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    Bankers and Artists: Gold, Golden, Gilded, Glittering

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    We have long entrusted the task of representing our ideas of value to members of two professions that might seem to have little in common: banking and art.
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    In studying the value associated with art in the nineteenth and twentieth centuries, I’ve spent a lot of time at the Metropolitan Museum of Art, which is, among other things, a vast compendium of the tastes of financiers.
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    When you look further into the intersections between art and finance, you often find that what is really at stake is a change in the way we feel and understand time.

    This piece has been shortened and can be read in its entirety at The Believer.

    In 2007, with Financial Markets ballooning on every side, the artist Damien Hirst cast a real human skull in platinum, encrusted the cast with 8,601 diamonds that might or might not have come from “conflict-conscious” sources, and called his construction For the Love of God. Images of the macabre object circulated with incredible speed, and there was cheery debate about whether the accomplishment of the work was in the realm of aesthetics or that of the market, whether what mattered were the artist’s choices or the fact that the piece had lived up to its announced intention to be “the most expensive piece of art by a living artist” and had sold for $100 million. Two years later, with financial markets imploding on every side, it was reported that the work had in fact been sold to a holding company that turned out to consist of Hirst’s gallerist, his business manager, his friend the Russian billionaire art collector Viktor Pinchuk, and Hirst himself. There were then those who, staring at their own newly empty stock portfolios, found in the title apt expression of their feelings. The work itself, with its diamond-laden eye sockets and its original inhabitant’s grinning teeth, seems unperturbed by any hollowness of value in the financial or art markets. It does not matter to this cynical epitome of our glittering age whether it was made for the love of anything but more zeroes.

    To my mind, what the work represents, specifically, is not our artistic, or not only our artistic, but our financial life.

    Since 2008, and the crisis of mismanagement that resulted in the failure of Lehman Brothers and precipitated our current financial woes, it has seemed to me that the business of all the large financial institutions–even the ones that conspicuously did not fail, like Goldman Sachs and JPMorgan Chase–has something important in common with the sale of Hirst’s diamond-encrusted skull. All of these institutions have, or had, significant interests in financial products like derivatives and mortgage-backed securities. These products, or “instruments,” or “vehicles,” are anchored not to any concrete goods but only to finance itself. It was in this way that, in 2010, during the midst of the financial crisis, the gross domestic product of the entire world was between $50 and $60 trillion, while the volume of derivatives trading was about 20 times the size of the GDP–$1,200 trillion, or $1.2 quadrillion.

    Mortgage-backed securities are created by assembling thousands of particles of debt–pieces of debt owned by homeowners in Peoria and by southern African governments at war over the diamond trade–and then packaging these together and selling them. Like the men of Wall Street, Damien Hirst is a creator of astronomical value, seemingly out of nothing. The diamonds on the Hirst skull were reportedly worth $23.6 million–the rest of the work’s value was created, overnight, in the assemblage. For the Love of God applies the technique of a leveraged buyout not only to a work of art but as a work of art.

    In fact, we have long entrusted the task of representing our ideas of value to members of two professions that might seem to have little in common: banking and art. And, in the last 700 years or so, it has happened more than once that visual and financial inventors have come up with strikingly similar representations. When you look further into these intersections, you often find that what is really at stake is a change in the way we feel and understand time.

    The History of Bankers and Artists

    In studying the value associated with art in the 19th and 20th centuries, I’ve spent a lot of time at the Metropolitan Museum of Art, which is, among other things, a vast compendium of the tastes of financiers. From the days when J. P. Morgan was the powerful president of its board to the period in which Robert Lehman donated nearly 3,000 works to be housed in a separate wing bearing his name, the museum has been built, stocked, and guided by bankers.

    In analyses of the financial crisis, it has become commonplace to point out that the prognosticators at Lehman Brothers and Goldman Sachs, and the hedge fund financiers and advertising moguls who love to collect Hirst’s art, seem to think about only extremely small windows of opportunity in time. Hirst himself said cheerfully to the Daily Telegraph, “we’re here for a good time, not a long time,” and the sentiment was shared by one of Hirst’s collectors, hedge fund financier Steven Cohen, who leant another Hirst, of a real tiger shark preserved in formaldehyde, to the Metropolitan Museum.  When the original shark rotted, and had to be replaced, Cohen was asked if it was still the same piece. He responded–and one feels that he could be talking as much about his profession as about his collection–that it didn’t really matter if the object itself endured: “We’re dealing with a conceptual idea.” For the bankers, the long future of their investors and even, strangely, of their own enterprises, does not seem to be terribly compelling.

