Art as a wartime investment the asset that is countercyclical

From a new Economic Journal article by Kim Oosterlinck:

During World War II, artworks significantly outperformed all alternative investments in Occupied France. With the surge in demand for portable and easy-to-hide (discreet) assets such as artworks and collectible stamps, prices boomed. This suggests that discreet assets may be viewed as crypto-currencies, demand for which varies depending on the environment and the need to hide value. Regarding art market valuation, this paper argues that while some economic actors derive significant utility from conspicuous consumption, others value the discretion offered by artworks. Motives for purchasing art may thus vary over time.

The pointer is from Kevin Lewis.  And via Samir Varma, here is a new piece on how the returns to fine art have been overestimated.


you read this site long enough, you come to appreciate, the diversity of threads, at the lead of the proprietors direction.

One of the key aspects of money is the utility as a store of value. During war, actual national currencies may lose a lot of that utility. So, people will substitute into other more tangible assets that can be hidden and aren't subject to the whims of the Treasuries printing presses.

far more complex than that but that's a tangible facet. was shouldn't be a focus of any example because it's such a f n loser for everyone, especially, most profoundly, in this enlightened age.

"was" was supposed 2b "war" . . .

'During World War II, artworks significantly outperformed all alternative investments in Occupied France. '

Hermann Göring would beg to disagree, since he didn't pay a cent to any previous artwork owners. 'The main lodge had a large art gallery where Göring displayed works that had been plundered from private collections and museums around Europe from 1939 onward. Göring worked closely with the Einsatzstab Reichsleiter Rosenberg (Reichsleiter Rosenberg Taskforce), an organisation tasked with the looting of artwork and cultural material from Jewish collections, libraries, and museums throughout Europe. Headed by Alfred Rosenberg, the task force set up a collection centre and headquarters in Paris. Some 26,000 railroad cars full of art treasures, furniture, and other looted items were sent to Germany from France alone. Göring repeatedly visited the Paris headquarters to review the incoming stolen goods and to select items to be sent on a special train to Carinhall and his other homes. The estimated value of his collection—numbering some 1,500 pieces—was $200 million.'

And the result of Göring's investment strategy? 'Göring was the second-highest-ranking Nazi official tried at Nuremberg, behind Reich President (former Admiral) Karl Dönitz. The prosecution levelled an indictment of four charges, including a charge of conspiracy; waging a war of aggression; war crimes, including the plundering and removal to Germany of works of art and other property; and crimes against humanity, including the disappearance of political and other opponents under the Nacht und Nebel (Night and Fog) decree; the torture and ill-treatment of prisoners of war; and the murder and enslavement of civilians, including what was at the time estimated to be 5,700,000 Jews.'öring

@ P_2, insightful post

prior_test2 June 21, 2016 at 1:59 pm

‘During World War II, artworks significantly outperformed all alternative investments in Occupied France. ‘

Hermann Göring would beg to disagree, since he didn’t pay a cent to any previous artwork owners.

I don't mean to sound rude but do you ever think about what you are saying before you post? I expect that Göring would agree entirely. If you get a valuable asset for nothing, it is an outstanding investment. Albert Speer is a good example. Speer collected a lot of art during the war. He paid next to nothing for those art works. After the war they were worth a lot. That was a great investment on his part. It made Speer a very rich man indeed. As investments go it is hard to think of a better one.

Although I do like the irony of the French, who filled Paris with the loot of the entire continent, complaining about the Germans taking stuff off them.

It was an especially good era for Do-It-Yourself-Vermeers, like the really ugly pseudo-Vermeer that Hans von Meegeren painted for Goering in return for some real paintings:

Which makes the following question relevant is expensive art harder to forge than currency? Is a Vermeer dollar much less reliable than a dollar dollar?

inflation/deflation, these are natural occurrences, even with age-old hard currency

Historically, when taxes and plunder were insufficient to pay for war, rulers resorted to inflation.

Did prices (or liquidity) plunge once peacetime set in?

money evolved, nobody made it, we is all greedy mfr's . . .
paradise lost, what to do?

age old minimalist sentiment, recognizes property as a burden, while paying due deference to those who get stuck with the goods.

as prior said, the Nazis took a ton of art off the market during WWII, including in occupied France. Now I'm not an economist at the prestigious Mercatus Institute, but wouldn't the Nazis taking off art the market also be a reason why the price of art went up in France during WWII? Do the authors account for this?

who is "art the market"?

magical abode we live on, and nothing else like it, so far, out in that big big woirld. we r still here, & we still talk 2u

if only, for just a smudge, in the fractals & equations; pastel like, . . .

a girl sings like that? a man doesn't have control of his emotions

Seriously, 12 comments already and I should be the first one to say "Fallen Madonna with the Big Boobies?"


I have always felt for the dilemma of the poor Dutch Art forger;

Nevertheless, a falsified "Vermeer" ended up in the possession of Reichsmarschall Hermann Göring. Following the war, the forgery was discovered in Göring's possession, and van Meegeren was arrested on 29 May 1945 as a collaborator, as officials believed that he had sold Dutch cultural property to the Nazis. This would have been an act of treason, the punishment for which was death, so van Meegeren confessed to the less serious charge of forgery instead. He was convicted on falsification and fraud charges on 12 November 1947, after a brief but highly publicized trial, and was sentenced to a modest punishment of one year in prison.

From an economically rational point of view, van Meegeren seems to have made the right choice. I expect from a psychological point of view he did too - I would think that he always *wanted* to get caught so he could show everyone how talented he really was. But from an Art History point of view, was it the right choice? He was unlikely to have been executed and he could have continued to churn out forgeries after he got out. Would anyone know? Would the world's net level of happiness be increased by increasing the number of Vermeers in the world - at least making people think there are more Vermeers in the world?

Personally I would like to own one of his forgeries. I don't know what happened to them but I expect they are too expensive for me these days.

Still the problem in war time, and supporting the situational argument for the causation of crime, is that you do not know who to trust:

And you should definitely not travel with a lot of assets.

Several commenters have made the point that artwork outperformed other investments during WWII especially for the Germans who stole it - a zero investment has an infinite return. I suppose Germans are refined in their appreciation of art but not so refined in their humanity. War, what is it good for? Plunder.

The disturbing thing about the Nazis is that this occurred among the best educated and most refined population in Europe. They were not backward hicks. The more education a German had the more likely he was to be a Nazi. Appreciation of Mozart went hand in hand with genocide.

But perhaps Göring's mistake was to be honest. If he had called his thefts something else, nationalization for instance, if he had declared that it was wrong for the 1% to monopolize all that art, and he was taking said Art for The People, and then got the German public art galleries to lend him the good pieces on a long term basis, would anyone have complained?

What is socialism but a euphemism for the sort of plunder that Göring did? The rest is rationalization.

Theft is such an odd term anyway. Hans van Meegeren *sold* works of art to Göring. For instance:

Christ with the Adulteress 1941–1942 (sold to Hermann Göring for 1,650,000 guldens about $624,000 or $6.75 million today, now in the public collection of Museum de Fundatie[70])

Negotiating with a Nazi with a gun in his hand is still negotiation of sorts. This painting sold for real money which suggests the gun was not so obvious. Was that theft? A lot of prominent Germans got rich buying assets of people who had to flee Europe in a hurry and were willing to take any price. It would be next to impossible to try to make a reckoning. With the Communists, by and large, no one has bothered.

Comments for this post are closed