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Picasso's $179 Million Defeat

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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I feel sorry for "Les Femmes d'Alger (Version 'O')," the painting by Pablo Picasso that just sold for $179.4 million. Now that it is in the possession of an anonymous collector, it is less likely than ever to be reunited with its 14 sisters in the "Women of Algiers" series.

Picasso started 15 variations on Eugene Delacroix's "Les Femmes d'Alger" on Dec. 13, 1954. He had just moved in with his future second wife, Jacqueline Roque. Henri Matisse, a friend and competitor whom Picasso jealously admired, had been dead for a month. Both events played a part in inspiring the variations, as Picasso later acknowledged. The paintings continued, and at the same time deconstructed, the line of Matisse's odalisques. The women depicted -- the few, that is, who had more or less conventional faces -- bore traces of Roque's slightly cat-like beauty. Even the faceless ones had her graceful neck.

Like another, later series that tore apart, satirized, reduced and then reassembled Velasquez's "Las Meninas," these works were intended to be seen together. I saw Picasso's Meninas displayed alongside their classical inspiration in Paris in 2008, and it was unforgettable. 

Picasso's dealer, Daniel-Henry Kahnweiler, sold the "Women of Algiers" series in its entirety in 1956 to the American collectors Victor and Sally Ganz, who paid $212,500 -- about $1.9 million today. They soon realized they couldn't afford it, and sold all but five of the paintings. 

That was like breaking up a family, but Picasso was still painting and it probably didn't seem like much of a crime. Yet reuniting the series became a daunting task. In 2009, the Louvre held an exhibition devoted to the "Femmes d'Alger" project, but just four of the large compositions were displayed, along with a number of preparatory studies.

The Ganz collection was auctioned in 1997, netting $207 million. "Version 'O'," originally acquired for $26,632, brought $31.9 million. The auction provided such spectacular returns on the Ganzes' original investment that it became the subject of an academic paper by William M. Landes of the University of Chicago, who wrote of the Ganzes:

They didn’t hit the jackpot overnight. Rather they spent a good deal of time and effort searching and acquiring art over many years. And like long-term investors in general, they had enough confidence in their purchases that they followed a “buy and hold” strategy.

It was probably wrong to describe the collectors' life work in investment terms. The Ganzes loved their paintings, hanging them around the house and loaning them to museums to be exhibited. It was a passion born of deep knowledge and a feeling for true genius. The 1997 auction only took place 10 years after Victor Ganz died. His children struggled to pay inheritance taxes. 

A London art dealer, Libby Howie, acquired "Version 'O'" at that auction. As it turns out, he was acting on behalf of a client, the anonymous person who sold the painting Monday. This was probably already a rather dispassionate investment. The seller spent serious money and more than quintupled the outlay in 18 years. Nonetheless, the painting still sometimes saw the light of day: It was at the Louvre exhibition, for example. Libby Howie was listed as the loaner. 

Nothing is known about the new buyer. The art critic Jerry Saltz, who went to see "Version 'O'" at Christie's auction house before the sale, said goodbye to it with a grandiose description that betrayed something of a lover's obsession. "I knew almost everything I saw might not be seen again in public," Saltz wrote.

Today's collectors often keep their art in freeport warehouses, where the works are seen only by their owners and prospective buyers. To these people, art is an alternative to other markets, such as bonds, equities and real estate. According to Deloitte's Art and Finance Report, post-war and contemporary art provided an annual return of 10.5 percent between 2003 and 2013 , compared with 7.4 percent for the Standard & Poor's 500 Index. In the last two years, judging by all the auction records that culminated in Monday's sale of "Version 'O'," the returns have probably been even better, especially on top works.

In 2011, the Berggruen Museum, owned by the city of Berlin, bought "Version 'L'" for $21.3 million, and it has drawn crowds. Even Picasso's granddaughter showed up to look at it. In the current art market, however, an institution such as the Berggruen cannot hope to assemble the whole Picasso series. It's probably even beyond the means of the tremendously wealthy Nahmad family, which has some of the "Femmes d'Alger" paintings. 

No matter how much auctioneers, dealers, art owners and fashionable painters may love this market, it is an abomination. Governments, which routinely meddle in saner, healthier markets, must step in to ensure that masterpieces can be seen and admired by the public.

Picasso, an avowed leftist, certainly meant for his work to be widely seen, not just traded. "What do you think an artist is?" he said. "He is a political being, constantly aware of the heart breaking, passionate, or delightful things that happen in the world, shaping himself completely in their image. Painting is not done to decorate apartments. It is an instrument of war."

With the sale of "Version 'O'" to an unknown individual for an indecent pile of money, Picasso lost an important battle in that war.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Marc Champion at mchampion7@bloomberg.net