruley and Bill Traylor. We are also advancing our foray into European Art Brut (the subject of our January/February exhibition). In addition to such well-known European “outsiders” as Anselme Boix-Vives, Michel Nedjar, Sava Sekulic, Scottie Wilson and Carlo Zinelli, we are pleased to present more work by Vasilij Romanenkov, who proved to be our most popular discovery of the year. We are also introducing the work of another self-taught Russian artist, Pavel Leonov.

Expressionism, of course, remains a mainstay of our summer presentation. With major works by the Austrian and German Expressionists increasingly hard to come by, we are pleased to have acquired a broad array of pieces by such artists as Max Beckmann, Otto Dix, George Grosz, Erich Heckel, Oskar Kokoschka, Otto Mueller and Egon Schiele. We are also continuing our involvement with women Expressionists, who have long been under-appreciated and therefore are still surprisingly accessible. These include Lea Grundig, Hannah Höch, Elfriede Lohse-Wächtler, Jeanne Mammen, Paula Modersohn-Becker, Alice Sommer and, naturally, Käthe Kollwitz. Although our interests have expanded organically over the years, the Galerie St. Etienne continues to cultivate the two areas--Expressionism and self-taught art--that have been our passion for more than six decades. The resulting depth of expertise is, we believe, as important in the new art market as it was in the old.