PRINT June 1962


“Taxes and Art” and Richard H. Rush's “Art as an Investment”

Taxes and Art (French & Co., Inc., Prentice-Hall, Inc.), 1961.

Richard H. Rush, Art as an Investment  (Prentice-Hall, Inc.), 1961, 418 pp.

OF THESE TWO BOOKS, Rush’s Art as an Investment must be considered the more vile, because it costs ten dollars and has 418 pages, while the French & Co. booklet can be had for the asking and is blessed with only 20 pages. By all other standards, they are at a dead heat.

Shortly after the appearance of the French & Co. booklet, The Commissioner of Internal Revenue issued a statement declaring that his office would examine with a wiser, if sadder eye, tax returns claiming deductions for donations of works of art to public or charitable institutions. There probably was no connection between the two events, but if there were, the reaction of the Commissioner would have been fully justified.

Let us imagine for a moment the thinking that might have gone into the present tax arrangement. Mr. Tax Law Writer observes the fact that many wealthy persons, out of the goodness of their hearts, or for reasons of prestige, or whatever, donate to museums here and there, valuable works of art. Often, indeed, the works are, by the time they are donated, worth a good deal more on the open market than the price the donor originally paid. Mr. Tax Law Writer sees an opportunity to feed two birds with one seed: he will let Mr. Donor deduct from his taxes the value of the art work “at the time it is given,” and at the same time, the nation’s museums and other public institutions will be constantly enriched by additional art treasures to be enjoyed by all the public. Thus, the giver’s goodness is rewarded, the nation’s museums enriched, and all at a cost to the government of less than the price of, perhaps, a fifteen kiloton bomb. Of course, Mr. Tax Law Writer envisioned, as he had every right to, a kind of stately, dignified, loving process of purchase, time elapse, and ultimate donation, in the usual tasteful and modest style. Never in his wildest conjectures could he have visualized the following sentence, from the French & Co. pamphlet: “It now becomes dramatically apparent why collecting and donating art objects has become a favorite tax tactic among those who are able to keep only a small part of their annual incomes out of the tax collectors hands. “Collecting and donating”—a kind of revolving-door from dealer to owner to museum. Poor Mr. Tax-Law Writer: “That is not what I meant at all. That is not it, at all.”

In the heady context of the current art market, all sorts of things become possible. Each auction breaks the record of the last, each year’s exhibition is priced higher than the last. A donor could buy a painting in June for $5,000 and donate it to a museum in January, by which time it is worth $10,000, and for his benevolence, $10,000 is deducted from his tax form. How does he know the price has doubled? Why, he has a genuine January appraisal of the painting’s value by someone who should surely know: the dealer who sold it to him in June! Recently, an art magazine reported cases of dealers offering paintings for sale along with appraisals postdated six months to a year later, with increases of from three to ten times the purchase price.

Aside from the kick-in-the-pants to a benevolent tax law, the “collecting and donating” fever has innumerable consequences, tangible and intangible, each contributing its dash of poison into the blood stream of art in America. The pressure on dealers, for example, to constantly raise the prices of their artists, is obvious. Examples of artists, selling moderately well on one price level, then raised to another where they are stranded at prices too high and from which it would be suicide to descend, are not infrequent.

French & Co.’s booklet turns the stomach, but at least it does deal with a true situation: there “is” a tax tactic available, and this dealer is here to tell you about it—as well as to sell you the give-able and deductible work of art. The Rush book however, announces itself with less than a half-truth: “You can make a fortune collecting art!” blares its jacket blurb. Mr. Rush is an investment banker. He knows that you can also make a fortune in the stock market, and the smallest grain of honesty might have led him to confess that the latter is more likely. His book purports to introduce the reader to the world of art and its market, in order to aid him in selecting objects which will increase in dollar value. In this way, “you can make a fortune collecting art.” Breathlessly, the book opens with a description of the great auctions of the 1950s and 1960s. ’56–57, record sales at Parke-Bernet! ’57–’58—a new record! ’58–’59—a still higher record! Dollar-signs ring up in the eyes of the reader—he is hooked. Deliriously, he will follow Mr. Rush anywhere, if only he can learn how to get his share of all this easy money. And the first place Mr. Rush takes him is into History—to familiarize him with the Schools of Art. There are some notable stopping-places on this tour. After breaking down (“for our purposes”) Contemporary art into two categories, “Naturalistic” and “Abstract,” the following two paragraphs appear: “Among our more recognized young American Contemporaries in the first group is Andrew Wyeth. He continues in the tradition of the strictly American artists, Thomas Eakins and Winslow Homer, who painted America in the spirit of America. Wyeth’s paintings seldom appear on the auction market. His water-colors retail in the medium four figures. A leader of the second group is Jackson Pollack, the “drip” artist. While Pollack is known as an Abstract Expressionist, Salvador Dali has produced a number of Abstract Surrealistic paintings, and is certainly the leader of the Surrealistic School." The record for the total number of mistakes in two paragraphs has hitherto been held, according to Mark Twain, by James Fenimore Cooper. Mr. Cooper may now rest in peace, and Mr. Twain himself would certainly appreciate the admirable way in which Jackson Pollack somehow emerges from this swamp of nonsense vaguely tainted with un-Americanism.

The lesson on German Expressionism is also notable. “The whole Expressionist School is an unhappy one, with few exceptions.” Rush explains that, because the School was unhappy, it attracted unhappy painters. Happy painters stayed away. After noting Hitler’s confiscation of Expressionist work, our fortune-maker unerringly zeros in on the moral: “The ironical part about this policy of Hitler was that while Hitler himself painted pictures, and several have appeared on the auction market recently, he painted no better than the Expressionists.”

There are lots of stops in Rush’s tour of the Schools of Art that are good for as many laughs. But the fact remains that this “investment” notion of art-buying floats in the air of American art like some nasty pollen, a dishonest myth that can result in no good to either artist or collector. Its effect on prices is the same as the “collecting and donating” dodge: artificial raises, for the simplest and crudest proof that the investment is paying off is the rise in its price. Its effect on the artist’s attitude toward his work is equally pernicious. As Rush is careful to point out, people like “happy” paintings, and “typical” paintings. An artist, caught up in the merry-go-round of trying to make an investment out of himself cannot help, in one degree or another, but direct his work toward a notion of what would be pleasing rather than what would be art.

Except for, perhaps, those collectors who can afford to deal in what FORTUNE might call “blue chip” paintings, art is a lousy investment. Art and artists will flourish when an admiring public buys paintings because they love them; if the myth that buying art is a good investment (in the Wall Street sense) is perpetuated, the result can only be disaster for both.

Philip Leider