    A hundred years ago, when the Morgan and Lehman and Goldman and Sachs families ran these banks, the long-term reputation of the enterprise was a crucial asset to the bankers. Even in the riotously speculative Gilded Age, this fact acted as a curb against profiteering, one that no longer seems to have any effect on many members of our financial classes. But can it be that it is only our bankers who have lost the sense of enduring value over time? It may be that our helpless rage at finance comes in part from our sense of bewildered complicity: how did these crazy instant values come to be the realm in which we live? Behind the Hirst lies a long double history of painting and banking and that suggests some clues.

    In the Gilded Age, many of the banks that have recently played important and devastating roles in our financial life–Goldman Sachs, JPMorgan, Lehman Brothers–were guided by men who had a passion for painting. J. P. Morgan’s collection was legendary. Paul Sachs, an early partner at the family firm, left banking to become a specialist in Italian Renaissance art, and to found the program in curatorial studies at Harvard. Robert Lehman and his father, Philip Lehman, each of whom ran Lehman Brothers, together assembled one of the great collections of Florentine and Sienese art outside Italy. Even the bank established to bail these other banks out, the Federal Reserve, had at its inception Paul Warburg. Warburg, often referred to as the “father” of the Federal Reserve, was the brother of Aby Warburg, one of the greatest scholars of the Italian Renaissance. In much the same way that aptitudes for math and music seem to descend together in families, so do there seem to be lineages for those gifted in the representation of value: the bankers and the painters. Not only did Gilded Age bankers study and collect art, their financial inventions were structurally quite like those of painters working at the same time. In particular, the financiers, as was true of Cézanne and his followers among the cubists, were interested in new representations of the future.

    In the Robert Lehman collection at the Met is a wonderful Cézanne, painted in about 1886, called Trees and Houses Near the Jas de Bouffan. When you stand looking at Trees and Houses, your eye might first take in the oddly angular bare limbs of the dark-patched autumn trees, then perhaps the greens and lavenders around their roots, the bits of sky between their branches, and, later, at the back of the painting, the ochre house with its steep roof. Cézanne’s project was to find ways to indicate volume and substance to the eye by breaking down every region of a painting into tiny areas of color. A house is not a square outlined shape, but hundreds of strokes of blended yellow, rose, brown, and green.

    Studying Cézanne with great absorption, Picasso and Braque made the first cubist paintings in 1906 and 1907. These were works in which hundreds of shattered aspects were reassembled. Things that one would ordinarily be able to see only with movement and the passage of time, like the front and profile of a woman’s face, could be seen simultaneously. Cubist paintings showed “now” and “next” at the same time. By breaking larger spaces into increments, visual art became capable of representing a tangible view of the future from within the present.

    In the period when Cézanne, whose father was a banker, was at work on Trees and Houses, French financial life was wracked by a series of spectacular failures that bankrupted many hundreds of thousands of households. Finance had discovered that to leverage funds for large projects, like the building of the railroads or the Panama Canal, the Rothschilds and the Warburgs had insufficient capital. New schemes involved the investment, in many small increments, of giant numbers of households. Many of these initial schemes were ill-founded or corrupt, and soon bankers found that they were having trouble persuading investors to have confidence in the future of stock offerings. People expected the value of a company to be based on its present value alone, its inventory or its physical plant, things that could be resold.  This produced a very limited idea of the value of a company and did not generate much liquidity.   

    In 1906, Philip Lehman, then the head of Lehman Brothers, joined together with Goldman Sachs, where Paul Sachs was then a partner, and the two banks instigated a small revolution. They made an initial public offering of the Sears Roebuck company that changed the way the value of a corporation was represented: based not on its total assets but on its price-to-earnings ratio. The relationship between a corporation’s stock price and its annual earnings was one that allowed time, and changes over time, to be incorporated into the valuation. The level of this ratio is still part of what allows bankers to make predictions about future earnings and growth. Both large- and small-scale investors could see that this new method produced, as the painters had done, a convincing representation of the present and future together. Vast liquidity was generated, and one of the things that the new financiers had money to buy was paintings.

