The Development of the Art Market in England

Money as Muse, 1730–1900

Thomas M Bayer, John R. Page

• Publisher: Routledge
• Year: 2015
• Print ISBN:
  9781138661301
• Edition: 1
• eBook ISBN:
  9781317323822
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

This book gives a comprehensive account of the history and underlying economics of the modern art market in eighteenth- and nineteenth-century Britain.

1 THE EARLY STAGES: FROM THE NETHERLANDS TO GREAT BRITAIN

The Netherlands

An immediate consequence of the system of anonymous patronage in the Netherlands in the sixteenth century was a process innovation in marketing. Untying the production of art from marketing improved the effectiveness of exchange and, as a result, a modern art market came into existence. Separately, production and marketing became more efficient internally, in their interaction with each other and with other markets.

On the supply side, art producers adopted cost-reducing measures, such as switching from panel to canvas painting: canvas was cheaper, easier to prepare, lighter in weight, and less sensitive to climate changes.¹ Division of labour resulted in specialization in subjects, copying, formula painting and mechanical repetition of designs for workshop production.² Paintings, on average, decreased in size: smaller paintings were better suited for the urban residences of the new patrons, and sellers could display a larger number of selections, thereby increasing the opportunities for sales. Market considerations were also responsible for the outpouring of engravings, published in large editions and sold inexpensively to the general population. Specific stylistic changes, such as the adoption by certain artists of a more monochromatic execution and the popularity of landscapes or grisailles were further manifestations of producers’ responses to changing market conditions.³

Process innovation in marketing led to the spread of art fairs, officially sanctioned art auctions, art lotteries and, ultimately, by the end of the fifteenth century, to the establishment of professionally operated art galleries.⁴ The gradual institutionalization of specialized art merchants brought its own dynamics into the equation: the profit-motivated art dealer became the main vessel by which the market sent its signals to both the demand and supply sides.⁵ However, by passing through middlemen, these signals were subject to modifications that reflected these dealers’ economic considerations. Consequently, their interests affected both producers and consumers of art.

The extent of middlemen’s influence over consumption habits and taste of art buyers on the one hand and the formal appearance of artists’ products on the other is difficult to gauge. We will employ a model to help examine conceptually the question of middlemen’s impact on the arts environment. The specific model we apply derives from an observation made by the anthropologist Igor Kopytoff that:

the exchange function of every economy appears to have a built-in force that drives the exchange system toward the greatest degree of commoditization that the exchange technology permits … In large scale and monetarized societies, the existence of a sophisticated exchange technology fully opens the economy to swamping by commoditization … The internal logic of exchange itself pre-adapts all economies to seize upon the new opportunities.⁶

Apparently, markets evolve, due to internal dynamics, towards maximizing their function as exchange systems. These markets – or rather, the individuals who voluntarily engaged in exchange – seek out new opportunities, and also act and react in a manner that, in their subjective opinions, optimizes these conditions. As a result, commoditization occurs.⁷

Applied to the transformation of the arts environment in sixteenth-century Netherlands, Kopytoff’s observation offers several explanations for those changes and identifies specific developments. The shift of patronage from the social elite to the middle classes resulted in new opportunities that the participants in the art economy seized. Consequently, the desire of these market players to promote exchange – that is, the ‘internal logic of exchange’ – drove the exchange system towards the greatest degree of commoditization permitted by the extant exchange technology and occasioned changes to improve it. The types of product innovation that aimed to improve production efficiencies were part of this trend. Similarly, the divisions of labour within the exchange system and the guilds’ reaction to them also fall under the rubric of commoditization.⁸ The emergence of intermediaries as exchange facilitators was, therefore, necessary for the expansion of the art market. The development into the specialized, professional art dealer was the next logical step.⁹

Professionalization came about gradually. Initially, a wide variety of individuals engaged in buying and selling of art works: painters themselves; frame-makers; second-hand dealers, often women called ‘uijtdraegsters’, operating at the lower-quality end of the market; inn and tavern keepers; and even some wine merchants.¹⁰ During the first half of the seventeenth century as the art market experienced an expansion faster than the rest of the economy of the northern Netherlands, specialized dealers became more common.¹¹

Generally, these dealers’ function in this market was to bring about and improve the flow of art goods from producer to consumer, and the demand for their services was positively associated with the degree of artists’ specialization and the variegation of consumer tastes. Self-interest tied their actions inextricably to improving the efficiency of the market and reducing market barriers. They challenged guild regulations pertaining to selling art or establishing art lotteries, began art auctions and, ultimately, set up fixed location retail art galleries.¹² The more effective dealers were, the more important they became as links between artists and collectors, thereby increasingly isolating producers from end consumers.

