By the late 1970s it seemed as if King Midas was at work again. In 1979 a 100-year-old toy, a German battleship 90 cm long and powered by the insides of a clock, sold for an astonishing $21,000 in New York City. Across the United States Ansel Adams’ photographs, which had fetched a modest $150 in 1971, commanded upward of $40,000 by 1980. In Europe late-19thcentury Chinese silk rugs quadrupled in price from 1970 to 1978. Canada was not exempt from the touch of gold. Group of Seven paintings soared during the decade. In 1981 a Lawren Harris oil was bought for $240,000, the highest price ever paid for a Canadian painting at auction. Queues formed outside coin shops as eager buyers snapped up 1948 Canadian silver dollars at $1,500 a toss. During sweaty bidding at Toronto’s Phillips Ward-Price auctioneers in April, 1981, a 1952 Mickey Mantle bubblegum baseball card went for $880. As inflation soared, seemingly without end, frightened investors flocked to put their fading dollars into something tangible, something with value. Many chose real estate, sending house prices in many Canadian centres into the stratosphere. Others fled to such collectibles as rugs, stamps, nostalgia—
often to the distress of long-term collectors, who watched with a mixture of horror and fascination as prices climbed to unthinkable levels.
But, as quickly as he came, the gilded monarch appears to have vanished. High-quality items have retained their value, but, for many would-be investors, the art and collectibles markpt has gone the way of real estate, the stock market and oil. In a report released in June, the giant New York investment banking firm Salomon Brothers Inc. chronicled a grim demise: prices paid for old masters down 22 per cent -
from the previous year; oriental rugs down 16 per cent; coins down 27.8 per cent. In Canada, at a Phillips auction in July, an A.Y. Jackson, sporting a presale estimate of $12,000, sold for $2,400.
Last year’s $1,500 dollar will fetch $1,100 today.
And the rookie Yankee bats at half of last year’s price.
As recently as 1978 the international art market was showing a 48.4-percent return on investment—32.1 percentage points above gold and
eight times the rate of inflation. Speculators elbowed long-term collectors aside in their frenzy to buy up everything from multimilliondollar Picassos to $1,000 Ronald Reagan movie posters. “ At literally every public sale there was a new price level,” marvels Alan Klinkhoff, one of the directors of Montreal’s Walter Klinkhoff Gallery Inc. “It was definitely an exciting time.” It was also disconcerting. “Reputations and price values were, in many cases, inflated,” says Ken Carpenter, art critic and professor of economics at York University in Toronto. “In a weak economic period the art market was experiencing a historically abnormal growth.” Lately, however, his-
tory has begun to right
itself. Record-high interest rates in the past year have lured speculators to treasury-bond havens and sent the tangibles market reeling. In Canada the weakness of the dollar, coupled with last November’s budget which dissallowed depreciation on resold Canadian works of art, only hurried the decline. “A lot of people are shying away from the market,” says Carpenter. “They are worried about what the animal will do next.”
The carnage in many areas is clearly visible. In June the giant interna-
-tional auction house
Sotheby Parke Bernet Inc. reported a 25-percent drop in sales from its 1980-’81 record of $640 million. For 1982 they are predicting a loss for the first time in 44 years. Ten of 32 Sotheby staffers in Canada have been let go. At auctions in Toronto this year both Sotheby’s and Phillips Ward-Price failed to sell between 20 and 30 per cent of catalogued items. Of the remainder, 25 per cent were gavelled down at less than presale estimates. In August
Phillips announced that its Toronto hall will reduce the number of auctions it conducts. “We make these moves with great regret,” says Jack Kerr-Wilson, president of Phillips in Canada. “But it is better to put a bandage on the scratch than to bleed to death.”
While auction houses are busily bandaging, many dealers and retailers are calling for body bags. Between September, 1981, and June, 1982, 12 art galleries closed in Montreal. “That is an abnormal number,” says Edith Yeomans, executive administrator of the Professional Art Dealers Association of Canada (PADAC). She adds that, of the 55 member galleries of PADAC across the country, most are experiencing a 30per-cent drop in sales. Says a stoic Klinkhoff: “Pictures are simply not moving.”
The malaise spreads beyond the painterly. “Business has definitely fallen off from last year,” says Lorraine Conrad, an antique dealer from Tantallon, N.S. “Prices have gotten out of hand, and people just can’t afford to come in here any more.” Those who do are stopping for practical items such as beds and sideboards. “I can’t sell the old prints, tinware or Nova Scotia glass that people used to clamor after,” adds Conrad. In Toronto Neil Sneyd, owner of The Map Room, one of the largest antique map dealerships in Canada, finds himself coping with a similar sales slump. “People are coming in and saying they would love to buy, but they are waiting until their stocks recover,” he says. “What this means is that I have to work harder.”
