Duveen by S.N. Behrman, the prolific playwright (The Second Man, Fanny) contains a smorgasbord of interesting, amusing, and illuminating grist for the mill of readers interested in marketing, history, and finance. Joseph Duveen (1869-1939) was the most successful dealer in fine arts, or indeed any pricey collectibles in history. He achieved almost a monopoly on selling almost all Italian art painted before the 1700's. His techniques to achieve the monopoly are at once hilarious and instructive. He insisted on paying the highest prices for all paintings that came up at auction or through collectors, and made sure that none of his collectors ever suffered a loss on the market value of any paintings he sold to them. He was the main force behind the collections housed in the National Gallery, the Tate Gallery, and the Frick. His customers, included Mellon, Kress, Rockefeller, Hearst, Frick, Morgan, Altman, Huntington, Bache, Goldman (of Goldman Sachs), Widener, Rockefeller and almost every other magnate of his time.

A key feature of his selling method included preparing a catalogue of the collector's holdings that immortalized the collection and the collector. The one magnate he wasn't successful with, Henry Ford, is the subject of a hilarious story. Duveen presented a catalogue to Ford with all the greatest pictures available in the 30s. Ford said it was such a beautiful book, that there was no reason for him to buy the pictures.

On other occasions, he refused to sell to a collector, until his collection has reached a certain point of grandeur. He always insisted that he could sell his best paintings to Mellon or Kress so why would he wish to sell to a mere millionaire who was not one of his favored customers already. In this technique he predated Madoff. In describing his methods, Mrs. Hearst said, "Duveen didn't want to sell any of his paintings. But his customers always badgered the poor fellow until he gave in."

 He liked to buy entire collections, and stored the collections in palatial dealing rooms that he maintained in London and New York. His mantra was that "Europe had the paintings but America had the money" so his main customers were the American industrialists, and 5 and 10 centimillionaires of his era.

His financing method was to use his paintings as collateral for loans, and to buy up all good collections and store them until the values increased. He was able to beggar his brothers and sisters by buying up their interests and refusing to pay them off during his lifetime. He didn't understand the concept of interest on money, and gave his collectors infinite time to pay their debts to him. Yet during this time, he had to borrow from banks like the Mellon and pay enormous interest. In addition, he had heavy expenses from maintaining his business and paying off all his runners, and finders across the world. Thus, he was always cash poor during his life.

He bought out all the interests in his family but didn't pay them off during his lifetime. The main problem in his financing was that he had to pay cash for everything he bought but he gave unlimited credit to all his customers. A favorite technique was to lend a painting to a collector to hang in his home or gallery for several years, while he became acquainted with the painting. He liked to say that the painting was the one asset that a collector could buy that would cost him no upkeep, and give him constant enjoyment from viewing it. They were unable to sue because he was the only one that could sell the paintings in his inventory.

 Behrman believed that the main customers were lonely, silent men who were ashamed of how they obtained their wealth, and unhappy with the ne'er do wells in their family. Through the paintings they gained respect and immortality. And the paintings never talked back to them, became playboys or died in race track accidents like their children.

Duveen had many partnerships with those who could aid him in his marketing. One was with Bernard Berenson, who vetted all his pictures, and received a commission on all that Duveen sold. Berenson eventually turned on Duveen, when the two had a bitter fight about the authenticity of a Titian that Duveen wanted to sell. Other partnerships were with the butlers and comptrollers of all his customers so that he could get advance knowledge of what they had to sell, and when they were in a mode of buying.

One of his marketing techniques was to buy up all the English and Impressionist paintings of the era that his collectors had in their possession, so that they would not be tempted to add to their collections. He liked to upgrade his customers into buying only the best paintings and eschewing all commercial items. He found out early that his collectors liked pictures of pretty woman, with bright colors and action in his paintings that came from English Nobility. And when a great masterpiece came up without these characteristics he would buy them but not try to sell them, and store them in his warehouse. He liked to say, "it is much easier to sell a second rate picture that has belonged to any English nobleman than a first rate one that has belonged to a treat man of the Italian nobility."

Duveen got his start selling Delft antiques that his poor family collected in Holland. He learned all the techniques of selling from his family's antique furniture business. But he soon came to the conclusion that it was much better to sell million dollar paintings than $ 5,000 rugs and medals. The book is sprinkled with great anecdotes and selling procedures of the time. For example, when he found a Da Vinci that a Russian countess was selling, he had first to pay for an option to buy the piece at a set price of 1 million. But then it had to be offered to the Tsar at that price before he could buy it.

Behrman, the author, is one of those 20th century men who despised business people. He took pleasure in thinking that Duveens' customers were "scrupulously dishonest". And he seemed to think it fair that Duveen was equally dishonest with the customers. He fails to note that people like Kress, and Woolworth, and Rockefeller, the billionaires of his day got their wealth from selling goods to the masses that uplifted their standards of living and gave them the comforts that the richest of two generations back couldn't buy. Behrman writes, "as his customers aged, they felt guilt about such things as machinegunning the strikers at their mines, they were characterized as exploiters of the poor and the source of their misery. they felt futility and hostility closing in around them, they longed passionately for the happy company, in the even darker regions ahead." Duveen's paintings and persona provided that company and relief from their guilt.

 Duveen was always cash poor, as he had enormous overhead and inventory from carrying all the items that were out of favor. He also maintained a lavish life style and was constantly giving works of art, and paying for the buildings of the institutions that ultimately housed the paintings like the Tate and The National Gallery. His New York Gallery was built at enormous expense on the corner of 56th street and Fifth Avenue, currently the Bendel building, but then called the Ministry of Maine. His family complained about the expense but Duveen assured them he had "all the pictures sold". The family said "show us the bills of sale". Eventually when he died, he made a big sale to Mellon, and was able to pay off all his debts and died with an estate of about 7.5 million pounds, the first time he was solvent and debt free in his life.

After he died a rival dealer said "We miss him but we are glad he is gone". What can we learn from Duveen? He had a complete marketing operation, with tentacles in every aspect of the supply and demand chain, paying every conceivable source of supply with bribes and emoluments. In this he reminds one of the publicity hungry flexions that run conglomerates of today, especially those in the Midwest, with their politician antennae always attuned to the sources of cheap goods that they can get ahead of everyone else.

He liked to pay the highest prices for things, maintaining the market for his goods and creating enthusiasm among his customers. He was completely attentive to the needs of his customers and would do anything to please them, thereby showing the wisdom of the motto used by most great businesses that "the customer is always right", and taking back items with no questions asked at the original selling price regardless of the legitimacy of the complaint. He maintained the viability of his market by buying up all goods that came to it, thereby insuring that his customers always made a profit. But after he died, the prices of all his goods suffered a terrific fall. He was a master at manipulating markets. He bought goods, not because he expected to make a immediate or reasonable profit on them, but in order to maintain the illusion that none of his customers ever sold a painting at a loss, and that his favored 400 year old Italian masters would never decline in value. The importance of running stops, and hitting the exercise price of knock out options comes to mind.

I'd like your comments on what we can learn from Duveen. 

Steve Ellison writes: 

His operation sounds like a corner.


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