Back in the land of broadband, here is my holiday reading instalment number four. It was [amazon_link id=”1907970576″ target=”_blank” ]Duveen: The Story of the Most Spectacular Art Dealer of all Time [/amazon_link]by S.N.Behrman. This book was originally a series of New Yorker articles and then published as a book in 1951, and republished last year by Daunt Books – interesting, as I know them as my favourite bookstores and hadn’t realised they also published books.

[amazon_image id=”1907970576″ link=”true” target=”_blank” size=”medium” ]Duveen: The Story of the Most Spectacular Art Dealer of All Time[/amazon_image]

 I’d never heard of Joseph Duveen, and it turns out to be a compelling story, wonderfully written. He bought masterpieces, mainly of the Italian Renaissance and sold them to many of the great American industrialists, Frick, Mellon, Bache, Kress and the like. But this is not a tale of a successful dealer; rather, it is how the modern art market was created. For Duveen invented the self-fulfilling character of value in art. He paid huge fortunes for pictures, sold them for more, bought them back for more again when the original purchaser died. A high price reflected the scarcity value of positional goods of course – these plutocrat buyers were the originals about whom Veblen wrote when he invented the notion of conspicuous consumption. But there are lots of high prices, and Duveen intended for them to reach for the sky. He would bid against himself in auctions to make sure the floor was never too low.

Scarcity mattered of course. Duveen didn’t buy post-1800 paintings because there were too many of them. He cornered the market in Old Masters. He borrowed huge amounts, buying collections on credit, because he was confident that once they were his the value of his assets far exceeded the debts.

The book describes a debate between Duveen and Bernard Berenson: “He [Duveen] was convinced that a masterpiece must be sold only through him, that any rival was a poacher on his special preserve. Berenson argued with Duveen that if other professionals bought and sold great pictures, they would in the end help Duveen, for they would expand the market.”

Berenson did not change Duveen’s mind. In the end, the growth in the art market in the early 20th century proved to be a generational phenomenon to some degree, as the plutocrats died, leaving a successor generation neither rich enough nor serious enough to amass the same kind of collection. The trusts were busted. The tax man caught up too, especially with inheritance tax. Duveen then persuaded his customers to leave their collections as bequests to the nation, starting with Mellon and his funding and opening donation to the National Gallery in Washington. The story thus has a pleasing arc, the wealth created through monopoly power over the people resulting in assets donated to the people.

So as well as a terrific read, this is a great introduction to the economics of the art market – alongside the latest Marshall Jevons novel, [amazon_link id=”B00C4UT19K” target=”_blank” ]Murder at the Margin[/amazon_link], [amazon_link id=”0226893952″ target=”_blank” ]Boggs: A Comedy of Values[/amazon_link] by Lawrence Weschler, and also this on Simon De Pury. Duveen he ain’t.