"Officials hope that the vast storage facility, which is expected to be tax exempt, will encourage collectors and corporations to stockpile their art in Beijing."

Beijing's getting a freeport.

Such a tragedy

The Barnes has had more visitors in its first two months in Philadelphia than it did in all of 2009 in Merion.

The Usual Suspects will do their usual carping (it's a simulacram of a McRestaurant where the vastly improved lighting serves only to distract you from your complicity in the greatest cultural crime of the century) but it's hard to see this as anything other than a victory.

Confidence Game

I mentioned this in passing the other day in discussing the Detroit situation, but I thought I'd flesh it out a little bit here.

One of the two main arguments of the anti-deaccessioning zealots is that, if museums are allowed to sell work to pay operating expenses (or, for that matter, to avoid a severe reduction of museum services and programs), "donor confidence will be shaken" -- donors will say, "Why should I give this to you? What guarantee do I have that you're not going to sell this tomorrow?"  The other primary argument they make is the ridiculous "held in trust" argument -- ridiculous because museums sell work like it's going out of style.

The donor-confidence argument never made much sense to me either -- for one thing, no one ever explains why the endless number of sales where the proceeds are used to buy more art don't shake donor confidence -- but leave that to the side for a moment.

Museums can acquire work in two ways. It can be donated. Or they can buy it.

What if a museum simply announced:  We will never sell a work that was donated to us.  So all you donors and potential donors out there can feel completely confident that we will never sell a work if you donate it to us.  (More confident, in fact, than under the current regime where, remember, museums can sell donated work so long as they use, or at least earmark, the sales proceeds for future acquisitions.)  This museum will have the most confident, motivated set of donors on the planet.

But ... in return, this museum announces that it will consider itself free to sell other, non-donated work, and use the sales proceeds for anything it wants, including avoiding the elimination of school tours, public programs and community outreach.

The question is:  would that be repulsive?

If so, why?

"What is the fair market value of an object that cannot be sold?"

Been meaning to mention Patricia Cohen's front-page story on the IRS's attempt to collect $29 million in estate taxes on a Rauschenberg "combine" that, because it includes a stuffed bald eagle, cannot legally be sold.  (I mentioned this a couple months ago here.)

Felix Salmon thinks the IRS's mistake here is thinking that "[i]f a work has great artistic value, ... it must have great financial value as well."  Interestingly, the fourth comment to Salmon's post is under the name "josephbothwell."  Joseph Bothwell is the former director of the IRS’s Art Appraisal Services unit.  I don't know if the commenter is the real Bothwell, but he says "the idea that great art has zero monetary value is just silly," concedes that "there are interesting issues in this case," and "invites all to read Robson v. Commissioner, Tax Court Memo 1997-176," which he says "makes it clear that a market has to exist, not necessarily that one has to have legal access to that market."  But in that case (which involved the sale of "mounted animal specimens," which was illegal in the taxpayers' home state of California) the Tax Court specifically found that, despite California law, "there is a market throughout the United States for items comparable to those donated by the [taxpayers]."  There was testimony in the case that "prices for game mounts in California are equivalent to prices in States that do not place restrictions on sales.  Thus, the restrictions imposed by California law do not materially affect the value of [taxpayers'] game mounts."  The Court concluded that "an active market exists throughout the United States for substantially comparable items."  That's a lot different than positing a hypothetical reclusive Chinese billionaire.  Where is the evidence of a real active market for the work at issue here?

Were the Hall Monitors right about Jeffrey Deitch?

Ed Winkleman doesn't seem to think so.

Balancing Priorities in Detroit

An interesting pair of stories out of Detroit this week.

First, an article in the New York Times about the city's massive financial problems, including long-term debt of $12 billion and deficit spending of $150 million a year.  The latest news is that the city is "cutting the pay and toughening work rules for many of its unionized workers," with the goal of saving about $100 million a year.

Against that backdrop, the Detroit Institute of Arts is pushing for a special new property tax to benefit the museum. The museum has a FAQ page about the campaign.  We're told that, without the tax, "there would be a severe reduction of museum services and programs."  Possible scenarios "include opening selected galleries only on weekends, elimination of school tours, public programs and community outreach."

That doesn't sound very good.  So, if the tax fails, perhaps, given how dire the situation is, they would consider possibly selling a work or two to avoid that severe reduction of services and programs?  Nope.  But look at the explanation they give for why they won't consider that.  First, they mention (question 22) that the art is owned by the City (not by the museum).  But, in the immediately adjacent question, they just assert, like it's a law of nature, that the collection "is held in trust for the benefit of the public and works of art may not be sold except to purchase other art to be added to the DIA’s collection."  You see?  They just can't.  It would violate the Held In Trust Law.  Works of art "may not be sold" -- it's prohibited! -- except to purchase other art.  Sorry.  Their hands really are tied.  It's unfortunate, but those are the rules.

