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Now Even Museums Can Afford Them

June 24, 1998

The most popular item now on display at a private art museum in Tokyo is a painting by Pierre Auguste Renoir, which the institution purchased just last year. How was the owner of this museum able to purchase and show such a choice work of art? The answer lies in both the buying craze for fine art that occurred in Japan at the height of the "bubble" economy of the late 1980s and in the collapse of that economy. Only a few years ago, this work by Renoir was one of the many high-priced paintings bought by Japanese who flocked to overseas auctions. Subsequently tucked away in a warehouse, it did not see the light of day until last year. A growing number of works of art are now finding their way into museums and galleries where they can be seen by the general public. Many of the costly masterpieces that once created an uproar in the worldwide mass media are now coming to an ironic--and for art fans, fortunate--end to their odd journeys.

Post-Bubble Trouble: Paintings Become "Bad Debt"
Ehime Prefecture's museum of fine arts, scheduled to open in fall 1998, has purchased more than 40 works of art in Japan and abroad since 1997. Among these, a portrait of a woman by Pierre Bonnard, a landscape by Paul Cézanne, and other paintings had been purchased mainly for investment by Japanese businessmen when the bubble economy was going strong. After being unloaded by their original Japanese owners, they fell under the control of financial institutions and were locked away behind warehouse doors. Each of these paintings cost the museum in Ehime upwards of 100 million yen (714,000 U.S. dollars at 140 yen to the dollar), but that is considerably less than the "bubble prices" of a few years back. Preparing to open in 1999, Shimane Prefecture's art museum, too, has already bought a landscape by Claude Monet and other paintings with histories similar to the ones described above. And this trend is spreading to art museums in every corner of Japan.

The people who began buying famous paintings at exorbitant prices in the late 1980s were generally new to the world of fine arts--business figures who had acquired large amounts of cash through real estate and securities investments. In 1990, the year in which art imports reached their highest monetary value in Japanese history, the equivalent of 500 billion yen worth of fine arts is said to have entered Japan. These included familiar names like Pablo Picasso, Vincent Van Gogh, Renoir, Marc Chagall, and Monet.

Then, in 1991, the bubble economy collapsed, and many of the collectors found themselves having to part with the paintings they had gone wild buying. This was because, as with investment in land, buildings, and automobiles, the investors had used the purchased items as collateral for loans. Despite the relatively small scale of these assets compared with real estate and other investments, financial institutions considered the works of art as "bad debt." The hundreds of millions of yen worth of art was valued at much too high a price, however, having been purchased during the recent economic boom. The tremendous difference in price before and after the collapse of the bubble economy threatened financial institutions with losses, leading them to hold back from selling off much of the art.

Museums Make the Most of It
Economic hard times continued, however, and financial institutions finally had no choice but to get the art off their hands, even at a considerable loss. Some of this art flowed back overseas, mainly to the United States, where the economy was resurging. Spring 1998 auctions in New York and London reportedly offered many pieces brought from Japan. These works, untouchable a mere decade ago, have now come well within the grasp of financially modest museums.

A bill designed to accelerate this trend is expected to be enacted this year by the National Diet. As a law, it will facilitate the registration of privately held outstanding works of art, allowing them to be shown at museums in Japan. The proposed law will also allow registered works of art to be used as payment for inheritance tax, if the owner so desires. (To this date in Japan, there has been only one instance of using fine art to pay an inheritance tax.) One bureaucrat involved with this issue at the Agency for Cultural Affairs has high hopes for this piece of legislation, saying that it will help put an end to the sad situation where precious works of art sleep the day away in warehouses.

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Trends in JapanEdited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.

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