    One of the great joint projects of bankers and artists was the modern art market, which was also an invention of the Gilded Age. What made the art market as we know it possible, starting in the middle of the 19th century, was the availability of cash. Among the art market’s first historians was Gerald Reitlinger, a son of the Reitlinger banking family. In 1961, Reitlinger pointed out, in his classic work The Economics of Taste, that large sums of cash could not be offered for paintings until people had large sums of cash, which no one did when wealth was held in land. It was only in the 19th century that industrialization and financialization produced the liquidity we now take for granted.

    For as long as artists have made a living from their art, even if a meager one, some version of the art market has been negotiated between people with power and people with artistic talents. But in each era, what was held to be valuable was different. Though the art trade has always measured value, that value was not always expressed in exclusively financial terms. The exchange between, say, Lorenzo the Magnificent and Botticelli took the form of an enduring patronage relationship with large-scale commissions for churches and palazzi. Much of the value exchanged was not monetary but religious or reputational. Both the banker and the painter were understood to be more pious and significant men as a result of their relationship.

    But in the Gilded Age, price was increasingly felt to be the measure of value which subsumed all others. In 1825, a Botticelli of the Holy Family sold for £10 and 13 shillings. In 1898, when offered another well-known Botticelli, of Saint Jerome, for £500, the British National Gallery was content to turn it down. But in 1912 that Saint Jerome sold to the American collector B. Altman for about $50,000. And by the time Andrew Mellon, in 1931, bought a Botticelli, together with a Rembrandt, he felt he was getting a rapaciously good bargain at a mere $1 million. Prices of valued paintings leaped up almost shockingly in the years before and after the first IPOs and the first cubist pictures. Suddenly people began to see paintings as representations not only of age-old values but of future values, not what the pieces were worth 100 years ago, but what they might be worth tomorrow.  It mattered less how much time they’d withstood the test of. All through the 20th century, prices for contemporary artwork were rapidly catching up to prices for works by old masters. Now, the first time a Damien Hirst is sold, the price is at a level only the greatest works of the past have achieved after being sold and resold for a century or more.

    The Hirst sale is part of an art market that, we are frequently told by gallerists and auctioneers and press agents, is currently at an all-time high. The numbers certainly are staggering. In the past year, there have been a great many articles in financial journals about a Cézanne, The Card Players, which became the world’s most expensive painting when it sold to the nation of Qatar for $250 million. A Warhol, three Van Goghs, three Picassos, a Klimt, and a Munch have all broken the $100 million barrier. Not so long ago a banker’s widow paid the highest price for a work sold at auction, $104.3 million for Giacometti’s sculpture Walking Man I, and that record was broken in 2012 by Munch’s The Scream. In 2006, the year before Hirst’s skull self-purchase, two of the most expensive paintings ever sold, two works of abstract expressionism, changed hands. One was a Willem de Kooning that Steven Cohen bought for $137.5 million. The other was Jackson Pollock’s No. 5, 1948, purchased for $140 million, the record price for a painting until 2012. The Pollock seems to have gone to a Mexican hedge-fund financier, although the extremely private man in question issued a press release of angry denial.

    Bankers and Artists, Motion and Time

    Like Cézanne’s Card Players, the previous record-holder also makes a revelatory representation of new ideas about time. And these ideas are in fact related to conceptions of temporality that are to be found in another record-setter, from 2006, a painting 650 years older than the Pollock. It’s a painting for which the Metropolitan Museum paid, by leaps and bounds, the most it ever had for a work of art. The tiny panel, made by the artist Duccio, in Siena in 1300, measures eight and a quarter inches wide and eleven inches tall, and it sold for over $45 million.

    In the Met’s orderly room of small, gold-framed Sienese and Florentine paintings, the little Duccio stands slightly off-center atop its rectangular podium. It has traveled a long way, but it was made small to travel with its owner. The frame is of worn wood, burned in two places by the candles of one of its early owners, who prayed to it. The Madonna and child are backed by traditional flat gold, very thick and solid, and into which the marks for the two halos seem to be incised quite deep. Against this gold background, the Madonna is long and graceful. Her blue robe gathers gently about her inclining face; she looks, as we immediately do, to the child she holds in her left arm. He is wrapped in cloths of pale orange and of lavender. The picture’s drama is all in its fabric: the baby reaches up and carefully tugs the blue robe aside so that he can see his mother’s face.

    Gradually, I’ve come to think that, even a continent away, and at the distance of 700 years, it is possible to see the first slight tremblings of the Lehman Brothers crash in this tiny painting of a mother and her child.