A by-product of this gradual loss of contact was a role change: art buyers ceased to be patrons of one or several artists and became instead customers of dealers. Correspondingly, dealers assumed the function of patrons and, consequently, became the hub of the market. As their influence grew and the dividends of wealth became increasingly centred in their hands, art followed their lead for wealth’s ‘rich rewards’. Dealers as personifications of the abstract exchange function were the very agents that drove the art market towards the greatest possible degree of commoditization within the available exchange technology. Therefore, middlemen’s behaviour and general market efficiency influenced art production towards improving the products’ marketability. Similarly, the dialectic between seller and buyer indicates that middlemen must have influenced the consumption habits and tastes of their customers.¹³

This economic approach offers an additional explanation for the transformation of the arts during this period. Many of the earlier mentioned formal and stylistic changes and variety in the appearance of pictures during this period are attributable, to varying extents, to market forces manifested by professional art dealers.

Inventory analyses show that the fortunes of living painters during Holland’s Golden Age began a steady decline towards the end of the first half of the seventeenth century. Evidently, the developing art market was quite susceptible to changes in economic climate and, burdened by ‘structural overproduction’, failed.¹⁴ The economic stagnation around mid-century, the catastrophic war with France that started in 1672, a tendency toward a more unequal income and wealth distribution and the growing trend of collectors to acquire paintings by old masters rather than contemporary works, all contributed to the market’s contraction. Demand declined, as did the number of specialists. Once again, artists had to depend more on traditional patronage than the open market.¹⁵

Johann van Gool, writing 100 years later, claimed that this decline had intensified due to speculation and corrupt activities of dealers.¹⁶ The application of a supply/demand model to this observation shows how speculative activities by dealers in contemporary art can lead to a downturn of the market. When contemporary paintings are perceived as investment goods, purchasers acquire art in anticipation of higher prices and for the purpose of selling it at some future date for a higher amount. If dealers speculate, their activities withhold from the market part of the regular supply of contemporary works. Therefore, ceteris paribus, prices increase until an equilibrium reflects this new supply and demand relationship. However, once this rise in prices satisfies the expectations of speculators, they put these previously withheld paintings back on the market. This sudden supply increase will affect a price decline even if demand stays constant. As prices decline, purchasers wait to buy in anticipation of future price decreases, thus adding pressure to an already downward moving market by reducing demand. Then investors may resort to panic selling further pushing prices down. As prices continue to decline, artists must reduce or even stop production. If paintings were strictly luxury goods, lower prices would eventually result in increased demand; however, if they are also treated as investment goods, disappointed investors may leave that market altogether. The above mentioned trend of collectors to acquire Old Master paintings over contemporary works indicates that part of this market’s decline may well have been due to the actions of disappointed speculators.

Great Britain

By the eighteenth century, the Netherlands’s economic fortune declined in favour of another nation whose growing prosperity initially rivalled that of the Dutch but soon overtook it. The centre of European economic activity had begun to shift across the Channel to England. By 1700, London, with a population exceeding 550,000 people, had become the largest and richest European city. The number of individuals there with sufficient wealth and leisure had expanded to a level where the satisfaction of their cultural aspirations became professionalized. As van Mander had opined, art soon followed this new wealth.¹⁷

Art patronage was no novelty in England. The Reformation had resulted in a redistribution of wealth, and many of the beneficiaries conspicuously displayed their fortunes by building grandiose houses with chambers and halls that needed decoration. During the seventeenth century, as the ‘grand tour’ was becoming fashionable, young upper-class Englishmen crossed the Channel, and their travels exposed them to the consumption habits of their Continental peers. True, John Evelyn’s comment that it was an ‘ordinary thing to find a common farmer lay out two-or-three thousand pounds in this commodity [paintings]’¹⁸ may well be hyperbole. Nonetheless, the impact of the conspicuous display of wealth and artistic patronage found in seventeenth-century Europe on impressionable young men coming from an island with still lingering iconoclastic tendencies¹⁹ and little native tradition of painting must have been extraordinary.²⁰ As the ‘grand tour’ became culturally institutionalized in England, some tangible evidence had to be shown as testimony for the journey’s successful accomplishment. Already under Charles I (1625–49), it had become fashionable for the elite to own works of art and promote spending large sums of money on building one’s collection.²¹ This trend somewhat continued under Charles II (1660–85).²² The passage of the Navigation Act in 1660²³ stimulated the British economy, and the building boom resulting from the devastating fire of London in 1666 helped divert new wealth into art.²⁴ Then, during the reign of William III and Mary II (1689–1702) enterprising Dutch picture dealers began bringing collections of paintings to England for sale at auction.²⁵ In the Treaty of Westminster in 1674, Britain finally had made peace with the Netherlands, and Dutch merchants took advantage of greatly relaxed enforcement of import rules concerning paintings to explore and expand this new market. By the 1680s these laws appear to have been entirely ignored, thus further reducing import trade barriers.²⁶ Moreover, William III’s Dutch origin and the English/Dutch alliance against France from 1689–1712 must have yielded additional benefits to the trade between the two countries. Estimates suggest that somewhere between 300 to 500 paintings were imported annually from Europe into London during the last forty years of the century.²⁷ Contemporary sources confirm that dealers and owners of art on the Continent knew that the English were prepared to pay high prices; furthermore, their knowledge of art was thought to be generally less than their enthusiasm for collecting. Consequently, and not surprisingly, many of the imported canvases were of dubious authenticity. The unsavoury image created by such unscrupulous business practices was a frequent source of gossip on, and condemnation of, the art trade throughout the eighteenth and well into the nineteenth century with far reaching consequences.²⁸