They go on to tick off the usual empty talking points: "such a sale would violate the intentions of donors" (would it, if the works sold were purchased by the museum rather than donated?) ... "donor confidence would be shaken" (again: what if the works sold were purchased rather than donated?) ... "and public outcry would be tremendous" (more tremendous than if there were a severe reduction of museum services and programs including the elimination of school tours, public programs and community outreach?).

Finally, they make the blackmail argument: "Selling art also would isolate the DIA from the national and international museum community. Other institutions that have considered selling art have seen public demonstrations and a withdrawal of financial support."  In other words:  we can't sell work because the other museums will isolate us if we do.  So the museums all agree to punish each other if anyone tries to sell ... and then they use the threat of that punishment as an argument against the sale in the first place.

If I were a voter in Michigan considering this proposed tax, I wouldn't think I've been given any reason to believe that the City "can't" sell art to avoid severe reductions in museum services and programs, if it wanted to.

"I’m convinced that if these artists were alive today, they would thank me."

Patricia Cohen had an interesting article in yesterday's Times on a one-time art forger with a new business model:  "openly selling his faked oils as the reproductions of the finest masters."

Rebecca Tushnet:  "Talk about appropriation art."

Mike Madison:  "Irony alert: Perenyi copies for a living, and he claims to be unique."  He also connects Perenyi to a Chinese village that produces thousands of reproductions each year.  The village is "either the hub of the universe with respect to copyright infringement in visual art, or a massive challenge to modern sensibilities about what is original, and valuable, about fine art. Or both."

Only Wrong When Brandeis Does It (a continuing series)

Carol Vogel reports in today's Times that the Prado is lending a "major" collection of about 100 paintings from its permanent collection to the Museum of Fine Arts, Houston, and the Queensland Art Gallery in Australia ... and "charging the museums an undisclosed fee."  As she says:

"Over the years institutions have raised considerable cash from showing rare pieces from their collections. The Museum of Modern Art, for instance, is said to have received $5 million for sending 200 masterpieces to the Neue Nationalgalerie in Berlin in 2004."

This common practice is apparently okay for everyone except the Rose Art Museum.  The latest reports, by the way, are that the Rose has given up on its evil plan to do what MoMA and the Prado (and others) have done, so we can all sleep soundly at night.

"Topless Woman Found"

"Details Sketchy."

If you consign a work to a gallery, and the gallery goes bankrupt, can the gallery's creditors reach your work? (UPDATED)

Answer:  yes, according to a recent Southern District ruling, involving the Salander-O'Reilly bankruptcy, discussed here.

The holding is that "a creditor could obtain a security interest in a consigned item senior to that of a consigneee who does not file a [UCC] financing statement":  "The law operates as follows: a consignor delivers goods to a [gallery], but does not file a financing statement, and thus the consignor's security interest is unperfected.  The [gallery] then grants a security interest in the consigned item to a creditor, who perfects [the security interest] by filing a proper financing statement."  In those circumstances, "the creditor's rights are senior to" the consignor's unperfected security interest.

The idea behind the rule is "to protect general creditors of the [gallery] from claims of consignors that have undisclosed consignment arrangements with the [gallery] that create secret liens on the inventory. To a general creditor of [Salander-O'Reilly's] such as the Bank, which could base the amount of a loan on the inventory possessed by a consignee, consigned property appears to be property wholly owned by the consignee unless the consignor files a UCC-1 financing statement, which notifies creditors of the status of a consigned item."

UPDATE:  I should have mentioned that this doesn't apply to consignments by artists (at least in New York), which are given special statutory protection.

"[T]here is no doubt about who the big winner is: the general public, which now can enjoy unprecedented access to a peerless cultural patrimony"

Noted philistine Martin Filler -- writing in that leading organ of philistinism The New York Review of Books -- says the new Barnes is "a triumph for all concerned."  The piece, titled "Victory!", is not available online, but is worth seeking out.

Among other things, he takes on the "malign and melodramatic" Art of the Steal, which portrayed the move "as an act of naked thievery."  He calls it, by contrast, a "civic rescue mission," more "comparable to a desperate family's intervention aimed at saving a shared inheritance from being squandered by an incompetent, out-of-control relative."

As he summarizes the backstory, "Barnes's overly conservative investment directives reduced his foundation's solvency," and its resources "were further diminished by a costly lawsuit over a proposed parking lot on its property in an upper-class residential neighborhood opposed by local residents, and sapped through extravagant spending by some of its officials."  The end result was that the foundation "was effectively bankrupt by the turn of the millenium."  ("Effectively," not actually.)

He also points out that, thanks to vastly improved lighting, "visitors can see these fabled works better than at any time since Barnes bought them."  But he doesn't say anything about the Exit signs that ruin the whole thing.

"Any rational assessment of the firing must take into account the practical financial issues in play "

Ed Winkleman: In Search of a More Nuanced Discussion about the Changes at MOCA.