    This is a painting built around a gesture, and this kind of gesture was then new. The paintings that preceded Duccio are generally very still. When you see an immobile Byzantine Madonna with a Christ child enthroned on her lap, you never ask yourself, I wonder what they’re going to do next? They’re not going to do anything next, they are there for all eternity. But the way Duccio’s mother and child lean together suggests that this happens between them right now, and that many things might happen next. The child might laugh, the mother might put her veil back in place. This new kind of painting is concerned with contingency– it is based on an idea of sequence not eternal but human. The little Duccio suggests something about its own future from its present point of view.

    Duccio’s compatriots were thunderstruck by the beauty of his work, and commissioned him to complete the altarpiece for their great church, the Duomo. Many of the most prominent citizens of Siena at that time were bankers; in 1300, Siena was the banking capital of Europe. And, like the painters whose works they admired and commissioned, the bankers were coming to new ways of seeing.

    The Italian bankers of this period invented significant aspects of our modern practice of banking, even the word banking itself. The early Italian bankers sat out in the streets behind modest tables, or benches, and it is from these benches, banchieri, that we get our word bank. At this juncture, bankers were chiefly concerned with making money on the exchange of currency, a practice that had incipient within it some, but not nearly all, of what would make later financialization possible. Playing on exchange rates was acceptable, but, because of the Church prohibition against usury, the more purely financial practice of charging interest was not.

    The Church prohibition against usury wasn’t the only obstacle to charging interest. At that time, each transaction between a banker and a customer was recorded on a different slip of paper. The bankers’ methods did not incorporate a coherent idea of sequence that would make clear representations of contingency possible. Financial processes, including the accumulation of interest over time, were hard to visualize.

    But the northern Italians around 1300 felt time moving around them differently. It was still true, as it had been for many centuries, that the sun and the moon made the day and the night, and the calendrical heavens made the rounded year. But a period of sustained economic growth and huge military ventures (the Crusades were fought from 1095 to 1291) had brought Europe into contact with the much more mathematically advanced Arab world. New exchanges had galvanized travel, agricultural production, and trade. European sailors had begun to use Arab navigational tools to locate themselves in the ocean. European crusaders, merchants, pilgrims, bankers, and artists needed, and brought back from their travels, new ideas of coordinated movement, and of sequence in time. Everything, even eternity, began to be expressed in sequences that admitted contingent possibilities, with different possible “nexts.”

    As early as 1202, the Pisan mathematician Fibonacci, who was trained in north Africa among Arab mathematicians, had published his Liber Abaci. In this book, he encouraged merchants to take up the much more powerful Hindu Arabic numerals for calculation and also explained in detail methods of calculating interest. But even much later in the 13th century, the Church, in an opinion written by Saint Thomas Aquinas, held firmly to its creed that usury was immoral.

    Aquinas based his position on the teaching of Aristotle, whose work had also been preserved in the Arab world and only recently reintroduced in the West. Aristotle held that the proper function of money was to move the value of one concrete object–a donkey–into another–five bushels of corn. In usury, money was able to generate value itself and, anchored to nothing concrete, its value was given to dangerous and erratic pulses. The danger of usury was that it introduced a special form of contingency, one that we’ve lately felt the consequences of: usury had the potential to create unpredictable future value. Even the bankers who stood to profit most hesitated over Aristotle’s warning that value without correspondence to the concrete was as formless as fire: the more you fed it, the more it would burn. 

    In about 1310, Duccio finished his commission for the Duomo. This, his masterwork, called The Maèsta, had dozens of small panels depicting episodes from the life of Christ. The people of Siena held a parade. Robert Lehman gives the details in his erudite catalog of his father’s paintings: “So great was the enthusiasm of the people of Siena upon the completion of this great altarpiece, that it was carried in procession to its place in the Cathedral amidst great celebration.” Lehman seems especially taken with the fact that, at that time, painting could still get commerce to stop: “Such was the event, that all business was suspended, all shops closed, and all Siena solemnly joined in the ceremony to mark this extraordinary occasion.”

    The Sienese bankers had more reason than usual to celebrate the enduring value of art. Some ten years before Duccio completed the altar, all the Sienese banks, long the most prosperous in Europe, had suffered a collapse so profound that Siena never recovered as a financial center. The end of war and an agricultural downturn had brought a severe contraction, and it seems the bankers had overextended their loans to crusading princes.

