Thursday, May 27, 2010

Master Clarke, a special Stuart, sells at auction; how much?

Master Clarke
By Gilbert Stuart, England 1783-4,
originally in the collection of Mr. and Mrs. Ferragamo, sold on May 19 to new owners

On May 19 a very special Stuart portrait was up for auction at Sotheby's spring sale of American Paintings, Drawings & Sculpture. -- Stuart's earlier English paintings were not as swiftly and monotonely produced as they were in later years in America, when Stuart's intent was to streamline income. Those days in England ie when he was studying under Benjamin West, was the time in which he wished to impress the general public/art world/aristocracy with his extraordinary talent. So the portraits are more detailed, expansive and original; this particular portrait is of the son of Richard Hall Clarke of Bridwell, Halberton and his wife, a celebrated beauty. The young boy is posed among the trees in the park of his family home, holding a long bow and arrow, the sport of archery being de rigeur in the upper-class at the time. It is not clear whether he knows what to do with the gear.

So how much did it sell for?

Saturday, May 15, 2010

If you need more money, get together with cronies and create a bank.

Finance, Then and Now

by Elizabeth Ahrens-Kley
The recent economic rescue plans undertaken by the U.S. government to stave off fiscal calamity, including a $787 billion stimulus in September '08, followed less than two years later by an eye-popping $955 billion from the Europeans and IMF to prop up indebted Euro nations, makes one believe that governments around the world are not hesitating in treating tax dollars as gambling chips, seemingly without much monetary value. Losing the poker game simply means the chips are lost! Winning simply means buying time to allow debt-plagued countries to recover enough to build some fiscal and monetary credibility. George Washington, whose image by American portrait artist Gilbert Stuart is on the one dollar bill, surely would be turning as green as the color of the bill at these vast and fearsome sums. Lest history be not forgotton, a brief glimpse back at the state of banking in Philadelphia, the bustling port and capital city of America at the turn of the 19th century, will shed light into the vast gulf existing between the banking institutions of then, and now. In particular, the story of Samuel Meeker’s “overborrowing” is of interest.

Complex collateralized debt obligations did not exist, nor did savings banks, or trust and loan companies. Nor commercial banks. The Fed was not established until 1913.
In the 1780s the first American banks were small state banks (at this time there were three: Philadelphia, New York, and Boston), and there was no central banking system. With the adoption of the new constitution, the financial system was substantially reformed beginning 1788, culminating in the establishment of the First Bank of the United States in 1791 endowed with the role of aiding federal finanacial operations and leading the way to development of a US banking system. The bank was capitalized at a then whopping $10 million, the state banks at that time were only capitalized at $1 million or less. Only the First Bank of the United States was nationwide and while servicing the large government debt, the smaller state banks commonly lent capital for local and regional business, trade, and infrastructure—from the three existing state banks in 1790, the number grew to 28 by 1800, all in New England and the Middle Atlantic states.

1803 was a year in which not only Philadelphia experienced an accelerating prosperity, it was also a momentous year in the life of Samuel Meeker (1763-1831), scion of a well-known prominent family from New Jersey. Transplanted to Philadelphia in the early 1790s in search of opportunity, he was one of a group of lesser known but ambitious young men willing to challenge the restrictive lending practices of the small group of old established families which controlled the field of finance at this time in the capital. The general complaint was that money was chiefly locked into the hands of these relatively few conservative individuals, who were mainly beholden to investors in England, who lent too little locally and most often to only a favored few, substantially restricting growth of commerce; and private lenders charged much too exorbitant rates of interest. Meeker was one of these progressive-minded citizens, this group of enthusiastic amateurs inexperienced in the profession of banking, but willing to make their own gamble that the time was ripe to exploit economic potential; by establishing a new line of credit, at reasonable rates of interest, to supplement the three other banks then dominating the commercial activity of the city. These individuals, leaders responding with creative energy to the current business climate in Philadelphia (still the country’s largest and busiest port) gathered together to draw up a plan for a new Bank.

Handsome, energetic and athletic (upstanding member of the Gloucester Fox-Hunting Club!) & understanding that new avenues of capital would help lubricate the wheels of commerce and prosperity in the capital, while also benefitting his own trading business Meeker, Denman & Co., Meeker was one of sixteen directors elected to the board of the new “Philadelphia National Bank” in the summer of 1803. A subscription book was opened for the sale of stock, the total amount of the Bank’s stock was subscribed and was placed at one million dollars. Organization of the bank proceeded rapidly, the board (including Meeker) met daily, the collected money was deposited in a box at the Bank of Pennsylvania. “A proper set of books, stationery, scales, weights, shovels and other materials” were ordered and steps were taken toward the drafting of rules and regulations. A few months later in the fall, Meeker’s own business received the first loan from the Philadelphia National Bank. Not only did Meeker receive the first loan from the new bank in 1803, he and his twin sister Phebe turned 40, both these circumstances surely providing the inspiration for what transpired next. Signalling acheivement at joining the ranks of the top social and financial elite, Meeker commissioned his portrait to be done by the premier portrait artist of the day, Gilbert Stuart, to be given as a gift to his beloved sister. Since the twins’ birthday was in the summer, surely a lavish and extravagent party was thrown to celebrate the event at Meeker’s well-known country estate on the banks of the Schuylkill River, Fountain Green. Here at this two-story stone house with commodious wings built to each side the guests would arrive by horse, dine on steak butchered from cows fed in the stalls on the property, and treated to the finest fruits and vegetables grown in the highly cultivated gardens. What a fabulous excuse to leave the hot and humid city in the summer (and to escape the periodic fevers), to mingle with many of the finest citizens of the city, and view the unveiling of a new Stuart portrait!

