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Art market

Brodsky tables bills to restrict the freedoms of N.Y. auction houses

Populist legislation involves no more “chandelier” bids, loans to buyers, or secret reserve

With the New York art market in the doldrums due to the deep recession and the departure of the Japanese buyers from the Impressionist market, yet more troubles for the auction houses may be peering over the horizon.

On 10 June, New York State Assemblyman Richard Brodsky, chairman of the Assembly Committee on Oversight, Analysis and Investigation, announced the completion of a two-year investigation of the art market and made several bills to reform practices which he called “inappropriate, unethical and unnecessary”. The legislation seeks to reform the auction house practice of accepting house bids on behalf of the consignor (the bill gives them the generic title of “sham bids”); prohibits loans by auction houses to buyers; establishes guidelines for museum deaccessioning, and codifies into state law disclosure of the existence of reserve and guaranteed prices (see also The Art Newspaper, No. 6, March, p. 18). The disclosure of the actual figure of a reserve auction price will not be required by the proposed legislation.

Attempting to paraphrase the writings of the critic and theorist Walter Benjamin, Assemblyman Brodsky warned that the “intrusion of a commodities ethic into the art market of the 1980s” invested art with an “aura ...that is not necessarily in everyone’s interest.” That aura, he said, often inflated prices artificially. The art market, he argues, could only be strengthened by a higher degree of public confidence.

“This is not a community which very easily accepts the concept of public accountability”, he said, singling out Sotheby’s for its allegedly exceptional resistance to cooperating with the committee’s investigation. “They had a very good run for eight or nine years and everybody made a lot of money”.

Both Sotheby’s and Christie’s responded that auction houses in New York were already adequately regulated by New York City. Mitchell Zuckerman, president of Sotheby’s Financial Services, warns of consignors simply leaving town for Paris, London or Tokyo if the proposed reforms become law. “Obviously, if the environment here is unattractive to people who have a choice of places in which to sell property,” he said, ”they will sell that property elsewhere”.

The investigation into the art market began, according to Assemblyman Brodsky, when record art prices made front-page news starting in the mid 1980s. Since then, Brodsky says, his committee has also acted on numerous complaints directed at the auction houses. Sotheby’s officials say that no such complaints have been brought to their attention. Echoing the auction houses, the Committee on Art Law of the New York City Bar Association, in reviewing the bill, has publicly disapproved of the proposed legislation becuase “no distinct, significant and demonstrable problem or abuse has been presented or perceived”.

Brodsky expects the Assembly to pass the bills in the coming legislative season. Opponents of the legislation, who characterise Brodsky’s interest in the art world as an effort to stay in the public eye after losing a bid for higher office, admit they are taking the bill very seriously indeed.

The legislation could find substantial support. Art dealers and auctioneers have few friends in the general public. Moreover, regulation of the art market is virtually costless for the taxpayer, and it could have a populist appeal to Americans who, at a time of recession, resent the widely-held (if already outdated) image of the rich Japanese buying up their “artistic patrimony”.

Appeared in The Art Newspaper Archive, 10 July 1991