    It took a while for Florence to emerge as the new financial center, and when it did, the Florentine bankers had in their hands a marvelous new method of representation. In various places in northern Italy, and then definitively in 1340 in neighboring Genoa, a wondrous device had come into use: double-entry bookkeeping. Now a regular column of money received could be reconciled with a parallel column of sums paid. Suddenly, bankers could represent, in one regular quadrant, a visually clear picture of the sequence of gestures between two financial actors over time. The Italian bankers had found a method of representation like that of Duccio and other painters, one which allowed them to represent progress toward the future.

    The Difference Between Bankers and Artists

    In the last few years of thinking these things over on my afternoons at the museum, when I left the little Duccio and went back out into the main entry hall, walked through drawings, photographs, and impressionism, and made a right into 20th-century art, I would see Damien Hirst’s shark glimmering in its blue formaldehyde. But if I walked two rooms past the shark, I would come to one of the few comfortable benches at the museum, where a person can sit with other travelers weary from their exertions in earlier eras. Here, though, after a while, people realize they are sitting not because they are tired but because they are absorbed. The bench is perfectly placed to allow one to lose oneself in Jackson Pollock’s Autumn Rhythm (Number 30), painted in 1950.

    To make this painting, as he did for all his action paintings, Pollock tacked his canvas onto the floor. Then he moved over and around it, making the sweeping curves of black, lavender, green, but mostly black, leaving the bits of cigarette paper where they clumped and fell. Pollock said that he wanted “motion made visible–memories arrested in space.” Duccio gave to his figures gestures dense with contingency. In Pollock’s work, we see the gestures of the artist himself, and the contingency is not merely represented in a narrative scene but is held within the process of creating the very representation we are viewing.

    After the Second World War, using math borrowed from physics, economists and mathematicians developed the extremely complicated models that are now the basis of work done by futures and derivatives traders. These models allow financiers to represent a whole probabilistic future realm. We often say that the investments of the wealthy are hedged in every direction. By this we mean that the risks, and insurance against those risks, have been calculated and folded into current investments. Any future possibility could be represented in a present price. Whether these values are sustained in the actual future does not matter; the creation of the value is always in the present.

    Duccio was a passageway from an old sense of time into a new one, from time stretching eternal to time broken into increments. The Pollock stands on the cusp between Gilded and Glittering, between the beauty of the lit Cézanne and the more terrifying gleam of sharks and eyeless skulls. Pollock’s friend the poet and curator Frank O’Hara felt that it was with a kind of desperate bravery that the abstract expressionists attempted to give us future possibilities of movement embedded in a canvas of here and now. O’Hara thought that it was no accident that action painting was invented after the bombings of Hiroshima and Nagasaki. He wrote in an essay on Pollock, “It is not surprising that faced with universal destruction, as we are told, our art should at last speak with unimpeded force and unveiled honesty to a future which well may be nonexistent, in a last effort of recognition which is the justification of being.”

    Once, last fall, I shared the low, wide double-bench in front of the Met’s great Pollock with two girls, teenagers. Several feet from me, they played a daydreaming game: “I think it looks like the clouds, you know when you watch them and try to make pictures,” one girl said. And though I had spent so many years looking at the painting, the friend’s reply had never occurred to me: “I think it looks like leaves blowing,” she said, “when they’re on the ground and the wind picks them up.” Then she added, candidly, “Still, I cheated, I looked at the title.” “What is it?” her friend wanted to know. “It’s called Autumn Rhythm.”

    It must be, finally, what it is in painting that is beyond banking that drives the prices of paintings ever higher. Their ability not just to represent the hazards of fortune but to let us feel the wind and the turning stars that mark our deepest sense of time and change. It is for this that we close up our stalls and carry the canvases to the church. How much is it worth, a moment of surcease? The Duccio and the Pollock suggest that we will not be able to get an answer to that question. There is that within them representable by no sum. It’s possible that there is no limit to what bankers will pay for these visual inventions, ones so like their own and yet eluding them all the same.

    Rachel Cohen is the author of A Chance Meeting, and Bernard Berenson: A Life in the Picture Trade, which is forthcoming in fall 2013. She teaches at Sarah Lawrence College. Excerpted from literary magazine The Believer (November/December 2012). We highly recommend readers visit their website to read this piece in its entirety.

    Published on Jan 24, 2013

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