Related from Greg Allen:  "I imagine that one of the best things about being a billionaire is how there's no shortage of people w/ awesome ideas for spending your money."

I'd just add that you hear a lot from the art police about incentives.  If museums are permitted to sell work to pay operating expenses, how will that impact future donations?  If a donor's intent is violated, even 50 years after his death, won't that depress future giving?  But think about the incentives here.  You become a trustee of a museum.  You contribute millions of dollars.  Then, when the museum runs into financial difficulties, you read that a "museum whose board of trustees has a combined net worth far in excess of $21 billion shouldn't have financial problems."  Who would want that job?

New Issue of Journal of Art Crime

The Spring/Summer 2012 issue of ARCA's Journal of Art Crime is out. My column this time looks at whether a state can make otherwise harmless photographs illegal if the photographer had the wrong intent when he took them.

"The suit is the third filed by an art collector involving a painting sold by the gallery, which closed last year."

Another Knoedler lawsuit.

"The Pennsylvania courts ruled repeatedly that private interests like the Friends have no standing to challenge the administration of a trust."

"Whatever the fallout from Camp’s statements, it seems hard to imagine that this development would alter any court’s analysis of the standing question that it has addressed on so many occasions."

More on the lack of financial problems at the Barnes

So I went back and looked at Judge Ott's opinion -- his first one, from January 2004 -- to see what it had to say about the Barnes's financial condition at the time.  The bottom line:  "What has been established beyond peradventure is that The Foundation's finances have reached a critical point."

More specifically, here's how he summarized the evidence:

• The world tour of works from the collection -- a world tour I'm sure most of today's hand-wringers bitterly opposed -- in the mid-1990s generated about $16 million.
• Half of those proceeds were used for renovations.
• The other half was placed in a restricted account for capital improvements.  About $4 million remained in that restricted account.
• Regarding assets available for operating expenses, there was $9.5 at the end of the 1980s.  That had fallen to $6.6 million by the end of 1997, $2.4 million by the end of 1998, and $1.6 million by the end of 1999.
• "The Foundation had been operating in the red over the past decade."
• Pew, Lenfest, and the Annenberg Foundation had provided $3.1 million in bridge financing to cover immediate operating expenses.  "In essence, the Foundation is covering its costs of operation at present only because of the bridge financing from Pew and Lenfest."
• The Foundation retained Deloitte and Touche "to conduct a financial analysis of three different operating scenarios at The Foundation," including one that continues "the education programs and public visitation schedule as they now stand."  "All three were projected to result in deficits."
• "The Board rejected the idea of filing for bankruptcy."
• "Lower Merion Township" -- or, as I believe they have come to be known over the last few years, The Friends of The Barnes -- "certainly bears some of the responsibility for the financial crisis.  The Foundation's attempt to raise revenues by increased public access to the gallery was met with hostility, bordering on hysteria, from some of the owners of the adjacent houses.  The township reacted to the situation by imposing a series of administrative regulations that have put a stranglehold on the Foundation's admissions policy."  Hey, that's what Friends are for.

But never mind all that.  The important thing is that a former Barnes official wrote a blog post that said they weren't bankrupt at the time.

Apparently it's a thing now to deny that financial problems led to the Barnes move (UPDATED)

For example.  Apparently the Friends of the Barnes have filed yet another petition to reopen the case on these grounds.

I thought it was always clear that the Barnes was in financial trouble.  The New York Times story announcing the proposed move, back in 2002, began:  "The financially beleaguered Barnes Foundation filed court papers today asking for permission to move ...."

John Anderson's Art Held Hostage, on p. 218: "Relatively small though the numbers were, the Barnes was, nevertheless, broke."

Most importantly, Judge Ott's 2004 opinion held that the Barnes "was on the brink of financial collapse."

So:  financially beleaguered, broke, on the brink of financial collapse ... but not yet technically bankrupt so stop the presses.  Or something.

UPDATE:  Lee Rosenbaum ("second to none in [her] strong belief that the Barnes should have remained in Merion"):  "[S]uggesting that the Barnes was not fiscally moribund at the time of the court hearings is as much a distortion of history as recent claims that founder Albert Barnes would have been pleased with the new Philadelphia facility."

"The way it was stolen was unusual. So was the way it was returned."

The Dali drawing stolen from Adam Lindemann's new gallery last week has been "mysteriously returned" -- by Express Mail, from Europe.  Turbo Paul says: "Publicity stunt which will be exposed shortly."

"What is it about Pablo Picasso that attracts vandals?"

Eric Felten explores.

And We're Back

Seems that while I was away Park West Galleries was involved in another lawsuit.  This one involved the Muhammad Ali Center, and quickly settled.  According to CBS News, "in recent years, Park West has been the target of 18 federal lawsuits in six states, each alleging fraud by the Michigan art dealer."