While imports thrived, the native arts in England were in an abysmal state at the dawning of the eighteenth century.²⁹ In his chapter on painters in the reign of King William, Walpole laments that ‘This prince, like most of those in our annals, contributed nothing to the advancement of arts’. He describes the subsequent reign of Queen Anne (1702–14) as ‘illustrated by heroes, poets, and authors [though it] was not equally fortunate in artists’.³⁰ Numerous reasons were given. John Pye, in his Patronage of British Art, published in 1845, cites a newspaper article reproduced in Gentleman’s Magazine in 1737 in which the writer laments that Great Britain, unlike France, offered no annual prizes to her native artists.³¹ Writing in 1753, Rouquet complains

Wherever commerce flourishes, wealth is one of those things that are [sic] mostly considered; and as the arts are not the high road to wealth, consequently less value is set upon them. And here I may observe … that the arts are not made an object of the public attention in England; for there is no foundation or institution in their favor …³²

This situation was exacerbated by the fact that Dutch artists had increasingly migrated to England since mid-century. Between the 1650s and 1700, approximately 116 painters from the Netherlands visited or emigrated to England. This flow increased after Charles II openly welcomed immigrants from Holland with his declaration of March 1672. Their production may have added between 118,000 to 237,000 most likely qualitatively superior works to the locally available stock.³³ The English market, centralized in London and less developed and regulated than those on the Continent, presented a ‘rare instance of a perfect natural experiment without any inherited institutional structure in the form, for example, of guilds or other restrictions on sales’.³⁴ Better trained and more popular, these Continental artists worsened the already tenuous situation of native English painters. Pye mentions a letter published in the the Adventurer on 5 December 1752, in which an artist grumbled:

I am, at present, but an humble journeyman sign-painter in Harp Alley; for, though the ambitions of my parents designed that I should emulate the immortal touches of a Raphael or a Titian, yet the want of taste among my countrymen, and their prejudice against every artist who is a native, have degraded me into the miserable necessity, as Shaftesbury says, ‘of illustrating prodigies in fairs, and adorning heroic sign-posts’.³⁵

Thus, foreign competition and imported old pictures, mainly cheap copies made in the art centres of the Continent specifically for the English market,³⁶ much impeded the development of local talent. Lack of support for, and even outright hostility towards, native artists by dealers further envenomed this situation.³⁷ Ironically, at the same time, collecting in general was growing in popularity and scope, and the period witnessed the emergence of a regular trade in works of art.³⁸ These buoyant conditions attracted local merchants and fostered, in the words of Pye, ‘instead of artists, skillful dealers’,³⁹ who put their marketing talents to work, organizing art auctions, lotteries and raffles.⁴⁰

The English art market was, therefore, in a state of tension at the beginning of the eighteenth century. Wealth’s ‘rich rewards’ were unequally distributed to the detriment of native English painters. Consequently, the economic history of art in England during the century exemplifies a process of native art producers competing for their share in an expanding market. For that purpose, painters had to find new opportunities without the supportive and flexible guild structure that existed in the Netherlands and in competition with an established trade in older pictures and cheap locally produced or imported copies.⁴¹ During this period the nasce...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• List of Figures and Tables
• Introduction
• 1 The Early Stages: From the Netherlands to Great Britain
• 2 The Commoditization of Theories of Art
• 3 The Painter as Homo Economicus
• 4 Critics and Auctions
• 5 The Evolution of Picture-Dealing
• 6 The Victorian Era
• 7 ‘Working the Oracle’: The Tools of the Trade
• 8 The Formation of a Nexus: A Story of Christie’s
• 9 Commoditization and the Artist as Producer: Product Differentiation and the Domestication of Pictures
• 10 The End of the ‘Golden Age’
• 11 Postscript: A Perpetual Innovative Whirl
• Notes
• Works Cited
• Index