Epilogue: it is ironic to note that only by special vote of the board could a loan by the Philadelphia National Bank be made of more than thirty thousand dollars, and that this vote was only accorded to the directors. Meeker apparently found it impossible to limit his own loans from the bank on numerous occasions, leading to his exclusion from the board in 1807. Possibly Meeker’s financial dealings were too much like gambling.
(© All rights reserved.)

Monday, May 10, 2010

"Wall St" is divided from "Main Street" version 1829

President Jackson declares war on the Bank of the United States
After Jackson’s first annual message to Congress in 1829, claiming that the Bank of the United States had failed in its requirement to “establish a sound and uniform currency”, the directors of The Philadelphia Bank feared disastrous results to the banking community if the Bank of the United States was forced to wind up its affairs.
Jackson was reflecting an overal populist view which was antagonistic to banks, informing Mr. Biddle (President of the Bank of the United States since 1823); “I do not dislike your Bank any more than all banks. But ever since I read the history of the South Sea bubble, I have been afraid of banks.”

The Philadelphia National Bank (for Meeker's role in the establishment of this bank click here) is against these actions by the federal government:
“The advantages which have resulted to the country from the establishment of an institution which has aided the fiscal operations of the Government in the collection and distribution of the public funds, furnished a sound circulating medium which may be considered at par in all parts of the Union, facilitated the general operations of trade and commerce, and which has by the diffusion of its capital advanced the prosperity of the people, are so obvious to all who have witnessed its operations, as to render it unnecessary to urge them in detail upon your consideration.” p64

Threat of closure by the federal government, and the actions by Jackson of removal of the federal deposits from the Bank of the United States, caused a tightening of credit in the economy and precipitated an overall panic, and by 1833 these actions were proving ruinous to commerce. The overall ensuing recession however caused other banks to extend their loan portfolios to relieve the pressure. Despite the panic,the thirties were years of great activity in the Philadelphia money market. New organizations had come on the scene; savings banks, trust companies, and loan companies. Bank capital proved insufficient, and most institutions attempted to borrow additional 1836 the Philadelphia bank tried to borrow half a million dollars in London with the assurance that ‘the business of the Bank is increasing and its affairs are properous,’ ...p66 (This did not succeed).

Ensuing inflation & the monetary system is impaired
After the loss of the government deposits in 1833, the Bank of the United States no longer had the means of regulating credit extension by the state banks, and inflation proceeded apace. It was an ominous fact that by spring, 1834, the notes of banks situated in the surrounding communities were circulating in Philadelphia at a discount. Once again, the monetary system of the United States had been wrecked, and a uniform currency had been replaced by a medley of “bank rags.” p67

quotes are from The Philadelphia National Bank 1803-1953 by Nicholas B. Wainwright, Wm F. Fell Co, Philadelphia 1953

..."In 1823, the Biddles were prosperous, having made money in real estate (a Biddle ancestor had been a member of the Proprietors), and influential, having been Free Quakers who sided with the Revolution. So, Nicholas Biddle became the president of the Second [US] Bank at 4th and Chestnut. Like all banks, he was given the ability to create money through taking deposits and loaning them out. Since in this process, two people (the depositor and the borrower) think they have the same money, there is effectively twice as much of it -- unless both actually demand it at the same time. If a bank has Federal revenues on deposit, as Biddle did, it is fairly easy for a politically active banker to predict whether that large depositor is likely to withdraw it. Political deposits seemingly make a bank stronger and safer, unless the banker has a fight with a politician. That's banking, but Biddle also became a central banker.... ......"

Monday, May 3, 2010

Stuart's "Astor" is demoted to "Gentleman" ! (trickery in the world of art?)


On May 9 2009 I posted an entry on Stuart's portrait of John Jacob Astor, about to be autioned at Soetheby's, with an estimated fetching price of only $75,000-$100,000 ("For a trifling sum of money)".

It turns out that the identification of this particular sitter as an "Astor" was done without the blessings of the professionals. The above portrait was identifed as John Jacob Astor "based only" on its similarity to another existant portrait of Mr. Astor! It seems to me that Soetheby's is supposed to check out the authenticity of each piece that comes under its hammer, and in fact perhaps that is what happened in this case. This "Portrait of a Gentleman", which the above portrait is now more humbly termed, is now once again up for grabs at auction, but at a much more modest price.

Explanation courtesy of Soetheby's;


This portrait by Gilbert Stuart had been previously identified as a portrait of John Jacob Astor, the first multimillionaire in American history. Gilbert Stuart was commissioned to paint Astor's portrait and according to Lawrence Park, the Gilbert Stuart scholar who published the 1926 four volume catalogue raisonné, he painted two versions (numbers 37 and 38 in Park's catalogue). Mr. Park identifies number 37 as the portrait that was purchased in 1909 through Charles Henry Hart for the collection of The Brook, a prominent men's club in New York City. Number 38 in Park is listed as the 2nd portrait of Astor, and the likeness Astor himself enjoyed. This portrait still remains in the Astor family today and was the subject of several lithographs after the painting. The present portrait was identified as a portrait of Astor based on its similarity to the portrait at The Brook. Further research at the Frick Art Library suggests that this portrait, and another portrait in the collection of the Van Cortlandt family, are both of a Mr. Badcock. The present work was formerly in the collection of a General Brigadier Badcock so it is possible that it descended in the family of the sitter.

Now, this portrait is currently only estimated to bring 40,000 - 60,000 USD.

Gee, too bad for the owners. Please NOTE here the importance of establishing a failsafe providence, or ownership history, of a Stuart portrait. This would have aided a quick determination of who the sitter is.

It should be added that a current expert on Gilbert Stuart, Ellen Miles (National Portrait Gallery), helped to rectify this minor misunderstanding.

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