Canadian newspapers are full of oriental carpet dealers conducting distress sales. When Vancouver’s John Shakour opened the Tuscany House three years ago, the trade in oriental carpets was feverish. Recently, the 24-year-old Iranian was forced to sell off his expensive inventory at cost price during a bankruptcy sale. “The market simply outpriced itself,” says Shakour sadly, “to the point where it is now completely dead.”
Bearing witness at the funeral are thousands of speculators who jumped aboard the collectibles’ ride to riches. “When the market was brisk, there was a tremendous temptation to go out and buy at tremendous prices,” says Klinkhoff. Those who succumbed are paying the price.
Frank Bakocs, a 50-year-old transmission shop owner in Toronto, is one of the thousands who got caught. “I didn’t see this coming at all,” he says. “It came so fast. If I didn’t have my own business to fall back on, I could have gone bankrupt.” At the height of investment fever Bakocs bought a four-stamp block of 1959 five-cent inverted St. Lawrence Seaway stamps for $92,500. That same
block is now worth $60,000. Although Bakocs is able to hold onto most of his major stamp investments, he has been forced to sell his large holdings of smaller denomination stamps, such as the Canadian Olympic series, at a loss. “I am just dumping them wherever I can,” says Bakocs. “They are being used for postage.”
At Sotheby’s in Toronto, John Phillips, director of the Works of Art division, admits that the auction house has received numerous inquiries from people wishing to unload last year’s investment folly. “We try to persuade them to
hold off selling. If not, they end up getting $2,000 for the $4,000 Victorian tea set they bought 18 months ago.”
For some, the sight of the strewn battlefield evokes little sympathy. Among knowledgeable dealers, the plight of the auctioneers is believed to be particularly just. “They brought this upon themselves,” says Walter Moos, owner of the Gallery Moos in Toronto. “Sotheby’s spring auction was a disaster. They put fancy reserves on mediocre pieces, and no one bought.” At Halifax’s ¿wicker’s Gallery, owner Ian Muncaster is just as blunt. “There was a deliberate
move to drive prices up,” he says. “It just did not make sense that a Jackson was selling for three times the price of a Gainsborough.” Nor are serious collectors dismayed to see the decline of the speculative market. “Things were getting out of hand,” says Bruce Young, a Toronto text editor and avid doll collector. “I was not prepared to pay the prices they were asking.” Young illustrates his point by gesturing toward a pouting character doll he purchased for $150 in 1978. It is now worth $3,000. Wary of the ever-escalating price trend, Young began to upgrade and pare down his collection from 500 to 150 dolls several years ago. “The market is flooded now, and dealers tell me they cannot get rid of medium-price dolls,” he says.
Norma Mosher, 68, shares Young’s passion for dolls. In her Toronto home, her collection competes for space with about 1,000 lead soldiers belonging to her husband, Jack, a retired journalist. The Moshers have found that their income cannot match the rising cost of their respective hobbies. While Jack Mosher notes that there are still reasonable finds to be had “if you shop carefully,” he grumbles that many miniatures are now beyond his purse. “The Heide miniature that I picked up in the Soldier Shop in New York for $1.25 in the late 1930s goes for $35 now,” he says. Adds his wife: “I only window-shop now. Buying is for millionaires.”
That has begun to change. “For the serious collector, the current situation is a small bonanza,” says York’s Ken Carpenter. “Two years ago, the average Joe couldn’t get the cream of the crop, the blue-chip works—now you can have your pick.” Adds Jack Kerr-Wilson: “With prices going down across the board, it’s almost the best possible time for the private collector.”
If the collapse of the market is seen as a boon for the conscientious collector, it is also being considered a good thing for the quality art object. As the $12,000 Golden Age comic books from the 1940s and scores of $3,000 limited-edition “art” books plummet in value, classy goods maintain their worth. Antiquarian books, 19th-century European silver and Rembrandts, among other items, continue to do well. Record sales, such as the 1888 Paul Peel which sold at auction in Toronto for $70,000 in June, are still not uncommon. “Essentially, the schlock is being purged from the market,” says Ken Carpenter. Although the speculative investor with a bank vault full of devalued Cornelius Kreighoffs may disagree, there is an air of returning sanity within the art and collectibles trade. Prices are already showing signs of recovery. “Now that the speculative market is, thankfully, gone,” says Walter Moos, “we can get back to looking at value. Intrinsic value.”
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