Turns out there’s a long tradition of the art market outperforming the real economy which Godfrey Barker is particularly adept at illustrating. He’s done it before but this riff is from his Wall Street Journal article out today:

The art market has bucked the prevailing economic gloom before. Art boomed for 33 years in London in the late Victorian years when the British, who paid the highest prices for pictures in the world, saw their agricultural economy fall into the “Great Depression” of 1872 to 1895.

In New York, art prices climbed steadily from 1885 to 1935 when U.S. banks repeatedly failed because of the loans they issued to railway builders that subsequently went bust and the U.S. narrowly avoided national bankruptcy in 1895 and 1907. Gold reserves dwindled and dollar devaluations were regular. When Pierpont Morgan, the richest man in the U.S. at the time, died in 1913, most of his estate was invested in art and books. An exhibition of his art at the Frick Art Museum in Pittsburgh in 2008 estimated his collection at $60 million – 86% of his net worth.

Mr. Morgan knew better than most people how unstable the public and corporate finances were at the time and how close the U.S. Treasury was skirting the abyss. While U.S. companies were going bust by the day, Mr. Morgan’s paintings by the likes of Gainsborough and Raphael remained enduring stores of value.

The correlation between stock collapses and art booms carried on throughout the 20th century. During the 1920s — while the Weimar Republic became more threatening, the UK endured a general strike and the Wall Street crashed — art prices enjoyed one of their biggest booms of the 20th century. In 1931 the US Treasury Secretary Andrew Mellon paid a world record price for a painting: £240,800 for Raphael’s Alba Madonna , the most expensive of his 21 purchases from the Hermitage museum in the then Soviet Union. Art prices were also resilient in the late 1980s after U.S. stocks fell 24% on Black Monday in October 1987.

A Flight to Tangibles (Wall Street Journal)