The birth of modern auctions

From Wesley Towner's "The Elegant Auctioneers"

English auction houses, by tradition and by design, catered then almost exclusively to the trade. Sales of famous art collections sometimes drew the curious as spectators, but private buyers were excluded from the bidding by custom. If they wanted to buy, they placed bids through dealers, who had entree to the sales and charged 5 or 10 percent commission on the purchase price.

The rooms had the atmosphere of a. catchall for derelict possessions. Things were sold just as they came from the consignor—often dirty and in disrepair. The lots were numbered and just put around.

Mediocrities were not readily distinguishable from things of value: Catalogues, unless interpreted by an expert, gave little clue as to which was which. Oil paintings had the dust and grime of years thick upon the glass that preserved the brush strokes of a master or blurred the hand of a copyist or forger. The sales had an air of cut-and-dried professionalism. Porters in green baize aprons held up chairs by one leg or hoisted portraits that may or may not have been painted by Reynolds above the bidders' heads. The auctioneer wore wore the formal dress of a stockbroker and, in. contrast to his surroundings, was a man of similar dignity and consequence. The porters, it was said, did not even wash their necks. The dealers who did the bidding sat around a big table or stood near it, subdued, expressionless, and tense, like seasoned players in a gambling house. They were firmly organized in the Ring,

The Ring, or knockout system, which still prevails at auctions where the bidding is predominantly by the trade-is an age-old conspiracy to control auction prices and keep the “privates” -the dealers' word for nonprofessional bidders—from getting anything of value at less than the going retail price. The dealers in a particular category of art property form a syndicate and agree not to bid against one another, When one member of the combine bids, the others- however much they may want to buy the lot refrain from running up the price.

After the public sale, the Ring holds its own auction, and the members bid on the lots obtained among themselves. If an item is of no interest to other members of the combine, the original bidder may pay for it and keep it. When two or more dealers in the ring compete for it, the difference between its knockdown price and the amount it brings in the Ring auction goes into the profits of the syndicate. An object of exceptional value may remain joint property of the syndicate members until one of the dealers finds a customer for it and submits a bid acceptable to the others. The gravy is then portioned out among the members as usual.

There are many variations and vicissitudes in the operations of the syndicates. Occasionally a rival combine will invade the auction rooms and bid against the regulars with the object of gaining membership in the established gang. Strong and unpleasant measures may have to be taken to restore monopoly. Sometimes syndicates operate within the syndicate, in which case two or more members form a conspiracy not to compete against each other in the Ring auctions. If the Ring-within-the-Ring succeeds in obtaining objects below their market value,its members may hold a third auction to divide the spoils.

For instance, a Chelsea soup tureen may bring £100 in a London auction. If the porcelain syndicate is composed of ten dealers and the soup tureen brings £1,000 in the King auction, each of the ten dealers gets £90 profit. But the £1,000 may have been paid by three dealers united in a Knockout of their own. The soup tureen for—brings say, £4000 in the subsequent auction among the three, regardless of which dealer buys the tureen, each of the three comes out with an additional £iooo profit. Moreover, a syndicate member, whether the mere circumstance that a Chelsea soup tureen has come up at auction nets him £90 or £1,090, would be unlikely to pay taxes on his ill-gotten gains, since the operations of |the ring are illegal in England, and in any case, undercover.

In any event, the “privates” are not to be tolerated at Ring-controlled auctions. A functionary, who used to be given the colorful title King of the Knockout, is delegated to take over the casual intruder who imagines he can buy advantageously for his own account at auction. If, for instance, a gentleman fancies a Georgian silver coffeepot and attempts to bid for it against the silver Ring, the King of the Knockout will run him up to about the retail value of the coffeepot—or higher, if the gentleman appears to be well-heeled and stubborn—and let him have it. The intruder goes home with his prize—for which he may have paid more than it would have cost in a Bond Street silver shop, -pondering on the fact that in the published reports of auction sales similar coffeepots had frequently fallen for the price of crockery.

As a defense against the Ring, English auction houses operate on a system of reserve prices. The consignor is permitted by law to put a secret reserve, or “upset,” price on each lot to be sold. When the bidding fails to reach the upset price the auctioneer knocks the lot down to himself and the would-be seller pays only a reduced commission. Thus the bidder is placed in the position of playing a kind of blindman's buff with, the auctioneer, who alone is supposed to know what the reserve price is.

Secret reserve prices, though not sanctioned by law, certainly prevailed at New York auctions. What was worse, if the auctioneer did not actually own the property he sold, he mixed in derelict objects of his own in order to cash in on the good will emanating from a real consignor's name. moreover, the consignor—if consignor there was—could hardly be said to be in a better position than the bidder faced with all those unidentified competitors. Most auctioneers were shoe-string operators; they delayed payment interminably, juggled the accounts and sometimes absconded with the funds altogether.

During his retirement from the rostrum Kirby had been mulling over the trouble with auctions, and he had come up with some cardinal principles to herald the Art Associations entrance into the field of management. What he proposed to establish, with the Seney sale as a springboard, was a free and unrestricted auction commission market with the private buyer as its main support. In the language of his manifesto this was to be accomplished by “selling without reserve, restriction or protection, never permitting addition to sales of private or estates' collections, prominently advertising and displaying real ownership, mating final payment within thirty days from the date of sale.

These are in essence the principles under which the Parke-Bernet Galleries functioned for many years. If they do not sound particularly cardinal now, they did in 1885.