From the Academy to Auction: The Evolution of Art as Investment


Innovative and risk-taking players in the late 19th and early 20th century Paris — the art world’s first epicenter — greatly enjoyed the advantages of the auction house, as they do today. However, prior to the auction house, the success of an artist was determined by the Academie des Beaux Arts, previously known as the Académie de Peinture et de Sculpture founded in 1648. Artists gained exposure exclusively via the Salon, where their work was exhibited, which was controlled by the Academy.
It was in the environment of the Academy that the first art investment consortium also emerged. The name, La Peau de l’Ours or “The Skin of the Bear,” was inspired by a 17th century folk tale stressing that one should “never sell the skin of the bear before you’ve actually killed it,” and was meant to underscore the financial risk posed by the fund. The group consisted of thirteen Parisian investors spearheaded by Andre Level, a financier and lawyer, who from 1904–1914 acquired works of emerging artists including Matisse and Picasso.
In 1903, the financier visited the 1903 Salon d’Automne showcasing works by Pierre Bonnard, Henri Matisse, Paul Gauguin and others. Intuiting the success of these young Impressionists, he and twelve partners created an art fund with which they would buy contemporary works to later sell at a profit. It is important to note that betting on emerging artists was ground-breaking at this time. In March 1914, the group organized a public auction in which 145 works were for sale among which Picasso’s and Matisse’s were the most heavily represented. The result of the auction was extraordinary: all 145 works sold for 116,545 francs, more than quadrupling the group’s initial investment. This was arguably the first successful public manifestation of the link between commercialism and public recognition. Similar to the market in pre-20th century England, the visual arts market in France greatly influenced the US, culminating in the commercial atmosphere that exists today.
Some thirty-five years after this Impressionist show, an aristocrat, auctioneering maestro, and chairman of Sotheby’s London appeared in the spotlight. Possessing an immense intuition into what would have currency and what would not, Peter Wilson understood that theater could be made out of the auction. With his ingenious pre-sale marketing efforts, celebrity invitations, black-tie dress code, and use of the Impressionist and Modern Goldschmidt sale as a launch pad, the auctioneer effectively created the “evening auction.” In a new tradition, collectors and spectators enjoyed pre-sale dinner with champagne, arriving to the sale inebriated and eager to display their affluence. “A picture is more interesting if someone has paid a lot of money for it, don’t you think?” said Wilson in an interview with the New Yorker. In this landmark sale, Manet’s Promenade (1880) earned an astounding £248,595. For context, in 1958 London, one could purchase a flat for £7,000. This moment utterly altered the art market and paved the way for the modern auction market known today.
Now a customary practice, Wilson’s grandiose evening sale tradition soon appeared in New York City. One of the first watershed moments there came with taxicab impresario and art collector, Robert Scull. Purchasing Pop, Minimalist, and Abstract Expressionist art early on and often numerous works at a time, Scull sold fifty of his high-profile works for many times over the purchase price. He ultimately reached a combined sale of $2.2 million at the groundbreaking 1973 auction: A painting Scull purchased for $750 reached a hammer price of $40,000; a Jasper Johns purchased for $10,200 went for $240,000. The Scull sale “heralded the beginning of a new era in the art world: a hyper-commercialized art market focused on promoting and selling contemporary art,” according to author Doug Woodham.
This sale was one of the most critical events for the contemporary art market for many reasons: It tested contemporary and post-war work on the open market for the first time and revealed that the auction could be a true media event that would capture interest far beyond the art world. In fact, Sotheby’s invested so heavily in marketing and publicity that even CBS broadcasted the event. Additionally, the sale demonstrated to collectors that purchasing work from this period can be highly profitable, thus substantiating living artists’ work. The debate on artist resale royalties notwithstanding, the Scull sale “established the idea that modern art could be a really effective money-making tool,” says Barbara Haskell, a curator at the Whitney Museum of American Art.